Document of The World Bank FOR OFFICIAL USE ONLY Report No: PAD743 INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT IN THE AMOUNT OF SDR 651.0 MILLION (US$1006.2 MILLION EQUIVALENT) TO THE REPUBLIC OF INDIA FOR A THIRD ELEMENTARY EDUCATION PROJECT (SSA III) April 22, 2014 Human Development Sector Unit South Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective as on March 31, 2014) Currency Unit = INR INR 60 = US$1 US$1.5456 = SDR1.00 FISCAL YEAR April 1 - March 31 ABBREVIATIONS AND ACRONYMS ASER Annual Status of Education Report AWP&B Annual Work Plan and Budget BEO Block Education Office BRC Block Resource Center BaLA Building as Learning Aid CCE Comprehensive and Continuous Evaluation CFR Concurrent Financial Review CPS Country Partnership Strategy CVC Central Vigilance Commission CRC Cluster Resource Centre CWSN Children with Special Needs DEO District Education Office DFID Department of International Development DISE District Information System in Education DPC District Project Coordinator DPO District Project Office EA Environmental Assessment EDI Educational Development Index EMIS Education Management Information System EU European Union EVS Environmental Studies FA Financing Agreement FM Financial Management FMRs Financial Monitoring Reports FMP Financial Management and Procurement GOI Government of India GL Guidelines Selection and Employment of Consultants IBRD International Bank for Reconstruction and Development ICR Implementation Completion Report IDA International Development Association IE Inclusive Education IEG Internal Evaluation Group IUFR Interim Unaudited Financial Report JRM Joint Review Mission MDG Millennium Development Goal MHRD Ministry of Human Resource Development MIs Monitoring Institutions NAS National Achievement Survey NCSL National Centre for School Leadership NCERT National Council for Educational Research and Training i NCF National Curriculum Framework NCTE National Council for Teacher Education NER Net Enrolment Ratio NGO Non-Government Organization NPV Net Present Value NUEPA National University of Educational Planning and Administration OBC Other Backward Classes O&M Operation and Maintenance ORAF Operational Risk Assessment Framework P4R Program for Results PAB Project Approval Board PDO Project Development Objective PINDICS Performance Indicators for Elementary School Teachers PRI Panchayati Raj Institution PTR Pupil Teacher Ratio REMS Research Evaluation, Monitoring and Supervision RMG Repair and Maintenance Grant RMSA Rashtriya Madhyamik Shiksha Abhiyan RTE Right to Education SA Social Assessment SC Scheduled Caste SDP School Development Plans SIS State Implementation Society SLAS State Learning Assessment Survey SMC School Management Committee SOP Standard Operating Procedure SPO State Project Office SSA Sarva Shiksha Abhiyan ST Scheduled Tribe SWAp Sector Wide Approach TA Technical Assistance TC Fund Technical Co-operation Fund TPE Third Party Evaluation TSG Technical Support Group ToR Terms of Reference UDISE Unified District Information System in Education UT Union Territories Regional Vice President: Philippe H. Le Houerou Country Director: Onno Ruhl Sector Director: Jesko S. Hentschel Sector Manager: Amit Dar Task Team Leader: Shabnam Sinha 11 INDIA Third Elementary Education Project (SSA III) Table of Contents I. STRATEGIC CONTEXT .................................................. 1 A . C ountr y Context ........................................................................................................................... 1 B. Sectoral and Institutional Context ........................................................................................... 1 C. Higher Level Objectives to which the Project Contributes..................................................4 II. PROJECT DEVELOPMENT OBJECTIVE(S) ......................... ........... 4 A. Project Development Objective (PDO) ................................................................................. 4 B . Project Beneficiaries .................................................................................................................... 4 C. PDO Level Results Indicators ................................................................................................. 4 III. PROJECT DESCRIPTION................ . ....................... ....... 5 A . Project C omponents ..................................................................................................................... 5 B . Project Financing: ...................................................................................................................... 10 1. Lending Instrument .................................................... 10 2. Project Cost and Financing ......................................... .......... 11 C. Lessons Learned and Reflected in the Project Design........................................................11 IV. IMPLEMENTATION .................................................... 12 A. Institutional and Implementation Arrangements ............................................................... 12 B. Results M onitoring and Evaluation ...................................................................................... 13 C . Sustainability .............................................................................................................................. 14 V. KEY RISKS AND MITIGATION MEASURES ..................................... 14 VI. APPRAISAL SUMMARY ................... ...................... 14 A. Econom ic and Financial Analysis ........................................................................................ 14 B . T echnical ..................................................................................................................................... 14 C . Financial M anagem ent .............................................................................................................. 16 D . P rocurem ent ............................................................................................................................... 17 E . Social ........................................................................................................................................... 18 F . E nvironm ent ............................................................................................................................... 19 Annex 1: Results Framework and Monitoring .................................. 21 Annex 2: Detailed Project Description ..................................... 29 Annex 3: Implementation Arrangements........... ................... ..... 40 Annex 4: Operational Risk Assessment Framework (ORAF) ....................... 64 Annex 5: Implementation Support Plan.....................................67 Annex 6: Economic Analysis ................................... ......... 71 iii PAD DATA SHEET India India: Third Elementary Education (P144447) PROJECT APPRAISAL DOCUMENT SOUTH ASIA SASED Report No.: PAD743 Basic Information Project ID EA Category Team Leader P 144447 B - Partial Assessment Shabnam Sinha Lending Instrument Fragile and/or Capacity Constraints Investment Project Financing Financial Intermediaries Series of Projects [ ] Project Implementation Start Date Project Implementation End Date 01-Jul-2014 30-Jun-2017 Expected Effectiveness Date Expected Closing Date 18-Jun-2014 30-Sep-2017 Joint IFC No Sector Manager Sector Director Country Director Regional Vice President Amit Dar Jesko S. Hentschel Onno Ruhl Philippe H. Le Houerou Borrower: Government of India Responsible Agency: Ministry of Human Resource Development Contact: Maninder Kaur Dwivedi Title: Director Telephone No.: 23382604 Email: Project Financing Data(in USD Million) Loan [ ] Grant [ ] Guarantee [X] Credit [ ] IDA Grant [ ] Other Total Project Cost: 29833.30 Total Bank Financing: 1006.20 Financing Gap: 0.00 Financing Source Amount BORROWER/RECIPIENT 28827.10 iv International Development Association (IDA) 156.30 IDA recommitted as a Credit 849.90 Total 29833.30 Expected Disbursements (in USD Million) Fiscal 2014 2015 2016 2017 2018 0000 0000 0000 0000 Year Annual 200.00 330.00 246.20 180.00 50.00 0.00 0.00 0.00 0.00 Cumulati 200.00 530.00 776.20 956.20 1006.20 0.00 0.00 0.00 0.00 ve Proposed Development Objective(s) The PDO is to improve education outcomes of elementary school children in India Components Component Name Cost (USD Millions) I. Improving Quality and Enhancing Learning 16,284.00 Outcomes II. Strengthening monitoring and evaluation for 4,913.00 improved accountability III. Enhancing access and retention for disadvantaged 8,636.00 children Institutional Data Sector Board Education Sectors / Climate Change Sector (Maximum 5 and total % must equal 100) Major Sector Sector % Adaptation Mitigation Co-benefits % Co-benefits % Education Primary education 100 Total 100 I certify that there is no Adaptation and Mitigation Climate Change Co-benefits information applicable to this project. Themes Theme (Maximum 5 and total % must equal 100) Major theme Theme % Human development Education for all 100 Total 100 Compliance v Policy Does the project depart from the CAS in content or in other significant Yes [ ] No [X] respects? Does the project require any waivers of Bank policies? Yes [X] No [ ] Have these been approved by Bank management? Yes [X] No [ ] Is approval for any policy waiver sought from the Board? Yes [X] No [ ] Explanation: The project requests a waiver to the requirement of referring to the Association's Procurement Guidelines and Consultants' Guidelines in the Financing Agreement for the Project. Specifically, this request is to waive: (i) the requirement of paragraph 1.1 of the Guidelines:Procurement of Goods, Works, andNon-Consulting Services under IBRD Loans and IDA Credits & Grants by World Bank Borrowers,and paragraph 1.2 of the Guidelines: Selection andEmployment of Consultants under IBRD Loans andIDA Credits & Grants by World Bank Borrowers, both dated January 2011, to make the guidelines applicable to the procurement of goods, works and services for the program through the Financing Agreement; and (ii) the requirement of paragraph 2 of OP 11.00 (Procurement)that the guidelines be incorporated by reference in the Financing Agreement and made binding on the Recipient. Does the project meet the Regional criteria for readiness for implementation? Yes [X] No Safeguard Policies Triggered by the Project Yes No Environmental Assessment OP/BP 4.01 X Natural Habitats OP/BP 4.04 X Forests OP/BP 4.36 X Pest Management OP 4.09 X Physical Cultural Resources OP/BP 4.11 X Indigenous Peoples OP/BP 4.10 X Involuntary Resettlement OP/BP 4.12 X Safety of Dams OP/BP 4.37 X Projects on International Waterways OP/BP 7.50 X Projects in Disputed Areas OP/BP 7.60 X Legal Covenants Name Recurrent Due Date Frequency Implementation Arrangements X CONTINUOUS Description of Covenant The Recipient shall cause MHRD, through EBBII, to oversee and be responsible for the day-today implementation of the Program Name Recurrent Due Date Frequency Manuals and Plans X CONTINUOUS Description of Covenant Vi The Recipient shall apply the SSA Framework for Implementation and the Manual on Financial Management and Procurement Name Recurrent Due Date Frequency Land X CONTINUOUS Description of Covenant The Recipient shall ensure that no Credit proceeds will be utilized for any land or other land associated asset acquisition nor involuntary resettlement Name Recurrent Due Date Frequency Implementation Arrangements with X CONTINUOUS Project States Description of Covenant The Recipient, through MHRD, shall cause each Project State and its respective SIS to execute a Letter of Undertaking in form and substance satisfactory to the Association Name Recurrent Due Date Frequency Procurement X CONTINUOUS Description of Covenant The Recipient shall ensure that all goods, works and services for the Project are procured in accordance with the Manual on Financial Management and Procurement Name Recurrent Due Date Frequency Safeguards X CONTINUOUS Description of Covenant The Recipient shall carry out and shall cause the Project Executing Agencies to carry out the Project in accordance with the Environmental Assessment Report Conditions Source Of Fund Name Type Description of Condition Team Composition Bank Staff Name Title Specialization Unit Reema Nayar Sector Manager Sector Manager LCSHE Maria E. Gracheva Senior Operations Senior Operations SASHD Officer Officer Harry Anthony Patrinos Sector Manager Peer Reviewer HDNED Tobias Linden Lead Education Lead Education SASED Specialist Specialist Mamata Baruah Senior Program Senior Program SASHD Assistant Assistant vii Juan Carlos Alvarez Senior Counsel Senior Counsel LEGES Dorota Agata Nowak Senior Country Officer Senior Country Officer SACIA Asha Bhagat Consultant Consultant SARFM Neha Pravash Kumar Senior Environmental Senior Environmental SASDI Mishra Specialist Specialist Jorge Luis Alva-Luperdi Senior Counsel Senior Counsel LEGES Susrutha Pradeep E T Consultant Social Development SASDS Goonesekera Specialist Supriti Dua Financial Management Financial Management SARFM Specialist Analyst Shabnam Sinha Senior Education Team Leader SASED Specialist Sangeeta Dey E T Consultant Consultant SASED Jasveen Thomas E T Temporary Team Assistant SASHD Joseph Shine E T Consultant Procurement Specialist SARPS Swati Sahni Consultant Consultant SASED Non Bank Staff Name Title Office Phone City Gaurav Bhargava Manager 01246714400 Karthik Pental Associate Consultant Vijay Ganapathy Sr. Manager Locations Country First Location Planned Actual Comments Administrative Division Viii I. STRATEGIC CONTEXT A. Country Context 1. India is uniquely placed to help reduce global poverty and boost shared prosperity. India's per capita income of US$1,410 (2011) means it is a low middle-income country, but its development challenges are deep and complex despite significant achievements made over the past decades. Between 2005 and 2010, India's share of global GDP increased from 1.8 to 2.7%, and 53 million people were lifted out of poverty. Progress on human development has been remarkable; life expectancy more than doubled from 31 years in 1947 to 65 years in 2012 and adult literacy more than quadrupled, from 18% in 1951 to 74% in 2011. India has already achieved the first Millennium Development Goal (MDG 1) by halving the proportion of people living on less than US$1.25 a day: rural poverty has decreased by 14 percentage points. 2. In spite of these positive developments, many challenges persist. About 50% of India's population lives in low-income and special category states' where poverty rates are close to 40%. Inequalities vis-i-vis disadvantaged groups such as the so-called scheduled castes (SC), scheduled 2 tribes (ST), and women persist. The ratio of girls to boys has decreased steadily over the last fifty years-a trend associated with the "missing women" phenomenon3 ; ironically, this ratio is particularly low in some of the more advanced states. Health outcomes compare poorly with those of countries at similar levels of development. At 65.4 years, total life expectancy is more than 5 years lower than the world average. Malnutrition rates remain high: 40% of the world's malnourished children live in India. Maternal and infant mortality rates and fertility rates also remain high compared with those of other growing economies in Asia4. B. Sectoral and Institutional Context 3. Sarva Shiksha Abhiyan (SSA) is India's main program for universalizing elementary education. Its overall goals include universal access and retention, bridging of gender and social category gaps in education and enhancement of learning levels of children. India passed its Right of Children to Free and Compulsory Education (RTE) Act, 2009, which became effective from April 2010, and gave effect to Article 21-A (Eighty-sixth Amendment Act of the Indian Constitution, 2002) making the provision of free and compulsory education of all children in the age group of 6- 14 years one of the Fundamental Rights. SSA has been designated as the implementation vehicle for RTE. The main challenge now is to improve pupil attendance and retention, and to focus on learning outcomes, especially for the disadvantaged groups. To achieve this, special efforts are required to enhance social accountability, institutional reform and governance for improved service delivery. One of the mandates of RTE is that all private schools will provide 25% of its seats in entry classes to children from disadvantaged backgrounds and their school fees will be subsidized by the government. This unique intervention involving the private sector will be under this SSA III intervention. ' Low-income states are defined as those below $494GSDP and Special Category States are mostly northern mountainous states, sparsely populated, and those with high transport costs leading to high delivery costs of public services., World Bank Group Country Partnership Strategy for India, :2013-17 2 World Bank Group Country Partnership Strategy for India: FY 2013-17 3 Country level sex ratio: 933 girls to 1000 boys, with 946 girls in the rural and 900 girls per 1,000 boys, according to the 2011 census 4 World Bank Group Country Partnership Strategy for India: FY 2013-17 1 The Gains and the Challenges: 4. SSA interventions have resulted in impressive gains, especially in access and equity. The number of out of school children at the elementary level has declined steadily since 2001, when the Census estimated that 32 million children of ages 6-14 years were out of school as per the Planning Commission's Working Group on Elementary Education (2011). According to the recent government child census, the number of out of school children in 2012-13 is 2.9 million. Nationally, India has brought down the proportion of out of school children to less than 5 percent and they are mostly located in the low income states. Enrolment at the elementary level has reached 200 million. The Net Enrolment Ratio (NER) at the primary level improved significantly from 82% to 99.8% during this period - reaching the MDG target. Gender parity has been achieved and the enrolment shares of SCs and STs have increased relative to their share in the population6 . The transition rate from primary (grades 1- 5) to upper primary level (grades 6-8) improved from 7 5 .0% in 2002-03 to 86.6 % in 2011-12. Retention rates in elementary education improved from 32.0% to 54.8% (in states with elementary grades I to 8) and from 45.5 % to 80.6% (in states with 7 grades 1 - 7) over the same time period . 5. Despite these gains, education in India faces many challenges, including: * Low Learning Outcomes: Learning outcomes for children in Indian schools are low and the learning trajectories for children who remain in school are almost flat.8 According to the National Achievement Survey (NAS) for grade V, 3rd cycle 9 , the national average score for achievement in a scale of 0-500 (with SD 50) was found to be 247 in Reading Comprehension, 251 in Mathematics and 249 in Environmental Studies (EVS). However, the inter-quartile range of the scores which indicates the heterogeneity in scores of students within a group varies across subjects at national level. Inter-quartile range of Reading Comprehension, Mathematics and EVS at national level were 67, 64 and 66 respectively. The inter-quartile range in the same subject across States ranges from 39 (Puducherry) to 93 (Uttar Pradesh) in Reading Comprehension; 37 (A&N Islands) to 85 (Uttar Pradesh) in Mathematics and 38 (Chandigarh) to 89 (Uttar Pradesh) in EVS. In fact, the inter-quartile range for Uttar Pradesh represents by far the highest as compared to other states/Union Territories (UT) in all the three subjects namely, Reading Comprehension, Mathematics and EVS. The NAS shows that there is no significant difference in average achievement scores between urban and rural as well as between boys and girls students across the country, which the 17th Joint Review Mission (JRM) has highlighted. It is pertinent to note here that moving forward, learning assessment systems need strengthening and triangulation with other assessment sources.1o * Among other non-governmental assessments the Annual Status of Education Reports (ASER), (ASER uses a different sampling and testing methodology from NAS), indicate that learning achievement has been decreasing over the years since 2010. Reading Accelerating Progress to 2015: A Report Series to the Special Envoy for Global Education, April 2013, (Working Paper) 6 20.09% at primary and 19.14% at upper primary enrolment as against a share of 16.4% (2011-12) of SC population and 11.4% enrolment (primary level) and 9.86% at upper primary level as against a population share of 8.2%.of ST 7 District Information System on Education, NUEPA, 2002-03, 2005-06 and 2011-12 Planning Commission, GOI - 12th Five-Year Plan NAS Grade V, 2012, 3 rd cycle report is available at http://www.ssatcfund.org/LinkClick.aspx?fileticket=TEJBnXMcOiQ%/o3D&tabid=2508 10 Findings from the 1 7 th Joint Review Mission of the Ministry of Human Resource Development and Development Partners (Jan 14-28, 2013) 2 proficiency has deteriorated; in 2012, 11.6 % of students are unable to read anything compared with 7.7% in 2010.11 A similar trend is observed for arithmetic proficiency.12 * Dropouts and Attendance: A large percentage of children enter primary schooling but drop out before entering upper primary schooling. The NER at the upper primary level i.e., grades 6 - 8, increased from 43.1% in 2005-06 to 67.03%, which is still a serious concern. 13 Further, dropout rates are higher amongst the marginalized groups and communities such as the ST community. There also seems to be a strong correlation between existing parental literacy levels and student attendance rates. * Children with special needs (CWSN): According to the Government of India (GOI), there are over 3.2 million children with special needs, of which only 2.7 million are enrolled in regular, neighborhood schools 1 4 . Many Non-Government Organizations, however, argue that the number of CWSN is actually much higher. Under the RTE 2009, addressing the needs of CWSN is a state obligation/mandate. However, there are inter- and even intra-state differences in the measurement, implementation and the understanding of what constitutes inclusive education (IE) for these children. Special efforts are needed to provide CWSN scholastic and co-scholastic parity with other children. * Variations in state performance. There are variations across states on various indicators. For e.g: " Student attendance rates have shown improvements in the last 5 years (primary classes has changed from 68.5% to 76.2% and at Upper primary level it has changed marginally from 75.7% to77.8%; Student and Teacher Attendance study 2012-13). However these are still low. Bihar, Jharkhand, Manipur, Tripura and Uttar Pradesh are states which have student attendance below 70% both at primary and upper level. A large proportion of students in these states belong to economically weak segments of the population, prone to migrate on a seasonal basis. o The NAS results for Cycle III grade 5 indicate that no state in India has been able to achieve both high performance and equitable distribution. There is a very strong correlation between mean score and inter-quartile score- with the higher the mean score the larger the inter-quartile range. This is in contrast to what is observed in international assessments, where, by and large, the strongest performers in terms of average scores also are able to have high levels of equity with very few poorly performing students. Much could be learned from further examining these stark inter-state differences since these differences can provide useful cross-state learning. There is a clear need to support governments in states with poor achievement scores to help them in developing the requisite capacity to improve internal efficiency in schools as well as the quality of education. o The latest Educational Development Index (EDI, 2012-13) released on December 5, 2013, reveal that West Bengal, UP and Goa continue to slide down on the EDT15 and Jharkhand is at the lowest spot at 35. * Monitoring and accountabilityfor performance. Teacher performance can be judged by a range of measures, including competence, effort and student outcomes. These in turn can be The percentage of students who are able to read an entire story or at least comfortably read a paragraph from the story reduced by 2.4 percentage points and 2.7 percentage points respectively from 2010 to 2012. 2 1 ASER, 2013: The percentage of students in Class IV who do not recognize a single digit from the numeric system has increased from 7.6 % in 2010 to 9.6 % in 2012. The percentage of students who are able to comfortably deal with three digits by one digit division has decreased from 35.8 % in 2010 to 26.5 % in 2012. 1 DISE: 2011-12 14 This does not include students enrolled in special school. 15 Educational Development Index (2012-13): NUEPA. EDIs are based on parameters like access, infrastructure, student-teacher ratio, teacher training besides outcomes vis-a-vis GER, SC/ST/Muslim enrolment, dropout rates etc. 3 variously measured. Standards for teacher performance need to be simple, understandable and monitorable. National Council of Educational Research and Training (NCERT) has developed a draft framework for Performance Indicators for Elementary School Teachers (PINDICS) that is based on norms and standards as enunciated in various studies and statutory orders of the government. (See Annex 2 for more detail.). Currently this tool is being discussed with State teams for their feedback. Measurement of student performance now has a robust foundation, with the NCERT having carried out a national assessment in a cyclical format. The NCERT has completed 3 rounds of achievement surveys for Classes III, V and VII/VIII. The reports on the third round for classes III and V are available while for class VIII will soon be published. 6. World Bank's previous support to SSA: SSA has been supported by the Bank, Department of International Development (DFID) and the European Union (EU) through a Sector Wide approach (SWAp). Since 2004, the International Development Association (IDA) has contributed US$1.85 billion to the program, US$500 million in SSA 1 (2004-07) and US$1.35 billion in SSA II (2008-12). DFID and the EU together contributed an additional US$546 million to SSAI and US$375 million to SSAII. The Implementation Completion Reports (ICRs) rated SSA I as Satisfactory and SSA II as Moderately Satisfactory. C. Higher-Level Objectives to which the Project Contributes 7. The project is aligned with the World Bank Group India Country Partnership Strategy (CPS, Report No. 76176 dated April 11, 2013) for 2013-17, and its overarching goals of achieving rapid economic growth, accelerated poverty reduction, and increasing shared prosperity. SSA III will contribute to the CPS engagement area of "Inclusion", and the CPS outcome of "improved access and quality of education." It addresses the concern of the CPS of providing incentives and community participation to reduce absenteeism along with special efforts to ensure access to education for underprivileged children, retain girls in secondary education, and open opportunities in higher education for all youth. It supports the goal of the CPS to focus on learning outcomes. The SSA program aims to raise learning outcomes for children at the elementary level. As large allocations of funding under SSA III are expected to be targeted on low-income and educationally backward areas, all of whom participate in the program, this would support the CPS investment principle of increased engagement in India's seven low-income states and seven special category states. II. PROJECT DEVELOPMENT OBJECTIVE(S) A. Project Development Objective (PDO) 8. The PDO is to improve education outcomes of elementary school children in India. B. Project Beneficiaries 9. The project will directly benefit about 200 million children enrolled in elementary schools and 4.5 million teachers in the sector. Girls are expected to be about 48.4% of the beneficiaries. C. PDO Level Results Indicators 10. The PDO will be measured by the following key results indicators: 4 * Attendance rates of students to increase * Retention rates of students to improve * Transition rates from primary to upper primary to improve * Learning levels adequately and regularly monitored III. PROJECT DESCRIPTION A. Project Components 11. The project is a Special Investment Lending (SIL) on a SWAp and will finance states' annual work programs and a small number of activities at the national level. As was under SSA I and II, the project will support the whole program and will finance a share (about 3.37%) of the overall program. Financing decisions for Districts and States are made based on the Annual Work Plan and Budget (AWP&B) process which are approved by the Project Approval Board (PAB) of the Ministry of Human Resource Development (MHRD), GOI. 12. Some continuing gaps in access in some states will need to be filled through minor civil works (for example, building toilets for girls and additional classrooms to respond to demand), upgrading primary to upper primary schools, annual school grants, transparent merit and need-based recruitment of teachers, salaries of teachers and staff for implementation, and provision of textbooks and other teaching/learning materials. 13. The support to SSA III will focus on the key goals of SSA namely: access, equity, quality and institutional reform. However, the shift in activities from SSA II will be seen through three key thrust areas which will be financed under SSA III are (I) Improving quality for enhancing learning outcomes; (II) strengthening monitoring and evaluation for enhanced accountability and (III) Enhancing access and retention for disadvantaged children. Annex 1 presents the results chain linking input to outputs to outcomes. Key new thrust areas for support include: L Improving Quality and Enhancing Learning Outcomes 14. The project will provide special attention to quality improvement with inherent accountability measures that will inform the SSA program in all its dimensions, including access and equity. The following areas will receive special attention: 1.1 Development of grade level learning indicators for students: The project will support the development of grade and subject specific learning indicators to measure children's progress in acquiring expected knowledge and skills at different grade levels. The NCERT will develop the model and illustrative indicators at the national level. While a few states have developed indicators suited to specific state curriculum, the national indicators will be a ready reference for other states to adopt or adapt. These learning indicators will be used as performance standards for assessment tools supported under the project, at classroom, state and national level. 1.2 Early grade reading and mathematics: Children in early grades (1 and 2) should achieve foundational skills in reading and mathematics leading to both improved retention and learning. At the national level, NCERT will develop guidelines and quality standards 5 for early grade learning. Each state will use the national guidelines to develop or extend its own state-specific early grade learning program along with the state academic authority and begin implementation in the 2013-14 academic year. MHRD will monitor implementation, while NCERT will provide capacity building. Specific academic and relevant pedagogical approaches will be followed to develop customized learning assessment tools for grades 1 and 2. 1.3 Upper primary math and science learning: The grade and subject learning indicators established by NCERT will be used by states in their strategies to improve science and math teaching in upper primary schools. There will be specialized teacher training programs (using appropriately developed special training modules). This will be supplemented by follow up and on-site support through the Block Resource Centers (BRCs) and Cluster Resource Centers (CRCs). Specific approaches have been identified for enhancing math and science teaching standards at the upper primary level like the use of math and science kits, worksheets, computer-aided learning modules, assignment of projects to students, and setting up of libraries and equipment for science. 1.4 School leadership development and school performance assessment: To improve management competence of school headmasters and educational administrators, a new National Centre for School Leadership (NCSL) within the National University of Educational Planning and Administration (NUEPA), is established, through technical assistance. The NCSL will develop a school leadership program and support its implementation in states, including the development of standards and a framework for assessment of school performance in elementary schools. The program has already been initiated in Andhra Pradesh, Gujarat, Himachal Pradesh, Mizoram, Rajasthan, Tamil Nadu, Uttar Pradesh, West Bengal, Chhattisgarh and Karnataka and will be extended to all states during the project period. 1.5 Teacher trainingand provisioning: The project will finance the training of teachers to acquire professional qualifications in states where large scale enrolments have led to severe teacher shortage. This will ensure a greater number of professionally qualified teachers in the school system. The project will also support annual in-service training of teachers, to allow for continuous upgrading of knowledge and teaching skills. This will be done through (i) identification of teacher training needs; (ii) annual review of teacher training packages; (iii) long-term and sustainable plan for preparation of master trainers; and, (iv) research and development for teacher training. Recognizing the importance of providing adequate number of teachers, the project will finance systems that facilitate the (i) achievement of the prescribed Pupil Teacher Ratio (PTR) for each school; (ii) ensuring that no school has a teacher vacancy of more than 10% (through effective redeployment of surplus teachers); and, (iii) provision of subject specific teachers, head teacher and part time instructors for art, health and work education in upper primary schools. The practice of recruiting at least 50% women teachers under SSA will continue to be encouraged. The project will finance teachers recruited through a process that takes into account the minimum qualifications as laid down by the designated academic authority, namely the National Council for Teacher Education (NCTE). II. Strengthening monitoring and evaluation for improved accountability 6 II.1 Monitoring learning outcomes: The project will support a three tier strategy for assessment of learning outcomes for enhanced accountability, through provision of consulting services, training and learning materials: * NAS conducted by NCERT: While the technical rigor of the NAS has greatly improved and NCERT has completed 3 rounds of achievements survey for Classes III, V and VIII and the new methodology was used for the third round of Classes III, V and VIII. The project will support continued capacity building of NCERT to demonstrate reliability over time for a given grade. Moreover, the next challenge is to promote the use of NAS results for remedial action and to improve the teacher training. This will require new skills in qualitative analysis as well as articulation and dissemination of results. Finally, the project will support expansion of the coverage of NAS to include CWSN in their home and school environment. The project will support these activities through technical assistance (TA), purchase of equipment and procurement of goods and services. * State Learning Achievement Survey (SLAS): While at the national level the NCERT has been conducting NAS, States/UTs need more disaggregated data on student outcomes at district level for remedial action and corrective measures. States/UTs will be supported, through consultant services and training, in conducting their own SLAS, learning from the experiences of states, like Karnataka, Gujarat and Tamil Nadu. The proposed funds would support this effort, in order to create and strengthen a culture of measuring children's learning across states. As a measure to link learning outcomes with budgetary approvals, GOI will provide special allocations to states to help their efforts at learning assessments through the AWP&B process. School-level classroom based assessments will be provided special focus through further development of Continuous and Comprehensive Evaluation (CCE) of pupils. The project will fund teacher training, technical assistance, and procurement of learning materials to improve classroom processes with approaches that integrate evaluation having child-friendly approaches and efficient record keeping. * In addition, there will be efforts to strengthen impact evaluation of various aspects of the program. As a first step, the Bank will access funds for helping the MHRD in undertaking evaluations addressing core issues relating to learning at the elementary level. The MHRD will be supported in undertaking independent evaluations especially in the areas of (i) building parental and teacher capacity to improve school accountability (School Management Committee) and learning outcomes; (ii) student and teacher attendance and (iii) documentation of good practices in early grade learning. The SSA program will also make available resources to the states for research and monitoring under the Research Evaluation, Monitoring and Supervision (REMS) grant through which the states will undertake quality research and evaluation research activities. These research inputs will also feed into program implementation. 1.2 Evolving performance standards for teachers' accountability:NCERT will develop, through appropriate provision of training and support, teacher performance standards. NCERT has developed a draft framework for PINDICS that is based on norms and standards as enunciated in various studies and statutory orders of the government. (See Annex 2 for more detail.) These performance standards define the criteria expected when teachers perform their major tasks and duties. Under each performance standard there will be specific tasks which teachers are expected to perform- termed as specific standards. These are further delineated as performance indicators that can be used to observe progress and to measure actual result compared to expected result. NCERT will also develop and pilot instruments 7 for teacher self-review and external evaluation. PINDICs will eventually evolve as the framework for effective teacher performance for effective monitoring and benchmarking across the country. 11.3 Social accountability: The RTE Act, 2009, supports the concept of social accountability and community participation through its various provisions. Every school must have a School Management Committee (SMC) consisting of representatives of the local authority, parents and guardians of children at the school and teachers. Three-quarters of SMC members should be parents/guardians, with proportionate representation from weaker sections/disadvantaged groups and 50% should be women. SMCs monitor the working of the school, prepare a school development plan, and, monitor utilization of grants. Continuous capacity building efforts are needed to strengthen SMCs. In the context of RTE, the process of social audits will be deepened to engage a multitude of stakeholders at multiple layers in the delivery of education and in the process of Shiksha Samvad (Education Dialogue). The project will support strengthening of this grassroots community oversight tool for enhancing social accountability to the community for a well-functioning school. 11.4 Unified DistrictInformation System for Education (UDISE): The project will finance the Education Management Information System (EMIS) unit that has been established for every district in the country. The school-based information system called the UDISE and household survey reports are both key data systems of the EMIS. The project will finance further strengthening and professionalizing data compilation through the UDISE for school- based planning. Annual data collected on infrastructure, access, retention, quality, teacher- related issues will feed into the planning process, as well as M&E, allowing for informed, data-supported mid-course corrections, as needed. UDISE collects data from all types of schools-recognized and un-recognized, government and private. UDISE consolidates data across the school education sector covering elementary (Classes I-VIII) and secondary (Classes IX-X) segments. UDISE systems will surmount concerns that have emerged around inconsistency in data gathering and overlapping of information sources at the upper primary level especially in case of composite schools (upper primary and secondary schools). NUEPA is the nodal agency responsible for the unified system for collection of school education statistics. State level nodal agencies have been identified to coordinate activities relating to collection, collation and dissemination of data under UDISE. Based on the UDISE data, NUEPA has developed an EDI to track progress of States towards Universal Elementary Education. The project will finance the EDIs for effective ranking of States based on their performance on developmental indicators. The ranking will encourage States to improve their performance and focus more attention on both inputs and outputs for better outcomes. Data quality assurance measures will be supported for the strengthening systems for collection of duly filled in data collection formats (DCFs), better checking for errors and missing information, training of teachers, training CRCs in collection of data, and digitalisation of report generation to improve data dissemination. Integrated data sets covering all schools at primary, upper primary, secondary and higher secondary levels will be received from all states and hosted at the NUEPA website (www.schoolreportcards.in). 11.5 Special Focus Districts: The project will finance interventions for special focus districts, several of these, are, backward districts that are allocated significant SSA Program funds. Low-income states (and within them the majority of the special focus districts) are generally the large spending states and will be provided special attention under the project for addressing concerns of out of school children, enhancing transition (especially for 8 children from special focus groups and migrant children) and for quality improvement efforts. The project will finance quality improvement efforts especially in the large spending states with large populations of SC/ST and minority children. Special focus districts are those with high concentration of the SCs, STs and minority. Funding priority has traditionally been given to these districts, for infrastructure development in addition to focussed planning for providing access, teacher recruitment and special efforts to address equity issues. Moving forward, the project will support focused quality improvement efforts in these districts, besides, focussed scrutiny of progress and interventions at the time of Appraisal of AWP&Bs, and while deciding the outlay by the PAB. 11.6 Institutional strengthening at different levels: The project will support institutional strengthening with greater decentralization for autonomy in planning. The quality of the planning process will be further augmented by the involvement of CRCs and BRCs that will be carefully nurtured to then work with SMCs to ensure effective planning. Institutional reforms that allow local communities to participate effectively in the school affairs through the SMCs will help transform the school system into a key institution for community partnership. III. Enhancing access and retention for disadvantaged children III.1 Provision of schooling and maintenance: While impressive gains have been made to improve access and make it almost universal (98% of children have access to a primary school), there is a small proportion of children especially from the marginalized and most disadvantaged communities who are out of school. In addition, at the upper primary level, enrolments are still relatively low. The coming phase of SSA will continue to make special provisions to enrol the marginalized children through special training centers to prepare them for grade and age appropriate mainstreaming. Community mobilization campaigns for the awareness of RTE Act will be made more widespread to increase enrolment and retention, especially at the upper primary level. Micro-planning and physical mapping of habitations will be strengthened to identify underserved habitations for schooling provision according to the neighbourhood norm prescribed by the individual States separately for primary and upper primary (predominantly, the practice has been of defining the neighbourhood norm of 1 km for opening a primary school and 3 Km for opening an upper primary school). Importantly, to ensure quality of infrastructure for the long-term, resources will also be put into ensuring that infrastructure is well maintained. Further, there will be enhanced focus on increasing drinking water and toilet facilities for girls and boys. 11.2 Enhancing participation and retention of girls, SC, ST, minority children, and CWSN.: There will be increased focus to improve the share of enrolment of girls, SC, ST, minority and CWSN in schools vis-i-vis their share in the population. The process and timeliness for the distribution of free entitlements like textbooks; uniforms; other entitlements for girls, SC, ST and minority children; and aids and appliances for CWSN will be strengthened to improve retention rates of these children in schools. The SSA III project will help design specific strategies for CWSN. Strengthened planning and appraisal under SSA 15. The District AWP&B process is central to the planning and implementation of SSA. All SSA expenditures and activities are driven by the AWP&Bs prepared annually by all districts of the 9 country. The process of AWP&B development, endorsement, appraisal, approval and monitoring supports the SSA Frameworkfor Implementation that is the basis for the implementation of the RTE Act. It supports a bottom up approach to planning, building upon inter-sectoral convergence at the grassroots level. The project will finance program management systems that support planning processes for the development of district AWP&Bs covering concerns of access, equity and quality through creation of individual School Development Plans (SDPs) that emerge from a process of micro planning undertaken in a participatory manner for all the habitations falling within the catchment area of the 'neighborhood' school. This will help convergence with investments from relevant centrally sponsored schemes for greater cost efficiency. 16. The AWP&Bs are appraised at the national level and approved by the PAB of the MHRD which reviews progress against targets and commitments, identifies problem areas, examines the quality of data used for planning, suggests interventions for various components, and looks for convergence in implementation of related programs by other departments/ministries. The minutes of the PAB for all States reflecting agreements on project targets, outcomes, undertakings, commitments and funding are disclosed on the MHRD website. Proposals not approved by the PAB are also discussed and the details are provided in the minutes of the meeting. The project will fund this planning and appraisal process and further deepen the grassroots involvement of the community through effective SDPs. 17. Technical Assistance: MHRD has requested for TA for capacity building of its national institutions-NCERT and NUEPA. This will be undertaken through a proposed TA fund which will potentially be a grant from DFID 1 6 . The two requested areas of support under the proposed Technical Co-operation Fund (TC Fund) are: * Support to NCERTfor national student assessments, including NCERT and states * Support to NUEPA for the development of standards for school performance, evaluation/monitoring and school leadership training with NUEPA and states. 18. The TA fund will operate under the following principles: (i) DFID would manage and finance the TA; (ii) technical expertise would be sourced competitively; (iii) NCERT, NUEPA and MHRD will play key roles in the selection of technical experts; and (iv) bi-annual JRMs will review the progress towards the TA's objectives. 19. Considering the significance of the TA to the project and to the goals of SSA itself, MHRD will use part of the proceeds of the loan to support NCERT and NUEPA in undertaking capacity enhancement on learning assessments, school leadership and school performance assessment. B. Project Financing: 1. Lending Instrument 20. SSA III will be financed by a US$1,006.2 million Investment Project Financing. The credit will finance a share (3.37%) of the GOI's Education for All Program. The Credit is structured in two portions - (a) SDR549.9 million (equivalent to US$849.9 million) made available under regular 16 The modalities are currently under discussion with DFID and MHRD. 10 IDA blend terms, and (b) SDR101.1 (equivalent to US$156.3 million) made available under IDA hard terms. 2. Project Cost and Financing Table: 1 . Project cost (USD IDA Financing % of IDA Millions) (USD Millions) Financing Improving Quality and Enhancing 16,284 549 55% Learning Outcomes Strengthening monitoring and 4,913 166 16% evaluation for improved accountability Enhancing access and retention for 8,636 291 29% disadvantaged children Table: 2 Portion A of the Credit - Blend Terms Credit Amount in SDR million New IDA 1.0 Recommitted IDA 543.4 Subtotal: 544.4 Portion B of the Credit - "Hard" Terms New IDA 100.1 Recommitted IDA 6.5 Subtotal: 106.6 Total IDA Credit Amount for SSA III 651.0 Financing 21. Retroactive financing will be permitted subject to the following conditions: (a) payments made for expenditures prior to the date of the Financing Agreement except that withdrawals of an amount not exceeding $200 million (the equivalent of SDR 129,400,000) may be made on account of payments made for Eligible Expenditures before that date and incurred after May 16, 2013; and (b) payments made for expenditures for works, goods and services supplied under a contract which any international institution or agency or the Association shall not have been financed or agreed to be financed under any other agreement. C. Lessons Learned and Reflected in the Project Design 22. The World Bank's support to the SSA program over the past 8 years has provided a rich set of implementation experiences, captured in Implementation and Internal Evaluation Group (IEG) reports. These have been incorporated into the design of the proposed project. Key learnings that has effected project design are: * Teachers need to be more effective and accountable. The proposed operation will equip teachers with more relevant, up-to-date knowledge and approaches to teaching, benchmarked against new performance standards. Teacher pay scales are now high in international terms (percentage of per capita GDP) and are sufficient to attract high-quality candidates to the profession. Increased effectiveness of SMCs will increase accountability, especially for teacher attendance. Regular national surveys of teacher effectiveness are planned as part of the project. 11 * Financingcould help as a tool to improve quality. The proposed operation will work with MHRD to strengthen the link between financing and performance within the SSA program, with overtime a shift towards funding outputs and outcomes. The program already targets resources to those districts with greatest needs. As described above, the AWP&B process will move states towards a more performance-based outcome focus, with financing linked to achievement of outcomes. * Leverage the contribution of the private sector both to expand access and to improve learning outcomes. Recognizing the contribution of private schools in enrolment and retention, the project is expected to also support children in private schools about 25% of enrollments in entry classes in elementary education from disadvantaged group and economically weaker sections, in the near future. * Decentralizationreforms can improve the governance of the education system. The SSA program is structured around a bottom-up planning process, starting with school development plans. To date these have been somewhat formulaic and the proposed operation will strengthen SMCs which will increase their capacity to carry out effective local needs assessments and planning. Many of the additional teachers under SSA, especially in the larger, poorer states are recruited by local government bodies. Recruitment processes are being made more merit based through institution of Teacher Eligibility Tests (TETs) that will further strengthen recruitment processes to become more transparent and merit-based. * Over time, building and improving systems to assess progress in student learning outcomes. A major thrust of the proposed project will be to support and extend the emerging national program of student assessment run by NCERT. The SSA program also provides resources for state governments to develop their own assessment programs to give more disaggregated feedback on system performance. * The IEG evaluation of SSA II emphasized the importance of communication and political commitment, built on demonstrable results. Significant and positive results demonstrated by the program have proven to be the lynchpin for sustained political ownership. In terms of communications, the national assessment regime provides high quality results, but more capacity building is needed on delivering those results effectively to policy makers and the broader community in a way that can be used to improve the design of the program and specific interventions. In addition, emphasis is being given to building up a portfolio of state-level assessments to provide more disaggregated feedback. IV. IMPLEMENTATION A. Institutional and Implementation Arrangements 23. The management and implementation arrangements under SSA III will follow those used in SSA I and SSA II. 24. The SSA program is governed by a national level General Body chaired by the Prime Minister, an Executive Committee and a PAB. The General Body meets once a year. The PAB is chaired by the Secretary in MHRD, and meets with each state to review and approve plans (called AWP&B) for the coming year. At the State level, a State Mission Authority whose governing council is chaired by the Chief Minister operates as an autonomous SIS which provides direction and oversight at the State level. The SIS, through the State Project Office (SPO), coordinates with 12 District and sub-District level organizations, supports districts in AWP&Bs, is responsible for monitoring and evaluation, and serves as a channel for the flow of funds to the lower levels. The SPO reports on implementation progress, and submits and negotiates the consolidated AWP&Bs, to the national level. 25. At the District level, the oversight function is carried out by District Elementary Education Committees, chaired by the District Collector. The District Project Office (DPO), which works in close collaboration with the SPO, prepares the district AWP&B, and monitors physical and financial implementation progress. The district office is headed by the District Education Officer (DEO) who also performs the duties of the District Project Coordinator (DPC). At the sub-district level, Block Education Offices (BEOs) have administrative responsibility for the schools, working in close collaboration with BRCs and CRCs on academic support. They work through close coordination with the SMCs to oversee educational management and implementation in the block. 26. Under the RTE Act, the SMCs have been provided greater powers and responsibilities. They along with Panchayati Raj Institutions (PRIs) and Urban Local Bodies (ULBs) effectively monitor and implement SSA, through community mobilization, preparing school development plans, identifying out of school children and monitoring students' and teachers' attendance. SMCs have representation from the local authority (the local level elected government). B. Results Monitoring and Evaluation 27. There are several mechanisms for monitoring and evaluation built into the SSA Program, which have been used with success under previous phases of Bank support. There is no additional burden for these monitoring systems since they are all already being used by the implementing agencies. 28. Monitoring is underpinned by the UDISE. UDISE is used by districts and states in preparing their AWP&B requests and by the MHRD to monitor the overall progress of the SSA Program through indicators generated from the UDISE and included in the Results Framework Document. Data from UDISE is available in the public domain through the internet, and data is available within about six months of the collection data (30th September each year). 29. The MHRD has contracted, with SSA funds, 41 Monitoring Institutions (MIs) which carry out independent reviews of the implementation of SSA at the school level. The MIs are research organizations, and universities, contracted through a common ToR. Each quarter the Monitoring Institutions visit a random sample of schools in a given state, assess progress against a standard set of performance measures, and prepare a report. MHRD reviews all reports and prepares a summary each year, which is made available to the Joint Review Mission (JRM). The reports are also available on the MHRD website. 30. Through the AWP&B process all states are required to report progress against a common set of indicators and to report about execution of activities from the previous year, prior to receiving funds for the coming year. Most of the data used in the AWP&B process is obtained through the UDISE, household surveys, and regular financial monitoring processes of the program. 31. The Bank will join GOI to review program implementation semi-annually through two JRMs of about two weeks each, both of which would be field missions, each mission visiting six states. Each mission will have 6 nominees of the GOI and 6 from the development partners. JRMs 13 will review status of progress and issues related to program planning, implementation, monitoring and evaluation, including financial management (FM)/procurement capacity of states and districts and agree on actions to support the weaker states. The missions will be held in the months of January/February and September/October each year. Each mission will cover four issues namely; equity, quality and fiduciary. Each year the MHRD in discussion with the World Bank would propose an additional fourth theme for each mission so that more in-depth analysis could be made around those areas. The costs will be shared between MHRD and the World Bank. This practice is well-established in the sector, with the Government leading the process. All reports from the JRMs are made publicly available on a dedicated website. The bi-annual JRMs will also review the TC Fund (when it becomes functional) and the progress towards its objectives. C. Sustainability 32. The progress under SSA-I was sustained effectively through SSA-II, especially given the high political commitment and the demonstrated success in improving access and equity. The ICR for SSA-II rated the assessment of risk to development outcome as substantial. Sustainability under SSA-III will be promoted by the proposed high levels of financial allocations of the Government under the 12th Five Year Plan (2012-17) and the robust legislative and regulatory framework under the RTE Act 2009. However, the challenges of the next phase of the program, i.e., an emphasis on quality with the need for increased accountability are new and significant, and there continue to be large variations in the capacity of state implementation structures. The proposed operation tackles these challenges directly and, if successful, should lay the platform for sustainability of these efforts following project completion. V. KEY RISKS AND MITIGATION MEASURES 33. The detailed Operational Risk Assessment Framework (ORAF) is presented in Annex 4. The implementation risk of the project is substantial. Table: 3 Risk Rating Stakeholder Risk Moderate Implementing Agency Risk (including Fiduciary) - Capacity Substantial - Governance Substantial Project Risk - Design Substantial - Social and Environmental Low - Program and Donor Low - Delivery Monitoring and Sustainability Low Overall Implementation Risk Substantial VI. APPRAISAL SUMMARY A. Economic and Financial Analysis 34. SSA I and II have been successful in increasing enrolment at the primary and upper primary levels. They have also been marked by the creation of the infrastructure required to support improvements in the quality of education. SSA III marks the continuation of this paradigm shift. In line with the aforementioned shift in focus , the major economic benefit/return from the investments 14 made under SSA III are expected to be in the form of improvements in the annual income of those who have completed primary education or upper primary education owing to an increase in quality. Further, there will still be a marginal return from absolute increase in enrolment. However, this increase should primarily be expected from an increase in enrolment at the upper primary level with only a minor benefit coming from an increase in the absolute value of enrolment at the primary level. 35. Benchmarking these expected benefits against the private cost of education, and funds made available (investment) through central government funding, state government funding and funding received through grants; clearly highlights that the benefits expected from the program far exceed the expected/budgeted costs. The project is expected to have a net present value (NPV) of US$ 12.4 billion and an internal rate of return (IRR) of 17.7 %. 36. In terms of fiscal sustainability, based on the experience of SSA I and SSA II, and the proposed cost-sharing arrangements between the center and state governments, analysis shows that the resource availability will continue to support the pace of implementation of the program. B. Technical 37. The proposed operation is a Sector Wide Approach supporting a large national program, because, though the Bank's contribution will be only a small percentage of program expenditure, significant results had been achieved in the past with this approach. For the current operation, however, specific design features have been introduced to enable this approach to improve learning outcomes (something which proved difficult previously). 38. First, as noted in the Lessons Learned section above, the key conclusions from international good practice about how to improve quality have been incorporated into specific interventions to be supported by the project. Second, there is a strategy for applying these lessons in the country context: existing pilots of these ideas have been identified where they exist already in India, so that where successful these can be scaled up; and, specific pilots in a small number of states are planned in areas where new Indian experience needs to be built up. Third, international experience demonstrates that there is no 'silver bullet' but various interventions need to be linked together and implemented at the same time. The annual state-wise planning process is an appropriate vehicle for different states to try different 'bundles' of interventions, where medium term goals have been set but annual plans can take account of progress made. Fourth, the biannual joint reviews by the Bank and the Government are opportunities to assess progress and provide guidance to states on successful interventions. Finally, a series of evaluations is planned for the different interventions, by the government with technical assistance from the Bank if necessary. 39. The project will support existing, well-functioning government systems (for planning, monitoring, and implementation, as well as FMP) - for example, though the FMP Manual that incorporates the principles and approaches of the Bank's Procurement Guidelines, the Manual has been used by the government independently of Bank funding. The project team considered the option of undertaking the project under the newly formed Program for Results (P4R) instrument but decided not to follow this approach because since the project will support the entire SSA-III program, it will work through a jointly agreed Results Framework, and the Bank's contribution will be a small percentage of the program, the Bank respects the GOI's preference to abide by the existing arrangements (the Investment Project Financing instrument through a SWAp which has been used in SSA-I and SSA-II successfully). 15 C. Financial Management 40. Financial Management arrangements for the program are documented in a Financial Management and Procurement (FMP) Manual as revised in December 2009. This clearly lays down the guidelines and procedures for planning/budgeting, funds flow, accounting and internal controls, staffing and capacity building, and audits. 41. DPs have been engaged with SSA program since 2004, the guiding principle in the determination of the financial management arrangements for SSA-III has, therefore, been to (a) use the existing systems to meet the accounting and financial reporting requirements for the project; and (b) work with MHRD to strengthen the systems and address the weaknesses identified in a manner that assists MHRD/ SSA implementing agencies, to significantly enhance the levels of fiduciary assurance in the use of funds. 42. Financial management systems for SSA program have been gradually strengthened over the years of program operations. However, following were the major areas of concern highlighted under SSA-II: limited capacity at state, district and sub-district levels; weak internal controls; repeat issues highlighted by statutory auditors such as release of funds treated as expenditures; and substantial staff vacancies at the district and sub-district level. 43. The appraisal for SSA-III reflects that the present financial management arrangements can be relied upon for financial accounting and expenditure reporting. However, the following specific areas may need focused attention in the short/ medium term to further strengthen the overall financial management implementation in the program; (i) adequate financial management staffing at various levels; (ii) strengthening capacity at state, district and sub district levels by introducing robust training plans and training modules; ; (iii) strengthened assurance mechanism i.e. the Statutory Audit and Internal Audit process; (iv) timely corrective actions in response to audit observations; (v) effective installation and application of financial accounting software across all implementing agencies; and (vii) enhanced internal control environment at state, districts and sub- districts levels. 44. Disbursement Arrangements: The applicable disbursement method will be "Reimbursement". Program expenditures under SSA III will be defined as expenditures on all the activities under the SSA program by GOI, eligible project States and UTs. The disbursements by IDA shall be 100% (or such other percentage as the GOI and the Bank may agree) of the Eligible Expenditures as reported through the Interim Unaudited Financial Reports (IUFR), subject to the agreed maximum annual caps. Disbursement will be made once per year around July/ August, for eligible expenditures incurred in the prior fiscal year as reported in the IUFRs. The program expenditures reported in IUFRs will be subject to subsequent confirmation/certification by the 17 annual audit reports of all state implementing agencies '7 For the eight states, namely: Delhi; Haryana; Himachal Pradesh; Maharashtra; Meghalaya; Mizoram; Pudducherry; and Lakshadweep the state level implementing agencies are the same under preparatory project: SSA-JJJ and the existing project: Rashtriya Madhyamki Shiksha Abhiyan (RMSA). The due date of receipt of audit reports under RMSA was December 31, 2013. While the reports for the respective eight states were received on 31st December 2013, however on review, for three states (namely Maharashtra, Meghalaya and Lakshadweep) the audit reports were found to be in- complete and not acceptable. As of February 15, 2014 acceptable audit reports have been received for all of the aforesaid common implementing agencies. States are in the process of bifurcating their societies 16 45. Audits of SISs will be conducted by firms of Chartered Accountants, empanelled with C&AG in accordance with ToRs which are documented in the Manual and which meet requirements of the Bank. Audited Accounts/Audit Report will be furnished to GOI; which in turn will furnish to the Bank with copies of these State Audited Accounts/Audit Reports within nine months of the close of the Financial Year i.e. by December 3 1st. 46. Given the existing implementation challenges and multiplicity of spending/ executing agencies, Financial Management risk is assessed as Substantial. D. Procurement 47. Procurement arrangements under SSA III will be in accordance with the SSA Financial Management and Procurement (FMP) Manual as revised in December 2009. The SSA FMP Manual along with the additional procurement provisions in the Financing Agreement (FA) and the Letter of Undertaking that MHRD signs with the States are substantially consistent with the Bank procurement Guidelines: Procurement of Goods, Works and Non-Consulting Services under International Bank for Reconstruction and Development (IBRD) Loans and IDA Credits & Grants by World Bank Borrowers, January 2011 and Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits & Grants by World Bank Borrowers, January 2011, and follow the agreements reached for earlier projects in elementary education in India. On December 20, 2013 the Managing Director of the World Bank concurred with the request for a waiver to the requirement of referring to the Bank's procurement guidelines in the Financing Agreement for India: Elementary Education Project: SSA- III with the understanding that the actual waiver will be requested from the Board at the time the Board considers this financing, specifically, the request seeks a waiver from: (i) the requirement of para. 1.1 of the Guidelines Procurement of Goods, Works, and Non-Consulting Services, January 2011; and, para. 1.2 of the Guidelines Selection and Employment of Consultants- January 2011 (collectively referred to as GLs henceforth) to make the GLs applicable to the procurement of goods, works and services for the program as provided in the FA; and (ii) the requirements set forth in para. 2 of OP 11.00 that the GLs are incorporated by reference in the loan agreement and are binding on the Borrower. Procurement under SSA III will be handled at National, States, Districts, Block/Cluster and Village/School levels. The main items to be procured are low value civil works, with approximate value less than US$ 25,000 for classroom construction to be undertaken by community institutions like School Management Committees, teaching materials, textbooks, computers, and consultant and non-consultant services. 48. As part of project preparation the Bank team visited Meghalaya, Madhya Pradesh and Andhra Pradesh. Based on these visits as well as well as a review of historical documentation available on the implementation of the earlier SSA programs the major procurement risks have been identified as: limited monitoring of decentralized procurement; limited capacity to handle procurement at school/village level; lesser awareness of procurement procedures at school/village level, where most of the expenditure is incurred; limited disclosure of procurement related information; and country environment factors. Based on this the procurement related risk rating is identified as "Substantial". Many of the mitigation measures are already in place or suggested in FMP Manual but the compliance needs to be improved. For remaining risks, a mitigation plan has been developed. 49. Financial and procurement audit reports of State implementing agencies are being published on the SSA website. In addition, the States also disclose the procurement plan, contract opportunities, bid documents and contract award information on their website. 17 50. The procurement audit to be conducted through the statutory auditors of SIS and internal auditors has been strengthened. MHRD has provided a procurement audit checklist which is being used by the auditors appointed. The concurrent financial review (CFR), which also covers procurement reviews, will continue. A tendering process for the appointment of concurrent auditors is underway. Two FMP specialists from World Bank will be a part of the Joint Review Missions for SSA III. All contracts issued under SSA III will be subject to post review by the Bank on a sample basis. Considering the large number of institutions involved, post review of contracts will be conducted in a few selected states annually in consultation with MHRD in order to cover all states within a four year cycle. 51. The detailed procurement arrangements for SSA III are described in Annex 3. E. Social 52. Social safeguards - Given that the proposed project is the 3rd phase of World Bank support to the SSA program, a Social Assessment Framework dated December 2013 has been prepared to update the implementation framework of SSA. The SA includes a desk review and a field investigation covering some sample States, which was disclosed on the MHRD website (www.ssa.nic.in) prior to project appraisal. 53. OP/BP 4.12 Involuntary Resettlement: This policy does not apply since the project will not involve any involuntary land acquisition. The project will only support expansion / repair / renovation / upgrading of existing schools. Normal government procedures would be followed for documentation of transfer of government/panchayat-owned and donated land. Land records are maintained in the States as per the States' Land Revenue Codes and Acts. The documentation would be accessible to JRMs on field visits to ascertain that no displacement (loss of residence or livelihood) has taken place in obtaining the land. All sites for construction will fall in the above categories. The SSA Framework does not provide for the purchase of land. SSA would not fund construction on any land for which clear title is not already available. 54. Even though no project funds would be used for purchase of land, there may be isolated cases of voluntary land donation, as per the States' land revenue laws. In such cases all land transfers to ensure that there is no significant physical displacement or adverse impact on incomes and also that all land transfers would meet the following criteria: (i) the land would be free of squatters, encroachers, other claims and encumbrances; (ii) to protect the poor, land would not be accepted from any donor who is below the poverty line, whose holding would then be reduced below the minimum size stipulated to be economically viable locally (generally 2.5 acres); (iii) any land with disputed title and/or legal or illegal settlements would be excluded; (iv) the voluntary nature of the donation would be verified by the local administration; and (v) land transfers would be completed with land title vested in the panchayat or other government body through a registered deed or MOU, or through any procedure prescribed by the law of the state. In keeping with program principles, all sites would be selected by or be acceptable to the concerned community. Any minor impacts of land obtained through voluntary donations would be addressed by the panchayats or other government bodies with due consideration to vulnerable groups 55. OP/BP 4.10 Indigenous Peoples: The project is designed not to have any negative social impacts. In fact, the project has the potential to generate substantial positive social benefits. The tribal development plan (TDP) that had been in operation under SSA II was replaced with more 18 powerful and responsive mechanism to meet the special needs of deprived sections of populations like indigenous tribal populations, SCs, minorities and girls. These were the Special Focus Districts (SFDs) that are provided special attention in planning, appraisal and financial allocations. The Indigenous Peoples Plan for SSA III, therefore, will to a large extent build and improve upon the well-functioning SSA implementation framework that is largely dependent on the SFDs for meeting the special needs of deprived segments. This project will further improve on the existing implementation framework to ensure equitable learning outcomes for this group and to effectively tap opportunities for enhancing social inclusion, recognition and participation of all stakeholders. F. Environment 56. An Environmental Assessment and Management Framework (EAMF) for World Bank support to SSA III was undertaken and completed in November 2013. It builds on the assessments conducted earlier for SSA I and SSA II and has been informed by results from a similar exercise conducted for the secondary school program (Rashtriya Madhyamik Shiksha Abhyan, RMSA), which looked at several upper primary schools across five states. SSA as a program has evolved since its launch and several guidelines and manuals have been developed. Most of these manuals continue to remain relevant to the program and will therefore be used for SSA III as well. 57. The nature of activities proposed under the current project does not pose significant environmental risks. Nonetheless, environmental management measures proposed as part of the limited Environmental Assessment (EA) would help in attaining/supporting the intended project objectives by creating a healthy and safe learning and teaching environment in schools. 58. In a vast majority of the cases where the school infrastructure has already been created, the most pertinent environment, health and safety issues revolve around the need for maintaining a clean, hygienic and safe learning and teaching environment. Issues such as regular cleaning and proper maintenance of toilets, kitchen, water supply facilities, regular quality checks for the potable water supply and waste management would require attention. 59. The school infrastructure Operation and Maintenance (O&M) is currently financed through annual Repair and Maintenance Grants (RMG) and other State funds, which are not always adequate. Under the project, all States will develop/strengthen sustainable school infrastructure O&M procedures. A feature of SSA has been the involvement of communities and school level institutions such as SMCs in the identification, planning, design, implementation, O&M of schools and other program activities, which will continue to form a part of these procedures. The nature, scale and level of interventions, however will continue to remain contextual and will vary between and sometimes, even within the state. 60. The Framework for Implementation of SSA in civil works specifies and also provides flexibility to states to scale up good practices. Successful interventions like Whole School Development Plan (WSDP), Building as Learning Aids (BaLA), etc. need to be further disseminated and shared at the field level. Further, interventions related to promoting cleanliness and hygiene among students will be strengthened by dove-tailing existing available materials and schemes. 61. National level monitoring will consist of Third Party Evaluations (TPE), periodic reviews by project implementing authorities and special monitoring visits by Technical Support Group (TSG) and national institutions. National level monitoring will be supplemented through the proposed 19 JRMs. UDISE coverage has expanded across all schools and this will provide critical information required for infrastructure planning for schools. The same mechanisms will be used for monitoring the environmental, health and safety requirements and performance under the project as well. Environmental audits will be conducted by special teams constituted out of the existing lot of engineers within the state implementing agencies. All States and UTs will be covered in a cycle of three years. 62. OP 4.01 has been triggered to ensure that all major (like building infrastructure) and minor (such as sensitization and training related) interventions are planned and designed to be environmentally sound by integrating appropriate principles and approaches into the over-all decision making process. The project is designated as Category B. 63. The EA prepared for SSA III was disclosed on the MHRD website (www.ssa.nic.in) prior to project appraisal. 20 Annex 1: Results Framework and Monitoring INDIA: Third Elementary Education (SSA III) Results chain for SSA Ill (2013-14 to 2017-18) Inputs Activities Outputs OutcomesI SSA Access mndretention: Impoe e rent All habitatowit Framework pgracation of and maintenaneof nfrtrutur R OSC t itrihxic of entil emeits. te rpoos, uO niformll chplorn proi,id Improved moitoin > an ior adult labour rforce nparticipation -------- mpove prtciatonImproved equity in Growth in Eqiy n ncuio:sar f il, C S, >enro nient and economy with Dvelopment of Sender sensioizztioneecio tsholmr mater iaIs/text books level jbettern GOIMonitorirg ofequity aid iclson nterventons elementary &mprved classroom improved teacher school Finance - Quality Early grade learning & and Science learning a p m processes Improved student and knowledge and pedagogy graduates Commissio a ns+Teache, tairning teacher attendance, *Improved learning :Use of CCE, supplementary mitalseryrce retention and transition levelsI States' scienceandmath kitsfr Jie S WB funds CCEstate and NASassessment L u r y S sytm * ec & cecacademic sipot peozi a o strengthened with Innoatimclassroom nrocesset GE masl igaanein Educatonal administrators, Improved School improved readmssters and SM leadership and gvenane an Education sector management: trained to perform their performance financial HIR Development of school leadershipstandards and tasks better Icesdmngmn admWinstrat training of educational administrators aid head School performance cncreaiey manademic ors and Development of school performancennmonitorinegoioe cmlgmnto academic standards and used for monitoring *SM(cl eveloped School schools support Consitutionao smCs, trainirgsand meetings of Development Plans personnel at sconducted regularlS state, ostrte an Effectiveness of expenditure: AWP&H process linked to available fu~nds incurred distrCclt and suoditrcD-eelopri sub-district -t.f di,tri,t based plan, stateffir _rGlfnsmdavialTieyadtOfus iESS goals by end of yea r(80%) levels, levels, ~~~access, ".retertien. ,e cnmaice quolity and improved school01fnsnaevilbeTmy ogao st approved AWP&Bsehttcr dtofLnd teachers PAkconducted for all states before academic year 0I + state funds released I cm nt mobilzao acn time (85%) 21 Results Framework Document 2013-14 to 2016-17 Target Values Frequency Data Respo and Report Collection nsibilit S. No Outcome BaeieInstrumen y for No Indicators Baseline 2013-14 2014-15 2015-16 2016-17 ts Data Collec tion PDO: To improve education outcomes of elementary school children in India PDO Indicators 1. Increase in the 12 states/UTs Independent 20 states/UTs Independent Independen Indepe student attendance reported student study 2014 on reported student Studies t Sample ndent rate attendance >80% teacher and attendance Studies Agenci at primary and student >80% at es/ 15 states/UTs attendance primary and 25 GOI reported student published on states/UTs attendance >80% SSA website reported student at upper primary attendance >80% at upper (Draft primary independent Study-2014 with (Independent data of 2012-13) study) 2. Increase in the Retention rate at Increase Increase Increase Increase Annual UDISE NUEP retention rate at primary level is retention rate retention rate to retention rate retention rate to UDISE A primary level 80% to 81% 82% to 83% 84% Reports disaggregated by states UDISE 2012-13 3. Increase in the Transition rate Improvement Improvement in Improvement Improvement in Annual UDISE NUEP transition rate from primary to in transition transition rates in transition transition rates UDISE A from primary to upper primary is rates to to 88% rates 88.5% to 89% Reports upper primary 86.7% 87.5% disaggregated by states UDISE 2012-13 22 Target Values Frequency Data Respo and Report Collection nsibilit S. Outcome Instrumen y for No Indicators Baseline 2013-14 2014-15 2015-16 2016-17 ts Data Collec tion 4. Learning levels NAS Grade 5 NAS grades 3 NAS grade 5 NAS grade 3 NAS grade 8 NAS Report of NAS NCER adequately and (2011-12) report and 8 reports report available report report available grades 3, 5 and T regularly available (cycle available (cycle 4) available (cycle 4) 8 every three monitored 3). (cycle 3) (cycle 4) years NAS grade 3 NAS rounds of NAS grade 5 data collected NAS grade 8 grades 3 and 8 in data collected (cycle 4) data collected process of (cycle 4) (cycle 4) implementation (cycle 3) Intermediate outcome indicators Component 1: Improving quality for enhancing learning 1. Specific early No early grade 6 states begun Specific early Specific early Specific early Annual PMIS Programme States grades quality learning program implementati grades quality grades quality grades quality Reports MIS programmes implemented in on of early programmes for programmes programmes for disaggregated implemented to states that is grade language and being run in 15 language and by State strengthen ready for learning numeracy states numeracy foundation in evaluation program being run in at being run in 25 language and least 10 National States/UTs numeracy Baseline not States/UTs workshop to available document and disseminate good practices in early grade learning 2. System of state Standard 5 states/UTs 10 states/UTs 15 states/UTs 20 states/UTs Program States level achievement Operating conducted conducted conducted conducted State SLAS MIS surveys(SLAS) Procedures SLAS SLAS SLAS SLAS reports established developed by MHRD for conducting SLAS 23 Target Values Frequency Data Respo and Report Collection nsibilit S. Outcome Instrumen y for No Indicators Baseline 2013-14 2014-15 2015-16 2016-17 ts Data Collec tion 3. More government 50% teachers 40% teachers 40% teachers 40% teachers 40% of teachers Annual PMIS Programme States school teachers receive in- received in- received in- received in- received in- Reports MIS trained through service training service service training service service training improved in- during previous training training service training academic year PMIS 2012-13. (yearly percentages expected to be lower due to significant increase in number of teachers recruited and increase in training days 4. Increased teacher Teacher Teacher Teacher States attendance attendance level attendance is attendance is 81.7% at 84.3% at maintained at Independent primary level primary and 90% at primary studies and 80.5% at 81.3% at and increased to Independen Indepe upper primary upper 87% at upper t Sample ndent level primary primary level Studies agenci es/GOI Independent Draft study, 2010 (data independent of 2006-07) study 2014 (data of 2012- 13) 24 Target Values Frequency Data Respo and Report Collection nsibilit S. Outcome Instrumen y for No Indicators Baseline 2013-14 2014-15 2015-16 2016-17 ts Data Collec tion 5. Increased training Head master 10% of head 20% of head 30% of head At least 50% of Programme PMIS States of head masters training has been masters masters trained masters trained HMs trained MIS sporadically and trained since since 2012- since 2012-13 across all irregularly 2012-13 13(cumulative) (cumulative) schools since conducted in a 2012-13 few states (cumulative) 6. Increased training Training for 10% of 15% of 20% of 25% of Quarterly PMIS States of educational educational educational educational educational educational administrators administrators administrator administrators administrators administrators from state to s from State from State to from State to from State to block level to Block level Block level Block level Block level conducted received received received received sporadically training since training since training since training since 2012-13 2012- 2012-13 2012-13 13(cumulative) (cumulative) (cumulative) Component 2: Strengthening Monitoring and Evaluation 1 CRC and BRC 50% vacancies in 55% 60% positions 65% positions At least 70% Annual PMIS Programme States academic support BRCs on average positions filled in BRCs filled in BRCs positions filled Reports MIS and supervision filled in and CRCs on and CRCs in at BRCs and PAB 2013-14 BRCs and average CRCs CRCs 25 Target Values Frequency Data Respo and Report Collection nsibilit S. Outcome Instrumen y for No Indicators Baseline 2013-14 2014-15 2015-16 2016-17 ts Data Collec tion 2. Improved >80% of SMCs 80% of 80% of 80% of 80% of PMIS States community constituted in constituted constituted constituted constituted and management of most states. SMCs bodies SMCs reporting SMCs SMCs reporting PMIS Distric schools reporting role role in school reporting role role in school Independen ts Training of in school supervision in school supervision. Quarterly t Sample SMCs conducted supervision supervision, progress Studies in some states. reports Evaluation of Indepe SMC Independent ndent functioning Studies agenci es/GOI 3. Development and Capacity National and School 25% 50% States/UTs Annual Report NUEPA NUEP use of school building done for international performance States/UTs states adopt by NUEPA A performance development of partnerships standards states adopt national school standards school established developed at the national school performance performance for national level performance standards standards developing standards school performance standards 4. Improved 3 states/UTs 5 of 7 of states/UTs 10 of 12 of states/UTs IUFRs and State-wise States utilization of incur states/UTs incur states/UTs incur FMRs expenditure & GOI funds by states expenditure of incur expenditure of incur expenditure of status of 80% of received expenditure 80% of received expenditure of 80% of received GOI and funds. of 80% of funds. 80% received funds. audit received funds reports MHRD financial funds. statement for 2013-14 26 Component 3: Improving equitable access and retention 1. Increase in the 134 million at Enrolment of Enrolment of Enrolment of Enrolment of Annual DISE DISE number of primary and 64.9 children at children at children at children at Reports NUEP children enrolled million at upper upper upper primary upper primary upper primary disaggregated A at upper primary primary level primary level level increased level increased level increased by states level in schools (total) increased to to 66 million to 66.5 million to 67 million 65.5 million UDISE 2012-13 2. Increase in 72.16% schools Share of Share of Share of Share of Annual separate toilets for with schools with schools with schools with schools with UDISE reports UDISE NUEP girls in separate toilets separate toilet separate toilet separate toilet separate toilet A government for girls facility for facility for girls facility for facility for girls schools girls increased to girls increased increased to DISE 2011-12 increased 73% to 73.5% 74% to72.5% 3. Increased Enrolment share Enrolment Enrolment Enrolment Enrolment Annual enrolment share girls: 48.63% share of girls, share of girls, share of girls, share of girls, UDISE UDISE NUEP of girls, ST, ST, Girls' share in SC, ST, and SC, ST, and SC, ST, and SC, ST, and Reports A Muslim children population: 48% Muslim Muslim Muslim Muslim disaggregated vis-a-vis relevant Enrolment share children at children at children at children at by states and age group share in of SC:20.24% upper upper primary upper primary upper primary districts population at SC share in primary level level reflect level reflect level reflect elementary stage; Population: 16.6 reflect their their relevant their relevant their relevant and increased % relevant age age group share age group age group share enrolment % out Enrolment share group share in population share in in population of identified of ST:10.85% in population population CWSN at ST share in elementary level population:8.6% Enrolment share of Muslims: 13.5% Muslim share in population: 13.4 0 UDISE 2012-13 (Census 2011 for girls, SC & ST: Census 2001 for Muslims) 27 Enrolment of 80% of 80% of 80% of 80% of Annual UDISE + CWSN is 2. Im identified identified identified identified UDISE Home NUEP out of 2.7m CWSN CWSN enrolled CWSN CWSN enrolled Reports based A+ identified (77% enrolled in in school and enrolled in in school and disaggregated survey of MHR enrolled out of school and education school and education by states + IE D identified education programs education programs quarterly CWSN) programs programs progress report of home based survey of IE UDISE 2012-13 Unit 28 Annex 2: Detailed Project Description INDIA: Third Elementary Education (SSAIII) A. Project Activities 1. The project is a Special Investment Lending using a SWAp and will finance states' annual work programs and a small number of activities at the national level. As under SSA I and II projects, the project will support the whole SSA program and finance a share (about 4%) of the overall program. The scope of interventions and resource requirements vary across States, Districts, and sub-Districts, and also from year to year, and so project activities will respond to changing circumstances, and progress against the Results Framework Document indicators (disaggregated to the state level) in order to best meet the development objectives. The project, therefore, is unlike a traditional investment credit with predefined components and associated ex- ante allocation of finance. Instead, the project will finance States' annual work programs, in addition to a National component on monitoring, research and evaluation, training, capacity building, and FM. 2. There are some continuing gaps in basic educational infrastructure and access in states which will need to be filled, especially in low-income states. This will be achieved through minor civil works (for example, to build toilets for girls and additional classrooms to respond to demand), upgrading of primary schools to include upper primary classes to maximize the efficient use of land and existing facilities, annual school grants (so that resources are put in the hands of SMCs to respond to specific local needs at the school level), transparent merit and need based recruitment of teachers, salaries of additional teachers which states and district recruit in order to fill gaps, salaries of staff for implementation at state, district, block and cluster level, and provision of textbooks and other learning materials. These types of activities have been carried out successfully in the past phases of Bank support, with impressive results; so it is important to continue to ensure that the remaining gaps in access to education are addressed. However, the share of these activities as a proportion of total program expenditures will go down over the period of the project. 3. The PDO emphasizes improvement in the quality of education, rather than access. This requires new interventions. The shift in activities from SSA II will be seen through three new key thrust areas which will be financed under SSA III are (I) Improving quality for enhancing learning outcomes; (II) strengthening monitoring and evaluation for enhanced accountability and (III) enhancing access and retention for disadvantaged children. L Improving Quality and Enhancing Learning Outcomes LI Development of grade level learning indicators for students. The project will support the development of grade and subject specific learning indicators to measure children's progress in acquiring the expected knowledge and skills at different grade levels. NCERT has developed learning indicators and shared with the states. The learning Indicators will include the domains of curricular expectation, children's abilities and potential. While a few states have developed the indicators suited to their state specific curriculum, the national indicators will be a ready reference for other states to adopt or adapt. These learning indicators will be used as performance standards for all assessment 29 tools supported under the project, at classroom, state and national levels, and will allow states to benchmark performance over time and compared to each other. L2 Early grade reading and mathematics: The objective is that children in early grades (1 and 2) should achieve foundational skills in reading and mathematics leading to improved retention and improved learning levels. At the national level, NCERT will develop guidelines and quality standards for early grade learning. Each state will use the national guidelines to develop or extend its own state-specific early grade learning program along with the state academic authority and begin implementation in the 2013- 14 academic year. Quite a few states have conducted and are continuing learning enhancement programs in the early grades like the Activity Based Learning (ABL) initiative in Tamil Nadu, 'Gunotsav', a quality initiative to improve student outcomes at the primary level in Gujarat, early grade interventions in Chattisgarh and Rajasthan, an early grade learning intervention launched in Bihar with learning indicators for each primary grade and a separate dedicated teacher for grades 1 and 2. Many NGOs are implementing initiatives in partnership with state governments in early grade learning The NCERT conducted a pilot initiative in Uttar Pradesh (Mathura) on early grade reading. Lessons from these states and other initiatives, based on national and state level workshops conducted, will be reviewed and incorporated while implementing the early grade learning interventions in the states. MHRD will monitor implementation while NCERT will provide capacity building. At the national level, NCERT, as the designated academic authority, is responsible for developing guidelines and quality standards for early grade learning. NCERT is in the process of sharing with the states a comprehensive strategy developed by them in the pilot project in Mathura which was rolled out in 2010. The project aimed to develop an understanding of the concept of early literacy, to create dialogue on the pedagogy of reading and writing in the early years and to create a cadre of teachers who are well- informed about the pedagogy of reading and writing in the early years. The national level will provide guidelines for the states to adapt / adopt for their local situation. MHRD will closely monitor the implementation of the early grade interventions while NCERT will provide support for capacity building. Based on the experience of implementing the pilot program, NCERT has developed exemplars of graded series of books and materials that are available for use by states for a reading program in grades 1 and 2. It is expected that each state will develop its own state specific program design for an early grade learning program along with the state academic authority. States will be setting their goals within their larger state curriculum and indicators. All states are committed to implementing a specific foundation program focused on reading, writing, comprehension and mathematics in grades 1 and 2 in the current year. Several states have begun interventions in the early grades to improve reading skills and basic number concepts and arithmetic skills and have the opportunity to fine tune the implementation, monitoring and evaluation of their programs. 30 The progress of the early grade learning component will be tracked against annual targets set out in the results framework. 13 Upper PrimaryMath and Science Learning: The National Curriculum framework (NCF), 2005, for curricular reform provides an outline to set the goals and approaches to improve standards of mathematics and science at upper primary level. The main goal in math teaching is to enhance ability of children to think logically, formulate and handle abstractions. While for science teaching, it is expected that it should engage the learners in acquiring methods and processes that will nurture their curiosity and creativity, particularly in relation to the environment. The grade and subject wise learning indicators established by NCERT will be used by states in their strategies to improve science and math teaching in upper primary schools. There will be specialized teacher training programs (using appropriately developed special training modules) and this will be supplemented by follow up and on-site support through the BRCs and CRCs. Specific approaches such as those listed below will be deployed to improve math and science teaching-learning standards at upper primary level: * Math and science kits developed by NCERT and available to states to adapt according to their local context * Development of worksheets for math and science * Computer aided modules/ programs on math/ science * Sharing of locally developed materials through inter district Metric Melas * Strengthening institutional capacity through setting up of more laboratories and libraries * Assigning projects that are relevant and interesting to children, which involve data collection, analysis, reporting, reasoning and inference. * Inculcation of more progressive cultures related to the cooperation and reflective practices within the teaching community. * Flexible and innovative modes of teacher training and teacher education. L4 School Leadership and School performance: To improve school management competence of school headmasters and educational administrators, a new NCSL within NUEPA, will be established, through TA, minor civil works, purchase of equipment and procurement of goods and services. The NCSL will develop a school leadership program and support its implementation in states, including the development of standards and a framework for assessment of school performance in elementary schools. The program has been initiated in the states of Andhra Pradesh, Gujarat, Himachal Pradesh, Mizoram, Rajasthan, Tamil Nadu, Uttar Pradesh, West Bengal, Chhattisgarh and Karnataka, and will be extended to all states during the project period. The TA will be provided mainly through a newly-established collaboration with the National College for School Leadership in England. The project will finance School performance assessment through development of indicators that will be developed by NUEPA. These will evolve the school as the delivery 31 and accountability point, guided by the common core and set expected performance standards. The initiatives will include (a) school performance standards to provide common core and expectations for all schools (b) guidance on strategies for helping schools to improve (c) use of the performance standards as the reference or benchmark for both internal and external evaluations of the school and (d) school performance standards to be integrated and interlinked with school leadership and teachers' performance (e) effectiveness of communication enhanced between the different levels for common understanding of the standards. State programs on school standards and performance assessment like the Gujarat's-Gunotsav, Odisha's Samiksha and efforts of Karnataka School Quality Assessment Organization (KSQAO) will be used as reference points. The Office for Standards in Education, Children's Services and Skills, England will be providing technical support to NUEPA. L5 Teacher training and provisioning: The project will finance the training of untrained teachers to acquire professional qualifications. This will ensure a greater number of professionally trained teachers in the school system. The project will also support annual in-service training of teachers, to allow for continuous upgrading of knowledge and teaching skills. This will be done through (i) identification of teacher training needs; (ii) annual review of teacher training packages; (iii) long-term and sustainable plan for preparation of master trainers; and, (iv) research and development for teacher training. Recognizing the importance of providing adequate number of teachers, the project will finance systems that facilitate the (i) achievement of the prescribed PTR for each school; (ii) ensuring that no school has a teacher vacancy of more than 10% (through effective redeployment of surplus teachers); and, (iii) provision of subject specific teachers, head teacher and part time instructors for art, health and work education in upper primary schools. The practice of recruiting at least 50% women teachers under SSA will continue. The project will finance teachers recruited through a process that takes into account the minimum qualifications as laid down by the designated academic authority, namely the NCTE. II Strengthening monitoring and evaluation for improved accountability IL1 Monitoring Outcomes: The project will support a three tier strategy for assessment of learning outcomes for accountability, through provision of consulting services, training and learning materials: * NAS conducted by NCERT: The technical rigor of the NAS has greatly improved, grade III, V and VIII have been assessed with a methodology meeting international standards The project will support continued capacity building of NCERT to demonstrate reliability over time.. Moreover, the next challenge is to promote the use of NAS results for remedial action and to improve the teacher training. This will require new skills in qualitative analysis as well as articulation and dissemination of results. Finally, the project will support expansion of the coverage of NAS to include CWSN. The project will support NAS strengthening and state level achievement surveys through its loan proceeds and more specifically through a TA component. The project will support the efforts of the national government to standardize the 32 NAS methodology of evaluation/assessment to ensure comparability of quality of education and learning outcomes. NCERT will be supported in system strengthening to expedite the entry and publication of the data files for the assessments provision on its website, the detailed sample selection plan (including weights for each strata) and the tools used for assessment facilitating disclosure and ease of access to states, researchers and policy makers to better utilize the NAS results for remedial action. NAS will be expanded to cover a specific component to assess learning outcomes of CWSN as this section of the student community has so far been left out of such assessments providing inadequate information of the progress. * State Learning Achievement Survey (SLAS): While at the national level the NCERT has been conducting NAS, States/UTs need more disaggregated data on student outcomes at district level for remedial action and corrective measures. States/UTs will be supported, through consultant services and training, in conducting their own SLAS, learning from the experiences of states like Tamil Nadu, Gujarat and Karnataka. A Standard Operating Procedure (SOP) has been devised by the MHRD, detailing the work processes that are to be conducted or followed within an organization, activities to be undertaken to facilitate consistent performance to technical and quality system requirements and to support data quality. SOPs are expected to assist the state/organization to maintain their quality control and quality assurance processes. The main instrument for inter-state comparisons will be the NAS - the focus of state assessments will be progress against the state curriculum/learning standards and to generate a more finely-disaggregated set of performance measures. Through the 2013-14 AWP&B process, every state has received funds for state-wide assessments. There are significant variations in allocations not only because of the size of states but also because some states are at the development/pilot stages. Almost all states are proposing to assess students in the final grade of elementary plus at least two other grades. Future AWP&B rounds will approve further funds for these activities. As a measure to link learning outcomes with budgetary approvals, GOI will link budgetary allocations to state efforts at learning assessments through the AWP&B process. * School level classroom based assessments through the further development of CCE of pupils. The project will fund teacher training, technical assistance, and procurement of learning materials. The RTE Act abolishes high-stakes testing of children in elementary grades, to ensure that all children can learn with their peers. This policy is based on sound international evidence that children who repeat grades rarely do better than if they had continued with additional remedial support. However, the absence of high-stakes tests means that teachers need: (a) other ways to keep track and report to parents on children's progress; and (b) to take responsibility for ensuring all children acquire the skills and knowledge for the relevant grade the first time around. CCE is the term used to cover these classroom-level, teacher-administered formative assessments. Practice is emerging in different states but there remains considerable uncertainty amongst teachers. 33 * In addition, there will be efforts to strengthen impact evaluation of various aspects of the program. As a first step, the Bank will access funds for helping the MHRD in undertaking evaluations addressing core issues relating to learning at the elementary level. The MHRD will be supported in undertaking independent evaluations especially in the areas of (i) building parental and teacher capacity to improve school accountability and learning outcomes; (ii) address issues of children of seasonal migrants and (iii) developing strategies to provide access to disadvantaged and economically weak categories of children to quality education in non-state schools. The SSA program will also make available resources to the states for research and monitoring under the REMS grant through which the states will undertake quality research and evaluation research activities. These research inputs will also feed into program implementation. 1.2 Teacher performance standards for accountability: Evolving performance standards for teachers' accountability: NCERT will develop, through appropriate provision of training and support, teacher performance standards. The NCERT has developed a framework for PINDICS and shared with the states that are based on norms and standards as enunciated in various studies and statutory orders of the government issued from time to time. These performance standards define the criteria expected when teachers perform their major tasks and duties. Under each performance standard there will be specific tasks which teachers are expected to perform- termed as specific standards. These are further delineated as performance indicators that can be used to observe progress and to measure actual result compared to expected result. PINDICs will eventually evolve as the framework for effective teacher performance for effective monitoring and benchmarking across the country. The following performance standards are covered under PINDICS: (i) Designing Learning Experiences; (ii) Knowledge and Understanding of Subject matter; (iii) Strategies for Facilitating Learning; (iv) Interpersonal Relationships; and, (v) School Development. The performance indicators would have three levels for assessment: (1). Below Average; (2) Average; and, (3) Above average. In addition, there will be continuing needs-based teacher-training programs to prepare teachers to teach an increasingly diverse student population, as well as in multi-grade settings. Identification of training needs will be strengthened by the use of performance standards and evaluation studies. 11.3 Social accountability: The RTE Act, 2009, supports the concept of social accountability and community participation through its various provisions. Every school must have a SMC consisting of representatives of the local authority, parents and guardians of children at the school and teachers and also making provision for three- quarters of the members to be from parents/guardians with proportionate representation from weaker section/disadvantaged group and 50% being women. SMCs monitor the working of the school; prepare a school development plan; and, monitor utilization of grants received. A continuous stream of capacity building exercises is needed to strengthen this institution. The project will support strengthening of this grass root level 34 tool of social audit for enhancing social accountability to the community for a well- functioning school. In the context of RTE, the process of social audit that has been in practice thus far will be deepened to allow for the multiple layers and multitude of stakeholders involved in the delivery of education followed by the process of Shiksha Samvad (Education Dialogue) at various levels. SMCs monitor the working of the school; prepare a school development plan; and, monitor utilization of grants received. All States have constituted SMCs in their schools except Government of West Bengal, which has constituted these committees in upper primary schools. A continuous stream of capacity building exercises will be further strengthened and some states like Bihar have undertaken legislative processes to further strengthen and enhance the autonomy of these institutions. Sharing of such rich experiences will be encouraged under the program. I.4 Unified District Information System for Education (UDISE): NUEPA produces District Report Card on elementary education that are released annually as part of UDISE dissemination activities; these contain time-series and cross-sectional data on more than four hundred variables at the district level. NUEPA also produces annual school report cards for all 1.1 million government and government aided schools in the country. The cards however need some improvement to provide more accessible information for parents, many of whom have low literacy and numeracy skills. The development of UDISE, through provision of hardware and software, consulting services and training, will also enable more rapid development of school report cards. Data-Capture Formats are being made available to users at local levels for greater dissemination and disclosure. As School Report Cards are available on the internet for all stake-holders to be able to view and use, efforts of international agencies like UNICEF to support studies based on the UDISE data will further help its greater dissemination and more user friendly interfaces. The project will finance the development of EMIS unit that has been established for every district in the country. The school-based information system called UDISE and household survey reports are both key data systems of the EMIS. The project will finance further strengthening and professionalizing data compilation through the UDISE for school-based planning. Annual data collected on infrastructure, access, retention, quality, teacher-related issues will feed into planning process, as well as M&E, allowing for informed, data-supported mid-course corrections, as needed. UDISE collects data from all types of schools - recognized, un-recognized, government or private. The project will support the implementation and phased roll-out (in academic year 2013-14) of a unified data system, which is being developed by MHRD. UDISE has been developed to minimize duplication in data collection and limit the multiplicity of agencies collecting data from the same schools. UDISE will now consolidate data across the school education sector covering elementary (Classes I-VIII) and secondary (Classes IX-X) segments. UDISE systems will surmount concerns that have emerged around inconsistency in data gathering, overlapping of information sources at the upper primary level especially in case of composite schools (upper primary and secondary schools). NUEPA is the nodal agency, responsible for the unified system for collection of school education statistics. State level nodal agencies will be identified to coordinate activities relating to collection, collation and dissemination of data under unified system. Data 35 quality assurance measures will be supported for the strengthening systems for collection of duly filled in data collection formats (DCFs), better checking for errors and missing information, training of teachers, training CRCs in collection of data, and digitalisation of report generation to improve data dissemination. Integrated data sets covering all schools at primary, upper primary, secondary and higher secondary levels will be received from all states and hosted at the NUEPA website: schools-www.schoolreportcards.in Special Focus Districts: The project will finance interventions for special focus districts, several of these, are, backward districts that are allocated significant SSA Program funds. Low-income states (and within them the majority of the special focus districts) are generally the large spending states and will be provided special attention under the project for addressing concerns of out of school children, enhancing transition (especially for children from special focus groups and migrant children) and for quality improvement efforts. The project will finance quality improvement efforts especially in the large spending states with large populations of SC, ST and minority children. Special focus districts are those with high concentration of the SCs, STs and Muslim minority. Funding priority has traditionally been given to these districts, for infrastructure development in addition to focussed planning for providing access, teacher recruitment and special efforts to address equity issues. Moving forward, the project will support focused quality improvement efforts in these districts, besides, focussed scrutiny of progress and interventions at the time of AWP&Bs, and while deciding the outlay by the PAB. II.5 StrengtheningAcademic Support through Capacity Building: * Sub-District Academic Support: BRCs and CRCs provide valuable 'just in-time' on-site academic support to schools and teachers. Their effectiveness is being improved through the Quality Monitoring Tools (QMT) developed in SSA, as well as performance standards being developed. Interventions include: enhancing capacity and resources available to existing BRCs/CRCs through training and the use of information technology; and, establishing BRCs/CRCs where such facilities do not exist, especially in urban areas. * National/State and District Level Academic and Management Support: National, state and district level institutions will continue to provide technical support and guidance. These include apex national institutions, such as the NCERT, the NUEPA and Indira Gandhi National Open University (IGNOU) which provide support in decentralized planning, management information systems, appraisals pedagogy, student assessment, teacher training, and monitoring and evaluation. At the state level, the State Councils for Educational Research and Training (SCERTs) and the State Institute of Educational Management and Training (SIEMATs), are institutions tasked with improving the quality of school education and management through curriculum and textbook renewal, FM and planning capacity training of District teams for quality enhancement interventions; and development of learning materials for students, materials for student assessment and teacher guides. At the District level, the District Institute 36 for Education and Training (DIETS) provide for capacity building of BRCs and CRCs. III. Enhancing access and retention for disadvantaged children III.1 Provisionof schooling and maintenance: While impressive gains have been made to improve access and make it almost universal (98% of children have access to a primary school), there is a small proportion of children especially from the marginalized and most disadvantaged communities who are out of school. In addition, at the upper primary level, enrolments are still relatively low. The coming phase of SSA will continue to make special provisions to enroll the marginalized children through special training centers to prepare them for grade and age appropriate mainstreaming. Community mobilization campaigns for the awareness of RTE Act will be made more widespread to increase enrolment especially at the upper primary level. Micro-planning and physical mapping of habitations will be strengthened to identify unserved habitations for schooling provision according to the neighbourhood norm prescribed by the individual states separately for primary and upper primary (predominantly, the practice has been of defining the neighbourhood norm of 1 km for opening a primary school and 3 Km for opening an upper primary school). Importantly, to ensure quality of infrastructure for the long- term, resources will also be Kasturba Gandhi Balika Vidvalavas (KGBVs) under SSA: Gedrdisparities still persist in rural areas and among disadvantaged put into ensuring that communities. KGBVs were set up in order to bridge the significant gaps in the infrastructure is well enrolment of'girls at the elementary level as compared to boys, especially at the upper primary levels. The objective of'KGB V is to ensure access and quality maintained. Further, There education to the girls (especially older adolescent girls) of'disadvantaged SC, ST, will be enhanced focus on OBC and minority communities. Residential schools at upper primary level are set up in the educationally backward blocks of'the country where female literacy is increasing drinking water below the national average andgender gap in literacy is above the national average. supply (from the baseline of The basic idea underpinning the scheme is to give second chancefor mainstreaming could not t never enrolled/dropout rural girls ftom marginalized backgrounds that 95% schools) and toilet complete class 5. An accelerated learning approach is adopted for curriculum facilities for girls ) and boys transaction to enable completion of'primary education to transition to upper primary level. Focus is provided on building lifL- skills, breaking social and (from baseline of 76% psychological barriers, and developing independent and critical thinking abilities in schools in 2011-12 to all the girls. Based on joyful, multi-level and innovative teaching learning pedagogy, KGBVs provide an atmosphere that enables the girls to deal with fSoftom aposition schools. of'strength, nurturing their interest in continuing education. The evidence of'impact studies of KGBVs is very positive, where they have been fund to provide an 11.2 Enhancing opportunity.for girls to learn in saft-spaces. particeationand retention of girls, SC, STh minority children, and CWSN. There will be increased focus to improve the share of enrolment of girls, SC, ST, minority and CWSN in schools vis-di-vis their share in the population. The process and timeliness for distribution of free entitlements like textbooks, uniforms, other entitlements for girls, SC, ST and minority children; and aids and appliances for CWSN will be strengthened to improve retention rates of children in schools. The A WP&B Process 4. The District AWP&B process is at the heart of SSA implementation. Practically all SSA expenditures and activities are driven by the AWP&Bs prepared annually by all districts of the country. It is within the process of AWP&B development, endorsement, appraisal, approval and 37 monitoring that the SSA Framework for implementation becomes operationalized throughout the country. 5. The AWP&B oreparation process is guided by MHRD. Each year at the beginning of the planning process based on the overall experience and objectives, focal areas for planning are identified by MHRD and communicated to the States. For example, for 2013-14, some of these include reaching out to the still un-reached targeted special focus districts; maximizing expansion of upper primary schools infrastructure, reducing dropouts, implementing focused programs for improving learning levels in math and language for grades 1, 2 and 3, implementing regular and reliable pupil assessment systems and remedial teaching; rationalizing teacher deployment and enhancing student and teacher attendance; and introducing measures for empowering SMC and their links with PRIs. 6. The process has been strengthened in a number of ways to ensure a performance-based outcome focus. In particular, the process now requires states to commit to specific annual targets on outcomes and to undertake associated policy commitments in key areas. For example, in the AWP&Bs for 2013-14 states commit to targets, including reducing dropout rates and gender gaps, enhancing achievement levels of children, and increasing enrolment of children from minority communities. In addition, states are also required to take measures such as appraising and redesigning the teacher accountability system and mechanisms. In order to enhance state level accountability for results, GOI will link budgetary allocations for assessments to the AWP&B process. 7. In order to allow states to meet quality improvement targets, there is now an enhanced priority to support state-wide quality improvement measures. The AWP&Bs continue to be appraised at the National level. Following receipt of the AWP&Bs, MHRD commissions an appraisal of each of the States AWP&B workplans. The appraisal process reviews progress against targets and commitments, identifies problem areas; examines the quality of data used for planning; interventions suggested for various components; and convergence in implementation with programs being implemented by other departments/ministries. 8. The PAB is the authorized body of the National Mission of the SSA to approve State/Union Territory (UT) AWP&B After the appraisal team has completed its work, MHRD convenes a PAB meeting to review the AWP&Bs on the basis of the appraisal report. The PAB makes decisions regarding the approval and funding of the AWP&B in the light of performance against agreed outcome and output targets and resource availability. Evaluation criteria include: progress made by states in implementing strategies for out of school children; and progress made in reaching agreed upon commitments on key outcomes. The PAB then discusses the proposed strategies to improve outcomes and sets targets for the states to meet for the forthcoming year, as well as undertakings related to system reforms. Financing also takes into regard on the state's performance in utilizing funds and meeting outcome targets. 9. The minutes of the PAB for all States reflecting agreements on project targets, outcomes, undertakings, commitments and funding are placed on the MHRD website for wider dissemination. The proposals not approved by the PAB are also discussed and the details are provided in the minutes of the meeting. 38 Technical Assistance 10. The MHRD has requested TA for capacity building of its national institutions, the NCERT and NUEPA. This will be undertaken through a proposed TA fund which will potentially be a grant from DFID (under discussion). The TA fund will support the following: * Support to NCERT: Support for national student assessments, including NCERT and states * Support to NUEPA: Support for the development of standards for school performance, evaluation/monitoring and school leadership training with NUEPA and states. 11. The TA fund will operate under the following principles: (i) DFID would manage and finance the TA (ii) technical expertise would be sourced competitively; (iii) NCERT, NUEPA and MHRD will play key role in the selection of technical expertise; and (iv) bi-annual JRMs will review the progress towards the TAs objectives. 12. Considering the significance of the TA to the project and to the goals of SSA itself, MHRD will use part of the proceeds of the loan to support NCERT and NUEPA in undertaking capacity enhancement on learning assessments and school leadership and school performance assessment. 39 Annex 3: Implementation Arrangements India: Third Elementary Education (SSAIII) Project Institutional and Implementation Arrangements 1. Management and implementation arrangements under SSA III will provide for: (i) program management, oversight and review; (ii) undertaking management and implementation through institutional arrangements like the PAB of the SSA; (iii) providing and generating technical support and capacity building effected through national and state level institutions. 2. National Level. The SSA is governed at the Centre by a General Body chaired by the Prime Minister, an Executive Committee and a PAB. At the national level, a PAB is functional that assists the General Body in the management and oversight of the SSA project that is now the vehicle for the RTE Act. The implementation agency for SSA III will be the MHRD, through EEB II bureau, which will be responsible for the day-to-day implementation of the Program and shall maintain the PAB throughout the Project implementation period. It will ensure that the SISs and other project executing agencies remain operational throughout the Project implementation period. The MHRD, through EEB II, will ensure that the PAB meets regularly and whenever necessary to, inter-alia, approve and sanction AWP&Bs and the national components and the State components, ensure adherence to the financial norms envisaged in the Program, with the overall objectives of the Program and the Project, ensure cost effectiveness of all proposed interventions at various levels and co-ordinate the activities of project executing agencies. The MHRD as the implementing agency will ensure that the SISs provide funds to various project executing agencies as per approved AWP&Bs and the provisions of the manual on Financial Management and Procurement. 3. State Level. At the State level, a State Mission Authority whose governing council is chaired by the Chief Minister operates as an autonomous SIS which provides direction and oversight at the State level. The SIS, through the State Project Office (SPO), coordinates with District and sub-District level organizations; supports districts in preparing annual plans and budgets; is responsible for monitoring and evaluation; and serves as a channel for the flow of funds to the lower levels. The SPO reports on implementation progress, and submits and negotiates the consolidated AWP&Bs, to the national level. 4. District Level. At the District level, the oversight function is carried out by District Elementary Education Committees, chaired by the District Collector. The DPO which works in close collaboration with the SPO, prepares the district AWP&B, and monitors physical and financial implementation progress. The district office is headed by the DEO who also performs the duties of the DPC. 5. Sub-district Level. BEOs have administrative responsibility for the schools, working in close collaboration with BRCs and CRCs on academic support. With the passing of the RTE Act, the sub-district level authority or the "local authority" having administrative control over the school or empowered by or under any law for the time being in force to function as a local 40 authority in any city, town or village;"'... will through close coordination with the SMCs oversee educational management and implementation in the block. 6. Community and School Level. Under the RTE Act the SMCs have been provided greater powers and responsibilities. They can take the support of the PRIs, to effectively monitor and implement SSA, through community mobilization, preparing school development plans, identifying out of school children and monitoring students' and teachers' attendance. SMCs are often sub committees of the Gram Panchayat (the village level elected government). 7. DecentralisedManagement Structurefor SSA: With the SSA becoming the main vehicle of implementing the RTE Act, the SSA framework suggests an integrated structure at the state and district levels for management at the state government level. Financial Management, Disbursements and Procurement 8. DPs have been engaged with SSA program since 2004, therefore preparation for SSA III is seen in continuum and an analysis of the major interventions of GOI during the earlier engagements was carried out. This was based on the review of the existing program through field visits and desk review of Audit Reports, JRM Documentation, SSA-II ICR report, IPAI reports on Concurrent Reviews, FMP Manual and the information available on SSA Website. 9. The SSAIII project will be implemented following SWAp approach and the guiding principles in the determination of the financial management arrangements have therefore been to (a) use the existing systems to meet the accounting and financial reporting requirements for the project; and (b) work with MHRD to strengthen the systems and address the weaknesses identified in a manner that assists MHRD/ SSA implementing agencies, to significantly enhance the levels of fiduciary assurance in the use of funds for the intended purposes. Key aspects of program financial management arrangements are detailed in the following paragraphs. 10. Financial Management Capacity Assessment for the Project: The years of SSA program implementation have resulted in constant strengthening of systems and procedures. However, considering the multiplicity of spending/ executing agencies (States, Districts and Sub-district levels) and diverse capacities across these agencies, there are persistent implementations challenges. The major learning areas for development identified during appraisal of SSA-III have been detailed below in tabulation form. Many of the below mitigation measures are already in place or suggested in FMP Manual, with varied level of compliance across the multiple program implementing agencies. Identified Risks/ Gaps Mitigation Measures Staffing: adequacy of financial - Focused attention to the staffing status of states with large vacancies management staffing at various - Concurrent monitoring of staffing status by MHRD and SIS levels. Variation in capacity: Different - Introduction of standard training module by MHRD (underpreparation) states/UTs have different - Minimum of 5 days of mandatory training to all the Finance and Accounting capacities; adherence to staff at all levels. uniform project procedures, - Rigorous implementation of Project FM guidelines as contained in the FMP 18 SSA Framework for Implementation, 2009 41 timely reporting and Manual coordination may be a - SMC/ manuals in the local language at all States challenge. - Concurrent monitoring of status of trainings by MHRD and SIS Funds remaining un-utilized: Financial management training at regular intervals to BRC/ CRC /SMC/ grants treated as expenditure at members sub-district levels. - Timely submission of UCs by sub-district level - Increased support to SMC by the District Project Office staff - Develop a road map (in phased manner) for 100% installation and application of the integrated Financial Accounting Software across all States, districts and BRC level Budgeting Realism: translation - Approval of outlays aligned to Central Budget allocations of allocations under AWP&B - Prioritization of budget activities taking into account committed liabilities into actual releases and and essential needs of each state. expenditures. - Preparation of monthly expenditure plan both at State and District level to encourage balanced spending throughout the year - Timely release of funds up-to sub-district level to encourage balanced spending throughout the year - Periodic review of expenditure norms (used for AWP&B preparation) and variances and making adjustments to budget estimates Weak internal controls and - Rigorous implementation of Project FM guidelines as contained in the FMP internal audit. Manual - Regular training at all levels with special emphasis to sub-district levels. - Regular review meetings at state and district levels to discuss audit observations. - Periodic Internal audits as per guidelines laid out in FMP manual In-adequate Audit Coverage - Audit coverage of all SMC/ (incurring annual expenditure above Rs 1 lac) and un-addressed statutory over a period of three years audit observations. - Audit by CA Firms empanelled with C&AG - Focused attention on compliance with ToR for statutory audit as laid out in FMP manual - Audit observations addressed in a time bound manner (suggestion) 11. Compliance of the mitigation measures will be monitored through the semi-annual joint review missions on continuous basis. Further, MHRD also conducts quarterly review meetings of Finance Controllers of states wherein various financial issues and subsequent actions are duly discussed and agreed upon. 12. Manual: Financial Management arrangements for the program are documented in the Financial Management and Procurement Manual (FMP Manual), as revised in December 2009. It is a comprehensive manual and is applicable to the entire program. Since its issue in 2004, has been in use/ reference across the program states and has also been translated in vernacular languages by the states. 13. Budgeting and Annual work plans: At the GOI level budget for the Program is included in the overall budget for MHRD. Similarly, at the state level budget is provided to the Department of Elementary Education for its share of SSA. Funds from these two budgets are eventually pooled at the SIS for further utilization under the program. The budget proposals under SSA are prepared in the form of an AWP&B, covering all the interventions specified in the SSA norms. 42 14. At State level, the AWP&B for the State, indicating detailed activities and cost estimates is prepared by consolidation of the State component and the individual AWP&B for all the districts of the State. The district level AWP&B is a highlight feature, as it enables upward planning initiating from the school level. The State level AWP&B plan is appraised by the EE Bureau before being shared with MHRD for final approval. At National level, for State AWP&Bs finalization two-tier appraisal process if followed: (i) by Appraisal Team, who examines and analyzes financial, programmatic, managerial and technical viability, and (ii) by PAB, who accords final approval for the plan. 15. Over the years of implementation, AWP&B preparation process has been strengthened in a number of ways to ensure a performance-based outcome focus. However, the following persists to be an area for further strengthening: (a) the area of actual spending as a proportion of planned allocation and/ or actual releases; and (b) to promote efficiency, the timing of release of funds and spending during the financial year. 16. Funds Flow Arrangements: This has been an area of substantial achievement. Electronic channels are being used for all transfer to states, and in a significant number of states for transfer to districts and sub- districts. 17. The fund flow design is shown in the following diagram. The details are given in the FM Manual. Sarva Shiksha Abhiyan IIl, Funds Flow Arrangements - CA liF n cy Consolidat Fund of World Bank MHRD's Budget for S SA L -- s A--------- ------- State Share r State Imopiementation State ShSocieties District Offices SBlock L Resource Centers Cluster Resource Centers Village Education Committees School Management Commitees J 18. Accounting and Internal Control: Books of accounts for the project are maintained following 'double entry method based on mercantile system' of accounting. A Chart of Accounts (standard activity list) is used to enable data to be captured and classified by expenditure center and type of expenditure. This is used by all implementing entities (up to district level) to ensure consistency in recording/ reporting of information. 19. Many states have started using off-the-shelf accounting software for recording/ compilation of information. Some of the states are taking the independent initiative of developing integrated accounting software for the whole state, which may be highlighted to the 43 other states as good practice. Financial accounting software has been installed and is working in 31 States up to the district level and in 8 states up to BRC level. At majority of the centers (State/ District/ Block) with operational accounting software, manual accounts/ books are still being maintained. 20. Internal controls continue to be an area of concern. The JRMs and Audit Reports time and again highlights : (a) Mercantile system of accounting (accrual basis) still not being followed consistently in some states (primarily at the sub-district level); (b) Funds released to sub-district, in particular to SMCs treated as expenditure; (c) Refund of unspent balance at block level treated as income/receipts; (d) Un-reconciled/unexplained ledger balances; (e) non maintenance/ non production of statutory records; (f) Inadequate internal controls over assets; (g) Insufficient monitoring of funds spent at schools and sub-district level; (h) Non reconciliation of remittances in transit; and (i) Internal Audit continues to be a weak area in some states across the program. It is noted that MHRD is taking various measures to address the deficiencies and weaknesses identified in the various reports. However, this still remain one of the focus areas for strengthening. 21. Internal Auditing (IA): Internal Audits are carried by an IA Team, or in states where an in-house team is not available; a firm of Chartered Accountants is engaged to carry out the function as per a specified ToR. IA reviews and reports on adequacy of internal controls, accounting for and safeguard of assets, accuracy and propriety of transactions, bank reconciliation, level of compliance with SSA financial norms, procurement procedures, etc. IA Reports are submitted to the State Project Director for necessary action and also to the Executive Committee of the SIS. However, IA continues to be a weak area in many states across the program due to insufficient attention/ resources. 22. Staffing: MHRD is already staffed with a Financial Advisor and a Chief Controller of Accounts who have the overall responsibility for financial management/ book keeping of the department, respectively. They are adequately supported by qualified, trained staff. MHRD has designated a Director in the Elementary Education Bureau as the person responsible for Financial Management and Procurement aspects. He is supported by a team consisting of GOI staff and 5 consultants from a TSG. They are responsible for review/ monitoring as well as for capacity building of the relevant staff at the state level. The state finance controller is responsible for implementation of financial management arrangements at SIS level as well as for monitoring the FM systems at district/sub-district levels. 23. However, staffing has been an area of constant concern, monitored continuously in the JRMS. SSA-II ICR reflected that shortage of financial management staff at the District level was a persistent problem across most of the large spending states. Further, while there is a marked improvement in the status of overall vacancies (as against sanctioned posts), for certain states large vacancies still persist at states and district levels, including some of the high-spending states. MHRD has expressed that focused attention shall be given to the staffing status in these states and the position shall be re-assessed during the first JRM after project effectiveness. 24. Financial Reporting: Program Expenditures will be reported by the district to the state and by the state to GOI. Expenditure statements of all the states will be compiled by GOI, along 44 with its own expenditure, for submission to the Bank as a single statement for the entire program. Reporting will be on a semi-annual basis. The IUFRs including state-wise and activity-wise expenditure for the previous half year and year-to-date will be submitted to the Bank in agreed formats, within 90 days from the close of the half year. 25. Auditing: Audits of SISs will be conducted by firms of Chartered Accountants empanelled with the CAG. Selection of the firm of Chartered Accountants is based on criteria (specified in the Manual), which assess the size of the firms in terms of the number of staff and relevant experience. The audit will cover Program financial statements, including a statement of receipt and expenditure and a balance sheet. The Audit will cover all SISs/ District Offices and sub-district units on a sample 19 basis. Audits will be carried out in accordance with TORs documented in the Manual and which meet requirements of the Bank. Audited Accounts/Audit Report will be furnished to GOI by the States, who in turn will provide the Bank with copies of these State Audited Accounts/Audit Reports within nine months of close of the Financial Year i.e. by December 3 1st. Table 4: Auditing Arrangements Implementing Agency Audit Auditors MHRD Project Financial Statements Comptroller & Auditor General of India State/ UT SIS Audited Financial Private Audit firms Statements & Audit Reports 26. Disclosure of information: Currently, the following information relating to SSA is disclosed on the SSA Website. This information is fairly detailed and indicates a significant level of transparency on the Program: * Manual on Financial Management and Procurement (English version released in 2010) * AWP&B, releases, expenditures; state-wise data generally updated every quarter * Minutes of quarterly review meeting of Finance Controllers of states * Annual Audited Financial Statement for each State; * Others like JRM Aide Memoires, SSA framework/ norms, link to State SSA Websites; which ensure clarity on program objectives. 27. Supervision Plan: As part of engagement on SSA III, attention will be given to the states with higher outlays/ expenditure. The supervision intensity will be bi-annual including visits to states as part of the JRMs. The JRM will be accompanied by one FMS from the Bank team to all JRM States. 28. Disbursement Arrangements: The applicable disbursement method for the IDA funds will be "Reimbursement". Program expenditures under SSA III will be defined as expenditures on all the activities under the SSA program by GOI, eligible project States and UTs. 19 As per the FMP manual, Auditor will be required to cover all SMCs/ (incurring annual expenditure above a specific threshold, presently Rs. 1lakh) over a period of three years. 45 29. The disbursements by IDA shall be 100% (or such other percentage as the GOI and the Bank may agree) of the Eligible Expenditures as reported through the IUFRs, subject to the agreed maximum annual caps. Amount of Part A of Amount of Part B of Percentage of the Credit Allocated the Credit Allocated Expenditures to Category (expressed in SDR) (expressed in SDR) be Financed (1) Goods, works, non- consulting services, 100 %of Eligible consultants' services, Salaries, Expenditures in Trainings and Workshops, 544,400,000 106,600,000 each Fiscal Year up under the Program for Fiscal to an Annual Cap Year 2013-14 to Fiscal Year 2017-18 TOTAL AMOUNT 544,400,000 106,600,000 30. An illustrative scenario showing the estimated expenditure eligible for reimbursement under SSA-III is presented below: Table 5: Estimated SSA Eligible Expenditure for reimbursement (INR in Crores) Particulars 2013-14 2014-15 2015-16 2016-17 2017-18 Total 20 Projected Eligible Expenditure 35,000 36,000 36,000 36,000 36,000 179,000 Capped Total IDA financing 1,200 1,980 1,477 1,080 300 6,037 Capped Total IDA financing 200.00 330.00 246.20 180.00 50.00 1,006.20 (in $ million) 31. Disbursement will be made once per year around July/ August, for eligible expenditures incurred in the prior fiscal year as reported in the IUFRs. The program expenditures reported in the IUFRs will be subject to confirmation/certification by the Annual Audit Report of all the project implementing agencies (when due). 32. The following points highlight the key disbursement aspects: * For each year, the annual disbursement shall be limited to the applicable annual cap for that financial year. Conversely, if eligible expenditures fall short of the applicable cap, the remaining funds will be carried forward to the next disbursement period in which there are sufficient eligible expenditures. * Any variation between the amounts of program expenditures reported in the IUFRs and those reported in the SIS annual audited financial statements will lead to a revision of the amount of eligible expenditure. In instance of disbursement implication, the same shall be recovered from or reimbursed to GOI through subsequent claims. * In case a state does not submit the audit report of a given financial year by the month of June following the audit due date (i.e., the previous December), expenditure reported by such state (for the year of default) will be excluded for disbursement purposes and not reinstated even if submitted subsequently. 20As shared by MHRD, due to start of new Finance Commission period, some shift may happen from plan to non-plan head hence, increase in outlay may plateau. 46 33. Retroactive financing will be permitted subject to the following conditions: (a) payments made for expenditures prior to the date of the Financing Agreement except that withdrawals of an amount not exceeding $200 million (the equivalent of SDR 129,400,000) may be made on account of payments made for Eligible Expenditures before that date and incurred after May 16, 2013; and (b) payments made for expenditures for works, goods and services supplied under a contract which any international institution or agency or the Association shall not have been financed or agreed to be financed under any other agreement. Procurement General 34. The SSA III project will be implemented in SWAp arrangement with the GOI and the World Bank. Bank support to SSA has been ongoing since 2004 and the procurement arrangements for the project will be similar to those of its predecessor SSA-I, SSA-II and SSA Additional Financing. 35. Procurement for SSA III will be carried out in accordance with SSA FMP Manual as revised in December 2009. The SSA FMP Manual along with the additional procurement provisions in the FA and the Letter of Undertaking that MHRD signs with the States are substantially consistent with the Bank procurement Guidelines: Procurement of Goods, Works and Non-Consulting Services under IBRD Loans and IDA Credits & Grants by World Bank Borrowers January 2011 and Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits & Grants by World Bank Borrowers January 201 land follow the agreements reached for earlier projects in Elementary Education in India. On December 20, 2013 the Managing Director of the World Bank concurred with the request to waive the requirement of referring to the Bank's procurement guidelines in the Financing Agreement for India: Elementary Education Project: SSA- III with the understanding that the actual waiver will be requested from the Board, at the time the Board considers this financing, specifically, the request seeks a waiver from : (i) the requirement of para 1.1 of the Guidelines Procurement of Goods, Works, and Non-Consulting Services, January 2011; and, para 1.2 of the Guidelines Selection and Employment of Consultants- January 2011 (collectively referred to as GLs henceforth) to make the GLs applicable to the procurement of goods, works and services for the program as provided in the FA; and (ii) the requirements set forth in para 2 of OP 11.00 that the GLs are incorporated by reference in the loan agreement and are binding on the Borrower. 36. The revised manual has made it mandatory for the States to follow the procurement procedures prescribed in this manual for all procurement under SSA including KGBV. Though the States may prescribe financial ceilings for various methods of procurement, the financial ceilings prescribed by MHRD from time to time will prevail and need to be adhered to. Implementing Agencies handling procurement 37. Procurement under SSA III will be handled at National, States, Districts, Block/Cluster and Village/School levels. At National level the procurement responsibility is handled by the MHRD. At State level, the SIS set up under Societies Registration Act 1860 will handle the procurement. The SIS has its units at District, Block and Cluster levels to handle the respective 47 procurements. At Village level, SMCs or such other bodies are responsible for school level procurement. In urban areas, this role is taken up by Ward Education Committee (WEC). Apart from the above implementing agencies, in some States additional implementing agencies (outside SIS) may be assigned with procurement responsibilities. The agencies which are owned by either the union government or state governments shall not be contracted under the project unless these are legally and financially autonomous, operate under commercial law, and are not dependent agencies of either the union government or state governments. However, based on their unique skills, government owned agencies like EdCIL, IGNOU, State IT Corporations and State Textbook Corporations are planned to be contracted on single source basis under the project and Bank has no objection to this. State Public Works Departments and State IT Departments will also handle the procurement of some civil works and IT equipment respectively under the project. At the national and state levels NCERT and NUEPA and SCERTs will also be acting as implementing agencies at the respective levels. The illustrative details of items procured at various levels are provided in the FMP Manual. Applicable procurementprocedures 38. Procurement under the project will be undertaken as per procedures laid out in the FMP manual. The FMP Manual has been reviewed by IDA and found to be in compliance with Section 4.09 of the IDA General Conditions for Credits and Grant and also found to be consistent with relevant portions i.e Appendix 1 and Annexes of the procurement guidelines. The majority of procurement is of small value and the entire project follows shopping, procurement through communities, direct contracting or open tendering (which is the Manual's equivalent for NCB). These methods are described in the SSA Financial Management and Procurement Manual. 39. The following contracts will not be financed by the Bank: (i) Contracts estimated to exceed the open tendering thresholds and (ii) consultancy contracts exceeding $300,000. 40. Applicability of the Fraud & Corruption provisions of the Bank's Guidelines is referred to directly in the Financing Agreement. To address any gaps, the Financing Agreement will be prepared with a section on "Additional Procurement Provisions" to ensure that the Project procurement arrangements are fully in line with the provisions of the Bank's Procurement Guidelines. 41. The Additional Procurement Provisions are: I. MHRD will ensure that all the States publish their Annual Procurement Plans on the websites of the SISs by October of each year. II. MHRD shall carry out the following Procurement Audits: a. Internal Procurement Audit in accordance with the provisions of the FMP manual. b. External Procurement Audit in accordance with the provisions of the FMP manual. c. Procurement Reviews as part of the CFR as per the provisions of the FMP manual 48 III. The Association reserves the option to carry out post review of any contract awarded. Such post review, however, shall be carried out in consultation with MHRD. IV. Conflict of interest a. A firm which has been engaged by the Recipient to provide consulting services for the preparation or implementation of a project, or any affiliate that directly or indirectly controls, is controlled by, or is under common control with that firm, shall be disqualified from subsequently providing goods, works, or services resulting from or directly related to the firm's consulting services for such preparation or implementation. Conversely, a firm which has been engaged by the Recipient to provide goods, works, or non-consulting services for the preparation or implementation of a project, or any affiliate that directly or indirectly controls, is controlled by, or is under common control with that firm, shall be disqualified from providing consulting services resulting from or directly related to those goods, works, or non-consulting services. b. Conflict among consulting assignments: Neither consultants (including their personnel and sub-consultants) nor any of their affiliates shall be hired for any assignment that, by its nature, may be in conflict with another assignment of the consultants. c. Relationship with Borrower's staff: Consultants (including their personnel and sub- consultants) that have a business or family relationship with a member of the Borrower's staff (or of the project implementing agency's staff or of a beneficiary of the loan) who are directly or indirectly involved in any part of: (i) the preparation of the bidding documents or TOR of the contract; (ii) the bid evaluation or selection process for such contract; or (iii) implementation or supervision of such contract may not be awarded a contract, unless the contract stemming from this relationship has been resolved in a manner acceptable to the Association throughout the selection process and the execution of the contract. d. Consultants or their affiliates competing for a specific assignment shall not derive a competitive advantage from having provided consulting services related to the assignment in question, and to that end, the Recipient shall make available to all short-listed consultants together with the request for proposals all information that would in that respect give all consultants equal opportunity and no advantage. e. A firm shall also be considered to have a conflict of interest if such firm submits more than one bid/proposal either individually or as a joint venture partner in another bid/proposal. This will result in disqualification of all bids/proposals in which the firm is involved. This does not however preclude a consulting firm to participate as a sub-consultant or an individual to participate as a team member in more than one proposal when circumstances justify and if permitted by the Request for Proposals. 49 V. Eligibilitv Exceptions a. Government-owned enterprises in the Recipient's country may participate only if they can establish that they: (i) are legally and financially autonomous; (ii) operate under commercial law; and (iii) are not dependent agencies of the Recipient or a Project State. b. Government officials and civil servants will not be hired under consulting contracts, either as individuals or as members of a team of a consulting firm. c. A firm declared ineligible by the Association in accordance with subparagraph (d) of paragraph 1.23 of the Procurement Guidelines Selection and Employment of Consultants under IBRD Loans and IDA Credits & Grants by World Bank Borrowers January 2011 or subparagraph (d) of paragraph 1.16 of the Procurement Guidelines Procurement of Goods, Works and Non-Consulting Services under IBRD Loans and IDA Credits & Grants by World Bank Borrowers January 2011 or in accordance with the Association's Anti-Corruption policies2 1 shall be ineligible to be awarded an Association-financed contract during the period of time determined by the Association. VI. Joint Ventures a. Mandatory joint ventures or other forms of mandatory association between firms shall not be financed under the proceeds of this Credit. VII. Fraudand Corruption a. The provisions of paragraph 1.23 (a) through (f) of the Procurement Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits & Grants by World Bank Borrowers January 2011 and provisions of paragraph 1.16 (a) through (f) of the Procurement Guidelines: Procurement of Goods, Works and Non-Consulting Services under IBRD Loans and IDA Credits & Grants by World Bank Borrowers January 2011 shall apply to all procurement financed by this Credit; and, b. All bidding documents/RFPs and all contracts financed in whole or in part by the Association, shall require bidders, suppliers, consultants and contractors to permit the Association to inspect the bidders', suppliers' and contractors' and their sub- contractors, sub-consultants, agents, personnel, consultants, service providers or suppliers accounts and records relating to the bid/proposal submission and contract performance of the bidders, consultants, suppliers and contractors, and to have these accounts and records audited by auditors appointed by the Association, if so required by the Association. 21 For purposes of this sub-paragraph, "Anti-Corruption Guidelines" means the "Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants", dated October 15, 2006 and revised in January 2011. 50 VIII. PriorReview a. There will be no prior review with respect to any contracts being financed under the Financing Agreement. Misprocurement 42. The Association does not finance expenditures for goods, works and services which have not been procured in accordance with the agreed provisions in this Financing Agreement and in accordance with paragraph 122 of Chapter IX of the Manual on Financial Management and Procurement. In such cases, the Association will declare misprocurement, and it is the policy of the Association to cancel that portion of the Financing allocated to the goods, works and services that have been so misprocured. 43. The Bank does not finance expenditures under a contract for goods, works, non- consulting services and consulting services if the Bank concludes that such contract: a) could not be awarded to the consultant or bidder otherwise determined successful due to willful dilatory conduct or other actions of the Borrower resulting in unjustifiable delays, or the successful proposal/bid being no longer available, or the wrongful rejection of any proposal b) involves the engagement of a representative of the Borrower, or a recipient of any part of the proceeds of the Loan, in fraud and corruption as per para 1.23(c) of the Guidelines: Selection and Employment of Consultants or para 1.16(c) of the Guidelines: Procurement of Goods, Works and Non- Consulting Services 44. When conducting the evaluation of bids, the Borrower shall check the eligibility of bidders from the lists of firms and individuals debarred and suspended, pursuant to paragraph 1.16(d) of the Procurement of Goods, Works and Non-Consulting Services Guidelines and/or paragraph 1.23(d) of the Consultants Guidelines, by the Bank that are posted on the Bank's external website. The Borrower shall apply additional due diligence by closely supervising and monitoring any on-going contract (whether under prior or post review) executed by a firm or individual which has been sanctioned by the Bank after such contract was signed. The Borrower shall neither sign any new contracts nor sign an amendment, including any extension of time for completion or a change or variation order, to an on-going contract with a suspended or debarred firm or individual after the effective date of the suspension or debarment without the Bank's prior review and no objection. The Bank will only finance additional expenditures if they were incurred before the completion date of the original contract or the completion date as revised (i) for prior review contracts, in an amendment to which the Bank has given its no objection, and (ii) for post review contracts, in an amendment signed before the effective date of suspension or debarment. The Bank will not finance any new contract, or any amendment or addendum introducing a material modification to any existing contract that was signed with a suspended or debarred firm or individual on or after the effective date of suspension or debarment. 51 Assessment of the Procurement Capacity of the Implementing Agencies Broaderprocurement relatedpolicies 45. The Constitution of India (Seventh Schedule) lists specific subjects in which the Union Government or the State Government alone can make laws and concurrent subjects in which both the Union and State governments can make laws. Procurement falls in the concurrent list. The Public Procurement Bill 2011 is yet to be enacted as law. Procurement of goods/works and services by MHRD and the State Governments (except for Tamil Nadu, Karnataka and Rajasthan who have passed their own procurement legislations) is regulated mainly by the General Financial Rules (GFR), 2005; State Finance Rules, Indian Contract Act 1872 as amended to date and the Sales of Goods Act. Other policy interventions such as Central Vigilance Commission (CVC) and the Right to Information Act also potentially impact on the government procurement systems. Any misconduct is prosecuted under the provisions of the Competition Act, 2002 and the Prevention of Corruption Act, 1988 (PCA). ProcurementCapacity Assessment for the Project 46. Procurement capacity assessment reports conducted in the past have concluded that the States have sufficient capacity to handle the procurement under the project. The report also however identified the need for improvement in procurement capacity at the Village level committees by providing appropriate training and detailed manuals. 47. In addition, the reports of various JRMs, audit reports submitted by Chartered Accountants and reports on CFRs, Ex-post review of the contracts issued under SSA-I, SSA- II, Additional Financing and the financial/performance audit conducted by CAG of India have identified various areas that require further strengthening. 48. As per the reports of various JRMs, the identified weaknesses are: weak internal audit in most SIS, lack of focus of internal audit on procurement, lack of community oversight for school level and lack of formal monitoring of the procurement plans. 49. Some of the findings of the CFRs are: a general lack of awareness of the provisions of FMP Manual, some instances of large variations in the costs of similar items, inappropriate procurement from private firm using conduit of government organization (which does not deal in the items procured), weak monitoring by SPO for large value procurements; and significant variation between what was mentioned in the procurement plan and the actual procurement conducted. 50. The World Bank appointed consultants in April 2011, to carry out the review of 135 selected contracts identified on the basis of Statement of Expenditures in 4 states (i.e. on an average 5 districts in each state selected based on volume of expenditure giving due weightage to regional representation and the value of the construction of civil works), namely, Maharashtra, Karnataka, Uttar Pradesh and Assam. The review found that the agreed procurement procedures were largely adhered to. Major findings were reported in less than 5% of the contracts. The review was of the opinion that the program could benefit from having dedicated procurement officers in the state and district offices. It also reported cases of procurement being carried out 52 towards the end of the financial year especially at the District level. It also highlighted that the reports submitted by internal and external auditors do not report deviations to the prescribed procurement procedures and mostly report 'nil' observations. 51. The Fiduciary Risk Assessment conducted By PwC in March-May 2011 covering Bihar, Gujarat, Madhya Pradesh and Uttar Pradesh identified that procurement was not standardized across the States. The threshold limits for various types of procurement varied across the states visited. Further, it was noticed that there was significant number of cash purchase and direct purchase at the School level. The report commented that ground level procedural guidelines for procurement were required and were yet to be formalized by some of the States covered in the assessment. 52. It is noted that MHRD has promptly initiated appropriate action to address the deficiencies and weaknesses identified in the various reports. MHRD has instructed the states to submit the procurement plans immediately after the receipt of PAB Minutes approving the AWP&B and some of the states have taken action to translate the FMP Manual in local languages and developed SMC Manuals. In summary, the capacity of the implementing agencies and the implementation arrangements for Elementary Education III has improved over the years. Major Risks related to procurementand MitigationPlan 53. The major factors contributing to procurement risk are a) limitation in monitoring the decentralized procurement; b) limited capacity to handle the procurement at school level; c) lesser awareness of procurement procedures at school/village level, where most of the expenditure is incurred; d) limited disclosure of procurement related information; e) country environment factors. The Table below summarizes major risks and risk mitigation plan for SSA- III. Procurement Risk and Mitigation Plan Risk Risk Mitigation Plan Residual Rating Risk Rating Corruption in High 22 Disclosure of contract opportunities and contract award decisions Substantial procurement Adherence to agreed procurement procedure Social oversight and community participation Internal/external procurement audits Effective complaint handling mechanism Improved documentation and record keeping Concurrent monitoring of procurement by MHRD and SIS 22The risk rating is decided by two factors, first the probability of occurrence of the event and second the impact of occurrence. Even if the probability of occurrence of corrupt procurement is very low (based on the data available for the implementation of SSA till date), its impact particularly on the reputation of MHRD and the Bank is expected to be quite high. This is the rationale behind the rating assigned for Corruption in Procurement 53 Risk Risk Mitigation Plan Residual Rating Risk Rating Delays in contract Medium Timely Procurement planning and regular monitoring of the Medium award and procurement plans. completion Effective contract management. Increased use of the procurement monitoring software developed by MHRD Provision and training of procurement staff Regular monitoring through review missions Procurement audit/ review Concurrent monitoring of procurement by MHRD and SIS Weak capacity and High Procurement training provided at regular intervals to SMC Substantial lesser awareness of members procurement SMC manuals in the local language to be prepared by all States procedures at Increased support to SMC by the District Project Office staff school/village level, where most of the expenditure is incurred Lack of economy Medium Need based procurement planning Medium in procurement and Development of standard bidding documents use Availability of trained procurement staff Competitive procurement Community ownership of assets Regular monitoring through review missions Procurement audit/ review Concurrent monitoring of procurement by MHRD and SIS Overall Risk Substantial 54. Many of the mitigation measures are already in place or suggested in FMP Manual but the compliance needs to be emphasized. For other measures such as effective contract management, MHRD has initiated steps immediately to put in place the mitigating measures and the compliance of these will be monitored through the semi-annual joint review missions and post reviews by the World Bank to be conducted in consultation with MHRD. Agreed Procurement Arrangements ProcurementPlan 55. MHRD has requested the States to publish their procurement plans on the respective SIS websites latest by October of each year. The SISs who are not yet having a website will be asked to develop the same. The individual state level procurement plans can be accessed from SIS website during Joint Review Missions for the purpose of monitoring of procurement. MHRD will address the following weaknesses observed during SSA-I, SSA-II & SSA Additional Financing implementation: 56. All states are to prepare Procurement Plans as per the format developed for the program. The importance of monitoring of the plan for timely completion of the procurement process will be emphasized. 54 57. MHRD will reiterate to States that all procurement is to be conducted in accordance with the provisions of the FMP manual. Confirmation on this may be provided by the States. 58. Revised thresholds for various procurement methods are to be shared with SIS. 59. The need for systematically maintaining the contract records/filing for post review should be emphasized. A model format for compiling contract data will be developed. In this connection, MHRD has already issued instructions to the states for maintaining data regarding major contracts. Possibility of computerization of procurement data (as part of the MIS) will also be explored. 60. A check list for procurement audits by external and internal auditors has been developed including a format for CA certificate for procurement audit and has been circulated to the states. The compliance needs to be monitored. 61. The procurement staffing and training requirements (contents as well as periodicity) will be emphasized. MHRD has asked the states to provide a minimum of 5 days of training to the staff in Financial Management and Procurement. 62. For all price-negotiated contracts, the CVC Guidelines shall be followed. The Bank will post-review such price-negotiated contracts, in consultation with MHRD and shall reserve the right to determine whether such contracts are financed or not out of the proceeds of the financing. 63. The States/UTs have been instructed further to put the invitation for tenders on their websites besides advertising in newspapers. 64. Above provisions wherever applicable, will also be added in SMC manuals. ProcurementThresholds 65. The Table below indicates the thresholds agreed for various procurement methods. Thresholds for various Methods of Procurement Category Method of Procurement Threshold (US$ Equivalent) Works Open Tender Up to 500,000 (Up to 800,000 only for SIEMAT buildings) Limited Tender Up to 75,000 Single Tender Up to 75,000 Procurement through Communities Up to 75,000 Goods except IT Equipment and Open Tender Up to 500,000 Textbooks Limited Tender Up to 50,000 (also applicable for non- Single Tender Up to 50,000 intellectual services and the services contracted on the basis of performance of measurable physical outputs) 55 Category Method of Procurement Threshold (US$ Equivalent) Goods (only Textbooks) 23 Open Tender Up to 2,000,000 Single Tender Up to 1,000,000 Goods (only IT Equipment) Open Tender Up to 3,000,000 Limited Tender Up to 50,000 Single Tender Up to 30,000 Consultants' Services As per FMP Manual Up to 300,000 ProcurementAudit 66. Following procurement reviews/audit will be conducted for the project: 67. Chartered Accountant Audit: The CA firms are being utilized to audit the accounts of SIS, including reviewing procurement procedures being used. The Districts and Sub-District Units are also being covered in the CA audit, on a sample basis. MHRD has modified the TOR for external auditors to cover the SMCs/Schools receiving more than Rs.0. 10 Million a year in a cycle of 3 years. In order to bring uniformity in procurement audit across the states, it has been provided procurement audit checklist including format for CA certificate to CA firms. It will be also be clarified that if the funds are transferred laterally to other implementing agencies outside the SIS, the SIS will share the procurement audit checklists with such agencies to ensure that the procurement audit for such agencies is conducted in accordance with the checklist. 68. Internal Audit: The FMP Manual requires the recruitment of internal auditors at SIS, who will also be responsible for internal procurement audit. These internal auditors are either departmental staff or the Chartered Accountant firms engaged to perform the internal audit function. Apart from SIS they also cover Districts and Sub-District Units. The procurement audit checklist developed for external CA auditors will also be utilized for internal auditors. 69. CAG Audit: The Comptroller and Auditor General (CAG) of India also conduct the procurement audit (as part of the financial audit) of MHRD as well as SIS. In addition CAG also conducts performance audits of the schemes run by the Government. 70. Concurrent Financial Review: The Institute of Public Auditors of India (IPAI) had been engaged by MHRD to conduct concurrent review of SIS. The contract with IPAI has expired and MHRD is in the process of running a competitive process to engage a firm to provide this service. MHRD will share the procurement related audit remarks from CFR reports with the World Bank along with the action taken report. ProcurementSta 71. MHRD has designated a Director in the Elementary Education Bureau as the person responsible for Financial Management and Procurement Aspects. The Director is supported by a team consisting of GOI staff and 5 Consultants from TSG. One of the consultants works on procurement matters. The consultants are responsible for review/ monitoring as well as for 23 Single Tender procedure will be used in the states which have textbook corporations. In case of other states, Open Tender procedure will be used to purchase the textbooks or get these printed. 56 capacity building of the relevant staff at the state level. However due to scaling up of the operation in Elementary Education III , the requirement of additional procurement consultant for capacity building of the states should be assessed. It is expected that approx. 45% of the total outlay will involve procurement of goods, works or services. 72. At SIS level, state finance controller is responsible for supervising the procurement at SIS level as well as monitoring of the procurement at district/sub-district levels. At district level, the account officer is designated for handling procurement also. Currently 5 days training covering FM and procurement aspects is provided to these staff each year. However, more focused training is required to ensure the correct understanding and application of the procurement procedures contained in FMP Manual. In some states procurement is being handled by officers other than the Finance Controller/Finance Officer and procurement training should be extended to these staff. At Village/School level also, basic procurement training should be provided regularly in addition to incorporating the procurement procedure in Manual. Use of visual aids like posters to display the procurement procedure at /School level may also be considered. ContractMonitoring 73. In order to ensure timely supply of goods/textbooks etc. and timely completion of works, ensuring right quality of the items, timely release of payment etc., SIS will be requested to set up internal mechanism for effective contract monitoring. In some states third party monitoring of the timely supply of textbooks is already in place. Disclosure 74. MHRD will publish financial and procurement audit reports of State implementing agencies on SSA website. The states have also been asked to disclose contract opportunities, bid documents and contract award information on their website in line with the CVC directives. The disclosure of financial information at SMC offices is being done in some states. However, this needs to be improved viz. to increase the penetration across all the states and have disclosure of both receipt of funds and expenditure. Complaint Handling Mechanism 75. In order to deal with the complaints received from contractor/suppliers effectively, a complaint handling mechanism is available at both the national and state level. On receipt of complaints, immediate action will be initiated to redress grievances. All complaints will be dealt with at levels higher than that of the level at which the procurement process was undertaken. 76. If the complaint is received prior to award of the contract, the complaint shall be taken into account while considering the award of the contract. If, after contract award, a protest or complaint is received from bidders, it would be examined and if necessary, the contract award will be reconsidered. 77. In cases where an individual staff is found responsible, suitable disciplinary proceedings will be initiated against such staff under the Civil Service Conduct Rules at national level or the 57 Classification, Control and Appeals Rules at the State Level. The receipt of any illegal gratification by staff is to be considered as misconduct and if established, will result in disciplinary proceedings against such staff, in addition to penalties under the law. The existing provisions under the law, the discipline and appeal rules and the powers of the Central Vigilance Commission are to be strictly followed to deal with the complaints of contractor/suppliers. Procurement supervision 78. All aspects of Elementary Education III including procurement shall be reviewed during Joint Review Missions which will be arranged twice a year. 79. Post Procurement Review: All contracts issued under Elementary Education III will be subject to post review on a sample basis annually. These reviews are meant to ensure that the agreed procurement procedures are being followed. Considering the large number of institutions involved, Post review of contracts will be conducted in a few selected states annually in consultation with MHRD in order to cover all states within a four year cycle. Safeguards 80. There was notable progress on social issues under SSA II. The SSA II framework focused attention on Special Focus Groups (SFGs), notably girls, SCs and STs, disabled children and deprived urban children and special focus districts (SFD) and other socially/educationally disadvantaged groups. During the project period these groups were mainstreamed in State and District planning, appraisal and implementation, training and monitoring. 81. MHRD prepared checklists for planning and appraising the States and Districts AWP&Bs to ensure that specific actions were taken for these special focus groups. The checklists were incorporated in the Planning & Appraisal Manual for use during implementation. Similarly, gender issues were addressed in all aspects of the program and in other related schemes with which the SSA converged. SSA continued to strengthen its convergence with other related Government programs such as the Integrated Child Development Scheme (ICDS), midday meal, women's and girls' empowerment (Mahila Samakhya), Drinking Water Mission, etc. This had contributed greatly towards equity and improved learning experiences for all children. 82. The SSA framework called for special attention to be paid to tribal children, among "special focus groups". Some of the specific interventions for tribal children in SSA included provision of school facilities in tribal areas, deploying and providing specific support for teachers in these areas, and preparing special instructional materials for tribal children. 83. For girls, under the National Program for Girls' Education at the Elementary Level (NPEGEL) program, special focus was given to education of girls from ST communities. The scheme was targeted to educationally backward blocks where the level of rural female literacy was less than the national average and the gender gap was above the national average, as also in blocks that had at least 5 percent ST population and where the ST female literacy rate was below 10 percent. The NPEGEL program has been closed and the activities have fed into SSA to further enrich it. Kasturba Gandhi Balika Vidyalaya (KGBV) schools were provided for girls in 58 educationally backward blocks, where a maximum of 75 percent girls enrolled were from ST, SC, OBC Minority Communities. 84. Building on this, in order to understand social impacts and to suggest enhancements to the existing social mechanism in place, a rapid SA has been undertaken as part of SSAIII project preparation. The project is designed not to have any negative social impacts but will trigger the Bank policy on indigenous peoples in line with the focus on vulnerable and disadvantaged communities. 85. In 2013-14, the GOI declared 316 districts as special focus districts, these districts being characterized by marginalization and backwardness. The government gives special attention to these special focus districts, which are identified on indicators based on a high concentration of the SCs, STs, and minority population.. 86. In order to ensure an adequate level of social due diligence, the following mitigation measures have been identified as minimum requirements to be in place as part of the social safeguards requirements. Social Assessment: 87. The World Bank proposes to support the India Elementary Education Project- SSA III through an Investment Project Financing loan. As a part of this, a SA exercise for SSA has been undertaken for incorporating social analyses and participatory processes into project design and implementation. This study has been carried out to ensure that social implications of the proposed project have been identified, analyzed and clearly communicated to the decision makers. In order to achieve this target, the broad objective was to identify, develop and incorporate social measures into project planning, preparation, implementation and monitoring as a means of identifying and addressing direct and indirect social outcomes through all aspects of project execution. The challenges identified for the proposed World Bank support to SSA-III (based on the social analysis through field visits to Karnataka and Kerala) were reviewed against the provisions of the SSA framework. In the backdrop of the above, the following suggestions are being made for MHRD to carry out during program implementation. 1. Suggestions for improving physical and social access i. Strengthening convergence of SSA with other centrally sponsored schemes that cater to the needs of the deprived sections. This convergence is required at different levels, especially at the district and sub-district levels. This is covered under section 7.3.1 of the SSA Framework and may be implemented at the micro level for greater efficiencies to emerge. ii. To achieve the desired level of awareness on rights and entitlements of the disadvantaged / vulnerable communities, a community mobilization plan and a media plan may be prepared by the state implementing agency, as part of the preparation of AWP&B. This may be undertaken in consultation with district officers especially of backward regions / special focus districts, clearly listing out (i) various methodologies to be adopted, (ii) target population of each methodology etc. This may be followed by preparation/ improvement and updating of the mobilization /communication 59 material during implementation. The community mobilization and media plans need to be tailored to suit the needs of the Scheduled Tribes, Schedule Castes, Muslims and urban deprived, for responsiveness towards education. iii. Focus needs to be on identifying the vulnerable children so that they can be covered at the earliest for special training. The child tracking systems developed by many states need to be made more responsive to capturing each vulnerable child at school / cluster level using the Aadhar system/other modalities identified by the states/MHRD and the child's progress and status may be documented and followed up. This or other methodologies could be utilized as a mechanism to track children of migrant population. Further to this, as envisaged in section no. 3.8.2.24 of SSA Framework, task forces/ mechanisms may be set up in each state to effect regular coordination between states / districts, to meet the above objective of child tracking. The involvement of NGOs in the process of mapping of migration, planning and implementation of interventions, (as envisaged in sec. 3.8.2.23 of SSA framework)may be considered depending on local demand and supply of the same. iv. The Scheduled Tribes continue to be a disadvantaged group and focus is needed to improve their enrolment and retention further. Role of the School Management Committee, local authority as notified and local tribal community must be ensured for involving them in ensuring universal enrolment and retention. Innovative practices may be adopted by the States to motivate tribal children and their families towards education and to ensure improved learning outcomes. The School Leadership Programme maybe contextualized to the issues in tribal areas so that the teachers can address the local and specific impediments to education. 2. Suggestions for improving equity i. The SMCs need to focus on and address specific issues and concerns relating to students, parents of disadvantaged groups, mothers etc. These issues may be dealt with by the SMC as a whole or sub-groups constituted within that and they should be encouraged to document and record minutes for further consideration and decision making by SMC. ii. Efficacy of teacher training programs may be assessed as the study reveals a need for sensitizing teachers to handle children from disadvantaged sections with greater sensitivity and care and to help them to cross the existing cultural divide and integrate with other children. iii. Preparation of bridge materials between home language and school language may be undertaken at the state/ district levels to enable teachers to transact in the tribal language and help tribal children adopt the school language in areas with considerable tribal populations. iv. Evaluation mechanisms may be evolved and made responsive to build accountability in the teachers and ultimately in the other stake-holders for learning outcomes of SC/ST and minority students. The CCE maybe stressed as tool to assess and improve the learning levels on a continuous basis. v. The different grievance redressal mechanisms being put in place in different States must be made operational and effective. The different models like toll free numbers, student counseling units at school level etc. will all have strengths which could be shared across States so that the best practices are disseminated. It may be ensured that 60 all States set up and operationalize these mechanisms for student counselling/ redressal of student grievances. 3. Suggestions for improving monitoring i. Frequency of monitoring the schools by block and cluster level functionaries through visits may be increased from the current system of once in two months to once in a month for enhancing the efficiency of the program. ii. The learning outcome of children, captured in the Quality Monitoring Tool (QMT) format, may be adopted as a major indicator for gauging the performance of school as well as the teachers. While there are other tools like National Achievement Surveys for the same purpose, this micro level quarterly monitoring will help to adopt immediate corrective measures in the school itself to reduce the gap in learning outcome before the end of each academic year. 4. Suggestions for dissemination of information about entitlements under the RTE Act and Grievance Redressal Mechanism i. Information dissemination campaigns may be undertaken to generate awareness about the SSA program and RTE and the grievance redressal mechanisms available to stake-holders to benefit from the rights based approach under RTE. Community Oversight: 88. As part of project monitoring, community oversight will continue to evolve and develop as a critical tool for providing information to develop corrective measures for addressing the special needs and rights of the deprived local populations. This will be strengthened through evolving special third party review mechanisms and special emphasis during the bi-annual joint review missions of the project each year. This audit would review the implementation of the objectives laid out in the SSA framework and highlight shortcomings in terms of compliance. Social audit will also cover broader social impacts to highlight issues relating to social inclusion and will recommend mitigation strategies that will be implemented and reviewed by successive JRMs. 89. The Social Assessment was disclosed on December 2013 on the MHRD website (www.ssa.nic.in) prior to project appraisal. E. Environment Assessment 90. Under SSA II, environmental issues were related mainly to civil works, including construction of toilets and water facilities in schools. The EA for the SSA II was undertaken and completed in September 2007, including findings from National TPE conducted in several major states. National level monitoring consisted of TPE, periodic reviews by project implementing authorities and special monitoring visits by TSG and other members. National level monitoring was supplemented through the JRMs. These missions were effective in identifying shortcomings and highlighting good practices. UDISE coverage had expanded across all schools and it 61 provided critical information needed for planning. The JRM reports indicated that overall construction quality has been satisfactory. 91. A further innovation under SSA II was the inclusion of environmental audits which were conducted by special teams using engineers within the State implementing agencies. All States and UTs were covered in a cycle of three years. The audits provided the State technical teams an opportunity to learn through self-evaluation. 92. Building on this, a limited EA for the proposed World Bank support to SSA III was undertaken and completed in November 2013. It builds on the assessments conducted earlier for SSA I and SSA II and has been informed by results from a similar exercise conducted for the RMSA, which looked at several upper primary schools across five states. The SSA as a program has evolved since its launch and several guidelines and manuals have been developed. Most of these manuals continue to remain relevant to the program and will therefore be used for SSA III as well. 93. The nature of activities proposed under the current project does not pose significant environmental risks. Nonetheless, environmental management measures proposed as part of the limited EA would help in attaining/supporting the intended project objectives by creating a healthy and safe learning and teaching environment in schools. 94. The environmental issues in the project are related mainly to the construction and operation of schools. Impacts pertaining to: (a) location (environmental and social features of the site and surrounding land-uses); (b) design (lay-out within the campus, sanitation, water supply, drainage, solid waste arrangements, waste water management, ventilation, access, energy efficiency, material usage, fire safety, storage facility and natural disaster dimension) and; (c) construction management, including occupational health and safety issues will have to be dealt with in cases where new school construction and/or additional civil works to meet the RTE requirements, including toilets and water facilities are envisaged. This will also include the situations where need based infrastructure is introduced for children with special needs. 95. In a vast majority of the cases where the school infrastructure has already been created, the most pertinent environment, health and safety issues revolve around the need for maintaining a clean, hygienic and safe learning and teaching environment. Issues such as regular cleaning and proper maintenance of toilets, kitchen, water supply facilities, regular quality checks for the potable water supply and waste management would require attention. 96. The school infrastructure O&M is currently financed through annual RMG and other State funds, which are not always adequate. Under the project, all States will develop/strengthen sustainable school infrastructure O&M procedures. A feature of SSA has been the involvement of communities and school level institutions such as /SMCs in the identification, planning, design, implementation, operation and maintenance of schools and other program activities, which will continue to form a part of these procedures. The nature, scale and level of interventions, however will continue to remain contextual and will vary between and sometimes, even within the state. 62 97. The Framework for Implementation of SSA in civil works specifies and also provides flexibility to states to scale up good practices. Successful interventions like WSDP, BaLA, etc. need to be further disseminated and shared at the field level. Further, interventions related to promoting cleanliness and hygiene among students will be strengthened by dove-tailing existing available materials and schemes. 98. OP 4.01 has been triggered to ensure that all major (like building infrastructure) and minor (such as sensitization and training related) interventions are planned and designed to be environmentally sound by integrating appropriate principles and approaches into the over-all decision making process. The project is project is designated as Category B. 99. National level monitoring consists of TPE, periodic reviews by project implementing authorities and special monitoring visits by TSG and other members. National level monitoring is supplemented through the JRMs. These missions have been effective in identifying shortcomings and highlighting good practices on a variety of aspects, including environment, health and safety dimensions. UDISE coverage has expanded across all schools and it continues to provide critical information required for infrastructure planning for schools. The same mechanisms will be used for monitoring the environmental, health and safety requirements and performance under the project as well. This will also include environmental audits which will be conducted by special teams constituted out of the existing lot of engineers within the state implementing agencies. All States and UTs will be covered in a cycle of three years. The audits are expected to provide the state technical teams an opportunity to learn through self-evaluation. 100. The limited EA prepared for SSA III was disclosed on the MHRD website (www.ssa.nic.in) prior to project appraisal. 63 Annex 4: Operational Risk Assessment Framework (ORAF) INDIA: Third Elementary Education (SSAIII) Stage: Board Risks Stakeholder Risk Rating Moderate Risk Description: Risk Management: The stakeholders in this project Teachers lack both skills and motivation to apply new pedagogical techniques. Teacher training directed are the MHRD, the state governments and towards quality improvement plus enhanced accountability are expected to influence behavioral change. implementation agencies, teachers, students and parents. While the Bank has supported School committees will be empowered with more relevant information to hold schools and teachers the SSA in its earlier phases (I and II), the accountability. Better information about quality of education is also likely to increase competitive pressures focus on quality improvement in this next for quality improvement. phase will bring in a new set of challenges: Resp: Client Status: Not Yet Stage: Both Recurrent: Due Frequency Yearly * There could be resistance from Date teachers to learning new ways to improve quality as it will challenge their traditional Resp: Client Status: In Stage: Both Recurrent: Due Frequency Yearly approaches Progress Date: * Existing capacity at state, district and school and community level is weak to implement and monitor quality interventions with a focus on learning FA outcomes * Parents may exercise the option to exit the government system and go to private schools rather than using their voice to improve public education 2.1 Capacity Rating Substantial Risk Description: Risk Management: * Capacity of national institutions to Close engagement and support to the national apex institutions like NCERT and NUEPA will lead quality interventions needs strengthen their capacity in this area. strengthening * Overall requirement of Finance and Accounts staff is being re-assessed and a detailed Annual * Weak capacity of finance and Training Program to be disseminated to all states. This will be a substantial step towards program staff at the sub district levels ensuring that financial and accounting functions at each IA are effectively managed. Resp: Client Status: In Stage: Imple Recurrent: Due Frequency Yearly Progress mentat Date: 4ion 64 2.2 Governance Rating Substantial Risk Description: Risk Management: There is weak governance This is third phase of SSA and MHRD is well versed with the various FM modalities. However, capacity at district and sub-district level there is a need to further strengthen the FM capacity and timeliness of audit reports still remains a matter of * Expenditures are far less than concern. A detailed financial assessment is underway to further identify and mitigate risks. outlays as budgets are not planned A FMP Manual has been in place for several years and will not be changed substantially for the realistically current project. Delays in receipt of audit reports Resp: Both Status: In Stage: Both Recurrent: Due Frequency Yearly * Accounting software not yet Progress installed fully at district level 3.1 Design Rating Substantial Risk Description: Risk Management: * Setting of national goals and grade * With the priority focus on quality, the state AWP&Bs will need to be aligned with this priority. The level learning standards, to allow PABs are being held on schedule now and going forward this will ensure timely release of funds to the comparability across states, may not be states. In addition the present budgeting and expenditure planning process is being re-assessed to further acceptable to all states improve budget effectiveness. * Strategies to improve early grade reading and numeracy have not been done The project design includes: on a large-scale in India additional support through TA to strengthen the National Assessment of Student at NCERT and its * In the past there have been use to improve learning instances when the Centre funds haven't reached the states in a timely manner, esp. * Additional support through TA in the areas of school governance and leadership to strengthen in the North East states where central share performance and accountability of school principals and supervisors and thereby school performance is 90 % - this affects program * Teacher performance standards framework developed by NCERT which will be applied by states to implementation and outcomes improve teacher performance * Weak accountability at various levels Stage: Both Recurrent: Due Frequency Yearly affecting quality o of srvce affctngqulit service delivery nd elvey and Resp: Bank Status: Due Yet Not ] Date. outcomes 3.2 Social and Environmental Rating Low Risk Description: Risk Management: * Social: There is a possibility of * As a result of a decade long campaign for community based decentralized planning and the project not taking into account issues implementation of interventions, general public became increasingly more aware to the vitality of around the needs of disadvantaged groups elementary education, particularly that of girls. There is significant increase in enrollment of girls and of and women. children belonging to other disadvantaged groups (SC and ST). Several states engaged teachers from the * Environment: School buildings local community, besides also engaging volunteers for mobilization and support activities. The recruits often may be ignoring environmental concerns constituted large percentage of women. The Results Framework reports on disadvantaged groups. and teaching learning processes may not * The MHRD has carefully developed the School Development Plan that factors in building factor in issues related to environment and strategies that are local specific integrating indigenous environment friendly components especially for sustainability. children's and teachers' comfort. Teaching learning materials pay special attention to environmental safeguards as they are based on the NCF 2005 that pays special attention to concerns of environment 65 protection and preservation. Resp: Both Status: In Stage: Both Recurrent: Due Frequency Yearly Progress Date: 3.3 Program and Donor Rating Low Risk Description: Risk Management: There may be lower-than- Since SSA is the vehicle for implementing the RTE Act, all governments will be committed to expected funding support to SSA as the supporting the program and financing will continue to be decent and long term country is facing economic problems As a flagship program of the GOI, allocations have historically been protected. Actually spending has tended to be somewhat less than allocations, so there is room for efficiency gains. In addition, the AWP&B process provides a mechanism for setting priorities for funding should there be fiscal constraints. Resp: Both Status: In Stage: Both Recurrent: Due Frequency Progress H Date: 3.4 Delivery Monitoring and Rating Low Sustainability Risk Description: Risk Management: * Sustainability will depend in part * The MIS system is being strengthened through the UDISE (integrates elementary and secondary of demonstrable achievements on quality of level MIS) to provide more accurate and timely data education, which are slow in becoming * Multiple mechanisms for monitoring quality, including through leading indicators, are needed apparent. Resp: Both Status: In Stage: Both Recurrent: Due Frequency Yearly Progress Date: Overall Preparation Moderate Overall Implementation Substantial Risk: Risk: Risk Description: Risk Description: There may be delays in project preparation due to issues around the As the counterpart has been used to working with the Bank and the DPs financial instrument to be used. The MHRD has demonstrated financial with the relevant M&E, fiduciary and monitoring mechanisms including discipline and strong fiduciary results based on existing project instrument the Joint Review Mission process, implementation with strong monitoring and request for any change may endanger the project very substantially. and results orientation will be possible. 66 Annex 5: Implementation Support Plan INDIA: Third Elementary Education (SSAIII) A. Strategy and approach for the ISP: 1. In keeping with the SWAp approach of this operation, the strategy of the Bank's ISP is one of partnership, with MHRD and the other DPs. The Bank's funding will be less than 4 % of total funding, and will collaborate closely to maximize its comparative advantage and provide the necessary implementation support, beginning with the primary funder, the GOI. 2. In general, the World Bank implementation support will be focused on capacity-building and strengthening of India's own systems for program development, implementation and monitoring, and for fiduciary oversight, at national and State levels, including both technical and fiduciary aspects. 3. On a day-to-day basis, MHRD, as the lead implementing agency for SSA, will provide India's 35 States and UTs the implementation support they need to reach SSA's development objectives, through the Bureau for Elementary Education and its TSG, guided by the Operational Manuals for SSA and through the national institutions (NCERT, especially on quality improvements, and NUEPA, especially on teacher and school performance, and leadership standards). At the State level, the SSA SIS will provide implementation support to the District Program Office, which in turn will provide support to the BEO and BRC, CRCs and schools. 4. MHRD's own M&E system will be the core source of data to monitor physical implementation, particularly the Unified District management Information System (UDISE). Financial implementation will be tracked through a combination of e-banking (financial transfers from the Center to the State, and from the State to the schools, will be done through electronic transfers), quarterly reports submitted by State Financial Controllers to MHRD, semesterly preparation of Interim Financial Reports (IFRs) and annual external audits. Where independent third-party monitoring and implementation support is necessary, this will be contracted out by MHRD, NCERT, NUEPA, States, and the World Bank. B. Implementation Support Plan. 5. The proposed Implementation Support Plan includes a range of technical support, including activities to be carried out by MHRD, the World Bank, and technical and fiduciary specialists. There will be increasing focus on quality interventions during this phase, after the significant gains made on access and enrolment during the earlier phases of SSA. Funding for third party implementation support would come from the TA fund, MHRD's own funding and the World Bank supervision budgets. 6. Implementation support will continue to be provided in part through the field based JRMs conducted semi-annually, in collaboration with MHRD. The Bank will join GOI to review program implementation semi-annually in January/ February and September-/October each year as per ToR agreed between the GOI and the Bank prior to each JRM. Both of the JRMs would be field missions, each mission visiting 6 states. Each Mission will have 6 nominees from the GOI 67 and 6 representatives from the DPs. Duration of the JRMs would be of about two weeks each. JRMs will review status of progress and issues related to program planning, implementation, monitoring and evaluation, including financial management (FM)/procurement capacity of states and districts and agree on actions to support the weaker states. Each mission will cover four issues in every mission, namely; equity, quality and fiduciary issues, and each year the MHRD in discussion with the World Bank would propose an additional theme for each mission so that more in-depth analysis could be made around those areas. The costs will be shared between MHRD and the World Bank. This practice is well-established in the sector, with the Government leading the process. The World Bank in consultation with the other DPs supporting the SSA program will appoint 6 (4 Education Specialists and 2 FMP specialists) people as the JRM members. All reports from the JRMs are made publicly available on a dedicated website. The bi-annual JRMs will also review the TC Fund after it is operationalised and the progress towards its objectives. 7. GOI will provide the leadership and coordination of each JRM. The organization of meetings and deliberations in the Delhi leg of each JRM will be the responsibility of GOI and the Bank on a rotational basis. 8. In January/February, the JRM would: * visit selected Districts in 6 States to review progress in overall implementation including, access and equity, quality, financial management, procurement and safeguard issues; * follow-up issues highlighted in evaluations and studies; * identify any studies to be undertaken in the intervening time before the next mission; * examine issues related to State and District implementation capacity and agree on actions taken to support weaker States and Districts; * review draft Annual Work Plans for the TC Fund and progress made on TC Fund implementation; and, 9. The September/October mission would in addition to the field visit to 6 States to focus on the above stated aspects, also carry out a review of information received on: * district plan approvals and GOI budget allocations for the States/UTs; * annual progress on agreed indicators in terms of compiled UDISE data and other sources, in particular the studies, evaluations and assessments of learning achievement included in the Results Framework; * Financial Monitoring Reports (FMRs), audited accounts and GOI budget allocations for SSA against expenditures; * status of implementation of safeguard policies; * six monthly reports from monitoring agencies which are expected to provide more qualitative information * progress made on TC fund implementation; and * results of evaluations of quality improvement related interventions 10. It is expected that throughout the implementation of SSA there will be conferences, workshops and other events through which lessons of experience in implementation will emerge and in which international practices could inform effective implementation. The priorities for World Bank's implementation support will be identified in consultation with GOI. 68 11. Independent Third Party Monitoring Institutes (MIs): The independent third party monitoring of SSA will continue to be conducted semi-annually by independent agencies (mainly state-level universities and research institutes). These MIs will conduct a comprehensive review of SSA program implementation of a sample of the districts allotted to them every six months, such that all districts in the country are covered every three years. Review will include teacher recruitment and training, infrastructure maintenance, textbook and uniform distribution, school grants, performance of technical and fiduciary personnel at all levels (schools, CRCs, BRCs, DEO and SPO, functioning of SMCs, quality interventions in schools and classroom processes, and all other aspects of SSA. MI reports will be discussed with SSA State Project officers, and then submitted to GOI and DPs, and posted on the SSA website. In addition, MHRD will commission a number of independent surveys to better understand the impact of specific aspects of SSA. MHRD has earmarked resources for monitoring, evaluation, research and management under SSA. 12. MHRD Quarterly Monitoring: MHRD will hold quarterly review meetings with heads of the finance function from each State, to discuss FM guidelines, internal and external audit observations, financial performance, staffing and training of FM personnel, etc. DPs are informed of key findings and agreements for next steps to strengthen FM performance in the States. This will continue during the next phase of SSA. 13. The main focus in terms of support to implementation during: Time Focus Skills Needed Resource Partner Role Estimate First twelve Increase enrolments and reduce Education specialists; $200,000 UK's DFID and months drop outs especially of Education economist; EU will provide marginalized children and Operations Officer; implementation CWSN; FMP specialists support through Improve attendance and participation in retention especially of girls, Joint Review children of disadvantaged Missions; DFID backgrounds and CWSN; will fund the to strengthen NAS for grades proposed TA fund 3,5 and 8; for capacity Conduct of baseline state level building of achievement surveys; NCERT and Development and use of grade NUEPA.. and subject wise level learning indicators; Development of PINDICS; Strengthen early grade learning programs in states; Increase the SMC's role in school management; Develop district based plans for access, retention, quality and improved school performance. 12-48 months Continue focus on increasing Education specialists; $200,000/ enrolments and reducing drop Education economist; year outs; Operations Officer; Continue quality interventions FMP specialists 69 from 1" year; Increase focus on upper primary math and science to improve learning levels; Support development and use of school performance and leadership standards; Development of equity-focused elementary education index to target SSA resources on neediest areas; close monitoring through RFD; submission of annual external audit reports on a timely basis. Other II. Skills Mix Required Skills Needed Number of Staff Weeks Number of Comments Trips 3 Education specialists 60 2 Missions/year Staff are based in India for flexible and rapid-response implementation support. Education Economist 8 2 /year Operations 3 1 /year Staff are based in India for flexible and Officer/Governance rapid-response implementation support. Specialist FM specialist 5 2 /year Staff are based in India for flexible and rapid-response implementation support. Procurement specialist 5 2 /year Staff are based in India for flexible and rapid-response implementation support. Social Development 3 1 /year Staff are based in India for flexible and specialist rapid-response implementation support. Environmental Specialist 2 1 /year Staff are based in India for flexible and rapid-response implementation support. 70 Annex 6: Economic Analysis INDIA: Third Elementary Education (SSAIII) 1. The objective of the first and second elementary education projects SSA I and SSA II have been to create an elementary education ecosystem that can encourage and support an increase in the primary and upper primary school enrolment in the country. With the gross enrolment in primary education having crossed the 120.0 percent mark and with the gross enrollment in upper primary education witnessing a strong uptrend; the SSA III is expected to focus more towards improving upon the quality of education imparted at government schools and towards improving learning outcomes for students. In its third terms, the program is also expected to work towards improving access to education for the marginalized groups such as SC, ST, Minority and CWSN. The program aims to improve upon the formative years of the Indian population by providing children with improved access to better quality education and therefore aims to systematically transform the same into the human capital that will act as a building block for future economic growth and social upliftment. Recent research has shown that not only completed years of schooling but also the quality of education is important to achieve the various economic and social benefits associated with education (Hanushek and Woessman, 2006). 2. Private Rates of Return. Completing primary and elementary education has high rates of return for the individual. Empirical evidence shows that these returns are higher for developing countries such as India compared to developed countries. Completing even primary and upper- primary education enhances the wage-earning capacity of individuals. Completing basic and elementary education also provides the option value to individuals to enter and complete higher levels of education. 3. Social Returns and Externalities. The social rates of return from investing in elementary education are also high as there are a range of positive externalities generated by education. A large body of literature shows that education leads to improved health outcomes such as lower infant mortality rates and better nutrition, a higher age of marriage and lower fertility among girls and women , higher likelihood of using modern health facilities for maternal and child health, among others. More educated societies are also more likely to experience higher rates of technological change which leads to higher economic growth rates. The benefits of upper primary education are becoming well-evidenced, both in sustaining the demand for high primary enrolment and attendance and equipping people with life skills and learning. 4. Poverty Alleviation and Equity. Education is one of the key strategies of countries around the world to break the vicious cycle of poverty of its citizens. Education enhances an individual's likelihood of gainful employment. Better health and lower fertility rates encouraged by education improve the quality of life of people as individuals and as members of households. They are more able to make use of economic and social opportunities available to them. 5. Given the focus of the SSA III, its economic benefits are expected to flow from two distinct program outcomes: * The bulk of the benefit is expected to flow from the improvement in the quality of education. SSA III is expected to witness heavy investments towards factors determining quality of education and it is expected that this improved quality will directly translate into 71 improvement in learning outcomes and in turn into improvement in the income of individuals who complete their elementary schooling. * A smaller proportion of benefits are expected to arise from an increase in enrollment and completion rates at the elementary schooling level. Here, it is important to note that this increase will primarily take place at the upper primary grades where gross enrollment is yet to reach the 100 percent mark. Any benefits at the primary grades will be because of demographic growth as the gross enrollment in primary education is expected to have peaked and is expected to normalize back to 100 percent mark over the coming years. 6. As per a Financial & Economic analysis that internalizes the social benefit arising from this improved access to better quality education, the NPV of the SSA III is expected to be USD 12.4 billion and the IRR is expected to be 17.7 %. Assumptions - Social Benefits 7. The first benefit stream arising from the SSA III is attributable to the increase in the number of students completing primary and upper primary schooling. It is important to note that as of financial year ending 2014, the gross enrollment in primary education stands at 119.2 percent. The percentage stand higher than the 100 percent mark due to enrollment from overage children. However, over the years this figure is expected to normalize towards the 100 percent enrollment mark. On the other hand gross enrollment at the upper primary level is 103.9 percent and is expected to observe a trajectory very similar to that followed by gross enrollment at the primary level; wherein the gross enrollment is expected to first overshoot the 100 percent mark and rise till about 125 percent mark before observing a revisionary trend back towards the 100 percent mark. Extrapolations and projections based on historical data reveal that the primary school completion rate is expected to normalize to the 100 percent mark by financial year ending 2018 and the upper primary completion rate is expected to overshoot the 100 percent mark and then normalize back to this benchmark figure by financial year ending 2025. 140.0% Gross Enrolment 130.0% 120.0% -Primary 110.0% Upper Primary 100.0% Elementary 90.0% 80.0% .. . . . . 000000000000 '-A~ r'J r'J rJ M M W M~ ~M~ 1 ~LA000000 1 1 MA MA M7 W C C C C C C C C C C C C4 C4 C4 C C C CN 72 8. The second stream of benefits is expected to be derived from the improvements in the quality of education that will in turn materialize in the form of improvements in the wage differential of those who have completed formal schooling vis-d-vis those who haven't. It is also expected to increase the wage differential as one compares the wage rate of individuals who have completed different level of formal schooling i.e. primary, upper primary etc. The income differential between the annual wages of those who have completed primary schooling and those who have had no access to formal schooling is expected to increase by 2 percent. Similarly the income differential between the annual wages of those who have completed upper primary schooling is expected to increase by 1 percent. 9. As per a regression based mincer equation that uses NSSO 67th round data, in the financial year ending 2014 the difference in the wage rate of individuals who have completed primary schooling and those who haven't had any formal schooling is US$ 75 per year and this difference is expected to increase to US$ 76.5 as a result of SSA III's investments towards improving quality of education. Similarly the difference in income for those who have completed upper primary schooling vis-d-vis those who haven't is expected to increase from US$ 77.8 to US$ 78.6. 10. All financial stream forecasts have been made after duly accounting for and adjusting for the expected rate of inflation and the long term inflation is calculated to be roughly 5 percent on the basis of historical data. 11. Finally, the estimation of number of individuals who are expected to reap the benefits of improvements in quality of education and the additional number of individual who will enter the job market after completing their primary and upper primary schooling and will therefore reap the benefits of the same has been computed after factoring in an unemployment rate of 4.9 percent (Ministry of Labor & Employment GOI, 2012 - 2013). Assumptions - Factors Leading to Improvement in Quality of Education 12. The premium for quality of education is expected to in turn be driven by a number of strategic elements. These elements will primarily focus on improving upon the teaching learning transactions by providing teachers with access to improved training and will focus on improving the mechanisms in place for monitoring and evaluation of performance of all entities involved with the management and operation of the SSA III. In this regard the most notable improvements would be as follows: * SSA III aims to focus on providing Children with Special Needs (CWSN) with improved access to better quality education. In this direction, the program aims to support teacher training and curriculum adaptation that would enable the general teaching staff to work with CWSN and teach them the regular curriculum in the given general classroom environment. The program will also aim to improve upon the processes in place for identification of CWSN so as to ensure that such special children are identified in a timely manner and in turn that teachers are able to provide them with timely support in line with their learning needs. The program will also focus on ensuring that CWSN are included as 73 a separate category in all National and State level instruments of achievement assessment and monitoring & evaluation. * SSA III will also focus on ensuring that children from marginalized groups and communities such as SC, ST and Minority have access to better quality education so as to ensure that their learning outcomes systematically converge with those of children from the general category. * SSA III is expected to coincide with and be supported by a marked improvement in the learning outcomes assessment frameworks/systems. The NAS is expected to standardize its methodology of assessment so as to enable temporal evaluation of achievement outcomes. It also expected that investments will be made towards improving upon the entire value chain that feeds information into the NAS so as to ensure that the survey results can be made available in a more expedient manner. The achievement survey is also expected to become inclusive of specific categories of students such as CWSN. Investments are expected to be made towards making it a publically available fluidic datasets which can facilitate micro data analysis till the district level. There is also expected to be a strong thrust towards decentralizing state level assessment. This assessment being an important part of the overall monitoring & evaluation arrangements will benefit from third party validation and verification as it will help in increasing accountability and ensuring that state governments aim for an increase in the effectiveness and efficiency with which the utilize fund for improving upon the quality of education. * SSA III is expected to improve upon the current system of fiscal management by ensuring that the release of funds is tied to achievement assessment and overall monitoring & evaluation. This is expected to lead to an improvement in the AWP&B and in turn lead to an improvement in the efficiency and effectiveness with which funds are disbursed, utilized and accounted for. * The monitoring & evaluation systems are expected to mature in terms of tracking teacher performance. These systems are also expected to improve upon the processes and procedures through which they record data that feeds into school level monitoring and evaluation. These changes are expected to generate the quantum of information that will enable the government to micro manage funds flow and technical support so as to ensure that they are able to control for geographic disparity in achievement outcomes and overall quality of education and funds management. Assumptions - Economic Costs 13. The annual private cost (based on NSSO 2007 data) for completing a year of elementary education has been taken as the average of the average cost incurred towards completing a year of primary education and the average cost incurred towards completing a year of upper primary education. As of financial year ending 2014, this average is expected to be US$ 27.5 per annum. 14. The opportunity cost for completing a year of schooling is taken as the wage foregone by children who would have otherwise been employed as child laborers. This wage has been 74 determined by using a mincer regression based on NSSO 2008-09 data. As of financial year ending 2014 this wage is expected to be US$ 242 per annum. 15. The percentage of children who would have otherwise been child laborers has been assumed to be 4.9 percent i.e. the percentage of children not attending school prior to the commencement of the second elementary education project (SSA II). 16. The project investment in the financial year ending 2014 is expected to be US$ 5.8 billion. This figure is expected to increase to an annual investment of US$ 6 billion through the course of the program. Post completion of SSA III the annual investment has been assumed to become 60 percent of the annual spend in the final year. Subsequently, this annual investment is expected to increase over the future so as to account for inflationary pressure. Sensitivity Analysis 17. A sensitivity analysis that analyses changes in the premium for quality and in the unemployment rate amongst primary school pass outs was also carried out. Holding all other things common, the moderate projection which was also held as the most suitable projection was attained at the point where the increase in the difference in the income of those who have completed primary schooling vis-d-vis those who haven't received any formal schooling increases by 2 percent; the difference in the income of those who have completed upper primary schooling vis-d-vis those who have completed primary schooling increases by 1 percent and the unemployment rate is 4.9 percent. At this point the NPV is US$ 12.4 billion and the IRR is 17.7 percent. 18. At unemployment rate of 4.9 percent the worst projection is observed at the point where the difference in the income of those who have completed primary schooling vis-d-vis those who haven't received any formal schooling increases by 1.5 percent and the difference in the income of those who have completed upper primary schooling vis-d-vis those who have completed primary schooling increases by 0.5 percent. 19. At unemployment rate of 4.9 percent the best projection is observed at the point where difference in the income of those who have completed primary schooling vis-d-vis those who haven't received any formal schooling increases by 2.5 percent and the difference in the income of those who have completed upper primary schooling vis-d-vis those who have completed primary schooling increases by 1.5 percent. Premium for Quality - Primary 1.5 percent 2 percent 2.5 percent NPV US$ 16.3 Billion US$ 16.2 Billion US$ 23.0 Billion 6 1.5 percent .2 IRR 16.3 percent 19.3 percent 22.4 percent 9 1 percent NPV US$ 5.7 Billion US$ 12.4 Billion US$ 20.8 Billion 75 IRR 14.6 percent 17.7 percent 19.1 percent NPV US$ 1.8 Billion US$ 8.5 Billion US$ 15.2 Billion 0.5 percent IRR 12.9 percent 16.0 percent 19.1 percent 20. Further, a sensitivity analysis that changes the unemployment rate while keeping the premium on income differential for those who have completed primary and upper primary education (2 percent and 1 percent respectively) reveals that the IRR and NPV improve as the unemployment rate decreases and vice-versa. Unemployment Rate NPV (US$ B) IRR (%age) 4 percent US$ 13.0 Billion 18.0 percent 4.9 percent US$ 12.4 Billion 17.7 percent 6 percent US$ 11.7 Billion 17.3 percent 76