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amendment to allow private sector participation and capital. Finally, there is a lack of contract documentation for evolving project vehicles with private sector participation. There are a number of challenges concerning infrastructure in the state and the sector seems to be ripe with opportunities.

There is a certain sector preparedness in Gujarat. In this state the biggest city, Ahmedabad, has already gained experience with obtaining a credit rating and issuing bonds to finance water and sanitation projects. Also several toll roads have been built with the help of the private sector and private financial institutions are eager to get more involved in infrastructure. The State government has prepared and launched an Infrastructure 2000 Plan, which gives a vision and a strategy (Gujarat, 2000) and the Government of Gujarat prepared a note on regulatory framework for water. The state was the first one in the country to draft a Build Operate and Transfer (BOT) law and has experience with giving concessions to the private sector. Inherent is the entrepreneurial spirit, which can be proven by the number of private consultants and specialized Non-governmental organizations (NGOs) in this field.

Developed under the Indo-US Financial Institutions Reform and Expansion (FIRE) project since 1996, accessing the market for financing urban water and sanitation has caught on in the country. The advantages of market access are ushering in fiscal discipline in operations of the service delivery, additional financing sources, and creation of incentives for better performance. Ahmedabad Municipal Corporation was the first one to access the capital market through direct access through the issue of municipal bonds in 1998. Since then, twelve more municipal bond issues aggregating to Rs. 12,700 million (USD 270 million) have been issued in India to finance infrastructure. The Government of India provided an impetus to this process through tax exemption for municipal bonds in 1999. Models for enhanced services to the urban poor are gradually emerging in the country. They include demand creation and institutionalization of citywide strategies and the slum-networking program in Ahmedabad.vii

The situation in Bangalore, the capital of Karnataka

Bangalore, the capital of Karnataka , has the Bangalore Water Supply and Sewerage Board (BWSSB) which is responsible for the provision and management of water supply and sewerage services in the metropolitan area of Bangalore.viii The following tables give some of the characteristics of the wastewater treatment and sanitation situation in Bangalore

Table 3 Levels of service provision


Adequacy level of Service Provision (%)


Adequacy of collection

Conveyan treatment &disposal




Huge losses in the sewer system causes reduction of 40% of the second figure

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