World Bank Supports Urban Service
Delivery in Karnataka, India
WASHINGTON, March 14, 2005 ─ The World Bank
approved today a US$216 million
loan to finance the delivery of urban services in the state of Karnataka
through enhancing urban infrastructure, and improving the institutional and
financial frameworks at the state and local levels.
The Karnataka Municipal Reform Project is designed to support an evolving
process of urban reforms in Karnataka that focus on large-scale
restructuring of urban governance and management. These reforms are expected
to result in the creation of well-governed and functioning cities that are
able to finance and deliver basic urban services for the urban poor in a
With a total population of about 53 million and a level of urbanization of
34 percent, Karnataka is one of the most rapidly urbanizing states in India.
Its growth in urban population, incomes, and competitive business has
created a strong demand for quality services across all urban areas.
Infrastructure investments have become an urgent priority for the state, yet
the shortfall in meeting the investments need is huge.
"This project will significantly enhance the State’s urban services—from
water supply and sewerage system to urban roads and slum up-gradation," said
Michael Carter, World Bank Country Director for India. "It will also
contribute to improved health conditions of the poor by improving access to
The project is designed around four main components:
• Institutional Development: Strengthen the institutional capacity in
undertaking basic urban planning and management functions at state and local
• Municipal Investment Support: Enhance urban infrastructure and services
delivery through the provision of investment support for upgrading urban
• Bangalore Development: Enhance Greater Bangalore metropolitan area’s
infrastructure and services delivery, particularly in roads and sewerage.
• Project Management: Support project implementation, including incremental
operating costs of relevant implementing units and a Project Development
Advisory Facility to support preparation and implementation of sub-projects
Urban Land Bodies (ULBs).
This project is the second World Bank engagement with Karnataka in the urban
sector—the first was the water supply-related Karnataka Urban Water Sector
Improvement Project, approved on April 8, 2004—and it complements and builds
upon experiences of parallel initiatives by other donors working in the
The loan, from the International Bank of Reconstruction and Development (IBRD),
the World Bank’s lending arm, is a Variable-Spread Loan with a maturity of
20 years, including a grace period of five years.