Ex-ante Evaluation Paper (for Japanese ODA Loan)
South Asia Division 1, South Asia Department, JICA
1. Name of the ProjectCountry: India
Project: North East Road Network Connectivity Improvement Project (Phase 2)
Loan Agreement: March 29, 2018
2. Background and Necessity of the Project(1) Current State and Issues of the Road Sector in India
In India, roads are an important means of transport that together with railways support themajority of domestic logistics, carrying 85.2% of passenger transport and 62.9% of freighttransport in India's transport sector (Source: Ministry of Road Transport and Highways).
Against this backdrop, while there has been progress in the development of national
highways in the plains that forms core highway networks under the country’s remarkableeconomic growth, development in the mountainous areas is lagging behind due to financial
and technical issues.
In particular, in North Eastern Region, where it contains more mountainous areas thanother regions, only 28.5% of all roads there are paved (national average: 63.4%) and only
53.0% of the national highways have more than one lane (national average: 77.9%) (Source:Ministry of Road Transport and Highways). Another factor hampering local logistics is thefrequent occurrence of landslide disasters caused by torrential rain (with an annual rainfall ofover 10,000 mm in part of the state of Meghalaya), constraining on the economic
development of the region. Furthermore, this is also a reason these highways cannot serve
as a dependable lifeline for the region. In fact, they fail to ensure a stable supply of goods
and access to medical and educational institutions, placing a burden on the lives of localresidents.
In the target area, whose main industries are subsistence farming and public service, theGDP per capita is significantly lower than the national average (34,405 rupees in 2010–2011,
compared to the national average of 59,606 rupees). Such disparity stands as a serious
domestic problem. As the region is rich in coal and other resources, there is good prospects
for future growth in the mining industry and in high value-added agriculture such as fruit andflower growing. Despite this, there is a lack of adequate connectivity within the region as wellas with other areas due to the inferior road infrastructure. Improving the road network inNortheast India, which is a key element for promoting economic activity, is vital to encourage
investment in these industries.
The Indian Government’s initiative of “ Special Accelerated Road Development

Programme for North-East” sets forth a goal of improving some 1,000 km of road network
between major cities in the region. India's Prime Minister, Narendra Modi, has set road
improvement as one of the priority policies of the Northeast state development in part byallocating roughly 170 billion yen of the 2016 fiscal budget to road maintenance in theregion. The 'North East Road Network Connectivity Improvement Project (Phase 2)'(hereinafter, "the Project") is also positioned as a part of this strategy.
This project contributes to a number of objectives by improving access within the area aswell as with other areas; stimulating economic development in the region; securing adependable lifeline for local residents; and improving connectivity with neighboring
countries like Myanmar and Bangladesh.
(2) Japan and JICA's Road Sector/Northeast Region Cooperation Policy and the Positioningof this ProjectJapan's Country Assistance Policy for India (March 2016) states that Japan's ODA is"expected to continue to play an important role in India to build critical infrastructures that
ensure continued investment and strong economic growth." It also sets "strengthening
connectivity" as one of its priority areas, and states that Japan, with a view tode-bottlenecking the infrastructure constraints to investment and growth, will support thedevelopment of a transportation hub and network infrastructure to strengthen connectivity
among major industrial cities and economic zones as well as regional connectivity. Under
this context, it further states the need to promote Japan-India cooperation to achieve
connectivity between North Eastern Region and other parts of the country, a point
acknowledged between the leaders of Japan and India.
Furthermore, JICA's Country Analysis Paper for India (March 2012) also regards thedevelopment of industrial and urban infrastructure as one of its priority areas, and indicatesthe necessity of providing assistance to develop and improve infrastructure that contributes
to the acceleration of regional economic development and streamlining of logistics,
including roads, to eliminate bottlenecks in economic growth. This project is consistent withthese policies and analysis paper.
There were 53 ODA loan cases in the transportation sector totaling 1.8502 trillion yen. In
technical cooperation, JICA has implemented the 'Institutional Development Project on theSupervision for Highway and Expressway Operation, Management and Maintenance' andthree other projects, which have been instrumental in strengthening the administrative
structure for operation and maintenance of roads by the Ministry of Road Transport andHighways. ODA loans for the Northeast states were also approved mainly in the fields ofelectricity, water and sanitation with 17 loans to date totaling 232.6 billion yen. In technicalcooperation, institutional improvements for sustainable agriculture and irrigation inMizoram state were supported through the 'Project on Capacity Enhancement for
Sustainable Agriculture and irrigation Development in Mizoram' (Dec. 2016–Nov. 2021).

(3) Other Donors' Activity
The Asian Development Bank has implemented a national highway improvement projectin the northeast. Meanwhile the World Bank has implemented a state road improvement
project in the state of Mizoram.
3. Project Description(1) Project Objective
To improve the connectivity in North Eastern Region of India through improving National
Highway (NH) 40 and establishing a new bypass for NH 54, thereby promoting regionalsocio-economic development.
(2) Project Site/Target Area
Northeast Region (Meghalaya and Mizoram states)(3) Project Components
1) Road improvement of NH40 (approx. 81 km: widening to 12 m width (2 lanes) or 4-lane
road, linear improvement, slope measures, paving, bridge rehabilitation, traffic safety
equipment, etc.) and maintenance.
2) Newly construction of bypass for NH54 (4 locations between Aizawl and Tuipang, 24 km
construction of 12 m wide road, slope measures, paving, bridges, traffic safety
equipment etc.), and maintenance.
3) Consulting Services (construction supervision, etc.)(4) Estimated Project Cost
52.247 billion yen (of which, the ODA Loan amount is 38.666 billion yen)(5) Schedule
Scheduled for April 2018–November 2026 (104 months in total). The project completionis defined as the commencement of the service (November 2022).
(6) Project Implementation Structure1) Borrower: President of India
2) Guarantor: None
3) Executing agency: National Highways and Infrastructure Development
Corporation Limited: NHIDCL4) Operation and Maintenance agency: Operations and maintenance work
are planned to be outsourced to private companies under the supervision andresponsibility of NHIDCL.
(7) Collaboration with Other Schemes and Donors
1) Related aid activities by Japan: Japan plans to support the improvement of main roadof NH54 in Mizoram state as well as NH51 in Meghalaya state through the 'North East
Road Network Connectivity Improvement Project (Phase1)'.
2) Aid activities of other aid organizations: None in particular.

(8) Environmental and Social Considerations/Poverty Reduction and Social Development
1) Environmental and Social Considerations① Category: A② Categorization Rationale: This project deemed Category A due to its high potential toexert significant negative impact as defined by the 'JICA Guidelines forEnvironmental and Social Considerations' (promulgated in April 2010).
③ Environmental Permit: Although not required under Indian law, an Environmental
Impact Assessment (EIA) report for both NR40 improvement and NR54 bypass
construction was prepared by NHIDCL in June 2017.
④ Anti-Pollution Measures: Mitigation measures against air pollution, water pollution,waste, noise, vibration, etc. are planned to be taken during construction work tomeet the emissions and other environment standards set by India. Measures to betaken include water sprinkling to control dust, periodic maintenance of equipment,
measures to prevent oil leaks, use of low-pollution equipment, installation of soundbarriers, etc. Surplus soil and waste generated during construction will be disposedof appropriately by selecting a depositing area based on discussions with residents,
following a linear decision process. Although it is assumed that air quality, noise andvibration standards will meet India's domestic environmental standards, monitoringand measures appropriate to residential areas are planned be carried out after roads
go into service.
⑤ Natural Environment: The negative impact on the environment from the Project isexpected to be negligible as the target area is not situated in or around any
vulnerable areas such as national parks.
⑥ Social Environment: The project involves land acquisition of 46 ha in Mizoram statewith the 257 households (1,485 people) would be affected, including involuntary
resettlement of 20 households (133 persons), and in Meghalaya state, 402
households (2,057 people) would be affected including involuntary resettlement of
291 households (1,343 people). Land acquisition and resident relocation arescheduled to be carried out in accordance with the legal processes of Mizoram andMeghalaya states as well as the resident relocation plan prepared according to JICA
guidelines. No particular opposition to the project implementation has been foundthrough consultation with residents affected by this project.
⑦ Other/Monitoring: During the construction work of the project and continuing after
the roads go into service, the construction contractor and NHIDCL will monitor airquality, water quality, noise, vibration etc. NHIDCL will also monitor the landacquisition process and livelihood restoration plan before and during construction.
2) Cross-cutting Items: None in particular3) Gender Classification: 'Project requiring a GI Gender mainstreaming needssurvey and analysis'<Activities/Classification Rationale> as a result of discussion with the counterpart
government, it was agreed to implement HIV measures in the project that facilitate
gender equality.
(9) Other Important Issues: None in particular
4. Target Outcomes(1) Quantitative Effects
Indicator

Baseline(Actual value in 2017)

Target (2026)[4 Years afterCompletion]

Average travel speed in target roadsections (km/h)

24 (NH54)30 (NH40)

40 (NH54)
50 (NH40)

Average travel cost in target roadsections (rupee/km per vehicle)

24 (NH54)
27 (NH40)

15 (NH54)
18 (NH40)

Traffic volume of target road sections 835 (NH54)
3103 (NH54)(PCU/day)4329 (NH40)8939 (NH40)
Note 1: PCU (Passenger Car Unit): Converted equivalent of a single passenger car
Note 2: Target value set is four years after project completion when contractual
maintenance and warranty period with the EPC contractor has concluded.
(2) Qualitative Effects
The expected qualitative effects of the Project include improved quality of life for local
residents by increasing the reliable supply of goods and supplies to the area, improved
comfort of travel in the target sections, and improved economic development in North Eaststates.
(3) Internal Rate of Return
Based on the following assumptions, the Economic Internal Rate of Return (EIRR) of theproject is 16.6% for NH40 and 11.0% for NH54. Rate of Return (FIRR) is not calculated as
no tolls will be collected from users[EIRR]
Cost: Construction cost (excluding tax), O&M cost
Benefits: Reduction of travel time cost, Reduction of vehicle operation cost
Project life: 25 years
5. External Factors and Risk Control(1) Preconditions: Consensus-building among local residents and relevant organizations willcontinue in the land acquisition process.
(2) External Factors
1) That the political and economic situation in India and areas surrounding project do notdeteriorate, and no large-scale natural disaster occurs.
2) That there are no changes in the India central government policies concerning road
construction in the North Eastern Region, the organizational structure of theexecuting agency and work content.
6. Lessons Learned from Past Projects and Application to the Project
Based on the ex-post evaluation results etc. of the 'Rural and Main Roads Rehabilitation
Project' in Guatemala, it is vital to carry out a thorough investigation in advance and consider
reinforcing the slope―even when the planned upgrade is on existing roads. This is due tothe elevated risk of landslides in road construction in mountainous regions.
The target area of the Project also has natural conditions susceptible to landslides andother soil threats. Therefore, the executing agency has been requested to incorporate
measures to prevent slope collapse, take efforts to prevent landslide disasters, and also
ensure a budget and necessary arrangements for operation and maintenance that includes
disaster recovery.
7. Evaluation Results
This project is consistent with the Government of India's policies on development andsolving issues as well as Japan and JICA's assistance policy and analysis. By developing
highways in India's North Eastern Region, it will contribute to better connectivity within theregion and with outside areas while also fostering economic development in the region.
Moreover, given that the project is deemed to contribute to Goal 9 of the Sustainable
Development Goals, the need for JICA to support the implementation of this project is high.
8. Plan for Future Evaluation(1) Indicators to be Used
As indicated in sections 4. (1) - (3)(2) Timing of the Next Evaluation
Ex-post evaluation: Four years after the project completion