Externally Aided Projects (EAPs)

6.1 Concept and Mechanism

Externally Aided Projects (EAPs) are development projects co-financed by multilateral development banks (MDBs) or bilateral aid agencies through sovereign loans or grants routed through the Government of India to state governments. The primary lenders to Rajasthan:

• World Bank: IBRD loans at LIBOR/SOFR-based rates (~3–5%), 30-year maturity, 5-year grace period
• ADB: Concessional loans at ~1.5–2%, 30-year maturity
• JICA: ODA loans at 0.01–0.5%, 40-year maturity — most concessional terms
• KfW (German development bank): Bilateral concessional financing for renewable energy/urban water

Onlending mechanism: GOI borrows at concessional rate → passes to state at slightly higher net-back rate (~5.5–6%), still below market borrowing rates. States bear the repayment risk. EAPs typically include technical assistance, safeguards, and performance monitoring.

6.2 Rajasthan's Active EAP Portfolio

14 ongoing EAPs with total outlay of ₹31,940 crore; cumulative expenditure ₹15,183 crore (as of 2024-25).

Source: Rajasthan Economic Review 2025-26, Chapter 2

Major ongoing EAPs (selected):

Project	Lender	Sector	Total Cost (₹ cr)	Status
Rajasthan Urban Sector Development Investment Program (RUSDIP)	ADB	Urban water/sewerage	3,000+	Ongoing
Rajasthan Urban Infrastructure Development Project	World Bank	Urban infrastructure	2,500	Ongoing
Rajasthan Water Sector Restructuring Project	World Bank	Water supply and irrigation	4,500	Ongoing
Rajasthan Disaster Resilience and Recovery Project	World Bank	Disaster recovery/resilience	500	Active
Rajasthan Rural Water Supply Project	JICA	Rural water supply	1,800	Ongoing
State Road Sector Modernisation	ADB	Road connectivity	3,200	Ongoing
Rajasthan School Education Reform	World Bank	Education	800	Ongoing

Source: Rajasthan Finance Department, EAP Division; World Bank and ADB Project Portals, 2024

6.3 Key EAP Achievements and Outcomes

RUSDIP (ADB-funded) — covers water supply, sewerage, storm drainage, and urban roads in 14 towns including Kishangarh, Bhilwara, Sri Ganganagar, Hanumangarh, Sikar:

• 3,000+ km of water distribution pipelines laid
• 24×7 metered water supply piloted in Kishangarh — first such pilot in Rajasthan
• RUDSICO (Rajasthan Urban Drinking Water Sewerage and Infrastructure Corporation) established as nodal agency

Rajasthan Water Sector Restructuring Project (World Bank-funded):

• Focus on irrigation systems, groundwater regulation, and water user associations (WUAs)
• Supports canal tail-end water delivery improvements in irrigation command areas
• Over 900 WUAs strengthened across 9 command area development (CAD) circles

JICA Rural Water Supply: 1.14 lakh dhanis and tens of thousands of rural households in arid western Rajasthan (Barmer, Jalore, Pali) connected to piped water supply.

6.4 EAP Compliance and Challenges

EAPs come with significant compliance requirements:

• Environmental and Social Safeguards: Resettlement Action Plans (RAPs) for projects displacing communities
• Procurement norms: International competitive bidding (ICB) above USD 10 million; deviations require lender approval
• Disbursement lag: EAP disbursement rate in Rajasthan has historically been 60–70% of annual projections
• State matching contribution: Usually 15–25% of project cost from state budget

Despite these challenges, EAPs bring concessional finance 200–400 basis points below domestic market rates, technical expertise in project design, and institutional reform conditionalities that improve governance.

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