Second Jharkhand State Road Project (RRP IND 49125) SECTOR ASSESSMENT (SUMMARY): ROAD TRANSPORT (NON-URBAN) A. Sector Performance, Problems, and Opportunities 1. State context. The state of Jharkhand was established on 15 November 2000 in India through bifurcation from Bihar state. It comprises 24 districts with a total geographic area of about 79,700 square kilometers (km 2 ). Jharkhand is surrounded by five states: Bihar in the north, West Bengal in the east, Orissa in the south, and Chhattisgarh and Uttar Pradesh in the west. Jharkhand is known as a tribal and forest state with scheduled tribes and castes making up about 38% of its 33 million population; forest covers about 28% of its area. 2. Railways, with a total length of about 2,000 km, largely serve the traffic needs of interstate traffic. Air transport service caters only to interstate traffic. As a result, roads are the predominant mode of transport services. 3. Roads. National Highway No. 2 (NH2), which connects Delhi and Kolkata, runs through Jharkhand. The state highway network was developed to improve connectivity with the NH2 with various parts of the state and other categories of roads, including rural and forest roads built to connect villages with state arteries (Table 1). Industry is concentrated in the central and eastern parts of the state taking advantage of easier access to the NH2. Table 1: Road Network in Jharkhand (kilometers) Roads Length National highways 2,402 State highways 1,361 Major district roads 4,954 Rural and forest roads 49,601 Other roads 1,888 Total 60,206 Source: Road Construction Department, Government of Jharkhand. 4. Transport characteristics. At the end of fiscal year (FY) 2012, 3,157,986 vehicles were registered in Jharkhand. The number of registered vehicles has increased on average about 15% per annum since FY2004; this exceeds the national average of about 10% per annum. About 60% of these are two-wheelers. With the increase in the number of vehicles, road capacity needs to be increased with adequate maintenance to maintain service. 5. Road safety. The loss to the Indian economy due to fatalities and accident injuries, estimated at 3.0% of gross domestic product in 1999 2000, is particularly severe as 53.1% of road accident victims were 25 65 years of age. 1 The road accident data in Jharkhand show a mixed picture. While the road accident rate was 18.0/10,000 vehicles in 2012, better than the national average of 30.7/10,000 vehicles, it was 2,119.3/10,000 km, about 72% higher than the national average of 1,227. 2 Most accidents are caused by drivers (67.0%), followed by other road users (6.9%), defects in road condition (4.5%), and defects in the mechanical condition of motor vehicles (3.9%). Most drivers at fault are speeding and/or have taken alcohol or drugs. In 1 Planning Commission. 2003. Report of the Working Group on Accidents, Injury Prevention and Control. New Delhi. This is the latest official report on the economic loss due to road accidents. Various studies conducted to update the figure also show the economic loss at about 2% 3 % of gross domestic product. 2 Government of India, Ministry of Road Transport and Highways, Transport Research Wing. 2013. Road Accidents in India 2013. New Delhi.
2 Jharkhand, state and district road safety councils conduct road safety awareness campaigns annually in accordance with national government initiatives to promote road safety, but no state initiatives address road safety from the perspective of road engineering or road user awareness. Currently, road safety audits are not mandatory for road engineering. A nodal agency should be designated to promote road safety in the state. 6. Road agencies. Fourteen states in India have established separate bodies in the form of corporations, authorities, or boards for road development and maintenance. Some have utilized private sector participation to a great extent in generating funds for development and maintenance, and others function as a part of the state government with the main budget sources from the departments in charge of road development and maintenance, i.e., public works department or road construction department. Experience from these states shows that these bodies tend to be more efficient in project development, implementation, and service provision, mainly due to the flexibility of institutional management, including staff recruitment and performance management. 7. In Jharkhand, the Road Construction Department (RCD) is the main agency for development and maintenance of state highways and major district roads. The Department of Rural Works is responsible for constructing and maintaining rural roads. As in other states, national highways in Jharkhand are managed by central government agencies: National Highways Authority of India and Ministry of Road Transport and Highways. The state government has created three autonomous bodies for road development and maintenance. The State Highway Authority of Jharkhand (SHAJ) was established in accordance with the State Highways Authority of Jharkhand Act 2007 and mandated to develop, maintain, and manage any state highways entrusted by the state government. SHAJ was expected to become independent from government funding within 3 years of its establishment. However, no single road has been entrusted to SHAJ to date; SHAJ has been executing nine RCD road improvement works of about 450 km. It currently functions as a semi-autonomous RCD agency. The state government established Jharkhand State Rural Roads Development Authority as an autonomous single purpose agency to implement the 100% centrally sponsored rural road connectivity program, Pradhan Mantri Gram Sadak Yojana. 3 Jharkhand Accelerated Road Development Company was established as a special purpose vehicle to develop 1,500 lane-km of state highways on a build operate transfer (annuity) basis. The company is a joint venture between the state government (26% of shares) and IL&FS Transportation Networks (India) (74% of shares). B. Government s Sector Strategy 8. The state government, through RCD, has been improving the state road network through a combination of budgetary support, Asian Development Bank (ADB) assistance, and public private partnerships. Using funds from the rural road connectivity program, rural roads have also been substantially improved. RCD s target is to increase road density by constructing state roads and to improve the existing road network by widening and rehabilitating existing roads. About a $2.5 billion investment is planned for this for 2012 2017. In addition, the state government is allocating $228 million to construct 1,500 lane-km of state roads through build operate transfer (annuity) during the same period. 9. Budgetary resources. Increasing budget amounts have been allocated in recent years. In FY2014, about Rs21,275 million (about $355 million) was allocated for roads and bridges 3 Of the total rural road network of 42,252 km, about 40% (17,252 km) was developed under the national rural road mission: Pradhan Mantri Gram Sadak Yojana.
3 capital expenditure. This includes Rs4,744 million (about $79 million) for road improvement works being financed by ADB and Rs2,759 million (about $46 million) for road development works being implemented under build operate transfer (annuity). Rs2,683 million (about $45 million) was allocated for maintenance under the nonplan budget category of state highways, which is sufficient for routine maintenance of all roads under RCD. 4 Periodic resurfacing (improvement of riding quality of pavement) has been conducted under the plan budget category. 5 Table 2 summarizes the plan and nonplan budget allocation from FY2010 to FY2014. Table 2: Road Construction Department Budget Allocation and Expenditure (Indian rupees million) Item FY2010 FY2011 FY2012 FY2013 FY2014 A. Budget allocation Plan 5,900 8,250 8,000 16,500 19,850 SHAJ 0 0 77 16 2,965 Nonplan 1,936 1,813 2,127 3,062 2,683 SHAJ - - - - 1 Total (A) 7,836 10,063 10,127 19,562 22,533 B. Expenditure Plan 5,135 6,870 7,913 15,241 19,111 SHAJ 0 0 0 2 16 Nonplan 1,185 1,677 2,037 2,919 2,164 Wages and salaries 772 764 856 903 967 Maintenance 413 913 1,182 2,016 1,197 Total (B) 6,320 8,547 9,950 18,160 21,275 SHAJ = State Highways Authority of Jharkhand. Source: Road Construction Department. 10. Operation and maintenance schemes. To meet the maintenance demands of the increasing number of state roads, the state government has taken steps to ensure a sustainable funding mechanism for timely maintenance. Five state roads of 185 km, or 627 lane-km, have been constructed under a build operate transfer (annuity) scheme, which includes 15 years of maintenance by the contractor. The maintenance cost under the scheme is part of the annuity payment as allocated in the plan budget as per the contractual requirements. 11. The state government envisages entrusting a number of state roads to SHAJ for operation and maintenance. As state roads are generally not toll roads, the government will allocate the necessary budget for SHAJ. To ensure a sustainable funding mechanism for road development including maintenance, the government enacted the Jharkhand State Road Development Fund Act 2011, which empowers the government to establish the dedicated Jharkhand State Road Development Fund for development of state roads. In 2015, the government decided to introduce a fuel cess (tax) of Rs1/liter of fuel for this purpose. 12. The state government envisages promoting the use of performance-based maintenance contracts (PBMCs) to ensure the appropriate service of the state road network with proper maintenance. A PBMC will facilitate the prioritization of budget allocation for road maintenance in accordance with contractual obligations. SHAJ plans to use a PBMC for the four roads to be 4 Jharkhand Infrastructure Development Corporation. 2013. Road Prioritization Study cum Vision Document for Identification of Viable Road Sections to be development in PPP Mode in the State of Jharkhand. Ranchi. RCD is responsible for maintenance of 6,876 km as of the end of April 2013. Routine maintenance cost is estimated at about $20 million assuming $3,000 per km. 5 Resurfacing cost is estimated at $48 million per year assuming $35,000/km every 5 years. This represents about 15% of the plan budget in FY2014.
4 improved by the project. The PBMC will be separate from the construction packages and be based on the result of a market survey of potential bidders. A relatively large PBMC will attract the participation of capable local firms expecting similar work opportunities in the near future, leading to sustainable road maintenance in the state. C. ADB Sector Experience and Assistance Program 13. The evaluation of ADB s assistance to transport operations found that (i) ADB s strategic selection and priority areas for involvement in the sector were significant and appropriate to the country s needs; (ii) ADB assistance helped to improve the quality and capability of roads and railway infrastructure; and (iii) ADB added significant value in the areas of policy development, institutional strengthening, encouragement to private sector participation, and increasing compliance and public awareness on social safeguards, road safety, and related issues. 6 The main weaknesses identified were poor project design, limited enforcement of safeguards, and lack of progress in addressing some of the key policy issues. To overcome these weaknesses, the project design for the transport sector was simplified to focus on improving executing agency performance in core functions, and providing assistance during preparatory and implementation stages to address the issues of safeguard compliance. Transport infrastructure development is a high priority for the Government of India, making ADB s strategy of reducing poverty through infrastructure-led growth especially relevant. 14. The goal of transport sector support under ADB s country partnership strategy, 2013 2017 for India is to increase the movement of people and goods in a more efficient, safe, sustainable manner. 7 ADB will support (i) a multimodal mix of transport network development, including a focus on modes with low-carbon emissions; (ii) institutional and organizational changes to road system institutions; (iii) connectivity within the subregion to support regional cooperation and integration, and along economic corridors linking major domestic centers of economic activity with emerging centers of production and employment; (iv) an innovative financing mechanism in transport infrastructure development and maintenance; and (v) social inclusiveness, including safety improvement and gender inclusiveness. 15. ADB has extensive experience in India s road subsector, with a large number of loan and technical assistance projects targeting national highways, state roads, and rural road projects of the central and state governments. 6 ADB. 2007. Country Assistance Program Evaluation: India. Manila. 7 ADB. 2013. Country Partnership Strategy: India, 2013 2017. Manila.
5 Problem Tree for Transport (Road Transport, Nonurban) Sector EFFECTS Limited mobility in Jharkhand CORE PROBLEM Poor road network, road quality, and road safety within Jharkhand state CAUSES Physical Nonphysical Low quality of existing roads Poor network capacity (insufficient new investment) Poor road design, especially for road safety Insufficient technical capacity in road engineering and road asset management Premature institutional setup of the State Highway Authority of Jharkhand Interventions Financing support from ADB Capacity development support from ADB
6 Sector Results Framework (Transport and Information and Communication Technology, 2013 2017) Country Sector Outcomes Country Sector Outputs ADB Sector Operations Indicators with Indicators with Targets and Outputs with Incremental Planned and Ongoing ADB Baselines ADB Contribution Targets Interventions Outcomes with ADB Contribution Increased movement of people and goods in a more efficient and sustainable manner 100% of villages (population >1000) have access to all-weather roads by 2017 (2000 baseline: 90%) Road freight traffic reaches 1.8 trillion ton-km in 2016 (2011 baseline: 1.2 trillion) Road passenger-km reaches 11.4 trillion in 2016 (2011 baseline: 7.4 trillion) Transport systems with safety and accessibility features for women, the elderly, disabled, and children expanded, improved, and maintained 126,500 km of state roads built or upgraded during 2013 2017 167,500 km of major district roads built or upgraded during 2013 2017 242,181 km of rural roads built or upgraded by 2017 compared during 2013 2017 EGM = effective gender mainstreaming, km = kilometer, TA = technical assistance. Sources: Asian Development Bank. 2013. Country Partnership Strategy: India, 2013 2017. Manila. Planned key activity areas State roads (58% of funds) Rural roads (18% of funds) Railways (4% of funds) Urban transport (20% of funds) Pipeline projects 12 projects amounting to $2,275 million for 2013 2015 (including two projects categorized as EGM) Ongoing projects 15 ongoing loans amounting to $3,262 million as of 31 December 2012 (including two projects categorized as EGM) Main Outputs Expected from ADB Interventions Planned key activity areas 4,700 km of state roads improved with pedestrian lanes, crossing points, and other safety features, including 150 km of subregional connectivity 12,300 km of rural roads improved to include pedestrian lanes, crossing points, and other safety features Pipeline projects 3,600 km of state roads improved with pedestrian lanes, crossing points, and other safety features, including 600 km of subregional connectivity 6,000 km of rural roads improved to include pedestrian lanes, crossing points, and other safety features Ongoing projects 9,000 km of state roads improved 30,000 km of rural roads improved Road corporations established in three states