The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) Document of The World Bank FOR OFFICIAL USE ONLY Report No: PGD265 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND INTERNATIONAL DEVELOPMENT ASSOCIATION PROGRAM DOCUMENT FOR A PROPOSED LOAN IN THE AMOUNT OF US$387.50 MILLION AND PROPOSED CREDITS IN THE AMOUNT OF US$112.50 MILLION TO INDIA FOR A CREATING A COORDINATED AND RESPONSIVE INDIAN SOCIAL PROTECTION SYSTEM (CCRISP) DEVELOPMENT POLICY OPERATION June 2, 2021 Social Protection & Jobs Global Practice South Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. . The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) (India) GOVERNMENT FISCAL YEAR April 1 – March 31 CURRENCY EQUIVALENTS (Exchange Rate Effective as of April 30, 2021) US$1.00 = INR 74.08 ABBREVIATIONS AND ACRONYMS ADB Asian Development Bank MHA Ministry of Home Affairs AFD Agence Francaise de Development MIS Management Information System APY Atal Pension Yojana MOF Ministry of Finance BC Business Correspondent MTEF Medium-Term Expenditure Framework CAG Comptroller and Auditor General NDMA National Disaster Management of India Authority CCT Conditional Cash Transfers NFSA National Food Security Act CMIE Center for Monitoring the Indian NIPFP National Institute of Public Economy Finance and Policy COVID-19 Coronavirus Disease 2019 NPA Non-performing Assets CPF Country Partnership Framework NSAP National Social Assistance Program CPGRAMS Centralized Public Grievance PDS Public Distribution System Redress and Monitoring System DBT Direct Benefit Transfer PEFA Public Expenditure and Financial Assessment DFS Department of Financial Services PER Public Expenditure Review EPFO Employees' Provident Fund PFMS Public Financial Management Organisation System EPF Employee Provident Fund PMGKAY Pradhan Mantri Garib Kalyan Ann Yojana FFC Fifteenth Finance Commission PMGKY Pradhan Mantri Garib Kalyan Yojana FPS Fair Price Shops PMJDY Pradhan Mantri Jan Dhan Yojana FRBM Fiscal Responsibility and Budget PMJJBY Pradhan Mantri Jeevan Jyoti Management Act Bima Yojana GDP Gross Domestic Product GFS Government Finance Statistics GNP Gross National Product PMUY Pradhan Mantri Ujjwala Yojana GOI Government of India SCD Systematic Country Diagnostic GRS Grievance Redress Service SDR Special Drawing Rights IBRD International Bank for SDRF State Disaster Response Funds Reconstruction and Development IDA International Development SFC State Food Corporations Association IFC International Finance Corporation SP Social Protection IMF International Monetary Fund TPDS Targeted Public Distribution System JBSY Janani Baal Suraksha Yojana UCCT Unconditional Cash Transfer KfW Kreditanstalt Fur Wiederaufbau ULB Urban Local Body LDP Letter of Development Policy UT Union Territory MAPS Methodology for Assessing Public WB World Bank Procurement Systems MGNREGS Mahatma Gandhi National Rural WBG World Bank Group Employment Guarantee Scheme PM-KSN Pradhan Mantri-Kisan Samman Nidhi PMSBY Pradhan Mantri Suraksha Bima Yojana . Regional Vice President: Hartwig Schafer Country Director: Junaid Kamal Ahmad Regional Director: Lynne D. Sherburne-Benz Practice Manager (s): Stefano Paternostro Task Team Leader (s): Qaiser M. Khan, Shrayana Bhattacharya The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) TABLE OF CONTENTS SUMMARY OF PROPOSED FINANCING AND PROGRAM.................................................................. 2 1. INTRODUCTION AND COUNTRY CONTEXT ............................................................................. 4 2. MACROECONOMIC POLICY FRAMEWORK.............................................................................11 2.1. RECENT ECONOMIC DEVELOPMENTS..............................................................................11 2.2. MACROECONOMIC OUTLOOK AND DEBT SUSTAINABILITY .................................................12 2.3. IMF RELATIONS ...........................................................................................................18 3. GOVERNMENT PROGRAM..................................................................................................19 4. PROPOSED OPERATION......................................................................................................19 4.1. LINK TO GOVERNMENT PROGRAM AND OPERATION DESCRIPTION .....................................19 4.2. PRIOR ACTIONS, RESULTS AND ANALYTICAL UNDERPINNINGS............................................20 4.3. LINK TO CPF, OTHER BANK OPERATIONS AND THE WBG STRATEGY .....................................32 4.4. CONSULTATIONS AND COLLABORATION WITH DEVELOPMENT PARTNERS ...........................32 5. OTHER DESIGN AND APPRAISAL ISSUES ...............................................................................33 5.1. POVERTY AND SOCIAL IMPACT.......................................................................................33 5.2. ENVIRONMENTAL, FORESTS, AND OTHER NATURAL RESOURCE ASPECTS .............................34 5.3. PFM, DISBURSEMENT AND AUDITING ASPECTS ................................................................35 5.4. MONITORING, EVALUATION AND ACCOUNTABILITY..........................................................38 6. SUMMARY OF RISKS AND MITIGATION................................................................................38 ANNEX 1: ADJUSTMENTS TO THE COUNTRY PROGRAM IN RESPONSE TO COVID-19 .........................41 ANNEX 2: POLICY AND RESULTS MATRIX .....................................................................................44 ANNEX 3: FUND RELATIONS ANNEX ............................................................................................47 ANNEX 4: LETTER OF DEVELOPMENT POLICY ...............................................................................53 ANNEX 5: ENVIRONMENT AND POVERTY/SOCIAL ANALYSIS TABLE ...............................................54 ANNEX 6: CLIMATE CO-BENEFITS ...............................................................................................57 The Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) was prepared by a team led by Shrayana Bhattacharya and Qaiser Khan and including Mehul Jain, Ambrish Shahi, Camilla Holmemo, Sutirtha Sinha Roy, Helene Bertaud, Tanusree Talukdar, Toni Koleva, Aurelien Kruse, Emilia Skrok, Shashank Ojha, Anindo Chatterjee, Dhruv Sharma, Victor Ordonez, Manoj Jain, Rangeet Ghosh, Urvashi Narayan, Tanvir Malik, Yeshika Malik and Satyanarayan Panda. Page 1 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) SUMMARY OF PROPOSED FINANCING AND PROGRAM BASIC INFORMATION Project ID Programmatic P176447 No Proposed Development Objective(s) The Development Objective of the proposed operation is to strengthen the capability of the state and national governments in India to respond to the needs of informal workers through a resilient and coordinated social protection system. Organizations Borrower: INDIA Implementing Agency: DEPARTMENT OF ECONOMIC AFFAIRS (DEA), MINISTRY OF FINANCE PROJECT FINANCING DATA (US$, Millions) SUMMARY Total Financing 500.00 DETAILS International Bank for Reconstruction and Development (IBRD) 387.50 International Development Association (IDA) 112.50 IDA Credit 112.50 INSTITUTIONAL DATA Climate Change and Disaster Screening This operation has been screened for short and long-term climate change and disaster risks Overall Risk Rating Substantial Page 2 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) . Results: Indicator Name Baseline Target Percentage share of States who have received direct grant from Central Government following 0 100 recommendations of FFC Size of Central FFC Grants made to States for annual 149,924 220,843 budget period (in INR crore) (2020-2021) (2021-2022) Amount of NSSF loan assistance to Food Corporation of INR 84636 crore 0 India National government has rationalized centrally No Yes sponsored schemes Percentage of urban municipalities receiving benefits 0 33 through NUDM Percentage of street vendors receiving benefits from 40% 55% SVANIDHI Gender-sensitive program coverage measured by 40% 50% proportion of female informal workers in total beneficiary pool of SVANIDHI Digital Payment Volumes 43383.28 million 47000 million Number of informal workers receiving benefits per 13 million 20 million month from the ONORC initiative Share of States receiving transfer from Central 0 33% Government based on forest, ecology and disaster risk index Percentage of million plus cities that have received 0 10 funds in 2022-2023 Responsibilities of concerned ministry for No Yes implementing Paris agreement have been defined . Page 3 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) 1. INTRODUCTION AND COUNTRY CONTEXT 1. The proposed operation supports India’s efforts to modernize its social protection system to serve new risks and needs emerging from the COVID-19 pandemic, rapid urbanization, structural transformations in the labor market and climate change. It aims to improve coverage and responsiveness of the Indian social protection system towards informal workers with emphasis on accelerating portable benefits (cash/credit/social insurance/food) and fostering greater support to sub-national governments to tackle the ongoing pandemic and future disaster and ecological risks. The reforms supported shall not only improve the capabilities of the government to respond to future crises, but also help scale-up localized and context-specific social protection to communities impacted by the devastating second wave of the pandemic in India. This is an emergency support Development Policy Operation for USD 500 million (for Fiscal Years 2021). The design draws on lessons from the recent PMGKY-DPF series, through which emergency social assistance was provided following COVID-19. The proposed operation also leverages the World Bank’s deep country knowledge on social protection in India, gained through technical assistance and analytics over the past decade. The approach is consistent with the recent WBG COVID-19 strategy to ‘build back better’ and the India Country Partnership Framework’s focus on building modern systems of social protection, supporting India to shift away from fragmented schemes, and better helping the poor and vulnerable informal workforce cope up with future climate and disaster shocks and enhance their resilience. 2. Natural disasters and COVID-19 have sounded an alarm for all nations, including India. Anticipating and addressing uncertainty and unexpected shocks is now the new normal in the management of nations and their economies. Whether macro- economic like the financial crisis of 2008, or sectoral as in the case of the current health crisis, or climate induced natural disasters like floods and cyclones, such shocks are increasingly determining the trajectory of economic growth and the ability of nations to address poverty and ensure shared prosperity. In this context, building a modern, 21st century social protection system has become essential for protecting citizens , particularly the poor and the vulnerable, and for ensuring a resilient and productive workforce . Even as India has managed historic gains in lowering poverty rates, nearly half the households in India are vulnerable – between the poverty line and twice the poverty line. The challenges faced by women headed households, adolescents – girls and boys, pensioners, and migrants , further highlights the urgency of addressing vulnerability to labor market shocks, climate change and extreme weather events. Furthermore, ninety percent of the Indian workforce is informal, without access to significant savings or workplace based social protection benefits such as paid sick leave or social insurance. As per data in the Periodic Labour Force Survey for 2018-19, among regular wage/salaried workers in the non-agriculture sector, 69.5 percent do not have written contracts and 51.9 percent were not eligible for any social security benefits. 1 To address such concerns, the government has implemented PMGKY and is driving various initiatives through the Ministry of Labour and Employment to expand coverage. Social protection is therefore more than just protecting the welfare of the poor; it is equally about securing India’s work force. 1http://mospi.nic.in/sites/default/files/publication_reports/Annual_Report_PLFS_2018_19_HL.pdf --Please reference Statement 16.on page 58. Page 4 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) 3. Labor market informality further constrains the ability of Indian households to cope and recover from livelihood shocks triggered by COVID-19 lockdowns. Significant portion of the Indian workforce is informal, without access to significant savings or workplace based social protection benefits such as paid sick leave or social insurance. The Indian Periodic Labor Force Survey (2017-18) finds that only 47 percent of urban workers have regular, salaried jobs. Even among workers in formal employment, over 70 percent do not have contracts, 54 percent are not entitled to paid sick leave and 49 percent do not have any form of social security benefits. 4. Public health experts are concerned about the disease spreading to rural areas, which have higher incidence of poverty, but lower quality of health infrastructure and service delivery compared to urban areas. As states are forced to impose circuit-breakers to contain the spread of the disease, unemployment rates are beginning to rise. The rate has risen by 1.15 percentage points in the last week of April 2021 compared to the first week of March 2021. Unemployment effects are much stronger in urban areas, where the rate has increased by 2.45 percentage points, as compared to an increase of 0.5 percentage points in rural areas over the April-March 2021 period. While more detailed household survey data is awaited, trends based on the first wave of the infection suggests that an increase in urban unemployment rates will likely have a bigger impact on low-income informal sector workers engaged in causal or temporary self-employed activities. 5. In India, inter-state migrants are at acute risk of increased poverty and destitution . Seasonal migrants dominate low-paying, hazardous and informal market jobs in key sectors in urban areas, such as construction. Estimates from the Economic Survey highlight that the magnitude of inter-state labor migration in India was close to 9 million annually between 2011 and 2016. The Government of India has disclosed that close to 10.5 million migrants returned to their home states during the lockdown period of the first wave. Analysis of CMIE’s household surveys show that 13.2 percent of migrants in 2019 who were reinterviewed in 2020 had returned to their households in the first eight months of 2020. High-frequency mobility indicators from Google and Apple for the second wave period have started to show a sharp contraction in retail activity as well as movement towards offices and workplaces since April 2020. Traffic congestion in most major cities is back to levels observed during the first wave of infection during April 2020, whereas trends in electricity consumption have also moderately weakened over the past month. Based on thes e indicators and past trends observed during the first wave of infection, it is likely that urban economic activity will decelerate as states impose non-pharmaceutical interventions, which is likely exacerbate the rate of reverse migration to rural hinterlands. Remittance transfers from urban migrants to families in rural areas are vital for lower -income Indian states. For example, studies show that in Bihar, remittances accounted for 35.6 percent of gross state domestic product (GSDP) in 2011–12. Media reports and civil society groups have highlighted how migrants relying on ad-hoc construction or service jobs have been displaced due to the lockdown during the first wave. Lack of portability in social protection benefits across state boundaries exacerbates the risks faced by migrants. With unemployment rates now starting to increase during the second wave, and decline in earnings and remittances is likely, inter-state migrant workers will continue to need targeted government support. 6. As per India’s Nationally Determined Contributions (NDC) submission, climate change is a major challenge for developing countries like India that face large scale climate variability and are exposed to enhanced risks from climate change2 . India has committed to an ambitious set of Nationally Determined Contributions (NDC) and is on track to achieve its “2˚C compatible” rated Paris Agreement climate action targets [1]. India’s Ministry of Environment, Forest and Climate Change (MoEFCC) leads the government initiatives on climate change. The committed NDC include 2 https://www4.unfccc.int/sites/ndcstaging/PublishedDocuments/India%20First/INDIA%20INDC%20TO%20UNFCCC.pdf [1] https://climateactiontracker.org/countries/india/ Page 5 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) achieving by 2030 a reduction in emissions intensity of its GDP by 33% - 35% below the 2005 levels; the share of renewables in power generation at 40 percent contingent on technology transfer and availability of finance; and an additional cumulative carbon sink of 2.5 – 3.0 billion tonnes of CO2 by 2030 with increased afforestation and tree cover. Other commitments are to better adapt to climate change by enhancing investments in development programs in sectors vulnerable to climate change, particularly agriculture, water resources, Himalayan region, coastal regions, health and disaster management. Social protection transfers to buffer workers and communities against climate induced disasters shall be vital as India moves forward on its climate commitments. Having adequate SP programs to compensate. Social protection transfers to buffer workers and communities against climate-change induced shocks shall be vital as India moves forwardHaving adequate SP programs to compensate for income losses shall be critical. 7. Even though this program is being prepared in part to respond to a national emergency, it draws on extensive knowledge work by the World Bank during the last several years. Over the years, the Bank has worked closely with national and state authorities to understand the strengths and lacuna of existing social protection programs in India. Improvements in last mile delivery of cash transfers have been facilitated by providing technical support to the Direct Benefit Transfer Mission which is responsible for digital payments into beneficiary bank accounts. The Bank has also been providing technical support to the Ministry of Rural Development on leveraging the Socio-Economic Census (SEC) data for targeting, which has improved transparency of beneficiary identification for programs in India through use of digitized asset and socio-demographic data. The World Bank has also worked closely with the apex policy making body NITI Ayog on social protection architecture and design. State governments are the focal point for delivery of social benefits. Several state level delivery innovations have contributed to reducing system leakages and improve efficiency of delivery. The Bank has been providing ‘nuts and bolts’ support to eight state governments to strengthen delivery systems. Finally, the Bank has anchored knowledge exchange across stakeholders by organizing a ‘Schemes to Systems’ workshop in Delhi in December 2019 to examine social protection reforms and last mile delivery issues, which was attended by top officials from state and national government agencies, along with keen participation from global experts, civil society, media and academics. It is this depth of country systems knowledge that enabled the Bank to respond so quickly but strongly in the first wave of India’s COVID -19 emergency through the PMGKY-DPO series (USD 1.15 billion) which provided emmergency relief (see Table 1 for details). The proposed program draws on lessons from the first wave of the pandemic to outline and support key reforms for the second wave and future crises beyond COVID- 19. The emmergency support DPO shall be complemented with state level operations and the potential for a follow - up DPO in the next fiscal to focus more on whole-of-government and institutional reforms to strengthen safety nets is also being explored. 8. Historically, India has provided social protection through a large and complex set of centrally sponsored schemes. These schemes are financed by the center and implemented by state governments. They include large -scale community-driven livelihoods programs (National Urban and Rural Livelihoods Mission), Panchayati Raj insitutions, self-help group initiatives, financial inclusion programs, safety nets, subsidies, public works, social pensions, quasi- income support and social insurance schemes. In addition, digital innovations for cash delivery and beneficiary identification also function as independent schemes under the purview of discrete line ministries. Ideally, these schemes can serve as building blocks of an integrated system where the whole is greater than the sum of its parts. For example, self-help groups can help last-mile delivery of social assistance in concert with technology innovations. However, there is no overarching institutional framework for coordinating these multiple scheme-based mechanisms. Faced with the COVID-19 crisis, the Government of India’s PMGKY has helped build an implementation framework whereby multiple schemes work together through leadership anchored by the Government of India. While the previous DPO series enabled provision of immediate cash transfers to about 320 million individual bank accounts identified Page 6 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) through pre-existing national social protection schemes and additional food rations for about 800 million individuals; it began to build a pathway through medium-term reforms to address faultlines in the SP system (see Table 1). The proposed DPO enhances devolution of flexible funds made available to states to deal with local risks and needs, and supports the government’s agenda to consolidate safety nets (scheme rationalization initiatives) and new initiatives to provide assistance and credit to informal workers and migrants. 9. The proposed program supports building an adaptive and disaster-responsive social protection system, while also expanding the ability of India’s safety nets architecture to become more inclusive by catering to a diversity of needs across states and vulnerable groups. Even prior to COVID-19, India needed to pivot its social protection system to address the needs of a more urban, mobile and diverse population. The onset of the pandemic has escalated the urgency of this reform agenda. Most social protection schemes operating in modern India are designed for a rural, agrarain and chronically poor country. That India now only exists in pockets – the majority of the country has seen booming tele-digital and transport connectivity, sharp declines in income poverty and new neglected sources of risks related to climate, urbanization and migration. State capability and the delivery landscape are deeply different across regions. With economic growth, states have also diverged in their social protection needs and riks -profiles. India’s response to COVID-19 and future resilience depends on how its social protection system responds to this heterogeneity and context-specificity. The proposed program enables flexibility for state governments to cater to their contexts, while ensuring the needs of migrants, informal workers and the urban poor are being better addressed. Despite fiscal stress, state governments have proactively expanded support for the poor during the COVID-19 crisis. The proposed reforms will allow states and local governments to access flexible funding to design and implement appropriate social protection responses to COVID-19 and safety nets. 10. With the implementation of PMGKY, India has come a long way in the expansion and strengthening of its social protection system, with nascent focus on coordination and portability . However, many challenges remain to ensure adequate coverage, benefit generosity, institutional alignment and efficiency of spending in the sector. First, making social protection in India responsive to the growing diversity and depth of needs and risk-profiles across states and regions requires important transversal reforms on how finances and institutions coordinate to provide benefits to households. Second, while India implements nearly three-hundred fragmented benefit delivery schemes, the present system is skewed with 58 percent of DBT beneficiaries receiving digital cash or wage transfers from government belonging to five core national schemes (PAHAL, MGNREGS, PMAYG, NSAP and Scholarhips)3 , while the remaining programs have significant overlap as they have never been subjected to benchmarking and rigorous expenditure reviews. The national government provides social assistance and social insurance to informal workers by relying on numerous schemes operating at the state and national level with limited coordination. Third, targeting and beneficiary identification for India’s largest safety nets are yet to become dynamic and streamlined, with different programs using different rules and eligibility verification protocols. 3 DBT Mission Data for 2020-2021 available: https://dbtbharat.gov.in/ Page 7 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) Table 1: Sequencing of Social Protection Interventions and Reforms through DPF Series Emergency COVID-19 Reforms (April-July Medium Term SP + COVID-19 Reforms COVID-19 Reforms + Long Term Structural SP 2020 through PMGKY-DPF1) (July-Nov 2020 through PMGKY-DPF2) Reforms (Feb- June 2021 through CCRISP DPF- 1) Scaling-up a core set of PMGKY triggered a Ministry of Finance pre-existing fundamental shift in the initiates rationalization food/cash programs social protection system through for COVID-19 relief through from scheme-based accepting PMGKY package, reaching silos towards a more 15 th Finance Commission 87% of poorest households. coordinated recommendation approach engaging for scheme key departments and rationalization and anchored by benchmarking. Ministry of Finance . By notifying COVID-19 Reforms Implementation of the pandemic as a enabled states to use SDRF 15 th FC recommendations ‘disaster’, monies to deliver deepens the adaptive the national government context-specific social and decentralized enables state governments assistance to populations in safety nets agenda to hot spots/containment initiated through the access to funds from zones previous DPF series. the State Disaster for COVID-19 relief. This Ministry of Finance Response Funds reform is being used by devolves funds to (SDRF) state governments to state/local to implement and design and scale-up locally governments to deliver COVID-19 cash/ relevant packages during the tailor responses to shelter second wave in India. Six states immediate relief to have announced localized context-specific needs migrants excluded from assistance packages based on for safety nets. PMGKY. case burden. Additional financing allocated based on the disaster risk index which includes climate change, ecological vulnerabilities and pollution parameters, among others. 40% of SDRF earmarked for relief assistance for crisis beyond COVID-19. Portable food and One-Nation-One-Ration in-kind and amendments to national Additional food-grains for benefits to migrant workers Labor Codes triggered all PDS households for May and through benefits (food and insurance) June 2021. State Disaster for migrants across Response Funds state boundaries. Mera Ration application to address information asymmetries in accessing portable rations – thereby scaling up access to benefits for migrants Page 8 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) Emergency COVID-19 Reforms (April-July Medium Term SP + COVID-19 Reforms COVID-19 Reforms + Long Term Structural SP 2020 through PMGKY-DPF1) (July-Nov 2020 through PMGKY-DPF2) Reforms (Feb- June 2021 through CCRISP DPF- 1) Clear benchmarking of food subsidy bill to establish cost to provide grains to migrants. Door-step delivery of relief UMANG platform leveraged Scheme to offer incentives by states online information and address constraints leveraging post offices, alerts on payment faced by FSPs, scaling up fair price shops to improve last-mile delivery of timely payments and and community-based cash. reducing transaction costs machinery for informal workers to contribute to insurance/ make transfers. Quasi-income support Through New credit program for urban measures for urban Affordable Rental Housing street vendors. informal Platform (for urban poor) and workers National Social Security Board , National Urban Digital Mission through the government expanded --aims to strengthen IT welfare funds to provide support for urban underserved Infrastructure for service COVID-19 relief. workers. delivery at the municipal . level. 11. The proposed policy program also includes a specific focus on reforms which enable India to strengthen disaster resilience of vulnerable populations to climate induced disasters. This is done through an important social protection reform which allows the use of nearly 40 percent of resources in state disaster response funds to provide communities in disaster impacted regions to access quick social and relief assistance to cope from loss of livelihoods, and through a reform which channels additional funds to ecologically precarious zones, thereby making the social protection system more agile and scalable in times of shocks, including future climate-related disasters. Further, a pillar within the program supports broader reforms being implemented by the Indian government to provide additional grants to states based on their performance to tackle pollution and an institutional framework to track India’s progress in meeting agreed norms in the Paris Agreement. While the latter two reforms may not have direct links with social protection efforts, these are important to build environmental resilience and reflects a new World Bank approach in India to include climate-sensitive actions in all national level DPOs. Such actions assume significance as in 2018 alone 23 million people in India were affected by disasters – the most compared to any other country in the world4 . The climate-sensitive components of the program are critical given India’s growing vulnerability to climate shocks. As per the Economic Survey, India would need around US$ 206 billion (at 2014-15 prices) between 2015 and 2030 for implementing adaptation actions in key areas like agriculture, forestry, fisheries, infrastructure, water resources and ecosystems. Apart from this, additional investments will be needed for strengthening resilience and disaster 4 https://nidm.gov.in/PDF/pubs/IDR2018.pdf Page 9 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) management 5 . The proposed reform is crucial to help India in addressing the adverse impacts of climate change and natural disasters on individuals and communities, mainly in the form of compensating for the loss of life and livelihood. 12. India’s social protection architecture stands at an important crossroad, poised to transform from a set of siloed schemes to a more coordinated and context-specific system. While India has multiple programs to provide support and the recent Pradhan Mantri Garib Kalyan Yojana (PMGKY) has been critical in this set-up, mission-mode expansion of coverage will require an overarching body which monitors, strategizes and guides how various innovations, centre - state agencies, schemes, staff and budgets will be coordinated to ensure adequate social protection coverage for the poor and vulnerable. Meeting the diverse needs of states requires an overhaul in India’s social protection financing and delivery architecture. This is critical to ensure centre and state consolidate delivery costs, avoid administrative duplication and respond to India’s diverse and changing risk profile. The proposed DPF focusses on these key structural reforms through four pillars : (1) Fostering deeper devolution to states to use resources for local needs/risks and disasters. (2) Expanding the social protection net for underserved urban informal workers (3) Strengthening delivery of existing new initiatives through focus on improved methods for targeting and payments (4) Climate action re forms to build adaptation and mitigation capacities for the most vulnerable. 13. Gender. The proposed program aims to address gender-gaps in program coverage for social assistance in India and the disproportionate burden of poverty faced by female headed households . Global experience indicates that poverty targeted safety nets tend to be gender sensitive driven by the fact that female headed households tend to be poorer than male headed households. In India, a review following the pandemic by SEWA, IWWAGE, EPoD and ISST have highlighted how female headed households and women workers face unique challenges in accessing points of service for cash transfers and are at risk of exclusion due to gender-gaps in access to public space, technology tools and digital literacy. The proposed CCRISP-DPF expands the ability of state governments to provide social assistance to the vulnerable through direct central grants. Majority state government interventions which utilize these central funds to transfer support (cash/food) use additional targeting weights for female headed households in their eligibility determination criteria. For example, results from the CMIE COVID-19 supplementary module between May and August 2020 shows that nearly 70 percent of women enrolled in the PMJDY program received cash transfer benefit. In the bottom 40 percent, 72 percent of such enrolled women received benefits. 79 percent of all female headed households received atleast one social protection benefit, while the coverage for male headed households was 85 percent. Beyond being gender targeted, the broader reforms supported through CCRISP shall also had more impact on female headed households. The largest component of state level safety nets is food distribution through PDS which covers almost 800 million people. Among PDS enrollees, PDS rice benefit are received by 75 percent of female headed households and 68 percent of male headed households. Further, the DPF supports new schemes and data systems which prioritize female informal workers (street vendors in particular) in delivery of benefits. Assistance provided through State Disaster Response Funds goes further than just addressing gender bias in poverty but it also includes specific focus on the objective of increasing final inclusion of women. 5 https://www.indiabudget.gov.in/economicsurvey/doc/vol2chapter/echap06_vol2.pdf Page 10 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) 2. MACROECONOMIC POLICY FRAMEWORK 2.1. RECENT ECONOMIC DEVELOPMENTS 14. The Indian economy was already slowing when the COVID-19 outbreak unfolded. Real Gross Domestic Product (GDP) growth had moderated from 8.3 percent in FY16/17 to 4.0 percent in FY19/20. The growth deceleration was due mostly to (i) impaired balance sheets in the banking and corporate sectors affecting credit and investment, and (ii) a marked decline in private consumption growth. 15. The “first wave” has been followed by a much bigger “second wave” of the pandemic, March 2021 onwards. The second wave is characterized by a steep rise in the number of daily cases (averaging 220 thousand in April 2021, compared to almost 87 thousand during the peak of the “first wave” in September 2020) accompanied by a 2.6 times increase in the number of daily fatalities compared to the previous peak. However, the spread has been uneven with western and central states bearing the initial brunt. Even though a nation-wide lockdown has not been implemented by the central government, states have responded with localized, and often stringent, social containment measures. 16. Against this backdrop of pre-existing weaknesses, the COVID-19 pandemic is causing major additional disruptions to economic activity. The implementation of a national lockdown, late-March 2020 onwards following the onset of the “first wave”, resulted in a major slowdown in economic activity, with the initial supply shock morphing into a demand freeze. Over the first quarter of FY20/21 (April-June 2020) real output contracted by 24.4 percent y-o-y, before rebounding on a sequential basis in Q2 and returning to positive (y-o-y) territory in Q3. The lockdowns imposed by various states following the “second wave” are resulting in a fresh round of disruptions in mobility and activity, hampering the rebound witnessed in FY20/21. Electricity consumption and revenue from E-way bills declined by 2.3 and 17.5 percent (m-o-m) respectively, in April 2021, albeit lower than the 14.4 and 78.8 percent (m-o-m) declines recorded in these indicators in April 2020 (during the national lockdown). Further, the weekly unemployment rate, released by the CMIE, has increased by about 3 percentage points, since end of March, to 9.5 percent by mid-May, with a significant jump in urban unemployment. 17. Despite the contraction in output and low oil prices, headline inflation remained elevated , over April-October 2020, losing momentum thereafter. It exceeded the ceiling of Reserve Bank of India’s (RBI) tolerance band (2-6 percent) for most of the first three quarters of FY20/21 - averaging 6.6 percent between April and December. This was largely attributable to supply chain disruptions, higher taxes on fuel and rising food prices. Prices pressures started to subside starting November 2020 following the easing of mobility restrictions since September. Between January and April 2021, inflation averaged 4.7 percent y-o-y, down from 6.8 percent in the year-earlier period. However, this primarily reflects a high base in 2020. 18. The Government of India (GoI) responded proactively to mitigate the economic fallout from the COVID -19 outbreak. In May 2020, together with the RBI, an “Economic Package” equivalent to 10 percent of GDP6 was unveiled comprising: (i) Financial sector measures to maintain the flow of credit and support small and medium enterprises 7 , (ii) 6 A figure that also includes significant liquidity injections by the RBI . 7 Which included: (i) a 100 percent credit guarantee on additional bank and Non-Bank Finance Companies (NBFCs) lending to MSMEs and other small businesses up to 20 percent of their outstanding credit as of end February, (ii) a “special liquidity scheme” where a S pecial Purpose Vehicle would channel liquidity from the RBI to invest in the investment-grade debt of NBFCs, housing finance companies and micro finance institutions, with the entire operation guaranteed by the government, and (iii) a broadening of the existing partial credit guarantee scheme for banks to purchase assets pools and bonds issued by NBFCs. In addition, the authorities sought to shield viable firms with liquidity pressures – particularly MSMEs – from immediate bankruptcy risks by (i) suspending the initiation of insolvency proceedings, (ii) excluding Page 11 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) Social safety net measures to help households cope with immediate income shocks 8 , (iii) Structural Reforms (announced in May but adopted in October) including far-reaching changes to agriculture marketing laws (refer to Annex I). 19. Likewise, in spite of elevated inflation, the RBI has adopted a proactive stance. To support the economy, preserve financial stability and stabilize borrowing costs for the central and state governments, the Monetary Policy Committee cut the repo rate by a cumulative 115 bps between March and May and indicated strong commitment to maintaining an accommodative policy stance for the foreseeable future. The RBI took additional steps to ensure that ample liquidity remained available in the market 9 . It announced a 6-month loan moratorium and Non-Performing Loans (NPLs) standstill through August 31, 2020, and subsequently a special restructuring scheme for accounts affected by COVID-19. Finally the RBI also announced on-tap TLRTOs of INR 1 trillion until March 2021 (now extended to September 2021), open market operations in State Development Loans (SDLs), to support state-level borrowing, and increased the Held to Maturity (HTM) limits for government securities from 19.5 to 22 percent until March 2022. Post the “second wave”, the RBI has announced new steps to aid Small Finance Banks (SFBs), increase credit flow to Micro, Small and Medium Enterprises (MSMEs)/Micro-Finance Institutions (MFIs) and to the healthcare sector, and introduced the resolution framework 2.0 for stressed assets of MSMEs/small businesses. 20. The COVID-19 shock has brought about a significant improvement in India’s external position, albeit due to a sharp contraction in trade. India’s external position had already improved markedly in FY19/20, as imports of goods and services contracted on the back of weak domestic demand. The current account deficit narrowed to 0.9 percent of GDP and the financial account recorded robust inflows of portfolio and foreign direct investment (FDI). In FY20/21, a further decline in the trade deficit combined with an increase in net services receipts and private transfers turned the current account balance into a surplus of 1.3 percent. Given robust net foreign investment inflows, and unsterilized RBI intervention in forex markets, reserves reached a peak of USD 579.3 billion by end-March 2021, equivalent to around 15 months of FY19/20 merchandise imports, and the Indian rupee appreciated 2.1 percent relative to the dollar between April 2020 and March 2021 (despite offsetting open market operations by the RBI). 21. However, it resulted in a sharp deterioration in public finances. The fiscal deficit of the central government for FY20/21 was revised to 9.5 percent of GDP (from 3.5 percent initially targeted in the budget), reflecting a combination of (i) lower than expected tax revenues, (ii) additional spending to support households and the economy, as well as (iii) the decision to bring off-budget expenditures on the books (specifically expenditures of the Food Corporation of India). Meanwhile, the fiscal deficit of States is estimated to have been between 4 and 5 percent of GDP, (against pre-COVID estimates of 2.8 percent). As a result, the general government deficit is expected to reach 14 percent of GDP in FY20/21. 2.2. MACROECONOMIC OUTLOOK AND DEBT SUSTAINABILITY 22. Given the significant uncertainty pertaining to epidemiological developments, real GDP growth for FY21/22 is likely to be in the range of 7.5 to 12.5 percent 10 . With most states implementing localized social containment measures, COVID-19-related debt from the definition of default for triggering insolvency proceedings within the Insolvency and Bankruptcy Code ( IBC), and (iii) increasing the threshold limit for initiating insolvency proceedings within the IBC 8 including (i) increasing the budgetary allocation for the rural employment guarantee program (MGNREGA), (ii) free provision of wheat or rice and pulses to needy households, and (iii) the introduction of “National Portability Cards” to allow beneficiaries to access the Public Distribution System from any Fair Price Shop across the country 9 including through targeted long-term repo operations (TLTRO), cutting the cash-reserve ratio, increasing the overdraft limits for the central and state governments, providing refinance facilities to DFIs (NHB, SIDBI and NABARD) and easing borrowing requirements under the marginal standing facility window. 10 These are World Bank staff estimates and were published in the April 2021 versi on of the India Macro Poverty Outlook Page 12 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) the economy is witnessing renewed disruptions to activity (albeit to a lesser extent so far compared to April-June last year). Private consumption and investment had recovered to pre-pandemic levels in Q3 FY21/22, but significant scars from the lockdown last year on the financial health of households (especially the urban poor), and of small and medium sized enterprises, may get exacerbated by the renewed resurgence in COVID-19 cases. Even assuming a quick dissipation of the “second wave”, over Q1 FY21/22 (April- June 2021), private consumption growth will remain modest due weakening of the financial health of households (with heightened uncertainty around income prospects likely to incentivize higher savings). The rebound in investment is expected to be more subdued due to further financial shocks. 23. The RBI is expected to continue to support the economy within the limits of its mandate, despite inflation risks. While it has refrained from adopting further interest rate cuts since May 2020, the Monetary Policy Committee has maintained an accommodative stance and provided unambiguous forward guidance that this would be the case “as long as necessary”. The RBI expects headline CPI inflation to remain within the target band (2-6 percent) at 5.0 percent in FY21/22, due to likelihood of food prices remaining subdued and a high base last year. Even so, the RBI’s projections suggest somewhat higher inflation at 5.2 percent y-o-y over April-September (first half) of FY21/22, underpinned by rising oil prices and manufacturing input costs. Inflation is expected to moderate to 4.8 percent y-o-y in the second half of FY21/22. There are upside risks to this outlook, underscored by increasing likelihood of higher global inflation, rising commodity prices, as well as local lockdowns, exacerbated by a growing supply of money and increasing debt. Overall, the RBI believes that inflation expectations are well-anchored, providing enough11 support to growth through the current surge in COVID-19 cases. Moreover, the RBI has also taken steps (and reiterated its commitment) to ensuring financial stability and an “orderly evolution of the yield curve” through large scale open -market operations of central government bonds (G-Secs) and, since October also state bonds (SDLs). Recently, the RBI announced a slew of measures to support the health sector through a Term Liquidity Facility and a Special Long-Term Repo Operations (SLTRO) for SFBs among other macro-prudential measures. 24. But there is significant uncertainty over the resilience of the financial sector and its ability to support the recovery. Risk aversion continues to hamper the flow of credit and COVID-19 has magnified pre-existing fragilities. The RBI’s Financial Stabilit y Report (January 2021) observed that the profitability of Public Sector Banks (PSBs) was weak due to muted credit-uptake and slow resolution of NPAs. Stress tests included in the report indicated that the Gross Non- Performing Loans ratio of scheduled commercial banks could increase to 14.1 percent (and 16.8 percent for public sector banks) by September 2021 under a scenario of ‘medium’ stress. At the onset of Covid -19, the RBI had announced a series of temporary forbearance measures aimed at protecting firms from a credit freeze and mitigating the impact on bank balance sheets. These included a 6-month moratorium and NPA standstill during which repayments were suspended without downgrading these accounts. On March 23, 2021, the Supreme Court of India ruled that the cutoff for the moratorium was August 31, 2020 beyond which all loans that had not been repaid as per schedule could be declared as NPAs. Following this decision, apart from the loans which will immediately be classified as NPAs, many other loans could be downgraded in coming months including in sectors such as real estate, retail and MSME. However, the full impact of COVID-19 on asset quality will emerge only over time, given that the “second wave” of the pandemic will likely have further impact on the health of firms and businesses. So far, the expected rise in NPLs is not likely to lead to stress at the system level12 . However, NBFCs and SFBs could also require recapitalization. 25. As economic activity normalizes, domestically and in key export markets, the current account is expected to (MPO). 11 G-Secs are issued by the central government and SDLs are issued by states. 12 Banks have been preemptively raising capital during FY20/21 in anticipation of rising NPLs and credit cost. Public sector ban ks have raised more than Rs.170 billion in FY20/21, while the government has announced recapitalization of these banks to the tune of Rs.200 billion in FY 21/22. Page 13 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) return to mild deficits . The current account deficit is projected to be around 1 percent in FY21/22 and FY22/23 and capital inflows are expected to be buoyed by continued accommodative monetary policy and abundant international liquidity conditions. 26. The general government deficit is expected to remain above 10 percent of GDP until FY21/22. As a result, public debt is projected to peak at almost 90 percent of GDP in FY20/21 before declining gradually thereafter. There are, however, considerable risks to these projections amid the resurgence in COVID -19 cases. Possibilities of increased spending and a moderation in tax revenues, both as a result of the effect of automatic stabilizers and new policy actions designed to support the economy, will likely encumber the fiscal outlook. The bulk of the deficit will be financed from domestic borrowing and in a high liquidity environment characterized by substantial risk aversion and low credit uptake, there exists substantial appetite for government securities. 27. Risks stemming from contingent liabilities exist and may need to be reassessed. Public sector undertakings and other public agencies have accumulated significant liabilities (with borrowing by public sector undertakings alone amounting to over 9 percent of GDP as of FY18/19) but risks are believed to be limited given that they maintain adequate access to capital in a context of abundant liquidity. Additional risks come from the financial sector, namely from a buildup of NPAs in public sector banks that could eventually require large-scale recapitalization. Other contingent liabilities that would entail significant fiscal cost could emerge if there are sector- or industry-wide calls on the MSME guarantees by the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMS+E) or by the National Credit Guarantee Trust Company Ltd. (NCGTC) as part of the Rs.3 trillion emergency liquidity facility for MSMEs. However, the scope of calls on the scheme will not be known until the full extent of NPAs become clear. Figure 1. India Public Debt: Baseline and Stress-Test Scenarios (General government debt-to-GDP ratio, percent) 105 Real GDP growth shock Fiscal shock 100 Interest rate shock Combined macro-fiscal shock 95 Contingent liability shock 90 Baseline 85 80 75 70 65 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 Source: RBI, Ministry of Finance, World Bank staff calculations Note: The combined macro-fiscal shock is the combined impact of the real-GDP growth shock (a decline of 1.9 percentage points in FY20/21 and FY21/22) and interest rate shock (an increase by 2 percentage points throughout the forecast period) . Page 14 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) 28. According to the World Bank’s calculations, India’s debt to GDP ratio is projected to increase significantly in the short term. Under a baseline scenario, the general government debt-to-GDP ratio is projected to peak at 89.7 percent in FY20/21 before declining gradually thereafter. However, there are risks related to the unprecedented nature of the pandemic and uncertainty about future developments. The debt and outlook projections are surrounded by particularly large uncertainties compared with precedent years. A delayed and more gradual recovery (than assumed in the baseline scenario, Table 2), a higher fiscal deficit or more adverse financial conditions would entail upward pressures to the debt- to-GDP ratio. The presence of contingent liabilities in India’s public sector is a source of vulnerability. It is estimated that, an interest rate shock or a combined macro-fiscal shock would result in a steady increase in the ratio over the coming years pushing debt to GDP ratio close to 100 percent. 13 29. The assessment of public debt sustainability indicates that, notwithstanding risks, the debt position remains sustainable. This conclusion is supported by the (stable or) declining debt path projected by FY23/24 and the debt profile in terms of maturity and holders. India’s public debt is: (a) mostly denominated in domestic currency; (b) mostly of medium-/long -term maturity; and (c) predominantly held by residents. India’s external debt (both public and private), amounting to around 21 percent of GDP and predominantly of long duration, is also assessed to be sustainable. Finally, India has a relatively robust institutional and operational framework for debt management. Since 2016, public debt has been managed by a dedicated Public Debt Management Cell (PDMC) housed in the Ministry of Finance, which oversees all key middle office functions. Specifically, the PDMC plays a key role with regards to debt management strategy formulation and reporting, while debt issuance is handled by the RBI. Thus, even in the event of heightened levels of debt in the short term, the strength of the overall debt management architecture provides comfort that market, and operational risks can be handled and mitigated adequately. 30. Significant uncertainty still persists around epidemiological and policy developments, but the pace of vaccinations is expected to pick-up July onwards. While the number of daily COVID-19 cases have been falling over the past few days, they remain elevated. Besides, the locus seems to have shifted from urban to rural areas and from the west to the eastern parts of India. The ‘second wave’ of infections has been followed by a slowing COVID -19 vaccination program, with average daily doses administered falling from 2.8 million in April to 1.7 million in May 2021. It is estimated that for India to fully vaccinate (both doses) at least half of its population by end-2021, almost 5 million doses will need to be administered daily, starting August. In order to ramp-up the pace of vaccination, reduce the wastage of doses and cover a larger population, the new vaccination policy was announced in April, which allowed the states and private healthcare operators to directly procure vaccines from the manufacturers, for vaccinating persons in the age group of 18-44 years. The GoI will continue to provide vaccinations to healthcare personnel, frontline workers and persons in the 45 years and above age group. The pace is expected to pick-up July onwards, as the supply situation improves with the GoI moving to fast-track the imports of a few vaccines developed outside India, which have been cleared for emergency use in the US, UK, EU and Japan or by the World Health Organization (WHO). Previously, these vaccines would have had to finish clinical trials in the country to get an approval from the India’s drug regulatory body . The pace of the rollout of vaccines will determine economic prospects this year and beyond. 31. Although downside risks have increased significantly from the pre-COVID baseline, and uncertainty has increased following the onset of the “second wave” of COVID -19, India’s macroeconomic policy framework is 13 Shocks to GDP growth, the primary deficit and a one-time realization of contingent liabilities cause level shifts in the debt-to-GDP ratio but remain consistent with a declining trajectory in the medium term. However, an interest rate shock of 2 percentage points would result in a steady increase in debt-to-GDP in coming years. A combined macro-fiscal shock affecting all three variables (interest rates, GDP growth and the primary deficit), would cause debt to increase to almost 99 percent of GDP in FY22/23. Page 15 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) considered adequate for Development Policy Financing . While real output will decline precipitously in FY20/21 this was largely a statistical consequence of the fact that India’s fiscal year begins in April (so that the full impacts of the lockd own and its aftermath were captured in one single year) and because growth is expected to resume as of FY21/22, once the “second wave” recedes and the pace of vaccinations gather pace July 2021 onwards . The deviation from the pre-COVID path of fiscal consolidation, including on account of countercyclical measures, is needed given the imperative to protect the poor and support economic activity, and may even support debt sustainability to the extent that it helps growth to recover faster. In view of measures by the RBI to mitigate the fallout from the impact of COVID-19, ample domestic funding is available and refinancing risks are moderate. In recent years, the monetary policy framework has been strengthened and, while India’s exposure to external volatility has increased, high reserve levels and limited external financing needs provide adequate buffers. Further strengthening of resolution mechanisms to tackle the likely broadening of financial sector stress, especially given the onset of the second wave, will be key in restoring investor confidence in the economy. The government has proposed in the Union Budget (February 2021) that the NCLT framework be strengthened and that the e-Courts system be implemented. Thus, while significant risks remain, the government and regulatory agencies (RBI and SEBI) have demonstrated that they have the capacity to respond swiftly and adequately. Table 2. India Selected Economic Indicators FY16/17 –FY23/24 FY24/25 FY21/22 FY22/23 FY23/24 Key Macroeconomic Indicators FY16/17 FY17/18 FY18/19 FY19/20 FY20/21 est. Forecas Forecast Forecast Forecast t Real Economy (Annual percentage change unless otherwise Indicated) Nominal GDP (local currency) 11.8 11.0 10.5 7.8 -4.9 14.0 10.4 11.1 11.2 Real GDP 8.3 6.8 6.5 4.0 -8.5 10.1 5.8 6.5 6.5 Per Capita GDP (real USD) 1719.3 1816.7 1915.4 1972.7 1787.1 1949.0 2043.6 2155.7 2276.4 Contributions to growth (percentage points) Consumption 5.2 4.7 4.8 3.9 -5.3 7.9 5.2 5.8 5.4 Investment 2.6 2.4 3.1 1.7 -4.2 4.7 2.6 2.9 3.1 Net exports 0.1 -2.8 0.4 -0.5 2.6 -1.0 -0.9 -1.2 -1.3 GDP deflator growth 3.2 4.0 3.7 3.6 3.9 3.5 4.3 4.3 4.3 Consumer price index inflation 4.0 4.5 3.6 3.4 4.8 6.0 4.5 4.0 4.0 (CPI av.) Fiscal accounts (general (Percent of GDP) government) Overall balance -6.9 -5.9 -5.8 -8.0 -14.0 -10.4 -9.4 -8.5 -8.0 Total Liabilities 68.8 69.8 68.6 72.5 89.7 88.4 88.1 86.5 85.6 Selected monetary accounts (Annual percentage change unless otherwise indicated) Base money (M0 or reserve -12.9 27.3 14.5 9.4 — — — -- -- money) Credit to nongovernment 4.4 9.5 12.7 — — — -- -- -- Interest rate (Repo rate and 6.4 6.1 6.3 5.4 4.0 — -- -- -- period average) Balance of payments (Percent of GDP, unless otherwise indicated) Current account balance -0.6 -1.8 -2.1 -0.9 1.3 -1.1 -1.2 -1.4 -1.5 Page 16 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) FY24/25 FY21/22 FY22/23 FY23/24 Key Macroeconomic Indicators FY16/17 FY17/18 FY18/19 FY19/20 FY20/21 est. Forecas Forecast Forecast Forecast t Imports 21.3 22.1 23.8 21.1 20.8 20.9 21.6 22.4 22.7 Exports 19.4 19.0 20.2 18.6 18.2 18.9 19.5 19.8 20.0 Foreign direct investment (net) 1.6 1.1 1.1 1.5 2.0 1.5 1.4 1.4 1.7 Gross reserves (in US$ billion, 370.0 424.5 412.9 477.8 — — — — -- eop) In months of next year's 7.4 — — — — — — — imports -- External debt 20.0 20.1 19.7 20.8 21.6* — — — -- Terms of trade (FY2000=100) 71.1 73.3 — — — — — — -- Exchange rate (RS./US$1, -- average) 67.1 64.5 69.9 70.9 74.7 — — — Other memo items Nominal GDP in RS. (trillions) 153.9 170.9 188.9 203.5 193.4 220.5 243.4 270.3 300.6 Source: India Central Statistics Office, Staff calculations. Note: *As of end-September 2020. Table 3. India’s Selected Fiscal Indicators FY15–FY23 FY15/16 FY16/17 FY17/18 FY18/19 FY19/20 FY20/21 FY21/22 FY22/23 FY23/24 FY24/25 Key Fiscal Indicators Actual Actual Actual Actual Actual Estimate Forecast Forecast Forecast Forecast Central Government Overall balance -3.9 -3.5 -3.5 -3.4 -4.6 -9.5 -6.8 -6.2 -5.5 -5.0 Primary balance −0.7 −0.4 −0.4 −0.4 -1.6 -5.9 -3.1 -2.7 -2.0 -1.6 Total Receipts 12.9 13.3 13.0 12.8 11.8 11.1 11.8 11.8 11.9 12.0 (revenue + capital) Tax revenues 10.6 11.1 11.2 11.0 9.9 9.8 9.9 10.1 10.2 10.3 Taxes on goods and 4.6 3.6 4.2 4.6 4.3 4.2 4.5 4.3 4.4 4.5 services Taxes on income 5.0 5.4 5.4 5.8 6.0 5.2 4.6 5.0 5.0 5.0 and profits Taxes on 0.7 1.5 1.5 0.8 0.6 0.5 0.6 0.6 0.7 0.7 international trade Other taxes 0.1 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 Non-tax revenues 1.8 1.8 1.1 1.2 1.6 1.1 1.1 1.1 1.1 1.1 Non-Debt Capital 0.6 0.5 0.4 0.7 0.6 0.3 0.2 0.8 0.6 0.6 receipts Expenditures 16.7 16.8 16.5 16.3 16.4 20.6 18.6 18.0 17.4 17.0 Current 14.8 14.9 15.0 15.0 14.7 14.8 18.3 16.2 15.7 15.2 expenditures Interest payments 3.2 3.1 3.1 3.1 3.0 3.6 3.6 3.5 3.5 3.4 Others (salaries, 8.4 8.0 7.9 7.9 7.5 8.5 11.9 9.5 9.2 8.7 supplies, and so on) Tax transfers to 3.7 4.0 3.9 4.0 3.2 2.8 3.0 3.0 3.0 3.0 Page 17 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) FY15/16 FY16/17 FY17/18 FY18/19 FY19/20 FY20/21 FY21/22 FY22/23 FY23/24 FY24/25 Key Fiscal Indicators Actual Actual Actual Actual Actual Estimate Forecast Forecast Forecast Forecast states Capital expenditures 1.8 1.8 1.5 1.6 1.6 2.3 2.5 2.3 2.2 2.2 Central Government 5.0 3.9 3.5 3.5 3.4 4.6 9.5 6.8 6.2 5.5 Financing External (net) 0.0 0.0 0.0 0.0 0.0 0.3 0.0 0.0 0.0 0.0 Domestic (net) 3.9 3.5 3.5 3.4 4.6 9.2 6.8 6.2 5.5 5.0 State Governments Overall balance -3.0 -3.5 -2.4 -2.4 -3.4 -4.5 -3.6 -3.2 -3.0 -3.0 Revenues 13.7 13.7 13.8 14.0 13.8 13.6 14.5 14.3 14.4 14.5 Expenditures and 16.7 17.2 16.2 16.4 17.2 18.1 18.1 17.5 17.4 17.5 net lending Total Liabilities General 85.6 68.5 68.8 69.8 68.6 72.5 89.7 88.4 88.1 86.5 Government Table 4. BOP and external financing requirements External financing requirements FY17/18 FY18/19 FY19/20 FY20/21 FY21/22 FY22/23 FY23/24 FY24/25 Actual Actual Est. Est. Proj. Proj. Proj. Proj. (in percent of GDP) 1. Financing Requirements (i-ii) 1.8 2.1 0.8 -1.3 1.1 1.2 1.4 1.5 i. Current Account Deficit* 1.8 2.1 0.9 -1.3 1.1 1.2 1.4 1.5 ii. Net Errors and Omissions 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2. Financing Sources (i+ii) 1.8 2.1 0.8 -1.3 1.1 1.2 1.4 1.5 i. Capital Account Balance (a+b+c) 3.4 2.0 2.8 0.8 2.2 2.2 2.5 2.8 a. Net Foreign Direct Investment 1.1 1.1 1.5 2.0 1.5 1.4 1.4 1.7 b. Net Portfolio Investment 0.8 -0.1 0.0 0.0 0.1 0.2 0.2 0.2 c. Net All Other Flows** 1.5 1.0 1.3 -1.2 0.6 0.6 0.9 0.9 ii. Change in reserve assets (1-2.i) -1.6 0.1 -2.0 -2.1 -1.1 -1.0 -1.1 -1.7 4. External Financing Gap (1-2) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Source: Reserve Bank of India and staff calculations. Note: *: Includes merchandise and invisibles. **: All other flows include short - and long-term debt flows (external assistance, commercial borrowings and trade credits) and banking capital. Positive change in reserves indicate a decline/negative indicat es an increase. 2.3. IMF RELATIONS Page 18 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) 32. The IMF does not have an active lending program in India. However, it carries out regular macroeconomic supervision and Article IV consultations twice yearly. The World Bank and IMF teams regularly exchange views and information. The IMF has provided a comfort letter which is attached to this document as Annex 3. 3. GOVERNMENT PROGRAM 33. Overall, India’s Social Protection system is static, with focus on chronic poverty and limited tools to address dynamic needs and mobile workers, state-level-diversity, urbanization, disasters and climate change. India spends nearly 2.2 percent of GDP on social protection. This is similar to other lower middle-income countries such as Indonesia. While India's range of protective programs is impressive for a developing country, the current social protection architecture in spending and priorities remains strongly focused on chronic poverty alleviat ion. For example, in 2016, while traditional safety nets such as the PDS received nearly seven billion dollars in budget allocations, the life and accident insurance programs spent less than a million dollars together. Programs such as the PDS and MGNREG constitute 70 percent of social protection spending in the country. At present, only 4 percent of households in India use government social insurance programs. Use of private sources of insurance is higher, particularly for wealthy households. IHDS 2012 data shows that 27 percent households report members using/benefitting from private insurance –unsurprisingly, the bottom 20 percent report very low uptake of private options (5 percent) compared to the top 20 percent (55 percent). Majority of Indian households – poor and non-poor-- rely on personal savings to deal with health, accidents or climate shocks. Micro surveys and administrative data also highlight major gaps in pension and health insurance coverage. During the ongoing second wave of the pandemic, the government has scaled up food transfers through additional grain allocations per household for May and June 2021. This measure will cost the government INR 26,000 crore. 34. Two major issues emerged following the pandemic– first the rural focus of the safety net and the lack of portability of benefits which led to increased suffering for urban and migrant informal workers. Furthermore, the crisis exposed the lack of coordination between programs and between the central government and states. The Government took a series of emergency measures under the PMGKY program which was supported by the earlier DPF series. With the impending poverty impacts of a second wave, and future waves in the country -- the Government now wants to build back better and create an adaptive, decentralized and coordinated and responsive social protection system to meet the evolving needs of the new Indian economy. The role of States will be critical as the need for future lockdowns and economic impacts of containment measures may impact workers differently across locations and states. 4. PROPOSED OPERATION 4.1. LINK TO GOVERNMENT PROGRAM AND OPERATION DESCRIPTION 35. Program Development Objective of the proposed operation is to: strengthen the capability of the state and national governments in India to respond to the needs of informal workers through a resilient and coordinated social protection system. In this context, ‘capability’ implies organizational guidelines, systems and institutional/legal mechanisms which allow government agencies to respond to demands for social protection to ensure strong coverage of the vulnerable. By ‘coordinated’, the program implies fostering an integrated institutional framework to implement a whole-of-society and whole-of-government approach for social protection and resilience, whereby pre-existing programs and platforms are leveraged by engaging all tiers of government including community groups. The program also aims to ensure a ‘ responsive’ social protection paradigm, implying that government fund-flows and systems for Page 19 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) safety nets should respond to the diversity in risk profiles across states, and that government programs should address new needs and risks faced by the workforce due to increasing urbanization, extreme weather events macro-economic transformations and the pandemic. 36. The proposed DPF supports all aspects of the Government’s social protection efforts through a series of reforms. The reform package is designed to improve efficiency of delivery and to address problems which have emerged due to a centralized one-size-fits all social protection approach, proliferation of national schemes, the lack of geographic portability of benefits and specific needs to support migrant and urban workers. By supporting this critical government priority, the proposed operation reinforces the GoI’s focus on social protection and strengthens the prospects of results being achieved successfully. Beyond emergency support to households to tackle impacts of future shocks, the focus of the Bank’s policy dialogue builds on the past social protection response to COVID-19 to foster a broader social protection and resilience agenda. 37. Results Framework : The results proposed are tentative and subject to change. This is because the operation has been prepared during a peak emergency period and government counterparts need additional time to provide inputs based on detailed consultations on results criteria, baseline and end line data sources. The nature of the evolving pandemic shall also impact assessments. The results estimates shall be subject to revision following the second wave of the Indian pandemic within the first quarter of the DPO being operational. 4.2. PRIOR ACTIONS, RESULTS AND ANALYTICAL UNDERPINNINGS Pillar I : Institutional Co-ordination Prior Action 1: The Ministry of Finance has increased devolution to state governments and direct grants to local government bodies, with a raise in central grants to states for disaster management (and 40% of State Disaster Response Funds earmarked for response and relief activities including livelihood support, cash transfers and others for disaster relief . Prior Action 2: Government of India has incorporated the food subsidy into the Budget for 2021-2022 as part of the Department of Food and Public Distribution demand for Grants Prior Action 3: The Ministry of Finance has initiated a detailed exercise to rationalize and reduce the number of centrally sponsored schemes. 38. The proposed pillar initiates a reform path to ensure improved coordination of funds and tiers of government in providing context-specific and climate-responsive social protection in Indian states. It contains prior actions which focus on streamlining schemes and fund-flows for social protection, fiscal devolution for local governments and enhanced allocations for cash transfers in ecologically precarious and disaster-prone zones. At present, there are nearly 320 cash or in-kind benefit transfer programs in India. However, these schemes absorb less than 5 percent of GDP and are splintered across more than twenty ministries. The current structure of financing social protection is built on the back of these 320 schemes designed and financed by the Government of India (GoI). These are supplemented by a similarly large number of state specific schemes. The result is a fiscal architecture that is centralized, silo driven, and fragmented creating implementation inefficiencies. Importantly, the schemes are designed in ways that do not allow states or local governments to be responsive to changing economic and demographic dynamics of its population and associated risk profile. Nor do their financing consider growing needs for support and relief to households and workers Page 20 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) who are vulnerable to climate-associated shocks and disasters. Scheme financing does not incorporate performance of programs either. This approach allows central programs to ca ter to chronic poverty but excludes the needs of the ‘new - poor’ – particularly in urban areas and the informal workforce. To address deeper reforms to improve coordination of finances and institutions, the proposed DPF will support three critical reforms. 39. Through PA1, the GoI will implement key fiscal reform recommendations pertaining to devolution and disaster responsive safety nets made by the 15th Finance Commission for the period 2021-202614 . The Union Budget of 2021 contains these provisions which have been legislatively approved by both houses of Indian parliament. These outline steps for future scheme rationalization, devolution of funds to state governments and directly to local governments as well, earmarking 40 percent of state disaster response funds for relief. Central grants to states have increased significantly from 149,924 crore INR budget estimate in 2020-2021 to 220,843 crore INR for 2021-2022. Within these central grants made to states, the amount for post-devolution revenue deficit grants has increased from 30,000 core INR in 2020-2021 to 118452 crore INR for 2021-202215 . The total grants to local governments for the period 2021-2026 are accepted to be 436,361 crore INR 16 . In the previous five-year period, central grants allocated to local governments were 287,436 crore INR 17 . These resources are vital as States implement localized lockdowns during the second wave of the pandemic and will need commensurate fiscal resources to provide contextually tailored relief packages. For example, states such as Odisha, Tamil Nadu, Kerala, Maharashtra and Delhi have announced social assistance to meet new shocks during the second wave for impacted populations drawing on state resources. Since COVID -19 has been classified as a national disaster, these central grants, particularly for disaster management, shall allow states to scale- up support for future waves of the pandemic and localized outbreaks. Resources from these grants for disaster management are used for livelihood support, protecting assets, cash transfers and other services for disas ter relief18 . 40. Through PA2, GoI will complete an expenditure transparency measure whereby financing lines of the largest Indian safety net, the PDS have been reflected in the Government Budget 19 . []. Prior to this a portion of the PDS financing was provided as loans from the NSSF. Through PA2, NSSF loans to FCI have been replaced by budgetary allocation. For example, in 2019-20, out of total food subsidy of Rs. 1.85 lakh crore of FCI, Rs. 1.10 lakh crore was provided as loan from NSSF. Whereas, Rs. 0.75 lakh crore was provided through Budget. As per the budget expenditure for 2021-22, the food subsidy budget met out of NSSF loan has been kept as zero. This is an important step to benchmark social safety nets spending. 41. Finally, through PA3, the GoI will initiate a national review of all centrally sponsored schemes with evaluation inputs from the NITI Aayog’s Evaluation Office, to benchmark duplication and rationalize based on recommendations of the 15th Finance Commission fiscal path. At present, all of India’s nationally financed safety nets fall under two types of schemes – Centrally Sponsored Schemes (CSS) where states also finance a share of expenditures and Central Sector Schemes (CS) which are fully borne by the national government. Majority of safety nets are classified as CSS. Through this measure, the MoF, following recommendations made by the Finance Commission, shall adhere to a threshold for annual allocation to Centrally Sponsored Schemes, below which the funding for a CSS is expected to be stopped ( in 14 https://dea.gov.in/sites/default/files/ATR%20Summary%20Annex%20III%20%284%20page%29%20final_0.pdf 15 Page II here : https://www.indiabudget.gov.in/doc/eb/stat18.pdfb 16 Paragraph 6 here https://dea.gov.in/sites/default/files/ATR%20Summary%20Annex%20III%20%284%20page%29%20final_0.pdf 17 Graph 7.1 on page 172 here: https://fincomindia.nic.in/ShowContentOne.aspx?id=9&Section=1 18 Page 232 in Chapter 8 of the FFC Report 19 Demand for Grants of Department of Food and Public Distribution Page 21 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) order to phase out CSS which outlived its utility or has insignificant outlay). Third-party evaluation of all CSS will be completed within a stipulated timeframe. Following recommendations of FFC report, the Department of Expenditure, Ministry of Finance is planning to rationalize the CSS schemes. The objective is to make the schemes more impactful and outcome oriented by (i) consolidating schemes to provide a holistic implementation, (ii) enhancing expenditure efficiency by eliminating infructuous schemes, (iii) removing incongruence and (iv) transparently determining the funding share to improve predictability. A third-party evaluation of CSS implementation experience will feed into this exercise. This will also positively affect the social protection related expenditures incurred through the various CSS, as nearly 320 schemes managed by the central government involve direct benefit transfers 20 . 42. Expected Results: Ideally, India needs a system whereby a certain core number of national schemes operate, while transferring the remaining safety nets budget to states as block grants, distributed based on performance, poverty, jobs landscape and existence of digitized mechanisms of delivery. Such an approach has been developed for health. Various middle-income countries follow similar models for social protection, allowing greater coordination of state and central funds and agencies, and integrated different instruments and programs. 43. The core set of actions proposed through the DPF shall ensure all centrally sponsored social protection schemes are reviewed for duplication and efficiency benchmarking. Number of centrally sponsored benefit transfer schemes (CSS) are expected to be reduced, targets shall be appraised based on inputs from DOE. The final set of rationalized schemes shall be determined through the Department of Expenditure and will be reflected in the implementation review of the program. The pillar ensures and measures enhanced state level financing for social protection, particularly through PA1’ s focus on increasing state and local government transfers to disaster and states. The actions shall ensure more states are able to access greater funds through central grants and eventually help scale up coverage of poor households in these precarious regions by allowing states more flexibility and funds to spend on cash transfers. In particular, as these programs prioritize female headed households in their eligibility criteria, coverage of t hese shall also increase –thereby addressing gender-based coverage gaps in access to social assistance. In the immediate term, the action shall be tracked through results on the share of states receiving these central grants following recommendations by FFC. The action shall also measure the significant increase in deficit grants made available to states by the national government within the FFC grants. Data shall be sourced from published budget documents. Pillar II : Expanding the Net for Urban Informal Workers Prior Action 4: The Ministry of Housing and Urban Affairs has launched the National Urban Digital Mission, which will upgrade data infrastructure and create data exchange platforms for urban local bodies. Prior Action 5: The Ministry of Housing and Urban Affairs has launched a new credit/loan program for urban street vendors. 44. The second pillar supports a series of reforms to enhance the responsiveness of India’s social protection system to urban informal workers, gig-workers and migrants. Even prior to COVID-19, India needed to pivot its social protection system to address the needs of a more urban, mobile and diverse population. The onset of the pandemic has escalated the urgency of this reform agenda. Most social protection schemes operating in modern India are designed for a rural, agrarian and chronically poor country. That India now only exists in pockets – the majority of the country has seen booming tele-digital and transport connectivity, sharp declines in income poverty and new neglected sources of risks related to climate, urbanization and migration. 20 The number of DBTs is from the website of DBT Mission Government of India . Page 22 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) 45. Through PA 4, the government shall roll-out the National Digital Urban Mission21 , which aims to improve digital infrastructure in urban local bodies, whereby technology tools which aim to create registries of properties, citizen needs and municipal information. This can be catalytic as it creates the first data layer for urban areas , which can be eventually better used to identify beneficiaries and workers for support. These data platforms shall capture specific details based on gender, thereby allowing future policy making and program design to address broader gender-based service delivery gaps and effectively reach single/deserted women, widows, adolescent girls, and tribal women 22 . This is a critical investment in the technological capabilities of urban governments, which shall be a backbone to any efforts to scale-up urban safety nets and social insurance for informal workers. 46. Enabling transformation of urban local body governance will require investing in all-inclusive solutions to education, financial inclusion, welfare and employment challenges that confront the poor in both urban areas. Digitally enabled initiatives for financial and digital inclusion of people have also shown an equalizing effect. GoI’s JAM initiative (Jan Dhan-Aadhaar-Mobile trinity) to link bank accounts, mobile numbers and national identification numbers has contributed to substantial advances in financial inclusion. As of February 24, 2021, 55 percent (23.21 crore) accounts, out of the total 41.93 crore accounts opened under the PMJDY scheme, belong to women account holders. A national common digital platform enabled initiative for universal banking coverage has also been launched to ensure that every Indian has a bank account, enabling the government to transfer subsidies and other benefits directly to the target beneficiaries and plug leakages in its welfare programs. 47. National Urban Digital Mission (NUDM). NUDM aims to build the ‘shared digital infrastructure’ that will strengthen the capacity of the urban ecosystem to solve complex problems at scale and speed. It is built as a public good and provides the ecosystem actors the foundational digital building blocks, ready-to-use platforms, standards, specifications, and frameworks. Ministry of Housing and Urban Affairs (MoHUA) has launched the NUDM program to streamline and coordinate efforts of the urban ecosystem by harnessing technology to leapfrog our ur ban transformation journey. NUDM aims to improve the ‘ease of living’ for citizens by creating a national urban digital ecosystem that delivers accessible, inclusive and efficient and citizen centric governance in India’s 4400 towns and cities. The progra m will help develop ‘shared digital infrastructure’ as a ‘public good’ and will include state -of-the-art digital urban platforms to manage the core digital urban data. These digital platforms will help develop the following for each of 4400 Indian towns and cities : • Registries at appropriate levels to a create single source of truth in respect of urban assets, service delivery, urban data and actors; these registries can capture gender-disaggregated data on ownership of assets and presence of female headed households 23 in urban areas. • Develop nationally scalable application systems with a special focus on achieving the Sustainable Development Goals for urban; 21 https://pib.gov.in/PressReleasePage.aspx?PRID=1700246 22 Gender-disaggregated and demographically nuanced design of data platforms will allow policy makers to bridge service delivery gaps in identifying and reaching the most marginalized women and girls. 23 As per the 2015 NFHS, 15% of households in India are female headed. This has increased from 9% in 2004-05. The headship of a household is based on self-reported status and often implies households without a male head due to death, separation, or other circumstances. As per analysis of NFHS data, while nearly 47% of female headed households were in the bottom 40 th wealth quintiles, only 39.4% of male headed households were in the bottom 40 th quintile. Page 23 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) • Create open standards and enforce the adoption of open standards by all national digital urban stakeholders; • Adopt the best principles of ‘cooperative federalism’ while working with the States, Union Territories & ULBs for the realization of the SDG goals; • Enhancing the efficiency and effectiveness of governance and citizen services delivery at all levels The NUDM program design is aimed at ensuring that all segments of citizens can benefit from its digital initiatives and components. NUDM. NUDM components should be able to configure, extend or customize applications to cater to their specific needs. In addition, it can be leveraged across multiple channels – both digital and physical to engage and serve citizens effectively. 48. Through PA 5, the government has initiated a new credit program for street vendors in urban areas. Street vendors account for 60 percent of the informal self-employed workforce in large Indian cities such as Delhi, Mumbai and Ahmedabad. The Ministry of Housing Affairs intends to target 5 million24 street vendors in India. An ISST study during the pandemic demonstrated that 97 percent of women reported a drop in incomes following lockdowns. Thus far, no targeted support is provided to this segment of the workforce, which has suffered significant shocks following the pandemic. Street vendors shall be identified through Urban Local Bodies (ULBs) and provisional Certificate of Vending would be generated for such vendors through an IT based Platform. To access the program, street vendors left out of the ULB led identification survey or who have started vending after completion of the survey can seek a Letter of Recommendation (LoR) to that effect by the ULB / Town Vending Committee (TVC ) to avoid exclusion ULBs have been encouraged to issue such vendors the permanent Certificate of Vending and Identification Card immediately and positively within a period of one month.. Thus far, the scheme aims to prioritize women street vendors. However, improved outreach and implementation shall require robust tools and capacities for targeting informal workers in urban areas. PA4 and PA5 initiate such a process. 49. The focus on expanding coverage of social protection to informal workers in urban areas is important from a gender lens as well. The latest PLFS (2018) data shows that roughly 78 percent of both male and female workers in urban areas are engaged in the informal economy. However, women are engaged in sectors such as domestic work, street vending and home-based work which are not covered by pre-existing social security measures. PA4 and PA5 will include such workers thereby expanding the evidence-base and the share of working women enjoying social protection benefits in urban areas. Both, the scheme for street vendors and the NUDM, contain specific clauses to implement an MIS with gender-disaggregated information on women workers and female headed households – as these will be prioritized for benefit delivery. This area will be complemented by technical assistance and an investment operation as it requires support on incentive design, training, gender sensitization, data exchange, business protocols and project management challenges. 50. Expected Results : The impact of measures shall be captured by coverage under the street vendors scheme and share of municipalities availing of the digital infrastructure upgradation made possible through NUDM. Over the long run, these set of reforms are expected to increase social protection coverage in urban areas, particularly for women who are an important share of the self-employed street vending workforce in Indian cities. More municipalities are expected to use services and digital infrastructure created by the NUDM. Data on coverage of the PMSVANIDHI shall be calculated through use of administrative data from MoHUA. In the immediate term, the program shall measure coverage of the 5 million targets established by MoHUA and the share of women within the beneficiary base. Data shall be 24 As per MoHUA estimates. Page 24 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) collected based on administrative data collected by MoHUA dashboard for SVANIDHI. Pillar III: Strengthening Delivery Systems Prior Action 6: The Ministry of Electronics and Information Technology has formulated a draft scheme with incentives to boost digital transactions in India. Prior Action 7: The Ministry of Consumer Affairs, Food and Public Distribution has launched a mobile-based application for migrants to locate the nearest fair price shop to receive food grains. 51. The third pillar of the DPF supports reforms to strengthen delivery systems for portable and digital social protection. Through PA 625 , the government shall aim to support incentives for digital financial transactions, which shall test and scale-up such mechanisms with the private sector in India. Digital payments are key to tighten the payments chain for social protection programs, and to enable easy and portable pan-national access to cash transfers and social insurance contributions in India. Promotion of digital transactions and payments ecosystem is an essential aspect of digital India programme to bring each and every segment of our country under the formal fold of digital payment services. The government aims to provide facility of seamless digital payment to all citizens of India. Over the past few years, digital payment transactions have registered tremendous growth in India. Digital payment volumes have doubled from 2,071 crore in FY 2017-18 to 4,571 crore in FY 2019-20 at CAGR of 30.21 percent. In FY 20-21 5,312 crore digital transactions have been recorded in the country. During the pandemic, digital payments have been keeping the economy afloat and also reducing people’s contact with virus. This has been evident in the rise of the number of transactions on modes such as NACH, IMPS, BHIM UPI, NETC, Debit/Credit Cards, NEFT and PPIs. Though there has been an unprecedented growth in digital payments, the potential is still huge. Cash continues to dominate Indian markets. It is therefore important to continue to push for adoption of digital payments, targeting untapped markets/ segments/ sectors. 52. To give a further boost to digital transactions 26 , a draft time-bound scheme has been formulated by MeitY as captured in PA6, which proposes to provide financial incentive to acquiring banks for promoting RuPay Debit card and low-value (upto Rs.2,000) BHIM-UPI transactions (P2M) and thereby building a sustainable digital payments ecosystem in the country. This scheme will facilitate Banks in building robust digital payment ecosystem and promoting RuPay Debit card and BHIM-UPI modes of payments in the country, which will help the Government in further deepening of digital payments in various part of countries. The total outlay for the scheme is estimated to be capped at Rs.1,300 crore annually for the financial year. These incentives are time-bound. The duration of the proposed scheme is 1 year, w.e.f. 1st April 2021. 53. The new scheme shall be complemented by end-to-end integration of digital payments in the complete supply- 25 The word draft referring to the scheme is term used under the budget rules in Indi a which means that even though the budget line has been created, its implementation is the fund release process to become active (allocation for the scheme in the published Expenditures under 2021 India Union Budget on page 17, point 72, https://www.indiabudget.gov.in/doc/Budget_at_Glance/bag7.pdf .) This is now happening and was discussed during negotiations and noted in the minutes. . 26 As per the Reserve Bank of India definition , ‘Digital Transaction’ means a payment transaction in a seamless system effected without the need for cash at least in one of the two legs, if not in both. This includes transactions made through digital / electronic modes wherein both the originator and the beneficiary use digital / electronic medium to send or receive money. Reference on page 4, point (5) here : https://rbidocs.rbi.org.in/rdocs/Content/PDFs/OSDT31012019.pdf Page 25 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) chain of major trades of the States & UTs. The government also plans targeted interventions/ models tying up cashless payments with the livelihoods of otherwise digitally-excluded population segments such as farmers, SHG members, ASHA workers and street vendors (especially women street vendors) will be planned and supported. A specific allocation has been made under the program to strengthen cyber-security in digital payments including robust grievance redressal mechanism. 54. Through PA 7, the government shall roll-out a mobile-based application which will help any migrant identify a local FPS where he/she can access food grains. This will help provide information to citizens to better use the ONORC initative. This is crucial as survey data on awareness and usage of the ONORC suggests that only 34 percent of households with ration cards were aware of the initiative. As per the social protection module in the CMIE survey fielded in Januray 2021, only 11 percent of ration card holding households that had members who tried to use an alternative Fair Price Shop (FPS)27 to procure foodgrains. Following the second wave of the pandemic and several States implementing lockdowns to contain the disease, the government has expanded food-grains distributed to nearly 800 million people identified through the PDS for the months of May and June 2021. 55. Expected Results : This area of reform shall improve timeliness and access of programs, thereby enhancing coverage of the poorest. PA 6 is expected to help accelerate the use of digital payments for informal workers and increase volume of digital payments. PA7 shall improve coverage of informal workers under the portable PDS. Data on results shall be collected from administrative data from PDS line agencies. Pillar IV: Climate Action Prior Action 8: The Ministry of Finance has enhanced weightage given to forest and ecology, climate-based vulnerability, and disaster-risk profile of each state of each state in allocating central government grants to state governments for disaster management. Prior Action 9: The Ministry of Finance has developed central challenge grants to be awarded to cities with populations above one million based on achievement of air quality parameters. Prior Action 10: The Ministry of Environment Forests and Climate Change has created a multi-sector committee to monitor progress of India’s implementation of the Paris Agreement. Prior Action 11: The Ministry of Environment, Forests and Climate Change has created a portal that captures key adaptation and mitigation actions taken by various ministries and helps disseminate amongst citizens information on key climate change matters in India. 56. Through PA 8 and PA 9, the GoI will implement key fiscal reform recommendations made by the 15 th Finance Commission for the period 2021-202628 . These helps strengthen the creation of a climate responsive safety nets paradigm by providing states funds to provide livelihood and social assistance, take up recovery and reconstruction and step up preparedness and capacity building in ecologically vulnerable regions of the country. The Union Budget of 2021 27 Two percent tried to use an FPS outside their state, two percent tried to use an FPS outside their district and seven percent tried to use an alternative FPS within their district. 28 https://dea.gov.in/sites/default/files/ATR%20Summary%20Annex%20III%20%284%20page%29%20final_0.pdf Page 26 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) contains these provisions which have been legislatively approved by both houses of Indian parliament. These mandate devolution of funds to state governments by incorporating pollution parameters, climate risks and disaster profiles of states while estimating central fiscal transfers to states 29 . Under PA8, the increased weightage to ecological and disaster risk is implemented by two channels. First, between 2015-2020, the Finance Commission allocated 7.5 percent weightage to forest cover while estimating the size and distribution of central grants to states 30 . Prior to this, no ecological considerations were made in the devolution formula for states. For 2021-2026, 10 percent of weightage is given not only to the size of forests but to “ecology” of the state as well 31 . This implies increased grants to forest cover and zones beyond designated forested areas such as mangroves. Secondly, for disaster risk financing, the government has implemented the FFC recommendations to move away from an expenditure-based model to one where disaster risk is given weightage in estimating transfers for states. Successive Finance Commissions have pursued an expenditure- based approach to determine the allocation of funds for disaster management to each State. The method would allocate monies based on previous state expenditures incurred on disaster management, thereby favoring the better-off States, which can allocate resources and show higher expenditures. Recognizing the growth in disasters and ecological risks across the country, the government has changed the way allocations are made for disaster management funds. It is important to note that this methodology has been the outcome of the deliberations of the Commission with main stakeholders like the Ministry of Home Affairs, NDMA, NITI Aayog, State Governments , WBG teams and UNDP as well as the latter's report on disaster risk financing. This new methodology, which replaces the expenditure-driven methodology, uses a combination of capacity (as reflected through expenditure), risk exposure area and population) and hazard and vulnerability (risk index)32 . 57. Air pollution is an issue that is being attended to by the Government of India Significant public resources are needed to address the challenge and local governments need to be incentivized to take action. Air quality has deteriorated across much of the country since the 1990s, and today, most of the country’s population is exposed to unhealthy levels of ambient PM2.5, exposure to which can cause such deadly illnesses as lung cancer, stroke, and heart disease. Poor air quality also reduces the productivity of the labor force and disproportionately impacts the poor who are less able to take preventive measures or seek medical attention to cope with the health impacts. Moreover, many of the sources that contribute to poor air quality also contribute to greenhouse gas emis sions. While Government of India has taken steps to address this challenge, having launched the National Clean Air Programme (NCAP) in 2019, neither the NCAP nor any other Central government scheme have provided funds to cities and states to implement measures to reduce air pollution. Moreover, cities have yet to implement air quality action plans, and there are no mechanisms to incentivize action or to enforce compliance. Prior Action 9 aims to address the issues of funding gaps and lack of incentives by providing challenge grants to urban local bodies based on achievements of measurable results, 29 The paragraph 6.47 and 6.48 on page 160 has a full explanation of the reform seeing forest/ecology as "global goods." Second, also see the summary paragraph of Chapter 8 on page 223. See report here : https://fincomindia.nic.in/ShowContentOne.aspx?id=9&Section= 1 SDRF and SDMF : The FC recommendations to create State Disaster Mitigation funds and a 40% earmarking for relief from the SDRF have been accepted by the Ministry of Finance and implemented. This is found in the DEA published ATR referenced above. The government has (i) earmarked 40% for relief + 20% for mitigation -these are cash and livelihoods support sources (please see page 259 for summary of FC recommendations) (ii) the government has moved away from an expenditure-based model to one where disaster risk is given weightage in estimating transfers for states. Please see para 8.48 and para 8.51 on page 236 for the new weightage to risk mapping. And also see para 8.52 for all data on SDRF allocations for 2020 and 2021. Report here : https://fincomindia.nic.in/ShowContentOne.aspx?id=9&Section=1 30 Page 157 Table 6.3 in the FFC Report. 31 Page 163 Table 6.4 in the FFC Report 32 Please see paragraph 8.48 and paragraph 8.51 on page 236 for the new weightage to risk mapping. And paragraph 8.52 for all data on SDRF allocations for 2020 and 2021 in the FFC Report here : https://fincomindia.nic.in/ShowContentOne.aspx?id=9&Section=1 Page 27 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) a combination of process-based indicators and improvement in air quality. Challenge grants 33 also create competition between cities by allocating funds from cities that fail to meet results to those that do. 58. Expected Result: The challenge grants through PA 9and enhanced central grants to states for forest and disaster risk and ecological concerns will make significant resources available for cities and States to address the challenge of air pollution and climate risks faced by the workforce. The challenge grants will also incentivize cities to take action, tha t, in turn, will lead to measurable reductions in air pollution. Disaster management grants based on risks as opposed to past expenditures shall also create a more need-based and contextually relevant SP system. 33 The recommendations of the 15th Finance Commission on challenge grants for air pollution manageme nt are accepted by the Parliament, and funds in the order of Rs. 2,217 crore have been allocated for the challenge grants in the 2021-22 Budget. Please see page 203 in FFC Report. Page 28 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) 59. India ratified the Paris Agreement exactly one year after the submission of its Intended Nationally Determined Contribution (INDC), on October 2, 2016. Prior to this, in 2009, at Copenhagen, India had also promised to reduce its emission intensity of GDP by 20 to 25 percent from 2005 levels by the year 2020. The outcomes of these commitments coupled with sustained interventions by the Government of India (GoI) has resulted in a reduction of India’s emission intensity of GDP by 21 percent between 2005 and 2014; subsequently, it is on track to achieve its pre-2020 climate actions goal. The National Action Plan for Climate Change (NAPCC) works through eight missions to deal with climate change adaptation and mitigation – National Solar Mission (under Ministry of New and Renewable Energy), National Mission for Enhanced Energy Efficiency (under Ministry of Power), National Mission for Sustainable Habitat (under Ministry of Housing & Urban Affairs), National Water Mission (Ministry of Jal Shakti), National Mission for Strategic Knowledge on Climate Change (under MoEFCC), National Mission for Sustainable Agriculture (under Ministry of Agriculture), National Mission for Green India (under MoEFCC), and National Mission for Sustaining the Himalayan Ecosystem (under Ministry of Science and Technology). 60. PA 10 reflects that the central government has taken an important step and constituted a ‘Apex Committee for Implementation of Paris Agreement (AIPA)’ to ensure a coordinated response on climate change matters that protects the country’s interests and ensures that India is on track towards meeting its climate change obligations under the Paris Agreement including its NDCs. As per the formal notification of the committee34 , it is proposed to be headed by the Secretary, MoEFCC and the proposed members include senior bureaucrats from related ministries such as Agriculture and Farmers Welfare, Science and Technology, New and Renewable Energy, Jal Shakti, Power, Earth Sciences, Health and Family Welfare, Housing and Urban Affairs, Rural Development, External Affairs, Commerce and Industry, and government think tank- NITI Aayog. 61. The notification outlines the following important functions of the committee - (i) defining responsibilities of concerned ministries for achieving India’s NDC goals, (ii) developing policies and programmes to make India’s domestic climate actions compliant with its international obligations, (iii) developing Monitoring, Reporting and Verification (MRV) protocol for National Inventory Management System (NIMS) under Paris Agreement, (iv) coordinating communication of NDCs, National Communications, Biennial Update Reports and Biennial Transparency Reports to UNFCCC, (v) regulating carbon markets in India post-2020 period and issuing guidelines on carbon pricing, market mechanism, and similar other instruments that have a bearing on climate change and NDCs, and (vi) enhancing private sector’s contributions for combating climat e change and providing guidance to help align their actions with domestic priorities., The formulation of this apex committee is expected by GoI to help achieve India’s climate goals at a faster pace. 62. PA 11 reflects that the government has launched the ‘India Climate Change Knowledge Portal’ as a “single point Information resource” that provides information on the different climate initiatives taken by various line ministries enabling users to access updated status on these initiatives. The knowledge portal is expected to include information on- (i) India’s climate profile, (ii) national policy framework and India’s NDC goals, (iii) adaptation and mitigation actions, (iv) bilateral and multilateral cooperation, and (v) international climate negotiations. It aims to help in disseminating knowledge among citizens about all the major steps government is taking at both national and international levels to address climate change issues. 34 https://static.pib.gov.in/WriteReadData/userfiles/AIPA%20Gazette%20Notification.pdf Page 29 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) Table 5: DPF Prior Actions and Analytical Underpinnings Analytical Underpinnings Prior Actions (Update) (be specific about the key findings informing the prior action) Operation Pillar I : Institutional Co-ordination Report of the 15th Finance Commission for 2021-2026, Finance Commission in Prior Action 1: The Ministry of Finance has increased devolution to state COVID Times, Government of India, December 2020 governments and direct grants to local government bodies, with a raise in central grants to states for disaster management (and 40% of State Disaster Adaptive Social Protection: Building Resilience to Shocks. Social Protection and Response Funds earmarked for response and relief activities including Jobs Global Practice, World Bank, 2020 livelihood support, cash transfers and others for disaster relief) From Intent to Implementation: A Snapshot of India’s Social Protection Response to COVID-19, Bhattacharya and Roy 2020 Pathways to Reducing Poverty and Sharing Prosperity in India: Lessons from the Last Two Decades, Poverty and Equity Global Practice, World Bank, 2016 India Poverty and Equity Brief, Poverty and Equity Global Practice, World Bank, October 2019 The Efficacy of Government Entitlements in Helping PL Families Navigate the Financial Impacts of COVID-19, Dalberg Asia, April 15th, 2020 Prior Action 2: Government of India has incorporated the food subsidy into White Paper on PM Garib Kalyan Yojana: Coverage, Identification and the Budget for 2021-2022 as part of the Department of Food and Public Implementation, IDFC Institute, 11th April 2020 Distribution demand for Grants Social Protection Financing and COVID-19 Policy Note, Centre for Policy Research, 11th April 2020 Prior Action 3 : The Ministry of Finance has initiated a detailed exercise to rationalize and reduce the number of centrally sponsored schemes. Social Protection and Jobs Responses to COVID-19: A Real-Time Review of Country Measures A “living paper”, World Bank Social Protection and Jobs Global Practice, v.1 March 20, 2020 Schemes to Systems: Social Protection in a Transforming India , World Bank Social Protection and Jobs Practice 2019 Social Protection for a Changing India , World Bank Social Protection and Jobs Practice 2011 Operation Pillar II : Expanding the Net for Urban Informal Workers Prior Action 4: The Ministry of Housing and Urban Affairs has launched the Economic Survey of India 2016, Ministry of Finance, Government of India National Urban Digital Mission, which will upgrade data infrastructure and create data exchange platforms for urban local bodies. India’s Internal Labor Migration Paradox, FCI Practice, World Bank Policy Paper 8356, February 2018 Prior Action 5: The Ministry of Housing and Urban Affairs has launched a new credit/loan program for urban street vendors. Informal Workers in India: A Statistical Profile. August 2020. Govindan Raveendran and Joann Vanek, WIEGO Page 30 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) Unintended Consequences of Lockdowns: Covid-19 and the Shadow Pandemic. NBER. September 2020. Ravindran, Saravana and Manisha Shah. Report of the High-Level Committee on Deepening of Digital Payments , Reserve Bank of India, May 2019 Home-Based Workforce Calls for Protections to Survive the COVID-19 Crisis, Homenet South East Asia. August 2020 Vegetables on Wheels in Ahmedabad, India: SEWA partners with municipality to ensure food access during lockdown. Martha Chen. WIEGO June 2020 The COVID-19 response: Getting gender equality right for a better future for women at work . ILO June 2020 Women and Work: How India Fared in 2020. IWWAGE and KREA, December 2020 Impact of COVID19 National Lockdown on Women Street Vendors in Delhi. ISST-JANPAHAL. December 2020 Reaching India’s Poorest Women with COVID-19 Relief. EPOD Yale Policy Brief. April 2020 State of Working India 2021. Centre for Sustainable Employment. Azim Premji University 2021 Pillar III: Strengthening Delivery Systems Social Protection Financing and COVID-19 Policy Note, Centre for Policy Research, 11th April 2020 Schemes to Systems: Social Protection in a Transforming India , World Bank Social Protection and Jobs Practice 2019 Social Protection for a Changing India , World Bank Social Protection and Jobs Practice 2011 Migration and COVID-19, World Bank Social Protection and Jobs Global Practice, March 31st, 2020 Prior Action 6: The Ministry of Electronics and Information Technology has formulated a draft scheme with incentives to boost digital transactions in Last-Mile Delivery Options for COVID-19 Relief in India, World Bank Social India. Protection and Jobs Practice, March 28th, 2020 Prior Action 7: The Ministry of Consumer Affairs, Food and Public Distribution Data Privacy and Regulations for India COVID-19 Program, World Bank Social has launched a mobile-based application for migrants to locate the nearest Protection and Jobs Practice, March 29th, 2020 fair price shop to receive food grains. A Mixed-Method Review of Cash Transfers and Intimate Partner Violence in Low and Middle-Income Countries. The World Bank Observer, Volume 33, Issue 2. Page 218-258. September 2018. Ana Maria Buller, Amber Peterman, Meghna Ranganathan, Alexandra Bleile, Melissa Hidrobo and Lori Heise Violence against Women as a ‘Relational’ Vulnerability . Naila Kabeer. UNDP Paper Series. 2014 How is economic security linked to gender-based violence? New insights from the Sexual Violence Research Initiative Forum 2019. December 2019. Amber Peterman, Shalini Roy and Meghna Ranganathan. IFPRI Page 31 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) Men, Masculinity and Domestic Violence Against Women in Marriage : Case Studies and Analysis ICRW 2016. Operation Pillar IV : Climate Action Prior Action 8: The Ministry of Finance has enhanced weightage given to forest Central Ground Water Board Groundwater Yearbook India 2018-19. Government and ecology, climate-based vulnerability, and disaster-risk profile of each state of India, 2019 of each state in allocating central government grants to state governments for disaster management. Climate change and water security: impacts, future scenarios, adaptations and mitigations. Prior Action 9: The Ministry of Finance has developed central challenge grants Kibria, G., Haroon, A. Y., & Nugegoda, D. (2016). to be awarded to cities with populations above one million based on achievement of air quality parameters. Ministry of Jal Shakti. (2019, June 27). Vulnerable and Overexploited Areas. Government of India Prior Action 10: The Ministry of Environment Forests and Climate Change has created a multi-sector committee to monitor progress of India’s University of Sussex-UCL (2020, August 26). Majority of groundwater stores implementation of the Paris Agreement. resilient to climate change. Prior Action 11: The Ministry of Environment, Forests and Climate Change has India 2020: Energy Policy Review, International Energy Agency 2020 created a portal that captures key adaptation and mitigation actions taken by various ministries and helps disseminate amongst citizens information on key Global Climate Risk Index 2020 climate change matters in India Conditional cash transfers to alleviate poverty also reduced deforestation in Indonesia. Paul. J Ferraro and Rhita Simorangkir. June 2020 4.3. LINK TO CPF, OTHER BANK OPERATIONS AND THE WBG STRATEGY 63. The current DPF is consistent with the approach of the World Bank Group’s India Country Partnership Framework (CPF)35 . A key goal of the CPF is to promote human capital investments by strengthening the coverage and coordination of state level social protection delivery systems. The CPF supports the development agenda of India through a balanced focus on what areas of intervention are critical, while also identifying pathways which outline how to engage India for long term delivery of results. This operation supports the CPF focus on strengthening public sector institutions and engaging a Federal India through its emphasis on decentralization. Finally, it supports a cross -cutting theme of the CPF on reducing gender-based inclusion gaps. 4.4. CONSULTATIONS AND COLLABORATION WITH DEVELOPMENT PARTNERS 64. The proposed DPF relies on extensive consultations with Bank clients in state governments and national programs in India. The proposed operation has benefitted from the Bank’s extensive analytical work on India’s social protection architecture with various academics and experts. The design incorporates lessons a yearlong webinar series with experts, civil society groups and key government agencies. It also benefits from WBG engagement in several states and with the national DBT Mission on social protection reform through operations and technical support. The reforms related to central grants to States through the 15 th Finance Commission have been through four years of deliberations 35 World Bank Group India: FY18-22; Report No. 126667-IN, July 25, 2018 discussed at the Board on September 20, 2018 . Page 32 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) formally anchored by the GoI, with inputs and feedback from States and local think-tanks and NGOs. The DPF design also incorporates past surveys, rapid reviews conducted by two national think-tanks for the World Bank. Implementation of the government program supported by this DPF will require intensive Technical Assistance (TA) to the central and state governments. Discussions with Bill and Melinda Gates Foundation (BMGF) on a Trust Fund partnership have been completed and led to the expansion of the World Bank’s TA through additional funds which shall be available throughout the DPF program period for implementation and monitoring support. KfW and Asian Development are also providing technical assistance support. To harmonize efforts and avoid duplication, a donor working group has bee n set up to meet regularly to coordinate and take stock of the technical assistance program. 5. OTHER DESIGN AND APPRAISAL ISSUES 5.1. POVERTY AND SOCIAL IMPACT 65. The program’s development objective is to strengthen the capability of the state and national governments in India to respond to the needs of informal workers through a resilient and coordinated social protection system . Building from the experiences and lessons learnt from the previous DPF series, this DPF series focuses on important structural changes in the country’s overall social protection delivery architecture. Amongst other measures, it seeks to support the Government’s efforts at greater devolution of funds to state and local government bodies to respond to the ongoing crisis and future shocks; strengthen and streamline centrally sponsored social protection schemes based on evidence from independent evaluations; improve the availability of food and income support for informal workers and migrants; improve urban street vendors’ acces s to lower cost credit and expand use of digital technology for payments and cash transactions for workers. The program focuses on addressing the needs of the urban poor – mainly informal workers and migrants. The interventions are likely to have largely positive social impacts. However, the long term social and economic impacts of some of the interventions supported by the DPF - viz. the streamlining of existing centrally sponsored social protection schemes, expansion of the SVANIDHI scheme for urban street vendors and digital platforms to deliver benefits – need to be assessed over a longer period of time through focused impact assessment studies. 66. Gender and Exclusion: The proposed program’s focus on directly transferring benefits to women through the PDS and SVANIDHI measures are aimed at redressing the amplified gender-based vulnerabilities at this time. Furthermore, enhanced grants to States and local governments for climate responsive safety nets, disaster relief and response to the second wave of the crisis shall benefit women as most States target female headed households as key beneficiary groups. As per survey data collected between May and August 2020, nearly 72 percent of women in the bottom 40 th wealth quintile with PMJDY bank accounts received a cash transfer benefit. In the same time period, nearly 75 percent of female-headed households received rice allocations under PDS benefits of PMGKY. Additionally, PDS provides extra food supplies to female-headed families. Further, the fuel supply program provides benefits to the female heads of `100 million households. At least half of all social pension (NSAP) recipients are women. A large body of evidence 36 highlights that providing cash/resources to women enhances their bargaining power, dignity and ability to exit violent households. Also, sociological evidence from India highlights that domestic violence against children/women perpetrated by men often has psycho-social roots in economic distress 37 . Cash and in-kind transfers are therefore important, not only to 36 https://academic.oup.com/wbro/article/33/2/218/5091868 and https://www.ifpri.org/blog/how-economic-security-linked- gender-based-violence-new-insights-sexual-violence-research 37 https://www.icrw.org/wp-content/uploads/2016/10/Domestic-Violence-in-India-4-Men-Masculinity-and-Domestic-Violence- in-India.pdf Page 33 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) improve women’s position, but also to reduce consumption/income stress in the household. Finally, the program will continue to closely monitor data on (i) benefit receipt by gender (ii) violence through administrative data on GBV cases and parallel surveys. However, it should be noted that the ability of surveys to pick up GBV is limited due to reluctance to report by victims. Furthermore, limited data on GBV are also triggered by challenges in collecting data ethically and safely via specialized surveys with trained teams. 67. Scheduled Tribes . Tribal groups have the highest poverty rate in India – irrespective of consumption poverty or multi-dimensional poverty indicators. The social protection programs being leveraged for COVID-19 relief give extra weightage to tribal households (due to constitutional protections accorded to these groups) in targeting of benefits. Nearly 94 percent of scheduled tribe households have access to the PDS, 40 percent of employment days generated through MGNREGS are for SC/ST groups. Approximately 74 percent of scheduled tribe households accessed rice benefits under the PDS component of PMGKY. Similarly, 21 percent of scheduled tribe households were enrolled in the LPG program and 11 percent of these households received benefits during the May to August 2020. Continued monitoring of results and technical assistance at the state level, to ensure tribal communities have adequate access to benefits, will be an important area of engagement going forward. Further, all actions supporting portable benefits for migrants will help tribal communities as they constitute a large section of inter-state migrants in India. 68. This is a multi-pronged emergency relief DPF that builds on the achievements of the previous DPF series and reinforces the need for multiple central and state government agencies to work in consonance to help alleviate and prevent further social and economic distress especially amongst the urban poor. The proposed DPF will build on the lessons learnt from the previous DPF series and focus on further strengthening institutional mechanisms and making social protection delivery systems more efficient at the central and state levels covering a diverse range of interventions as indicated in the PAs. Relieving the social and economic distress amongst the most vulnerable groups – informal workers, migrant workers and returnee migrant workers – is at the core of the operation. 69. Personal data collection and processing risks . The COVID-19 outbreak highlights the need to monitor and mitigate risks related to data misuse, under circumstances where measures to ensure the legitimate, appropriate and proportionate use and processing of that data may not feature in national law or data governance regulations, or be routinely collected and managed in health information systems. There is no data collection exercise supported through the DPO and will exclusively rely on existing data collected by the various existing social protection programs involved. These data collection is regulated under existing IT acts and guidelines. However, data misuse can emerge as a risk. The World Bank shall work closely with civil society partners and partners to ensure that technical assistance to be provided to the social protection sector alongside this DPO, will seek to incorporate good international practice for dealing with such data in such circumstances. Such measures include, by way of example, data minimization (collecting only data that is necessary for the purpose), data accuracy (correct or erase data that are not necessary or are inaccurate), use limitations (data are only used for legitimate and related purposes), data retention (retain data only for as long as they are necessary), informing data subjects of use and processing of data, and allowing data subjects the opportunity to correct information about them. The World Bank is actively engaging with legal experts in India to track the Personal Data Protection Bill, which is expected to be tabled in the parliament Further, the Bank shall ensure that all design recommendations pursue privacy-by-design principles leveraging federated views of data and citizen audits. 5.2. ENVIRONMENTAL, FORESTS, AND OTHER NATURAL RESOURCE ASPECTS 70. The program will not have any significant negative effects on the environment, forests and natural resources. Page 34 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) Selected reforms will contribute towards positive environmental effects, e.g. enhanced weightage given to forest and ecology climate-based vulnerability and disaster-risk profile of each state in allocating funds and incentivizing allocation to cities based on achievements on air quality. Other institutional reforms or arrangements will not have any environmental effects. For any incidental, minor negative environmental effects, there is a well-developed legal compliance framework. The Ministry of Environment, Forests and Climate Change (MoEFCC) is the nodal agency in the administrative structure of the Central Government for the planning, promotion, co-ordination and overseeing the implementation of India’s environmental and forestry policies and programs. And, the MoEFCC receives technical advice from the Central Pollution Control Board. At the state level, there are similar agencies - the Department of Environment and its associated authorities, and the State Pollution Control Board and the Department of Forests - which are responsible for compliance to relevant national and state laws and regulations. 71. Under the climate change pillar, Prior Action 8 will increase the funds available to the state. These state transfers will be based on an enhanced weightage given to ecological/ climate-based vulnerability. The strengthened social protection systems will provide fast and flexible cash support to possible future climate-related disasters such as floods and cyclones and will facilitate the climate adaptation agenda. Therefore, a positive environmental contribution. And Prior Action 9 will make resources available for cities (> 1 million population) based on the achievement of air quality parameters. Such incentives will contribute towards tackling air pollution and thereby improve air quality and health outcomes for their city residents. This will provide an impetus to the existing policy and institutional framework on air quality that includes (i) the Air (Prevention and Control of Pollution) Act 1981 (amended in 1987) being implemented by the Central and State Pollution Control Boards; (ii) emission standards for stationary (thermal power and industry) and mobile (vehicles) source of air pollution; and (iii) time-bound, goal-oriented programs for cities such as the National Clean Air Program. Further the Prior Actions 10 and 11 facilitate institutional strengthening through establishing a multi- sector approach and web-based disclosure, both of which will contribute towards positive environmental outcomes. 5.3. PFM, DISBURSEMENT AND AUDITING ASPECTS 72. A Public Expenditure and Financial Assessment (PEFA), 2010 was conducted in India by The National Institute of Public Finance and Policy (NIPFP) with support from World Bank, on the basis of which the World Bank concludes that PFM systems are working adequately and the Country fiduciary risk is moderate. Subsequent assessments and technical work have been undertaken by the Bank at Union level in several areas such as Planning, Budgeting (program), Financial reporting (IFMIS), Public Investment Management, Chart of Accounts, Government Finance Statistics (GFS) and Financial/Performance Auditing. Following are the main strengths and weaknesses of the system: • India has achieved a reasonably high level of fiscal transparency and the comprehensiveness of the fiscal information publicly available has improved over the years. • Adoption of the Fiscal Responsibility and Budget Management Act (FRBM) has led to presentation of fiscal policy strategy documents and projected major fiscal indicators in the medium term. General Government budget is publicly disclosed. • The budget documents contain relevant information on macroeconomic forecasts, fiscal deficit indicators, deficit financing sources, government borrowings and debt stock. However overall budget credibility is impacted by the absence of a hard budget constraint, thereby allowing substantial adjustments in the budget during the year through supplementary grants. • There is scope for further strengthening budgetary preparation and approval procedures (e.g. the Budget Manual) and in the manner it is controlled. Page 35 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) • There is scope for unifying and improving public financial management (PFM) systems in India which are currently dis-jointed38 . Public expenditures may be made at the national —or, union—level, through 28 states, or 715 districts. The expenditure commitment controls are not effective and cash management is not integrated with control over commitments. • There is a scope for further streamlining and enhancing financial rules for effective internal expenditure control. Internal audit has continued to remain a weak link in the financial management system. • The Constitution provides for Comptroller and Auditor General of India (CAG) to act independently as a statutory auditor of Union and States. CAG provides a range of audits such as regularity (financial) audit, regularity (compliance) audit, IT audit and performance audit. The audit reports are usually made available to the public within a year from the end of the FY and is submitted to the legislature. The independence of the CAG and auditing standards are acceptable to the World Bank. 73. GOI makes funds available to several Central Sponsored/Sector Schemes through departmental budgets, where in resources are transferred as ‘Grant in Aid’ to central level autonomous, semi-autonomous institutions under the administrative control of ministries. This ‘Grant in Aid’ is released by line ministries in two to three instalments. Agencies submit Utilization Certificates, confirming end use of funds and seek replenishment. The treasury uses the newly developed Project Financial Management System (PFMS) platform to electronically transfer and account for payments to vendors, suppliers and staff. Considerable progress has been made in recent years with the use of PFMS for Direct Benefit Transfers to the bank accounts of program beneficiaries – covering large programs such as MNREGA, NSAP, PMAY, PAHAL – thereby improving transparency, accountability and governance in the DBT administration. 74. There exists a substantive opportunity at Union level to leverage earlier PFM reforms and further augment revenue collection, enhance expenditure efficiency and create more headroom for undertaking larger productive investments 39 . Till now India has not undertaken a comprehensive, coordinated PFM reform: instead, reforms have occurred as standalone reform initiatives of individual Union or state government departments. The most significant financial management reform in recent years is the expansion in the use of Direct Benefit Transfers (DBT), which has been driven from the Prime Minister’s Office and supported by dedicated institution, the DBT Mission. Most states have launched PFM reforms, often in parallel, rarely in coordination with each other or with the Union. State initiatives have included measures to strengthen cash management, introduce commitment controls and most have featured investments in new Financial Management Information Systems. However, the scope for state-led reforms is also constrained by their dependence on Government of India (GoI) and Comptroller and Account General (CAG) in setting the presentation of financial statements, accounting and reporting standards, reforms in budget orientation and benchmarks for financial and fiscal transparency. 75. World Bank has been actively engaged with Fifteenth Finance Commission (FFC), Department of Expenditure and Department of Economic Affairs in helping develop the next steps. Recent FFC report tabled in the parliament on November 9, 2020 (for the period 2021-26) recognizes that the PFM architecture in India has not been adequately modernized and reforms undertaken in past have been rather piecemeal. FFC has highlighted the need for a comprehensive plan and recommended (a) that FRBM Act be restructured and a time-table for defining and achieving debt sustainability may be examined by a High-powered Inter-governmental Group, and (b) the need for strengthening three mutually reinforcing pillars to improve the quality and efficiency of public spending and financial management 38An Integrated Financial Management Information System (IFMIS) incorporating systems for management of personnel database and payroll records at central government level in India does not exist. Page 36 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) across all levels, namely (i) fiscal rules across all levels of government for fiscal sustainability; (ii) a public financial management system which provides complete, consistent, reliable and timely reporting of the fiscal indicators; and (iii) an independent assessment mechanism (like fiscal council) to provide assurance and advice on the working of the other two pillars. In addition, FFC has recommended a need for developing a comprehensive framework for strengthening PFM in consultation with the States and other relevant stakeholders, and in this regard provided an example of one such overarching PFM legal framework40 , prepared by independent domain experts. While the government is in the process of examining these recommendations in detail, they have already included two critical reforms in FY 22 budget, namely (a) bringing off-budget borrowings on budget (like food and fertilizer subsidy), and (b) strengthening cash management in GoI 41. 76. Public procurement is decentralized to Ministries, States and Public Sector undertakings. Public procurement is governed by General Financial Rules 2017 at Federal Level and Public Financial Rules of respective states at State Levels. Some States have promulgated Public Procurement Acts. As part of COVID -19 response, Federal Government has issued orders and instructions to streamline public procurement processes. These instructions have included designating agencies for procurement of goods for COVID response, greater use of Government e-market Portal, removal of import duties for a period to key products and ingredients and simplified tender processes. Bank has carried out country procurement assessment using the Methodology for Assessing Public Procurement Systems (MAPS) and final report is shared with MoF. Preliminary findings show that India has a moderately well-functioning public procurement system with islands of excellence. Over 80 percent of procurement is carried out through open competition procedures and use of e-procurement is mandatory and used by procuring entities throughout the country. However, the system has some weaknesses that relate to weak bidder complaint systems, long procurement cycle time from initiation to contract award, delays on contract execution and absence of strategic use of data for development and monitoring of the system. 77. Foreign Exchange Controls: The World Bank has reasonable assurance that the control environment for foreign exchange in the Reserve bank of India (RBI), which is the Central Bank of India, is satisfactory for the purposes of this DPO. This assessment is based on the RBI audit report and the satisfactory outcomes of other operations, which have been disbursed and managed through the RBI. The International Monetary Fund (IMF) has not carried out a Safeguard Assessment of the Central Bank (RBI) so far. As part of the preparation for t his operation, the RBI’s audit report and published annual financial statements for the three financial years (FY17-18, FY 18-19 and FY19-20), were reviewed by the World Bank. The audit reports have a clean, unqualified opinion and was conducted by private firms of chartered accountants. 78. Disbursement: The proposed operation will follow the Bank’s disbursement procedures for Development Policy Financing. Upon effectiveness, the borrower, that is, the GoI will submit, to the World Bank, a withdrawal applica tion. The World Bank will disburse the U.S. dollar proceeds of the facility to the GoI’s account with the RBI. This account is controlled by the Office of the Controller of Aid, Accounts, and Audit of the Department of Economic Affairs, GoI and is part of the GoI’s general foreign exchange reserves. Once the amount is credited it will be added to the consolidated fund of GOI and will be available as part of the general budget proceeds. GOI shall, within thirty (30) days after the withdrawal of the Loan/Credit report to IBRD: (a) the exact sum received into the account; (b) the details of the account to which the local currency equivalent of the proceeds will be credited; (c) the record that an equivalent amount has been accounted for in the Borrower’s budget management systems; and (d) the statement of receipts and disbursement 40https://fincomindia.nic.in/ShowContentOne.aspx?id=27&Section=1 (Elements of a PFM Framework) 41Recommendations to strengthen cash management was made by the Bank in the note to the PM in 2014 and to the Expenditure Finance Commission in 2016. Based on pilots, these are being scaled up across the GoI. Page 37 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) of the bank account at RBI. The loan proceeds for this operation do not finance specifically agreed activities. The proceeds may be used for any general purpose, in support of the program, other than for financing excluded expenditures (as defined in the legal agreement for the operation). If any amount of the proceeds is used to finance excluded expenditures, the legal agreements will authorize the World Bank to require India to refund the amount. The amounts so refunded shall be cancelled from the loan. 79. Overall, the fiduciary risk of the proposed operation is rated moderate. This rating is based on the current status of PFM systems, procurement systems and Forex control environment in the country. 5.4. MONITORING, EVALUATION AND ACCOUNTABILITY 80. The program will leverage knowledge partnerships to track impacts and results . The World Bank has already been collaborating with knowledge partners such as JPAL, EPoD, IDFC and CPR on taking stock of India’s social protection programs through ongoing Advisory Services and Analytics. These partnerships shall be critical to track impacts and implementation challenges as we move forward. The World Bank will rely on four datasets for results : (i) Panel survey data for Results Indicators 1,4,5,6,7 and 9. The Bank shall include relevant social protection and scheme specific questions into the dataset in partnership with the Poverty GP (ii) Administrative data on program releases and bank account transactions maintained by DBT Mission and NDMA shall also be used to triangulate results. (iii) Administrative data on coverage under the One Nation One Ration initiative by PDS line agency for Results Indicator x (iv) Administrative data from MoEF shall be leveraged for Results 1 and the Climate Action Pillar. 81. “Grievance Redress. Communities and individuals who believe that they are adversely affected by specific country policies supported as prior actions or tranche release conditions under a World Bank Development Policy Operation may submit complaints to the responsible country authorities, appropriate local/national grievance redress mechanisms, or the WB’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address pertinent concerns. Affected communities and individuals may submit their complaint to the WB’s independent Inspection Panel which determines whether harm occurred, or could occur, as a result of WB non-compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service (GRS), please visit http://www.worldbank.org/GRS. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org . ” 6. SUMMARY OF RISKS AND MITIGATION 82. The overall risk rating of the proposed operation is “substantial” on account of substantial macroeconomic and institutional capacity for implementation and sustainability. In addition, there is uncertainty regarding the extent of the impacts of the COVID-19 pandemic, and in a pessimistic scenario, the pandemic could destabilize the economy further and lead to increased mortality and morbidity. Nevertheless, despite the risk related to COVID-19, the proposed operation would likely achieve its objectives as it is designed to provide an economic lifeline to the vulnerable. 83. The political risk from consolidating the number of social protection programs are limited because most Page 38 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) beneficiaries are covered under six major social assistance programs 42 , including MGNREGS and the national Public Distribution System43 . The latter two programs are rights-based, thereby ensuring that these will continue to serve the poor as mandated by law. The largest cash transfer schemes for the poor will not be considered as the rationalization efforts are expected to be focused on a large number of small and splintered schemes which can be better bundled without dropping any beneficiaries. The significance of safety nets in Indian political economy and strong civil society activism will also ensure that any exclusion is avoided and addressed. The first batch of programs to be cut will be fewer beneficiaries. The risks of specifically excluding women in reducing the number of women will be reduced through increased transparency. The World Bank group is also partnering with some front line NGOs specially those working with women’s access to also highlight and any inadvertent exclusions some of which may be due to gender specific discrepancies in access to mobile phones in some parts of India. Furthermore, most states are trying to develop unified delivery system which will simplify access for beneficiaries – this will reduce the barriers faced by women in accessing programs for which are eligible. These systems will have gender disaggregated electronic data bases facilitating real time monitoring. 84. The macroeconomic risk is substantial. Growth has moderated from an average of 7.4 percent during FY15/16- FY18/19 to an estimated 4.0 percent in FY19/20. The social containment measures adopted by the GoI to manage the COVID-19 outbreak resulted in real GDP contracting by an estimated 8.5 percent in FY20-21. Given the significant uncertainty pertaining to both epidemiological and policy developments, real GDP growth for FY21/22 can range from 7.5 to 12.5 percent. Meanwhile, depressed revenues and higher expenditure needs in FY20/21 translated into a significant fiscal expansion and increase in public debt. According to WB calculations in a baseline scenario the general government debt-to-GDP ratio is projected to peak at about 89.7 percent in FY20/21 before gradually declining thereafter. The pandemic crisis is certain to increase poverty levels and reduce the incomes of those who already are poor. There are, however, considerable risks to these projections amid the resurgence in COVID-19 cases since April 2021. Possibilities of increased social spending and a moderation in tax revenues, both as a result of the effect of automatic stabilizers and new policy actions designed to support the economy, will likely encumber the fiscal outlook. Nonetheless, public debt is sustainable because it is mostly denominated in domestic currency, of long/medium-term maturity, and predominantly held by residents. Moreover, risks are mitigated by the fact that the proposed operation is precisely designed to build back better and will allow the population to not only weather the COVID -19 crisis but also weather future crises – national or localized whether caused by climate change or by other risks. 85. The institutional capacity for implementation and sustainability risk is substantial. The COVID crisis brought home some of the strengths and weaknesses of India’s social protection. Strengths are e -payments, a near-universal food program as well as a large scale self-targeted employment guarantee program (MNREGA). Weaknesses are that programs cannot quickly enroll new individuals in need of benefits, and nor are benefits portable. This risk is additionally hampered by fragmentation. There are over 320 Direct Benefit Transfer schemes which provide either cash or in-kind benefits. While the policies and guidelines of centrally sponsored schemes is developed by the Union government, actual implementation (targeting, identification, etc.) is the responsibility of the State governments and Union Territories. There is adequate capacity at the Union government to guide and oversee Program implementation. The Public Financial 42 As per data on the DBT Mission website accessed on 30 th May 2021, in 2020-2021, four cash programs provide benefits to 40% of all DBT cash beneficiaries – these are PAHAL, PMAYG, NSAP and Scholarships. If MGNREGS is included to consider its wage component which flows as a cash benefit to beneficiaries, these five programs account for 58% of all DBT cash beneficiaries. Please see: https://dbtbharat.gov.in/ 43 As per the PDS Dashboard, the program covers nearly 236 million households and 792 million individuals. Data here : https://nfsa.gov.in/public/nfsadashboard/PublicRCDashboard.aspx Page 39 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) Management System (PFMS) developed by the GOI is a fund tracking and expenditure filing system that can provide real time status of fund utilization and available funds. However, at the State level, the capacity to implement effectively varies, as there are capacity constraints which includes limitations of banking and financial service providers. Further, the nature of reforms will require a shift in organizational culture - notably in terms of increased use of analytics and delegation of decision-making – and coordination across Central Ministries, State Governments, Reserve Bank of India and Banking & Financial service providers. The Program will address these risks through Technical Assistance which will provide support to the design, implementation, and monitoring and evaluation to the Union and State governments. The proposed DPF will support a national platform for coordination. 86. These institutional risks are further minimized by the program aims to contextually -specific SP systems –moving away from a one-size-fits-all approach in the current regime (where Delhi has the same SP programs as Bihar). Furthermore, at present there is tremendous duplication of schemes across states and centre as states need additional top-ups and create new schemes to serve populations excluded by national programs. Table 6: Summary Risk Ratings Risk Categories Rating 1. Political and Governance ⚫ Moderate 2. Macroeconomic ⚫ Substantial 3. Sector Strategies and Policies ⚫ Moderate 4. Technical Design of Project or Program ⚫ Moderate 5. Institutional Capacity for Implementation and Sustainability ⚫ Substantial 6. Fiduciary ⚫ Moderate 7. Environment and Social ⚫ Low 8. Stakeholders ⚫ Moderate 9. Other ⚫ Low Overall ⚫ Substantial Page 40 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) . ANNEX 1: ADJUSTMENTS TO THE COUNTRY PROGRAM IN RESPONSE TO COVID-19 . 1. The COVID-19 pandemic affected economic activity significantly during the first six months of FY 2020. In response to the pandemic, the Government of India (GoI) implemented a strict nationwide lockdown between Marchand May2020 to prevent the spread of infections. As a result, supply chains and economic activity were disrupted. The lockdown was lifted gradually, from June 2020 onwards. This allowed economic activity to resume from the second quarter (July to September 2020) onwards. 2. Real GDP growth is estimated to have contracted by 8.5 percent44 in FY20/21—mainly due to restrictions on economic activity and mobility leading to large contractions in private consumption and investment. However, growth is expected to rebound in FY21/22 (within a range of 7.5-12.5 percent).. The financing needs of the GoI are expected to rise significantly. The sharp economic slowdown has affected revenues disproportionately with general government revenues declining by over 10 percent in FY21. At the same time, expenditure needs have risen. As a result, the general government deficit is expected to have risen to over 14 percent in FY21 and Public and Publicly Guaranteed debt to have reached 90 percent. The bulk of the required financing is expected to be sourced from domestic markets which have enough liquidity, with minor contribution from international borrowing. 3. The COVID-19 pandemic has exacerbated the vulnerabilities for traditionally excluded groups, such as youth and women. The lockdown, in the first quarter of FY21, appears to have had a major impact on household consumption. Mean per capita consumption is estimated to have dropped by 36 percent over April-July 2020 y-o- y. Available household survey data indicate that relat ive to the “traditional poor” the most affected population were relatively younger, more urban and educated. With the end of the lockdown, however, household consumption seems to have recovered to almost pre-pandemic levels. In addition, interstate migrants are at risk of increased poverty and destitution. Estimates from the Economic Survey highlight that the magnitude of inter- state labor migration in India was close to 9 million annually between 2011 and 2016 and migrant remittances in lower-income states like Bihar accounted for 35.6 percent of gross state domestic product (GSDP) in 2011–12. MSMEs that account for the largest non-farm employment (30 percent) with about 20 percent female participation are considered to have been impacted the most due to lockdown. 4. Fiscal and monetary policies aimed at managing the impact of the pandemic, together accounted for more than 10 percent of GDP in FY2145 : • Pradhan Mantri Garib Kalyan Yojana (PMGKY), to protect the poor and vulnerable impacted by Coronavirus Containment Measures, expected to cost approximately $23 billion. • MSME support includes Emergency Credit Line Guarantee Scheme for INR. 3 trillion, INR. 200 billion subordinate debt for stressed MSMEs, INR. 100 billion to provide equity funding for MSMEs with g rowth potential and change in the definition of MSMEs, by increasing investment limits and firm turnover, to help incentivize firms to grow. • Agriculture infrastructure fund - proposed financing facility of INR. 1 trillion (to be funded by NABARD) to promote post-harvest management infrastructure and, Micro-food enterprise - INR. 100 billion for technical upgrade and promotion of clusters of local products. • Outlay of Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) - a universal 44 World Bank staff estimates 45 World Bank staff calculations Page 41 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) employment guarantee program, is increased by INR. 500 billion. • Increased state government borrowing-limit, from 3 percent to 5 percent of GSDP (additional INR. 4.28 trillion). • Long-Term Repo Operations (LTROs) and Special Liquidity window: To alleviate cash flow pressures, the Reserve Bank of India has conducted LTROs and Targeted LTROs for a total amount of INR. 9.6 trillion (about 4.5 percent of GDP) since February 2020. Moreover, a Special Liquidity Facility for mutual funds of INR. 500 billion was opened on April 27, 2020, to ease liquidity pressures on mutual funds. 5. WBG support for responding to the crisis : 6. In alignment with its global response, the WBG has been closely supporting GoI’s strategy, which consists of three phases. In the first phase, the GoI tackled the health aspects, and partnered with the Bank for a $1 billion health project. In the second phase, GoI invested $23 billion in social protection program to support the poor and vulnerable communities during the lockdown, and the Bank provided financing of $1.15 billion. In the third phase, GoI focused on economic stabilization and reducing the costs of the lockdown. This includes support to MSMEs and their workers during lockdown by committing about 1.5 percent of GDP to MSME finance. The Bank financing of $750 million is supporting this program to provide liquidity for their balance sheets, to mitigate against potential solvency problems and job losses, and to lay the foundations for a stronger MSME financing ecosystem in the recovery phase. 7. Additionally, the Bank activated the Contingent Emergency Response Component (CERC) in five projects to support the state governments’ COVID -19 relief efforts. Moreover, many projects made special provisions for COVID-19Assistance Packages within their project scope. Going forward, the Bank will be supporting the GoI as follows: • Saving lives: Other than the ongoing health programs, the Bank is a potential partner with GoI on its flagship program of Atmanirbhar Swasth Bharat Yojna which aims at strengthening the health sector in the country by strengthening healthcare services, health emergency preparedness and response and strengthen core capacities as per the International Health Regulations. In addition, the Bank is exploring innovative ways of support to the state and central governments through upcoming operations in the education and health sector. • Protecting poor and vulnerable people: The third phase of the Social Protection program is aimed at strengthening the capability of the state and national governments in India to respond to the needs of informal workers through a resilient and coordinated social protection system. Some upcoming projects have specific COVID-19 components supporting this pillar, e.g. Fisheries Sector COVID-19 Response and Recovery, and Resilient Kerala Program for Results. • Sustainable growth and job creation: The Bank is preparing a project on raising and accelerating MSME productivity which will focus on strengthening institutions and markets. Job creation is a special focus under the infrastructure projects as well. • Strengthening policies, institutions and investments for rebuilding better: This is an all-encompassing theme under the India CPF and is integrated in most of the projects. The upcoming engagement with the National Disaster Management Agency on Seismic Risk Mitigation Project is one such example. Page 42 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) 8. The IMF does not have an active lending program in India. However, it undertakes regular macroeconomic supervision and Article IV consultations twice yearly. The Bank and IMF teams regularly exchange views and information. The partnership with other donors was brought to fruition in both the Social Protection and MSME COVID- 19 response DPLs. Within the Social Protection DPL, the Bank has worked in collaboration with the Asian Development Bank (ADB), Agence Française de Développement (AFD), and Kreditanstalt Fuer Wiederaufbau (KfW). The Japanese International Cooperation Agency (JICA), Asian Infrastructure Investment Bank (AIIB), the New Development Bank (NDB) and International Fund for Agriculture (IFAD) are also exploring potential parallel financing in upcoming operations. Discussions are ongoing to expand the World Bank’s TA through additional funds from the Bill and Melinda Gates Foundation (BMGF) and the United Kingdom’s Foreign, Commonwealth and Development Office (FCDO). Page 43 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) ANNEX 2: POLICY AND RESULTS MATRIX Prior actions Results46 Baseline Target Prior Actions Completed under DPF Indicator Name (2021) (2023) Pillar 1: Institutional Reforms for Improved Coordination and Context-Specific Social Protection Prior Action 1: The Ministry of Finance has increased devolution to state governments and direct grants to local government bodies, with a raise in central Percentage share of 0 100 grants to states for disaster management (and 40% of State Disaster Response Funds States who have received earmarked for response and relief activities including livelihood support, cash direct grant from Central transfers and others for disaster relief) Government following recommendations of FFC 149,924 220,843 Size of Central FFC Grants (2020-2021) (2021-2022) made to States for annual budget period (in INR crore) Prior Action 2 : The Ministry of Finance, Government of India has incorporated the Amount of NSSF loan INR 84636 0 food subsidy into Budget 2021-22 as part of the Department of Food and Public assistance to Food crore Distribution demand for Grants Corporation of India47 Prior Action 3: The Ministry of Finance has initiated a detailed exercise to rationalize National government has No Yes and reduce the number of centrally sponsored schemes. rationalized centrally sponsored schemes Pillar 2: Expanding Social Protection Net for Urban Informal Workers Prior Action 4: The Ministry of Housing and Urban Affairs has launched the National Percentage of urban Urban Digital Mission, which will upgrade data infrastructure and create data municipalities receiving 0 33 exchange platforms for urban local bodies. benefits through NUDM. 46 The operation has been prepared through an emergency period. Results are subject to change by October 2021 following the second wave of the Indian pandemic. 47 Page 264, Statement 27, in the official government expenditure profile report as part of Union Budget 2021 . Page 44 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) Prior actions Results46 Prior Action 5: The Ministry of Housing and Urban Affairs has launched a new Percentage of street 40%48 55% credit/loan program for urban street vendors. vendors receiving benefits from SVANIDHI Gender-sensitive program 40%49 50% coverage measured by proportion of female informal workers in total beneficiary pool of SVANIDHI. Pillar 3: Strengthening Delivery Systems Prior Action 6: The Ministry of Electronics and Information Technology has formulated a draft scheme with incentives to boost digital transactions in India. Digital Payment Volumes 43383.28 47000 million million Prior Action 7: The Ministry of Consumer Affairs, Food and Public Distribution has Number of informal 13 million 20 million 51 launched a mobile-based application for migrants to locate the nearest fair price workers receiving benefits shop to receive food grains. per month from the ONORC initiative 50 Pillar 4 – India Climate Action Pillar Prior Action 8 The Ministry of Finance has enhanced weightage given to forest and Share of States receiving ecology, climate vulnerabilities and disaster risk of each state in allocating central transfer from Central 0 33% government grants to state governments for disaster management. Government based on forest, ecology and disaster risk index 48 As per official MoHUA data published on the SVANIDHI dashboard, of the 50 lakh street vendors estimated as eligible and the t arget group for the program, nearly 20 lakh have received the initial first loan amount. The roll-out has been expedited due to the second wave of COVID-19. This is estimated at 41%. 49 As per data shared through MoHUA, 8 lakh INR of the total disbursed loans of 20 lakh have been provided to women. See gender breakup on the scheme dashboard : https://pmsvanidhi.mohua.gov.in/Home/PMSDashboard 51 Currently 13 million portability transactions are being recorded every month indicating availing of PDS ration by informal wo rker families at places other than their usual place of stay and livelihood using ONORC and Mera Ration App. This number is demand driven. However, these are likely to increase t o 20 million every month as awareness and information on the facility increases. Page 45 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) Prior actions Results46 Prior Action 9 : The Ministry of Finance has developed central challenge grants to Percentage of million 0 10 be awarded to cities with populations above one million based on achievement of plus cities that have air quality parameters. received funds in 2022- 2023 Prior Action10: The Ministry of Environment Forests and Climate Change has Responsibilities of No Yes created a multi-sector committee to monitor progress of India’s implementation of concerned ministry for the Paris Agreement implementing Paris Prior Action 11: The Ministry of Environment, Forests and Climate Change has agreement have been created a portal that captures key adaptation and mitigation actions taken by defined various ministries and helps disseminate amongst citizens information on key climate change matters in India. Page 46 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) ANNEX 3: FUND RELATIONS ANNEX Page 47 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) Page 48 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) Page 49 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) Page 50 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) Page 51 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) Page 52 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) ANNEX 4: LETTER OF DEVELOPMENT POLICY Page 53 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) ANNEX 5: ENVIRONMENT AND POVERTY/SOCIAL ANALYSIS TABLE Significant poverty, social or Significant positive or negative Prior Actions Completed under DPF 1 distributional effects positive or environment effects negative Pillar I: Institutional Co-ordination Positive. Positive. This will allow state The flexibility will allow states to governments to provide direct support design approaches which are to citizens affected by localized and ecologically adapted to their national crises for example the current conditions. COVID spike. Prior Action 1 : The Ministry of Finance has increased devolution Greater devolution of funds to state to state governments and direct grants to local government governments and local government bodies, with a raise in central grants to states for disaster bodies will allow more flexibility in management (and 40% of State Disaster Response Funds response to local conditions. earmarked for response and relief activities including livelihood support, cash transfers and others for disaster relief Ensuring proper identification of beneficiaries (especially the poorest and most vulnerable beneficiaries) and ensuring transparency in transfer of benefits to the beneficiaries will be critical to the success of the PA. Prior Action 2: The Ministry of Finance, Government of India has Neutral Positive. Greater transparency on incorporated the food subsidy into Budget 2021 -22 as part of the financing allows improved citizen Department of Food and Public Distribution Demand for Grants. access. Prior Action 3 : Neutral To be determined; likely positive The Ministry of Finance has initiated a detailed exercise to rationalize and reduce the number of centrally sponsored Scheme rationalization will allow schemes. smoother flow of funds to greater numbers of beneficiaries. However, from the beneficiaries’ perspective, one of the outcomes of rationalizing CSSs could be that they might find themselves excluded from the schemes in which they were earlier enrolled as beneficiaries. Discontinuation of legacy schemes would also have adverse impacts on beneficiaries of those schemes. This would have a detrimental impact on their incomes and quality of life, especially if these beneficiaries are primarily dependent on multiple social protection schemes for their income. In the context of the Covid situation, the impact of this would be exacerbated. Suitable measures need to be adopted Page 54 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) Significant poverty, social or Significant positive or negative Prior Actions Completed under DPF 1 distributional effects positive or environment effects negative to address these exclusions and ensure that there are no longitudinal negative impacts on the beneficiaries and their dependents. The impacts of this PA need to be assessed over a longer period of time. Effective communication between concerned departments and beneficiaries to assuage any fears or concerns would need to be maintained before and during the scheme rationalization process. Transparent, accessible and responsive grievance redressal mechanisms would be critical. This will allow benefits to flow to those who need them. However, clear grievance redress mechanisms shall be needed to ensure no exclusion occurs due to discontinuation of legacy schemes. Pillar 2: Expanding Social Protection Net for Urban Informal Workers Prior Action 4: The Ministry of Housing and Urban Affairs has Positive. Digital payments will Positive. launched the National Urban Digital Mission, which will upgrade reduce carbon footprint data infrastructure and create data exchange platforms for urban local bodies,. Prior Action 5: The Ministry of Housing and Urban Affairs has Neutral Positive. launched a new credit/loan program for urban street vendors. Access to lower cost credit and cash support to urban street vendors is likely to help the intended beneficiaries in better managing their cash flows and having more money for their families’ consumption and saving needs. Steps need to be taken to ensure that the scheme is well publicized and, in light of hardships caused on account of the Covid pandemic, the street vendors availing of the credit are enrolled in the Rashtriya Swasth Bima Yojana (RBSY) to ensure that the beneficiaries and their families are covered under the Government of India’s health insurance scheme for BPL families. Page 55 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) Significant poverty, social or Significant positive or negative Prior Actions Completed under DPF 1 distributional effects positive or environment effects negative Pillar 3: Strengthening Delivery Systems Prior Action 6: The Ministry of Electronics and Information Positive. Will reduce cardon Positive. Technology has formulated a draft scheme with incentives to footprint. Use of digital transactions will reduce boost digital transactions in India. delivery of benefits providing care is taken to assure that people in areas with poor connectivity have access to alternate systems. Prior Action 7: The Ministry of Consumer Affairs, Food and Positive. Public Distribution has launched a mobile-based application for migrants to locate the nearest fair price shop to receive food Will ensure quicker access to benefits. grains. Positive. Digital payments will reduce carbon footprint Program needs to be backed with focused financial and digital literacy efforts targeted at the poorest and most vulnerable stakeholders. Pillar 4 – India Climate Action Pillar Prior Action8 : The Ministry of Finance has enhanced weightage Positive. This will allow state Positive impacts as it will increase given to forest and ecology, climate-based vulnerability and governments to provide direct support incentives for state and local disaster-risk profile of each state of each state in allocating to citizens affected by localized and central government grants to state governments for disaster governments to take a pro-active national crises and future climate management. approach to ecological/ climate shocks. risks in policy Prior Action9: The Ministry of Finance has developed central Positive due to reduction in Positive as air pollution related health challenge grants to be awarded to cities with populations above PM2.5 emissions and black concerns impact human capital and one million based on achievement of air quality parameters. carbon footprints well-being. Prior Action10: The Ministry of Environment Forests and Neutral Climate Change has created a multi-sector committee to Positive impact on climate monitor progress of India’s implementation of the Paris change. Agreement. Prior Action11: The Ministry of Environment, Forests and More transparency on climate issues Climate Change has created a portal that captures key will provide citizens more information. Positive impact on climate adaptation and mitigation actions taken by various ministries change. and helps disseminate amongst citizens information on key climate change matters in India. Page 56 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) ANNEX 6: CLIMATE CO-BENEFITS Vulnerability Context a) Climate Change Vulnerability: India regularly experiences some of the world’s highest maximum temperatures, with an average monthly maximum of around 30oC and an average May maximum of 36oC. The Indian Meteorological Department 52 reported an increasing trend of 0. 61°C/100 years in annual mean temperature during 1901 – 2019; the increasing trend in maximum temperature was 1.0°C/100 years and the trend in minimum temperature was 0.22°C /100 years. The five warmest years on since nation-wide records commenced in 1901 have been 2016 (+0.71°C), 2009 (+0.541°C), 2017 (+0.539°C), 2010 (+0.54°C) and 2015 (+0.42°C). Eleven out of 15 warmest years were during the period 2005-2019. Earlier, India’s Second National Communication to the UNFCCC (2012)53 reported an average temperature increase of around 0.59°C between 1901 – 2007. The warming trend had accelerated over the period of 1971 – 2007 (0.14–0.25°C per decade), with warming strongest in the winter and post-monsoon seasons. The mean winter season temperature has increased by 0.70°C over the past 100 years, while the post monsoon season has increased by 0.52°C. Since 1992, an estimated 25,000 Indians have died as a result of heatwaves. According to the first Assessment of Climate Change over the Indian Region published by the Union Ministry of Earth Sciences (MoES)54 , temperatures in India are projected to increase by approximately 4°C by 2080-2099 under the RCP8.5 emissions pathway, and around 1.1°C under the RCP2.6 emissions pathway. b) Disaster Vulnerability: The Indian subcontinent is among the world's most disaster-prone areas. Almost 85 percent of India’s area is vulnerable to one or multiple hazards. 23 States and Union Territories covering 45.64 million hectares of land are subject to floods and are prone to flood disasters 55 . Nearly 12 percent land is prone to flood and river erosion; out of 7,516 km coastline, 5,700 km is prone to cyclones and tsunamis; 68 percent of the cultivable land is vulnerable to drought, hilly areas are at risk from landslides and avalanches, and 15 percent of landmass is prone to landslides. A total of 5,161 cities and towns are prone to urban flooding 56 . One of the major direct climate change impacts has been the increase in rainfall intensity which presents a great challenge to the urban development bodies in India. c) Impacts on Vulnerable Population: The most impacted will be the marginal farmers, the coastal communities, low-income families, and forest communities with an inordinate higher impact on women and girl children and under privileged groups. Multiple factors amplify disaster risk in India – notably social vulnerability – with almost 150 – 200 million people remaining undernourished and high levels of exposure driven by unplanned development in risk-prone zones. However, India scores markedly better in terms of its coping capacity. Approximately 600 million people in India today live in locations that would become moderate or severe hotspots by 2050 under the carbon-intensive scenario. India is home to major climate hotspots which are defined as locations where changes in average temperature and precipitation will have a negative effect on living standards 57 . 52 https://mausam.imd.gov.in/backend/assets/press_release_pdf/Statement_on_Climate_of_India_during_2019.pdf 53 https://unfccc.int/resource/docs/natc/indnc2.pdf 54 http://www.indiaenvironmentportal.org.in/content/467861/assessment -of-climate-change-over-the-indian-region/ 55 https://www4.unfccc.int/sites/ndcstaging/PublishedDocuments/India%20First/INDIA%20INDC%20TO%20UNFCCC.pdf 56 Annual Report 2018-19, National Disaster Management Authority of India, GoI. Page 1. 57 Mani, Muthukumara, Sushenjit Bandyopadhyay, Shun Chonabayashi, Anil Markandya, and Thomas Mosier. 2018. South Asia’s Hotspots: The Impact of Temperature and Precipitation Changes on Living Standards. South Asia Development Matters. Washington, DC: Page 57 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) Table: PA-wise Adaptation and Mitigation Climate Actions Reforms Adaptation Actions Mitigation Actions Pillar 1: Institutional Co-ordination Prior Action 1: The Ministry of Vulnerability Context: See above Finance has increased devolution to state governments and direct grants Intent to address identified vulnerabilities: These fiscal to local government bodies, with a reforms will consider growing needs for support and relief raise in central grants to states for to households and persons who are more vulnerable to disaster management (and 40% of climate induced shocks and disasters. State Disaster Response Funds earmarked for response and relief Explicit link between identified climate change risks and activities including livelihood support, specific project activities: Greater devolution to state cash transfers and others for disaster governments and local government bodies relief. accompanied with higher share of central grants to states for disaster management will allow more flexibility in response to local conditions climate and disaster vulnerabilities of the states, increasing the resources to meet their adaptation needs. Prior Action 2: Government of India Vulnerability Context: In terms of livelihood impacts due has incorporated the food subsidy into to climate change, the agriculture sector will be the most the Budget for 2021-2022 as part of the affected with more than half of households in severe Department of Food and Public hotspots being in agriculture. It will severely affect the Distribution demand for Grants income of 10 percent of the population. High-input, high- . output agriculture will be negatively affected even as demands for food and other agricultural products rise because of an increasing population and expectations for an improved standard of living. Millions of subsistence and smallholder farmers will experience hardship and hunger through being less able to predict climate conditions. Intent to address identified vulnerabilities: The Public Distribution System (PDS) of India plays a crucial role in reducing food insecurity by acting as a safety net by distributing essentials at a subsidized rate. As climate change is projected to impact the food security of the nation, it is important to address the crucial linkages of the PDS program budget. Explicit link between identified climate change risks and specific project activities: Through a partnership between central and state governments, the food-safety net program aims to supplement essential household supplies including wheat, rice, sugar, and kerosene. This is critical to ensure food security during a climate-induced shock, pandemic, or disaster event. The expenditure transparency measures will improve coverage, especially to those living in disadvantaged, remote, or difficult to World Bank. doi:10.1596/978-1-4648-1155-5. License: Creative Commons Attribution CC BY 3.0 IGO Page 58 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) Reforms Adaptation Actions Mitigation Actions access areas to ensure food during a climate-related shock or disaster. Prior Action 3: The Ministry of Finance has initiated a detailed exercise to rationalize and reduce the number of centrally sponsored schemes. Pillar 2: Expanding Social Protection Net for Urban Informal Workers Prior Action 4: The Ministry of Housing and Urban Affairs has launched the National Urban Digital Mission, which will upgrade data infrastructure and create data exchange platforms for urban local bodies Prior Action 5: The Ministry of Vulnerability Context: Urban street vendors are Housing and Urban Affairs has associated with unsanitary living conditions, limited or no launched a new credit/loan program access to services, a high dependence on labor markets, for urban street vendors.. complex social relationships, and high levels of climate and disaster vulnerability. They are especially vulnerable to climate change because their homes are frequently located in hazardous areas. Intent to address identified vulnerabilities: Street vendors often suffer heavily because of climate change as they live in low-lying land that are more vulnerable to flooding due to extreme weather events. This also impacts their livelihoods as their assets are destroyed in such events. The SVANIDHI scheme will ensure they have access to finance when in case of an extreme weather event. Explicit link between identified climate change risks and specific project activities: Small-scale credit and cash support will help resume their businesses in the urban areas, including surrounding peri-urban/rural areas which has been impacted due to climate shocks, pandemics and disasters. Pillar 3: Strengthening Delivery Systems Prior Action 6: The Ministry of Vulnerability Context: see above Electronics and Information Technology has formulated a draft Intent to address identified vulnerabilities: Digital scheme with incentives to boost payments will facilitate easy and portable pan-national digital transactions in India. access to cash transfers and social insurance contributions under climate shocks and disasters. Explicit link between identified climate change risks and specific project activities: The digital cash transactions will be used to provide cash transfers to the vulnerable and impacted people during a climate-induced shock or Page 59 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) Reforms Adaptation Actions Mitigation Actions disaster. This will help India develop strong adaptive social safety nets. Prior Action 7: The Ministry of Vulnerability Context: People may be forced to move by Consumer Affairs, Food and Public “sudden onset” weather events—flooding, forest fires Distribution has launched a mobile- after droughts, and intensified storms; results of other based application ) for migrants to humanitarian crises; or slow onset events such as locate the nearest fair price shop to desertification, sea-level rise, ocean acidification, air receive food grains. pollution, rain pattern shifts and loss of biodiversity. The migrants are furthermore vulnerable to climate change impacts due to lack of resources, services, and finances. Migrants to urban centres face challenges around accessing nutritious food, adequate employment, social protection, housing and, water and sanitation facilities. This poses additional challenges to the government to ensure not only livelihood security for the population but also tackle challenges pertaining to food and nutrition security. Intent to address identified vulnerabilities: A migrant will face uncertainty in employment prospects compounded by an economic slowdown after climate-induced or disaster event, affecting their food security. The project will ensure that the government provide relief to these people by ensuring food security and support the vulnerable populations and hence, widen the safety net for the poorest of the poor. Explicit link between identified climate change risks and specific project activities: The mobile-based application which will help any migrant find a local FPS where they can access food grains to ensure food security under a climate shock or disaster. Pillar 4 – India Climate Action Pillar Prior Action 8: The Ministry of A third of forest areas in India Finance has enhanced weightage are projected to change by given to forest and ecology, climate- 2100, with deciduous forests based vulnerability, and disaster-risk changing into evergreen ones profile of each state of each state in due to increased allocating central government grants precipitation58. to state governments for disaster XVFC recommendations management acknowledge that the ecological services being provided by a State's forest cover extend to the country as a whole. A higher weight of 10 percent for the forest and ecology criterion has been 58 Source: IPCC Report (https://www.ipcc.ch/pdf/assessment-report/ar5/syr/AR5_SYR_FINAL_All_Topics.pdf) Page 60 The World Bank Creating a Coordinated and Responsive Indian Social Protection System (CCRISP) (P176447) Reforms Adaptation Actions Mitigation Actions assigned. The increase in weight is a recognition of the forest, a global public good, as a resource that ought to be preserved and expanded through afforestation of degraded and open forests for national benefit as well as to meet India’s NDC commitments of creating an additional cumulative carbon sink of 2.5 – 3.0 GtCO2e by 2030 with increased afforestation and tree cover. Prior Action 9: The Ministry of Climate change benefits can Finance has developed central be concurrently achieved challenge grants to be awarded to while pursuing clean air cities with populations above one targets. The clean air million based on achievement of air measures will not only reduce quality parameters the primary and precursor emissions of PM2.5, but also lower carbon dioxide (CO2) and black carbon (BC) emissions for direct climate benefits. Prior Action 10: The Ministry of The multi-sector committee Environment Forests and Climate will facilitate implementation Change has created a multi-sector of India’s NDC. This will lead to committee to monitor progress of an increase in carbon sinks and India’s implementation of the Paris a substantial reduction in net Agreement. GHG emissions for the country. Prior Action 11: The Ministry of The portal will facilitate information dissemination and The portal will establish a Environment, Forests and Climate awareness-raising focused on climate change mitigation transparency framework that Change has created a portal that and adaptation. will lead to an improvement in captures key adaptation and gathering data and mitigation actions taken by various information on GHG emissions ministries and helps disseminate and climate change issues and amongst citizens information on key further disseminate it among climate change matters in India. citizens. Page 61