At the request of the Government of India (GOI), the Asian Development Bank (ADB) approved in March 2006 a 4-tranche, $300 million multitranche financing facility (MFF) to help implement the Uttarakhand Power Sector Investment Program (UPSIP). The UPSIP aimed to meet the priority infrastructure requirements identified in Uttarakhand’s roadmap for state energy sector development.
Uttarakhand, in the northern part of India, is one the country’s poorest states. It was created in November 2000 from a split in the state of Uttar Pradesh. At around 2008, its annual per capita electricity consumption was less than half the national average, and economic development was constrained by lack of power supply.
Agriculture has always been an important sector of India’s economy. In 2009, it contributed 16% of the country’s gross domestic product, and in 2010, employed 53% of its workforce. Over a decade before project appraisal in 2010, however, sector performance had been below government targets due to lack of infrastructure, weak backward-forward linkages, and inadequate production capital.
Over 90% of the terrain of the state of Uttarakhand in northern India is hilly and minimally connected through rail and air, making roads the lifeline of its transport system. But at project appraisal in 2006, about 30% of the state highways and major district roads and more than 70% of the other district and village roads needed repair or rehabilitation.
In mid−2000s, Madhya Pradesh in central India suffered from high electricity losses and poor service levels due to antiquated electrical distribution systems, particularly in the rural areas. This was the result of many years of insufficient funding for the expansion and maintenance of the systems.