Infrastructure Development in Karnatakaidd.kar.nic.in/docs/Sust_Infra_Dev_Nov_2010.pdf · Infrastructure Development in Karnataka ... 4.4 Social Inclusion ... pickups, lift irrigation

Infrastructure Development in Karnataka

Following a Sustainable Paradigm

Proposal for Official Development Assistance Grant/ Soft Loan

[A Note Prepared By the Government of Karnataka, Infrastructure Development Department: November 2010]

Sustainable Infrastructure – Concept Paper Submission to WBG

Government of Karnataka-Infrastructure Development Department 2

CONTENT

1. OBJECTIVE ........................................................................................................ 4

2. ECONOMIC & SOCIAL BACKGROUND OF KARNATAKA .............................. 5

2.1 Metrics of Demography ........................................................................................................................ 5

2.2 Economy and Employment .................................................................................................................. 7

2.3 Exports ...................................................................................................................................................... 8

2.4 Natural Resources ................................................................................................................................. 8

2.5 Need for Paradigm Shift ..................................................................................................................... 10

3. VISION 2020 AND SECTORAL TARGETS ...................................................... 13

3.1 Vision 2020 ............................................................................................................................................ 13

3.2 Core Elements of Karnataka’s Vision 2020 ............................................................................................ 14

3.3 Some Key Areas of Transformation to Achieve Vision 2020 .................................................................. 15

3.4 Targets envisaged in Vision 2020 ............................................................................................................ 15

4. TRANSFORMATION OF VISION THROUGH INFRASTRUCTURE ................. 17

4.1 Key Targets for Infrastructure Sector .................................................................................................... 17

4.2 Key focus areas of Infrastructure ........................................................................................................... 19

4.3 Environmental Sustainability............................................................................................................. 23

4.4 Social Inclusion........................................................................................................................................ 27

4.5 Fund Requirement for infra development .............................................................................................. 29

5. SUSTAINABLE INFRASTRUCTURE ACTION PLAN ...................................... 31

5.1 Issues with Infrastructure Development.......................................................................................... 31

5.2 World Bank’s Approach to Sustainability ....................................................................................... 32

5.3 The Building Blocks for Karnataka ................................................................................................... 32

5.4 Support Required by the Government of Karnataka ..................................................................... 51

5.5 Assessment of Funds ............................................................................................................................... 51



6. WAY FORWARD ............................................................................................... 54

7. CONCLUSION ................................................................................................... 55



1. Objective

The Government of Karnataka drew up a vision for the development of

infrastructure in social and economic sectors, Vision 2020. It is desired that

the infrastructure development should happen in a manner that is sustainable

environmentally while it catalyses the delivery of inclusive development. The

key areas of development identified are: Energy, Information and

Communication Technology1, Roads (rural and Highways), Railways, Ports,

Logistics, Drinking Water Supply and Sanitation2, etc. The state is endowed

with rich natural resources and but has inadequately developed infrastructure

to harness the resources. The State plans to more than double the investment

in infrastructure, annually, in the 11th plan period. The State has to partner with

private sector in a new relationship- the PPP mode in this huge endeavour.

The State has also to fine tune the configuration of knowledge, technology,

managerial, technical and financial architecture for managing infrastructure,

the creation of and sustenance of it, to get optimal levels of development. This

requires a well orchestrated effort on the part of the State’s governance.

The objective of this paper is to develop a Sustainable infrastructure

Action Plan for Karnataka; such a task has to be supported by an enabling

policy environment, capacities, expertise to conceive and develop projects of

great magnitude. In this context, adequate support in the form of

developmental assistance is sought from WBG- financial assistance and

capacity building services and technical expertise.

1 Content segment –Energy, ICT, HRD, etc. 2 Carriage segment – Roads, ports, airports, railways, logistics, water supply and sanitation, etc.



2. Economic & Social Backgroundi of Karnataka

Karnataka, earlier known as Mysore, came into being on November 1st, 1956, with

the merger of five different provinces where Kannada was the main language. It

currently has 29 revenue districts, 176 blocks and 27,481 =s3, and covers an area of

about 191791 sq.km.

2.1 Metrics of Demography

Its share of 5.31% of the nation’s total population in 1991 has reduced to around 5%

in 2008. The State’s decadal growth rate of population has also been declining,

though it is higher than the neighboring States. Population density at 275 per sq km

is relatively low compared to other States. The share of the State’s rural population is

estimated to have declined from 69% in 1991 to about 64% in 2008.

Figure 1: Karnataka Population Pyramid 2026

3 However the Habitations are 57417 (2001 Census)



Population Issues

Ever Increasing Working Population: In 2005, 63% of Karnataka’s total population

was in the working age group of 15-59 years, which is higher than the all-India

average of 59%. The working population (15-59 age group) is set to increase by

0.77 crore (3.58 crore to 4.35 crore) between 2006 and 2026, which means an

average of 4 lakh new entrants to the workforce each year up to 2026.

“Medium Human Development4”(UN Classification): As per the National Human

Development Report 2001, Karnataka ranks seventh among major Indian 2001

States on human development index (HDI). The State’s HDI has improved from

0.54 in 1991 to 0.65 in 2001. At an international level, this means that Karnataka’s

position among nations, at around 120, is marginally better than India at 127.

Regional and social disparities in human development: Within the State, however,

the variance between districts is wide – Raichur with a HDI of 0.547 being the

lowest, and Bangalore Urban with a HDI of 0.753 being the highest. Disparities

can also be observed across communities with HDI (in 2004) for SCs (0.575) and

STs (0.539) much lower than the State average.

UN’s Millennium Development Goals (MDGs)- "to eradicate extreme poverty

and hunger": In 2004-05, the poverty headcount ratio (HCR) in rural Karnataka

was 20.8%, and in urban Karnataka, it was much higher at 32.6%. The combined

HCR for Karnataka stood at 25%. It is to be noted that HCR in urban Karnataka is

much higher than all its neighboring States, as well as the country average, which

is a cause for concern, especially in the context of the rapid urbanisation the State

is going through.

Dependence on Unorganised Sector for Livelihood: With the organised sector

having a share of 8% of total employment, it is the unorganised sector that is key

to providing livelihood in the State.

4 the process of enhancing individual and collective quality of life in a manner that satisfies basic

needs (as a minimum), is environmentally, socially and economically sustainable and is empowering in

the sense that the people concerned have a substantial degree of control over the process through

access to the means of social power."



Mitigating the above issues requires creation of significant employment opportunities,

appropriate education and skill development of the workforce as an essential

requirement to improve ‘employability’. Providing appropriate and adequate

employment opportunities and accelerating the pace of creation of jobs are essential

for Karnataka’s growth.

2.2 Economy and Employment

The GSDP for Karnataka in 2006-07 was Rs. 1, 94,008 crore (at current prices) as

against Rs. 37, 18,000 crore for India, which makes it 5.2% of the country’s GDP.

Karnataka has had moderate growth rates in its State income. In the period 1999-

2006, Karnataka had a GSDP growth rate of 5.9% making it fourth amongst

compared States and lesser than India’s GDP growth of 6.5%. The State’s real

income growth, which struggled to cross beyond 4% till the early 1990s, is now

nearly 6%. Karnataka has lower per capita GSDP than most comparable States - it is

only marginally higher than the India average.

Table 1: Sector Share of input and their contribution to GDP

Key Issues

Dependence on Tertiary Sector serving a limited Population: The share of primary

sector, which contributed to about 60% of the GSDP in 1960- 61, is only about

18.9% in 2006-07. In the same period, the share of secondary sector increased

from 15.2% to 26%. The share of the tertiary sector has more than doubled from

24.8% to 55.1%.

Sectoral misalignment between economy and employment: With employment

share of 60.8%, Agriculture contributes only 18.5% to GSDP, underlining a large

population which needs to be enabled to take advantage of the opportunities.



Lowest growth rate for Agriculture: It exhibits low growth of 0.8% but is absorbing

a large amount of labour as it still employs about 61% of the workers. This implies

a decline in output per worker and falling labour productivity.

Other Key issues being:

Marginalisation/ Feminisation of labour

Gender disparities in wages and employment

Existence of Child labour

2.3 Exports

During the 10th plan period, the total exports from Karnataka have grown from Rs.

20,144 crore (2001-02) to Rs. 1, 05,850 crore (2006-07) at a CAGR of 39%.

Electronics and computer software exports have grown at a CAGR of 37% with the

total exports reaching Rs 56,478 crore in 2006-07. This sector constituted 53% of the

total exports from the State. 36% of the total Indian exports in this sector were from

Karnataka, establishing the State’s leadership. However, the State’s export

performance is not limited to Information Technology alone. During the 10th Plan,

petroleum and petro-product exports of Rs 36,087 crore (CAGR =113%) and gems

and jewellery exports of Rs 21,095 crore (CAGR=94%) from the State saw very high

growth rates. The other major exports from the State during the 10th Plan were iron

ore and minerals (Rs 21,299 crore; CAGR=60%), readymade garments (Rs. 24,291

crore; CAGR=19%) and engineering goods (Rs. 15,083 crore; CAGR=39%).

2.4 Natural Resources

Karnataka is blessed with rich and diverse natural resources. 60% of the Western

Ghats run through the State, showcasing immense natural beauty. Around 30.7 lakh

hectare (16.1% of the State’s geographical area) is covered by forest. The State is

home to world-famous sandalwood and rosewood trees, hosts 5 National Parks and

21 Sanctuaries and ranks 4th among all States in respect of area under tree cover.

However, the Western Ghats have now been classified among the world’s critical

bio-diversity hot-spots – a bio-geographic region with a significant reservoir of

biodiversity. The State has seven river systems; Karnataka has 33000 tanks with a



total command area of 4 lakh hectare. The State also has about 1100 other minor

surface irrigation structures that include barrages, bridge cum barrages, anicuts and

pickups, lift irrigation schemes etc.

The major minerals available in the State are iron ore, gold, manganese, limestone,

dolomite silver and shale. There are around 235 mines in the State. During the 10th

Plan period Karnataka exported iron ore and minerals worth Rs 21,299 crore,

growing at a CAGR of more than 60%.

Key Issues

Nearly 70% of the states geographical area falls under ‘arid’ and ‘semi arid'

climatic zones, where rainfall is scanty and average temperature is high

The west flowing rivers account for 58% of this average annual availability but

almost 80% of the water from these rivers is not utilisable for irrigation due to

topographical and environmental constraints.

Due to overexploitation, the groundwater balance available for future

development has fallen from 9.7 lakh HAM in 1992 to 6.5 lakh HAM in 2004.

The value addition to minerals found in the state is low.



2.5 Need for Paradigm Shift

The road to sustainable infrastructure is challenged:

Figure 2: Conceiving Sustainable Infrastructure

A look at Karnataka’s development trajectory in the past few decades shows that its

economy has grown at around 6%. There has been a sectoral shift in terms of its

composition, with the tertiary sector overtaking the primary sector as the major

contributor to economy around the year 1990 (see figure below).

Resources demand, low level of projectisation and management skills, demand for increased doles Slow low quality delivery

process

Inequitable Access, Poor information

In adequate supply , deteriorating assets

Sustainable Infrastructure

Citizen

Social and Environmental Infrastructure: Edu, Water Supply, Health, Sanitation

State

Economic Infrastructure: Transportation, Energy, Ports, Airports, Railways etc



Figure 3: Movement in sectoral contribution to NSDP from 19070 to 2008

The primary focus of development policy in Karnataka has to be on balanced growth

ensuring better sectoral output employment ratio. This requires creation of

employment opportunities in the non-farm sector – both in industry and services that

are more productive and offer higher returns to labour. This further requires that an

enabling environment in terms of infrastructure availability, policy and procedures is

made available for the growing sectors in industry and services so that they have

incentives in enhancing their employment base.

The table below from Vision 2020ii provides movement of two indicators under

different plan periods with the interventions planned in the document for balanced

growth: (a) GSDP (b) ratio of Output per Worker in Service to Agriculture:

Table 2: Movement of GSDP and Ratio output per worker under different sector interventions

Indicator GSDP growth rate Ratio of Output per Worker (Service to

Agriculture)

Business As Usual5

2007-12 (11th Plan)

8.1%

8.8

2012-17 (12th Plan) 8.5% 12.0

2017-22 (13th Plan) 8.9% 16.2

5 Business as usual: trends of the past 12 years of sectoral growth rates and sectoral shares of GSDP and employment to continue.



Employment Alignment- I6

2007-12 (11th Plan)

8.1%

7.9

2012-17 (12th Plan) 8.9% 8.4

2017-22 (13th Plan) 9.1% 8.2

Employment Alignment- II7

2007-12 (11th Plan)

8.1%

7.1

2012-17 (12th Plan) 8.9% 5.7

2017-22 (13th Plan) 9.1% 4.9

There is a need for a paradigm shift to overcome the issues identified on population,

economy and Income. Karnataka needs to exploit its resources and enable its

population through infrastructure in a sustainable manner to achieve the

developmental goals moving towards Employment Alignment-II scenario as depicted

above.

6 Employment alignment – I: disparities do not rise; ratio of output per worker in services and agriculture remains stable; net annual movement of workers out of agriculture – 2,00,000; net annual movement of workers into industry and services – 1,40,000 and 4,60,000 respectively 7 Employment alignment – II: disparities decline, ratio of output per worker in services and agriculture decline; net annual movement of workers out of agriculture – 3,20,000; net annual movement of workers into industry and services – 2,20,000 and 5,00,000 respectively



3. Vision 2020 and Sectoral Targets

3.1 Vision 2020

A State vision assumes importance in understanding the shared goals of its people,

bringing about an alignment in their combined efforts and realising optimal synergies

in their action. The vision should enable the State to ensure farmers, workers,

entrepreneurs, scientists and others to find their due space by following an inclusive

growth process leading to a prosperous and equitable Karnataka.

The key fundamentals for development are therefore:

Equitable & Inclusive: Geographically and demographically; and

Sustainable: development that "meets the needs of the present without

compromising the ability of future generations to meet their own needs."

Figure 4: Themes of Sustainable Development

Sustainable Development will remain one of the greatest challenges of the 21st

Century, where we have to address the needs of the present without compromising

the ability of the future generation to meet their own needs. A Sustainable

Environmental

Values

Economic

Values

Social Values

Bearability

Values

Viability Values

Sustainable Values

Equitability Values



Engineering Infrastructure(SEI) Model8 advocates infra development following the

‘triple bottom line’ concept during the planning, design, development, implementation

and management phases. The three themes (Economical, Environmental and social)

are highly interrelated and are of equal importance, which are gaining world wide

acceptance within the corporate community as a framework for corporate reporting

practices in sustainable development. The set of values underlying these themes are

Environmental Values: natural resources utilization, environmental management

drive, pollution prevention and controls- (air, land waste and water resources)

Social Values: standards of living, equal opportunity, community, governance,

institutions, consultations, inclusion and empowerment of citizenry

Economic Values: cost savings, profits research and development, economic

growth, efficiency and stability

The intersection of these spheres yield new set of SEI model values

Bearability Values(socio-environmental): cost savings, profits research and

development, economic growth, efficiency and stability

Equitability Values(social-economic): equitability values of business ethics, fair

trades and workers right

Viability (environmental-economics): energy efficiency, subsidies and incentives

for the use of natural resources

The infrastructure development to attain sustainability should promote a rigorous

interaction for a balance amongst the three themes of sustainability.

3.2 Core Elementsiii of Karnataka’s Vision 2020

Based on a perspective view of the social, economic and historical foundations of the

State, the following are identified, inter alia, as core elements for achieving the vision

of a peaceful and prosperous Karnataka:

Eliminate poverty and deprivation at all levels and achieve Millennium

Development Goals (MDGs)* by 2015

Enhance human capabilities to promote equitable growth covering all sections of

people and regions of the State

8 Reference: A Sustainable Engineering Infrastructure Model for the 21st Century by Bassey Okon, Sunday Ekpo and Dr Taha Elhag



Institutionalize good governance across the State through enhanced

transparency, accountability and participation.

3.3 Some Key Areasiv of Transformation to Achieve Vision 2020

Increase rural incomes through greater viability of agriculture and allied

activities

Improve access and availability of quality healthcare for all

Achieve a sustainable and orderly process of industrialization and urbanization

Enhance opportunities and empower women across economic, social and

political spheres

Improve energy availability and develop infrastructure to boost productive

potential of economy

Ensure sustainability of the state’s environment and natural resources

Build and sustain Bangalore’s global leadership in science, technology and

knowledge based industries

3.4 Targetsv envisaged in Vision 2020

The table below brings out the targets in vision 2020 in social sectors:



Development Vision Units

Level

Present 2020

A. Economic Sector

1 Agriculture

Irrigated Area % on potential 49 >90

Lakhs Hectares 30 61

Watershed Area Lakhs Hectares 44.75 80

Agricultural Labour % of total 61 35

Agricultural Growth % 0.8 4

2Public Transport On total trips % 45 73

Public Transport with renewable energy % 0 100

3Forest Area covered % 16.7 33

4Industry Growth % 7.9 9

Industrial Employment % 15 22

5Road

Average Km / sq.Km 1.07 1.50

NH + SH Km 21486 40000

≥ 2 lanes Km 6696 66456

All weather Roads % 60 100

6Electricity

Infrastructure Capacity MW 9559 18500

T&D Loss % 28 < 15

Agriculture IP Set

metering % 29 > 90

Table 3(A&B): State growth parameters- Vision 2020 target levels

Development Vision

Units

Level

Present 2020

7Railways Rail Density Km /1000 sq.Km 16.9 28

8Output per workers (Agri : Services) Ratio 8.8 4.9

9Cold Storage Capacity 1000 MT 250 4800

B. Social

Literacy Rate Literacy Rate % 67 100

Access to Skill Training % low 100

Health

IMR (Infant Mortality

Ratio) No. 48 10

MMR (Maternal

Mortality Ratio) No. 228 25

Population Spread Urban Crores 2.08 2.8

C. Others

Rural Poverty % 20.8< 5

Urban Poverty % 32.8 0

Access to water LPCD 27 100

Slum population % 7.8 0

D. Pollution Levels SPM > 160 40

4.

4.

4.

4.



4. Transformation of Vision through Infrastructure

Sustainability and acceleration of Karnataka’s economic growth critically hinges

on the availability of adequate and good quality infrastructure facilities. Though the

State’s physical infrastructure is fairly extensive, it has failed to keep pace with

rapidly rising demand resulting in frequent and acute demand-supply gaps. This calls

for a larger, coordinated transformational approach to infrastructure planning and

implementation. While the Government’s investment for infrastructure development is

inescapable, the PPP route also needs to be encouraged. Along with supplementing

scarce public resources, it creates a competitive environment and thus improves

efficiencies.

4.1 Key Targets for Infrastructure Sector

The quality and adequacy of infrastructure is the major determinant for

improving quality of life and attracting investments. A few infrastructure targetsvi are

identified below for reference.

Table 4: Infra sector key targets

* to be read as- Road Density: 1.07 km per Sq Km (current level), 1.50 km per Sq Km (Goal for 2020)

Road net work:

Though the State has a good road density of 1.05 km per sq km, much of this is

single lane and/ or un-surfaced- only 10% of Roads are 2 lanes or above, 2% of

Roads in the form of National Highways carry 40% of traffic, 50 % of rural roads

are un-surfaced.. The State requires a core road network (NH + SH) of around

40,000 km, but has around 24,000 km currently. A 250% increase in vehicle

*



population between 1997-2007, doubling of freight vehicle density and inadequate

funds for road maintenance, has led to asset deterioration.

Railways/ Ports/ Energy:

The State continues to have a low rail density of 16km per 1000sqkm; almost half

of Gujarat, Tamil Nadu or Kerala and faces a shortfall of capacity to handle

projected increases in port, cargo and air traffic, which are also hindered by poor

connecting infrastructure.

The capacity of ports themselves is inadequate pushing exporters to move their

goods to neighbouring states’ ports thus hurting the competitiveness of industry.

The per capita consumption of energy is low at about 750 units.

Water / Irrigation

Though the State has a potential to bring under command of irrigation about 35

lakh hectares of land; due to water related disputes it could harness only 22 lakh

hectares. The number of Minor Irrigation tanks have remained static at about

33000 over years and in fact their capacity to store water has decreased over

years with silting etc. A rough estimate9 indicate that a 200- day employment

round the year for agriculture labour and agriculturists pose a deficit of 100 crore

mandays of labour, annually, to be created through other measures- NREGA ,

transfer of labour to non- agriculture activities, through enhancing agricultural

productivity, etc. The Vision 2020 sets the following targets in agriculture growth :

9 Based on an estimation done by Mr LV Nagarajan, Principal Secretary ( Water resources)



Table 5: Agriculture growth vision 2020 target levels

4.2 Key focus areas of Infrastructure

The following key themes are identified for infrastructure Development:

Transportation

Road Network: State plans to develop a core road network as stated above and

provide impetus to economic activity by connecting locations of agricultural,

industrial and tourist importance. This will be in line with existing and potential

regional industrial clusters, urban corridors and district development plans. High

density stretches are identified for the creation of dedicated corridors, constructed

with private participation.

Rail Network: The State is endeavoring to put up at least 4800km of Railway

corridors with the help of Railways.

Logistics Network: At the same time, the State will develop a logistics architecture

consisting of Transportation, Storage, and Distribution to meet the needs of just–



in-time requirements. This service will have significant employment benefits.

Infrastructure creation for border areas to leverage from growth centres in

neighbouring States will also be encouraged. Public-private partnerships (PPP)

with a minimum specified period for revenue sharing/ annuity would provide an

important mechanism in this endeavour.

Ports: The state has planned to develop ports to enhance both inbound and

outbound trade.

Energy:

The State has planned to put up another 10741 MW of power units. This would

help in improving the power consumption to 1200 units per capita.

The state has planned to facilitate construction of gas pipelines to enhance

energy security and make clean energy available to all classes of population.

Achieving Orderly Industrialization & Urbanization

Karnataka is a rapidly urbanising State having 36% of its population in urban

areas. Urbanisation offers the ability for better provision of basic services, and acts

as a centre for growth of industry and services. By facilitating employment in higher

productivity sectors, it raises quality of life and disposable incomes. Therefore, if

properly managed, faster industrialisation and urbanisation is desirable. In

Karnataka, however, both these processes are largely concentrated around

Bangalore. This has led to proliferation of slums, inadequate infrastructure, and glut

of unskilled labour, environmental degradation, and income disparity. The State’s

policies therefore need to be driven by three broad concerns – improve linkages

between the city and its hinterland, make the towns a productive setting for growth

and develop a distinctive approach to address issues of urban poverty. To achieve a

transformational change, the State has to renew efforts on the following objectives:

Industrial Zones:

To harness the local natural resources and also to optimize its value addition,

following sector specific industrial zones/ corridors will be developed as identified in

Industrial Policy ‘09vii:



Steel : covering Bellary, Koppal, Bagalkot, Haveri, Gadag & Raichur Districts

Cement: covering Gulbarga, Bagalkot, Chitradurga, Belgaum and other Districts.

Food Processing: covering Bangalore Rural, Kolar, Belgaum, Gadag, Koppal,

Shimoga, Bagalkot, Bijapur, Davangere, Mandya and Dharwad Districts.

IT/ BT : covering Mysore, Mangalore, Hubli-Dharwad, Belgaum, Shimoga,

Gulbarga, Kolar and Mandya Districts

Automobile: covering Ramanagara, Shimoga Dharwad and Kolar Districts.

Readymade garments: covering Bangalore Rural, Tumkur, Kolar, Mandya,

Belgaum, Bidar, Dharwad and other Districts.

Sugar and co-gen, power: covering Bidar, Belgaum, Bagalkot, Shimoga and

Mandya Districts.

Pharmaceutical/Bio-Technology: covering Bangalore, Mysore and Hassan

Districts.

Power Generation: covering Raichur, Bellary, and Bijapur & Chitradurga Districts.

Media & Entertainment : Bangalore (R) and Ramanagara.

The state’s aggressive industrialization planned through the recent Global

Investors meet where 403 MOUs in various Industrial sectors as below have been

signed. Given below is the breakup of sector wise investments and its footprints10(

the latter not to drawn to scale:

Table 6: sector wise Industrial Investments in Karnataka through Global Investor Meet 2010

Sl.No. Sector No. of projects Investment

(in Crores)

1 Aerospace 6 4929.00

2 Automobile 6 802.32

3 Cement 15 8619.20

4 Chemical 12 5578.19

5 Coke 1 212.00

6 Distillaries 5 466.12

7 Engineering 37 1302.14

8 Energy 34 50051.85

9 Food Based 31 1921.16

10 Health 11 1332.42

10 This is presented to indicate that at present the real addition to ecological footprint is not known. This would be clear only when the investments are brought up for environmental clearance.



11 Infrastructure 31 5356.92

12 IT/BT 59 11361.06

13 Iron & Steel 52 254759.08

14 Others 25 2645.24

15 Petrochemicals 5 28988.36

16 Pharmaceutical 6 170.35

17 Plastic 5 303.45

18 Sugar 10 2189.25

19 Telecom 3 117.86

20 Texttile 6 1547.97

21 Tourism 29 2829.06

TOTAL 389 385483.00

Figure 5: Industrial Growth (Present and future) vs. Ecological Footprint

Industrial Growth- Present & Future

0

10

20

30

40

50

60

70

80

90

100

0 10 20 30 40 50 60 70 80 90 100

x1

x2

B

IJ

CD

EF

G H

K

L

N

M

P

O

V

U

X

W

TS

RQ

AH

I

G

H

L

O

W

LOW HIGH

Industrial Growth

Ec

olo

gic

al F

oo

t Prin

t

AB Aerospace Sector MN Iron / Steel

CD Software / Hardware OP Sugar

EF Electronics / Telecommunication QR Textiles

Industrial

Zones

GH Engineering ST Drugs & Chemicals

IJ Automobile UV Distillaries / Breweries

KL Cement WX Petroleum Products

Ecological footprint to increase with the new MOUs

Area-Based Approach with Urban Corridors as Hubs of Economic Activity.

The State will target investment in select urban corridors to make them centres

of industrial activity and develop select Tier II / III cities as future growth centres. As



part of Suvarna Karnataka Development Corridorviii (SKDC) Programme, following

major industrial corridors with 8 lane roads will be developed: Bidar-Bangalore via

Chitradurga, Tumkur-Honnavar via Shimoga, Chitradurga-Mangalore via Shimoga-

Udupi and Bangalore-Belgaum via Davanagere -Hubli. Additional corridors will also

be developed to cover Bidar, Bijapur and other potential locations.

4.3 Environmental Sustainability

Eco-Footprint of Infrastructure Sectors

The Eco-foot print of various infrastructure sectors are very varied. While the

sectors like Agricultural Hub, irrigation, water Supply and Urban Transport have

higher eco-footprint, others like renewable energy- solar, wind, mini-hydel and

transportation like port and railways as shown in the figure below.

Figure 6: Figure: Ecological footprint Vs Infrastructure Growth

InfrastructureLow High

Low

High

Ecolo

gic

al F

ootp

rint

Solar

Wind

Mini Hydel

Ports

Railways

Road

Dry Agri

Wet Agri

Urban Transport

Energy-

Thermal

Water Supply

Agri-Hubs

Irrigation



As these infrastructure grow the ecological footprint is only going to increase

at differing rates. It may be pertinent to encourage those technology like renewable

energy, railways, ports which have relatively lesser impact on the atmosphere.

Eco-efficiency in Infra development

Environmental Inputs (influence) in the form of Energy, Water, Materials, Land

is used by any product or service to produce value and waste (GHG Emission,

Emission- Sox, Nox, Emission to Water, Waste/ Hazardous Substance, Loss of Bio-

diversity). The eco efficiency represents, ratio of the value delivered from a product or

service to the input amount of inputs.

Figure 7: Eco-efficiency construct

Energy,

Water, Materials,

Land

GHG Emission

Emission- Sox, NoxEmission to Water

Waste/ Hazardous SubstanceLoss of Bio-diversity

Product/

Services

Value Delivered

Waste Impacts

Resources

Product/ Service Delivered

• Eco-efficiency = -------------------------------------------

Environmental Influence

To improve the eco-efficiency, we need to

Decrease input resources

`Reduce the wastages

Enhance recycling and Maximize Renewables

Reduce Dispersion of toxic Substances

Eco-efficiency adoption in environmental sustainability program will require the following

Higher degree of Planning and Design before any infrastructure development



Lower cost of Infrastructure Financing to offset the relative higher cost of eco-

friendly technology

Proper Operation and maintenance for higher efficiency of the project at all times

Holistic view while adopting any sustainable infrastructure

Consider Life-cycle cost of the project.

The State will take the following steps for Environmental Sustainability

Forest Cover

As suggested by National Mission for Green India, Karnataka will proactively take

action on degraded land through direct action by communities organized through

JFMCs (Joint Forest Management Committees) to increase forest cover from

16.7% to 30% by 2020.

The State will also set up a task force for conservation of the Western Ghats, set

up sites for seabird conservation and for domesticated animal biodiversity for

protection of birds and animals.

As means of reducing GHG emissions, Karnataka will undertake

projects for ‘biomass energy in rural areas, development of high-rate

biomethanation processes’

‘Use of alternate energy and biomass gasification’, setting up a large

commercial bio-fuel plant and promote usage of wastelands for cultivation of

biofuels while addressing food security issues.

Karnataka Renewable Energy Development Limited (KREDL) will promote

energy efficient projects to avail the benefits of Clean Development

Mechanism (CDM).

Water/ Irrigation

The State would have to enhance its irrigation capabilities, but the same is

subject to decisions of Water Tribunals and other Statutory authorities. The State

also has to take up integrated drought proofing measures covering all the lands,

involving water shed management and Irrigation. The treatment of land through



watershed approach requires about rupees 4000 cr. The State will try to improve

water quality through:

Following the guidelines on groundwater management (Planning Commission)

and ownership; the pending State bill will be revised to incorporate latest

developments.

All ULBs and PRIs to enforce mandatory rain water harvesting measures for

households.

The Karnataka Water Resources Regulation Authority will facilitate improved

water resources management, conservation and regulation to ensure an optimum

use of available water resources across different use categories.

Sustainable Mining

By adopting relevant recommendations of the National Mineral Policy, 2008 to

ensure sustainable development of mineral resources in harmony with

environment.

By ensuring proper resettlement and rehabilitation of persons being displaced.

By converting old unused mining sites into forests and other appropriate forms of

land use.

By averting exports of natural ore and encourage process industries to ensure

that the natural resource wealth of the State gets multiplied through carrying out

value addition activities within the State.

Air quality improvement

By ensuring that Bangalore meets the WHO air quality guidelines.

By promoting fuel efficiency by incentivising the use of hybrid/ electric vehicles

and LPG/CNG for road-based public transport.

By improving access, efficiency, effectiveness and comfort of public transport to

reduce growth of private vehicles.

By devising procedures for blending fuels with specified percentage of bio-fuels

as advised by the Bio-fuel Task Force.

By improving intra-city bus services both on a point-to-point basis as well as to

provide last mile connectivity between metro stations and neighbourhoods/offices.



By full fleet conversion of its buses to CNG. The State will also explore options of

fuel cell bus (FCBs) for reducing air pollution and global GHG emissions.

A few Environmental targetsix identified in Vision 2020 are:

Table 7: Environment targets in vision 2020

4.4 Social Inclusion

To address socially inclusive growth we need to address several factors

Poverty eradication: The first goal specified in the UN’s Millennium Development

Goals (MDGs) is ‘to eradicate extreme poverty and hunger’. In 2004-05, the

poverty headcount ratio (HCR) in rural Karnataka was 20.8%, and in urban

Karnataka, it was much higher at 32.6%. The combined HCR for Karnataka stood

at 25%iv. It is to be noted that HCR in urban Karnataka is much higher than all its

neighbouring States, as well as the country average, which is a cause for

concern, especially in the context of the rapid urbanisation the State is going

through.

Monthly Per capita Consumer Expenditure (MPCE): Over 30% of the rural

population, i.e., more than 1 crore persons in rural Karnataka live on less than

Rs.12 per person per day. Around 30% of urban population, i.e. around 60 lakh

persons live on less than Rs 19 per person per day.

Poverty Reduction: The 10th Plan target for the State was to reduce the HCR

from around 27% to 7.85% and number of poor to 45 lakhs by 2007v. However, in

2004-05, it still stood at 25%, with the number of poor being 138.89 lakhs

Urban-Rural disparity: The average MPCE of urban Karnataka is more than

double that of rural Karnataka. A large proportion of the rural workforce is



engaged as casual labour and earns minimal wages and is largely dependent on

agriculture for employment and income. There also exist wide disparities in

wages, education and health indicators and access to basic services.

The disparity between north and south Karnataka persists In terms of the Human

Development Index (HDI) also. 7 out of 8 districts having HDI lower than India’s

HDI level of 0.621 are in North Karnataka, whereas all 7 districts having HDI

greater than the State average of 0.65 are in South or Coastal Karnataka. In

terms of basic infrastructure, overall performance of the State is poor – only 35%

households had access to all the three basic services, i.e., safe drinking water,

electricity and toilets as per Census 2001.

Gender Development: The Gender Development Index (GDI) depicts the

inequalities between men and women to attain a long and healthy life, appropriate

education and a decent standard of living. The GDI of Karnataka at 0.637 (2001)

is higher than the all-India value of 0.609, and has improved from 0.525 in 1991.

The State ranks sixth among the major States on GDI. However, gender

disparities in the form of adverse sex ratio, wage differentials and various health

and education dimensions are still prevalent in the State.

Social disparity: Deprived groups (SC/STs, OBCs and Muslims) have exhibited

lower social and economic indicators including acute lower levels of consumption,

lower literacy rate and health indicators.

To improve social inclusiveness we need to improve access and affordability of

basic and social infrastructure to the deprived groups.

Physical Infrastructure like irrigation, road network and rail network etc

Social infrastructure like Health, Education (mainly skill-based training)



Figure 8: Ecological footprint Vs Infrastructure Growth

Social Infra Devp.Low High

Low

High

Access

Vocational Edu

Primary Edu

Primary Hosp.

Sewerage

Water Supply

Solid Waste

Empirically it is understood that as the social infrastructure development happens

the socially backward population is likely to have higher access thus leading to higher

human development Index. Some of these social infrastructure Vocational Education

will provide higher access to the individuals than others, which may be prioritized to

be taken up at the earliest, though all of them may be required.

Human Development Index to measure Social Inclusion

Human Development Index comprise of poverty, education and health among

others as its input parameters, and can be a measure of Social inclusion. By

measuring the HDI the social inclusion can be tracked and through various

interventions can be improved.

4.5 Fund Requirement for infra development

The cross-country study of investment levels in infrastructure in the fast-growing

Asian countries reveals the need to increase infrastructure investment to 9% of GDP

over the next 15 years to sustain a growth rate of around 9%. This would entail a

huge thrust on infrastructure investment in the State. Gross capital formation as a



percentage of GSDP would have to rise to 7.5% during the 11th Plan period and to

10% and 11% during the subsequent Plan periods, translating to total investment in

infrastructure of Rs. 92,462 crore, Rs. 1, 86,275 crore and Rs. 3, 15,657 crore at

2006-07 prices (these figures include investments in Irrigation) during the 11th, 12th

and 13th Plan periods respectively.



5. Sustainable Infrastructure Action Plan The State plans to meet the lags in access to core infrastructure- drinking water,

transport, energy, logistics, ICT, etc by partnering with the private sector in a big

way as the Central and state budget- funded investments are still leaving a gap of

1/ 3rd or more of the demand for investments. While designing the projects the

State would keep in focus the viability of the projects from the financial and

economic angle and ensure that the project is environmentally sustainable and

support social inclusion.

5.1 Issues with Infrastructure Development

Infrastructure services are provided by various Government departments, agencies,

corporate entities, and statutory authorities. While the Government is reasonably

good at creating (constructing) infrastructure, the model is deficient due to:

Lack of life-cycle costing and maintenance planning:

A ‘lowest tender’ approach to the exercise, which results in low capital outflow,

but also consequent degradation in performance and poor ‘value-for-money’ to

users.

Low level of projectisation- in scheduling tasks and subtasks, monitoring costs

and milestones, etc,

Integrated planning requirements:

Even where city ‘master plans’ exist, they are more in the nature of land-use

plans,

Infrastructure facilities are not well meshed together.

Capacity deficiency in managing contracts- skills to manage large investments in

a projectised approach; capacity to absorb larger investments in a shorter period

of time.

Attitudes and perceptions of entire governance architecture to PPP- Political

executive, bureaucracy, Courts, Legislature, CAG, fourth estate, etc.

Lack of sustainability and environment consciousness

Projects are evaluated on financial merits, rather than a composite index than

considers environmental, social, and sustainability aspects.



Insufficient focus on equitable development, poverty alleviation and employment

creation:

Substantial infrastructure is targeted at the more visible/ vocal sections of

society.

Social disparity in accessing infrastructure by the lower sections of the society

Regional disparities in infrastructure development

Climate change impact mitigation

5.2 World Bank’s Approach to Sustainability

These deficiencies are by no means endemic to Karnataka alone, but cover most

States and Countries. The recognition of these deficiencies has prompted agencies

such as the World Bank to develop and propagate “Sustainable Infrastructure Action

Plans.” The SIAP document (Source: World Bank SIAP Report 2009-11) mentions

four key considerations:

Focus attention on key cross-cutting issues: climate change, the role of the

private sector, regional disparities in infrastructure service delivery, rapidly

growing demand for infrastructure in urbanizing economies, affordability and the

need to support and build upon technological advances;

Need to embed sustainability in infrastructure services going beyond the “do-no-

harm” objectives. In addition to the traditional economic and financial viability of

infrastructure services, the design of infrastructure programs needs to support

environmental sustainability and social inclusion: the “triple bottom line;

Ensure support for a strong governance framework for infrastructure services; and

Leverage its financing by mobilizing additional private financing and harmonized

aid resources for infrastructure, using its (World Bank’s) convening power to

support developing countries.

5.3 The Building Blocks for Karnataka

The deficiencies mentioned in the previous section, and the approach

suggested by the World Bank underline the need for a systematic and focused

approach to infrastructure development, rather than an ad-hoc and reactive

response. There are three “Building Blocks” to achieve this objective:



Figure 9: Steps for developing a Sustainable Infrastructure Program

Each of these aspects is outlined in the following:

Convergence & Integration of Infrastructure Plans

As a part of convergence and Integration following steps need to be undertaken

Sector sustainability studies as input for Policy Changes and Reforms

At present the management of several infrastructure sectors is not sustainable

financially, e.g., Power, Irrigation, Urban Infrastructure etc. The sector specific

studies will aim at identifying and putting in place the specific policy changes to make

the sector financially viable so that the private investment can be attracted.

However, to attract private capital, a policy framework has been laid down through

the Karnataka Infrastructure Policy 2007x harnessing private sector investment

through Public Private Partnerships. The policy identifies 10 sectors and 34

subsectors where public-private partnerships are encouraged. Efforts are on to

translate the policy into law. That law shall assure a fair return for investors as well as

protects interests of users to assure quality supply at reasonable cost. Further,

sanctity of contracts would be observed along with ensuring speedy and effective

dispute resolution mechanisms.

Planning for Convergence

& Integration

Leveraging Finances for Shelf of Projects

Building

Capacity



Land reforms

With increasing urbanisation, land is always going to be a premium commodity in

urban areas. It is essential to unlock the economic potential of land by liberalising

restrictive provisions in legislation such as 79 A & B of the Land reforms act.

Updation of asset registry, land survey, computerisation of land records, and creation

of land bank of available government lands in each ULB will be done to identify

revenue raising opportunities and optimally develop land for slum rehabilitation,

transport, or for residential, industrial and commercial purposes.

Relief & Rehabilitation (R&R) Policy

In order to speed up the process of land acquisition for the purpose of industries, a

clear cut land acquisition policy will be evolved in consultation with farmers and

industry. In this policy, necessary measures will be spelt out to ensure that only dry

land and single crop land will be acquired for industrial purposes. The policy will also

have a provision to take the land owners as partner in the project by offering certain

equity to them. Alternatively land owners will be offered adequate compensation and

rehabilitation based on the set guidelines.

Establishment of Regulatory Framework

Certainty and rule based revision of user charges / Tariff is a pre-requisite for the

private sector participation. Para 34 of the Infrastructure Policy ’07 lays down the

need for a PPP Regulator with role of setting norms for entry and exist, tariff fixation

and establishing standards for construction, operations and maintenance of the

facilities/ services. Necessary provisions would be made in the PPP Law (being

drafted) in respect of sectors that do not have any regulator e.g.: Minor Ports, State

Highways and Mono rail etc. It may be that one Regulator would handle one sector or

multiple sectors.

Citizen Centric City Planning and Service Provision

ULBs are to give priority attention to provision and improvement of essential basic

services like water supply, sanitation and sewerage to ensure developing of inclusive

cities where every citizen has an entitlement to basic services. Citizens need to be

empowered to decide on the facilities and infrastructure they desire in their localities.



Ward planning involving citizens will be implemented through a bottom-up process as

done in Kolkata. An integrated and efficient public grievance redressal system for

citizens to present their complaints and suggestions will be available in both physical

and online forms (similar to integrated bill payment facilities in ‘Bangalore-one’

centres), in all towns/cities of the State to provide a strong interface, better service

delivery and improved relations between service providers and citizens.

Capacity Building

There is a limited capacity within the government and its agencies to conceptualize,

prepare, procure and manage PPP projects. Capacity Building refers to a very wide

gamut of ‘needs’:

Change stakeholder ‘mindset’ to infrastructure planning

The Governance architecture enabled to appreciate the aspects of sustainable

infrastructure and PPP;

The political executive to ensure continuity in decisions and policies particularly

with reference to PPP and learn to respect contractual terms in PPP;

Building a robust regulatory structure that takes into account the relationship

between the executive, regulator, stake holders, and such regulator or its

appellate body to be the last arbiter without resort to Art 226/ 227 of Constitution

of India and reliefs available for activities under Art 12.

Training Mid and Lower level GoK officials on sustainable PPP project

development areas.

Grading of projects against Environment, Social and Governance factors and

Climate Change.

Create Infrastructure Index in each sector and undertake survey of users of green

infrastructure.

Leveraging Finance for Shelf of Projects

Leveraging Finance

An initial estimate of the funds needed for the selected few projects stands at USD

27816 Mn (Refer table in page 37). GoK has a limited funding capacity for



undertaking these projects through its own resource. It is clear that SIAP funding

available from WBG and Government (budgetary) finances would be limited – the

need is to leverage private finances as well. PPPs would also tap efficiencies in the

private sector.

Shelf of Projects

Karnataka intends to develop shelf of sustainable projects through the sector studies.

The following few selected projects have been put forth for consideration as a

starting point.

1. Karnataka Rural Water Supply and Sanitation projectxi

Project Details: Third Water Supply & Sanitation Project covering highly quality

and quantity with the objective to increase rural community’s access to improved

and sustainable drinking water and Sanitation services and to Institutionalize

decentralization of rural water supply and sanitation service delivery to Gram

Panchayaths and user groups. It is proposed to cover 1370 quality and quantity

affected habitations focusing on Fluoride spread over 460 GPs benefiting about

35 lakhs (3.5 million) people across 15 districts (mentioned above) under the

project. This proposed target is out of 14979 quality-affected villages/habitations

comprising 3560 villages/habitations affected with excessive Fluoride in 29

districts of the state

Project Cost: The estimated project cost of Rs.1500 Crores (USD 333.33;

Conversion rate 1USD=45 Rupees) also includes the project management cost of

Rs.110.00 Crores for implementation of the project over a period of 5 years.

Project Benefit: The proposed project will directly benefit to 35 lakhs people living

in the rural Karnataka. The project will help in saving time in collection of water,

increased availability of safe water, reduction in deceases by way of using house

hold latrines and smokeless chulla, better sanitation practices, strengthening

Gram Panchayaths and User Committee etc.



2. Comprehensive Traffic and Transport Planxii- Bangalore

Bangalore population has been growing at a rate of 3.25% per year in

the last decade. There has been a phenomenal growth in the population of

vehicles as well especially the two and four wheelers in this period due to

rising household incomes. In the absence of adequate public transport

system, people are using the personalized modes which is not only leading to

congestion on limited road network but also increasing environmental

pollution. An average Bangalorean spends more than 240 hours stuck in traffic

every year. Such delays result in loss of productivity, reduced air quality,

reduced quality of life, and increased costs for services and goods.

The Comprehensive Transport Plan proposes the following measures:

A. Extension of mass transport system to provide wide coverage and transport

integration with other modes of transport.

B. Provide substantially large network of medium level mass transport system

such as BRT11 to cover the areas beyond the Metro network and on over

loaded corridors.

C. Land use adjustments and densification of corridors along mass transport

corridors where possible.

D. Extension of commuter rail system up to the BMRDA’s New Townships &

beyond up to Tumkur, Hosur etc. to act as sub-urban services.

E. Rationalisation of local bus system and its augmentation.

F Improvement in traffic management. 7 Special facilities for pedestrians

within the entire network specially in the core areas; pedestrian-friendly

development of selected shopping streets inside the core area going to be

served by Metro. Provision of pedestrian sky walks/subways, footpaths and

road furniture along the roads where necessary.

G Diverting through traffic on Peripheral Ring Road. Providing transport hubs

at the junctions of Peripheral Ring Road with important radials such as; the

National Highways and other heavily loaded roads.

11 Bus rapid Transport System



H. Improving primary, arterial and other important roads (particularly radial

and ring roads) by providing grade separation, junction improvements, adding

missing links, widening and other road side facilities wherever necessary. In

gist the transportation architecture would be as below:

Figure 10: Map describing Comprehensive Traffic and Transport Plan

The implementation of the CTTP fully would enable Bangaloreans to perform 73% of

trips through public transport, thus improving the sustainability of traffic while

reducing pollution levels including noise. In fact the externalities of rapid mass

transportation systems are so high that in a 30 year period the costs could be

recovered from externalities alone.



Modes Daily Trips in Lakhs (Modal Split)

2006 2025

Scenario

1

Scenario

2

Scenario

3

Car4.2 (7.5%) 15.5 (12.2%) 9.7 (7.6%) 7.0 (5.5%)

2W18.4 (32.8%) 60.4 (47.5%) 45.6(35.9%) 20.6 (16.2%)

IPT7.3 (12.9%) 14.9 (11.7%) 8.9 (7.0%) 6.7 (5.3%)

Public

Transport26.3 (46.8%) 36.3 (28.6%) 50.0(49.5%) 92.9 (73%)

Total56.2(100%) 127.2 (100%) 127.2 (100%) 127.2 (100%)

TRANSPORT DEMAND ANALYSIS

Note: Scenarios are defined and detailed in CTTP.

Table 8: Transport Demand Analysis in Bangalore

Project Details: The project comprises of Mass Transport System,

City Bus System, Inter-city Bus Terminals, Transport Integration, Transport

System Management Measures, Pedestrian/NMT Facilities, Road Development

Plan, Parking Facilities, Integrated Freight Complexes etc

Project Cost: Rs 46944 Crore (USD 10.43 bn)

Project Benefit: Integrated traffic plan, GHG emission reduction, Environmental

sustainability

3. Water Project for Drinking and Irrigation

Project Details: Government of Karnataka has formulated Upper Bhadra Projectxiii

which is a unique project to utilize 23 TMC of water from the Tunga and Bhadra

Reservoirs for irrigating and drinking water requirement of drought prone areas of

Chitradurga, Tumkur and Kolar districts. The project has a component to desilt

and feed 156 tanks for recharge of ground water.



Project Cost: Rs.5900 crores (USD 1311.11)

Project Benefit: Drought proofing- Meeting the irrigation and drinking water

requirement of drought prone areas of Chitradurga, Tumkur and Kolar districts.

4. Rail Connectivity to Port and Industrial Zonesxiv

Figure 11: Rail Connectivity to Port and Industrial Zones

Project Details: Rail connectivity would comprise of 48 projects of 5525 Km

connecting the major growth centres and ports with the hinder land

Project Cost: Rs 21760 Crore (USD 4835.55 Mn)

Project Benefit: Foster industrial growth, employment and social equity, Integrated

development, GHG emission reduction, Environmental sustainability



5. Connectivity plan between cities and growth zones: Suvarna Karnataka

Development Corridorxv

Project Details: Development of Key road linkages connecting the key economic

centres

Project Cost: Rs 3893 Crore (USD 865.11 Mn)

Project Benefit: integrated development, Regional and Social Equity

6. Comprehensive Development Plan of Rural Roadsxvi in Karnataka

Project Details: The proposed project is aimed to provide improved access of

Rural Community by providing connectivity for villages to the marketing centers,

hospitals, educational institutions, major highways towns and uplifting the

economic and social welfare of the rural poor. The Project also serve to create

new economic opportunities and activities, generate additional employment and

income, facilitate and improve delivery of other rural services and enhance

democratic processes and skills among rural poor.

Project Cost: Comprehensive Development Plan of Rural Roads requires a total

funding of Rs 54427 Crore (USD 12,094 Mn). GoK has been able to carry forward

many of the projects with assistance. There are projects worth USD 1737.33 Mn

which need to be funded.

Project Benefits: Social inclusion, Social Equity, access to economic opportunities

7. Gas based powerxvii projects

Project Details: The Gas Authority of India Ltd (GAIL) has plans to lay a pipeline

from Dabhol to Bangalore (See map below) and another from Mangalore to

Bangalore. A third pipeline is being laid from tap-off from Reline pipeline in

northern Karnataka. GoK has plans to generate over 9000 MW of gas based

green power all along the pipeline.



Figure 12: Dhabol- Bangalore Gas Pipeline and Spur-lines

Project Cost: Rs 36,000 Crores

Project Benefit: GHG emission mitigation, access to gas by all class of users.

8. Renewable Generationxviii:

Project Details:

i. RE Capacity Addition from 2400 MW to about 6600 MW by 2014. To

generate 12800 MU RE by 2014

ii. (ii) Energy Conservation & Energy efficiency 7900 MU (900 MW)

Project Benefit: GHG emission mitigation, Environmental sustainability



Other Project in Planning Stage

The State Govt is currently working on several projects which will be subsequently

posed for sustainable funding:

Industry Specific Development Corridor (In planning stage)

To provide connectivity a number of road, rail, and logistics projects on the anvil.

New Port facilities are also planned. But these have to be integrated.

Social infrastructure projects in Health and Education.

Similarly, there are a number of urban transport projects across the state (6 Major

cities excepting Bangalore), including the development of ring roads, arterial

roads, grade-separators etc. Again, the concern is to integrate them to provide

seamless service to users.

As on Nov 2010, Karnataka has 90 projects of cost Rs 67,789.42 Crores. These

are being developed through PPP route by various depts. and agencies of GoK

Refer Annexure I.

Among these 90 projects, 23 are key projects whose status is given below.



Sl

No

Name of the Project Project cost (Rs Crore)

Relevance Status



1 Bellary Airport 140 Connectivity

Steel City- Fast

growing region

Project Development

Agreement to be

signed

2 High Speed Rail 6689

(completion

cost)

Connects City to

Airport - BIAL

RFP Stage; Bid by

12/08/2010

3 Sea Port at PORTS

Tadri

(35 MT expandable to

114 MT)

3000 Phase - I To serve the

Cement, Steel &

auto Region

RFQ issued on 15th

Apr; Response by – 30

June 2010 (Pre-bid

on 05/06/2010)

4 Sea Port at Haldipur

(19MT- Swiss

Challenge Project-

MEL)

1900 To serve the

Cement, Steel &

auto Region

DPR under Progress;

Bid by Dec 2010

5 Monorail Project in

Bangalore- Corridor-

31 Km

5600 To serve as feeder to

Metro

DPR under process

6 Monorail Project in

(Swiss Challenge-

15KM- SCOMI-

GEODESIC)

2100 To serve as feeder to

Metro

DPR Stage

Bid likely by end

June or July 2010

7 Energy /Gas Pipeline

Project s

7000 by GAIL From Dhabhol-

Bangalore

Under

implementation; COD

by Mar 2012.

8 City Gas distribution Green Field

Development

Feasibility

Underway; Likely to

be taken up in 12

towns/ cities along

the Gas pipeline.



9 Mega Power Projects

(Three projects of

700MW each)

10500 To meet the

Karnataka’s Power

needs

Gas based: PCKL-

2100 MW (Feasibility

study done)

Belgaum, Gadag,

Davangere; Bid by

June 2010

KPCL-1400 MW;

10 Railway projects

(2421 KM)

(1428 km - under

progress +892km -

newly sanctioned )

14000 To improve

connectivity to

ports, Industrial

Zones.

1428 kms of Rail

works under

implementation. In

2010-11, 9

projects have been

approved . Out of

this for 5 projects

GoK has approached

Railways for sanction

on PPP:

1. Hubli- Ankola,

2. Talaguppa-

Honnavar,

3.Kudchini- Bagalkot,

4.Bijapur- Shahbad,

5.Dharwad-

Belgaum.

DPR ready for first

three.

11 Roads (general) 3500 1600 km NIT by Jun/July

2010

(partly issued)

16 VADA- Industrial

Infrastructure

30345 State - of - the Art

Industrial Park over

500 Sq Km in Bellary

Feasibility done; RFQ

by June / July 2010



Therefore, there is a need – at the State and City levels – to have capacities built in

the planning bodies who could take on board partnership between Government,

17 Convention Centre at

Devanahally (Tourism)

1050 Will be the largest in Bid Process

completed

18 Other Tourism

ProjectsTourism

Projects

1621 Tourism circuits,

Golf Course,

Aquamarine, etc.,

Partly under bid

19 Logistic Park at 154 (Phase -

I)

Transportation,

storage and Logistics

in

Feasibility & DPR

Stage

20 Devanahalli Business

Park

9500 Business Hub by the

side of the fastest

growing Airport-

Bangalore

RFQ by end June

2010

21 7 Intermodal Terminal

HUBs

(6 in Bangalore 1 in

Mangalore); To

povide seamless

interchange

Feasibility Study

done for Peenya,

Yeshvantpur,

Yelahanka, Mysore

Road, Majestic &

Bayappanahalli

22 Airstrips at Raichur,

Gadag, Bagalkot and

ChikkmangalurAirstrips

Projects

145 Air connectivity to

Districs

PPP Annuity – Bid in

June 2010

23 Renewable Energy 23890

(by 2014)

Sustainable Energy Under

Implementation



Industry, Academia and NGOs; the latter could take a holistic view of the planning

process.

Stages of Sustainability program

The following principles have been adopted for estimating the SIAP funding

For different type of projects different level of SIAP funding has been sought

mostly varying from 10% to 33.33% depending on the need.

The shelf of projects is of an enormous size. The same has to be taken up in

phases as per priority. Phase I: Started and Completed in 11th Plan (FY 2007-

12), Phase II: Started in 11th Plan (before FY 12) and Completed in 12th Plan (Yr

2012-17), Phase III: Started and Completed in 12th Plan (FY 2012-17)

The Sustainable Funding requirement based on- project cost and %age assistance

sought, comes to 6515.56 USD Millions. Phase wise breakup of the assistance would

be, Phase I- USD 771.47 Mn, Phase II- USD 4623.23 Mn, Phase III- USD 1120.85

Mn. The gist of projects is as per the table below:

Table 9: Projects for Sustainable Funding: Costs, %age assistance sought, Phasing, Phase-wise fund requirement

Sl No Sector

Projects

No

Cost Remarks Assistan

ce as %age of Projects

Cost

Phases12 Sustainable Fund Requirement in

Phases (USD Mn)

(USD million)

(PPP/ Other) I, II, III Phase I Phase II Phase III

1 2 3(a) 3(b) 4 5 6 7 8 9

PPP projects in sectors needing sustainability funding

1 Agri-Infrastructure 8 190.17 PPP 20% Phase I 38.03

2 Energy 4 1633.33 PPP 20% I (50%) II (50%) 163.33 163.33

3 Industrial Infrastructure 15 5410.22 PPP 10% I 541.02

4

Transportation & Logistics((a)CTTP Bangalore, (b) KSHIP and KRDCL Road Projects 86 11208.54

PPP/ Other 20%

II (50%) III (50%) 1120.85 1120.85

5 Tourism 7 258.78 PPP 10% I 25.88

6 Urban & Municipal Infrastructure 2 32.07 PPP 10% I 3.21

Individual Infrastructure projects needing sustainability funding

12 The shelf of projects is of an enormous size. The same has to be taken up in phases as per priority. Phase I: Started and Completed in 11th Plan (FY 2007-12), Phase II: Started in 11th Plan (before FY 12) and Completed in 12th Plan (Yr 2012-17), Phase III: Started and Completed in 12th Plan (FY 2012-17).



7

Karnataka Rural Water Supply and Sanitation project 1 333.33 Other 33.33% II 111.11

8

Water Projects for Drinking and Irrigation 1 1311.11 Other 33.33% II 436.99

9

Connectivity plan between cities and Growth Zones- Rail 48 4835.56

PPP/ Other 20% II 967.11

10

Connectivity plan between cities and Growth Zones-Road 1 865.11 PPP 10% II 86.51

11

Comprehensive Development Plan of Rural Roads in Karnataka13 1 1737.33

Other/ PPP 100% II 1737.33

TOTAL 174 27815.55 771.47 4623.23 1120.85

Total Ass-istance 6515.56

13 Comprehensive Development Plan of Rural Roads requires a total funding of USD 12,094 Mn. GoK has been able to carry forward many of the projects with assistance. There are projects worth USD 1737.33 Mn which need to be funded.

5.4 Support Required by the Government of Karnataka

Of the three strategic interventions that are required by the Government of

Karnataka, the aspect of ‘leveraging finance’ will follow as a natural corollary of the

first two: (i) Planning for integration and convergence and (ii) capacity building. Most

of the infrastructure projects particularly in Transportation, Water require support by

way of Viability Gap Funding. In projects under a) transport (roads& bridges,

railways, sea ports, Inland Waterways) b) Energy (Conventional and renewable

energy), c) Urban infrastructure (Transport, Water Supply, sewerage, Solid Waste

management) d) Infrastructure projects in SEZs, e) International Convention Centres

and other tourism infrastructure projects, f) Social infrastructure (Health, Education);

if undertaken on PPP, upto 20% VGF is available from GOI. However the projects

under Railways, urban transportation, renewable energy and social infrastructure are

is not viable with this assistance. These projects would need SIAP funding. WBG

could be in a position to lend marginal support in this.

The World Bank group is in an eminent position to provide this support to the

Government of Karnataka, and use the opportunity to demonstrate the benefits of

sustainable infrastructure planning in a concrete and conducive environment. The

Government of Karnataka needs support in terms of:

Know how, and the technical assistance required- stage I and II; and

Funding for Sustainable Infrastructure- stage III

5.5 Assessment of Funds

The project is envisaged to be completed in 3 Stages

Stage I: Addressing the Access Gap through Core Sector Strategies and

Maximizing Effectiveness through cross sectoral themes

Stage II: Rolling out Infrastructure Sustainability Plan

Stage III: Funding for Sustainable Infrastructure for Project Implementation

The following table sets out an estimate of funds required for the activities envisaged

for the technical assistance for Sustainable Infrastructure Planning in Karnataka:



Table 10: Sustainable Infrastructure Action Plan for Karnataka

Sustainable Infrastructure Action Plan for Karnataka

Phasing SIAP Theme SIAP Key Steps

Activity Description for

Karnataka

Fund Requirement

(USD Mn)

Stage I: Six Months

A. Addressing

the Access Gap

through Core

Sector

Strategies Sector Strategy

1. Master Plan for Infrastructure

Sectors- Transportation, Energy,

Water, ICT etc

2. PPP Regulation 1.0

B. Maximizing

Effectiveness

through cross

sectoral themes

1. Climate Change

2. Public Private

Partnership

3. Rural-Urban

Integration

1. Institutional Strengthening

Program for Harnessing

Karnataka Specific Cross Sectoral

Synergy- Climate Change, PPP

and R-U Integration 2.0

2. Capacity Building 1.0

Stage II: Six Months

C. Sustainability

Program

1. Environment

2. Social

3. Governance

4. Viability

1. Funding for grading of

projects against Environment,

Social and Governance factors

and Climate Change 0.5

2. Capacity Building within Gov

Stake Holders 1.5

3. Awareness Building among

Infrastructure users 2.5

4. Create Infrastructure Index

and undertake survey of users of

these green infrastructure 0.5

5. Setting up of Regulatory

Structures 5.0

6. Project Level Monitoring

through a Robust MIS 5.0

7. Supporting Viability funding See below

D. Leverage

finance

1. Private Finance

2. Managing Risks for

Public Finance

3. Mobilizing Aid

Resources

4. Harmonizing Aid

Policies through

Partnerships

1. Development of program for

financing projects based on their

emphasis on key factors as

Climate Change, Environmental,

Social and Governance etc. 1.0



2. Funding for grading of

projects based on complex

parameters 5.0

3. Capacity Building 1.0

Stage III: After 12 Months

E. Creation of

Fund and

Project Funding

1. Creation of 'Sustainable Fund'

for Project Grant/ Finance (Refer

Table in Para 5.3 ‘Leveraging

Finance’) 6515.56

Total (USD Mn) 6541.56

The Govt of Karnataka requests that the Technical Assistance Loan of USD 26 Mn

for stage I and II for undertaking sector strategy and sustainability program may be

provided by WBG, initially. Subsequently, based on the evolution and success of

stage I and II, funding for stage III may be provided by the WBG based on sector

programs and specific projects as they take concrete shape.



6. Way forward

The following way forward is envisaged for the project.

Stage I: 0-6 Months

1. Addressing the Access Gap through Core Sector Strategies and Maximizing

Effectiveness through cross sectoral themes

Master Plan for Infrastructure Sectors- Transportation, Energy, Water, ICT etc

Institutional Strengthening Program for Harnessing Karnataka Specific Cross

Sectoral Synergy- Climate Change, PPP and R-U Integration

Capacity Building

Stage II: 6-12 Months

2. Stages II: Rolling out Infrastructure Sustainability Plan

Funding for grading of projects against Environment, Social and Governance

factors and Climate Change

Capacity Building within Gov Stake Holders

Awareness Building among Infrastructure users

Create Infrastructure Index and undertake survey of users of these green

infrastructure

Setting up of Regulatory Structures

Project Level Monitoring through a Robust MIS

Supporting Viability funding

Stage III: After 12 Months

3. Project Implementation

Development of program for financing projects based on their emphasis on

key factors as Climate Change, Environmental, Social and Governance etc.

Funding for grading of projects based on complex parameters

Capacity Building

Creation of 'Sustainable Fund' for Project Grant/ Finance to the tune of 20%

on projects meeting Sustainability Criteria.



7. Conclusion Social inclusion and Environmental sustainability in addition to Financial Viability

are the three cornerstones of any Sustainable Infrastructure Project. The same has

been embraced in Vision 2020 document (Oct 2008) of GoK. If the required

infrastructure are not developed and managed properly, the achievement of the

Development Targets as set out by GoK would be difficult and would impact the poor

the most living in rural areas. Access, greater reliability and equitable distribution of

Sustainable Infrastructure distinguishes the ‘haves’ from the ‘have-nots’ and paves

way for human development, thus reducing the disparity among social classes.

India is new to partnering with private sector as equal partners in the PPP mode.

The relationship between State and the private partner has to be based on equity

and sharing. In most PPP projects the PPP partner would be discharging State’s

monopoly functions. The treatment of such partnership has to evolve, as the

processes in normal democratic process of decision making following elaborate

procedures in the State Governance structure, if copied to such partnership could

jeopardize the efficiency and speed that private sector could command in delivery of

quicker and quality services/ outcomes to the community. But the modalities in such

relationships are yet to be defined in the context of Art 12 and 14 of the Constitution

of India, the RTI Act and the Legislative sovereignty.

The Action plan requires enormous support in capacity building in improving skill

levels in Governance, expertise in conceiving and modeling projects and in achieving

the triple bottom- lines. The Govt of Karnataka requests that the Technical

Assistance Loan of USD 26 Mn for stage I and II for undertaking sector strategy and

sustainability program may be provided by WBG, initially. Subsequently, based on

the evolution and success of stage I and II, funding for stage III may be provided by

the WBG based on sector programs and specific projects as they take concrete

shape.

PTO.



GoK would endeavor to implement sustainable infrastructure and would actively seek

the support of WBG in financial assistance and capacity building services.

V Madhu

Principal Secretary, IDD, Govt of Karnataka

Room No 8, Vikasa Soudha, Dr Ambedkar Veedhi,

Bangalore- 560001, Karnataka

Phone 080-22035085

Email: [email protected]

[email protected]

Principal Secretary

Bangalore

Nov 2010.



BIBLIOGRAPHY

i Source: Karnataka State Planning Board, “Karnataka – A vision for Development,” December 2008,

Chapter 1 & 2.

ii Ibid i Page 60

iii Ibid i Page 18

iv Ibid i Page 19

v Ibid i Page 23, 26, 29, 32, 36, 39, 42

vi Ibid i Page 46

vii As per Industrial Policy ’09 Para 5.3.6 Pg 8 [www.karnatakaindustry.gov.in]

viii As per Industrial Policy ’09 Para 5.3.4 & 5.3.4 Pg 8

ix Ibid i Page 52

x Source: Infrastructure Development Department, http://idd.kar.nic.in/infrastructure.htm

xi Source: Rural Development and Panchayath Raj Department

xii CTTP Study undertaken by KUIDFC.

[http://www.kuidfc.com/WEBSITE/WebPage.nsf/lookupAllCat/Resources-

Traffic%20Management%20Plan-Traffic%20Management%20Plan-CTTP-Bangalore]

xiii Source: Upper Bhadra Project by<>

xiv Source: Infrastructure Development Department

xv Source: Karnataka State Highway Improvement Project-II

xvi Source: Rural Development and Panchayath Raj Department

xvii Source: Power Company of Karnataka Limited

xviii Source: Power Company of Karnataka Limited`

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