Document of The World Bank FOR OFFICIAL USEONLY Report No: 39039-IN PROJECTAPPRAISAL DOCUMENT ONA PROPOSEDCREDIT INTHEAMOUNT OF SDR41.4MILLION (US$63 MILLIONEQUIVALENT) TO THE REPUBLIC OF INDIA FORA BIHARRURALLIVELIHOODSPROJECT- JEEViKA" I' MAY 21,2007 Sustainable Development SectorUnit India Country Management Unit South Asia Region This document has a restricted distribution and may be usedby recipients only inthe performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective April 30,2007) Currency Unit = IndianRupees (Rs.) Rs. 42 = US$1 US$1.52493 = SDR 1 FISCAL YEAR April 1 - March31 ABBREVIATIONS AND ACRONYMS IDA IRDP II International Development Association IntematedRural DeveloDment Promam Vice President : Praful C. Pate1 CountryDirector : IsabelM.Guerrero Senior Manager, India Program : Fayez S. Omar Sector Manager : Adolfo Brizzi Task Team Leaders : Parmesh ShahNaralakshmi Vemuru FOR OFFICIAL USE ONLY BiharRuralLivelihoodsProject."JEEViKA" INDIA TABLE OF CONTENTS Page A STRATEGICCONTEXT AND RATIONALE........................................................................... 1 A.1 Country and sector issues................................................................................................................. 1 A.2 Rationale for Bank involvement ...................................................................................................... 3 A.3 Higher level objectives to which the project contributes ................................................................. 3 B. PROJECTDESCRIPTION.......................................................................................................... 3 B1. Lendinginstrument .......................................................................................................................... 3 B.2. Project development objective and key indicators........................................................................... 4 B.3. Project components .......................................................................................................................... 4 B.4. Lessons learned andreflectedinthe project design......................................................................... 5 B.5. Alternatives considered andreasons for rejection............................................................................ 6 C. IMPLEMENTATION ................................................................................................................... 7 c.1. Institutional and implementationarrangements ............................................................................... 7 c.2. Monitoringandevaluation ofoutcomesh-esults............................................................................... 9 c.3. Sustainability.................................................................................................................................... 9 c.4. Criticalrisks andpossiblecontroversial aspects............................................................................ 10 c.5. Loadcredit conditions and covenants............................................................................................ 12 D. APPRAISAL,SUMMARY........................................................................................................... 13 D.l. Economic and financial analyses ................................................................................................... 13 D.2. Technical........................................................................................................................................ 13 D.3. Fiduciary ........................................................................................................................................ 14 D.4. Social.............................................................................................................................................. 15 D.5. Environment................................................................................................................................... 16 This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. Its contents may not be otherwise disclosed without World Bank authorization. D.6. Safeguardpolicies.......................................................................................................................... 16 D.7. Policy Exceptions andReadiness................................................................................................... 17 Annex 1:Country and Sector Background ................................................................................................. 18 Annex 2: Major Related Projects Financedby the Bank and/or other Agencies ........................................ 23 Annex 3: Results Framework and Monitoring............................................................................................ 24 Annex 4: Detailed Project Description ....................................................................................................... 29 Annex 5: Project Costs................................................................................................................................ 38 Annex 6: ImplementationArrangements .................................................................................................... 39 Attachment 1- Accountability Arrangements ............................................................................. .46. Attachment 2 - Communications.................................................................................................. 48 Attachment 3 -Rural Livelihoods Management Information System........................................... 49 Annex 7: FinancialManagement andDisbursement Arrangements ........................................................... 52 Annex 8: Procurement Arrangements ......................................................................................................... 60 Annex 9: SafeguardPolicy Issues............................................................................................................... 68 Annex 10: Economic Analysis................................................................................................................... 72 Annex 11:Project Preparationand Supervision ......................................................................................... 77 Annex 12: Documents inthe Project File ................................................................................................... 79 Annex 13: Statementof Loans and Credits................................................................................................. 80 Annex 14: Country at a Glance................................................................................................................... 84 MAPIBRDNo.35350................................................................................................................................ 87 I N D I A BIHARRURALLIVELIHOODS PROJECT "JEEViKA" - PROJECTAPPRAISAL DOCUMENT S O U T H ASIA SASSD Date: May 21,2007 Team Leader: Parmesh Shah Country Director: Isabel M.Guerrero Sectors: General agriculture, fishing and forestry Sector Director/Sector Manager: Constance A. sector (70%); Other social services (20%); BernardAdolfo Brizzi Apcultural marketing and trade (10%) Themes: Other rural development (P); Rural services and infrastructure (S); Participation and civic engagement (S); Gender (S) Project ID: PO90764 Environmental screening category: (B) Partial Assessment Lending Instrument: Specific InvestmentLoan Safeguard Screening Category: Limitedimpact For Loandcreditdothers: Total Bank financing (US$M.): 63.00 I Pronosedterms: Standard Credit. with thirtv five (35) vears maturitv and ten f 10) vears mace I Source Local Foreign Total BORROWER/RECIPIENT 7.00 0.00 7.00 InternationalDevelopment Association (IDA) 63.OO 0.00 63.OO Local Communities 3.OO 0.00 3.OO Total: 73.00 0.00 73.00 FY I 2007/8 I 2009 I 2010 I 2011 I 2012 I 2013 1 0 0 0 Annual 3.OO 6.00 22.00 31.00 8.00 3.OO 0.00 0.00 0.00 Cumulative 3.OO 9.00 31.00 62.00 70.00 73.00 0.00 0.00 0.00 Projectimplementationperiod: Start: September 1,2007 End: October 31,2012 Expectedeffectiveness date: August 31,2007 Expectedclosing date: March 31, 2013 -Does-the project depart from the CAS incontent or other significant respects? Re$ PAD A. 3 - -- -.- [ ]Yes [XINo Does the project require any exceptions from Bank policies? Re$ PAD D.7 [XIYes [ 3 N o Have these been approved by Bank management? [XIYes [ ]No I s approval for any policy exception sought from the Board? [ ]Yes [XINO Does the project include any critical risks rated "substantial" or "high"? Re$ PAD C.4 [XIYes [ ] N o Does the project meet the Regional criteria for readiness for implementation? Re$ PAD D.7 [XIYes [ ] N o Project development objective Re$ PAD B.2, TechnicalAnnex 3 The project objective i s to enhance social and economic empowerment o fthe rural poor inBihar. Project description Re$ PAD B.3, TechnicalAnnex 4 The project has four components: Component I:Community Institution Development - This component will build and strengthen primary and federated social andeconomic community institutions. Component 11: Community Investment Fund - This component involves transfer o f financial and technical resources to the Community Based Organizations on a demand driven basis for use as a catalyst to improve their livelihoods. Component 111:Technical Assistance Fund-This component will improve quantity and quality o f service provision by public, cooperative, community and private service providers. The fund will also promote use o f Public-Private Partnerships in improving the supply of key support services for the community organizations and federations inthe areas o f institutionbuilding, finance and livelihoods enhancement. Component N: Project Management - This component will facilitate overall co-ordination, implementation, and financial management, monitoring and learning o f the project at state and district levels. Which safeguardpolicies are triggered, ifany? Re$ PAD D.6, TechnicalAnnex 10 Environmental Assessment (OPBP 4.01); Indigenous Peoples (OPBP 4.10) Significant, non-standard conditions, if any, for: Re$ PAD C.5 None Board presentation: None Loadcredit effectiveness: None Legal Covenants applicable to project: Details inProject Agreement Throughout the duration o f the Project, the Project Implementing Entity shall be responsible for the management and co-ordination o f its Project activities. It shall implement the project through the BRLPS which shall: a) Have an EC and GB with broad representation from all key stakeholders as defined in Memorandum and Articles o f Association; b) Have SPMU, DPCUs and BPIUswith the staffing and responsibilities as documented inthe PIP and agreed with the Association; and a CEO from the Civil Service for a reasonable period o f time; c) Implement the Project inaccordance with the PIP and the procedures, principles and practices set forth inthe COM; Prepare and furnish to the Association, not later than January 31 o f each year, commencing in January 31, 2008, an annual work plan, budget and procurement plans for implementation o f the Project activities; Establish by January 1, 2008 and thereafter maintain throughout Project implementation in manner satisfactory to the Association, a gnevance redressal cell within BRLPS; Maintain CIF for purposes o f providing grants to the beneficiaries which may be used as revolving funds and enter with each beneficiary into a beneficiary agreement, on terms and conditions set forth inthe PIP and COM; Select support organizations (inter alia NGOs, MFIs, CBOs) for assisting in Project implementationinaccordance with criteria andprocedures set forth inthe COM and PIP; Carry out the Project inaccordance with the agreed EMF and implement the Tribal Development Plan ina manner satisfactory to the Association; Ensure that the Project shall not involve any compulsory acquisition o f land, forcible eviction or involuntaryresettlement o fpersons; Monitor and evaluate the progress of the Project and prepare Project Reports inaccordance with the provisions o f Section 4.08 (b) o f the Association's General Conditions and on the basis o f indicators agreed with the Association; Within six months or such later date as agreed with the Association, place inposition a suitable internal auditor(s) pursuant to TORSacceptable to the Association; Maintain a financial management system and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Association; and have these audited by independent auditors acceptable to the Association, in accordance with consistently applied auditing standards acceptable to the Association; m) Procure all goods, works and services required for the Project and to be financed out o f the proceeds o fthe Financing inaccordance with the provisions o f Schedule 2 to FA. A. STRATEGICCONTEXTAND RATIONALE A.1 Country and sector issues 1. Bihar i s the thirdmost populous state inIndia with 8.1 percent o f the country's population. Bihar recorded poor economic growth' through the nineties and grew at 4 percent duringthe Tenth Plan period, against the national annual growth rate o f 7 percent for the same period. The average annual per capita income o f US$157* for Bihar i s a quarter o f the national average. Bihar i s predominantly rural with 89 percent o f the population living inrural areas and a rural poverty ratio o f 44.3 percent, the second highest after Orissa. The situation inrural Bihar i s characterized by poor service delivery, complex political and social fabric, limited inclusion in institutions, limited economic opportunities, and poor development infrastructure. These factors along with the lowest per capita development expenditure3 in Bihar have prevented improvement in its 32nd rank amongst all India states, in the Human Development Index (0.367) and the Gender EquityIndex. 2. While the state has witnessed a decrease in the poverty ratio from 64.4 percent in 1983 to 44.3 percent in 2006, the absolute number o f poor i s still a staggering 36 million (of a total population o f 82 million). Poverty i s heavily concentrated amongst the landless or near landless agncultural households, with these two vulnerable groups constituting 70 percent of the households inBihar. It is estimated that nearly 2.3 million poor are exposed to huge amount o f high cost4 debt for food, health and education, accounting for 25-30 percent o f consumption expenses, further impoverishing them. There are also intra- state inequities with North Bihar being more poverty stricken than South Bihar. Scheduled Caste (SC) Hindus and Muslimhouseholds constituting25 and 15.4 percent respectively, o f landless households are among the poorest in the state. Disparities are also evident along gender and caste lines, with SCs accounting for one-fourth o f Bihar's landless poor. These issues have constrained social and economic mobilization in Bihar, especially the development o f institutions o f the poor. Absence o f sensitive support and facilitation structure has led to low levels o f social capital among the poor and consequently hinderedformation o f good quality organizations o fthe poor. 3. Delivery o f financial services to the poor i s seriously constrained in Bihar. Against an estimated demand for micro credit services o f about US$2.4 billion, the commercial banks have been able to only advance credit o f US$8.4 million in the last year, leaving a vast section o f the poor dependent on high cost borrowings from informal sources. This has seriously limited asset and capital formation, access to credit and development o f self employment opportunities among the poor. 4. Agriculture employs over 80 percent o f the population and i s the backbone o f Bihar's economy. Even with l o w agncultural productivity, Bihar still accounts for 8-10 percent o f the national agricultural production and i s the second largest producer o f vegetables, third largest producer o f fruits and largest producer o f litchis (75 percent) and "Makhana"'. However, the period o f 1991 to 2001 saw a sharp decline in cultivator households from 47 to 33.6 percent and an increase in agncultural labor from 39.4 to 48.6 percent. Major reasons for under performance o f the agricultural sector have been poor quality o f producer organizations, lack o f capital formation, poorly developed value chains, inadequate research and extension facilities and non-performance o f the entire service delivery system including credit, input, storage and marketing facilities. Also, the land tenure system i s skewed with 96 percent o f the farmers working on 68 percent o f the land at subsistence or below subsistence levels. Various preparatory studies * Central 'per capita growth rate o f 2.6 percent per annum as against 4.8 percent per annumat the all India level. Statistical Organization (CSO), India, 2004. less than half o f the national average o f US$150. Sources vary from money lenders, relatives and friends, banks and SHGs and interest rates very from 2-10 percent per month. aqua nuugorgon nut - Bihar's share is 90 percent o f India's production (worth US$100 million), collected by poor men and women. indicate the need to invest in farmer organizations, productivity enhancement, farmer responsive extension systems, and assetization o fthe poor households and development o f value chains for small and marginal farmers to increase income and employment opportunities from agriculture. 5. An important lessonemerging from this scenario o f growing phenomenon o f landlessness and the diminishing returns from agriculture is the need to invest also in non-farm employment in order to strengthen the rural economy and alleviate ruralpoverty. This i s especially critical inview o f the swelling ranks o f agriculturallaborers and modest increases innon-farm workers, with every passingyear inBihar. One reflection o f this development i s large out-migration o f workers to other prosperous states, almost from every single poor household, insearch o f employment and better wage; with its attendant social and cultural problems. Important to note i s that nearly 95 percent o f these migrants are unskilled, though sktlled workers earn double the earnings o f unskdled workers. Developing sktll base o f migrant households can add substantial value to the migrationbasedlivelihoods. 6. The Government o f Bihar (GOB) has been implementing a number o f poverty alleviation programs for self employment like Swarnajayanti Gram Swarojgar Yojana (SGSY), wage employment like National Rural Employment Guarantee Program (NREGP), and social protection like Public Distribution System (PDS), supplemental nutrition, housing, and pensions for the aged, widows and disabled. Social barriers and stratification, weak "voice", inadequate capacity and poorly developed capability among the poor has prevented them from gaining information, knowledge and access to these programs and benefiting from them. GOBthrough agencies like the Bihar Women's Development Corporation and NGOs has supported the formation o f 50,000 Self Help Groups (SHGs). However, the quality and sustainability o f the social and economic mobilization has been inadequate with limited impact on poverty reduction. 7. The GOBhas initiated a series o f reform measures to facilitate favorable investment climate and efficient delivery o f public services in the State to reduce poverty. The GOB'Sbudget for 2007 and the Eleventh Five Year Plan priorities reflect this vision. Inthe 2006 local government election where 50 percent seats were reserved for women, women from mostly poor and disadvantaged households won nearly 58 percent seats. According to a recent State decision, half o f the 200,000 posts o f government school teachers have been reserved for women. Similarly, half o f the seats o f "Nyaya Mitras" in all the 8,500 Panchayats are reserved for women6. The proposed investments in effective delivery o f public services include recruitment o f 240,000 teachers and health workers, enhanced provisions o f basic supplies and medicines to primary health care centers, referral centers being outsourced to private sector on transparent bidding and contracting, and food stamps and kerosene coupon system to reform the ratiodpublic distribution system. 8. Various policies and programs initiated by the GOB,including their proposals for the Eleventh Five Year Plan support mobilization and empowerment o f poor especially women, and enhancing opportunities for social and economic empowerment. However, inorder to realize GOB'Svision o f SHGs as vehicles o f social and economic empowerment investments are required in organizing most women from the poor and disadvantaged households into SHGs' using participatory and transparent system o f identification o f the poor on a large scale and in a rapid manner. This will enable reduction inpotential social backlash and conflicts which may arise during the social mobilization process. The proposed "Bihar Rural Livelihoods" project builds on the experiences and lessons emerging from Bihar's efforts at poverty reduction and would enable scaling up o f the social and economic mobilization o f the poor. The project would therefore assist GOBinits core agenda o fpoverty reduction. NyayaMitras refer to law graduates who are placedto assist the GramKutcheries (village courts) headedby surpanches (electedvillageheadmen) insettlinglegaldisputes. Currently,less than 10% ofmembershipinSHGs is ofthe poor and less than 5% ofthepoor are inSHGs. 2 A. 2. Rationalefor Bankinvolvement 9. The poverty levels inBihar are one o f the highest inthe country and it will be difficult for India to achieve Millennium Development Goals (MDGs) without a scaled up program o f poverty reduction in Bihar. GOBhas requested International Development Association (IDA) to assist in addressing the twin challenges o f (i) building and strengthening inclusive organizations o f the poor and improving their access to credit and livelihood opportunities, and (ii) supporting the capacity enhancement o f public, private and non-governmental service providers for credit and livelihood support services for the poor and their organizations. IDA is uniquely positioned to support and partner with GOBin bringing its knowledge o f national and international best practices, particularly in regard to Community Driven Development (CDD) and social and economic empowerment. Currently, IDA is supporting five similar programs inIndia with an outreach o f about a million community groups and ten millionpoor households across 60,000 villages in states o f Andhra Pradesh, Madhya Pradesh, Rajasthan, Chhattisgarh and Tamil Nadu. These projects support the social and economic mobilization o f poor households into self managed community organizations and facilitate development o f linkages with financial sector and the markets to enable the poor to become credit and investment worthy. They also provide the poor with voice and enable them to access social services inan efficient and accountable manner. A. 3. Higherlevelobjectivesto whichthe project contributes 10. The project i s aligned with the Government o f India's (GoI) and GoB's Eleventh Five Year Plan strategy. The GOBintends to reduce the below poverty line populationto 22 per cent by 2015 or by about 1.5 per cent per year, inorder to achieve the MDGtarget. This Five Year Plan emphasizes investment in women's socio-economic empowerment, enhancing livelihood opportunities in the farm and non-farm sector, and participation o f local level institutions such as SHGs to make service delivery more accountable. GoB's strategy involves effective targeting o f the poor, especially the most vulnerable groups o f SCs and Scheduled Tribes (STs), inorder to make growth inclusive. This project will contribute to empowerment and livelihood enhancement o f the rural population, focusing on women and vulnerable groups so that they become active partners inBihar's journey out o fpoverty. 11. The Bank's Country Strategy (CAS) for India discussed in August 2004, highlights support for lagging states including Bihar to move closer to India achieving the MDGs through sustained growth, poverty alleviation and improved access to quality social services. The CAS also emphasizes building productive development relationship with four states, including Bihar, where poverty i s concentrated and public institutions are weak. 12. The project directly supports the MDGs ofi (i) improving incomes o f the poorest - reducing the proportion o f the people living on less than $1 a day (Goal 1, Target 1); (ii)promoting gender equality and empowering women (Goal 3, Target 4); and (iii) development and implementation o f strategies for decent andproductive work for youth (Goal 8, Target 45). B. PROJECTDESCRIPTION B.l. Lendinginstrument 13. The lending instrument selected for the proposed project i s a Specific Investment Loan (SIL). This instrument allows for the necessary support for development o f rural livelihoods in Bihar through institutions o f the poor in 776 village Panchayats covering 4,000 villages in 42 blocks in six districts o f Nalanda, Gaya, Muzzafarpur, Madhubani, Khagaria and Purnea. The project is expected to directly benefit about 2.9 million people belongingto 590,000 households. 3 B.2. Project developmentobjectiveandkeyindicators 14. The project objective is to enhance social and economic empowerment o f the rural poor inBihar. 15. The key performance indicators are: 0 Selfmanaged8community institutions established for a majority o fparticipant households 0 Increase inincome for project participant households 0 Project participants (SHGmembers) havereducedhighcost debts from informal sources. B.3. Projectcomponents The proposed project includes the following four main components (details are provided inAnnex 4) 16. Component I:Community InstitutionDevelopment (US$18 million): This component is the buildingblock o fthe project and would be implementedina phasedmanner. The first phase will involve building and strengthening vibrant and self managed primary institutions o f the poor including SHGs based on internal thrift and revolution o f savings. Duringthe secondphase, the SHGs will be federated at the village level into Village Organizations (VOs), which will receive project investments for various activities through a participatory micro planning process. The third phase would involve forming federation o f VOs as higher level apex CBOs at the block or cluster level for taking up livelihood enhancement and income generating activities and developing linkages with market institutions. This component will facilitate empowering CBOs to develop direct linkages with financial service providers including commercial banks. The communities will also be provided skills and tools to develop social accountability mechanisms to enable transparency and good governance o f the institutions o fthe poor and build effective service delivery partnerships with local government. The component will also facilitate better village-level communication on issues affecting social and economic activities o f interest to the rural poor. 17. Component II:Community Investment Fund (US$42 million): The Community Investment Fund(CIF) is designedto transfer financial andtechnical resourcesto the CBOson a demand driven basis through a participatory micro planning process. These financial resources would be transferred to village organizations as a grant. The VO i s expected to use this resource as revolving fund to finance various SHGs in the village, based on the micro planning process. This C F will serve as a catalyst to improve their livelihoods, buildtheir institutions and leverage credit from formal sources on fair terms. Some of the key elements that could be supported using the CIF include income generation and livelihood improvements, food security needs, slull development to increase employment and employability, and limitedproductive community level infrastructure facilities. 18. Component111: Technical AssistanceFund(US$5.5 million): The Technical Assistance Fund (TAF) will improve quantity and quality o f service provision by public, cooperative, community and private service providers. The fund will also promote use o f public-private partnerships in improving the supply o fkey support services for the community organizations and federations inthe areas o f institution building, finance and livelihoods enhancement. Key activities which could be supported by this component include community institution building through NGOs, microfinance related technical assistance to SHGs and VOs to undertake financial and credit management and business development services through public, cooperative and private sector initiatives (including NGOs and non-profits) in agriculture, livestock and non farm sectors. This fundwould also be used for encouraging innovations by individuals, enterprises, organizations and institutions inthe public and private sector aimed at improving rural livelihoods. 'Selfmanaged as defined by the project's graduation indicators. 4 19. Component IV: Project Management (US$7.5 million): This component would facilitate overall co-ordination, implementation, and financial management, monitoring and learning of the project at state and district levels. It would include setting up and strengthening state and district level project units, providing office infrastructure and logistic support, and setting up monitoring, evaluation and learning systems. This component will be managed by the District Project Coordination Unit (DPCU) and State Project Management Unit (SPMU). The key activities would include identification and contracting resourcehpport agencies, disbursement o f salaries and other benefits to staff, procurement and maintenance o f vehicles, office and equipment, and liaison and convergence with other agencies and government departments. B.4. Lessonslearnedandreflectedinthe project design 20. Extensive lessons are available with GOBfrom implementation o f various poverty alleviation programs such as SGSY and IntegratedRural Development Program (IRDP). Recent experience with the CDDapproach under the IDAfundedprojectssuchas Andhra PradeshDistrict PovertyInitiativesProject, Andhra Pradesh Rural Poverty Reduction Project, Madhya Pradesh District Poverty Initiatives Project, Rajasthan District Poverty Initiatives Project, Gemidiriya Project in Sri Lanka and Nepal Poverty Alleviation Fund in South Asia as well as from other countries such as Philippines and Indonesia also provide lessons for sustainable results. The project has incorporated the following lessons into its design: Lessonsfromother Projects IncorporatedintoBRLPdesign The project will use participatory identification Effective targeting o fpoor households methods to ensure that the poor become active participants inthe project. This data will be shared in a transparent manner inthe village. The project will be demand driven and will use micro Community participationand ownership in planning methodology prior to supporting achievingoutcomes to be ensured intervention. Hence, the community will decide its own needs and priorities. A core group within the community would be trained in facilitating open ended micro planning. This aspect will be closely monitoredthrough Drocessmonitoring. Facilitatinginvestment opportunities for To form effective partnerships and linkages with the livelihoods inadditionto savings and credit market, formation o f economic activity groups will mobilization through a nuanced stratem take place after the formation o f SHGs. Federating institutions enable economies o f Federations will be formed at the village and block scale, greater voice and sustainability level o f SHGs. Economic activity groups will be formed ineconomic clusters at the block level. Instilling accountability mechanisms within ~~ ~ External and internal monitoring systems will be the community ensures good quality introduced, including social accountability systems institutions which will provide regular feedback on quality o f services to project staff and give voice to the poor. Investment inskills and capacity building The first phase o f the project will focus only on should be treated as an investment rather institution development. Further, during the other than cost as it i s key to success inachieving phases, specific capacity development support will be PDOand sustainability provided to associative tiers and federations. The project will also provide capacity buildingto technical 5 providers in order to improve the quality o f their services to the Door. Community resource persons/facilitators are A cadre o f community managed functionaries will be effective social mobilizers, low cost and trained who will then mobilize and provide support to offer a sustainable option for scaling up the network o f institutions. To ensure sustainability, linkages with PRIs and line departments will be developed at the outset. These linkages will be facilitated in terms of PRI service Linkage with line departments and PRIs provisioning becoming more inclusive and their services to become more accountable. Bihar Rural Livelihoods Promotion Society i s an Decentralized implementingagency with independent registered society under the Department highquality staffto minimize political o f Finance inBihar. BRLPS staff is based at the state interference and block levels to ensure effective delivery and availability o f technical expertise at the local level. The recruitment procedure i s competitive and allows for recruitment both from within the government and open market. BRLPS i s developing incentive structures to attract and retain highquality staff. Efficient MIS, standardized financial Computerized RLMIS, quantitative and qualitative management procedures, regular auditing monitoring and learning will be part of the monitoring and learning system for the project. 21. Lessons from pilot projects in Bihar: From September 2006, key design elements and implementation arrangements o f the project have been tested through the pilots funded through the Project Preparation Facility (PPF) by BRLPS. A total o f 151 SHGs have been formed across 22 villages, with savings o f US$3,600. These savings have been revolved into small loans worth US$2,200. About $11,000 has been disbursed as CIF so far to 68 SHGs after receipt o f micro credit plans from 366 households. Analysis o f these plans reveals that 45% o f the loans were taken for consumption and 47% for production purposes. Withinthe consumption bracket, 58% o f the loans were taken for meeting food requirements o f the household. Thirteen SHG households already possessing milch cattle were linked to the village dairy cooperative society resulting inan increase innet income by 33% while working capital provision led to an increase in income by 11% for turmeric producers. T he results from pilots indicate that the basic design o f the project and the project processes are working on the ground. The pilots have also informed the project design on social mobilization strategies, phasing of interventions and the importance o f emphasis on consumptionissues for micro planning and livelihood investments B.5. Alternatives considered and reasons for rejection 22. The project considered the following alternatives and rejected them: Working exclusively with local government: This alternative was rejected as the project i s not dealing with decentralized service delivery and community infrastructure and i s focused on enablingaccess to credit and income generating opportunities. Opting for the "Social Fund" approach within CDD: This approach transfers resources to implementing NGOs and has the advantage o f a quick transfer of resources. However, this approach was rejected because it i s not optimal for long term sustainability as it does not transfer slulls and capacity directly to the participating community and i s not conducive for developing self sustaining 6 institutions of the poor. It will also bypass local government completely and i s incontradiction to the decentralization strategypreferredby the State. Converging with existing line departments and anti-poverty programs: The current anti-poverty programs such as SGSY, ICDS and EGS, operating through line departments are not being able to effectively target the poor or build social capital. Inaddition, an autonomous society will be able to function independently and attract motivated and competent staff from varied backgrounds such as private sector and non-government agencies. Ethics o f participatory demand driven approaches, transparency and accountability will be easier to establish in a new organization than instill into an existing government agency. Moreover, the society will be able to ensure convergence and linkages with antipovertyprograms at a later stage, once the community institutions havebeen strengthenedto leverage state resources in a more organized manner. It has been agreed with the State Government that the project will help improve the quality of Government programs and lay the foundation for incorporating good quality social mobilization into them. The commercial banks have also indicated their reluctance to give credit to groups which are not of good quality and are currently government promoted. C. IMPLEMENTATION C. 1. Institutionalandimplementationarrangements 23. The project would be implemented according to rules and procedures agreed in the Project Implementation Plan (PIP) and Community Operational Manual (COM). These documents outline roles and responsibilities of implementing agencies and provide details o f project processes and project cycle. The PIP and COM are based on the experiences gained during the implementation of pilots, similar projects and the outcome o f various workshops, studies and analyses that were carried out as part of project preparation. The COM will be subject to periodic reviews conducted jointly by GOBand IDA, with stakeholder participation - to ensure flexibility and to promptly address any constraints to the successful implementationof the program. 24. ProjectInstitutionalArrangement: The project's institutionalarrangementsarebuiltas support structure starting from the community and village level and going to the Block, District and State level. The primary agency responsible for the project's implementation will be the BRLPS established by the GOB, as the promotional and umbrella agency for rural livelihood promotion in Bihar (details are provided inAnnex 6). (a) Community and Village level: The institutional arrangements at the village-level under the project are designed to enable poor women and other disadvantaged groups to form their membership organisations at group level and subsequently federate at the village and block level. This three tier structure gives the poor women and their organisations ability to achieve economies o f scale and aggregate in terms of access to services, credit and markets. It also enables them to build good quality sustainable institutions with a financial base. These CBOs also enable external institutions like commercial banks to reduce their transaction costs indealing with a large number o f small, dispersed and low transaction volume poor households. (b) Block Project Implementation Unit (BPIU): One BPIUwill be set-up ineach of the 42 project blocks and will play a critical role inproject implementation. The Block Project Manager will head the BPIU supported by a Training Manager, Area Coordinators and Community Coordinators, and other administrative staff. This Unitwill facilitate the formation and functioning of Block Level Federation of 7 the SHGs. Along with a cadre o f Community Resource Persons, the BPIU will be responsible for village and block level implementation. (c) District Project CoordinationUnit (DPCU): In each o f the six project districts, a District Project Coordinator (DPC) will headthe DPCUwhich will be responsible for coordinating, implementing and managing project activities in the district. The structure o f the DPCU will be lean with the DPC supported by Monitoring and Evaluation and Accounting staff. Other relevant specialists inthe areas like social development, livelihoods and micro finance will be added, based on district specific requirements that emerge duringimplementation. (d) Bihar Rural Livelihoods PromotionSociety (BRLPS): In order to work intensively with the target population for the project and demonstrate an effective and efficient model o f project implementation for livelihoods development, the GOBhas set-up the "Bihar Rural Livelihoods Promotion Society" (BRLPS) and registered it under the Society Registration Act, 1860. This society will provide guidance and advise to the program, faciliate and coordinate project's functioning and periodically monitor progress. The BRLPS has a seventeen member General Body and an Executive Committee entrusted with the management o f the Society and i s headed by the Development Commissioner, GOB.It has broad representation from all key stakeholders as defined in the Memorandum and Articels o f Assocaitons o f the BRLPS. BRLPS will manage the project through a State Project Management Unit (SPMU). The Chief Executive Officer (CEO) o f BRLPS will be supported by a team o f professionals with expertise in institution building, capacity building, social development, livelihoods, microfinance, communication, monitoring and evaluation, human resources development, procurement and finance. Other expertise needed will be obtained on contracts/partnership basis with other agencies. Considering the limited service providers that are available inthe state, the SPMU will have in-house arrangements in the form o f "Cells" to plan, manage and coordinate activities in key areas o f Training and Capacity Building, BusinessFacilitationandPartnershipDevelopment. (e) Accountability Measures: BRLPS has set up a broad based structure through the Governing Body with members also from civil society, business associations and financial institutions apart from the GOB.BRLPS has proposed to set up a dedicated gnevance redressal cell to handle gnevances and complaints regarding the project. These will include a dedicated phone number, currently functioning website to register grievances and a focal point in BRLPS to comply with the Right to Information Act. The project will also enable transparency through public display o f information at the village and block level and BRLPS web site. Inaddition to fiduciary audit arrangements, social audit will be undertaken at the village level by CBOs at village and block level. Procurement committees o f CBOs will ensure review o f procurement decisions. Community Score Cards and Report Cards enabling users o f services and members o f CBOs to evaluate various service providers and give feedback will also be introduced. (Refer to Annex 6, attachment 1) 25. FundFlow: The funds will flow from IDA to the GOBas per the prevailing policy o fthe GO1for transfer o f external aid to the States. The fundrequirement o f the project will be budgeted inGOBannual budget and made available to the project on a quarterly basis as per the approved annual work plan. Funds to the village institutions will be transferred to their bank accounts. In order to address the issues o f possible delays in fund transfer to village institutions due to limited network/ time taken in clearance o f cheques, the project has completed a mapping o f the existing network o f banks and i s proposing to sign an MOUwith a large commercial bank. The details are documented inAnnex 7. 26. DisbursementProcedures:Disbursements from IDA credit would be based on quarterly interim financial reports. A Special Account would be opened in the Reserve Bank o f India and would be operatedby the Department o f Economic Affairs (DEA) o f GoI. The authorized allocation o f the Special 8 Account would be US$8 million. The Special Account would be operated in accordance with IDA'S operational policies. 27. A Project Preparation Facility (PPF) advance o f US$822,826 was set up to cover the project preparation cost and this will be available till Credit signing. The activities covered under the PPF are consistent withthe financing categories o f IDA. C.2. Monitoring and evaluation of outcomeshesults 28. The BRLP Monitoring, Evaluation and Learning (ME&L) arrangement would be an integral part o f the project implementation plan and would be used to monitor and document achievements o f the project in key areas o f livelihood interventions, including empowerment, income and service delivery standards. The feedback processes would provide important inputs to resolve implementation hurdles and facilitate implementation efficiencies at all levels. The ME&L system has two distinct, but complementary components: (i)Implementation process (input-output) monitoring, and (ii) Implementation Audit and Result/Outcome evaluation. The former will be handled by the communities together with Project Management Units at all levels. It will provide rapid feedback on key process trends including two major risks in the project like social conflict arising out o f social mobilization and possible elite capture of benefits. The SPMU, DPCU and BPIU will use the decentralized and flexible Rural Livelihoods Management Information System (IUMIS) to develop adaptive decision making. However, the latter activity will be outsourced to an independent agency with credible experience and track record insocio-economic analysis andreporting on rural livelihood interventions. The RLMIS will be linked with the project's financial and procurement management systems to ensure consistency and compatibility o f data and information. Significant investment will be made on peer learning between various village and block level organizations and community functionaries. The project will make investments in computerization and information technology based communication to facilitate implementationefficiency andrapid learningprocesses. C.3. Sustainability 29. The core o f the project's design is to build vibrant social and economic CBOs to whom the project transfers not only assets and shlls, but also ownership over time. The features in the project which will ensure longterm sustainability along different dimensions are the following: (i) Institutional sustainability:The project will ensure institutional sustainability by an effective Level Federation - LF), and buildtheir capacity to become self reliant and self managed institutions. As social mobilization strategy that builds a multi-tier system o f community institutions (SHG, VO, Block part o f community institutions development, the project will transfer skills, knowledge, and management to these community institutions through a systematic process o f leadership and organization development. These `people's institutions' will be democratic, inclusive, and transparent and take on the roles o f a permanent social organization beyond the project period. (ii) Economic Sustainability: The different levels o f community organizations will have a strong economic base through the generation o f self savings that are pooled together and rotated as equity, which forms the basis o f an SHG. At a higher level these groups will be linked to the formal banlung system in the state that is mandated to provide financial services to such groups. The creation o f self assessment and rating mechanisms at different levels o f CBOs will ensure partnership with banks and financial institutions. This would enable the community groups to leverage finance for economic activities, independent o f the project finance, on a continuing basis and ensure a sustainable flow o f funds to the rural poor. 9 30. The sustainable and productive use o f the assets created by the CIF at the household, group and village level will be ensured through the project creatingpermanent linkages with the market inwhich the community takes up livelihood based activities, through bringinginprivate and public players in different sectors and activities. As these assets and production processes will be fully owned by the CBOs, the community would address operations and maintenance from their own equity contribution. C.4. Critical risks and possible controversial aspects 31. The project recognizes major risks in working in Bihar but also believes that given the poverty situation, current innovation capital and entrepreneurial spirit o f the rural people, there are significant benefits from engagement inBihar. Some o fthe major risks and mitigation measures include: Risks Risk Mitigation Measures Risk Rating To Project Development Objective 1.Weak The project i s proposed to be implemented through an autonomous S Implementation agency that will maintain an independent Executive Committee, a Capacity competent CEO and a team o f professionals. The implementation unit will be strengthened with appropriate capacity building measures, facilitating access to quality consultants/professionals for designing and setting up management and monitoring systems and help inestablishing a strong and responsive project implementation team. The project will buildcapacity o f competent NGOs and public sector agencies to increase supply of good quality support to community organizations Technical Assistance Fund has been provided to develop quantity and quality o f service providers. 2. Elite Capture The project will begin with interventions that would be o f interest only to S o f Institutions the poor such as consumption and food security. The project will also work on organizing the poorer social communities on a saturation basis and on a large scale. The project plans to institute simple, participatory, and transparent social accountability systems, develop basic rules and principles for the project, and also ensure that while investments in private goods are for the poor and their organizations, all technical assistance investments will also be accessible to the non-poor. The project will also develop strong process monitoring systems to develop early warning indicators for elite capture o f institutions and benefits. To prevent positions, especially at the community level, from being subject to patronage, recruitment i s being done on a competitive basis at the state level by a professional HR agency. At the community level, community mobilizers will be identified in conjunction with SHGs, field staff and community resource persons. Quality o f training will be ensured by project. 3. Leakage o f Specific accountability measures and grievance redressal mechanisms S funds andpoor will be instituted by BRLPS. The project will use social and public accountability accountability mechanisms including dedicated phone numbers for reporting complaints and grievances and dedicated web site for updated information. Social audit and procurement committees at the community level will be strengthened along with Community Score Cards and 10 Report Cards for service providersinthe project. 4. Weak financial Project level: Contracting in a professionally qualified finance person as S management Chief Financial Officer (CFO) with support from a firm o f Chartered capacity at the Accountants as FM Technical Support Consultant. A project FMmanual project and has been developed to guide the project finance staff. At the community community level level the project design incorporates significant investment in capacity givena large buildingincludingbook keepingand financial management at SHGlevel. numberof A set of readiness filters has been developed for SHGs and VOs which beneficiary need to be achieved before they access the CIF tranches. The COM groups withno includes the financial management aspects at community level. exposureto Concurrent internal audit to review the process at the village institutions handling of and physical verification of assets on a samplebasis isproposed. resources To Component Results 1.Ineffective The project will use participatory and nuanced social mobilization M social strategies to be inclusive. This will be accompanied by effective mobilization so communication campaigns using local communication mediums and that vulnerable development of capacity of community functionaries on a large scale. groups are The project will include social awareness workshops to build cohesion excluded from and belongingness among local groups. Monitoringsystems will be built the project so as to provide early warning signals, so action can be taken against exclusion. 2. Many The project will identify mitigationmeasures which enable the project to M Livelihood adapt to flood and promote insurance products for the poor; developed Activities are and marketed through public and private sector partnerships. It will also prone to floods in build linkages with other programs on flood forecasting and develop Bihar information material and planning methodologies which minimize the impact o f floods on livelihoods. 3. Continuing The project will attempt a three pronged strategy that involves a) M stagnation of low partnering with the producer and farmer organizations to increase their wage rates returns on investments by facilitating better market linkages; b) working with the PRIs (i.e., Gram Panchayats) to ensure better targeting of the rural poor under Social Protection programs; and c) introducing interventions like food security which is expected to help in improving the bargainingpower of the poor. 4. Poor physical The project has developed close linkages with the National and State M infrastructure roads project supported by the World Bank to ensure priority coverage o f limiting the districts covered under the program. livelihood opportunities and income generation 5. Poor bank The Project will work on three levels: a) encourage the communities to M network andrisk start a thrift movement and adopt sound internal lending practices; b) aversion on the develop partnership with Financial Institutions in developing rating part of Bankers to systems which enable higher credit allocation to the good quality groups; lend and c) institute a special technical assistance fund to develop new products and tools to improve financial efficiency and accountability. \T- Negligible Risk ,-Low Risk, M-MediumRisk, S-Substantial Risk, and H-HighRisk 11 Overall RiskRating: Substantial C.5. Loadcreditconditionsand covenants Effectiveness - Standardconditions. 32. The maincovenants are: 33. Throughout the duration of the Project, the Project Implementing Entity shall be responsible for the management and co-ordination of its Project activities. It shall implement the project through the BRLPS which shall: Have an EC and GB with broad representation from all key stakeholders as defined in Memorandumand Articles o f Association; Have SPMU, DPCUs and BPIUs with the staffing and responsibilities as documented inthe PIP and agreed with the Association; and a CEO fi-om the Civil Service for a reasonable period o f time; Implement the Project inaccordancewith the PIP and the procedures, principles and practices set forth inthe COM; Prepare and furnish to the Association, not later than January 31 o f each year, commencing in January 31, 2008, an annual work plan, budget and procurement plans for implementation o f the Project activities; Establish by January 1, 2008 and thereafter maintain throughout Project implementation in manner satisfactory to the Association, a gnevance redressal cell within BRLPS; Maintain CIF for purposes of providing grants to the beneficiaries which may be used as revolving funds and enter with each beneficiary into a beneficiary agreement, on terms and conditions set forth inthe PIP and COM; Select support organizations (inter alia NGOs, MFIs, CBOs) for assisting in Project implementationinaccordance with criteria and procedures set forth inthe COM and PIP; Cany out the Project inaccordance with the agreed EMF and implement the Tribal Development Planina manner satisfactory to the Association; Ensure that the Project shall not involve any compulsory acquisition of land, forcible eviction or involuntary resettlement ofpersons; Monitor and evaluate the progress of the Project and prepare Project Reports in accordance with the provisions o f Section 4.08 (b) of the Association's General Conditions and on the basis o f indicators agreedwiththe Association; Within six months or such later date as agreed with the Association, place inposition a suitable internal auditor(s) pursuant to TORSacceptableto the Association; Maintain a financial management system and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Association; and have these audited by independent auditors acceptable to the Association, in accordance with consistently applied auditing standards acceptable to the Association; Procure all goods, works and services required for the Project and to be financed out o f the proceeds of the Financinginaccordancewith the provisions o f Schedule 2 to FA. 12 D. APPRAISAL SUMMARY D.l. Economic and financial analyses 46. Economic Analysis: Since the project i s based on demand driven micro plans, the economic assessment does not attempt to evaluate all the components in terms o f quantifiable economic and financial returns. However, using the experience from similar projects elsewhere in India and based on informed cost-benefit estimates o f some potential livelihood interventions, analyses were undertaken to determine net benefits o f few potential economic activities. Inthis regard, attention was given to the CIF, which comprises o f US$42 million or 67 percent o f total project cost; 75 percent o f this fund is set aside for productive livelihood activities including food security. The evaluation o f the CIF i s based on a financial viability analysis o f selected four productive livelihood activities which are expected to be included in the micro plans. These have been modeled in detail in Annex 10. Each o f these potential activities possessed a financial return within the range o f 28 percent to 50 percent. The methodology used to analyze these micro plans will be used as part o f the appraisal process to make sure that the SPMU establishes a threshold for a minimumexpected financial return o f a given micro plan to qualify for CIF financing. 47. Fiscal Impact: The total cost o f the project i s estimated to be US$73 million and the project i s designed ina way that more than 75 percent o f this amount i s to be directly channeled to the community. The project is expected to directly benefit about 2.9 million people belonging to 590,000 poor households. In this regard, some o f the positive impacts o f the project in Bihar include: (i) a more cost effective anti-poverty program that would provide fiscal savings to allow the State to broaden its anti- poverty programs; (ii) training and capacity building interventions o f the project would provide job opportunities to the youth and unemployed with net benefit to the State in the form o f tax return and economic dynamics; (iii) focus o f the project to identify viable economic activities and cluster target groups to scale up with viable market connections would result intangible fiscal returns to the State inthe form o f different income possibilities; (iv) improved transparency, accountability and governance o f village institutions for effective use o f public resources and related services; and (v) the project will contribute to local economic growth as a result o f the aggregate income levels o f the poor, which could potentially improve revenues at local and State levels. It should also be noted that the project would lead to a wide array o f social, institutional, and economic benefits, mostly long term, that are not easily quantifiable. Thus, no attempt will be made to quantify these benefits resulting from the project. 48. During the five year life o f the project, contributions o f the GOBis about US$7 million or approximately US$1.66 million per year. Since this i s only a minor proportion o f the annual budget outlay o f US$2.4 billion o f the government, it should not have a major fiscal impact. Most o f the government's counterpart funding would finance recurrent costs o f the project, including salaries and allowances o f project staff at block and village levels, and government seconded staff at the SPMU, DPCUs and BPIUs. Inthe long term, the GOBwould bear only incremental cost for government staff after project closure with no commitment for all other contractual staff. In addition, all recurrent expenditures for the livelihood enterprises will eventually be met by the communities. D.2. Technical 49. The project will aim to be flexible in terms o f activities financed but will adhere to certain key principles, such as: a) demand-driven nature o f investments; b) community management o f activities; c) targeting the poorest o f the poor and the poor at all levels o f the CBOs; and d) financial efficiency and accountability. Micro Credit Plans (MCP) will form the basis for "financing" all livelihood activities i.e., all SHG members will prepare their MCPs which will include the type o f investment to be made and asset to be purchased. The purchase o f asset and investment decision will be taken by the respective household 13 or CBO, i.e., the project or its staff will not influence the purchasing decision. The investment could be supported by three possible sources o f funding- a) internal corpus o f the SHG; b) the CIF, inwhich case the proposal i s submitted to the VO (or the livelihood cluster); and c) bank loans, via the SHG-Bank linkage model. The CIF would be transferred to VOs as a grant. The VO i s expected to use this resource as revolving fund to finance various SHGs in the village, based on the MCPs. This revolved fund, combined with the savings o f SHGs is expected to multiply the project funds by two to three times, thus increasing overall credit availability for the SHGs. VO i s the source o f CIF funds for both the SHGs and also the business clusters. 50. The technical quality of livelihood investments would be ensured by: first, allowing CBOs to evaluate the request for fundingand also to support activities that the communities are familiar with; and second, allowing communities to procure technical assistance from the public, NGOs or private sectors if they choose to do so. Activities indifferent sectors would be carried out withinthe policy framework and general guidelines established for other Bank-assisted projects, where applicable. 5 1. The project would also seek greater involvement o f producedfarmer organizations, NGOs and the private sector to a) facilitate access to backward and forward linkages for successfully implementing the livelihood activities - both in the farm and non-farm sectors b) develop technology and c) disseminate process or extension services. In addition, the project includes support for human resource development at all levels inthe system. D.3. Fiduciary FinancialManagement 52. The financial management arrangements are adequate to account for and report on project's expenditures and to meet IDA'S fiduciary requirements. A bank report on Public Expenditure Management - Selected Issues (December 2005) has identified significant constraints and weaknesses in the Public Financial Management both at the state and rural local government levelg. The risks to the financial management arrangements for the project have been mitigated by the design o f the proposed implementing arrangements. At the project level an independent society at the State level with units at district and block level has been set up and at the community level the primary implementing unitswill be the VOs and SHGs. 53. The financial management framework includes contracting o f qualified finance specialist as a CFO at the state level with support from a Financial Management Consultant and appropriate staff at the district and block level. The accounting at the project level will be carried out using an o f f the shelf accounting package which i s inuse at the state level". The design o f the chart o f accounts will allow the project expenditures to be classified by project components and generate periodic financial reports both for internal and external purposes. The financial and administrative rules o f BRLPS, the project Financial Management Manual (FMM), the COM together with the MOUiBeneficiary agreements with the SHG, VO and BLFprovidesthe overall internal control framework. 54. The main challenge to satisfactory project financial management arrangements are the ability o f the project to develop the capacity o f the various village institutions (SHGs, VOs and BLFs), especially the VOs to be formed and envisaged to have a key role during implementation. These institutions have little exposure to basic book keeping and accounting. The community institutional building component envisaged investing substantially in building the capacity o f local communities in book keeping and Inorder to address some ofthe constraints and modernizethemanuals and codes the Bankhas sanctioned arecipient executed DFIDgrant. loManual books of account will also be maintained at the block level till issues of power back up are addressed 14 accounting through training to SHGmembers, office bearers o f the proposed VOs and developing a cadre of para professional book keepers. Technical support including financial management support will be provided to the VOs to buildtheir institutional capacity. The release o f funds to the SHGs and VOs i s also linkedto achievement ofcertain readinessfilters which includes financial management indicators. 55. The project will provide grants to VOsBLFs which will in turn seek to revolve the funds (along with other sources of funding including own funds) by providing finance to fund investment and other proposals from SHGs and livelihood groups against appraised MCPs. The funds from the project will be released in tranches based on achievement of readiness filters and milestones by the SHGs, VOs and eventually BLFs. Monitoring o f the utilization of funds by the community groups will be carried out through a process o f social audit and accountability, independent process monitoring and concurrent internal audit. 56. Audit: The external audit of the project will be carried out by a private Chartered Accountants firm(selectedon a competitivebasis) andwill carry out the audit asperTOR approvedbyIDA. Thiswill cover the SPMU, 6 DPCUs and 42 BPlUs and provide an opinion on the financial statements o f the project within six months of the close of financial year. This will be supplemented by concurrent internal audit which will essentially focus on the BPIU's and village institutions on a sample basis (SHG, VO and BLF). The audit will be as per TOR approved by IDA. This will include audit of VOs/ BLFs and a sample audit of records and accounts o f SHGs, physical verification of assets procured by beneficiariesNOs and adherenceto social accountabilitypractices such as public disclosure/ transparency etc. he internal auditors will be appointed within six months o f effectiveness so that the auditors can provide early feedback onthe overall design and operation of the project financial management system. 57. Social Audit: In addition to financial audit, social audit will be undertaken by the CBOs to monitor a) the utilization o f funds; b) procurement o f goods and services; and c) financial efficiency and accountability. For the CIF component implementedby VO/SHG the project has envisaged a process of building transparency by encouraging development of monthly summary report with cash and stock (where applicable) which would be displayed inthe notice boardo fthe VO/ BLFoffice. Procurement Arrawements 58. The project has proposed guidelines for community procurement in the COM to enable procurement under CIF. The project has also made provision for limitedprocurement at the state and district level. As this is the first such project in Bihar and there i s limited capacity at all levels for procurement, a number o f measures involving capacity building, disclosure and complaint redressal are proposed inAnnex 8. D.4. Social 59. Giventhe complexity of Bihar's society, which often translates into structural economic poverty, the project will approach both inclusion of vulnerable groups, and promote social cohesion. The project will adopt a very intensive and broadbased dissemination of the project objectives, non-negotiables, key principles, investments and activities to all the relevant stakeholders. This will help strengthen shared norms at the local level through multi-caste awareness raisinghensitization workshops that build cohesion and belongingness among local groups. The identification of the poor households will be done inan open and transparent fashion to gain confidence and support of all members of the community in the project villages. The project will work towards organizing the identified poor, through participatory processes with a special focus on women headedhouseholds and migrants. A nuanced mobilization strategy will be adopted for the mobilization, social capital development and income enhancement for the identifiedpoor. Livelihood investments in skills and assets will be undertaken for target households, while technical 15 assistance in terms of market information and market linkages will be extended to other community members as well. This i s to mitigate risks o f conflict and social backlash. Strategic communication will be used to enable community institutions to address social practices such as dowry, child marriage and alcoholism. The preparation process included piloting o f social mobilization approaches and consultations with community members, SHG members, NGOs, academia, research institutions and government functionaries. Through this process a distinct strategy for gender mainstreaming and addressing issues of the migrant households has been developed. D.5. Environment 60. Theproject will provide technical and economic support to the organizations ofthe rural poor for implementing livelihood activities in a demand-driven manner. Based on the nature and the scale o f the activities that will be funded by the project, the project interventions are not expected to cause any significant adverse impacts on the environment. Accordingly, the project i s classified as category B. Government of Bihar has conducted an Environmental Assessment (EA) o f the project, based on the list of activities that are likely to be supported in the project districts. An Environmental Management Framework (EMF) has been developed as a part o f the EA, to address the environmentalissues pertaining to the project-supported activities and to mainstream them inthe planning, design and implementation of activities included in MCPs. The EMF includes activity-specific Technical Environmental Guidelines (TEGs), environmental management indicators for the project monitoring and evaluation plan, and capacity-building for environmental awareness and management. A simple organizational and process structure has beendeveloped to ensure adequateand effective implementation of the EMFinthe project. D.6. Safeguard policies SafeguardPolicies Triggered by the Project Yes N o Environmental Assessment (OP/BP 4.0 1) PI [I NaturalHabitats (OP/BP 4.04) [I EN1 PestManagement (OP 4.09) [I [NI Cultural Property (OPN 11-03,being revisedas OP 4.11) [I EN1 Involuntary Resettlement (OPBP 4.12) [I EN1 Indigenous Peoples (OP/BP 4.10) [YI 11 Forests (OPBP 4.36) [I EN1 Safety o f Dams (OP/BP 4.37) [I PI Projects inDisputedAreas (OP/BP 7.60)* [I EN1 Projects on InternationalWaterways (OPBP 7.50) [I EN1 61. Indigenous People's (OPBP 4.10): The project has developed a Tribal Development Plan (TDP) to address the institution development and livelihoods needs o f Scheduled Tribe (STs) population in the project districts to actively participate and gain social and economic benefits from the project interventions. 62. Involuntary Resettlement (OP/BP 4.12): The project will not involve involuntary resettlement. For activities involving change in land-use and/or ownership, this would be done on a voluntary basis determined through a set of criteria. The guidelines for this arrangement have been included in the PIP and COM. Sub-projects whereininvoluntaryresettlement i s likely to occur would be disallowed. * By supporting theproposedproject, the Bank does not intend toprejudice the$nal determination of theparties' claims on the disputed areas 16 63. Environmental Assessment (OPBP 4.01): The project has developed an Environmental Management Framework (EMF) to address the environmental issues pertaining to the project-supported activities andto mainstreamthem inthe planning, design and implementation o f activities. D.7. Policy Exceptions and Readiness 64. The project has received authorization from the Bank Senior Management under OPBP 6.00 for financing food expenditures. The project proposes to transfer grants to communities against MCPs under the CIF Component. These MCPs for livelihoods would be holistic innature to include access to assets, income generation activities, skill development, access to education and health services and some consumption needs (food security). Based on experience from the pilots under the project, community managed food procurement and distribution activities, and extension services for increasedproduction of paddy have been identified as priority needs by the community. While expenditures for production, storage or distribution of food are eligible for Bank financing, authorization has been received for purchase of food. As mentioned in section A.l, Bihar has very poor Human Development Indicators. The access to food by community will not only enablereducedriskto disease for all age groups but will also enhance children's growth and development and reduce adverse pregnancy outcomes for mothers and children. Community's ability to procure food under the project will play an important role in strengthening the CBOs to plan, implement and manage their activities and become self managed and self-reliant sustaining over a period of time. 65. The project has developed a participatory targeting methodology for identification of the poor. These poor will be organized into SHGs. The community managed food purchase and distribution activities will be managed by SHGs and their federations. To ensure transparency and accountability in food procurement and distribution, social audit committees of VOs will monitor the transactions and ensure that there are no leakages. The project has also proposed a number o f social accountability measures like Community Score Cards and a dedicated phone line for grievance redressal. Inaddition, the project will use transparency measures like display of information at public places. Details on the food security activity and implementation strategy are includedinthe COM and PIP. 66. The project complies with all other applicable Bank policies and there are no other policy exceptions requiringmanagement approval. 67. The project will be ready for implementation at Board Presentation. Core operational and financial staff is on board and the staff o f first phase blocks would be appointed by October 1, 2007. Government has allocated adequate budgetary provisions for the current financial year. A financial management system has been put in place. The PIP and COM have been prepared. The first year implementation plan and eighteen months procurement plan have been finalized. A monitoring, evaluation and learning systemi s beingput inplace. 17 Annex 1: Country and Sector Background INDIA: Bihar RuralLivelihoods Project "JEEViKA" - Background 1. Bihar i s the third most populous state in India with 8 percent o f the country's population. Bihar recorded poor economic growth" through the nineties and grew at 4 percent duringthe Tenth Planperiod, against the national annual growth rate o f 7 percent for the same period (Table 1.1). The average annual per capita income o f US$157 for Bihar i s a quarter o f the national average. Bihar i s predominantly rural with 89 percent o fthe populationlivinginrural areas and a rural poverty ratio o f 44.3 percent, the second highest after Orissa. The situation in rural Bihar i s characterized by poor service delivery, complex political and social fabric, limited inclusion inmost institutions, limited economic opportunities, and poor development infrastructure. These factors along with the lowest per capita development expenditure" in Bihar have prevented any improvement in its 32ndrank amongst all India states, and the HDI(0.367) and the GEI. 2. The state has witnessed a decrease in the poverty ratio from 64.4 percent in 1983 to the present 44.3 percent. However, the number o f poor is still a staggering 36 million (of 82 million population). Poverty i s heavily concentrated amongst the landless or near landless agncultural households with these two vulnerable groups constituting 70 percent o f the households inBihar. It is estimated that nearly 2.3 million poor are exposed to huge amount o f high c o d 3 debt for food, health and education, accounting inequities with North Bihar being more poverty stricken than South Bihar - a reflection o f iniquitous land for 25-30 percent o f consumption expenses, further impoverishing them. There are also intra-state distribution. Landholdings are highly fragmented, at an average size o f 0.75 hectares, which i s half o f the all-India level o f 1.41 hectares. Almost half o f the households are landless or near landless with agricultural laborers constituting 48 percent o f the labor force in agriculture, about double the all India level o f 27 percent. Sectoral Issues 3. High levels of socialfragmentation: Disparitiesare evident along gender and caste lines, with SC Hindus and Muslimhouseholds constituting 25 and 15.4 percent respectively, o f landless households in the state (Table 1.2). Rural Bihar is also divided along caste lines determining social behavior and economic segmentation; and this 'reference group' being a key to social and economic mobility. These social issues have constrained social and economic mobilization inBihar and constrained development o f per capita growth rate o f2.6%per annumas against 4.8% per annumat the all India level l2less than halfo fthe national average o fRs.6,748. l3Sources vary from money lenders, relatives and friends, banks and SHGs and interest rates very from 2-10 percent per month. 18 collectives o f the poor. Preparatory studies have shown that the existing institutions such as cooperatives, SHGs, farmer's associations are not inclusive o f the poor. Absence of sensitive support and facilitation structure has lead to low levels o f social capital among the poor and consequently hindered formation o f good quality organizations o f the poor. Social 0.00 0.01-0.40 0.41-1.00 1.01-2.00 2.01-4.00 4.00+ group Other 6% 49% 23% 12.6% 6% 3% OBC 9% 58% 19% 9.5% 3.5% 0.7% sc 23.8% 67.1% 6.4% 2.1% 0.6% 0.0% 4. Ineffective delivery of financial services to the poor: Delivery o f financial services to poor in Bihar i s constrained due to both structural and market factors. Rural households are exposed to huge amount o f debt from informal sources. Adverse terms o f credit and usurious interest rates (often above 36 percent per annum) stress the poor households. Preparatory studies have revealed that highdebt-servicing costs and out-of-pocket expense towards health and education account for roughly 30 percent o f debt burden. The estimated demand for micro credit services in Bihar is put at US$2.4 billion. SHG bank linkage which i s seen as the primary source o fproviding formal micro credit services to the poor has been able to reach just US$8.4 million in the State during last fiscal (2005-06). Inadequate response fkom formal credit system i s due to variety o f factors including ineffective social mobilization o f poor, sparse banhng network, low employee productivity, risk aversion on part o f banking sector, l o w credit deposit ratio and poor financial performance o f credit institutions. This has seriously limited asset and capital formation, credit access and development o f self employment opportunities among the poor. 5. Poorly developed value chains in the agricultural sector: Agnculture employs over 80 percent o f the population and i s the backbone o f Bihar's economy. Even with low agricultural productivity, Bihar still accounts for 8-10 percent o f the national agricultural production and i s the second largest producer o f vegetables, third largest producer o f h i t s and largest producer o f litchis (75 percent) and "Mal~hana"'~. However, the period o f 1991 to 2001 saw a sharp decline in cultivators from 47 to 33.6 percent and an increase in agricultural labor from 39.4 to 48.6 percent. Major reasons for under performance o f the agricultural sector include poor quality o f producer organizations, lack o f capital formation, poorly developed value chains, inadequate research and extension facilities and non-performance o f the entire service delivery system including credit, input, storage and marketing facilities. Also, the land tenure system i s skewed with 96 percent o f the farmers working on 68 percent o f the land at subsistence or below subsistence levels. Various preparatory studies indicate the need to invest in farmer organizations, productivity enhancement, farmer responsive extension systems, and assetization o f the poor households and development o f value chains for small and marginal farmers to increase income and employment opportunities from agriculture. 6. High migration rates due to lack of livelihood opportunities:An important lesson emerging from this scenario o f growing phenomenon o f landlessness and the diminishingreturns from agnculture is the need to invest more innon-farm employment and to strengthenrural economy and alleviate rural poverty. This i s especially critical in view o f the swelling ranks o f agricultural laborers and modest increases in l4Source:55throundofNSS (1999 -2000), reportno. 469, via www.indiastat.com aquanut/gorgonnut-Bihar's share 90% ofIndia's production(worth US$lOO million), collectedbypoormen andwomen. 19 non-farm workers. One reflection o f this development i s the current rate o f migration inBihar which i s 42 percent. There i s a large out-migration o f workers to other prosperous states, almost from every single poor household, insearch o f employment and better wage; with its attendant social and cultural problems. Remittances account for approximately one third o f the total average annual income in sample villages; these are used to smoothen consumption needs and medical expenditure, and accumulation o f assets i s minimal. According to Post Office officials the total value o fMoney Orders sent to Bihar from other parts o f India was worth US$lOO million in 2005-2006. This represents a fraction o f the total money sent and carried to Bihar by migrants. It i s also important to note that nearly 95 percent o f these migrants are unskilled, though slulled workers earn double the earnings o f unskilled workers. Government ofBihar's StratemandReforms 7. The GOBhas been implementing a range o f poverty alleviation programs for self employment like SGSY, wage employment like NREGP, and social protection like public distribution system (PDS), supplemental nutrition, housing, and pensions for the aged, widows and disabled. Social barriers and stratification, weak "voice", inadequate capacity and poorly developed capability among the poor has prevented them from gaining information, laowledge and access to these programs and benefiting from poor women (SHGs - 50,000). However, the quality and sustainability o f the social and economic them. GOBthrough agencies like the WDC and NGOs has supported development o f collectives o f the mobilization has been inadequate. As a consequence, these groups o f the poor have been unable to access credit and other support services from commercial banks and other service providers. These efforts have also been undertaken in a very scattered fashion and have not been sustained after the initial financial support. Lack o f access to credit and livelihood support services has lad to subsistence based livelihoods and limited impact on poverty reduction. 8. The GOBhas initiated a series o f reform measures to facilitate favorable investment climate and efficient delivery o f public services in the State to reduce poverty. The GOB'Sbudget for 2007 and the EleventhFive Year Planpriorities reflect this vision and are summarized hereafter: 9. Enhancing Investment Climate and Growth: The Agricultural Produce Market Act (APMC) has been repealed to liberalize the agrarian sector. In addition, Administrative Reform Commission, Land Reforms Commission and Agriculture Commissions have been established. The recent state budget announced that revenues are projected to increase to 36.5 percent o f GSDP in 2007/08 compared to 29.4 percent in2005/06, which i s a ratio amongst the highest o f all states. The combination o f highrevenues, relatively restrained revenue expenditure, and additional borrowing (part o f which i s automatic inflow from the National Savings Scheme postal deposits) i s allowing GOBto project a massive increase inPlan and Capital spending. The capital investment outlay i s projected at 8.5 percent o f GSDP, four times bigger than the historical average. The roads sector i s one o f the highest priority areas inthis budget. The GOBhas prioritized investments ineducational institutions, promotion o f the Buddhisttourist circuit and hospitality industryto promote tourism and the state as an education hub. Combined with other reforms in administration, and infrastructure these sectors are expected to leverage further private investment. There i s a need to ensure that the poor and marginalized sections are able to participate in the upcoming investments and growth sectors. 10. Advancement in women's empowerment: In the 2006 PRI election where 50 percent seats were reserved for women, women from mostly poor and disadvantaged households won nearly 58 percent seats. Half o f the 200,000 teachers to be recruited will be women. A recent decision o f the state i s to reserve halfthe seats o f "Nyaya Mitras" in all the 8,500 Panchayats for women16. Inaddition, the GOB'S l6 NyayaMitras refer to law graduates who are placedto assist the GramKatcheries (village courts) headedby sarpanches (electedvillageheadmen) in settlinglegaldisputes. 20 Eleventh Five Year Plan proposes to use the network o f SHGs as a vehicle o f social and economic empowerment. 11. Making public sewice delivery more efective: The proposed investments ineffective delivery o f public services include recruitment o f 240,000 teachers and health workers, enhanced provision o f basic supplies and medicines to primary health care centers, referral centers outsourced to private sector on transparent bidding and contracting, and food stamps and kerosene coupon system to reform the ratiodpublic distribution system. Issues to be addressed by the Proiect 12. The various policies and programs initiated by the GOBtowards mobilizing and empowering poor especially women, and enhancing opportunities for social and economic empowerment are noteworthy. However, in order to realize GOB'Svision o f SHGs as vehicles o f social and economic empowerment the project will invest inthe following. 13. Building social andJinancia1 capitalfor thepoor: The project will organize women from the poor and disadvantaged households into SHGs17usingparticipatory and transparent system of identification of the poor on a large scale and ina rapid manner. This will enable reduction inpotential social backlashand conflicts which may arise duringthe social mobilization process. This social and economic mobilization o f poor into SHGs on a large scale will require intensive efforts, resources and deployment o f skilled staff. The project's core investment will be inbuildinggood quality self sustaining and viable institutions o f the poor at village and block levels through large scale investments inhuman capital development and democratic norms o f governance and accountability. It will also invest in developing good quality financial management systems involving thft, revolved credit, micro planning and financial discipline among SHGs enabling them to access higher amounts o f credit from financial institutions including commercial and cooperative banks. This will enable SHGs and their federations at Village and Block level to become credit worthy and viable financial institutions. 14. Increasing livelihood opportunities:The project will facilitate improvements inlivelihoods o f the poor through investments ineconomic organizations and increased access to assets, skills, technology and markets. This would involve working on making investments which increase share o f the poor in value chain for key livelihoods for the poor including agriculture and dairying. This will be done inpartnership with established service providers to maximize returns for the poor. It will promote universal food security in the poor households belonging to SHGs would ensure food for the poor especially in the lean months and reduce the chronic and high cost indebtedness. The project will offer customized skill buildingfor migrant workers inorder to enhance their working conditions andremittances. 15. Enhancing voice and access to information: The social empowerment should enable poor to enhance their voice and participation in local governments and service delivery through line departments to enhance access o f the poor to education and health services; social protection services including pensions, PDS and other social welfare programs. The SHGs will then be able to hold providers ofpublic services to be more effective and accountable. 16. The proposed "Bihar Rural Livelihoods" project builds on the experiences and lessons emerging from Bihar's efforts at poverty reduction and would enable scaling up o f the social and economic mobilization o fthe poor. The project would therefore assist GOBinits core agenda ofpoverty reduction. Currently, less than 10%ofmembershipinSHGsis ofthepoorandless than5% ofthepoorare inSHGs. 21 Annex 1: Attachment 1 INDIA: Bihar RuralLivelihoods Project "JEEVXA" - Framework for Project Interventions J Facilitation & Access to Livelihood information and Promotion Accountability 22 Annex 2: Major Related Projects Financedby the Bankand/or other Agencies INDIA: BiharRuralLivelihoods Project "JEEViKA" - Sector Issue Project Latest Supervision I S R Ratings (bank-financed projects only) Implementation Development Progress Objective Bank Financed Poverty Reduction Andhra Pradesh District Poverty Initiatives Project S S and livelihoods (Cr.3430-IN) Rajasthan District Poverty Initiatives Project S S (Cr.3339 - IN) Madhya PradeshDistrict Poverty Initiatives Project S S (Cr.3430-IN) Chhattisgarh District Poverty Initiatives Project M S M S (Cr. 3749-IN) Andhra PradeshRuralPoverty Reduction Project S S (Cr.3732-IN) Sri Lanka Community Development and S S Livelihood Project (H0780-LK) Tamil Nadu Empowerment and Poverty Reduction S S Project (Cr. 31806-IN) Social and Gender RuralWomen's Development and Empowerment S S Specific Programs Proiect (Cr. 2942-IN) Other Development Agencies Rural Livelihoods Programs inAndhra DFID Pradesh, Madhya Pradesh, Orissa, West Bengal, Gujarat, Himachal Pradesh, Karnataka and Rajasthan IFAD Women's Empowerment inBihar and Uttar PradeshProject Onssa Tribal Empowerment and Livelihoods Program Jharkhand-Chhattisgarh Tribal Development Program Livelihood Improvement Project inthe Himalayas North Eastern Region Community Resource Management Project for Upland Areas M S -Moderately Satisfactory; S - Satisfactory 23 Annex 3: ResultsFramework andMonitoring INDIA: BiharRuralLivelihoodsProject - "JEEViKA" ResultsFramework Project Outcomehmpactindicatorsfor the PDO Use of result information Development Objectives 1. Enhancedsocial 1.1 Self managed" self help groups 1.1-1.3 At MTRthe success and economic established, covering at least 80% o fthe o f capacity buildingand empowerment o f the target households livelihoods interventions will ruralpoor inBihar. 1.2 At least 50%o f those who havereceived be evaluated and the CIF have increased incomeby at least strategies will be redesigned 30% o fthe baseline ifthemanagement 1.3 At least 50% o f SHGmembers have effectiveness i s not found reduced highcost debts from informal adequate to achieve project sources. objectives. Intermediateresults Resultindicatorsfor eachcomponent Use of result monitoring by component (workinprogress) Component one: 1.Formationo f self 1.1 Information about the rules o f (1.1-1.2) PY-3 evaluatesthe reliant and inclusive engagement related to the project strategies o f community community available to at least 80% o f intended mobilization and capacity institutions including participant households buildingsupport ifthe SHGs, Village 1.2 Percentage o ftargetedpoor households targeting, inclusiveness and Organizations and that are organized into SHGs represented effectiveness o f CBOs are Federations. inVO andBLF found to be less than expected. 80% o ftargeted households into The constraints will be SHGs analyzed inredesigningthe 60% o f formed SHGs into VO; and strategies. 40% o fthe formed VOs into BLF (1.3- 1.4) PY-3 evaluates the 1.3 At least 75%o f formed VOs accessed and thft and credit strategies managedproject funds as per project including strategies for linkages processes at any point o f time with financial institutionsifthe 1.4 At least US$l1.9millionbeneficiary total savings & credit savings mobilizedleveragingUS$17.8 mobilization i s significantly million o f financial institutionlending and less than the desired level. US$23.8million o finter-loaning Intermediateresults Resultindicatorsfor each component Use of result monitoring by component (workinprogress) Component two 2. Establishment and 2.1 At least 50%o f CIF is made for the (2.1) In PY-3 the strategy o f use o f Community productive asset generating sustained livelihoods financing will be Investment Fundfor income revisited ifa reduction indebt Self managed as defined by the project's graduation indicators inthe COM. 24 food security, social burdenis not found. services, assets and 2.2 Food security in~reased'~for 80% o f (2.2 -2.3) InPY-3 the strategies income generation target households as compared to the for capacity buildingand and service sector baseline placement support for youth investment. and migrants will be evaluated 2.3 At least 5,00OZ0directjobs created iftheresults are significantly through project facilitation & at least 75% less than the expected numbers. o f them are getting sustained income Intermediate results Resultindicatorsfor each component Use of result monitoring by component Component three Service delivery standards 3. Establishment and 3.1 At least 5 major business linkages 3.1 PY-3, revise project's operationalization o f established through publidprivate market linkage strategies ifless Technical Assistance partnership by CBOs than 3 businesses established Fund. 3.2 At least 3 new partners are inductedto 3.2 PY-2, onwards intensify promote additional microfinance activity training and other inputsif with total turn over o fUS$0.71 million. income i s significantly less than the expected level Intermediate results Resultindicatorsfor eachcomponent Use ofresultmonitoring bv comDonent Componentfour 4.1 Project Monitoringand Learning System 4.1 FromPY1onwards Project established, including RLMIS, learning intensify efforts to develop and Management and experience sharing forums at different establish Learning mechanisms levels o fproject management. and RLMIS 4. The project i s well managed and 4.2 Project implementationprocedures and 4.2 FromPY1monitor the coordinated at the agreed business standards*' are followed implementation standards and State, District and for at least 80% o fproject interventions at make review strategy, conduct Cluster levels. any point intime. staff training, etc. for course correction. l9Food security is definedin context of the project as availability of 10 Kgs per personper householdper month at reasonable cost. Currently the households have to borrow from high interest lenders to buy required food thus making the households indebted. The project will enable householdsto access food at reasonableinterest, low cost food from public distribution system entitlements andincreasepaddyproductionfrom small landholdings. 2oThroughskill development to the youth inthe areas of driving, construction, security guard, nursing,computer, etc. 21 The Project Implementation Plan will highlight the business standards for each of the service delivery areas viz. CBO formationanddevelopment, sub-project appraisal, fund disbursement,audit compliance. 25 z g w z s ;i 2 g d W N .-F c? 3 t- s 0 W s 10 3 c! 3 0 0 I g m W N 00 N t sn d Z dZ d Z )9 3 Annex 4: Detailed Project Description INDIA: BiharRuralLivelihoods Project "JEEViKA"- Project Area 1. The project will be implementedinabout 776 Village Panchayats covering 4,000 villages in42 blocks insix districts ofNalanda, Gaya, Muzzafarpur, Madhubani, KhagariaandPurnea.The six project districts have been selected based on poverty and social assessment wherein clustering of districts has been done based on criteria which include poverty levels, social vulnerability, livelihood potential, infrastructure gap, literacy levels and social capital. All Village Panchayatsinthe 42 blocks (Table 4.1) will be covered under the project. The project is expected to directly benefit about 2.9 million people belonging to 590,000 households. Table 4.1. Details of Proiect Districts No Total District- Districts No. of BRLp BRLP wise total Blocks Panchayats population 1. Gaya 24 11 142 3.4 Million 2. Nalanda 20 7 99 2.3 Million 3. Khagaria 4 3 60 1.2 Million 4. Purnia 14 7 148 2.5 Million 5. Madhubani 21 7 147 3.5 Million 6. Muzzafarpur 16 7 180 3.7 Million Target Population and Selection 2. BRLPS had undertaken a Poverty and Social Assessment (PSA) o f Bihar. This Assessment looked at four aspects viz. poverty, social vulnerability, livelihood potential and social capital. The 38 districts ofBihar were categorized into 5 clusters viz. MuchAbove Average Above Average Average Below Average Much Below Average 3. Based onthis, the cluster position of eachof the 6 districts with respect to the four dimensions emergedare presentedin4.2. Table 4.2. Cluster position ofproject districts 29 4. The poverty levels are very high in Khagaria, Madhubani and Purnea. These districts are also characterized by low levels of social capital. Livelihood potential i s also rather limited in these three districts. O fthese districts, social vulnerability i s very highinPumea. 5. The poverty levels inNalanda and Gaya are not very highhowever, ifone takes into account the relatively higher level of social capital, the level o f poverty should be lower. In Gaya, the livelihood potential i s also above average. Inthese two districts, the existing economic and social potential are not fully utilizedto reachthe matchinglevel ofdevelopment. 6. Finally, the district o f Muzzafarpur has average level of livelihood potential, social vulnerability and social capital and yet, the present level o fpoverty i s below average. 7. The criteria of selecting the blocks are as follows: High incidence of disadvantaged groups as reflected in the percentage of SC and ST population inthe blocks. Adverse status of women as reflectedinadverse sex ratio and female literacy. Infrastructure availability. 8. Based on the above mentioned criteria, Table 4.3 provides the blocks that are proposed in the project. Table 4.3: SelectedBlocks District Total Blocks Selected no. of Blocks Selected Blocks Nalanda 20 7 Asthawan; Bihar; Harnaut; Nagar Nausa; Rahui; Rajgir; Sarmera Amas; Atri; Barachatti; BodhGaya; Dobhi; Gurua; Gaya 24 11 Khizisaraj; Manpur; Sherghati; Tan Kuppa; Wazirganj Khagaria 7 3 Alauli; Chautham; Khagaria Muzzafarpur 16 7 Bochaha; Dholi (Moraul); Kurhani; Minapur; Musahari; Sakra; Saraiya Madhubani 21 7 Benipatti; Jainagar; Jhanjharpur; Khajauli; Lakhnaur; Pandaul; Rajnagar Pumea 14 7 Amour; B.Kothi; Baisi; Banmankhi ;Bhawanipur ; Dhamdaha ;Rupauli 6-Districts 102 42 Project Phasing 9. The project will adopt a saturation approach, meaning all the poorest ofthe poor families inall 42 blocks o f 6 districts will bebrought under SHG fold. Mobilizing such a hugenumber ina State like Bihar i s a huge task and hence will be done inphased-manner. 10. Blocks will be covered on a stage-wise basis in two phases. The project will focus on 18 blocks duringthe first 2 Years andtheremaining24 blocks startingfromYear 3. 11. For the first 2-Years, the project will collaborate with the CBOs in Andhra Pradesh to achieve intensive coverage of institution and capacity building and in developing microfinance activities. The strategy includes immersion programs in Andhra Pradesh for the Bihar community members and leaders as well as the BRLP project staff; use of external community resources persons (CRPs) from Andhra 30 Pradesh and probably other States like Madhya Pradesh, and Rajasthanwhere similar programs have been implemented inthe past. 12. For Stage 11, when the remaining 24 blocks are targeted starting from Year 3 onwards, the project will tap into the pool o f social capital nurtured and developed in the 18 blocks during Stage Ifor replicating good practices related to institution and capacity building,and micro finance activities. 13. In each Block it is estimated to cover 12,600 BPL households into 1,050 SHGs, in 2 Years. Details o fphasing are provided inthe PIP. Project Strategy 14. The situational analysis o f Bihar has clearly shown that the poor need both social and economic empowerment in a fractured and hierarchical society on the one hand and food security and social services on the other. Expenditure on these services has lead to a high level o f indebtedness at very high rates o f interest for the poor. Also distress migration for any kindo fjob, especially agricultural and other low paid labor, i s widely prevalent amongst the poor. Simultaneously, there are emerging opportunities for economic empowerment through local livelihood creation in many agnculture and allied sectors which can directly benefit the rural poor. The studies, field visits, and lessons from the pilots have informed the core design o f the proposed project to address the above challenges and opportunities in a holistic manner. 15. The core strategy of the program is to buildvibrant and bankable women's CBOs in the form o f SHGs, who through member savings, internal loaning and regular repayment become self sustaining organizations. The groups formed would be based on self savings and revolving fund and not on a single dose o f CIF funds for assetization given as a subsidy. The primary level SHGs would next be federated at the village, by forming VOs. Such community organizations would also partner a variety o f organizations for providing back end services for different market institutions such as correspondents for banks and insurance companies, procurement franchises for private sector corporations and delivery mechanisms for a variety o f government programs. 16. The project components describedbelow are based on the above design o f buildinga multitiered, self sustaining, model o f CBOs who will self manage their own development processes. The project strategy i s therefore phased in a manner o f first horizontally buildingup a very large number o f primary level women based SHG with the rural poor, through a saturation policy in the six chosen districts. Because o f the extreme poverty levels in Bihar, the project will first capitalize these SHGs, through investingpart o f the CIF, to supplement the savings o f these groups. The groups will also be linkedto the commercialbanks for low cost loans. 17. Inthe next phase, these primary level SHGs will be federated at the village level to form the second tier o f the VOs. The VOs will receive investments from the project, for further on lending to the SHGs and members, through a second dose o f the CIF to be used for assetization, food security purchases, and retiring o f high cost debts. A large part o f this capital inflow i s likely to be for meeting immediate consumption needs, particularly health and food purchase, given the extreme level o f poverty inrural Bihar. Thiswill ensure that assetization and future cash inflows are not utilized forjust repaying highcost debts to money lenders inthe future. 18. Inthe thirdphase, the VOs will be federatedto form higher level community organizations at the cluster and block levels. These apex community level federations will be responsible for enhancing livelihood activities in a comprehensive manner acting as microfinance institutions for lower level VOs, and economic institutions that take up specific income generating activates based on the assets created at 31 the family level, such as animal husbandry, agnculture and non farm enterprises. For the sustainability o f lower level institutions as both sustainable economic and social entities such aggregation i s essential. 19. To ensure that assetization of the poor i s put to productive use and does not just lead to them procuring an asset or cash that i s captured by the elite thereby not leading to income streams, a set o f service providers will be positioned in the project, through partnerships, who will provide forward linkages to markets for products and services on which the poor have a very highoutflow today. This will be executedthroughthe Component I11(Technical Assistance Fund).The above sequential and interlinked project design, phased over the whole project period, will create a social and economic ecosystem controlledby the poor and leading to their own sustainable development. Project Components 20. The components o f the project have beendesignedto enable achieving the development objective of the project which i s to enhancesocial and economic empowerment of the ruralpoor inBihar. The four components are - 1) Community Institution Development; 2) Community Investment Fund; 3) Technical AssistanceFund; and 4) Project Management. Component 1: Community Institution Development (Total: US18 million, IDA contribution: US$16 million) 21. This component is the core investment of the project and would be implemented in a phased manner. The first phase will involve strengthening and building vibrant and self managed primary institutions of the poor including SHGs based on internal thrift and revolution o f savings. During the second phase, the primary level SHGs will be federated at the village level to form VOs, which will be provided project investments for various activities through a participatory micro planning process. The third phase would involve supporting federation of VOs to aggregate as higher level apex federated community organizations at the block or cluster level for taking up livelihood enhancement and income generating activities and develop linkages with market institutions. This component will facilitate empowering CBOs to develop direct linkages with financial service providers including commercial banks. The communities will also be provided skills and tools to develop social accountability mechanisms to enable transparency and good governance of the institutions o f the poor and build effective service delivery partnerships with local government. The component will also facilitate better village-level communication on issues affecting social and economic activities of interest to the rural poor. 22. The next section provides a detailed description of possible activities that can be taken up under the project. These are described indetail inthe PIP and COM prepared by the project. These are based on various stakeholder consultations, discussions with the community and results from pilots undertaken duringpreparation. 23. BLFs -Formation, development and strengthening o f CBOs (including SHGs, VOs -Federation of SHGs, Block Level Federations of VOs, ProducerEarmer Organizations and Livelihood cluster organizations): The objective of this activity i s to enable the mobilization of poor and poorest women from nearly 590,000 households belonging to the SC, ST, EBC and minority communities into about 55,000 SHGs. These SHGs will be federated into approximately 770 VOs and 42 BLFs. Activities include a) social mobilization of the poor with specific focus on excluded, vulnerable and migrant households; b) formation of new groups and strengtheningo f existing groups; c) training o f the groups on micro planningmethodologies and financial managementto handle savings and credit. 32 24. The project will support strengthening the organizational capabilities o f these federations in livelihood promotion, developing linkages with service providers including commercial banks and building knowledge base and skills at the grassroots by developing a cadre of para-professionals. In addition, livelihood groups and their federations will be supported through customized training for village and block level management of enterprises, franchise management, quality enhancement and value addition shlls. Linkages of these groups to the commercial sector will be facilitated. Given the delicate social condition and the poor economic status o f even the "non-poodprivileged", an effort will be made to make these federations inclusive o fthe non-poor to encourage social cohesion. 25. The project will also invest in developing a cadre o f good quality community resource persons (CRPs), community managedbookkeepers, livelihood associatesand other functionaries. 26. Developinga "community managed" sustainable T h f t and Credit program: The objective o f this activity i s to enable 55,000 SHGs of poor households develop and manage finances including group savings, interest accrual, loans from commercial banks and community investment fundprovided by the project. The activities which could be supported include a) institutionalizingrobust financial systems in SHGs, VOs and BLFsto help themmanage microfinance processes; b) training and capacity buildingon MCPs which i s the basis for accessing both bank finance and CIF; c) developing and adopting quality monitoring protocols like rating o f SHGs and VOs not only to enhance confidence of partner banks/ microfinance institutionsbut also to provide inputsto capacity buildingactivities. 27. Other key activities that will be supported by the project include strategic communication. This will involve information, education and communications support, including awarenessbuildingprograms and campaigns in villages on issues affecting social and/or economic activities of interest to rural poor, for example, children's education, child labor, child marriages, and HIV/ATDS. Under the Local Government (PRls) support, activity, PRIs especially at the Gram Panchayats (village) will be sensitized in the implementation of social protection programs like PDS, pensions, ICDS, NREGA, etc. to be effectively targeted and inclusive of the poor. This will be complemented by investment in social accountability mechanisms which enable the poor and their organizations to demand and access better quality public services and entitlements. Component 2: Community Investment Fund (Total: US$42 million, IDA contribution: US$35 million) 28. The CIF i s designedto transfer financial andtechnical resources to the CBOs on a demand driven basis through a participatory micro planning process for use as a catalyst to improve their livelihoods and build their institutions. Some of the key elements that could be supported using the CIF funds include income generation and livelihood improvements, food security needs, skill development to increase employment and employability, and limitedproductive community level infrastructure facilities. Up to 10 percent o f the CIF can be used by the CBOs to pilot social risk management interventions in areas like health and disabilitJg; and alternate public service delivery models incooperation with service providers and local governments. These resources would be transferred to VOs as a grant. The VO i s expected to use this resource as revolving fund to finance various SHGs in the village based on the micro planning process. The VO will be free to fix terms and conditions under which the resource will be lent to SHGs. This revolved fund, combined with the savings of SHGs is expected to multiply the project funds by two to three times, thus increasing overall credit availability for the SHGS.~'The experiences gained by *'Poor are highly vulnerable to healthshocks andto deathor disability ofthe primarybread-winnerofthe family. 30This i s based on large scale experience of over 600,000 self help groups and 29,000 VOs in Andhra Pradeshwith a savings baseofUS$349 Million. 33 community institutions in using these funds will also enable them to leverage higher investment from Banks and other commercial sector agencies and increase creditworthiness o f the poor. Details are provided inthe PIP and COMprepared by the BRLPS. 29. Some o f the activities which could be supported under the project are described in the sections below and are based on the various consultations, appraisals, pilot programs and studies undertaken under the project. However, the exact nature o f the activities supported will be based on a participatory demand driven micro-planningprocess. 30. Food Security: i s a community managed credit and food distribution mechanism, specifically to address the food requirement o f the SHG members. The objective o f the activity is to enable the poorest o f the poor and the poor to have continued access to food o f improved quality; ensure consumption smoothing by reducing the food price volatility particularly duringthe lean period and also fill the gap o f the household food requirement in the absence o f a functioning PDS Key activities which could be b) facilitate access to credit from commercial banks - CIF could be used for rolling-out the program; c) supported include a) aggregation o f demands (i.e., food requirement o f each SHG member's household); training on community procurement process, paclung and distribution o f food grains and other commodities, and financial management (incl. loan recovery, and book-keeping) and accountability. K e y possible outcomes include - a) ensuring food security even during lean season when regular household incomes are insufficient to meet basic consumption needs; b) reducing debt levels by reducing the dependence on high cost informal debts and also as a result o f cost savings due to collective purchasing; and c) capacity o f SHGs to manage procurement and logistic issues. 3 1. Assets and Income Generation:This would include expanding the existing livelihoods o f the poor and introducing new livelihoods. The objectives o f this activity are: a) assetization at both householdand community level (e.g., procurement and marketing centers, small processing plants); b) diversification o f livelihood opportunities for the poor; c) increasing household income, by way o f increased conversion o f assets to incomes; and d) reducing the expenditures at enterprise level through collective efforts for leveraging economies o f scale and enhance the bargainingpower o f the poor. Other activities which could be supported include - a) facilitating access to credit from other sources primarily commercial banks; b) scaling-up universal livelihood interventions like dairying; c) supporting initiatives for mitigation of livelihood risks including death, disability and asset replacement insurance; d) financing development o f the backward and forward linkages. K e y possible outcomes include - a) increase in both type and size (i.e., value) o f assets per household; b) increase in number o f livelihood sources, at least two to three livelihoods per HH; and c) increase inhousehold income o f the poor households. 32. Skill building: The objective o f this activity i s to a) increase employment and employability o f educated rural youth from poor households and b) to improve the bargaining power o f migrating youth through enhancement o f market based skills enhancement programs and certification through partnerships. Key activities which could be supported include a) setting up livelihood enhancement and training centers with special focus on English language, computer skills and post-training placement services; b) establishing a Migration Resource Center (details in PIP) on a pilot basis in a major city where migrant workers from Bihar are present in large numbers; and c) convergence with government departments such as Rural development to leverage available resources and infrastructure. Key possible outcomes include a) youth provided with slulls and job placement; b) increase in income resulting from skill development; and c) setting up o f Migration Resource Centers providing services to migrant workers from the six project districts. 33. Piloting social risk management interventions: The objective i s to a) improve access to health care and primary and secondary education and b) overcome debilitating risks such as loss o f breadwinner 34 or income generating asset. Key activities which could be supported include a) identification and training o f woman outreach workers on education and health issues; b) collaborate with the Bihar Education Department and the SSA3*, and service providers (e.g., PRATHAM) to provide access to good quality primary education for the poor households and c) piloting various micro-insurance approaches. K e y possible outcomes include a) increase in school enrollment and improved education outcome o f children o f the poor; b) reducing vulnerability and/or mitigating social risks; and c) piloting at least one insurance product and taking it to scale. Component3: TechnicalAssistance Fund(Total: US$5.5 million,IDA contribution: US$5 million): 34. The Technical Assistance Fund (TAF) will improve quantity and quality o f service provision by public, cooperative, community and private service providers. The fund will also promote use o f public- private partnerships inimproving the supply o f key support services for the community organizations and federations in the areas o f institution building, financial services and livelihoods enhancement. K e y activities which could be supported by this component include institution building by NGOs, microfinance related technical assistance to SHGs and VOs to undertake financial and credit management and business development services through public, cooperative and private sector initiatives (including NGOs and non-profits) in agriculture, livestock and non farm sectors. This find would also be used for encouraging innovations by individuals, enterprises, organizations and institutions in the public and private sector aimed at improving rural livelihoods 35. Microfinance: The objective o f this activity i s to a) create an enabling environment for investment inthe microfinance sector; b) develop co-production models with SHPIs/NGOs, MFIs, banks and insurance companies for increasing access to financial services for the poor; c) enhance capacity, quality and performance o f partner microfinance structures3*; and d) adopt a crowding-in strategy by pursuing alternate channels for delivery o f financial services. Key activities supported include a) developing rating mechanisms for SHGs, VOs, and credit scoring methodologes for partner institutions; b) developing capacity building modules, training aids, common accounting and reporting systems; c) developing a partner financial institutes platform including supporting partner banks in setting up exclusive cells for microfinance and livelihood finance; and d) piloting new channels for reaching financial services (like business-facilitator, bank-correspondent, remittance facility, etc.). 36. Business Development : The objective o f this activity i s to mobilize both public (including cooperatives) and private sector initiatives (including NGOs, corporate sector and non-profits) to promote vertical integration o f smallholder agriculture with private investment in input supply and post-harvest value addition initiatives including agro-processing, and also to develop livelihood clusters in the non- farm sector and to provide support inbackward and forward linkages to the communities engaged in the sector. Key activities to be supported include a) addressingbarriers for business development arising from the existing regulatory policies; b) promoting agricultural extension and training; c) providing technical assistance in setting-up storage and processing infrastructure; and d) assistance with advisory services such as inpreparing feasibility analysis and preparation o f "investable" business plans for new business ventures, inboth farm and non-farm sector. 37. NGO Service Provisioning for Community Institution Building: This activity will support development o f the capacity o f competent NGOs inBihar to emerge as good quality service providers for supporting development o f self reliant community organizations. These NGOs will be contracted by the project and CBOs to deliver services in areas o f social and economic mobilization, institution development, livelihood promotion and other areas identified through a demand driven process. NGOs 31SSA: Sarva Sikshya Abhyan, a national program ofprimary education. 32Microfinance structures include SHGs, Federation of SHGs, MFIs and others. 35 that meet the basic criteria of scale in field operations, innovation and governance will be supported to apply for support under this fund. The process o f selection has been detailed inthe PIP. The project will initially provide expertise to NGOs to undertake an organization diagnostics and prepare a plan o f action for organizational development and capacity enhancement. The selected NGOs will then be given performance based contracts and provided resources based on achievement of graduation indicators by CBOs as defined inthe COM. 38. Innovations: The objective o f this activity is to support innovations by individuals, enterprises, organizations and institutions inthe public and private sector aimed at improving rural livelihoods which have been tested and have the potential for being scaled up in Bihar. Key activities which could be supported include - a) scoping for innovative ideas/proposal in the areas o f empowerment; income generation; asset creation andjob creation; b) support inorganizing annual Bihar innovation Forumevent; c) providing hand-holding support to innovators to raise resources, apart fi-om funding innovative ideas; and d) establishing a Bihar Livelihood Enhancement Action Platform. Component4: ProjectManagement(Total:US$7.5 million,IDA contribution: US$7 million) 39. This component would facilitate overall co-ordination, implementation, and financial management, monitoring and learningo f the project at state and district levels. Itwould include setting up and strengtheningstate and district level project units, providing office infrastructure and logistic support, and setting up monitoring, evaluation and learning systems. This component will be managed by the DPCUs and State Project Management Unit (SPIVIUS and the important activities include identification and contracting resource/support agencies, disbursement o f salaries and other benefits to staff, procurement and maintenance of vehicles, office and equipment, and promote liaison and convergence with other agenciesand government departments. 36 Cooperatives, Ranks, Senice Sector T T t T c -. 37 Annex 5: Project Costs INDIA: BiharRuralLivelihoods Project "JEEViKA" - Local Foreign Cost Total Component cost US$ Million cost US$ Million US$ Million I.CommunityInstitution 18.0 0.0 18.0 Development 11. Community Investment 42.0 0.0 42.0 Fund I11Technical Assistance 5.5 0.0 5.5 Funds N.ProjectManagement 7.5 0.0 7.5 Total Including 73.0 0.0 73.0 Contingencies: 38 Annex 6: ImplementationArrangements INDIA: BIHARRURALLIVELIHOODS PROJECT - "JEEVIKA" 1. Project Institutional Arrangement: The project's institutional arrangements are built as support structure starting from the community and village level and going to the Block, District and State level. The primary agency responsible for the project's implementation will be the Bihar Rural Livelihood Promotion Society(BRLPS) established by the GOB, as the promotional and umbrella agency for rural livelihood promotion inBihar. The implementation arrangement i s shown inFigure 6.1. Institutionalarrangementsat the StateLevel: 2. Bihar Rural Livleihoods Promotion Society: In order to work intensively with the poor and disadvantaged who are the target population for the project and demonstrate an effective and efficient model o f project implementation for livelihoods development, the GOBhas set-up the BRLPS registered under the Society Registration Act, 1860. This society will provide guidance and advice to the program, faciliate and coordinate project's functioning and periodically monitor progress. 3. Composition: The BRLPS has a seventeen member General Body and a ten member Executive Committee entrusted with the management o f the Society. The General Body and the Executive Committee are headed by the Development Commissioner, GOB. It has representatives from the government, civil society, industry associations, and financial institutions in the General Body and the Executive Committee. The Memorandum o f Understanding (MOU), the bye-laws and regulations are included inthe PIP. 4. BRLPS will manage the project through the SPMU. The CEO o f BRLPS will be the project director of SPMU who will be supported by a team o f professionals with expertise ininstitution building, capacity building, social development, livelihoods, microfinance, communication, monitoring and evaluation, human resources development, and finance. Other expertise needed will be obtained on contracts/partnership basis with other agencies. Considering the limited service providers that are available inthe state, the SPMU will have in-house arrangements in the form of "Cells" to plan, manage and coordinate activities in key areas o f Training and Capacity Building, Business Facilitation and Partnership. Job description, roles andresponsibilities are detailed inthe PIP. Institutionalarrangementsat the DistrictLevel: 5. District Project Coordination Unit (DPCU): In the six project districts, a District Project Coordinator (DPC) will head the DPCU which will be responsible for coordinating, implementing and managing project activities in the district. Other relevant specialists in the areas like social development, livelihoods and micro finance will be added, based on district specific requirements that emerge during implementation. Detailedjob descriptions, roles and responsibilities are provided inthe PIP. 39 Figure6.1: BiharRuralLivelihoodsPromotionOrganogram 7 ExecutiveCommittee ,............................................... I 1 I District Training Cell :41 Accounts andOffice Suppxi Team ....... ....... ...... . . . . T T 40 Institutionalarrangements at the Block Level: 6. Block Project Implementation Unit (BPIU): One BPIU will be set-up in each o f the 42 project blocks and will play a critical role inproject implementation. The Block Project Manager will head the BPlU supported by a Training Manager, Area Coordinators and Community Coordinators, and other administrative staff. This Unitwill facilitate the formation and functioning o f the Block Level Federation o f the SHGs. Along with a cadre o f Community Resource Persons, the BPIU will be responsible for village and block level implementation. Communities and village level: 7. The institutional arrangements at the village-level under the project are designed to enable poor women and other disadvantaged groups to form their membership organisations at group level and subsequently federate at the village and block level. This three tier structure will provde the project participants and their organisations the ability to achieve economies of scale and aggregate in terms o f access to services, credit and market services. It will also enable them to build good quality sustainable institutions with a financial base. These institutions will enable external institutions like commercial banks to reduce their transaction costs in dealing with a large number o f small, dispersed and l o w transaction volume poor households. 8. SelfHelp Groups: Women from poor and disadvantaged households will be mobilised to form affinity groups known as SHGs. The group membership will be between 10to 15 households. The SHGs will be based on thrift and revolving their internal savings for providing credit to each other. These groups will be provided support indeveloping group norms, financial management capacity, development o f solidarity and access slulls, credit and services from a variety o f service providers. These SHGs will be provided support to be federated into VOs involving 200 to 300 members at the village level. 9. Village Organizations: VOs will provide the SHGs technical assistance for micro plan preparation for livelihoods and enable access to financial and technical resources from the project and financial institutions, and undertake collective activities like food security, village level procurement and other activities requiring collective action. These VOs will be the main receipients o f project resources. The VOs will be faciliated to develop Block Level Federations (BLFs) covering about 30 to 40 villages (10,000 members). 10. Block Level Federations:The BLFswill provide VOs with technical assistance, capacity building and facilitate convergence between CBOs and different agencies o f development like local governments and line agencies. BLFs will also hire functionaries to provide support to VOs. They will arrange bulk finance for the VOs from commercial banks and support formation and promotion o f livelihood based organisations and activities requiring linkages with commercial sector organisations. 11. Livelihood Institutions/Producer Groups and federations: The project will promote livelihood based activity groups and federations o f members who have common livelihoods in sectors such as dairy, agriculture, fisheries, and honey. Members may belong to different SHGs and will receive technical and financial support in areas o f input procurement, extension services, technical assistance services and marketing services. These groups and federations would be enabled to develop commercial and direct relationships with private, cooperative and public sector agencies. 12. Para Professionals/Community Service Providers: A cadre o f activists and para professionals including community activists, book keepers, community resource persons, para veterinarians, job resource persons, health activists will be developed by the project through investment in their knowledge and skills to provide services to and be accountable to the CBOs and be paid by them over a period o f time. 41 KeyRoles andResponsibilitiesof Key Institutions 13. Table 6.1 provides a summary of the roles andresponsibilitiesofproject institutions at different levels inthe project. Table 6.1: Summary Aes andresponsibilities State Societv State Project Collaborate with stakeholders through continuous interface, dialogue and Management Unit appropriate linkages Recruitment of Core Team, induction and continuous capacity building of staff for implementation EstablishTraining and Capacity BuildingCell; Business Facilitation Cell and Partnership Cell Managing grant and monitoring effectiveness and implementation o f the project as per the desired objective Design and conduct capacity buildingprograms Establishinformation sharing and dissemination platforms Establishnorms for partnerships/contracts with service provider organizations and individuals. Initiate studies on project performance, knowledge gap areas and emergent issues for programimprovement Design and operationalize project management system including monitoring system, financial management, human resource management and administrative systems Policy advocacy on pro-poor issues and coordinate with relevant Government line departments Constitute advisory committee to reviewperformance DistrictProject Prepare annual work plan o f project activities and ensure timely Coordination Unit accomplishment o fthe same Ensure operationalization of all financial, administrative and HRD guidelines at the districtlevel Conduct periodic reviews of project progress and report to SPMU. To also informthe District Administration as and when required Conduct capacity building programs as well as other related activities for districtandblock level staff Establish strong linkages with district Government offices, line development departments, district resource agencies and eminent public representatives for garnering requiredsupport for the project Monitor and supervise Community Investment Fundrouted to poor through BLFor bythe Blockunit ofproject Document learning o f the project and disseminate the same at all relevant platform, with SPMU as well as district administration Constituting district coordinationcommittee and conduct regular interface Extend handholding to block staff as and when required, facilitating block team and also beingresponsible for furnishing RLMIS information to SPMU on time. A District Project Coordinator will be appointedby the BRLP society to head the DPCU and thematic specialists will be placed for providing the requisite handholding sutmort. Block Project Organize target community into SHGs and commodity producers' groups and 42 ImplementationUnit thenfederating themat the Village Organizationlevel Build capacity o f SHGs, commodity producers' groups and village organization Constitute the apex structure of the Community Institutions at the Block viz. Block Level Federation (BLF) and ensuring functioning of the same through handholdingand regular capacity buildinginput Manage the interface between banlung systemand community groups through membershipinBLFandliaisonwithbanks Helpcommunity institutions inpreparinglivelihood subprojects, gettingtheir approval fiom DPCU/SPMUand ensure their implementation with quality Support community institutions in developing linkages with financial institutions, service provider agencies and line development departments Facilitatecommunity institutions to develop forward and backwardlinkages Conduct regular interface of BPIU and BLFwith Block Government officials and Panchayatrepresentatives and gamer support from them Manage and monitor channeling o f CIF to SHGs or commodity producers' group. Furnishinformation through RLMISand submittingprogress reportto DPCU. Block Level Facilitateprovision o f technical assistanceto the VO and SHGmembers Federation Problem solving and conflict resolution ReviewVO-SHG performance 0 Review micro plans for the social and economic development of the SHGsNO 0 Prepare Action Plan for the socio-economic development o f its constituent area. Network and be a confluence for convergencebetween CBOs initiated and the Government and other Agencies intheir geographical area benefiting the target poor. Act as a platform for sharing experiences and concerns of VO-SHGs Village Organization Providing technical assistanceto SHGmembers Problem solving and conflict resolution ReviewSHGperformance Facilitate formation o f SHGs of the remainingpoor inthe village Compile micro plans for the socio-economic development o f its members Review micro plans for the social and economic development o f SHGs Prepare Action Plan for the socio-economic development o f its constituent area. Network and establish linkages with resource agencies for implementing the micro plans/investment plans and thus ensure the economic and social empowerment of the poor households. Act as a platform for sharing experiencesand concerns o f SHGs 43 Proiect ImplementationCycle 14. The project will form 55,000 SHGs in42 blocks o f the six districts including 95% of the poor and poorest of the poor households. The mobilization will take place in two stages. In the first phase, 18 blocks will be covered. The project will be subsequently scaled up to the rest of the 24 blocks inthe third year of the project. The PIP provides the project cycle including the details of key steps and sequencing of activities to beperformedwhile implementingthe project. Figure 6.2: Project ImplementationProcess at Village Level Graduation Indicators Regularsavings, Socialmobilization of velocity of Inter the poor Trainingon group loaning, quality of booksof accounts, norms, book keeping, thrift andinter loaning repaymentrate - quality andquantity of functionaries i Formationof Village Organization, Capacitybuilding on Micro credit planning Micro CreditPlans formed, and social audit Small scale activity with CIF funded activity access to limted amount successfullymanaged, 'ofInvestmentplanningfor CIF Regularmeetings, high velocity of inter loaning, andhigh ratesof livelihoods repayment, Positivefeedbackon VO services estimated through social accountabilitysystems .Training on Bankmicro Residualcapitalof creditplans federations Formationof federations Regularaccess to credit at the block levelwith Goodpracticesof trainingon norms and procurement capacitybuilding Establishedpartnerships Trainingon business Well-trainedfunctionaries - addition, development skills, value offering services forming Processmonitoring in partnerships place Trainingon procurement 44 VillageLevelProiectImplementationCycle 15. The cycle that the project will follow at the village level i s laid out in Table 6.2 below. The Village Development Cycle has four stages of Social Mobilization, Capacity Building, Livelihood Implementation, and Federation and Consolidation. Table 6.2 provides details of activities at the village level and key milestones for each stage. Table6.2: Project ImplementationCycle at the village level Stages CriticalActivities Key milestonesand graduationindicato: 0 Socialmapping and baseline usingparticipato 0PIP completed and the list approved Vi11age methods 0Formationof at least ten SHGs per Level 0 Develop a list ofproject participants through village participatory identificationof the poor 0Openingo fbank accounts for all SHGs 0 SeekGram Sabha approval of PIP list 0Regular meetings and savings o f groups 0 Mobilizetarget families and SHGmembers Highvelocity ofinterloaning 0 Formation of SHGs, introductionof capacity 0Highrepayment rate buildingand opening ofbankaccounts 0Substantial number o f CRPs/CMs and 0 Identification and training of communityresoi bookkeepers trained and providing persons (CRF's)/community mobilizers (CMs) ai services bookkeepers 0 SHGsmeet regularly, practice thrift and interloaningaccording to group noms 0 Training to SHGs indevelopment of micro Establishment o f VO and office bearers Village credit plans for assetization 0Majority of SHGs have been credit Level 0 SHGs trainedindevelopment ofMCPs for linked commercial Banks 0Micro credit plan approved and first FormationofVO tranche o f CIF provided 0 Establishment of accountability systems 0Majority of SHGs received credit from 0 Introductionof CIF inlimitedamount for tar! Banks and repaid interventions such as food security 0Accountability systems inplace and 0 Capacity buildingfor VO inmicro credit plan functioning Establishment o f social audit committee 0Results from score cards and report card! 0 Launchthematic communicationcampaigns consolidated and disclosed 0 Identification and formation o f livelihood acti0Livelihood activity groups formed Village groups 0Livelihood investment plans formed Level 0 Training on Livelihood investment plans 0Procurement committee established 0 Establishpartnerships and linkages with servil Iproviders, private sector 0 Establishment ofprocurement committee Stage IV:Federation and consolidation 45 Attachment 1-Accountability Arrangements INDIA: BiharRuralLivelihoodsProject "JEEViKA"- 1. All project informationwillbe made available through a functioning project ~ e b s i t and~project e ~ will comply with provisions o f the State Government's kght to Information Act. The BRLPS has broad representation from all key stakeholders as defined inits Memorandum and Articles o f Association 2. BRLPS will proactively set up a dedicated grievance redressal cell to handle grievances and complaints regarding the project. The cell will also have an exclusive phone number for receiving calls and a cell phone number for receiving SMS. These numbers will be publicized widely through various means including posting on the project web site. The BRLPS website will also have a provision for registering grievances. The Executive Committee o f BRLPS will review grievance redressal performance under the project as an agenda item in all the meetings. In addition, the project will confirm to the requirements o f the Right to Information Act and appoint a focal point to deal with requests for information. 3. The project will also enable comprehensive audit arrangements covering all project aspects like sources and utilization o f finds, and expenditures are incurred. 4. At the village and block level, social audit will be undertaken which will monitor utilization o f funds, procurement o f goods and services, financial efficiency and accountability. The VOs and BLFs will have sub-committees such as a social audit committee for tracking expenditure and financial supervision and a procurement subcommittee for ensuring transparent procurement processes. Report Cards, with criteria developed inconjunction with members, will be used for evaluating VO performance periodically. Score cards will be developed to rate all service providers including BRLPS, BLF and VO on a six monthly basis. The cumulativeresults will be published annually and shared with stakeholders. 5. The project will enable transparency through public display o f information related to release o f h d s , physical and financial progress and expenditures, at the VO and BLF notice boards as well as displayed on the BRLPS website. The project will also display all state level procurement related information on the website. 33www.brlp.in 46 I oods Project "JEF - State L,evel Community Leivl 1 Scorc Evaluationof VU Cards +------ and actitxties at regular intervals Internal ~ Audit Booksof Accounts ~ 47 Attachment 2 Communications - INDIA: BiharRuralLivelihoodsProject - "JEEViKA" Communications 1. The main objective o f the communication strategy i s to increase awareness and promote a better understanding of the project's vision, approaches, objectives, components, policies, procedures, implementationand financing mechanisms among the various project stakeholders and partners. Communication Strategy 2. To achieve the above objective, the communication strategy for the BRLP would be based on a modular approach using multi-media to communicate multi-sectoral content from multiple sources to multiple users with built in end-user needs assessment and feedback mechanisms, in short the Four M modular approach for rural communication. The multiple users would consist of project staff, SHGs, private enterprises, financial institutions; line Government departments, NGOs, donor organizations, etc. The multiple media would consist of print, drama, folklore, fairs, displays, radio, video, CD's, photos, television, telephone, internet, etc. The multi-sectoral content would consist of apculture practices, HIV/AIDS prevention, employment opportunities, health, labor laws, land reforms, market prices and opportunities, project objectives, approaches, policies and procedures, women's rights, etc, The multiple sources would consist of SHGs and members, project staff, line departments of the government, NGOs, relevant local, national and international research institutes, universities, private enterprises, financial institutions, world wide web, etc. Activities 3. Development of internal communication system: This will include periodic training o f staff in communication, exchange and learning o f experience through workshops, conferences, meetings, and development o f a cadre of community reporters ineachproject block, development o f electronic networks within andbetweenPatnaanddistricts, periodic visits to similar projects within and outside India. 4. Development of external communication system: This would include the development and dissemination of a variety o f relevant project relatedinformation and material invernacular languages for distribution to interested organizations, groups, or individuals on activities beingcarried out by self-help groups, multi-caste awareness raising/sensitization workshops focused on building social cohesion and belongingness among local groups, public awareness and campaigns invillages on issues affecting social and/or economic activities o f interest to rural poor, such as children's education, child labor, chld marriages, HIV/ATDS, etc. This will also involve development and maintenance of the project web-site and feedback mechanisms by different stakeholders as provided in the Accountability Arrangements (Annex 6, attachment 1) 5. Pilot activities in community radio and promoting functional literacy, especially among the adults usinglatest advancesininformation technology which has been tested and proven inother parts o f India. 48 Attachment 3 RuralLivelihoodsManagementInformationSystem - INDIA: Bihar RuralLivelihoodsProject - "JEEViKA" RuralLivelihoodsManagement InformationSystem 1. The project will support a decentralized and flexible rural livelihoods management information system (RLMIS). The main objective o f the Management Information System would be to assist in the decision making process by managers based on factual and verifiable data, analysis and lessons learnt at each level, viz, state, district, block, cluster, VO, and SHG level. The RLMIS would be used: 0 to organize, analyze and manage the data and information in an easy to understand, accessible manner and to ensure consistency at different levels o fproject interventions 0 as an input for evaluating the performance o f project. 2. The RLMIS would use simple paper based to web-based RLMIS systems (during the five year project implementation period) depending on the needs, availability o f skills, and cost effectiveness and telecommunication infrastructure at each o f the SHG, village, block, district and state project levels. It will be linked with the project's financial and procurement management systems to the extent possible. Linkages with commercialbanks and other partneringinstitutionswith the organizations o fthe poor being created by the project will be explored to ensure consistency and compatibility o f data and information and for more accurate attribution o f project benefits. Following is a brief description o f the RLMIS architecture for the Project. The following pilots are currently being undertaken inthe project: Institution building: Saturation o f the village by formation o f SHGs and its network in the targeted communities Job creation for the unemployedyouth inone block 3. The main objective o f the above pilots i s to test the appropriateness and effectiveness of the proposed project interventions ina limited scale before they are scaled up and to learn lessons from these interventions. These lessons are being usedinthe design o f the project. 4. The following data and information are being collected and documented: 0 Preparation o f monthly reports o f the SHG meetings focusing on the following areas: (a) obstacles being faced by the group; (b) proposed solutions for overcoming the bottlenecks and reasons for choosing the preferred solution; (c) social processes in group formation - affinity or activity based; (d) vulnerabilities; (e) risks being faced by the poor;(0key lessons learnt; and (g) actions to be taken. Descriptiono f activities which can be scaledup as and when identified. Keyindicators for input, output, outcome andimpact indicators. RLMISfor theproject 5. The RLMIS for the project will be designed to track key process and activity indicatorsrequired to monitor the progress of improvements in rural livelihoods, social and economic empowerment o f the 49 poor, identify bottlenecks, emerging opportunities and take timely management decisions. The project will support three types o f RLMIS, viz, manual, semi-manual and fully automated computerized system according to the need, appropriateness, capacity, technical and cost effectiveness at each level, household, SHG, Village, Cluster, Block, District and State levels. The RLMIS would specifically cater to the needs o f the management at each o f the following levels: 6. RLMIS at household level: The RLMIS at the household level would consist o f providing data and information on resource endowment, basic demographic patterns, income and expenditure, consumption o f staple foods (e.g. rice and wheat). This data will be used for determining the trends in household income and expenditures, level o f indebtedness, consumption patterns, food security and capacity buildingo f the household. This data will be supplemented by data from other household surveys and readily available data from studies undertaken by other institutions. This will be used by project staff to determine the progress and performance o fproject initiatives at the householdlevel. 7. RLMIS at SHG level: The focus o f the RLMIS at the SHG level will be to help increase the quality o f groups and capacity building- the RLMIS at the SHG will be manual which would be usedby the CRPs to provide the data and information needed for the creation o f sustainable, credit worthy, bankable, transparent and motivated SHGs. The key indicatorsthat the RLMIS will provide are amount o f savings and loans; income received from inter-loaning, prevailing interest rates from moneylenders inthe local area, interest on savings, and repayment. Inthis regard, the following RLMIS related activities are currently inplace. 8. The SHGs maintain two types o f records: (i)Meetings Register and (ii) FinancialRecords. (i) MeetingRegister:Themeetingregisterrecordsthedate,time,numberofmeeting,totalnumber o f group members, number o f members present, names with signatures o f members attending the meeting, proceedings o f the meeting, amount o f savings, issues to be discussed, date and place of next meeting. These records will be kept inmanual form with the project providing the registers and writing supplies. From these records, a quarterly report will be provided by the Community Coordinator on the progress o fthe SHGs. (ii) FinancialRegister-savings,loansandcash:TheSHGbookkeeperwillmaintainthreetypesof registers for tracking savings (Bachat Pustika), loans (Rin Pustika), and cash (Rokad Pustika). At the SHGlevel, these books will be maintainedmanually which would be kept by each SHG. (iii) Computerizationof SHGfinancialregister:TheprojectwillsupportthecomputerizationofSHG savings, loans and cash records using an outsourcing model to be carried out through a service provider specialized inmicrofinance operations with substantial relevant experience. The selected service provider would use a variety o f methods to computerize the SHG financial register, such as training a local village person to input the data o f savings, loans and cash records o f all SHG's in the village and use o f appropriate easy to use software; electronic devices, such as Personal Digital Assistants, Mobile phones, etc. The project will finance the computer hardware and related accessories, equipment, generator, supplies and the consulting services o f the service provider and pilot the use o f latest advances in information technologies. 9. Village Organization level: The VO consists o f 10 to 15 SHG's - where the focus o f RLMIS would be to identify the strong and weak SHG's, monitor performance o f SHG's, measures to be taken to strengthen the weak SHG's and document lessons the RLMIS would be a combination of manual and - semi-automated system which would be used by the VO leaders and Community Coordinators. The key indicators which the RLMIS would provide are: level o f food security, number o f SHG formed by 50 category, amount of savings, loans, income from inter-loaning and interest on savings, credit received from commercial banks or other financial institutions, and amount o f CIF receivedfrom the project funds 10. Cluster level: consists o f a group o f 25 to 35 villages where the focus o f RLMIS would be to identify the strong and weak village organizations, monitor the performance o f village organizations, measures to be taken to strengthen the weak VO's, and document lessons. The RLMIS would be a combination o f manual and semi-automated system consolidating the data from the VO level RLMIS. The area coordinators would use this. The key indicators which the RLMIS would provide are: number o f VO's formed, performance o f livelihood activities being camed out at the cluster level, amount o f savings, loans, income from inter-loaning and interest on savings, credit receivedfrom commercial banks or other financial institutions, amount o f CIF receivedfrom the project funds by eachVO assets created. 11. Block level - consisting o f three to four clusters- where the focus o f RLMIS would be to identify performance o f each cluster, measures to be taken to strengthen the weak cluster and document lessons - the strong and weak clusters and measures to be taken to strengthen the weak clusters, monitor the RLMIS would be a semi automated computerized system which would be used by the Block Development Manager. The key indicators which the RLMIS would provide are: performance o f livelihood activities being camed out at the cluster level, amount o f savings, loans, income from inter- loaning and interest on savings, credit received from commercial banks or other financial institutions, amount o f CIF received from the project funds by each cluster, and assets created. 12. District level -consisting o f about 3-11Blocks -where the focus o f RLMIS would be to identify the strong and weak blocks, monitor the performance o f each block, measures to be taken to strengthen the weak blocks and document lessons learnt, identify activities which can be scaled up at the block level -theRLMISwouldbeafully computerizedsystemwhichwouldbeusedbythe districtlevelmanager. The key indicators which the RLMIS would provide are: performance o f livelihood activities being carried out at the block level, amount o f savings, loans, income from inter-loaning and interest on savings, credit received from commercial banks or other financial institutions, amount o f CIF received from the project funds by eachblock. 13. State level Project RLMIS: - consisting o f 6 districts - where the focus o f the RLMIS would be to identify the strong and weak districts, monitor the performance o f each district, measures to be taken to strengthen the weak districts, document the lessons learnt, identify activities which can be scaled up at the district level - the RLMIS would be a fully computerized system which would be used by the state level project managers. The key indicators which the RLMIS would provide are: performance o f livelihood activities being carried out at the district level, amount o f savings, loans, income from inter-loaning and interest on savings, credit received from commercial banks or other financial institutions, amount o f CIF receivedfrom the project funds by each district. 51 Annex 7: FinancialManagement andDisbursementArrangements INDIA: BiharRuralLivelihoodsProject - "JEEViKA" 1. The project has adequate financial management arrangements to account for and report the project expenditures FinancialManagementAssessment (State andPRIIssues) Arrangements in the State which have been documented inthe report - Public Expenditure Management 2. The Bank carried out a limited review o f the Pubic Financial Management & Accountability inBihar: Selected Issues (December 2005). The report concludedthat the PFMAinthe state are weak and need considerable modernization and has suggested reforms invarious areas spanning State Government and Panchayati Raj Institutions (PRIs) including greater delegation to field offices and strengthening accountability and oversight. The rural local government institutions also lack capacity including financial management capacity with almost complete absence o f accounts personnel inthe District Rural Development Agencies (DRDAs) and PRIs. In the project context this i s being mitigated by creating a separate legal entity, Bihar Rural Livelihood Promotion Society (BRLPS) to implement the project at the State level. BRLPS will have units at the district and block levels and directly involve the communities by creation o f SHGs and developing VO) which would be federations o f SHGs and BLFs which would be federations o f VOs with limitedrole for the elected PRIs. Qualified finance staff will be contracted by the project at the state, district and block level and the project will contact the services o f the Financial Management Technical Resource Consultant (FMTSC). CountryIssues 3. Generic country level issues and specific resolutions under the project are discussed further. (a) Bihar's existing accounting system concentrates mainly on book keeping and transactional control over expenditures.:The project i s being implementedby a registered legal entity BRLPS, which will have a project specific accounting systems using an o f f the shelf accounting system which will enable generation o f timely and reliable financial reports. (b) Quality and timeliness of audit reports: the project financial statements will be audited by an independent firm o f Chartered Accountants inaccordance with the TORapproved by the Bank. (c) Timelyflow of fundsfrom Government of Bihar to the State Society: this is a limited risk and will be addressed by a legal covenant requiring the GOBto provide funds on a quarterly basis to the BRLPS based on its requirement o f funds. (d) Thefollowing country issue with respect to non-availability of the project Jinancial statements does not apply: as BRLPS i s a registered society under the Societies RegistrationAct, 1860 and the rules framed there under require the Society to prepare and file audited financial statements with the Registrar o f Societies. 52 Significant Risks and MitigationMeasures Risk I RiskRating I RiskMitigating Measures incorporated into Conditions for Board &, project Design Effectiveness Country Level M * State Level H A separatelegal entity hasbeencreated to Public Disclosure o fproject implementthe project withits ownGoverning related mformationat Body and Executive Committee, financial various levels is a covenant. management, delegation, transparency and disclosure arrangements. Project Level, H Contracting inqualified finance staff at the State Appointment o f a qualified including district andblock level as per skill set and CFO is a legal covenant. community qualifications prescribed inthe FMManual. Fund institutions release especially CIF linkedto readiness filters/ milestones. Strengthening community institutions to provide community oversight' disclosures and social audit mechanisms. Control Risk Budgeting M Adequate budget provisionhas been made inthe State Budget for the year 2007-08. Accounting l H Project specific FMManual and Community Operations Manual (COM) which incorporates the FM aspectsat Community level has been developed. An offthe shelf accounting package has beeninstalled at the State level w h c h will be rolled out to the D M C U andBPIU. Training on FMhasbeenbuiltinto the overall capacity building plan. Internal control H The internal control processeshave been Appointment o f internal documented inthe draft FMManual (for the auditors to audit the project) and COM Manual. Tranche Fundrelease community organizations to SHGNOs linkedto compliance with triggers/ andproject units is a readiness filters which include FMindicators covenant. s such as existence o f a trained book keeper. Internal audit system which will cover VO, BLF and sample o f SHGs also. FundsFlow The Banlung network at the village level i s not extensive. The project has signedan MOUwith the largest Bank inIndia which i s expected to address this issue to some extent. Financial Reporting Since fundrelease (grant) to VOs/BLFs is linked & Consolidation to achievement o f readiness filters/ triggers, the financial reporting i s simplified. Auditing M Overall project risk i s rated as Substantial * this refers to the Govt. of India. While a CFAA has not been carried out inIndia, this is based on the literature survey and other studies such as the study on PFMA in CSS and other state level SFAA's carried out by the Bank. 53 Strengths and Weaknesses 4. Strength: The project has the following strengths inthe area o f financial management: 0 A project specific FMM(draft), COM (draft) and finance and administrative rules including delegation has been developed. 0 A FMTechnical Support Consultant (FMTSC) has been hired for project preparationand the services o f the FMTSC will be available (before Board Approval) based on a revisedTOR to provide support duringproject implementation. Implementinp Entities Significant weaknesses Mitigation Possible delays infundrelease from state Various administrative measures have been Government to the project due to cumbersome taken by GOBto de-bottleneck administrative procedures inthe State Government. procedures. Bank has an on-going TA to modernizebudget and financial rules. Projectnot adhering to compliance with triggers Checking o f compliance with triggers and while releasing funds to the community institutions. readiness filters will be built into the TOR o f internal auditors and process monitors. 5. Project: State/ Districtand Block level: The project will be implementedby a legally registered entity called the BRLPS. BRLPS will have a SPMU, 6 DPCU and 42 BPIU. The project will be implementedintwo phases with 18blocks inthe Phase I(2 years) and additional 24 blocks inPhase 11. 6. Community Level: SHG/ Livelihood Groups/ Village Organizations and Block Level Federations: At the community level the key institutions involved inthe project include a) SHGs; b) VOs being a federation o f SHGs; c) BLFs which will be a federation o f VOs; and d) livelihood groups and producers groups. In addition there will the involvement o f various service providers such as para- professionals and community service providers. The project provides for a transition in the implementation arrangements wherein initially (six months to a year), the project will work in creation and strengthening o f SHGs and federate a group o f SHGs into a VO. All funds for CIF will be channeled through the VOs with support from the BPIU. After a period o f 2/3 years, the VOs are expected to be federated into BLFs and the project will then channel funds through the BLF.The financial management arrangements will be dovetailed into this transitioninimplementation arrangements. 7. Planning & Budgeting :The project's planning process will follow a bottomup approach i.e. it will grow out o f SHG and livelihood groups MCPs and will get consolidated at the VO and BLF. Based on such appraised plans they will seek financing from the project. The BPIU annual work plans will be determined by the quantum o f such plans and other activities to be implementedby the BPIU. These will eventually be consolidated at the State level to get the project Annual Work Plan. The project planning process will be dovetailed into the budgetingcycle o f the GOBand will be completed in line with the state's annual budget process i.e. by February each year. The project will be budgeted as a separate line iteminthe state budget. Adequate budget provision for the project has been made inthe State budget for the financial year 2007-08. 8. Fund Flow Arrangement: The funds flow arrangements are captured inthe Figure 7.1 below. 54 and cotild resuit in ways to reduce the time and the cost o f transferring funds to the village institutions. The basis of fund transfer to the SHG, VO and BLFwill be as under: Till the VOs come into existence (end o f lst initial capital fund and will be released year) to the SHG directly. These will be required to be repaid to the VO on its formation. Transfer is linked to achievement o freadiness filters by the SHGs. Till the BLFscome into existence (3rdyear onwards), the request for fundtransfer against MCPswill be from the BPIUto the VOs. These are linkedto meeting the readiness filters as prescribed inthe COM. The VOs will be required to repay the CIF to the BLF on their formation based on the MOUsnegotiated 11. Accounting Policies, Procedures and Systems: The SPMU, DPCU and BPIU will maintain their accounts on cashbasis following double entry book keepingprinciples. The project currently uses an o f f the shelf accounting package (TALLY) in the SPMU. This will be rolled out and implemented at the DPCUand BPIU after the chart o f accounts are updated inline with the project implementationactivities. In addition till adequate arrangements are made for power back up etc especially at the BPIU level, manual books o f account will also be maintained including ledgers for tracking tranche release and utilization by SHG/ VOs and BLFs. 12. A FMM has been developed for the project level implementing units and a COM34has been developed for the community institutions The FMMand the COM document indetail the accounting and financial management processes such as funds flow, budgeting, internal control and audit arrangements at the project and community level. The key issues that have been addressed inthe design o f the accounting policies and procedures are: The SPMU, DPCU and BPIU will be the primary accounting centers under the project. The BLF, VO and SHGs will maintain accounts for the funds received from the project. Since it is proposed that the VO and BLF will eventually be registered legal entities35 they will be required to maintain proper books o f accounts, prepare financial statements and get them audited inaccordance with the provisions o f the Act. All fund release to the DPCU and BPIU will be treated as a inter unit transfer and not considered as expenditure. Tranche release (of CIF) to SHG, VO and BLFby the BPIU, will be releasedon the basis o f achievement o f readiness filters and triggers (performance and repayment linked financial indicators) by the VO/BLF; accordingly the tranche release will be recorded as an expenditure inthe books o f the 34 The implementation design for social and skill development funds will be developed during implementation as these are expectedto be implementedonly inthe second year ofthe project. Accordingly, the FM aspectswill also bedevelopment during implementation. ''In the initial years the VO and BLF are not expectedto be registered. Once they achieve a critical mass and start market and bank linkagesthey will seek registration 36 Based on the appraisal of individual Micro Credit Plan (MCP) of the SHGs, the VOs will aggregate the plans and seek financial assistance from the project and/or financial institutions. The project will provide grant funds to the VOs to the extent VOs approach the project for financing the MCP. Thus the project will not be financing individual MCP or sub projects but financingthe VO/BLF on the assessmentof achievemento fmilestoneswhich will include fiduciary aspects. The VO will inturn provide loans to the SHGs and based on repayments, the VOs will revolve the funds for financing subsequent proposals. In the later years of project implementationwith the creation of BLFs these resourceswould be transferred to BLF grant (loan to VO). The VO/ BLF is expectedto use this resource as revolving fund to finance various self-helpgroups in the village based on the micro planningprocess. The VO will be free to fix terms and conditions under which the resource will be lent to SHGs. This revolvedfund, combined with the savings of self help groups is expectedto multiplythe project funds by two to three times, thus increasingoverallcredit availability for the self help groups. 56 The project will compile periodic financial reports (monthly, quarterly, annual and cumulative over the project) for the project. Other f h d releases to NGOs, service providers including training and capacity building agencies will be accounted as advance (except for output based contracts) and adjusted to expenditures only on submission o f expenditures. 13. Finance Staffing, Training and Capacity Building: The project currently has the services o f the FMTSC and an officer from the Finance cadre o f the GOB.The finance wing at the SPMU will be headedby a qualified finance professional as Chief Finance Officer and will be supported by the FMTSC duringinitial phase o f project implementation. The project will recruit finance and accounts staff for the DPCU and BPIU inline with the implementation o f the project inphases. The finance and accounts staff will be trained inthe requirements o f accounting and reporting systems o f the project. In-house training will be arranged by the SPMU at the start o f the project and repeated as and when required. Experience with CDDprojects indicate the need for highlevel of investments inbuildingthe capacity o f village book keepers, with clear definitions inthe roles and responsibilities o f master trainers. This will be challenge in Bihar too given the low literacy level and fact that the project i s working amongst the poorest o f the poor. At the community levelbook keepers will be trained to assist the SHG, VO andBLF3'. A standard menu o f training modules for each level o f village institution will be developed (based on the COM) and this training will be carried out as part o f the capacity building plan at different points in the project cycle. This will include standard training modules/ handbook for SHG, Livelihood groups, VOs and BLFs as well as more detailed modules for the trainers. 14. Internal Control Framework For the state, district and block level units the applicable framework would be the delegation o f financial and administrative powers and payment responsibilities are documented in the Finance and Administrative rules. Additionally this will be supported by the approval process for specific project activities and various CIF as outlined in the project FMWCOM. These will be reviewed regularly to ensure that these remain valid and adequate during project implementation. Some o f the other key control parameters are as follows: Each project accounting unit will close the books within a specified number o f days o f the end of the month, reconcile balances with the banks and forward the same to the SPMU for consolidation. The SPMU will have the responsibility for qualitative and timeliness aspects o f financial reporting 0 Contractual agreements (MOUs) will be entered into between project and VOBLF setting out the obligations, milestones etc and with other service providers. 0 At the SHG, VO and BLFrecordingo f all financial decisions inthe minute books, public display o f financial information, access o f accounting records to all members and social audit procedures will ensure that transparency and oversight functions are maintained. Financial controls are documented inthe FMManual. Audit Arrangements 15. ExternalAudit: The external audit o f the project will be carried out byprivate firm o f chartered accountants appointed by the Executive Committee o fthe BRLPS. The firm would be appointedbased on a competitive process and meet minimumcriteria established inthe FM Manual. The TOR for audit has been agreed with IDA and documented in the FMManual. The annual audit report will consist o f annual financial statements, (ii) audit opinion, and (iii) management letter highlightingweaknesses, if any, and 37As part of the capacity building process, Community Resource Persons from the Bank funded APRPRP will be providing training including book keepingtraining to the SHG members inthis project. The project will enter into a contractwith the AP projectfor this purpose. 57 identifying areas for improvement. Inaddition, an audit report for special account held at Go1would also be submitted in the usual manner. Thus, the following audit reports will be monitored in Audit Reports Compliance System (ARCS): I ImplementingAgency IAudit IAuditors I BRLPS Project Audit Private Chartered Accountants DEA/ GO1 Special Account Comptroller & Auditor General o f India 16. InternalAudit: The project will appoint, within six months o f effectiveness, independent firm(s) for carrying out internal audit o f the project, VOs/BLFs and a sample of SHGs, livelihood groups. Initially the sample size will be high and based on the experience and developmenthatisfactory progress o f community oversight institutions, the frequency and sample size would be reviewed. The TOR for the same has been agreed with IDA and documented inthe FMManual. FinancialManagementand Oversightat CommunityLevel 17. At the village level: Social audit will be undertaken by the CBOs to monitor a) the utilization o f funds; b) procurement o f goods and services; and c) financial efficiency and accountability. For the CIF Component implemented by VO/SHG, the project has envisaged a process o f building transparency by encouraging development o f monthly summary report with cash and stock (where applicable), which would be displayed inthe notice board o f the VO office: 4 Books o f accounts for loan funds will be maintained on a regular basis by individual SHGs, VOs, BLFs and any other CBOs. All key financial and physical information will be displayed at a prominent location or at the VO's office. A Social Audit Committee will be elected at the VO level which will verify the use o f loans. A Community Procurement Committee that will be trained in expenditure traclung, financial supervision andprocurement to ensure transparency intransactions. 4 Report Cards developed in conjunction with the community's criteria for evaluation o f VO's performance, whichwill be followed up after eachtransaction. Score cards developed to rate all service providers, including BRLP and VO, on a six monthly basis. This data will then be discussed inopen meetings o f the VO/BLF andwith the BRLP to identify corrective actions. The cumulative results will be published annually by BRLP and shared with stakeholders inthe annual report. 18. Financial Reporting and Monitoring: Each accounting centre will compile financial information provided by the constituents in agreed formats designed to provide an audit trail. The summarized interim financial reports (by project components and sub- components) on a quarterly basis with break up o f funds released to SHGs and VOs will be submitted to IDA on a quarterly basis. The Financial reporting will be done on a quarterly basis and will be submitted to IDA within 45 days o f the end o f the quarter. The reporting formats (IFRs) have been agreed upon and included inthe FMManual. 19. Public Disclosure: Necessary financial information including funds released to SHGs, VOs and BLFand annual report for the programwhich will includeprogram and financial informationand will be available inpublic domain through the project website3*. 38www.brlp.in 58 20. Advance & Disbursement Arrangements: the disbursement would be based on quarterly Interim Financial Reports, the formats o f which have been agreed and documented in the FM Manual. Based on the projected disbursement profile a maximum advance o f US$8 million (inthe thirdyear) with an initial advance of US$3 million would be adequate. 21. Retroactive Financing: Project Preparation Facility o f US$822,826 being used for project preparation and piloting. The PPF will cover all project costs till credit signing. The activities covered under the PPF are consistent with the financing categories with IDA. Therefore, no retroactive financing i s required. 22. ' Project Covenants: Appointment o f a professionally qualified CFO duringproject implementation Retaining a FM Technical Support Consultant (FMTSC) at least for the first three years o fproject implementation. HiringCA firm(s) for internal audit covering project and village level institutions within six months o feffectiveness 23. Supervision Plan: The project would require an in-depth and intensive supervision inthe initial year especially for ensuring successful implementation o f the FM arrangements and capacity building activities at the community level given the low level o f capacity. This will include field visits to SHGs, VO etc on a six monthly basis and review o f the training handbooks and consultations with the internal auditors. Mid Term Review would be conducted after two and a half years o f the project to comprehensively review the FMperformance o f the project. Support will also be provided inthe capacity buildingcomponent for VOs andBLFs. 59 Annex 8: ProcurementArrangements INDIA: BiharRuralLivelihoodsProject - "JEEViKA" General 1. Procurement for the proposed project would be carried out in accordance with the IDA'S "Guidelines: Procurement under BRD Loans and IDA Credits" dated M a y 2004; and "Guidelines: Selection and Employment o f Consultants by World Bank Borrowers" dated M a y 2004, and the provisions stipulated in the Legal Agreement. The various items under different expenditure categories are described ingeneral below. Procurementunderthe CommunityinvestmentFund(CIF) component: 2. The project i s planned to be implemented in six districts and over its duration would assist approximately 55,000 SHGs in 42 blocks. The project aims to build and strengthen self-managed institutions o f the poor including SHGs, Federation o f SHGs, Producer/Farmer Organizations and Livelihood Clusters; transfer financial and technical resources to the CBOs on a demand driven basis for use as a catalyst to improve their livelihoods; and develop increased Private Sector involvement and PublicRrivate Partnerships in improving the supply side o f key livelihood services. A major portion of the total project cost will be devoted to the key component o f CIF. Under this Component, funds will be transferred as grants to federations based on SHG that are an aggregation o f investment priorities o f the members. SHGs will receive funds, on loan basis, for providing loans to individual members for financing investment priorities. The investments would be for: e Livelihood enhancement activities such as cultivation o f cash crops, animal husbandry (goats, dairy cattle, backyardpoultry etc.); non-farm activity (bee keeping, home industry such as weaving, pottery etc.); e Address food security needs; e Increase employment and employability o f the rural poor households, including rural youth; and e Productive community infrastructuresuch as small storage houses, dryingplatforms, milk chilling or processing units, village procurement centers, common work sheds for artisans etc. 3. In addition, the village and block level federations may also hire technical service providers, Service Organizations (SOs) or individuals for technical and management support. The activities under this component would be community demand driven and most o f the procurement would be carried out by members o f the SHGs and their federations. However, unlike in normal investment projects with predefinedprocurement needs, the nature o f procurement under this component cannot be pre-decided or planned at this stage. 4. Procurement at the SHG or its larger federations level would be o f very small value and shall be guided by "Community Participation inProcurement" as detailed inPara 3.17 o f the Guidelines. Inorder that the procurement i s guided by and meets the basic principles o f efficiency, equal opportunity, cost- effectiveness and transparency o f the process, the simplified and flexible procedures, corresponding simplified bidding and contract formats and safeguards applicable (social audit etc.) are detailed in the COMpreparedbyBRLPS that i s agreeable to the Bank. 5. The procurement procedures to be followed under the CIF component would be: 60 (a) Works: Small value works not exceeding US$25,000 equivalent per contract may be carried out by: the village or block level SHG federation members themselves, or (ii) direct contract to registered by CBOs or (iii) a qualified local contractor selected through shopping (after inviting three quotations in to response to a written invitation. (b) Goods: Goods estimated to cost less than US$250 per contract may be procured through direct contracting procedures in accordance procedures specified in the Community manual and Goods estimated to cost less than US$25,000 equivalent per contract would be procured through shopping procedures on the basis of at least three quotations. (c) Services: Contracts estimated to cost less than equivalent o f US$5,000 may be hired following Section V o f Bank's Guidelines for the Selection o f Consultants in case o f individuals and through single source method for technical service providers. Consulting services estimated to cost less than US$lO,OOO may also be hiredbasedon consultant qualifications. 6. Procurement by members o f the SHG i s expected to be prudent since this will be using the proceeds o f a loan from the seed hnd on which the beneficiary will also pay interest. Thus it is in the borrower's interest to ensure that procurement i s carried out well. However, to ensure that the SHG members know o f the best practices for prudentprocurement and that other procurement carried out at the village or block level i s also done efficiently and transparently, a method of Social Audit and disclosure has been incorporated in the COM. This will essentially arrange for the mandatory use o f Procurement Sub-committees for Village or Block level procurement, open sharing o f information at meetings, allowing all access to accounts and procurement documents and for summary display o f procurement information, costs etc. at appropriate location(s) inthe village andor block. Procurement in other components 7. Works: There will be small civil works such as refurbishing o f offices at the state, district and block levels and for pilot initiatives such as rural information, knowledge and service centers, community radio stations, mostly costing less than US$25,000 per contract. Therefore, for contracts estimated to cost below US$25,000 may be procured following Shopping procedures in accordance with Para 3.5 o f the Guidelines using a simplified Request for Quotation document agreed to by the Bank. Contracts above US$25,000 shall be procured through NCB using the Model Bidding Document developed by the GO1 task force. 8. Goods: Goods and equipment will include office equipment, I T R L M I S equipment (desktop and laptop computers, printers, servers, software, GIS packages, scanners, UPS, photocopiers, fax machines, Local Area Network, WAN, etc.) communication aids such as multimedia projectors, Audio visual equipment, digital and video cameras, mobile units; training materials, etc.; office furniture, generators etc. Goods estimated to cost less than the equivalent o f US$500,000 per contract shall be procured following N C B procedures in accordance with the provisions o f Para 3.3 and 3.4 o f the Guidelines. The acceptable procedures for N C B contracts are given in the Attachment 1 to this Annex. Goods estimated to cost less than US$ 50,000 per contract [e.g., small items o f equipment which are available off-the-shelf, urgent requirements o f computers, audio-visual equipment, furniture etc.] shall be procured under Shopping procedures inaccordance with Para 3.5 o f the Guidelines. Rate contracts o f the Directorate General o f Supplies and Disposals (DGS&D) would be acceptable as a substitute for Shopping procedures. 61 Goods and equipment o f proprietary nature estimated to cost less than US$5,000 equivalent per contract [e.g., books, periodicals, extension and publicity materials, software, proprietary equipment and spares etc.] and petty items costing US$250 equivalent or less may be procured usingDirect Contractingprocedures inaccordance with Para 3.6 o fthe Guidelines. 9. Consultancies and training: The project involves substantial efforts for capacity buildingo f SHGs and their federations, other villagehlock level institutions, cooperatives and community members etc. enabling them to function as efficient, accountable, transparent and self-managed institutions. Training o f beneficiaries for slull development and for capacity building o f state and district level teams would also be provided under the project. Technical assistance services would be obtained mostly from NGOs and CBOs. Inaddition, services o f f i m s or individual consultants would be needed for other assignments that include baseline survey, monitoring and learning, environmental assessment, consultancies for developing training modules, HIV/AIDS awareness campaigns etc. Services o f certain specialized agencies to act as service providers or for partnership arrangements to promote or enhance livelihood activities (e.g. milk production and marketing, rice intensification, honey production and marketing, etc.) shall be obtained through sole-source selection procedures and will be indicated inthe Procurement Plan. 10. The shortlist for consultancies estimated to cost US$500,000 or less may comprise entirely national consultants interms o f Para. 2.7 o f the Guidelines. Assessmentofthe agencies' capacityto implementprocurement 11. Though most o f the procurement would be carried out by members o f the community or the village level organizations, some procurement would also be carried out centrally by the State Project Management Unit (SPMU) at BRLPS. SPMU as well as all the other community level entities undertaking project activities and implementation are newly formed entities. Thus none o f these have any institutional experience inprocurement. 12. Presently, BRLPS has appointed a consultant with adequate knowledge o f IDA procurement procedures as the procurement officer for project preparation activities such as COM, Procurement Plan. However, this person does not have hands on experience o f Bank funded procurement. Secondly, once project implementation starts there will be a large number o f concurrent procurement activities that need to be planned and implemented, with corresponding needs to administer and monitor the resulting contracts and a single procurement designated staff will not be able to handle this large volume o f work. 13. In the later stages of the project, some procurement responsibilities may be delegated to the functional field offices o f the project. As these offices are yet to be set up, the capacity of such an office and o f its procurement designated staff cannot be assessed at the moment. However, in Bihar there i s limited hands-on experience o f Bank funded procurement. Thus it i s envisaged that the designated procurement officers at the DPCUwould not have limited capacity for project procurement and adequate training will be required inprocurement procedures. Legislationfor TransparencyinPublicProcurement 14 Though the GOB does not have an explicit legislation for ensuring transparency in public procurement, as a first step in this direction the GOB has passed an act called the Bihar State Infrastructure Development Enabling Act in2006 whose objective i s to attract private sector participation inthe designing, financing, construction, operation andmaintenance ofinfrastructure projectsinthe state and to provide a comprehensive legislation for reducing administrative and procedural delays. Inaddition, Right to Information Act o f the Government o f India is now in place obligating officials to disclose procurement related information ifrequested. Lastly, efforts would be made to initiate such legislation in 62 the State o f Bihar as part o f improving Governance, such as making it a part of the proposed DevelopmentPolicy Loan. Perceived Risks and Mitigation Measures: 15. At community level: Since this i s the first Bank supported CDD project in Bihar targeted at the rural poor, and who are mostly unaware o f procurement procedures, the procurement risk is substantial, especially when contracting i s carried out by the communities. Lessons from similar projects elsewhere indicates the need for continuous awareness raising and training on community procurement procedures combined with strong monitoring mechanisms such as social audit and enforcement o frules o f conduct in the use o f public funds. Duringthe first year of the project, the emphasis o f the project would be on the creation o f self sustaining institutions o f the poor which would be based on principles o f transparency, fairness, economy and efficiency in the use o f both community generated and external funds from the project and other financial institutions. This initial orientation phase i s expected to take place over the first year o f the project, resulting in very l o w level o f disbursement rate during this period. With the gradual development o f village and block level organizations and partnership arrangements with the private sector providers o f livelihood enhancing services, procurement o f works, goods and services are expected to increase substantially invalue and size o f contracts after this initialphase. 16. To ensure that individual members o f the SHG, village and block level organizations are conversant with the procurement procedures they should follow, priority should be accorded to the placement o f resource persons hired by BRLPS to orient the members o f the SHGs in prudent procurement practices, and to other village or block level institutions in procedures as detailed in the manual and in social audit. This exercise shall be repeated periodically to account for project being expanded to new blocks ina phasedmanner. 17. Mitigationmeasures for procurement related risks would include : (i) o f simple financial and use procurement formats which can be easily understood by the rural poor communities; and training on community procurement procedures; (ii) ensuring transparency by requiring that all financial transactions have at least three signatures and that all procurement information is shared publicly at community meetings; (iii) publicizing the details o f all financial transactions in community, village, block, district and state notice boards and on web-sites where feasible; (iv) puttingvisible signs insites where works are being carried out by contractors displaying their names, scope o f works being carried out, project cost and completion dates; (v) ensuring that the use o f funds are discussed in group meetings in which the members have the right to suspend further disbursements o f funds if RLMIS use and/or corrupt practices are found; (vi) developing mechanisms o f appropriate channels o f communication for complaints; (vii) carrying out independent monitoring o fthe project by watch groups, institutingscore cards, etc.; and (viii) intensive field supervision by project staff andBank. 18. At State Project Management Unit (SPMU) level: SPMU does not have the experience or capacity to carry out procurement, thus there i s a strong risk that the critical procurement activities - specially the consultant services that need to be procured in the initial stages o f the project, are not done efficiently. Further, once project implementation starts there will be a large number o f concurrent procurement activities that need to be planned and implemented, with corresponding needs to administer and monitor the resulting contracts, and lack o f capacity to do this efficiently will severely compromise project progress. 19. There i s a risk that errors in procurement would not be corrected due to lack o f sufficient oversight, or that inabsence o f a mechanism to handle and efficiently deal with complaints bidders would tend to go for litigation thus slowing down or completely stalling procurement progress. 63 20. To address these risks, the following mitigation measures are proposed: Capacity: 0 SPMU to hire a procurement consultant with sufficient knowledge and hands-on experience o f Bank funded procedures including those applicable to procurement of consultants; 0 SPMU shall hire at least one procurement assistant to support the work o f the procurement consultant expert, 0 BRLPS shall ensure that the responsible persons in district based offices have the capacity to carry out procurement as per agreed procedures by providing them necessary training and resource materials intime. 0 Training shallbe arranged for the staff inthe procurement cell and a few other select staff, inBankprocurement procedures - with afocus on procedures applicable to this project. For this, SPMU will contact prominent training institutions. Disclosure: 0 Establish and maintain a website for the project which is already functional. Place on the website (i) the procurement plan, even if incomplete due to early stage of preparation, (ii) SPN, Expression o f Interest, lWP/Bid Documents, (iii) o f all results biddinglproposals (other than that carried out by SHGs) within set time o f opening, and (iv) all feasibility studyreports. Decision makingprocess: Ensure SPMU has an evaluation committee whose composition includes persons with necessary technical skills the type o f contracts in question, and a decision making committee or individual with adequate delegation o f financial authority. Posts and names o f committee members to be made public on website. 0 Timeline for decision making to be made public. Complaints: 0 Inform about where to address any procurement related complaints through a public notification and through the BRLPS website. Make public the process to deal with complaints. Training: 0 Provide procurement staff with training (e.g. at NIFM, ASCI etc.) and follow up with refreshers ifrequired. Reporting: 0 SPMU shall provide a simplified quarterly procurement report summarizing the status o f procurement as compared to the agreed procurement plan, reasons for any actions that are delayed and remedial actions being taken to expedite the procurement. 21. Ofthe recommendedmitigation measures, some key measures the project is puttinginplace are: 0 Procurement Committee: The VO and the BLF will have procurement committees whose members will be trained on procurement aspects to assist the community. 64 Social Audit Committee: In order to ascertain the quality and cost-effectiveness and efficiency o f procurement, the Social Audit Committee will have members who will undertake procurement audit andprovide their opinion to the respective VO or BLF. Procurement Audit along with Financial Audit: A rigorous procurement and financial audit will be needed in the initial two years at least till the community has understood and i s confident about procurement. Public information display: Display o f information on procurement inthe VO and BLF office will help community learn from each others positive and negative experience. Rate Banks: These are to be createdby each BPIUand provided to all VOs and BLFs.The data inthese Rate Banks shall be updated every six months. With the necessary mitigation measures in place, the overall procurement risk for this project is Moderate. Procurement Plan 22 As stated above, aplanfor procurement at the SHG or village andblocklevel cannot be prepared. For central level procurement, BRLPS has prepared a list o f project procurement requirements and a procurement plan for the initial 18 months. The plan describes the procurement actions and basis for the methods to be applied to procurement to be carried out at the central level. The agreed plan will be available in the Project Implementation Plan in the bank's IRIS system. It will also be available in the project's database and in IDA'Sexternal website. The Procurement Plan will be updated in agreement with IDA or as required to reflect the actual project implementation needs and improvements in institutional capacity. Frequency of Procurement Supervision 23. Given the extremely low capacity of the implementing agencies, intensive supervision missions o f at least four times during the first year i s recommended to review the procurement status, update the procurement plan, carry out selective post-review and resolve procurement related issues. In addition to supervisions missions, the Bank will also carry out an annual ex-post review o f procurement that falls under the prior review threshold. Details of the Procurement Arrangements Involving International Competition 24. Due to the relatively small value o f almost all contracts that would be procured under the project, procurement i s expected to be through NCB or lesser procedures, and currently no International Competitive Bidding(ICB) is envisaged. Review by the Bank A. At State Project Management Unit(SPMU): 25. Works and Goods: The first two contracts at SPMU level, regardless of value, all subsequent contracts above US$500,000 and all direct contracts implemented by BRLPS shall be subject to prior review by the Bank. 65 26. Consultants: Consultancy services estimated to cost above US$lOO,OOO equivalent per contract, and single source selection o f consultants firms (other than unique service providers described in the PAD) for assignments estimated to cost above US$50,000 equivalent per contract and contracts with individuals estimated to cost over US$5,000 equivalent will be subject to prior review by the Bank. 27. The thresholds will be periodically reviewed andrevisedas needed duringproject implementation based on forthcoming actions and client capacity. B. At Community Level: 28. Post review o f sample contracts shall be conducted, initially on a quarterly basis for the first year and the findings will be incorporated inthe COM which shall also be revised simultaneously. This will supplement the findings o f the regular social audit conducted by the communities. 66 Annex 8: Attachment-1 INDIA: BiharRuralLivelihoodsProject - "JEEViKA" AgreedProceduresfor NationalCompetitiveBidding[NCB] 9 Only the model bidding documents for National Competitive Bidding agreed with the Government o f India Task Force [and as amended for time to time], shallbe used for bidding; ii) Invitations to bid shall be advertised in at least one widely circulated national daily newspaper, at least 30 days prior to the deadline for the submission o fbids; iii) Nospecialpreferencewillbeaccordedtoanybiddereitherforpriceorforothertermsand conditions when competing with foreign bidders, state-owned enterprises, small-scale enterprises or enterprises fromany given State; iv) Except with the prior concurrence o f the Bank, there shall be no negotiation o f price with the bidders, even with the lowest evaluated bidder; Extension o f bid validity shall not be allowed without the prior concurrence o f the Bank (i) for the first request for extension if it i s longer than eight weeks; and (ii) all subsequent for requests for extension irrespective o f the period (such concurrence will be considered by Bank only incases o fForce Majeure and circumstances beyond the control o f the Purchaser/ Employer; vi) Re-bidding shall not be carried out without the prior concurrence o f the Bank. The system o f rejecting bids outside a pre-determined margin or "bracket" o f prices shall not be used inthe project; vii) Rate contracts entered into by Directorate General Supplies and and Disposals (DGSD), will not be acceptable as a substitute for N C B procedures. Such contracts will be acceptable however for any procurement under National Shoppingprocedures; viii) Two or three envelop system will not be used. 67 Annex 9: SafeguardPolicyIssues INDIA: BiharRuralLivelihoodsProject "JEEViKA" - EnvironmentalSafeguards 1. The project will support employment generation and livelihoods improvement for the poorest sections o f the populations in the project districts, through a participatory and community-driven process. Based on the nature and the scale o f the activities that will be funded by the project, the project interventions are not expected to cause any significant adverse impacts on the environment. Accordingly, the project i s classified as category B. 2. Since the project investments will be selected by the communities in a demand-driven manner, the list o f BRLP activities i s not available a priori. Based on the list of activities that are likely to be supported inthe project districts, Government o f Bihar has conducted an Environmental Assessment (EA) o f the project. The objective of the EA i s to identify the likely environmental impacts o f the project activities and to design environmental safeguards for ensuring that: 0 Project-supported activities are designed and implemented with adequate and appropriate environmental mitigation measures. 0 Cumulative environmental impacts o fproject activities are addressed. 0 Environmental benefits o f project-supported activities are enhanced and environment-enhancing livelihood activities are promoted. 0 Long-term sustainability o f the benefits from the project-supported activities i s assured by securing the naturalresourcebase on which they are dependent. 3. In order to achieve these objectives in a comprehensive and coordinated manner, an Environmental Management Framework (EMF) has been developed for the project, and it comprises o f the following components: Technical Environmental Guidelines (TEGs), which have been developed to address the environmental concerns associated with the specific project activities likely to be supported by the BRLP. 0 Environmental monitoring and evaluation Plan 0 Environmental Training and Capacity Building 0 Process and responsibility structure for implementation o f the EMF 4. The EMF prescribes the environmental management parameters to be included in the project monitoring and evaluation plan, and environmental audits to periodically evaluate the adequacy o f the EMFand to modify it as required. Itis recommended to conduct a supplemental study to explore options for project-supported activities that would enhance the capacity of the local communities for adaptation and living intelligently with floods. 5. Inorder to mainstreamthe environmentalaspects into the process oflivelihoods generation, the EMF also includes an environmental capacity-building component, aimed at developing professional environmental management capacity as well as promoting environmental awareness in the targeted communities. 68 IndigenousPeoples(OP/BP 4.10) 6. The state o f Bihar has a Scheduled Tribe (ST) population o f about 0.71 million or about 0.9% o f the states population. Some o f the major tribes in the state include the Santhal, Oraon and Munda. Of the 39 districts inthe state, STs are found in 11districts and vary inpopulation composition from 5.9 percent inKatihar to 0.1 percent inEast Champaran. The ST populationpercentage to total population inthe six project districts is: Madhubani (0.03), Purnea (4.40), Gaya (0.08), Nalanda (0.04), Khagaria (0.02) and Muzzafarpur (0.09). However, o f the blocks inPurnea where the project will be implemented, two blocks namely Banmankhiand Dhamdaha have significant ST populationo f 5.6 and 10.8percent, respectively. 7. Thus, in accordance with the OPBP 4.10 on Indigenous Peoples', the project has developed a Tribal Development Plan (TDP) based on free, prior and informed consultations with ST community. The TDP captures the approach and strategy to ensure that the tribals are aware o f the project, participateinit andbenefit from interventions. TribalDevelopment Plan 8. The objective o f the TDP is to support the social and economic empowerment o f the ST community in the project area. This will be done by: (i) building and strengthening their self-managed institutions including SHGs, Federation o f SHGs, Producer/Farmer Organizations and Livelihood Clusters; (ii)transferring financial and technical resources to the CBOs on a demand driven basis for use as a catalyst to improve their livelihoods; and (iii) developing increased private sector involvement and publidprivate partnerships in improving the supply side o f key livelihood services. The project investments will provide due respect to the dignity, human rights and cultural uniqueness o f the tribal community. 0 Scoue: The DPCUs and the BPIUs will ascertain the tribal population in project blocks and also identify the villages where a significant populationo f STs i s residing. 0 Plan Comuonents: All the four project components are part o f the TDP. N o special components were deemed necessary. The four components are (i)Community Institutions Development, (ii) Community Investment Fund, (iii) Technical Assistance Fund and (iv) Project Management. Project functionaries will be sensitized to special needs o fthe ST population, to enable targeted focus and careful project implementation. 0 Key elements o f Tribal Plan: The tribal strategy has recognized and incorporated certain key elements (Table 9.1) related to Institutional strengthening and development, endowmentlasset and skill development, capacity building, enabling inputs and policy influencing inputs.These are described inTable below. Table 9.1: Key elements o fthe TDP Key elements IKey considerationsandsuggestedinterventions I Information . - I 1 Proiect information will be made available in the tribal villages and to tribal families in a culturally sensitive manner at the same time keeping in view the literacy levels and other key characteristics o ftribal habitations. Local artists and local art forms to be used. Inclusion .. All ST families in villages with both dispersed and concentrated . populations, will be organized into SHGs. Villages with large ST population will have exclusive tribal SHGs. Strengthening of social institutions o f the tribal community along with federations will be taken up. Local tribal traditions and leadership will be 69 involvedinthe process of institution building. Investments . Investments will be supported in land, which many tribal families own, along with improvements in production practices, productivity and marketing. Economic empowerment through improved livelihoods and incomes will enable tribal families strengthen their de jure rights on agnculture land .. which they currently possess based on temporary settlement into de facto rights. Support will also be sought from the District Administration to strengthen landrights. Support will be provided for skill development o f tribal youth. Potential indigenous skills will be explored for other livelihoods opportunities. Implementation .. Staff working in villages with significant tribal population will receive .. sensitization trainings. Preference will be given to community members who are sensitive to the needs of tribals for training as para professionals. Partnerships will be formed with technical service providers - individuals and organizations that have experience worlung with Tribals. Convergence with government programs for tribals to enhance benefits will be actively pursued. Gender Strategy andActionPlan 9. Highlevels of poverty, landlessness, limitedlivelihoods opportunities, low wage rates, and huge out migration of especially men from the poorest households, place a disproportionate burdenon women in Bihar. Prevalence of highfertility, and maternal and child mortality rates are due to poor access to health services. Rural Bihar has low literacy and awareness levels, especially among the poorest households. Social and cultural practices of childmarriages, dowry, and liquor consumptionhave added to indebtedness. Migrationfrom poor households i s on the increase for labor. Highoccurrence o f seasonal migration among men leads to a number of women headed households in the rural areas subject to exploitation, and food insecurity. 10. GOBis committed to women's social, economic and political empowerment. Bihar is the first state inthe country to reserve 50 percent seats for women inthe three tiered local government bodies and also passing a legislation requiring50 percent of the elected seats inmunicipal corporations to be reserved for women. The GOBsees SHGs not only as an important vehicle for social and economic empowerment but inaddition, the GOB'SEleventhFiveYear Planproposes to use the network of SHGs to make service delivery effective and accountable. 11. The World Bank's gender action plan promotes gender equality as smart economics, stating that women's economic empowerment i s not only a question o f rights but their empowerment actually benefits their families, communities and national development efforts, thus putting poverty reduction on a faster track. 12. The objective of the gender strategy is to advance the empowerment of women so they can fully participate in the larger growth and empowerment strategy o f the state. The project aims to achieve the following genderrelated goals: Strengthen poor women's organizations, asset base, increase livelihoods opportunities and income 70 Reduce gender gaps inhuman development: education, health andnutrition 0 Expandaccess of women to gender specific needs such as child care 0 Increaseparticipationof women inlocal self governments and local governance 0 Increase access for poor women to social protection schemes and entitlements o f food security, pensions, housing and employment Enhancethe skill base of literate or semi literate young women and link them to jobs 0 Reduce exploitative migration andtrafficking of young girls 0 Increase awarenessof H N and access to H N testingand counseling GenderAction Plan 13. The project has mainstreamed gender into its objective and design. The plan i s a means to engender the project implementationby strategically involvingwomen and incorporating their needs and demands inevery component of the project. - ~ Objectives Actions Strengthening 0 Identification o f poor women, especially the most vulnerable -women headed poor women's households, widows, destitute, aged, orphan girls- during the identification of the poor social capital and 0 Mobilizingpoor women into SHGs and federations; and into livelihoodgroups s k i l l base 0 Providing awareness on entitlements, legal andpolitical rights 0 Awareness and support on issues related to dowry, lack o f mobility and domestic violence 0 Building slulls o f enterprise management, value addition, technical training to enable themto interact onfair terms withthe market Increase awareness o f legal literacy Providingwomen 0 Proving access to the community investment fund both for assetization as well as a seed opportunities for fundto promote credit worthmess ofwomen's groups livelihoods 0 Increasing access to financial services through promoting bank linkages with SHGs and enhancement and federations asset creation Promoting grass 0 Identifying and training community mobilizers, community resource persons, para root leadershp o f professionals andhealth workers women 0 Providing exposure visits to community leaders inother states 0 Office bearers o f community organization at all levels to be women Improving access 0 Training o f health outreach worker inpartnership withNGOs to reproductive 0 Expanding the network o f decentralized health care clinics inproject districts health and day Improving access to ANM workers, public drug schemes and PHCs care 0 Improving accessto anganwadi and ICDS schemes through public and NGO partnerships 0 Awareness campaigns regarding entitlements and HIV ~Promoting 0 Utilization o f CIF for food security programs managedby women householdfood 0 Linking women with PDS coupon systems security Reduction o f 0 Awareness building and sensitization o f women to their rights exploitation o f 0 Promoting self employment women in 0 Sensitizing teachers in schools, introducing accountability systems to increase enrollment organized sector, rates inschools reducing child 0 Setting up crbches and bridge schools through partnership with NGO or public programs trafficking and inproject areas child labor Engendering 0 Affirmative action infavor o fwomen being recruited as state, district and block Staff Project 0 Sensitization o f all staff towards gender issues Management 71 Annex 10: EconomicAnalysis INDIA: Bihar RuralLivelihoodsProject - "JEEViKA" 1. Since the project i s based on demand driven micro plans, the economic assessment does not attempt to evaluate all o f the components in terms o f quantifiable economic and financial returns. However, using the experience from similar projects elsewhere in India and based on informed cost- benefit estimates o f some potential livelihood interventions, analyses was undertaken to determine net benefits o f few potential economic activities. In this regard, attention was given to the Community Investment Fund(CIF), which comprises o f US$42 million or 67 percent o f total project cost. 75 percent o f this fund has been estimated for productive livelihood activities including food security. The evaluation o f the CIF i s based on an analysis o f the financial viability o f selected four productive livelihood activities which are expected to be included in the micro plans; these have been modeled below. Each o f these potential activities analyzed possessed a financial return within the range o f 28 to 50 percent. The methodology used to analyze these micro plans will be used as part o f the appraisal process to make sure that the SPMU will establish a threshold for a minimumexpected financial return o f a given micro plan to qualify for CIF financing. 2. The BRLP consists o f four distinct, but complementary components designed to collectively ensure empowerment o f the poor through viable community organization, enhance income security and improve service delivery standards. While facilitating these socio-economic opportunities for the rural poor, the project i s expected to support various interventions identified and prioritized by beneficiary villagers and organized households. Given the diversity and complexity o f community sub-project, it would be difficult to predetermine a given activity and run a cost-benefit analysis. Thus, the economic assessment does not attempt to evaluate the entire project interms o f quantifiable economic and financial returns. However, using the experience from similar projects elsewhere in India and based on informed cost-benefit estimates o f some potential livelihood interventions, analyses was undertaken to determine net benefits o f few enterprises. Inthis regard, attention was given to the CIF, which comprises some 67 percent o ftotal project cost. 3. The CIF provides resources to the poor communities for use as a catalyst to improve their livelihoods by financing income generation activities in addition to support to food security, social services, skill development and limited productive infrastructure facilities. The evaluation o f the CIF i s based on an analysis o f the financial viability o f selected productive subprojects. The fact that the appraisal document for BRLP has assessed several potential subprojects, this analysis has benefited from the inputs and costhenefit estimates o f these assessments. 4. Accordingly, the following four interventions are chosen for the economic analysis (i) dairy production, (ii) food security, (iii) fisheries, and (iv) incense sticks. The cost-benefit model provides a framework through which most productive and community infrastructure activities will be analyzed by the BPIUs as part o f the appraisal process. The SPMU could establish a threshold to be used as a minimumexpected financial return from a given activity to qualify for CIF financing. Inmost cases, the financial return threshold should not be less than 12%. 72 -- 0 zm 7 0 0 0 C C 3 0 C 310 + * w hl I-- -__ 0 91 8 3 0 C 3 m s 2 C d - r g C --- hl -8 y1 C 3 0 E 310 d - v , P n 9 I -__ U w U w 3 0 C 310 C d - r g C --_ c\ 31 H C 3 z d E d - w 9 n -__ 8 8 E $ 2 3 0 C 3 m * w n 3 --- 8 8 E $ 2 3 0 m C erg 3 m r- n 3 - 0 C t 5 0 8 C 9 - C n - 8 c C C 3 % a C n I - 8 8 fC $ 2 0 3 - Ve; E -28 c 1 - T m C I t r - s C Cc 4 c r C C r C C C - r C 0 C 0 r f - C C 0 C 0 r z - C C 0 C 0 r E- -t- m r - v c C O 1 B C 0 3 r E- - m c m C O B [ I I C r- C 0 yr t 3 4 r f I - - m c m C 0 B r.- P I C t [I C CI r I - m r- 2 s r 4 - 2 h .sii r 7 cR * a 0 c - C I II I 0 0 2 I m c? 3 I 0 0 2 m c? i 8 3 m c? * + 8 3 m c? :- 0 0 d 3 d 0 0 3 8 0 '"* 0 m W c? * 2- F * t * d d 8 2m c? 3 t 8 3 m c? 3 8 2m 0 x 0 c? 3 3 d 8 2m 0 0 m v , c? 2 3 + t * 0 0 2m c? 3 c Y Y Y v) y1 3 2 e, .I $ a I 0 2 0 CI 0 2 0 m 0 2 VI 0 ? m 0 v! r- IA 0 2 IC, Annex 11: Project Preparation and Supervision INDIA: Bihar RuralLivelihoodsProject "JEEViKA" - Planned Actual PCNreview June 21,2005 June 21,2005 InitialPID to PIC July 25,2005 July 26,2005 InitialISDS to PIC July 25,2005 July 27,2005 Appraisal April 23,2007 April 16,2007 Negotiations May 14,2007 May 14,2007 BoardIRVP approval June 14,2007 Planned date of effectiveness August 31,2007 Planned date of mid-termreview January 31,20 10 Planned closing date March 31,2013 Key institutionsresponsible for preparation of the project: Bihar Rural Livelihoods Promotion Society, Department of Finance, GOB;Bihar Women's DevelopmentCorporation, GOB.Bank staff and consultants who worked on the project included: Name Title Unit Parmesh Shah LeadRural Development Specialist/Task Team Leader SASSD Varalakshmi Vemuru Sr. Social Development SpecialistKo-Task Team Leader SASSD PhilipBeauregard Senior Counsel LEGMS Thao L e Nguyen Senior Finance Officer LOAG2 Mohan Gopalahshnan Senior Financial Management Specialist SARFM Kiran Ranjan Baral Senior Procurement Officer s m s Biswajit Sen Senior Livelihoods Specialist SASSD VijaysekarKalavakonda Private Sector and Social Safety Nets FPSDN Assaye Legesse Senior Agricultural Economist SASSD Sanjay Pahuja Environment Specialist SASSD Shweta S. Banerjee Junior Professional Associate SASSD DeborahLee Ricks ProgramAssistant SASSD Sarita Rana ProgramAssistant SASSD Niraj Verma Financial Specialist -Microfinance SASFP Mio Takada Young Professional -Food Security SASSD Samik Sundar Das Rural Development Specialist SASSD Barbara Verardo Senior Social Development Specialist SASSD Vinayak N.Ghatate Consultant - Livelihoods Finance Consultant - Livelihoods SASSD SitaramachandraMachiraju SASSD Subramaniam Janakiram Consultant - Communications, MIS, InnovationForum SASSD Meera Shenoy Consultant -Private Sector Partnerships SASSD Ashis Mondal Consultant -Results Framework SASSD Peer Reviewers Steen Jorgenson Director, Social Development SDV Sanjay Pradhan Director, Public Sector Governance PRMPS Jeeva Perumalpillai-Essex Lead Operations Officer AFTS2 T. Vijay Kumar CEO, Society for Elimination of Rural Poverty, Andhra External 77 Bank funds expendedto date onprojectpreparation: 1. Bankresources: Bank Budget: $ 270,000 2. Trust funds: PHRD: $111,111 DFID: $ 30,000 3. Total: $411,111 EstimatedApproval and Supervision costs: 1. Remainingcosts to approval: $ 22,000 2. Estimatedannual supervision cost: $ 124,000 78 Annex 12: Documentsinthe ProjectFile INDIA: BiharRuralLivelihoodsProject "JEEViKA" - 1. Project ImplementationPlanand Community OperationalManualpreparedby BRLPS 2. Bank StaffAssessments 3. BRLP Project Concept Note, Project InformationDocument, IntegratedSafeguards Data Sheet 8. Tribal Development Plan Asian DevelopmentResearchInstitute, Patna 9. Community Based Tourism Opportunity Study InternationalTrade Center, Geneva inBodhGaya 10. Migrationand Remittances inBihar DFID,NewDelhi 79 Annex 13: Statement ofLoans and Credits INDIA: BiharRuralLivelihoodsProject - "JEEViKA" Differencebetween expected and actual Original Amount inUS$Millions disbursements Project ID FY Purpose m m IDA SF GEF Cancel. Undisb. Orig. Frm. Rev'd PO75060 2007 RCHI1 0.00 360.00 0.00 0.00 0.00 363.72 10.00 0.00 PO90585 2007 PunjabStateRoadsProject 250.00 0.00 0.00 0.00 0.00 250.00 3.07 0.00 PO90592 2007 PunjabRuralWater Supply & Sanitation 0.00 154.00 0.00 0.00 0.00 157.40 21.46 0.00 PO78539 2007 TB I1 0.00 170.00 0.00 0.00 0.00 159.29 -11.oo 0.00 PO90768 2007 TN IAMWARM 335.00 150.00 0.00 0.00 0.00 485.92 0.00 0.00 PO83187 2007 UttaranchalRWSS 0.00 120.00 0.00 0.00 0.00 127.33 4.83 0.00 PO78538 2007 NationalHIV/AIDS ControlProjectI11 0.00 250.00 0.00 0.00 0.00 256.52 0.00 0.00 PO71160 2007 KarnatakaHealth Systems 0.00 141.83 0.00 0.00 0.00 144.20 2.20 0.00 PO75174 2007 India AP DPL 111 150.00 75.00 0.00 0.00 0.00 75.64 -151.17 0.00 PO97036 2007 OrissaSocio-EconDev Loan I1 150.00 75.00 0.00 0.00 0.00 75.36 -150.65 0.00 P100789 2007 AP Community Tank Management 94.50 94.50 0.00 0.00 0.00 190.39 0.00 0.00 Project P079708 2006 TNEmpwr &PovReduction 0.00 120.00 0.00 0.00 0.00 111.50 -2.37 0.00 PO83780 2006 TNUrban111 300.00 0.00 0.00 0.00 0.00 262.16 37.91 0.00 PO79675 2006 KarnMunicipal Reform 216.00 0.00 0.00 0.00 0.00 198.26 1.19 0.00 PO86414 2006 Power SystemDevelopmentProjectI11 400.00 0.00 0.00 0.00 0.00 313.55 -86.45 0.00 PO78832 2006 KarnatakaPanchayats StrengtheningProj 0.00 120.00 0.00 0.00 0.00 98.54 -25.73 0.00 PO90163 2006 FALG Brick Project 0.00 0.00 0.00 0.00 0.00 4.40 0.00 0.00 PO91453 2006 VSBK Cluster Project 0.00 0.00 0.00 0.00 0.00 2.88 0.00 0.00 PO92735 2006 NAIP 0.00 200.00 0.00 0.00 0.00 185.05 -11.18 0.00 PO93720 2006 Mid-Himalayan(HP) Watersheds 0.00 60.00 0.00 0.00 0.00 53.41 3.20 0.00 PO75058 2005 TN HEALTH SYSTEMS 0.00 110.83 0.00 0.00 20.06 79.91 23.53 26.54 PO73370 2005 MadhyaPradeshWater Sector 394.02 0.00 0.00 0.00 0.00 363.81 81.70 0.00 Restructurin PO73651 2005 DISEASESURVEILLANCE 0.00 68.00 0.00 0.00 0.00 61.38 26.47 0.00 PO77856 2005 Lucknow-MuzaffarpurNationalHighway 620.00 0.00 0.00 0.00 0.00 453.33 -30.00 0.00 PO77977 2005 RuralRoads Project 99.50 300.00 0.00 0.00 0.00 212.41 -17.38 0.00 PO84632 2005 Hydrology I1 104.98 0.00 0.00 0.00 0.00 94.04 39.06 -2.07 PO84790 2005 MAHARWSIP 325.00 0.00 0.00 0.00 0.00 292.42 9.42 0.00 PO84792 2005 AssamAgric Competitiveness 0.00 154.00 0.00 0.00 0.00 141.81 42.11 0.00 PO86518 2005 INSMEFinancing& Development 120.00 0.00 0.00 0.00 0.00 5.00 3.33 0.00 PO94513 2005 India TsunamiERC 0.00 465.00 0.00 0.00 0.00 405.20 255.54 0.00 PO73776 2004 ALLAHABAD BYPASS 240.00 0.00 0.00 0.00 0.00 121.26 84.46 0.00 PO78550 2004 UttarWtrshed 0.00 69.62 0.00 0.00 0.00 61.53 1.11 0.00 PO73369 2004 MAHAR RWSS 0.00 181.00 0.00 0.00 0.00 71.01 -9.12 0.00 PO50655 2004 RAJASTHAN HEALTH SYSTEMS 0.00 89.00 0.00 0.00 0.00 69.54 43.65 0.00 DEVELOPMENT PO79865 2004 GEF Biosafety Project 0.00 0.00 0.00 1.oo 0.00 0.49 0.48 0.00 PO82510 2004 KamatakaU W S ImprovementProject 39.50 0.00 0.00 0.00 0.00 16.48 10.98 0.00 PO50649 2003 TN ROADS 348.00 0.00 0.00 0.00 0.00 239.02 103.55 0.00 PO67606 2003 UP ROADS 488.00 0.00 0.00 0.00 0.00 291.12 202.93 0.00 PO76467 2003 ChadDRPP 0.00 112.56 0.00 0.00 20.06 78.11 57.02 0.00 80 PO71272 2003 AP RURAL POV REDUCTION 0.00 150.03 0.00 0.00 0.00 25.43 0.09 0.00 PO72123 2003 TecWEnggQualityImprovementProject 0.00 250.00 0.00 0.00 40.11 94.99 28.90 -47.06 PO75056 2003 Food & DrugsCapacity BuildingProject 0.00 54.03 0.00 0.00 0.00 40.80 26.39 0.00 PO73094 2003 AP CommForestMgmt 0.00 108.00 0.00 0.00 0.00 46.59 2.50 0.00 PO74018 2002 GujaratEmergency Earthquake 0.00 442.80 0.00 0.00 115.24 97.34 135.90 37.98 Reconstruct PO72539 2002 KERALA STATE TRANSPORT 255.00 0.00 0.00 0.00 0.00 116.95 57.62 0.00 PO71033 2002 KARNTank Mgmt 0.00 98.90 0.00 0.00 25.07 53.36 51.89 -0.06 PO50647 2002 up WSRP 0.00 149.20 0.00 0.00 40.11 97.10 111.21 0.00 PO69889 2002 MIZORAM ROADS 0.00 60.00 0.00 0.00 0.00 24.31 8.37 0.00 PO50653 2002 KARNATAKA RWSS I1 0.00 151.60 0.00 0.00 15.04 64.37 50.41 0.00 PO40610 2002 RAJ WSRP 0.00 140.00 0.00 0.00 15.04 74.25 45.15 0.00 PO50668 2002 MUMBAIURBANTRANSPORT 463.00 79.00 0.00 0.00 0.00 359.46 240.27 0.00 PROJECT PO10566 2001 Gujarat Highways 381.00 0.00 0.00 0.00 101.00 19.51 120.51 19.51 PO50658 2001 TECHN EDUC 111 0.00 64.90 0.00 0.00 0.00 6.67 0.33 -2.11 PO55454 2001 KERALA RWSS 0.00 65.50 0.00 0.00 12.27 7.89 11.36 -1.97 PO55455 2001 Rajasthan DPEP I1 0.00 74.40 0.00 0.00 0.00 22.82 11.99 0.00 PO59242 2001 MP DPIP 0.00 110.10 0.00 0.00 20.06 6.16 12.86 -6.87 PO67216 2001 KARWSHD DEVELOPMENT 0.00 100.40 0.00 0.00 20.06 44.94 47.93 31.07 PO70421 2001 KamatakaHighways 360.00 0.00 0.00 0.00 0.00 21.72 21.72 0.00 PO71244 2001 Grand Trunk RoadImprovementProject 589.00 0.00 0.00 0.00 12.53 149.62 162.15 0.00 PO59501 2000 TA for Econ ReformProject 0.00 45.00 0.00 0.00 12.03 15.08 22.73 11.39 PO50657 2000 UP Health Systems DevelopmentProject 0.00 110.00 0.00 0.00 30.09 31.27 50.33 10.18 P049770 2000 RENEGY I1 80.00 50.00 0.00 0.00 26.00 20.09 43.96 -3.60 PO10505 2000 RAJASTHAN DPIP 0.00 100.48 0.00 0.00 0.00 25.17 14.99 15.01 P009972 2000 Natl Highways 111 516.00 0.00 0.00 0.00 25.16 91.26 116.42 116.42 PO50646 1999 UP Sodic Lands I1 0.00 194.10 0.00 0.00 0.00 0.60 -3.16 -6.22 Total: 7,318.50 6,238.78 0.00 1.oo 549.93 8,131.14 1,966.97 198.14 INDIA STATEMENT OF IFC's HeldandDisbursedPortfolio InMillionsofUSDollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. 2005 ADPCL 39.50 7.00 0.00 0.00 0.00 0.00 0.00 0.00 2006 AHEL 0.00 5.08 0.00 0.00 0.00 5.08 0.00 0.00 2005 AP Paper Mills 35.00 5.00 0.00 0.00 25.00 5.00 0.00 0.00 2005 APIDC Biotech 0.00 4.00 0.00 0.00 0.00 2.01 0.00 0.00 2002 ATL 13.81 0.00 0.00 9.36 13.81 0.00 0.00 9.36 2003 ATL 1.oo 0.00 0.00 0.00 0.68 0.00 0.00 0.00 2005 ATL 9.39 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2006 Atul Ltd 16.77 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2003 BHF 10.30 0.00 10.30 0.00 10.30 0.00 10.30 0.00 81 2004 BILT 0.00 0.00 15.00 0.00 0.00 0.00 15.00 0.00 2001 BTVL 0.43 3.98 0.00 0.00 0.43 3.98 0.00 0.00 2003 Balrampur 10.52 0.00 0.00 0.00 10.52 0.00 0.00 0.00 2001 Basix Ltd. 0.00 0.98 0.00 0.00 0.00 0.98 0.00 0.00 2005 Bharat Biotech 0.00 0.00 4.50 0.00 0.00 0.00 3.30 0.00 1984 Bihar Sponge 5.70 0.00 0.00 0.00 5.70 0.00 0.00 0.00 2003 CCIL 1S O 0.00 0.00 0.00 0.59 0.00 0.00 0.00 2006 CCIL 7.00 2.00 0.00 12.40 7.00 2.00 0.00 12.40 1990 CESC 4.61 0.00 0.00 0.00 4.61 0.00 0.00 0.00 1992 CESC 6.55 0.00 0.00 14.59 6.55 0.00 0.00 14.59 2004 CGL 14.38 0.00 0.00 0.00 7.38 0.00 0.00 0.00 2004 CMScomputers 0.00 10.00 2.50 0.00 0.00 0.00 0.00 0.00 2002 COSMO 2.50 0.00 0.00 0.00 2.50 0.00 0.00 0.00 2005 COSMO 0.00 3.73 0.00 0.00 0.00 3.73 0.00 0.00 2006 ChennaiWater 24.78 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2003 DQEL 0.00 1S O 1.50 0.00 0.00 1.50 1.50 0.00 2005 DSCL 30.00 0.00 0.00 0.00 30.00 0.00 0.00 0.00 2006 DSCL 15.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2005 Dabur 0.00 14.09 0.00 0.00 0.00 14.09 0.00 0.00 2003 Dewan 8.68 0.00 0.00 0.00 8.68 0.00 0.00 0.00 2006 FederalBank 0.00 28.06 0.00 0.00 0.00 23.99 0.00 0.00 2001 GTF Fact 0.00 1.20 0.00 0.00 0.00 1.20 0.00 0.00 2006 GTF Fact 0.00 0.00 0.99 0.00 0.00 0.00 0.99 0.00 1994 GVK 0.00 4.83 0.00 0.00 0.00 4.83 0.00 0.00 2003 HDFC 100.00 0.00 0.00 100.00 100.00 0.00 0.00 100.00 1998 IAAF 0.00 0.47 0.00 0.00 0.00 0.30 0.00 0.00 2006 IAL 0.00 9.79 0.00 0.00 0.00 7.70 0.00 0.00 1998 IDFC 0.00 10.82 0.00 0.00 0.00 10.82 0.00 0.00 2005 IDFC 50.00 0.00 0.00 100.00 50.00 0.00 0.00 100.00 IHDC 6.94 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2006 IHDC 7.90 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2006 Indecomm 0.00 2.57 0.00 0.00 0.00 2.57 0.00 0.00 1996 IndiaDirect Fnd 0.00 1.10 0.00 0.00 0.00 0.66 0.00 0.00 2001 Indian Seamless 6.00 0.00 0.00 0.00 6.00 0.00 0.00 0.00 2006 JK Paper 15.00 7.62 0.00 0.00 0.00 7.38 0.00 0.00 2005 KMahindraINDIA 22.00 0.00 0.00 0.00 22.00 0.00 0.00 0.00 2005 W I T 11.oo 2.50 0.00 0.00 8.00 2.50 0.00 0.00 2003 L&T 50.00 0.00 0.00 0.00 50.00 0.00 0.00 0.00 2006 LGB 14.21 4.82 0.00 0.00 0.00 4.82 0.00 0.00 2006 Lok Fund 0.00 2.00 0.00 0.00 0.00 0.00 0.00 0.00 2002 MMFSL 7.89 0.00 7.51 0.00 7.89 0.00 7.51 0.00 2003 MSSL 0.00 2.29 0.00 0.00 0.00 2.20 0.00 0.00 2001 MahInfra 0.00 10.00 0.00 0.00 0.00 0.79 0.00 0.00 Montalvo 0.00 3.00 0.00 0.00 0.00 1.08 0.00 0.00 1996 MoserBaer 0.00 0.82 0.00 0.00 0.00 0.82 0.00 0.00 1999 Moser Baer 0.00 8.74 0.00 0.00 0.00 8.74 0.00 0.00 2000 Moser Baer 12.75 10.54 0.00 0.00 12.75 10.54 0.00 0.00 Nevis 0.00 4.00 0.00 0.00 0.00 4.00 0.00 0.00 2003 NewPath 0.00 9.31 0.00 0.00 0.00 8.31 0.00 0.00 82 2004 NewPath 0.00 2.79 0.00 0.00 0.00 2.49 0.00 0.00 2003 NikoResources 24.44 0.00 0.00 0.00 24.44 0.00 0.00 0.00 2001 Orchid 0.00 0.73 0.00 0.00 0.00 0.73 0.00 0.00 1997 Owens Coming 5.92 0.00 0.00 0.00 5.92 0.00 0.00 0.00 2006 PSL Limited 15.00 4.74 0.00 0.00 0.00 4.54 0.00 0.00 2004 Powerlinks 72.98 0.00 0.00 0.00 64.16 0.00 0.00 0.00 2004 RAKIndia 20.00 0.00 0.00 0.00 20.00 0.00 0.00 0.00 1995 RainCalcining 0.00 2.29 0.00 0.00 0.00 2.29 0.00 0.00 2004 RainCalcining 10.00 0.00 0.00 0.00 10.00 0.00 0.00 0.00 2005 R a m 3.74 10.28 0.00 0.00 0.00 0.00 0.00 0.00 2005 Ruchi Soya 0.00 9.27 0.00 0.00 0.00 6.77 0.00 0.00 2001 SBI 50.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1997 S E I 3.21 0.00 0.00 0.00 3.21 0.00 0.00 0.00 2000 SREI 6.50 0.00 0.00 0.00 6.50 0.00 0.00 0.00 1995 Sara Fund 0.00 3.43 0.00 0.00 0.00 3.43 0.00 0.00 2004 SeaLion 4.40 0.00 0.00 0.00 4.40 0.00 0.00 0.00 2001 Spryance 0.00 1.86 0.00 0.00 0.00 1.86 0.00 0.00 2003 Spryance 0.00 0.93 0.00 0.00 0.00 0.93 0.00 0.00 2004 SundaramFinance 42.93 0.00 0.00 0.00 42.93 0.00 0.00 0.00 2000 SundaramHome 0.00 2.18 0.00 0.00 0.00 2.18 0.00 0.00 2002 SundaramHome 6.71 0.00 0.00 0.00 6.71 0.00 0.00 0.00 1998 TCW/ICICI 0.00 0.80 0.00 0.00 0.00 0.80 0.00 0.00 2005 TISCO 100.00 0.00 0.00 300.00 0.00 0.00 0.00 0.00 2004 UPL 15.45 0.00 0.00 0.00 15.45 0.00 0.00 0.00 1996 United Riceland 5.63 0.00 0.00 0.00 5.63 0.00 0.00 0.00 2005 United Riceland 8.50 0.00 0.00 0.00 5.00 0.00 0.00 0.00 2002 UshaMartin 0.00 0.72 0.00 0.00 0.00 0.72 0.00 0.00 2001 Vysya Bank 0.00 3.66 0.00 0.00 0.00 3.66 0.00 0.00 2005 Vysya Bank 0.00 3.51 0.00 0.00 0.00 3.51 0.00 0.00 1997 WIV 0.00 0.37 0.00 0.00 0.00 0.37 0.00 0.00 1997 Walden-Mgt India 0.00 0.01 0.00 0.00 0.00 0.01 0.00 0.00 2006 iLabsFund I1 0.00 20.00 0.00 0.00 0.00 0.00 0.00 0.00 Totalportfolio: 956.52 249.41 42.30 536.35 604.74 175.91 38.60 236.35 Approvals PendingCommitment FY Approval Company Loan Equity Quasi Partic. 2004 CGL 0.01 0.00 0.00 0.00 2000 APCL 0.01 0.00 0.00 0.00 2006 Atul Ltd 0.00 0.01 0.00 0.00 2001 Vysya Bank 0.00 0.00 0.00 0.00 2006 FederalBank 0.01 0.00 0.00 0.00 2001 GI Wind Farms 0.01 0.00 0.00 0.00 2004 Ocean Sparkle 0.00 0.00 0.00 0.00 2005 Allain Duhangan 0.00 0.00 0.00 0.00 Totalpendingcommitment: 0.04 0.01 0.00 0.00 Annex 14: Country at a Glance INDIA: Bihar RuralLivelihoods Project "JEEViKA" - POVERTY and SOCIAL South LOW- India Asla Income Development diamond' 2005 Population, mid-year(milifons) 10946 1470 2,353 GNIpercapita (Atlasmethod, US$) 730 684 580 Lifeexpectancy GNI(Atlas method, US$biliions) 8042 1005 1384 Average annual growth, 899-05 Population(%j 15 17 19 Laborforce(%) 19 21 2 3 Gross Most recent estimate (latest year available, l999-05) primary capita enrollment Poverty(%of population belownatronalpo vertylrne) 29 Urbanpopulation (%oftotalpopulation) 29 29 31 Lifeexpectancyatbirth(pars) 63 63 59 I Infant mortality(per looolive births) 62 66 80 Childmalnutntion(%ofchildrenunder5) 47 45 39 Access to improvedwatersource Access to animprovedwater source (Xofpopuletion) 86 84 75 Literacy(%ofpopulationege ?5+t 61 60 62 Gross pnmaryenrollment (%of school-agepopulation) 18 10 04 -India Male PO I8 10 Lowincomegroup Female tp 0 5 99 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 8 8 5 1995 2004 2005 Economlc ratios. GDP (US$ biliions) 2272 3552 6959 6057 Gross capitalformation/GDP 237 265 310 334 Exportsof goods andservices/GDP 54 110 82 203 Trade Gross domestic savings1GDP 8 5 251 311 324 Gross nationalsavingslGDP 8 9 264 333 347 Cunent account balance/GDP -23 -18 -07 -13 Interestpayments/GDP 0 9 14 0 5 06 Domestic Capital Total debt/GDP 8 0 266 I79 153 savings formation Total debt servicelegports 230 276 a 7 P 6 Present value of debtlGDP 158 8 7 Present value of debllexports 72 7 573 indebtedness 1985-95 1905-05 2004 2005 2005-09 (average annualgroMh) GDP 55 6 0 8 3 9 2 8.3 GDP percapita 34 4 3 6 6 7.7 7.0 -India __ Lowincomegroup Exportsof goods and services 0 9 8 5 281 22.0 8.6 i!b: STRUCTURE of the ECONOMY z: zi f%of GDP) 1985 2004 2005 IGrowth of capltal and GDP (Ye) Agriculture 337 282 Industry 264 281 ;ei_" Manufacturing 8 4 8 1 159 157 Services 399 436 537 544 Householdfinal consumptionexpenditure 67.4 63.8 59.9 588; 01 02 03 04 05 Generalgov't finalconsumptionexpenditure 114 0.6 110 Imports of goods andservices 7.8 P.2 20.0 23.3 -GCF -GDP I (averageannualgroMh) 1985.95 19g545 2004 2005 /Growthof exports and Imports (%) Agriculture 3.5 21 0.0 6.0 Industry 6.5 58 9.6 9.4 Manufacturing 6.7 54 8.7 9.1 Services 6.7 82 9.6 9.9 I Household finalconsumptionexpenditure 5.7 52 3.8 5.7 Generalgov't final consumptionexpenditure 4.2 5.5 5.4 9.6 W 01 02 03 W Gross capitalformation 5.4 63 8.7 8.8 ~ -E*ports -Imports Imports of goods andservices 9.9 0 0 22.3 27.1 Note:2005dataarepreiiminaryestimates.Groupdataareto 2004.2005lndicates2005-06(Apr lto Mar31). 'Thediamonds showfourkeyindicators inthecountry(in bo1d)comparedwithits income-groupaverage. lfdata aremissing,thediamondvA beincomulete. 84 BALANCE of PAYMENTS 1985 1995 2004 2005 (US$ millions) 'Eqorts of goods andservices 12,777 39,657 126,81 165,390 Imports of goods andservices 448 5UQ M),811 84,679 Resource balance -6,841 -11556 -22,430 -29289 Net income -776 -3205 -2.669 -5.027 Net currenttransfers 2207 8,506 20253 24,095 Currentaccount balance -52a -6255 -4,846 -a221 Financingilems (net) 4,639 3,38 31618 24.874 Changesinnet reserves 571 2,936 -26,772 -14,653 Memo: Reserves includinggold (US$ millions) 6,520 21887 140,076 150.666 Conversionrate(DEC,local/US$) Q.2 33.4 44.9 44.3 EXTERNAL DEBT and RESOURCE FLOWS 1985 1995 2004 2005 (US$ millions) :omposition of 2005 debt (US$ mill.; Total debt outstandinganddisbursed 40,951 94,464 124,376 123,123 IBRD 2,396 9,649 4.865 5,557 IDA 9,750 TT,499 23,662 23,363 G:B.788 Total debt service 3,531 0,566 8250 24,335 IBRD 3 0 170 300 417 IDA 124 357 773 609 Compositionof net resourcefiow Official grants 450 565 872 1060 Official creditors 1421 -1046 996 1421 Private creditors 2273 1254 4,693 379 Foreigndirect investment (netinflow) a 6 2,144 5,474 6,596 Portfolio equity(net inflows) 0 1591 8.835 11968 World Bank program Commitments 2,882 1427 2,111 1592 E- Bilaterd Disbursements 1375 \. IBRD 13B 1843 2.00 B IDA . D. Other mdtilaterd F - Private Principalrepayments 157 I T 0 784 843 C-IMF G- Sbrt-term Net flow 128 149 1059 1288 lnterestpayments 280 901 289 364 Net transfers 938 -752 770 904 Development Economics 4/23/07 85 MAP SECTION 84° 85° 86° 87° 88° I N D I A BIHAR RURAL LIVELIHOODS PROJECT Great PROJECT DISTRICTS To 31 NATIONAL ROADS PASCHIM Kathmandu 0 25 50 75 100 OTHER ROADS CHAMPARAN KILOMETERS RAILROADS 27° Gandak DISTRICT CAPITALS 27° 28A STATE CAPITAL Little To N DISTRICT BOUNDARIES Gorakhpur Bettiah Ga E STATE BOUNDARY PURBA kadn 28 P INTERNATIONAL BOUNDARIES To Motihari A Shiliguri CHAMPARAN Sitamarhi L GOPALGANJ Gopalganj SITAMARHI Rapti MADHUBANI Madhubani Siwan Gandak 31 28 MUZAFFARPUR A S I W A N S Muzaffarpur Darbhanga R A 26° DARBHANGA H P U R N I A Ghaghara A M S A R A N S Madhepura A ahananda 26° D M Saharsa H Chhapra VA I S H A L I Samastipur EP Purnia SAMASTIPUR U Hajipur Kamla R A 31 To Ganga Ara Patna Dinajpur K A T I H A R B H O J P U R BEGUSARAI Khagaria Ghugri Katihar PATNA KHAGARIA Ganga To Begusarai Varanasi Son 31 Munger 30 N A L A N D A Bhagalpur Jahanabad Bihar Sharif Sheikhpura Luckeesarai JAHANABAD To LUCKEESARAI Ingraj 25° 31 B H A B H U A SHEIKHPURA MUNGER Bazar Sasaram 2 Mohana B H A G A L P U R 25° AURANGABAD To Jamui Chandan Jangipur Jamuna Nawada Aurangabad Gaya N AWA D A J A M U I G A Y A Son MARCH This map was produced by the Map Design Unit of The World Bank. IBRD 2 The boundaries, colors, denominations and any other information shown To on this map do not imply, on the part of The World Bank Group, any 35350 2007 To Hazaribag To judgment on the legal status of any territory, or any endorsement or Asansol acceptance of such boundaries. 84° 85° Asansol 86° 87° 88°