Gujarat rural roads project
Report No: ; Type: Report/Evaluation Memorandum ; Country: India; Region: South Asia; Sector: Rural Roads; Major Sector: Transportation;
                                                        ProjectID: P009855


India: Gujarat Rural Roads Project (Credit 1757-IN)

         The India Gujarat Rural Roads Project, supported by Credit 1757-IN for SDR71.2 million
equivalent, was approved in FY87. The Credit was closed one year later than scheduled in FY95 and
SDR 29.8 in project savings was canceled from the credit - SDR 19.3 in 1973 and SDR 10.5 million
at credit closing. The Implementation Completion Report (ICR) was prepared by the South Asia
Regional Office. A summary of the Borrower's report is included as Appendix B.

          The objectives of the project were: (i) to provide all-weather roads to the rural poor in
          selected
districts of Gujarat; (ii) to improve rural road planning and rural road construction and maintenance
practices; (iii) to improve maintenance management of state roads and train staff, and (iv) to
determine the potential for resource mobilization through a study of road user charges and to
improve road safety. To achieve these objectives, the project included a six-year program to
construct or improve over 4,000 kilometers of rural roads, equipment, offices, housing and technical
assistance, a road safety program, and road maintenance and road user charge studies.

         Although the project was seriously behind schedule three years after credit effectiveness, the
rural road construction program was successfully completed within the appraisal time schedule and
cost estimates, following Gujarat Government's renewed commitment to the project in 1990.
Subsequently, the project was extended and savings arising from the depreciation of the rupee were
used to construct 40 percent more rural roads than planned at appraisal. In general, roads were built
to a satisfactory standard, and the project helped to establish a more competitive local contracting
industry, although inadequate supervision resulted in some poor quality roads. Despite the slow start,
the Roads and Building Department successfully implemented the large and complex construction
program. During the project period, milk sales increased substantially in the project area and local
farmers and Government agricultural officials indicate that construction of the roads resulted in
changes in the pattern of agricultural production in favor of more cash crops. Project beneficiaries
included many poor rural women who are primarily responsible for the production and marketing of
dairy products. The 16 percent economic rate of return (ERR) estimated for the completed project is
lower than the appraisal estimate of 28 percent, despite the addition of agricultural benefits not
estimated at appraisal, owing, to incorrect assumptions used in the appraisal estimate. However, the
reevaluated ERR itself is based on assumptions about the benefits of the roads which cannot be
substantiated because of the absence of monitoring data. The Gujarat Government gave little
attention to the road safety and road financing objectives of the project, although a study of road user
charges was carried out at the national level.

    The Operations Evaluation Department (OED) concurs with the ICR ratings for the project's
outcome as satisfactory, institutional development impact as substantial and sustainability as likely.
Although sustainability may be affected by inadequate funding for road maintenance, the current
overall condition of rural roads in Gujarat is such that roads are not expected to seriously deteriorate.
OED has rated Bank performance as satisfactory in view of its flexibility in changing its procedures
to suit local conditions, but supervision of the project was at times lax.
        The project illustrates the impact of Government commitment on project implementation: a
change in government in Gujarat quickly turned the project around when it was two years behind
schedule by allocating more money and staff to the project. A major lesson is that a methodology to
screen road subprojects ex ante should be agreed with the Borrower and be based on sound economic
analysis and inputs from sector specialists (such as agriculturists). Similarly, a system to monitor the
benefits of project roads during and after implementation of the project should be established early in
the implementation period.


The ICR is comprehensive and is rated as satisfactory.

No audit is planned.