FOR OFFICIAL USE ONLY Report No: PAD4250 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT PROGRAM APPRAISAL DOCUMENT ON A PROPOSED LOAN IN THE AMOUNT OF US$125 MILLION TO INDIA FOR THE RESILIENT KERALA PROGRAM (P174778) PROGRAM-FOR-RESULTS June 2, 2021 Urban, Resilience, and Land Global Practice South Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. INDIA CURRENCY EQUIVALENTS (Exchange Rate Effective as of March 31, 2021) Currency Unit = US Dollar (US$) US$1.00 = INR 73.11 INR 1.00 = US$0.01 GOVERNMENT FISCAL YEAR April 1 – March 31 ABBREVIATIONS AND ACRONYMS ABPA Agri-Business Promotion Agency AEMU Agro-Ecological Management Unit AEU Agroecological Unit AEZ Agroecological Zone AFD Agence Française De Développement AIIB Asian Infrastructure Investment Bank BAMS Budget Allocation and Monitoring System C&AG Comptroller and Auditor General CAT Climate Action Tracker CMDRF Chief Minister’s Distress Relief Fund CPF Country Partnership Framework CPRCS Kerala e-Governance IT Procurement Portal (http://cprcs.kerala.gov.in/) CRN Core Road Network DBT Direct Benefit Transfer DCAT Disaster and Climate Action Tracker DDMA District Disaster Management Authority DEA Department of Economic Affairs DLI Disbursement-Linked Indicator DLR Disbursement-Linked Result DoA Department of Agriculture DoAH Department of Animal Husbandry DoECC Department of Environment and Climate Change DoF Department of Finance DoHFW Department of Health and Family Welfare DoR Department of Revenue DPL Development Policy Loan DPO Development Policy Operation DRF Disaster Risk Financing DRFI Disaster Risk Financing and Insurance DRM Disaster Risk Management DTCP Department of Town and Country Planning E&S Environmental and Social EHS Environment, Health, and Safety EIRR Economic Internal Rate of Return ESSA Environmental and Social Systems Assessment FM Financial Management FPO Farmer Producer Organization FRBM Fiscal Responsibility and Budget Management FSA Fiscal Sustainability Analysis FWP Forward Works Program GBV Gender-Based Violence GDP Gross Domestic Product GeM Government e-Marketplace GHG Greenhouse Gas GIS Geographic Information System GoI Government of India GoK Government of Kerala GRM Grievance Redress Mechanism GRS Grievance Redress Service GSDP Gross State Domestic Product HLEC High-Level Empowered Committee IA Implementing Agency IAMIS Integrated Agricultural Management Information System IDSP Integrated Disease Surveillance Programme IFC International Finance Corporation IFI International Financial Institution IFMIS Integrated Financial Management Information System IFSA Integrated Fiduciary System Assessment IMF International Monetary Fund IPF Investment Project Financing IPHL Integrated Public Health Laboratory IRR Internal Rate of Return IVA Independent Verification Agent IWRM Integrated Water Resources Management KfW Kreditanstalt für Wiederaufbau KHRI Kerala Highway Research Institute KILA Kerala Institute of Local Administration KMSCL Kerala Medical Services Corporation Limited KSAD Kerala State Audit Department KSDMA Kerala State Disaster Management Authority KSTP Kerala State Transport Project LSG Local Self-Government LSGD Local Self-Government Department LSGI Local Self-Government Institution LSG Local Self-Government LTRO Long-Term Repo Operation M&E Monitoring and Evaluation MIGA Multilateral Investment Guarantee Agency MIS Management Information System MSMEs Micro, Small, and Medium Enterprises NPV Net Present Value O&M Operations and Maintenance OPBRC Output and Performance-Based Road Contracts OPRC Operations Procurement Review Committee PAD Program Appraisal Document PAP Program Action Plan PDO Program Development Objective PFM Public Financial Management PforR Program-for-Results PHL Public Health Laboratory PLANSPACE System for Progress Analysis and Concurrent Evaluation PMC Project Management Consultant PMSS Project Management Support Services PMT Program Management Team PMU Program Management Unit POM Program Operations Manual PWD Public Works Department PRI Panchayati Raj Institution PWD Public Works Department RA Results Area RBCMA River Basin Conservation and Management Authority RBI Reserve Bank of India RKDP Rebuild Kerala Development Programme RKI Rebuild Kerala Initiative RKP Resilient Kerala Program RMMS Road Maintenance Management System SC Scheduled Caste SDRF State Disaster Response Fund SEA Sexual Exploitation and Abuse SPCB State Pollution Control Board SPF State Partnership Framework ST Scheduled Tribe TA Technical Assistance TCP Act Town and Country Planning Act ToR Terms of Reference TTL Task Team Leader ULB Urban Local Body WBG World Bank Group WRD Water Resources Department WRM Water Resources Management The Resilient Kerala Program (P174778) was prepared by a multi-sector team led by Urban, Resilience and Land Global Practice. Contributing Global Practices include Disaster Risk Management and Climate Change; Urban; Agriculture & Food; Water; Transport; Health, Nutrition and Population; Governance; Macroeconomics, Trade and Investment; Social Protection; Jobs, Natural Resources; Social Sustainability and Inclusion; Environment; and South Asia Advisory Services. Regional Vice President: Hartwig Schafer Regional Director: John A. Roome Country Director: Junaid Kamal Ahmad Practice Manager: Abhas Jha Elif Ayhan, Balakrishna Menon Parameswaran, Task Team Leader(s): Deepak Singh The World Bank The Resilient Kerala Program (P174778) TABLE OF CONTENTS DATASHEET ........................................................................................................................................... I I. STRATEGIC CONTEXT .................................................................................................................... 1 A. Country Context ....................................................................................................................... 1 B. Sectoral (or Multi-Sectoral) and Institutional Context ............................................................... 2 C. Relationship to the CPS/CPF and Rationale for Use of Instrument ............................................ 4 II. PROGRAM DESCRIPTION .............................................................................................................. 5 A. Government Program ........................................................................................................... 5 B. Theory of Change .................................................................................................................. 5 C. PforR Program Scope ............................................................................................................ 6 D. Program Development Objective(s) (PDO) and PDO Level Results Indicators ....................... 10 E. Disbursement Linked Indicators (DLIs) and Verification Protocols ....................................... 10 III. PROGRAM IMPLEMENTATION .................................................................................................... 11 A. Institutional and Implementation Arrangements ................................................................ 11 B. Results Monitoring and Evaluation ..................................................................................... 11 C. Disbursement Arrangements .............................................................................................. 12 D. Capacity Building ................................................................................................................ 12 IV. ASSESSMENT SUMMARY ............................................................................................................ 13 A. Technical ............................................................................................................................ 13 B. Fiduciary ............................................................................................................................. 17 C. Environmental and Social .................................................................................................... 19 V. RISK............................................................................................................................................ 22 ANNEX 1. ADJUSTMENTS TO THE INDIA WORLD BANK GROUP COUNTRY PARTNERSHIP STRATEGY ... 24 IN RESPONSE TO COVID-19 PANDEMIC .............................................................................................. 24 ANNEX 2. RESULTS FRAMEWORK MATRIX.......................................................................................... 27 ANNEX 3. DISBURSEMENT LINKED INDICATORS, DISBURSEMENT ARRANGEMENTS AND VERIFICATION PROTOCOLS ....................................................................................................................................... 39 ANNEX 4. SUMMARY TECHNICAL ASSESSMENT .................................................................................. 55 ANNEX 5. SUMMARY ENVIRONMENTAL AND SOCIAL SYSTEMS ASSESSMENT .................................... 78 ANNEX 6. PROGRAM ACTION PLAN .................................................................................................... 83 ANNEX 7. SUMMARY FIDUCIARY SYSTEMS ASSESSMENT ................................................................... 85 ANNEX 8. IMPLEMENTATION SUPPORT PLAN .................................................................................... 96 The World Bank The Resilient Kerala Program (P174778) DATASHEET BASIC INFORMATION BASIC INFO TABLE Country(ies) Project Name India The Resilient Kerala Program Project ID Financing Instrument Does this operation have an IPF component? Program-for-Results P174778 No Financing Financing & Implementation Modalities [ ] Multiphase Programmatic Approach (MPA) [ ] Fragile State(s) [ ] Contingent Emergency Response Component (CERC) [ ] Fragile within a non-fragile Country [ ] Small State(s) [ ] Conflict [ ] Alternate Procurement Arrangements (APA) [ ] Responding to Natural or Man-made Disaster [ ] Hands-on Enhanced Implementation Support (HEIS) Expected Project Approval Date Expected Closing Date 24-Jun-2021 30-Jun-2026 Bank/IFC Collaboration Joint Level Yes Complementary or Interdependent project requiring active coordination Proposed Program Development Objective(s) The objective of the Program is to enhance Kerala’s resilience against the impacts of climate change and natural disasters, including disease outbreaks and pandemics. Organizations Borrower : India Implementing Agency : Government of Kerala i The World Bank The Resilient Kerala Program (P174778) Contact: R. K. Singh Title: Additional Chief Secretary Finance, Finance Department Telephone No: 914712327586 Email: acs.finance@kerala.gov.in COST & FINANCING FIN_SUMM_WITH_IPF SUMMARY Government program Cost 1,701.65 Total Operation Cost 530.00 Total Program Cost 530.00 Total Financing 530.00 Financing Gap 0.00 Financing (USD Millions) Counterpart Funding 160.00 Borrower/Recipient 160.00 International Bank for Reconstruction and Development (IBRD) 125.00 Cofinancing - Other Sources (IFIs, Bilaterals, Foundations) 245.00 Asian Infrastructure Investment Bank 125.00 FRANCE: French Agency for Development 120.00 Expected Disbursements (USD Millions) Fiscal 2022 2023 2024 2025 2026 2027 Year Absol 10.00 15.00 25.00 30.00 35.00 10.00 ute Cumul 10.00 25.00 50.00 80.00 115.00 125.00 ative ii The World Bank The Resilient Kerala Program (P174778) INSTITUTIONAL DATA INSTITUTIONAL DATA TBL Practice Area (Lead) Contributing Practice Areas Agriculture and Food, Health, Nutrition & Population, Urban, Resilience and Land Social Protection & Jobs, Water Climate Change and Disaster Screening This operation has been screened for short and long-term climate change and disaster risks SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT) Risk Category Rating 1. Political and Governance  Substantial 2. Macroeconomic  Substantial 3. Sector Strategies and Policies  Moderate 4. Technical Design of Project or Program  Moderate 5. Institutional Capacity for Implementation and Sustainability  Moderate 6. Fiduciary  Substantial 7. Environment and Social  Substantial 8. Stakeholders  Substantial 9. Other  Substantial 10. Overall  Substantial COMPLIANCE Policy Does the program depart from the CPF in content or in other significant respects? [ ] Yes [✔] No Does the program require any waivers of Bank policies? [ ] Yes [✔] No iii The World Bank The Resilient Kerala Program (P174778) Legal Operational Policies Triggered Projects on International Waterways OP/BP 7.50 No Projects in Disputed Areas OP/BP 7.60 No Legal Covenants Sections and Description I. Program Fiduciary, Environmental and Social Systems Without limitation on the provisions of Article V of the General Conditions, the Program Implementing Entity shall carry out the Program in accordance with financial management, procurement and environmental and social management systems acceptable to the Bank, including those set out in the ESSA and the Program Action Plan, which are designed to ensure that: (a) the Loan proceeds are used for their intended purposes, with due attention to the principles of economy, efficiency, effectiveness, transparency, and accountability; and (b) the actual and potential adverse environmental and social impacts of the Program are identified, avoided, minimized, or mitigated, as the case may be, all through an informed decision-making process. Sections and Description II. Program Institutional and Implementation Arrangements The Program Implementing Entity shall: (a) vest the overall responsibility for implementation, management, and monitoring and evaluation of the Program in the RKI, which shall implement the Program with assistance of the Implementing Agencies; and (b) maintain the RKI-IC and HLEC, or other equivalent structures acceptable to the Bank, within the RKI, in order to support Program implementation and oversight. Sections and Description III. Program Action Plan The Program Implementing Entity shall: (a) implement the Program Action Plan agreed with the Bank, in a manner and substance satisfactory to the iv The World Bank The Resilient Kerala Program (P174778) Bank; and (b) refrain from amending, revising, waiving, voiding, suspending or abrogating, any provision of the Program Action Plan, whether in whole or in part, without the prior written concurrence of the Bank. Sections and Description IV. Independent Verification Agent The Program Implementing Entity shall: (a) maintain, at all times during the implementation of the Program, one or more Independent Verification Agent(s) under terms of reference acceptable to the Bank, to verify the data and other evidence supporting the achievement of one or more DLRs as set forth in the table in Schedule 4 to this Agreement and recommend corresponding payments to be made, as applicable; and (b) (i) ensure that the Independent Verification Agent(s) carries out verification and process(es) in accordance with the Verification Protocol; and (ii) submits to the Bank the corresponding verification reports in a timely manner and in form and substance satisfactory to the Bank, prior to submission of any withdrawal application under Categories (1) to (9) of the table in Section IV.A.2 of Schedule 2 to the Loan Agreement. Conditions v The World Bank The Resilient Kerala Program (P174778) I. STRATEGIC CONTEXT A. Country Context 1. India’s Gross Domestic Product (GDP) growth has slowed in the past three years, and the COVID-19 outbreak is expected to have had a significant impact. 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 slowdown was caused by a decline in private consumption growth and shocks to the financial sector. Against this backdrop, the outbreak of COVID-19 has had a significant impact. Growth is estimated to have contracted sharply in FY20/21. On the fiscal side, the general government deficit widened in FY20/21, owing to higher spending and mostly low revenues. Going forward, as per the latest projections of the Government of India (GoI), growth is expected to be above 10 percent, which is the mid-point of the World Bank's recent projection range of 7.5 to 12.5 percent. The expected recovery will put India among the world’s fastest-growing economies. 2. Although India has made remarkable progress in reducing absolute poverty in recent years, the COVID- 19 outbreak has reversed the course of poverty reduction. Between 2011-12 and 2017, India’s poverty rate is estimated to have declined from 22.5 percent to values ranging from 8.1 to 11.3 percent. However, recent projections of GDP per capita growth, taking into account the impact of the pandemic, suggest that poverty rates in 2020 have likely reverted to estimated levels in 2016 1. Labor market indicators from high frequency surveys - including from the Centre for Monitoring Indian Economy (CMIE)- suggest that vulnerability has increased, particularly for urban households. Overall, the pandemic and its economic impacts are estimated to have raised urban poverty, creating a set of “new poor” that are relatively more likely to be engaged in the non-farm sector and to have received at least secondary education. 3. The State of Kerala (the State) has enjoyed robust economic growth, albeit below the national average, in recent years. The real gross state domestic product (GSDP) grew by approximately 6.3 percent on average between FY11/12 and FY18/19 (below the 7.0 percent average for Indian states), although it had risen to 7.4 percent in FY15/16–FY18/19. However, due to the COVID-19 outbreak and the subsequent nationwide lockdown, the State’s economy will contract in FY20/21 and only recover gradually thereafter. 4. The State has run high fiscal deficits in recent years, which has resulted in a steady increase in the State’s public debt-to-GDP ratio. This deterioration in fiscal performance was primarily driven by gradual increases in committed expenditure—especially on salaries, while own-tax revenues 2 have remained relatively low as a share of GSDP. Kerala adopted a Fiscal Responsibility and Budget Management (FRBM) Act in 2003 (amended in 2017), mandating it to maintain a fiscal deficit less than 3 percent of GSDP during FY17/18–FY19/20). Since FY17/18, the fiscal deficit has gradually declined from 3.8 percent of GSDP to less than 3 percent of GSDP in FY19/20, 3 by cutting expenditures significantly. Public debt remained stable, marginally above the 29.67 percent set target under the FRBM Act, 2017. 5. The near-term outlook for Kerala has been significantly affected due to COVID-19 impacts, but public debt will stabilize as growth recovers. According to the budget for FY21/22, GSDP is expected to contract by 3.8 percent in nominal terms in FY20/21. While the State’s total receipts only declined by 2.5 percent, owing to increased transfers from the Central Government, the State’s own-tax revenues declined by over 25 percent. 1 The Government of India has deployed significant resources for social assistance, including toward urban poor households and migrants. 2 The main sources of own-tax revenue include the state goods and services tax, state excise, value added tax, motor vehicles tax, stamps and registration duty, land tax, and taxes on utilities. 3 Figures for FY19/20 are based on preliminary estimates published by the Comptroller and Auditor General (C&AG) of India. Page 1 The World Bank The Resilient Kerala Program (P174778) Spending rose by over 12 percent as the Government increased spending on welfare programs. Thus, fiscal deficit has widened to 4.3 percent of GSDP and the public debt-to-GSDP ratio rose to 36 percent. However, as growth recovers, fiscal deficit is projected to return to below 3 percent by FY23/24 and debt is expected to stabilize at 37 percent of GSDP in FY21/22, declining thereon. B. Sectoral (or Multi-Sectoral) and Institutional Context 6. The State of Kerala is highly vulnerable to natural disasters and changing climatic dynamics given its location along the coast and steep gradient along the slopes of the Western Ghats. The State Disaster Management Plan identifies 39 hazard types that can turn disastrous without proper preparedness and risk reduction planning. 4 Some of the dominant hazards include cyclones, storm surge, coastal erosion, sea level rise, tsunami, flood, drought, lightning, landslide, and earthquakes. In the recent past, the state has experienced Cyclone Ockhi in 2017; floods and landslides in 2018, 2019, and 2020; and the COVID-19 pandemic. The 2018 floods—the worst in the century—led to widespread loss of life, property, and habitats in Kerala, mainly in the Pamba River Basin, causing 498 casualties, affecting over 5.4 million people, displacing 1.4 million people, and resulting in financial losses of US$3.74 billion (INR 267.20 billion). The devastating impacts of these disasters highlighted the under-preparedness of the State. 7. Recurring disasters have left devastating impacts on the livelihoods of women, especially women farmers and fisherwomen. Around 320,000 women farmers suffered losses amounting to INR 4.0 billion across the State, on account of destroyed crops, soil fertility loss, loss on borrowing, and land reclamation costs. 5 Women’s representation in higher-value chains has also remained a challenge. Fisherwomen, who are engaged mostly in traditional vending activities, remain bereft of critical social security schemes and safety nets, which has dented their preparedness against climate change, natural disaster, and disease outbreak events. 8. The World Bank’s support to build multidimensional resilience in Kerala commenced right after the 2018 floods and landslides. The foundation of the engagement was set by the World Bank-supported First Resilient Kerala Development Policy Operation (DPO, US$250 million), approved in June 2019. It supported the Rebuild Kerala Development Programme (RKDP) 6—the GoK’s strategic and integrated road map for recovery, rebuilding, and resilience. DPO set the course for centering resilience-related policies and institutional reforms in key cross-cutting areas and sectors of the economy. Kerala’s limited fiscal space and high levels of debt have severely constrained its ability to deal with major exogenous shocks. Initial steps were undertaken in DPO to improve fiscal sustainability including through mobilizing private finances. Initial steps were undertaken in DPO to improve fiscal sustainability including through mobilizing private finances. DPO and the engagement so far have also triggered policy and institutional reforms to enhance resilience to enable holistic river basin management, sustainable and climate-resilient agriculture, risk-informed land-use planning and multi-year capital planning, disaster management plans at all levels, and the creation of a dedicated institutional modality, the Rebuild Kerala Initiative (RKI), to manage the rollout of the RKDP and DPO. These efforts have improved Kerala’s capacity to respond to disasters and other extreme events, evidenced by reduced loss of lives, assets, and livelihoods by the 2019 and 2020 floods and landslides. 9. Kerala experienced the first confirmed cases of COVID-19 in India on January 30, 2020. High levels of urbanization and population density, tourist inflows, regular inward and outward travel of non-residents, and an 4 Kerala State Disaster Management Authority: Government of Kerala, State Disaster Management Plan 2016. 5 Sainath, P. "Kerala’s Women Farmers Rise Above the Flood." People's Archive of Rural India. Last modified October 8, 2018. 6 Rebuild Kerala Development Programme (RKDP): https://rebuild.kerala.gov.in/reports/RKDP_Master%2021May2019.pdf. Page 2 The World Bank The Resilient Kerala Program (P174778) aging population with co-morbidities made Kerala susceptible to infection and spread. The GoK responded proactively through a robust response plan, based on learnings from the Nipah virus outbreak experience in 2018. As of June 1, 2021, there have been 2,546,339 total confirmed cases, including 202,426 active cases, 2,334,502 recovered, and 9,009 deaths. Kerala has one of the lowest casualty rates (0.35 percent) among Indian states. Over 7.33 million people in Kerala (or 20.67% of its population) have been vaccinated. 7 10. Building on the RKDP and the DPO, the partnership between the GoK and the World Bank has both expanded and deepened. Among its highlights are the technical support provided for mobilizing market-based finance for rebuilding activities; the RKDP Development Partners Conclave in July 2019; the scoping of International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA) support for climate-resilient infrastructure in the State; and deepened engagements in key economic sectors, all built around the core theme of enhancing resilience. The close working relationship between the GoK and the World Bank has influenced the State’s policy, institutional, and investment agenda to advance resilience to climate change impacts and natural disasters. In advancing the partnership, the GoK and the World Bank have worked closely to bring other partners on board, among them, the Kreditanstalt für Wiederaufbau (KfW) 8, the Asian Infrastructure Investment Bank (AIIB), and Agence Française De Développement (AFD). 11. A State-level strategic GoK-World Bank partnership was developed to strengthen institutional, economic, and social resilience of the State to the impacts of natural disasters and climate change. The Kerala State Partnership Framework (SPF, figure 1) brings together Kerala’s priorities and programs in the RKDP and the strategic priorities of the World Bank’s India Country Partnership Framework for FY18-22 (CPF: FY18-22; report No. 126667-IN, July 25, 2018 discussed at the Board on September 20, 2018) and provides a strategic platform and roadmap for the engagement of the World Bank Group (WBG) with the State of Kerala. Figure 1. Kerala State Partnership Framework (SPF) 12. Over the medium term, the engagement with Kerala is expected to evolve and advance through multiple tracks as depicted in figure 2. 7 GOK Dashboard for COVID-19. URL: https://dashboard.kerala.gov.in/index.php. 8 Provided €2 million grant for technical assistance (TA) and a €100 million loan to parallel finance the DPO. Page 3 The World Bank The Resilient Kerala Program (P174778) Figure 2. Expected Evolution of the Resilient Kerala Program 13. The DPO was followed by the preparation of a Second Resilient Kerala Development Policy Operation (US$250 million) aimed at deepening policy and institutional reforms initiated under the DPO. Due to the COVID- 19 outbreak and a change in India’s strategy in using World Bank financing, the GoI decided to rather pursue the use of a Program-for-Results (PforR) which was well matched to its objectives. The majority of the key policy actions planned for the second DPO were already achieved by the GOK. C. Relationship to the CPS/CPF and Rationale for Use of Instrument 14. The proposed Resilient Kerala Program 9 (RKP or The Program) is consistent with the World Bank Group India Country Partnership Strategy FY 2018 to 2022 discussed by the Board on September 20, 2018. In order to respond to the COVID crisis, the CPF program has been adjusted as further described in Annex 1. The CPF recognizes that improving disaster risk management (DRM) and resilience to climate change (Objective 1.5) and improving living conditions and sustainability of cities (Objective 1.2) are key to facilitating resource-efficient growth and poverty reduction. To enhance India’s competitiveness and enable job creation, the CPF supports enablers such as increasing resilience of the financial sector and financial inclusion (Objective 2.2) and improving connectivity and logistics by making the transport systems more climate and disaster resilient (Objective 2.3). To invest in human capital, the CPF highlights the need for improving coverage and coordination of social protection systems (Objective 3.5) and pursues climate-smart engagement to support India’s climate change mitigation and adaptation efforts, as a cross-cutting theme. The RKP adopts the four catalytic approaches outlined in the CPF to achieve the objectives: (a) leveraging the private sector, (b) engaging a Federal India, (c) strengthening public sector institutions, and (d) supporting a Lighthouse India. 15. The PforR was determined to be the appropriate financing instrument for translating the policy actions under the earlier DPO into results on the ground. The PforR allows linking policy and institutional shifts with enhanced capacities, real expenditures, and verifiable results on the ground. It provides financing-linked incentives for a range of stakeholders at all levels to converge on an integrated and multisectoral resilience framework and platform, toward achieving an agreed set of results. The proposed PforR aims to strengthen institutions and systems toward resilience and demonstrate a model of integrated and multidimensional resilience 9 The Resilient Kerala Program is also referred to as the Resilient Kerala Program for Results. The latter project name is used where the financing instrument needs to be emphasized. Page 4 The World Bank The Resilient Kerala Program (P174778) at the ground level, at a river basin—the Pamba River Basin—that was subject to devastating impacts during the 2018 and 2019 floods and landslides. The area-based approach of the Program will demonstrate the impacts of a set of integrated reforms that build upon each other to achieve the envisaged results. 16. The Program responds to the World Bank’s priority to address COVID-19 response and recovery. Consistent with the country program adjustment approach (according to Annex 1), the Program supports the strengthening of public health systems in the State to tackle the impacts of COVID-19 and to prepare the State against future pandemics and disease outbreaks. II. PROGRAM DESCRIPTION A. Government Program 17. The RKDP constitutes the GoK’s medium-term road map for a Green and Resilient Nava Keralam (New Kerala)—the main vehicle to mainstream resilience in development. The RKDP, launched in July 2019, is to be implemented over a period of eight years. It aims at “the creation of a society that has sustainable livelihoods for its inhabitants and a land with modern infrastructure that cannot be undone by natural disasters”. The RKDP encompasses policy, regulatory, institutional, and investment actions and programs across four cross-cutting and 12 sector-based areas that are critical for resilient and sustainable recovery and rebuilding. It has also initiated critical steps toward addressing climate vulnerability, enhancing resilience, and redoubling its efforts to protect the coastline against sea level rise and erosion. An analysis of RKDP priorities details a total outlay of US$4,993 million (INR 365,069 million) for 2019–2027. 18. A subset of the RKDP has been strategically selected as the government program (the program) within which the proposed PforR Program (the Program) is situated. The health scope of the Program includes promoting an integrated One Health approach to diagnose, track, and respond to disease outbreaks. Specific activities include prevention and control of diseases, strengthening of public health laboratories and public health education, and training. These activities are complemented by the National Health Mission. 10 B. Theory of Change 19. Lack of norms and systems, weak institutional capacities, and limited resources constrained preparedness to disaster and disease outbreak events up to 2018. The DPO and accompanying TAs enabled the GoK to put in place critical resilience policies and regulations in sectors and cross-cutting areas. This Program will advance the resilience agenda through establishing norms, statewide systems, and institutional capacities and by investing in an integrated resilience model in the Pamba River Basin districts. Table 1 in Annex 4 presents the expected incremental change compared to the baseline before the State partnership and the DPO. 20. The proposed Program aims to support and incentivize a transformational shift to build long-term and multidimensional resilience to climate change, natural disaster, and disease outbreaks in the State. The RKP will achieve these objectives through two Results Areas (RA): (a) strengthening transversal systems for resilience and (b) embedding resilience in key socioeconomic sectors. The RKP results areas and activities have been prioritized on the basis of three factors: (a) building on policy actions corresponding to the most critical challenges in resilience, (b) synergies to implement an integrated model of dimensional resilience, and (c) ownership and implementation readiness. Figure 3 illustrates the Theory of Change. 10 A GoI program to enhance state systems to improve health outcomes, including disease surveillance and response. Page 5 The World Bank The Resilient Kerala Program (P174778) Figure 3. Theory of Change for the Resilient Kerala Program C. PforR Program Scope 21. The PforR Program Boundary is defined by the RKDP focusing on transversal and sector-specific areas that enhance resilience. Detailed information on how the PforR Program and the government program, RKDP, are aligned and which sectors are selected are provided in Table 1. The Program will be implemented over five years (FY2022–27), both at the State level and in the Pamba River Basin area comprising of four districts, namely Alapuzzha, Idukki, Kottayam, and Pathinamthitta. It will be financed in the amount of US$125 million by IBRD, US$125 million by AIIB, and €100 million (or US$120 million equivalent) by AFD 11 as presented in Table 2. Detailed breakdown of financing across the disbursement-linked indicators (DLIs) and among development partners are provided in the Expenditure Framework and Annex 4. Table 1. PforR Program Boundary The Government Program: The Resilient Kerala PforR Reasons for Title Rebuild Kerala Development Programme (RKDP) (the Program, RKP) Nonalignment 12 Objective To enable the GoK’s resilient recovery To enhance the GoK’s The Program supports and catalyze transformational shift resilience against the impacts critical transversal and toward risk-informed socioeconomic of climate change, natural sector-specific areas of the development through supporting disasters, and disease RKDP with a focus on sustainable communities, institutions, outbreaks. enhancing resilience for livelihoods, and putting in place major disasters, climate change, infrastructure. and disease outbreaks. 11 The proposed AFD co-financing of €100 million is subject to approval by the Department of Economic Affairs (DEA). 12 This column explains the areas where the Government program has a broader scope compared to the PforR Program. Page 6 The World Bank The Resilient Kerala Program (P174778) The Government Program: Title Rebuild Kerala Development The Resilient Kerala PforR Reasons for (the Program, RKP) Nonalignment 12 Programme (RKDP) Duration 2019–2027 2021–2026 Supporting medium-term results areas of RKDP. Geographic Kerala Kerala (statewide) for Geographic coverage of the Coverage development of institutions Program for RA 2 targets and systems (mainly within RA demonstrating a results- 1); focusing on districts along based approach in a basin the Pamba Basin for that was affected the most demonstrating integrated during 2018–2019 floods. resilience at local level (mainly within RA 2) Sectoral Encompasses key sectors of the RA 1: Fiscal, DRFI, Social Sectors under the Program Coverage economy such as agriculture, animal Protection, Urban, and DRM are based on (a) priorities in husbandry, fisheries, forestry, land, RA 2: Health, Agriculture, the RKDP along with livelihoods, roads, transportation, urban, WRM, and Roads emerging health priorities water supply and sanitation, water due to COVID-19, (b) resources management (WRM), and comparative advantages of health emergencies; also addresses the World Bank in sharing cross-cutting priorities: climate change, best practices and DRM, disaster risk financing and international standards, insurance (DRFI), environment, and and (c) progress achieved open data. through DPOs 1 and 2. Results The RKDP aims to rebuild Kerala in a The two results areas are (a) Results areas are selected Areas (RA) speedy and effective manner that strengthening transversal to reflect the focus of the ensures (a) higher standards of systems for resilience and (b) Program among areas infrastructure, assets, and livelihoods for embedding resilience in key defined in the RKDP. resilience against future disasters and economic sectors (b) building individual, community, and institutional resilience to natural hazards while fostering equitable, inclusive, and participatory reconstruction that builds back better. Overall US$1,701.65 million US$530.00 million Financing Table 2. PforR Program Financing Summary Financing Source Amount (US$, millions) Percentage of Total International Bank for Reconstruction and Development (IBRD) 125.00 23.58 Cofinancing - Other Sources (IFIs, Bilaterals, Foundations) 245.00 46.22 • AIIB 125.00 23.58 • AFD 13 120.00 22.64 Counterpart Financing (GoK) 160.00 30.19 Total Program Financing 530.00 100.00 22. The detailed descriptions of the results areas and the associated activities are provided in the following paragraphs. Using the river basin as the geographical unit for resilience planning, the RKP aims to establish transversal foundations and strengthen sectoral practices in resilience at the State level and roll out a model of multidimensional resilience across the Pamba Basin, a location of devastating damages during the 2018 floods, by overlaying sector interventions on transversal systems. The vertical integration and horizontal synergies of this model are illustrated in figure 4. 13 The proposed AFD co-financing of €100 million is subject to approval by the Department of Economic Affairs (DEA). Page 7 The World Bank The Resilient Kerala Program (P174778) Figure 4. Integrated Chain of Interventions for Impact and Sustainability of Reforms 23. The Program consists of the following activities: Results Area 1: Strengthening Transversal Systems for Resilience 1.1 Sustainable Fiscal and Debt Management (a) Strengthening capacity to deal with contingent liabilities due to disasters and disease outbreaks. (b) Establishing debt management unit within DoF, adopting and implementing a debt management plan, and enhancing capacity of debt management unit. (c) Strengthening revenue mobilization, expenditure management, financial controls and treasury operations. 1.2 Comprehensive Disaster Risk Finance and Social Protection System 14 (a) Developing a comprehensive risk financing framework to enhance financial resilience of government and communities to natural disasters and disease outbreaks. (b) Building database of vulnerable populations and post-disaster payments platform to transfer social protection payments to beneficiaries. (c) Implementing risk insurance and adaptive safety net programs for select vulnerable groups in Pamba Basin districts. (d) Mobilizing resources from the market for disaster risk financing. (e) Enhancing decision-making capabilities and financial literacy of women in order to channel social protection payments through women. 14 The gender-specific actions are detailed in Annex 4. Page 8 The World Bank The Resilient Kerala Program (P174778) 1.3 Risk-Informed Urban Master Plans for Cities and Towns (a) Implementing reforms related to risk-informed master planning by urban local bodies. (b) Incentivizing adoption of risk-informed urban master plans and priority action plans by urban local bodies in Pamba Basin districts. (c) Training and capacity building of urban local bodies on risk informed planning and investments. 1.4 Risk-Informed Local Disaster Risk Management Plans (a) Formulating and/or updating disaster risk management plans for local self-government institutions in Pamba Basin districts. (b) Developing technical tools and training in disaster risk management. (c) Supporting investment planning integrating climate risk information at the local level. (d) Developing the DCAT tool to track local investments which are climate and disaster risk informed. Results Area 2: Embedding Resilience in Key Economic Sectors 2.1 Resilient Public Health Systems Strengthening public health systems for disease outbreak prevention and preparedness. 2.2 Integrated and Sustainable Water Resources Management (a) Establishing a river basin conservation and management authority for integrated water resources management. (b) Developing flood forecasting system, integrated reservoir operation system and investment plans for Pamba Basin for improving integrated water resources management, and adopting integrated river basin management plan including recommendations for investments. (c) Implementing critical investment(s) on water resources management as defined in the integrated river basin management plan. 2.3 Sustainable and Resilient Agriculture Systems (a) Strengthening agroecological units to facilitate implementation of agroecological zone approaches for development of agriculture production. (b) Forming new farmer producer organizations in Pamba Basin districts. (c) Promoting participation of women in agricultural activities, including through support for membership of women in farmer producer organizations, increase in access to information, benefits and other services for capacity building of women farmers, and provision of business development and leadership training. 2.4 Climate Resilient Road Infrastructure (a) Establishing a road maintenance management system cell in the PWD to support implementation of climate proof designs, budgeting and implantation for the road sector. (b) Upgrading 400 kilometers of Core Road Network (CRN) infrastructure in Pamba Basin districts through output and performance-based road maintenance contracts. Page 9 The World Bank The Resilient Kerala Program (P174778) D. Program Development Objective(s) (PDO) and PDO Level Results Indicators 24. The objective of the Program is to enhance Kerala’s resilience against the impacts of climate change and natural disasters, including disease outbreaks and pandemics. 25. The PDO-level results indicators include the following: (a) Fiscal sustainability of GOK to cope with disease outbreaks and natural disasters is strengthened (Text) (b) Women’s access to post-disaster adaptive safety net payment is enhanced (Text) (c) People are benefiting from local DRM plans and One Health Community Surveillance systems in Pamba Basin districts (Text) (d) People are benefiting from early flood warning services and flood protection measures in Pamba Basin (Text) (e) Share of climate adaptation or mitigation investments by LSGIs in Pamba Basin districts has increased (Percentage) E. Disbursement Linked Indicators (DLIs) and Verification Protocols 26. Program resources will be disbursed based on the achievement of nine DLIs. These DLIs have been chosen to reflect five principles: (a) integrated approach to multidimensional resilience, (b) alignment with and ability to add value to the government program, (c) building on policy and institutional reforms achieved previously, (d) technical merits, and (e) ability to incentivize results and support achievement of the PDO. Table 3 lists the DLIs and the associated funding allocations. The detailed DLI matrix is provided in Annex 3. Table 3. The PforR Program DLIs and Allocation of External Resources (US$, millions) Total 15 Fund DLI IBRD AIIB AFD External Recipient Financing RA 1: Strengthening transversal systems for resilience DLI 1: Fiscal sustainability of GoK to cope with disease 4.69 4.69 15.00 24.38 DoF outbreaks and natural disasters is strengthened DLI 2: Disaster-related adaptive safety net system of GoK 10.00 0.00 15.00 25.00 DoF is strengthened DLI 3: Disaster risk financing and insurance capacity of 10.00 0.00 25.00 35.00 DoF GoK and vulnerable households in Kerala are improved DLI 4: Urban local bodies developed and sanctioned risk- 7.50 7.50 15.00 30.00 LSGD informed urban master plans and priority action plans DLI 5: Climate risk information integrated into local body 17.50 17.50 30.00 65.00 LSGD DRM plans RA 2: Embedding resilience in key economic sectors DLI 6: Capacity to track and respond to zoonotic disease 15.00 15.00 5.00 35.00 DoHFW outbreaks of human importance in a timely manner DLI 7: Integrated river basin management plan is developed for Pamba Basin and implementation 10.00 10.00 15.00 35.00 WRD commenced. DLI 8: Farmer producer organizations have increased 15.00 25.00 0.00 40.00 DoA access to new and organized markets 15 The proposed AFD co-financing of €100 million is subject to approval by the Department of Economic Affairs (DEA). Page 10 The World Bank The Resilient Kerala Program (P174778) DLI 9: CRN is rehabilitated and/or maintained to meet 35.00 45.00 0.00 80.00 PWD resilient service standards in the Pamba Basin Front-End-Fee (FEF) to be paid pursuant to Section 2.03 of the Legal Agreement in accordance with Section 2.05 0.31 0.31 0.00 0.62 (b) of the General Conditions Total 125.00 125.00 120.00 370.00 Note: DoA = Department of Agriculture; DoHFW = Department of Health and Family Welfare. The breakdown of allocation by DLI has been agreed among IBRD, AIIB, and AFD in consultation with the GoK. 27. The achievement of DLIs and disbursement-linked results (DLRs) will be verified by an Independent Verification Agent (IVA), according to verification protocols agreed between the GoK and the World Bank. RKI will recruit the IVA which will conduct verification of Program DLIs and DLRs based on the verification protocol given in Annex 3. The IVA shall submit its assessment reports to RKI, which in turn will, submit the report to the World Bank, the AIIB, and the AFD for disbursement of funds. III. PROGRAM IMPLEMENTATION A. Institutional and Implementation Arrangements 28. The Program will be implemented through the GoK’s existing institutional modalities and systems. At the apex level, RKI will serve as the Program Management Unit (PMU), responsible for management, coordination, and monitoring and evaluation (M&E) of the Program. RKI is supported by a Program Management Team (PMT) providing Program Management Support Services (PMSS). The participating sector departments shall be the Program’s implementing agencies (IAs). RKI will collaborate and coordinate with all departments and associated technical agencies such as the KSDMA, the Kerala Institute of Local Administration (KILA), LSGIs, and district administrations in the Program area, to implement the Program. RKI will be supported in the field by District Disaster Management Authorities (DDMAs), which are statutory units headed by the District Collector and include representation from LSGIs and line departments, to coordinate and oversee implementation in the four districts. 29. Participating departments (IAs) will be responsible for achieving the agreed results in their respective areas. The IAs will be responsible for coordinating with other departments, line agencies, and local governments to implement the Program and achieve the agreed results. They will also be responsible, either directly or through coordination and oversight, for ensuring compliance with the relevant fiduciary, environmental and social (E&S) safeguards rules, Program Action Plan (PAP) requirements, procurement guidelines, and norms and systems of the GoK during Program implementation. Further details are provided in Annex 4. 30. The Program is ready to implement investment activities in the first year and prepare investment plans for the subsequent years. The critical investments for the first year are mainly in the road sector, which is at an advanced stage of investment readiness for the pilot investments envisaged in the Pamba Basin. Investments for other sectors (for example, health, WRM, and agriculture) will be identified through the preparation of annual investment planning and ongoing government expenditure program in the Pamba Basin districts to allow timely and efficient implementation of the Program. B. Results Monitoring and Evaluation 31. Program monitoring will comprise the following elements: (a) standard progress monitoring, (b) verification of results by IVA, and (c) impact evaluations. Page 11 The World Bank The Resilient Kerala Program (P174778) 32. RKI will be responsible for reporting progress on Program implementation and achievement of results, while the departments will be responsible for tracking progress related to their respective results areas. The PMU, supported by the PMT, drawing inputs from IAs and LSGIs, will prepare biannual progress reports and shall submit it to the RKI Implementation Committee and a High-level Empowered Committee (HLEC) headed by the Chief Secretary for review, approval, and further actions. The approved biannual progress report shall be shared with the World Bank, AIIB, and the AFD. 33. The IVA shall conduct annual/biannual assessments and prepare a consolidated report furnishing evidence toward achievement of DLRs and providing recommendations for drawdown of funds. This report shall be submitted to RKI for review and submission to the HLEC and, upon approval of the HLEC, submit to the World Bank and other financing partners, for effecting disbursements. 34. The RKI shall undertake or support the following impact evaluation activities: (a) Program Impact Evaluation to assess the long-term impacts of the operations wherein the impact assessment will be supported through baseline, midterm, and end-of-Program surveys; (b) specific sectoral (thematic) evaluations, as required; and (c) process monitoring and periodic tracking surveys and compiling of good practices emerging from the Program for knowledge sharing among stakeholders. C. Disbursement Arrangements 35. The DLI matrix and the proposed annual financial allocations are presented in Annex 3. The GoK will pre-finance Program expenditures using its own budgetary resources through the identified budget lines of the Expenditure Framework. The Program funds will be disbursed by the World Bank to the GoI on satisfactory achievement of the DLIs, as verified by an IVA. Upon certification, RKI will communicate the achievement of the DLRs to the World Bank. Based on the World Bank’s approval letter, disbursement requests will be submitted to the World Bank office through the Controller of Aid, Accounts, and Audit, using the World Bank’s e-Business platform. The funds will be disbursed by the World Bank to the GoI, which in turn will be released to the GoK, based on the financing norms between the central and state governments. Most DLIs are scalable, enabling partial disbursement of the amount allocated. Where actions are not achieved in any particular year, the allocated amount will be carried over to subsequent years. In case of early achievement of targets, disbursement requests may be submitted after clearance from the World Bank. D. Capacity Building 36. Institutional development is a central tenet of the proposed RKP. The Program aims to embed the policy and institutional shifts initiated through the DPO prior actions within the relevant GoK institutions and build their capacities to roll out and implement the new policies and institutional frameworks to enhance resilience in the State. Capacity building and institutional strengthening of fiduciary, environmental, and social systems identified as part of the Program assessments, will be financed by trust fund resources from the World Bank and other development partners. 16 37. The proposed Program will be bolstered by parallel TA and capacity-building initiatives in addition to the ongoing TA support by KfW in the roads sector. Additional TA commitments include but are not limited to (a) €2 million TA grant financed by the KfW and executed by the GoK in urban and DRF and (b) World Bank-financed and executed TAs for fiscal sustainability and capacity-building activities channeled through various ongoing and upcoming investment projects in WRM, DRM, and waste management. 16 The proposed Program is not a hybrid operation and does not include a TA/Investment Project Financing (IPF) component. Page 12 The World Bank The Resilient Kerala Program (P174778) IV. ASSESSMENT SUMMARY A. Technical Strategic and Technical Relevance 38. Kerala is likely to face significant climate change impacts and natural disasters in the coming years, due to the vulnerable topography of the State. According to climate projections for 2021–2050, the annual average maximum temperature is projected to increase by 1.3°C and the annual average minimum temperature by 1.1°C. Further, the models point to a rise in erratic diurnal rainfall with reduced monsoon rainfall, which could increase flooding and surface run-offs and reduce groundwater recharge from rainfall. Disasters have caused large-scale losses of lives, assets, and livelihoods. Nearly 500 lives were lost in 2018 and another 121 lives in 2019. About 1.4 million people were displaced in 2018 and short-term economic losses amounted to US$3.74 billion. Kerala has also been severely affected by the COVID-19 pandemic and is vulnerable to zoonotic diseases. Detailed climate vulnerability context and specific climate adaptation and mitigation actions supported by the Program are presented in Section B.3 of the Technical Assessment dated April 2021 17. 39. The proposed RKP is one incremental and important step in a programmatic engagement between the GoK and the World Bank. The scope of the Program is aligned with the RKDP and driven through the RKI institutional framework. While the RKDP has a broader mandate, World Bank support is focused on cross-cutting areas and critical sectors where the impact on enhancing resilience will be the most significant value addition to the GoK’s efforts. 40. The Program’s design is based on a solid technical foundation. The RKP builds on the RKDP and draws on TA and analytical work that have underpinned the DPO and other sector projects which have been supported by the World Bank in the past. It also borrows from the engagements of other development partners and various studies and reports produced by the GoK, the GoI, academic institutions, and think tanks from relevant sectors in recent years. Finally, the Program is informed by relevant global good practices and experiences in DRM, climate change, DRF, and adaptive safety nets, as well as in other sector-specific areas represented in RAs 1 and 2. 41. The Pamba River Basin is selected to demonstrate integrated resilience because it was heavily affected during the 2018 floods. Importantly, the area is a microcosm of the State, encompassing dense tropical forests, semi-urbanized settlements, and the rice bowl of Kerala in its lowlands, and thus, a canvas where a multisectoral resilience approach can have a multiplier impact. Lessons learned from the Program will allow the GoK to extend the model to other sensitive river basins in the State. 42. The thrust on building multidimensional resilience through the proposed Program allows for greater focus on and scope for addressing gender and other inclusion gaps in the State. While Kerala performs well on key gender indicators around women’s education, health, and nutrition, declining workforce participation of women, which stands at 20.4 percent, 18 needs greater policy and program focus. Moreover, as noted previously, frequent disasters have left devastating impacts on the livelihoods of women, especially among vulnerable groups. The proposed Program, through interventions in the DRF, water, agriculture, and roads sectors, is positioned for deep gender impacts. The agriculture interventions will focus on improving women’s workforce participation in rural areas and promoting women’s entry into formal and advanced farmers’ organizations, while social protection interventions will aim at financially empowering poor and vulnerable women. 17 See Technical Assessment (prepared by the World Bank, dated April 2021), Section B.3. on Climate Change Co-benefits of the Program and Table 1: Climate Adaptation and Mitigation Actions by DLI. 18 Annual Report, Periodic Labor Force Survey, 2018–19. Page 13 The World Bank The Resilient Kerala Program (P174778) Leveraging the Private Sector 43. The proposed Program supports maximizing finance for development. The World Bank has played a pivotal role in mobilizing a number of development partners to support the RKDP and the RKP. The Program supports a whole-of-WBG approach to financing. Complementing the World Bank’s activities, IFC is currently scoping investments in water supply and upgrading of government hospitals, channeling funds through a parastatal intermediary. The IFC team is also working with MIGA to bring in commercial banks to finance part of this loan. Additionally, the Program will support the GoK to mobilize market-based resources for disaster risk financing. Program Expenditure Framework 44. The cost of the Government reform program for FY2021–26 is estimated at US$1.7 billion. The government reform program converges with the broad umbrella of the the GoK’s ongoing RKDP. The cost of the RKP is US$530 million, of which, the World Bank will finance US$125 million, representing 24 percent of the Program cost. Further, the AIIB will support the Program with US$125 million (an equal share to World Bank financing), and AFD plans to provide €100 million (US$120 million equivalent) 19. The remaining US$160 million, which is 30 percent of the Program, will be financed by the GoK. The Program expenditures include consulting services, investment elements for IT and infrastructure, goods, and operational costs required to achieve the PDO. High-priority investments to demonstrate integrated multisector resilience in the Program districts are critical elements of the Expenditure Framework and strengthening capacity of human resources toward achieving the PDO. The summary Program Expenditure Framework is provided in Table 4. Table 4. Summary Program Expenditure Framework FY2021–26 (US$, millions) Implementing Government PforR Expenditure Classification Agency Program Program Consultancies, IT infrastructure (hardware and software development), DoF 92.03 71.45 training, salaries, and operational costs Creation of capital assets through incentive grants, training and capacity LSGD 748.49 144.74 building, salary, and operational expenditure Consultancies, IT infrastructure (hardware and software), software WRD 79.37 41.98 development, training, maintenance, and capacity building Consultancies, minor infrastructure support, financing access, IT DoA infrastructure (hardware and software), training and capacity building, and 440.89 41.11 operational costs Consultancies, infrastructure support, access to finance, IT infrastructure DoHFW (hardware and software development), training and capacity building, 122.25 113.86 salary, and operational costs Infrastructure expenditure, construction and maintenance, IT infrastructure PWD (hardware and software development), consultancies, training, capacity 208.64 106.85 building, and operational costs RKI Consultancies, capacity building, training, and PMU support 10.00 10.00 Total 1,701.65 530.00 19 The proposed AFD co-financing of €100 million is subject to approval by the Department of Economic Affairs (DEA). Page 14 The World Bank The Resilient Kerala Program (P174778) 45. The Program does not include any activities assessed to have a significant adverse impact on the environment and/or affected people as defined in the World Bank Policy and Directive on PforR Financing, nor works, goods, and consultancy contracts above the Operations Procurement Review Committee (OPRC) thresholds. As part of the implementation support, the World Bank will screen Program activities to ensure that no high-risk activity is included in the Program to ensure compliance with the PforR policy requirements. 46. Funding predictability is high and the Expenditure Framework is adequate to achieve intended results. Risks to the Program Expenditure Framework arising out of budget constraints are low. The Resilient Kerala Program cost constitutes a relatively small portion of the overall budgeted spending of the participating departments and is aligned with the GoK’s priorities at the state and departmental levels. Estimated allocations by the GoK and annual expenditure projections are found reasonably adequate to support the Program framework. Details on assumptions made and yearly allocations for each IA, according to economic category and linked to budget lines, can be found in the Program’s detailed Expenditure Framework included in Annex 4. Economic Justification 47. The Program supports actions to strengthen institutions statewide for attaining multidimensional resilience and to test resilience in an integrated manner across key socioeconomic sectors in the Program districts of Idukki, Kottayam, Pathanamthitta, and Alappuzha. The Program generates the following key benefits, not all of which are quantifiable: • More sustainable state and local government finances through debt management and revenue enhancement measures • Speedier economic recovery through social safety nets, disaster risk planning, and COVID-19 response • Reduced incidence of deaths and illnesses through better preparedness for disease outbreaks • Reduced vehicle operating costs, commuter time, and money savings through rehabilitation and maintenance of vulnerable roads to resilient standards • Reduced damages from floods to human settlements, infrastructure, agriculture, and other socioeconomic activities through improved WRM practices, flood forecasting, and urban master plans and local DRM plans • Increased farmer incomes through targeted support for new and existing FPOs, strengthened crop insurance programs, granular flood forecasts, and improved WRM practices • Employment creation through labor-intensive construction works. 48. Recent disasters, climate change, and disease outbreaks may undermine the progress that the GoK has made in reducing poverty and promoting shared prosperity, if immediate recovery, reconstruction, and long- term resilience-building efforts are not undertaken. The total damages and losses of the 2018 floods and landslides are estimated to be around US$3.74 billion (INR 267.18 billion) and total recovery needs at around US$4.25 billion (INR 310 billion). The needs are largest for the infrastructure sectors (transportation, water, sanitation and hygiene, power, and irrigation), followed by social sectors, productive sectors, and cross-cutting sectors. 49. Actions to support environmental sustainability, inclusive growth, and public health have been crowded out by COVID-19-induced supply-side shocks. The State’s economy and the GoK’s revenue-generating potential have been affected by the lockdown since March 2020. To bring the economy back to normal, the GoK has Page 15 The World Bank The Resilient Kerala Program (P174778) increased expenditures to (a) control the spread of the pandemic, (b) provide financial assistance to the vulnerable population, and (c) support livelihood generation. As a result, its fiscal position has deteriorated considerably. A recent DoF-commissioned study projected 2020–2021 revenue shortfalls to US$4.34 billion (INR 334.55 billion). A closer review of the national and State fiscal stimulus packages reveals that environmental sustainability and inclusive growth have been crowded out. 50. The World Bank’s involvement would leverage global experiences and good practices to instill sound policies and test integrated approaches to multidimensional resilience and to respond to and recover from COVID-19. The Program is small compared to the size of the economy and does not have fiscal implications. It provides the needed support to sustain the GoK’s vision for a resilient Kerala. 51. Quantitative economic analysis of the sector programs under RA 2 indicates they are economically viable. The four sector pilots under RA 2 target and demonstrate an integrated approach to building resilience in the four most-affected districts in the 2018 floods. Each pilot focuses on a specific sector—health, WRM, agriculture, or roads. The economic benefits of the sector interventions can be quantified to varying degrees. The quantitative economic analyses, where feasible, suggest that these interventions are economically viable. 52. The road sector pilot investments are expected to provide an economic rate of return of 15–38 percent. The road sector investments rehabilitate about 400 km of the CRN to comply with climate-resilient standards. Quantifiable benefits include reductions in vehicle operating costs and time savings in moving passengers and freight. Unquantified benefits include increased road safety, reductions in greenhouse gas (GHG) emissions, job creation, and reductions in disease and disaster response times. The investments are based on projected traffic volumes for the next 30 years with bridge designs for 100-year floods and culverts and drainage systems design that factor 25- and 10-year discharges in urban and rural areas, respectively. These pilot investments also support the identification and refinement of best practices for rehabilitating the entire CRN across the State. 53. The One Health approach is cost-effective in reducing adverse population and animal health impacts of zoonotic diseases. Early detection, early diagnosis, and early control measures, as advocated in the One Health approach, are most effective in reducing the costs of controlling outbreaks. Worldwide experience suggests that up-front disease surveillance and diagnosis investments can mitigate the need for subsequent treatment costs about three or more times larger, if a disease outbreak were to occur and an order of magnitude higher should the disease turn into a pandemic. Controlling disease outbreaks reduces economic disruptions and hence losses in economic growth, increases in poverty and inequality, productivity losses, and increases in service delivery costs. As an innovative program, it is appropriately included as a pilot. 54. The agriculture program is targeted toward crops with high potential for value addition and toward increasing the incomes of the vulnerable poor. The Program aims to increase farmer incomes by supporting and strengthening existing FPOs in the four districts. The analysis is focused on the targeting of crops for support through the Program and the value addition of a similar World Bank-funded program in Tamil Nadu. The results indicate that the FPO support program is targeted to crops with high potential for adding value. The safety net and insurance programs are targeted toward providing rapid support to the most vulnerable population. 55. The water sector pilots are expected to reduce flood damages through more granular and timely forecasts and to improve the allocation of water resources across multiple uses. The direct benefits of the Program would come from reduced economic damages, loss of lives, and the number of people affected. Increased flood warning lead times of 24 hours or more provide time for aversive action that can significantly reduce economic damages. An incremental cost-benefit analysis of just the flood forecasting component using a Page 16 The World Bank The Resilient Kerala Program (P174778) modified sectoral approach indicates economic rates of return of 22 percent and net present value (NPV) of INR 1 million using a 12 percent discount rate. The indirect benefits are more efficient and effective planning of reservoir operations leading to increased hydropower generation and reliable supplies for agriculture, drinking water, and industrial uses. B. Fiduciary 56. The Integrated Fiduciary System Assessment (IFSA) concludes that the present systems together with proposed mitigation measures will provide reasonable assurance that the financing proceeds will be used for the intended purpose, with due attention to the principles of economy, efficiency, effectiveness, transparency, and accountability. The IFSA identified key fiduciary risks that may affect the Program’s development outcomes and recommended system improvement and capacity strengthening mitigation measures that will be implemented during the life of the program. Based on the IFSA, the fiduciary risk of the Program is assessed ‘Substantial’. The Fiduciary Assessment in Annex 7 and the IFSA report present an analysis of the overarching public financial management (PFM), financial management (FM), procurement, and anti-corruption framework. 57. The FM and procurement systems for the RKP are predicated on extant country systems. The Program will be implemented by RKI and six GoK departments. It will, therefore, be influenced by the extant GoI and the GoK’s fiduciary systems such as the Kerala Budget Manuals, Kerala State Treasury Codes, Indian Government Accounting Standard, Public Works Account Codes, Kerala PWD Manual, Kerala Stores Purchase Manual, Kerala Medical Services Corporation Limited (KMSCL) provisions, State delegation of financial powers, and staffing regulations. RKI will be responsible for overall coordination, management, and oversight of the Program. The overarching framework of FM and procurement systems across the participating departments are similar; however, the practice of the applicable rules and regulations may slightly vary across them. Further, the Program is not expected to procure any large contracts valued at or above the OPRC thresholds for a Substantial risk rating. The IAs shall report to the World Bank if any large contracts appear during Program implementation. The World Bank will monitor fiduciary systems and contract management reports to identify any large‐value contracts throughout the Program implementation. 58. The Program activities will be pre-financed by the State budget. The Program Expenditure Framework comprises the cost of ongoing activities and incremental initiatives. The World Bank funds will be annually budgeted based on approved Program plan and disbursed based on the achievement of annual DLRs. Fund flow will follow a dual approach: (a) for ongoing initiatives where the six participating departments have operational head of account, funds will be budgeted along the existing budget lines based on work plans and activities approved by RKI and (b) for new initiatives, where the participating departments do not have an existing functional head, the funds would flow either through RKI or through a new budget head. RKI has an existing operational budget head for externally aided projects through which the Program funds will be routed. 59. The FM systems are considered adequate to account and report on Program activities and capture the Program expenditure details. The GoK has implemented an end-to-end IT-based Integrated Financial Management Information System (IFMIS) for budgeting, allocations, fund flow, payment, and accounting. The Program expenditure will be incurred and managed within the State budget and payment systems which are functioning systematically and are subject to multiple reviews. The Internal Audit wing in the DoF will conduct the internal audit of the Program with support from the Internal Audit wings of the six participating departments according to the agreed terms of reference (ToR) with the World Bank. The annual financial statements of the Program will be prepared by RKI and the audit will be conducted by the Comptroller and Auditor General (C&AG). Page 17 The World Bank The Resilient Kerala Program (P174778) The audit report will be submitted by RKI to the World Bank within twelve months from the end of the Indian financial year (that is, by March 31 of the subsequent calendar year). 60. Procurement systems. Based on the activities identified in the Program scope, the main procurable items include (a) goods: machinery, equipment, materials, and supplies for health, IT hardware, software, and office equipment required by the participating departments and provisions for the Centre of Excellence at the Kerala Highway Research Institute (KHRI); (b) works: upgrading of CRN (contract size not exceeding US$40 million), special repairs to communications (OPBRC), system establishment and incremental program support for the WRD, and post-flood projects under RKI; and (c) consultants: for modernization of the DoF and training of staff, support for unified database and DRM, training support for the Institute of Health and Family Welfare, modernization of WRD, consultancy/capacity building for WRD, and support for the Centre of Excellence at the KHRI, and other Program activities. The IAs use the same e-tendering system, their own standard bid documents, Government e- Marketplace (GeM) portal of the Central Government, and Kerala e-Governance IT Procurement Portal (CPRCS). Procurement systems of the participating departments were assessed and found to have processes and procedures for effective implementation of the Program with fiduciary risks identified and proposed for mitigation in PAP (Annex 6). 61. Governance and accountability systems. All government departments and agencies are covered under the Right to Information Act 2005. The C&AG carries out compliance and performance audits annually, and audit- related queries are reported to the Legislature and Public Accounts Committee for recommendations and actions. Central/State vigilance units have jurisdiction and power to undertake an enquiry or cause an investigation/enquiry to be made on any information that a public servant has exercised/refrained from exercising, for improper or corrupt purposes. The PWD follows complaints handling processes outlined in the PWD Manual. Overall State Vigilance and Anti-Corruption Bureau (SV & ACB), over the last 5 years (2016 to 2020), received a total of 3653 complaints, disposed of 3693 complaints, and 1970 enquiries were pending with it at the end of 2020. 62. The Program will be subject to the World Bank ‘Guidelines on Preventing and Combating Fraud and Corruption in Program-for-Results Financing’ dated February 1, 2012, and revised on July 10, 2015 (the Anti- Corruption Guidelines). These guidelines shall be applied in an unrestricted manner on all activities within the ‘Program boundary’. To operationalize implementation of the various areas covered in the Anti-Corruption Guidelines, RKI shall perform the following: (a) Maintain and compile a quarterly report of complaints that may be reported that are related to the Program and share it with the World Bank. (b) Incorporate the World Bank’s listing of ineligible firms in the filter used by IAs when they conduct due diligence. This list is available at the following website: http://www.worldbank.org/debarr. (c) Incorporate and filter the World Bank’s suspension list that will be obtained from the World Bank team by RKI periodically and shared with the participating departments. (d) Report on a quarterly basis that none of the contract awards are made to any ineligible/suspended firms. (e) Ensure that each participating bidder shall submit a self-declaration that the firm is not subject to ineligibility or has not been sanctioned under the World Bank system of debarment and cross- debarment. Page 18 The World Bank The Resilient Kerala Program (P174778) (f) Ensure that fraud and corruption risk prevention measures will be implemented throughout the Program, as agreed in the PAP, and that RKI and other authorities will take timely and appropriate action to address issues and indications of fraud and corruption and shall report these to the World Bank. (g) Ensure that RKI, bidders, and other entities participating in the Program will cooperate fully with representatives of the World Bank in any inquiry conducted by the World Bank into allegations or other indications of fraud and corruption in connection with the Program and will take all appropriate measures to ensure the full cooperation of relevant persons and entities subject to the jurisdiction of RKI and other authorities in such an inquiry. (h) Ensure that the Program audit reviews and certifies the above actions. C. Environmental and Social 63. An Environmental and Social Systems Assessment (ESSA) was conducted to determine the GoK’s systems’ capacity to manage the E&S effects under this Program (see ESSA Summary in Annex 5). Various documents were reviewed, multiple consultations with the IAs (at the state level) and with the LSGIs (in the four Pamba districts) were done, gaps for strengthening systems were included in the PAP (see Annex 7), and6), consistency with the core principles and exclusion of activities ineligible for PforR financing were confirmed. Environmental Assessment 64. The Program’s institutional development has no direct environmental impacts and will offer an opportunity to render positive benefits through mainstreaming environmental management. The Program’s investment activities—mainly roads and WRM—may have construction-related environment, health, and safety (EHS) impacts such as air, noise, safety, waste, and debris management. All of these were assessed to be minor, localized, generic, and reversible and can be mitigated effectively. The respective departments have the capacity to manage these limited construction-related impacts with the support of external consultants as necessary. For instance, in the roads sector, the PWD’s environmental management systems have been strengthened by designing investment activities in the Pamba River Basin with up-front environmental impact studies, management plans, and integration with bid/contract documents. Further, external consulting supervision support is planned during implementation. In the agriculture, WRM, and DRM sectors, environmental considerations are intrinsically integrated with the designs/plans and the capacity to address them are adequate. Applicable legislations—crosscutting and those relevant to particular sectors—are adequate to address any of the environmental impacts of the Program. The GoK’s regulatory agencies—Department of Environment and Climate Change (DoECC), State Forest Department, and the State Pollution Control Board (SPCB)—are well established, and their functions are streamlined. As implementation support, the World Bank should focus largely on further strengthening environmental management capacity, specifically in WRM, and ensure compliance of contractual requirements and good EHS practices in investment activities, particularly in the roads sector. Activities that are not eligible for PforR financing should remain excluded. Social Assessment 65. Risks. The ESSA has examined the social risks and benefits of the Program for all the sectors. There are risks of exclusion of women, SC/ST, migrant workers, fisherfolk, and urban poor from resource or investment planning process related to (a) risk and climate-informed urban master plans and DRM plans, (b) integrated river Page 19 The World Bank The Resilient Kerala Program (P174778) basin plans, and (c) the AEZ-wise packages for farmers. There are also risks of exclusion of migrant workers and fishing and tribal communities from social protection entitlements and exclusion of migrants from access to public health facilities. Social protection investments may alter intra-household power dynamics by channeling entitlements into bank accounts of female members, with consequent risk of increased Gender-Based Violence (GBV) or Sexual Exploitation and Abuse (SEA). The roads sector attracts substantial risks related to large-scale economic and physical displacement of squatters, encroachers, and vendors during construction works. They may also see an influx of migrant laborers with associated risks for host communities. 66. Institutional. Institutional assessment was carried out at two levels: (a) capacity of statewide systems and (b) capacities of participating sector agencies. Kerala has the most comprehensive frameworks for citizen engagement. Its decentralized, annual planning and appraisal process ensures large-scale citizen mobilization, and it has also invested in ensuring gender empowerment through measures such as gender budgeting, tracking of gender outcomes, and Kudumbashree campaign for women’s political and economic empowerment. It has strong, centralized mechanisms for grievance redress and systems for inclusion of vulnerable communities through development of tribal sub-plans (ST), special component plans (SC), action plans for elderly, and their monitoring. The sector institutions however have limited capacities to manage social risks and ensure participation and social inclusion in their sectoral/departmental works due to their predominantly technical focus and overlapping and unclear mandates. These institutions will need to build capacities in citizen’s engagement, awareness generation, and accountability that are part of the overall recommendations and PAP (Annex 6). 67. Core principles. The social assessment was focused around social sustainability, avoidance of adverse impacts (Core Principle # 1), public and worker safety (Core Principle # 3), land acquisition (Core Principle # 4), and equitable access and indigenous communities (Core Principle # 5). Sector interventions planned under the Program are consistent with the core principles and most emerging risks are of low or moderate nature and are small, reversible, and can be mitigated through augmented social capacities, except in road investments (Core Principle # 4), where adverse impacts are likely to be large and irreversible. 68. Exclusions. To ensure compliance with Bank Policy on PforR, two types of activities are excluded: (a) any road repair and maintenance works requiring resettlement and removal of structures (on a single alignment/package) affecting more than 50 persons and (b) any town/city to be selected for risk-informed master planning, if this planning is likely to adversely affect existing settlements or resources accessed by indigenous communities residing within or near municipal limits. To ensure compliance with Bank Policy on PforR, the implementing agency (PWD) will adopt measures for screening and management of land acquisition that are consistent with Core Principle #4, and ensure that they manage land acquisition and loss of access to natural resources in a way that avoids or minimizes displacement, and assists the affected people in improving, or at the minimum restoring, their livelihoods and living standards, in line with the World Bank Policy on PforR. 69. Implementation support. Being a multisector Program, there needs to be focus on a timebound process for bolstering the capacities of key sector institutions for ensuring inclusiveness in sector/resource planning and implementation. In addition, establish Program-level grievance redress mechanisms (GRMs) and strengthen existing ones (of sector agencies) to make them more transparent and accountable. 70. Social risk rating. The social risk rating is assessed as being ‘Substantial’ as certain investments are likely to lead to adverse social impacts, particularly in the case of the road sector. These investments are likely to lead to removal of non-titleholders, especially in areas where roads pass through settlements, which tend to have large encroachments. Current institutional capacities within the PWD are not aligned with World Bank policies, which carry additional reputational risks for the World Bank (according to the PWD Government Order (CE Page 20 The World Bank The Resilient Kerala Program (P174778) Roads/General-3/2020-21) on ‘Eviction of Illegal Constructions and Encroachments on Roads under Public Works Department’ encroachers are to be evicted from roads and their Right of Ways). Institutional responsibility for land acquisition in road projects lies with the PWD. Existing institutional capacity of PWD will be bolstered through capacity building of PWD staff on land management practices, which is intended to also enable them to ensure the Program is implemented as per World Bank PforR policy. RKI as the coordinating agency will provide oversight and ensure consistency in management of acquisition related social impacts with the Bank Policy. These investments are also likely to lead to large labor influx at select sites with likely adverse impacts on host communities. There are also likely risks of increased GBV/SEA due to the transfer of social protection entitlements into the bank accounts of female members of vulnerable households. The risks related to GBV/SEA associated with the expected labor influx will be mitigated through strengthening existing grievance redress mechanisms at the state, department and local levels to enhance transparency and responsiveness by enabling creation of an open log of grievances and redressal actions and through improving PWD’s tender documents to include related contractual obligations and mechanisms for monitoring these obligations. Citizen Engagement 71. Over the last 25 years, Kerala has formalized a system for citizen engagement through its People’s Plan Campaign. Every year, the LSGIs are expected to go back to their communities to receive feedback on their past year’s performance through a process of community monitoring or social audit and seek their inputs for next year’s annual development plan. Local governments have also been relying on community consultations for articulation and inclusion of needs of different social constituencies and women in these plans. The State engages with socially vulnerable and marginalized groups such as SC/ST and the elderly to articulate their needs for the preparation of tribal sub-plans for STs, special component plans for SCs, and action plans for the elderly, apart from preparation of a gender sub-plan for earmarking funds for women’s development. The State relies heavily on institutions such as the Kudumbashree for the empowerment of women and draws upon their support to expand the outreach of schemes and to deliver a large number of public services. Other community-based organizations with a statewide footprint, such as Volunteer Youth Action Force and Apada Sena (emergency response volunteer force), also support the State in emergency preparedness and response on a voluntary basis. 72. The proposed Program will adopt these approaches for extending community outreach and use existing social capital for more intensive and participatory planning, such as for the preparation of river basin management plans, DRM plans, and urban master plans, apart from using these community collectives for expanding outreach of health/disease surveillance or social protection schemes. The Program also aims to strengthen department-level grievance systems, including those of local governments, apart from creating a Program-specific GRM to ensure availability of a platform to provide feedback and to register grievances and complaints with respect to the Program investments. 73. Communities and individuals who believe that they are adversely affected as a result of a Bank supported PforR operation, may submit complaints to the existing program grievance redress mechanism 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 http://www.inspectionpanel.org. Page 21 The World Bank The Resilient Kerala Program (P174778) V. RISK 74. Overall, the Program faces Substantial risks to achieving its development outcomes. Risks associated with political and governance, macroeconomic, environment and social, stakeholders, and fiduciary are considered ‘Substantial’. The GoK has invested on key reforms and improvements in state capabilities and resilience across sectors in the last two years, with support of the World Bank, KfW, and other development partners. The risks associated with sector strategies, policies, technical design of the Program, and institutional capacity for implementation and sustainability are rated ‘Moderate.’ 75. Political and governance risk is rated Substantial, given that the upcoming State elections will bring a new government to power. The reforms and the Program contents have broad appeal across stakeholders, on account of the wide-ranging consultations held during the formulation of the RKDP and preparation of the DPO. At the political level, through RKI, consultations were held with various political groups on key reforms and planned activities in the past. 76. Macroeconomic risk is rated Substantial. Kerala has high fiscal deficits due to low own-revenues and high expenditures, and with decline in growth due to the COVID-19 crisis, short-term public expenditures are expected to go up substantially. The GoK needs to manage deficits through higher revenue mobilization and greater expenditure controls to meet the FRBM Act targets. The World Bank will be providing a TA to the DoF to strengthen its capacities to assess and manage macroeconomic and fiscal risks and explicitly focus on fiscal sustainability. 77. The risk associated with technical program design is rated Moderate. The GoK’s efforts, supported by the World Bank and other development partners, to strengthen the State’s capabilities under the aegis of the RKDP provides a robust foundation for this Program. Thus, the technical risks are limited, as the ground for implementation has already been laid out. Since the Program focuses on the DPO sectors, except for the addition of health sector, the risk of dealing with the unchartered is limited. 78. The fiduciary risk is rated Substantial. Given the decentralized nature of the Program, there is an inherent risk associated with variations in fiduciary capacity, compliance and co-ordination of FM and procurement processes. The fiduciary risks will be mitigated through development of guidance to address procurement transparency and accountability including streamlining complaint redressal mechanism with debarment provisions, obtaining of utilization certificates and financial reports from the IAs handling, strengthening assessment of internal controls, strengthening of assessment of financial control at sub-district level of program implementation and provision of support to RKI to closely monitor procurement and FM performance. The actions to mitigate the fiduciary risks have been included in the PAP (Annex 6). With implementation of these mitigation measures, the fiduciary systems are anticipated to provide reasonable assurance that Program funds will be used for the intended purpose. However, the risk is still retained as substantial on account of the inherent risk and the same shall be re-assessed as the implementation progresses. 79. The environment and social risk is rated Substantial as certain investments are likely to have adverse social impacts. This is particularly in the case of roads, where investments are likely to lead to the removal of non- titleholders, especially in urban settlements, which tend to have large number of encroachments. In addition, the road sector carries the risk of inflow of migrant labors (labor influx) for the host communities. Many departments and local governments have experience of working with local communities but have limited capability to manage sector-specific risks and gaps during sectoral planning and their associated investments. On environmental risks, the implementing agencies have the capacity to manage construction-related impacts with the support of external Page 22 The World Bank The Resilient Kerala Program (P174778) consultants as necessary. The residual risks will be mitigated through the capacity building included in the PAP (Annex 6). 80. Stakeholder risk is rated Substantial. Planned actions in some sectors, such as transport, WRM, water supply, agriculture, and urban planning, may have direct implications to local communities and civil society organizations. While the outcome of the operations will be beneficial to the State as a whole, it would be critical for RKI and the departments to ensure that a robust consultative process as defined in the RKDP and in the Program documents is followed during implementation. 81. Other risks associated with the impacts of COVID-19 on Program implementation are rated Substantial. In the short term, the pandemic will likely have an impact on Program implementation in the four Program districts, especially in mobilizing stakeholders and carrying out investment activities. Over the medium term, however, with the rollout of the vaccination program, it is expected that these risks will be reduced. . Page 23 The World Bank The Resilient Kerala Program (P174778) ANNEX 1. Adjustments to the India World Bank Group Country Partnership Strategy in Response to COVID-19 Pandemic 1. The COVID-19 pandemic affected economic activity significantly. In response to the pandemic, the Government of India (GoI) implemented a strict nationwide lockdown between March and May 2020 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 percent 20 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 relative 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 FY21 21: • 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 growth 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. 20 World Bank staff estimates 21 World Bank staff calculations Page 24 The World Bank The Resilient Kerala Program (P174778) • Outlay of Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) - a universal 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. WBG support for responding to the crisis 5. 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. 6. 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-19 Assistance 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 25 The World Bank The Resilient Kerala Program (P174778) 7. 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 26 The World Bank The Resilient Kerala Program (P174778) ANNEX 2. RESULTS FRAMEWORK MATRIX 22 Results Framework COUNTRY: India The Resilient Kerala Program Program Development Objective(s) The objective of the Program is to enhance Kerala’s resilience against the impacts of climate change and natural disasters, including disease outbreaks and pandemics. Program Development Objective Indicators by Objectives/Outcomes RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 RA 1: Strengthening transversal systems for resilience DoF implements at least Fiscal sustainability of GOK to GOK’s debt to Gross State GoK’s debt to Gross five short- to medium- cope with disease outbreaks Domestic Product (GSDP) DoF has adopted a debt State Domestic Product DLI 1 term priority actions in and natural disasters is ratio is 37.3 percent (WB management plan. (GSDP) ratio is below the debt management strengthened (Text) estimate for FY20/21). 35%. plan. Women’s access to post- Safety net payments are Bank accounts for relief 500,000 women owned 100,000 women are disaster adaptive safety net processed to the head of payments are registered bank accounts are benefiting from relief payment is enhanced (Text) the household regardless under eligible female registered for relief payments through DBTs 22 The DPO level and Intermediate Results Indicators within this Results Framework (incl. definition, baseline, intermediate targets, end target) will apply to all IFIs and represents the collective results and outcomes to be achieved from activities supported by IBRD, AIIB and AFD joint co-financings. The proposed AFD co-financing of €100 million is subject to approval by the Department of Economic Affairs (DEA). Page 27 The World Bank The Resilient Kerala Program (P174778) RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 of the gender. member of beneficiary payments through Direct in Pamba Basin districts. households. Benefit Transfers (DBTs). State level DRM plans 3.9 million people are People are benefiting from and emergency response benefiting from local local DRM plans and One protocols are in place, DRM plans and One Health Community but local level Health Community Surveillance systems in Pamba preparedness to disasters Surveillance systems in Basin districts (Text) and disease outbreaks is Pamba Basin districts. low. (Gender disaggregated) Share of climate adaptation or mitigation investments by 0.00 20.00 LSGIs in Pamba Basin districts has increased (Percentage) RA 2: Embedding resilience in key economic sectors 4.8 million people are benefiting from flood People are benefiting from early warning services flood early warning services Not available. and flood protection and flood protection measures interventions in Pamba in Pamba Basin (Text) Basin districts. (Gender disaggregated) . Page 28 The World Bank The Resilient Kerala Program (P174778) . Intermediate Results Indicator by Results Areas RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 RA 1: Strengthening transversal systems for resilience A State Unified Database 100,000 beneficiary has been built for the households are receiving There is no Unified provision of safety nets 500,000 beneficiary social protection benefits Disaster-related adaptive Database of beneficiary in case of disaster, households are (adaptive safety net safety net system of GOK is DLI 2 households for direct populated with registered in the State’s /insurance) through direct strengthened (Text) benefit transfers (DBTs). beneficiary data using Unified Database. benefit transfers (DBTs) clear data protection linked to the state’s protocols. unified database. $0 mobilized through DoF has mobilized $50 DoA has developed and market-based disaster risk million using market- notified guidelines on DoF has adopted and financing mechanism in based disaster risk Disaster risk financing and payment norms, notified institutional 33,000 farmers from Pamba Basin. Low uptake financing instrument to insurance capacity of GoK and modalities, mechanism and Pamba Basin districts are DLI 3 of insurance by complement the State vulnerable households in administrative rules, and implementing enrolled in crop households: 27,578 Disaster Response Fund Kerala are improved (Text) monitoring arrangements for insurance. farmers insured (< 2 (SDRF) / Chief Minister's arrangements for crop disaster risk financing. percent of farmers) in Distress Relief Fund insurance. Pamba Basin. (CMDRF). DTCP, with support from KILA, has developed and notified the guidelines KILA has trained 9 urban 4 urban local bodies in ULBs developed and Urban Master Plans are for risk-informed master local bodies in Pamba Pamba Basin districts sanctioned risk-informed not risk-informed; many DLI 4 planning for the state, Basin districts on risk- have sanctioned the final Urban Master Plans and are not sanctioned; and and the training informed urban master urban master plans and Priority Action Plans (Text) few are implemented. program for urban local planning. priority action plans. bodies in Pamba Basin districts. Page 29 The World Bank The Resilient Kerala Program (P174778) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 Disaster and Climate Action Tracker (DCAT) tool is developed and adopted for No Yes Yes Yes Yes Yes assessing climate adaptation and mitigation investments (Yes/No) 150 LGs in Pamba Basin districts have KSDMA has downscaled 100 LGs in Pamba Basin There lacks of integration 200 LGs in Pamba Basin satisfactorily completed 150 LGs have been climate models and districts have been Climate risk Information is and use of local level districts have integrated local level emergency assessed through DCAT provided this assessed through DCAT integrated into local body DRM DLI 5 climate risks to climate information into management exercises and achieved enhanced information to all Local and achieved the target plans (Text) strengthen local level the local body disaster coordinated by KSDMA target of 50% co-benefits Governments (LGs) in of 30% co-benefits preparedness. risk management plans. as per the updated local score. the State. score. body disaster risk management plans. 200 LSG resource 700 LSG resource 1200 LSG resource 1700 trained LSG GOK lacks of capacity to 1700 trained LSG resource persons and persons and persons and resource persons and integrate DRM and persons and functionaries Capacity of GOK is enhanced functionaries are trained functionaries are trained functionaries are trained functionaries are climate risk into planning are mobilized for climate- on disaster and climate risk- in climate-informed in climate-informed in climate-informed mobilized for climate- and tools to enforce informed DRM informed urban and DRM DRM investment DRM investment DRM investment informed DRM Urban and DRM plans as investment planning, planning (Text) planning, DCAT, and risk- planning, DCAT, and risk- planning, DCAT, and risk- investment planning, well as to monitor climate DCAT, and risk-informed informed urban master informed urban master informed urban master DCAT, and risk-informed change co-benefits. urban master planning. planning. planning. planning. urban master planning. RA 2: Embedding resilience in key economic sectors Disease surveillance, referral The district level IPHLs 7 district level IPHLs and 7 district level IPHLs are care and case management are have low capacity on 7 districts and one apex one apex center are 6,000,000 beneficiaries fully operational and improved at district level outbreak investigation, center have prepared participating in at least are utilizing specialized each IPHL is undertaking through Integrated Public referral services and comprehensive plans to one outbreak tests offered by IPHLs. at least 1200 culture and Health Laboratories (IPHLs) informing infectious operationalize IPHLs. investigation in the past (Gender disaggregated) sensitivity tests annually. (Text) diseases management. quarter. Page 30 The World Bank The Resilient Kerala Program (P174778) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 DoHFW has provided No formal district level DoHFW has DoHFW has identified and Capacity to track and respond training to 250,000 LG DoHFW undertakes 150 LGs are One Health (OH) operationalized district controlled at least one to zoonotic disease outbreaks and Kudumbashree routine joint disease implementing coordination platform. No level OH coordination zoonotic disease outbreak of human importance in a DLI 6 members on protocols outbreak investigations community based OH community based OH platform with trained of human importance in timely manner is strengthened for community based OH and inspections in 4 surveillance in Pamba surveillance protocols and and certified staff in Pamba Basin districts in a (Text) surveillance in Pamba Pamba Basin districts. Basin districts. systems. Pamba Basin districts. year. Basin districts. River Basin Conservation WRD has implemented at WRD has developed Integrated River Basin No Integrated River Basin and Management WRD has adopted and WRD has interfaced the least two critical flood forecasting and Management Plan is developed Management Plan has Authority (RBCMA) is operationalized WRM systems with investments identified in DLI 7 integrated reservoir and implemented for Pamba been developed for fully operational with integrated river basin KSDMA, DoA, PWD and the Integrated River Basin operation systems for Basin (Text) Pamba Basin. technical and plan for Pamba Basin. LSGD. Management Plan for Pamba Basin. operational staff. Pamba Basin. Small Farmer Agribusiness Consortium Farmer Producer Organizations (SFAC) has entered an 12,500 farmers have 15 FPOs have increased (FPOs) have increased access 12 FPOs exist across all agreement with an Agri- DLI 8 been mobilized into at access of farmers to new to new and organized markets Pamba Basin districts. Business Promoting least 25 FPOs. and organized markets. (Text) Agency (ABPA) to support FPOs in Pamba Basin districts. Female members in the Board of Directors of all FPOs 5.00 25.00 (Percentage) Integrated Agriculture Agriculture Management 30,000 farmers across 80,000 farmers across 16 Farmers in 16 AEUs have Management Information System is AEU-wise plans are 16 AEUs have accessed AEUs have access to access to technical and Information System launched with one prepared for 16 AEUs in technical and financial technical and financial financial support for AEU-wise (IAMIS) is expanded to scheme (crop loan Pamba Basin. support as per AEU plans support through as per designated crops (Text) include all modules and assistance). through IAMIS. AEU plans IAMIS. functions. Page 31 The World Bank The Resilient Kerala Program (P174778) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 Forward Works Program 400 km of CRN is meeting Core Road Network (CRN) is PWD has launched the (FWP) is generated for at Zero km of CRN is resilient standards in rehabilitated and/or climate compatible Road least 6000 km of CRN meeting resilient service Pamba Basin with maintained to meet resilient DLI 9 Maintenance with budgetary standards in the Pamba sustainable asset service standards in the Pamba Management System allocation through a Basin. management practices Basin (Text) (RMMS). separate climate works established. budget head. . Page 32 The World Bank The Resilient Kerala Program (P174778) . Monitoring & Evaluation Plan: PDO Indicators Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection Fiscal sustainability of the GOK will be monitored Fiscal sustainability of GOK to cope with Report published by RBI through measuring its total disease outbreaks and natural disasters is Annual RBI, DoF and DoF in public RKI (PMU) debt to Gross State strengthened domain Domestic Product (GSDP) ratio. Bank accounts for relief payments are registered The unified database for under eligible female Women’s access to post-disaster adaptive beneficiary households member of beneficiary Biannual DoF, DoR RKI (PMU) safety net payment is enhanced and progress report by household. Payments are DoF and DoR channeled through these bank accounts. Number of people living in Pamba Basin districts People are benefiting from local DRM where local DRM plans are plans and One Health Community LSGD, DoHFW, updated, and One Health Annual Progress report RKI (PMU) Surveillance systems in Pamba Basin DoF, DoAHD Community Surveillance districts systems are operational by LGs. Share of climate adaptation Share of climate adaptation or mitigation or mitigation investments investments by LSGIs in Pamba Basin by LSGIs in Pamba Basin Annual LSGD DCAT, Progress Report RKI (PMU) districts has increased districts measured by the DCAT People are benefiting from flood early Number of people living in warning services and flood protection Pamba Basin districts Annual WRD MIS, Progress Report RKI (PMU) measures in Pamba Basin where flood early warning Page 33 The World Bank The Resilient Kerala Program (P174778) services are provided, and flood protection measures . are implemented. Page 34 The World Bank The Resilient Kerala Program (P174778) . Monitoring & Evaluation Plan: Intermediate Results Indicators Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection This indicator measures key milestones in enhancing protection of vulnerable Disaster-related adaptive safety net The Unified Database, households and Annual DoF RKI (PMU) system of GOK is strengthened Progress Report strengthening GoK’s financial capacity to manage disaster risks. This indicator measures key milestones in institutionalizing the planned Disaster Risk Financing and Insurance Strategy as well as the Disaster risk financing and insurance development and capacity of GoK and vulnerable Annual DoF, DoR, DoA Progress Report RKI (PMU) implementation of a risk households in Kerala are improved transfer mechanism in Pamba Basin and for agriculture sector to reduce the funding gap related to disaster risk management. This indicator measures the key outcomes of the ULBs developed and sanctioned risk- capacity building program informed Urban Master Plans and Priority provided by DTCP and KILA Annual LSGD, KILA Progress Report RKI (PMU) Action Plans for ULBs on risk-informed urban planning and the development of risk- Page 35 The World Bank The Resilient Kerala Program (P174778) informed Master Plans and Priority Action Plans in Pamba Basin. This measures the adoption Disaster and Climate Action Tracker of DCAT for planning (DCAT) tool is developed and adopted for investments and evaluation Annual LSGD Progress Report RKI (PMU) assessing climate adaptation and of scores obtained by LSGs mitigation investments for climate and disaster co- benefits. Local DRM plans are updated with climate proofing process and Climate risk Information is integrated into emergency response Annual KSDMA, LSGD DCAT, Progress Report RKI (PMU) local body DRM plans protocols by LGs. Investments made by the LGs are climate and disaster risk informed. This indicator will monitor number of LSG resource persons and functionaries Capacity of GOK is enhanced on disaster trained on climate- and climate risk-informed urban and DRM informed DRM and Annual LSGD Progress Report RKI (PMU) planning investment planning, DCAT application, and risk- informed urban master planning respectively. The indicator measures the Disease surveillance, referral care and number of district level case management are improved at district IPHLs with improved Annual DoHFW HMIS RKI (PMU) level through Integrated Public Health capacity on disease Laboratories (IPHLs) surveillance, outbreak investigation, referral Page 36 The World Bank The Resilient Kerala Program (P174778) services and case management. It also measures the number of beneficiaries utilizing the specialized tests offered by these IPHLs. The indicator measures the capacity of GOK to track Capacity to track and respond to zoonotic and respond to zoonotic RKI (PMU), State disease outbreaks of human importance Monthly DoHFW IDSP reports disease outbreaks of Surveillance Unit in a timely manner is strengthened human importance in a timely manner. This indicator measures the development and implementation of Integrated River Basin Management Plan Integrated River Basin plan is developed and implemented for Pamba Annual WRD, RBCMA Progress Report RKI (PMU) for Pamba basin, flood Basin forecasting and sharing data with related departments. The access of FPOs to new and organized markets is Farmer Producer Organizations (FPOs) measured by increase in have increased access to new and Annual DoA MIS, Progress Report RKI (PMU) the value of marketed organized markets output at the beneficiary level. The share of female Female members in the Board of members in the Board of Annual DoA Progress Report RKI (PMU) Directors of all FPOs Directors for all FPOs. Farmers in 16 AEUs have access to Farmers that have accessed technical and financial support for AEU- technical and financial Biannual DoA IAMIS, Progress Report RKI (PMU) wise designated crops services for designated AEU Page 37 The World Bank The Resilient Kerala Program (P174778) crops will be captured under this indicator. Cumulative number of kilometers of priority CRN Core Road Network (CRN) is rehabilitated rehabilitated and/or and/or maintained to meet resilient Annual PWD MIS, Progress Report RKI (PMU) maintained meeting service standards in the Pamba Basin resilient standards in the . four Pamba Basin districts. Page 38 The World Bank The Resilient Kerala Program (P174778) . ANNEX 3. DISBURSEMENT LINKED INDICATORS, DISBURSEMENT ARRANGEMENTS AND VERIFICATION PROTOCOLS 23 . Disbursement Linked Indicators Matrix DLI_TBL_MATRIX DLI 1 Fiscal sustainability of GOK to cope with disease outbreaks and natural disasters is strengthened Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Outcome Yes Text 4,687,500.00 3.75 Period Value Allocated Amount (USD) Formula Baseline GOK’s debt to Gross State Domestic Product (GSDP) ratio is 37.3 percent (WB Estimates). Year 1 DoF has adopted a debt management plan. 687,500.00 None Year 2 - 0.00 None Year 3 - 0.00 None Year 4 DoF has implemented at least five short- to 2,500,000.00 $500,000 for each priority action medium-term priority actions in debt implemented, up to a maximum of management plan. $2,500,000 in the aggregate Year 5 GoK’s debt to GSDP ratio is below 35%. 1,500,000.00 None 23 The Disbursement Linked Indicators, disbursement arrangements and verification protocols will apply to all IFIs and represents the collective results and outcomes to be achieved from activities supported by IBRD, AIIB and AFD joint co-financings. However, the DLI allocation in the DLI matrix only reflects the portion of IBRD financing. The proposed AFD co-financing of €100 million is subject to approval by the Department of Economic Affairs (DEA). Page 39 The World Bank The Resilient Kerala Program (P174778) DLI_TBL_MATRIX DLI 2 Disaster-related adaptive safety net system of GOK is strengthened Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome Yes Text 10,000,000.00 8.00 Period Value Allocated Amount (USD) Formula Baseline No Unified Database of beneficiary households for DBT payments Year 1 A State Unified Database has been built for the 2,500,000.00 None provision of safety nets in case of disaster, populated with beneficiary data using clear data protection protocols. Year 2 - 0.00 None Year 3 500,000 beneficiary households are registered in 5,000,000.00 $10 for every beneficiary household the State's Unified Database registered Year 4 - 0.00 None Year 5 100,000 beneficiary households are receiving 2,500,000.00 $25 for every beneficiary household social protection benefits (adaptive safety net receiving social protection benefits /insurance) through direct benefit transfers up to a maximum of $2,500,000 in linked to the State’s Unified Database the aggregate Page 40 The World Bank The Resilient Kerala Program (P174778) DLI_TBL_MATRIX DLI 3 Disaster risk financing and insurance capacity of GoK and vulnerable households in Kerala are improved Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome Yes Text 10,000,000.00 8.00 Period Value Allocated Amount (USD) Formula Baseline Zero USD mobilized through market-based disaster risk financing mechanism in Pamba Basin. Low uptake of insurance by households: 27,578 farmers insured (less than 2 percent of farmers in Pamba Basin). Year 1 DoA has developed and notified guidelines on 2,000,000.00 None payment norms, modalities, administrative rules, and monitoring arrangements for crop insurance. Year 2 DoF has adopted and notified institutional 1,000,000.00 None mechanism and implementing arrangements for disaster risk financing. Year 3 33,000 farmers from Pamba Basin districts are 3,300,000.00 $100 per farmer up to a maximum enrolled in crop insurance. of $3,300,000 in the aggregate Year 4 - 0.00 None Year 5 DoF has mobilized $50 million using market- 3,700,000.00 $0.074 for each USD mobilized up to based disaster risk financing instrument to a maximum of $3,700,000 in the complement the State Disaster Response Fund aggregate (SDRF) / Chief Minister's Distress Relief Fund (CMDRF). Page 41 The World Bank The Resilient Kerala Program (P174778) DLI_TBL_MATRIX DLI 4 ULBs developed and sanctioned risk-informed Urban Master Plans and Priority Action Plans Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output Yes Text 7,500,000.00 6.00 Period Value Allocated Amount (USD) Formula Baseline Urban Master Plans are not risk-informed; many are not sanctioned; and few are implemented. Year 1 DTCP, with support from KILA, has developed and 1,350,000.00 None notified the guidelines for risk-informed master planning for the state, and the training program for urban local bodies in Pamba Basin districts. Year 2 - 0.00 None Year 3 KILA has trained 9 urban local bodies in Pamba 3,150,000.00 $350,000 per urban local body Basin districts on risk-informed urban master trained up to $3,150,000 in the planning. aggregate Year 4 - 0.00 None Year 5 4 urban local bodies in Pamba Basin districts have 3,000,000.00 $750,000 per urban local body up to sanctioned the final urban master plans and $3,000,000 in the aggregate priority action plans. Page 42 The World Bank The Resilient Kerala Program (P174778) DLI_TBL_MATRIX DLI 5 Climate risk Information integrated into local body DRM plans Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output Yes Text 17,500,000.00 14.00 Period Value Allocated Amount (USD) Formula Baseline There lacks integration and use of local level climate risks to strengthen local level DRM. Year 1 KSDMA has downscaled climate models and 2,000,000.00 None provided this information to all Local Governments (LGs) in the State. Year 2 200 LGs in Pamba Basin districts have integrated 2,000,000.00 $10,000 per LG up to $2,000,000 in climate information into the local body disaster the aggregate risk management plans. Year 3 100 LGs in Pamba Basin districts have been 4,500,000.00 $45,000 per LG up to $4,500,000 in assessed through DCAT and achieved the target the aggregate of 30% co-benefits score. Year 4 150 LGs in Pamba Basin districts have 3,000,000.00 $20,000 per LG up to $3,000,000 in satisfactorily completed local level emergency the aggregate management exercises coordinated by KSDMA as per the updated local body DRM plans. Year 5 150 LGs have been assessed through DCAT and 6,000,000.00 $40,000 per LG up to $6,000,000 in achieved enhanced target of 50% co-benefits the aggregate score. Page 43 The World Bank The Resilient Kerala Program (P174778) DLI_TBL_MATRIX DLI 6 Capacity to track and respond to zoonotic disease outbreaks of human importance in a timely manner is strengthened Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome Yes Text 15,000,000.00 12.00 Period Value Allocated Amount (USD) Formula Baseline No formal district level One Health (OH) coordination platform. No community based OH surveillance protocols and systems. Year 1 DoHFW has operationalized district level OH 3,000,000.00 None coordination platform with trained and certified staff in Pamba Basin districts. Year 2 DoHFW has provided training to 250,000 LG and 3,000,000.00 $12 for each member trained up to Kudumbashree members on protocols for $3,000,000 in the aggregate community based One Health surveillance in Pamba Basin districts. Year 3 DoHFW undertakes routine joint disease 3,000,000.00 $750,000 per district up to outbreak investigations and inspections in 4 $3,000,000 in the aggregate Pamba Basin districts. Year 4 150 LGs are implementing community based One 3,000,000.00 $20,000 per LG up to $3,000,000 in Health surveillance in Pamba Basin districts. the aggregate Year 5 DoHFW has identified and controlled at least one 3,000,000.00 None zoonotic disease outbreak of human importance in Pamba Basin districts in a year. Page 44 The World Bank The Resilient Kerala Program (P174778) DLI_TBL_MATRIX DLI 7 Integrated river basin management plan is developed and implemented for Pamba Basin Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Outcome No Text 10,000,000.00 8.00 Period Value Allocated Amount (USD) Formula Baseline No Integrated River Basin Management Plan has been developed for Pamba Basin Year 1 WRD has developed flood forecasting and 1,000,000.00 None integrated reservoir operation systems for Pamba Basin. Year 2 River Basin Conservation and Management 3,000,000.00 None Authority (RBCMA) is fully operational with technical and operational staff. Year 3 WRD has adopted and operationalized integrated 1,500,000.00 None river basin plan for Pamba Basin. Year 4 WRD has interfaced the WRM systems with 2,000,000.00 None KSDMA, DoA, PWD and LSGD. Year 5 WRD has implemented at least two critical 2,500,000.00 $1,250,000 per investment investments identified in the Integrated River implemented up to $2,500,000 in Basin Management Plan for Pamba Basin. the aggregate Page 45 The World Bank The Resilient Kerala Program (P174778) DLI_TBL_MATRIX DLI 8 Farmer Producer Organizations (FPOs) have increased access to new and organized markets Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Outcome Yes Text 15,000,000.00 12.00 Period Value Allocated Amount (USD) Formula Baseline 12 FPOs exist across all Pamba Basin districts Year 1 Small Farmer Agribusiness Consortium (SFAC) has 3,000,000.00 None entered an agreement with an Agri-Business Promoting Agency (ABPA) to support FPOs in Pamba Basin districts. Year 2 12,500 farmers have been mobilized into at least 5,000,000.00 $400 per farmer membership up to 25 FPOs. $5,000,000 in the aggregate Year 3 - 0.00 None Year 4 - 0.00 None Year 5 15 farmer producer organizations have increased 7,000,000.00 $466,666.67 per farmer producer access of farmers to new and organized markets. organization up to $7,000,000 in the aggregate DLI_TBL_MATRIX DLI 9 Core Road Network (CRN) is rehabilitated and/or maintained to meet resilient service standards in the Pamba Basin Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output Yes Text 35,000,000.00 24.00 Period Value Allocated Amount (USD) Formula Page 46 The World Bank The Resilient Kerala Program (P174778) Baseline Zero km of CRN is meeting resilient service standards in the Pamba Basin. Year 1 PWD has launched the climate compatible Road 2,000,000.00 None Maintenance Management System (RMMS). Year 2 - 0.00 None Year 3 Forward Works Program (FWP) is generated for 6,000,000.00 $1,000 per km of CRN generated by at least 6000 km of CRN with budgetary FWP with budget allocation, up to allocation through a separate climate works $6,000,000 in the aggregate budget head. Year 4 - 0.00 None Year 5 400 km of CRN is meeting resilient standards in 27,000,000.00 $67,500 per km of CRN meeting Pamba Basin with sustainable asset management resilient services standards, up to practices established. $27,000,000 in the aggregate . Page 47 The World Bank The Resilient Kerala Program (P174778) . Verification Protocol Table: Disbursement Linked Indicators DLI_TBL_VERIFICATION DLI 1 Fiscal sustainability of GOK to cope with disease outbreaks and natural disasters is strengthened Fiscal sustainability of the GOK will be monitored through measuring its total debt to Gross State Domestic Product (GSDP) Description ratio. Data source/ Agency DoF Verification Entity IVA • Year 1: IVA to confirm that DoF has adopted a debt management plan, which includes at least three-year rolling projections of the debt trajectory; assessment of borrowing costs and risks associated with current debt structure; and medium-term strategy for debt servicing and new issuances. • Year 2-3: IVA to confirm that at least five short-term (0-1 year) to medium-term (2-3 year) priority actions in debt Procedure management plan have been implemented. For example, priority actions may include actions such as: establishing a debt management unit in the DoF. • Year 4-5: IVA to report on GOK’s debt to GSDP ratio annually and confirm that the ratio is below 35 percent at end of the project. DLI_TBL_VERIFICATION DLI 2 Disaster-related adaptive safety net system of GOK is strengthened This indicator measures key milestones in enhancing protection of vulnerable households and strengthening GoK’s financial Description capacity to manage disaster risks. Data source/ Agency DoF Verification Entity IVA • Year 1: The GOK has agreed to use the NFSA (PDS) database as the base layer for the Unified Database, over the project period, beneficiaries from other social protection schemes would also be added to and registered in the database. The minimum data required would be the AAY households which is approx. 0.5 million500,000 as per the Procedure current data. The first disbursement can be considered once the Unified Database has been developed and notified, built and data for the AAY households ported from the NFSA (PDS) database. • Year 3: Disbursement shall be triggered once at least 500,000 beneficiary households are registered in the Unified Database. IVA will generate a Report of the Unified Database and check for capture of key data of core beneficiary Page 48 The World Bank The Resilient Kerala Program (P174778) households; and run check for duplication of households using the Unique ID number and/ or a combination of parameters (e.g., Name, date of birth, address, aadhar number, ration card number, telephone number). The exact algorithm for the de-duplication can be devised once status of existing data is known. • Year 5: Disbursement shall be triggered once 100,000 beneficiary households are receiving social protection benefits (adaptive safety net / insurance) through DBTs linked to the Unified Database • IVA will generate a Report of the Unified Database and check for capture of key data of core beneficiary households; and run check for duplication of households using the Unique ID number and/ or a combination of parameters. • IVA will prepare a consolidated report based on the evidence included in the Financial Flows Report(s) (of the DBT payments through the current system) detailing the number of beneficiary households who have received accounts- based payments (i.e. the number of active accounts which recorded a transaction) in an individual payment cycle and/or disaster related payment. Additionally, the IVA will corroborate that the sampled households on the DBT payroll are account holders and that their accounts have been credited in time according to the payment guidelines. Note: Database is Populated once the data is entered into the Unified database. Each household is considered as Registered once verified for the bank account and phone number and assigned a unique ID which has been communicated back to the beneficiary and acknowledged. DLI_TBL_VERIFICATION DLI 3 Disaster risk financing and insurance capacity of GoK and vulnerable households in Kerala are improved This indicator measures key milestones in institutionalizing the planned Disaster Risk Financing and Insurance Strategy as Description well as the development and implementation of a risk transfer mechanism in Pamba Basin and for agriculture sector to reduce the funding gap related to disaster risk management. Data source/ Agency DoF, DoA Verification Entity IVA • Year 1: IVA will verify that the guidelines on payment norms, modalities, administrative rules, and monitoring arrangements for the crop insurance have been developed and notified. Additionally, “draft” operating guideline detailing the implementation and administration of DRFI is posted on the website of relevant Government Procedure departments (DoF, DoR, RKI, and SDMA). • Year 2: IVA will verify the notification of a Government Order by the GoK detailing the Institutional framework and implementing arrangements for managing and administering disaster risk financing. Page 49 The World Bank The Resilient Kerala Program (P174778) • Year 3: IVA will use data only from AIMS portal, conduct random checks of seasonal enrollment processes in Pamba Basin district(s) to verify optimal functionality, usage of the mobile app/portal and timeliness in receiving data. Confirm whether reconciliation of data (between insurer, farmer, and banks providing crop loans) is within prescribed timeline. In addition to AIMS portal data, the DoA confirmation on DLI will also consider letter issued by Insurance company(s) confirming enrollment and its timelines from cutoff dates thereof. • Year 4-5: IVA will verify the total funds available for disaster risk management, and disaggregate by source i.e., SDRF/CDRF, raised through bond issue, purchase of reinsurance, and/or loan (contingent) agreement in place. Verify and document the various sources of financing and also potential use (to pay for risk reduction/resilience, post-disaster expenditures, to pay social benefits to the vulnerable households etc.). DLI_TBL_VERIFICATION DLI 4 ULBs developed and sanctioned risk-informed Urban Master Plans and Priority Action Plans This indicator measures the key outcomes of the capacity building program provided by DTCP and KILA for ULBs on risk- Description informed urban planning and the development of risk-informed Master Plans and Priority Action Plans in Pamba Basin. Data source/ Agency LSGD, KILA Verification Entity IVA • Year 1: IVA to confirm that the guidelines for risk-informed Master Plans and Priority Action Plans are developed by DTCP and KILA and notified by LSGD. • Year 2-3: IVA to confirm that training program is developed by KILA for DTCP and ULBs in Pamba Basin. ULBs are selected for preparing risk-informed Master Plans. Nine ULBs in the Pamba Basin trained on Risk-Informed Master Planning. Procedure • Year 4-5: IVA to confirm that four selected ULBs in Pamba Basin have completed (i) maps and databases including georeferenced cadastral and topographical maps as well as multi-hazard risk and vulnerability assessments; (ii) data collection, analysis and public participation processes; and (iii) conceptual Master Plans for internal review. The ULBs officially publish Draft Master Plan and Priority Action Plan for stakeholder feedback, review and revise the plan and approve it in the municipal council. Four selected ULBs complete the legal process for the Master Plan and Priority Action Plan including final sanction by GoK. DLI_TBL_VERIFICATION DLI 5 Climate risk Information integrated into local body DRM plans Description Local DRM plans are updated with climate proofing process and emergency response protocols by LGs. Investments made Page 50 The World Bank The Resilient Kerala Program (P174778) by the LGs are climate and disaster risks informed. Data source/ Agency LSGD, KILA, KSDMA Verification Entity IVA • Year 1: IVA to confirm that KSDMA has KSDMA has downscaled climate models and provided access to all LGs in the State. • Year 2: IVA to confirm that at least 200 LGs in Pamba Basin districts have integrated the downscaled climate information into the updated local body disaster risk management plans. • Year 3: IVA to confirm that at least 100 LGs in Pamba Basin districts have been assessed through DCAT and achieved Procedure the target of 30% co-benefits score. Disbursement can be requested for every 50 LGs meeting the target. • Year 4: IVA to confirm that at least 150 LGs in Pamba Basin districts have satisfactorily completed local level emergency management exercises coordinated by KSDMA as per the updated local body disaster risk management plans. Disbursement can be requested for every 50 LGs meeting the target. • Year 5: IVA to confirm that at least 150 LGs have been assessed through DCAT and achieved enhanced target of 50% co-benefits score. Disbursement can be requested for every 50 LGs meeting the target. DLI_TBL_VERIFICATION DLI 6 Capacity to track and respond to zoonotic disease outbreaks of human importance in a timely manner is strengthened The indicator measures the capacity of GOK to track and respond to zoonotic disease outbreaks of human importance in a Description timely manner. Data source/ Agency DoHFW Verification Entity IVA • Year 1: IVA to confirm the issue of official orders on creation and responsibilities of One Health coordination structures at the district level. • Year 2: IVA to confirm that DoHFW has provided training to at least 250,000 LG and Kudumbashree members on Procedure protocols for community based OH surveillance in Pamba Basin districts. • Year 3: IVA to confirm that DoHFW undertakes routine joint disease outbreak investigations and inspections in 4 Pamba Basin districts through reviewing IDSP and community surveillance data and documentation; conducting interviews with One Health teams and community surveillance team members; and reviewing of data generated by Page 51 The World Bank The Resilient Kerala Program (P174778) the PIED cells through documentation and select site visits; • Year 4: IVA to confirm that at least 150 LGs are implementing community based OH surveillance in Pamba Basin districts. Disbursement can be requested for every 50 LGs reached. • Year 5: IVA to confirm that at least one new Zoonotic disease outbreak of human importance has been identified and controlled in Pemba Basin districts in a year based on the final Outbreak report and verified by the State Surveillance Unit. The outbreak reporting system has a First Information Report informing about the outbreak and the final report providing details of actions taken and the status. The final report will be the one that will provide information on control (no more cases being reported including measures taken) and this will be confirmed by the State Surveillance Unit. DLI_TBL_VERIFICATION DLI 7 Integrated river basin management plan is developed and implemented for Pamba Basin This indicator measures the development and implementation of Integrated River Basin plan for Pamba basin, flood Description forecasting and sharing data with related departments. Data source/ Agency WRD, KSDMA, RBCMA, LSGD, DoA, KWA Verification Entity IVA • Year 1: IVA to confirm that WRD has developed and institutionalized flood forecasting and integrated reservoir operation systems for Pamba Basin through reviewing • Year 2: IVA to confirm the notification of River Basin Conservation and Management Authority (RBCMA) based on GO and evidence of key staff appointments. Procedure • Year 3: IVA to confirm that WRD has adopted and operationalized integrated river basin plan for Pamba Basin based on GO. • Year 4: IVA to confirm the adoption of the Flood forecasting data sharing protocol. • Year 5: IVA to conduct annual physical inspection and confirm that at least two critical investments implemented per the integrated river basin management plan have been implemented to manage flood risks. DLI_TBL_VERIFICATION DLI 8 Farmer Producer Organizations (FPOs) have increased access to new and organized markets The access of FPOs to new and organized markets is measured by increase in the value of marketed output at the Description beneficiary level. Page 52 The World Bank The Resilient Kerala Program (P174778) Data source/ Agency DoA Verification Entity IVA • Year 1: IVA confirm recruitment of ABPA to support the Small Farmer Agribusiness Consortium (SFAC) in building capacity of the FPOs in Pamba Basin districts. Procedure • Year 2-3: IVA confirms formation of 25 FPOs and membership. • Year 4-5: IVA confirms that at least 15 FPOs have increased access to new and organized markets measured by increase in the value of marketed output at the beneficiary level. DLI_TBL_VERIFICATION DLI 9 Core Road Network (CRN) is rehabilitated and/or maintained to meet resilient service standards in the Pamba Basin CRN rehabilitated and/or maintained with resilient standards in the four Pamba basin districts through climate informed Description investment works and long-term performance-based maintenance contracts. Data source/ Agency PWD Verification Entity IVA Evidence for the compliance of this DLI shall stem from a report prepared PWD and audited by the independent auditor. The report shall include in particular: • Year 1: Status on RMMS implementation and its mainstreaming in PWD and its usage generate FWD for CRN. CRN refers to an identified 7000 km of state road network that carries 70-80% of the total traffic on the state roads. Status on institutionalization of RMMS Cell, level of staffing and establishment of Climate Cell in KHRI • Year 2-3: IVA to confirm that FWP has been generated for at least 6000 km of CRN with budgetary allocation from PWD and through a separate climate works budget head. Disbursement can be requested for every 3000 km of CRN Procedure generated by FWP. • Year 4-5: IVA to confirm that at least 400 km of CRN is meeting climate resilient standards based on the following evidence: o Status of award of cumulative 400 km of long-term road maintenance contracts and climate informed investment works in the four Pamba basin districts and its satisfactory operational status in terms completion of at-least the Initial Rectification and Minor improvement works in case of long-term maintenance contracts and 100 % Physical Progress achieved for Work Contracts, service levels and E&S safeguards management by an Independent Monitoring Agency like PMC; Page 53 The World Bank The Resilient Kerala Program (P174778) o Status of Physical, Financial Progress and E&S safeguards management of CRN Rehabilitation works with resilient standards in the four Pamba basin districts by an Independent Monitoring Agency like PMC; o Evidence on compliance of the improved riding quality of roads maintained under long-term road maintenance contracts in comparison to a sample of 100 km of other CRN located in Pamba Basin districts based and based on Roughness survey; o Status on implementation and use of climate module of RMMS to develop climate works program; o Disbursement may be requested for every 100 km and up to 400 km of CRN meeting resilient standards in . Pamba Basin. Page 54 The World Bank The Resilient Kerala Program (P174778) ANNEX 4. SUMMARY TECHNICAL ASSESSMENT A. Introduction 1. A Technical Assessment was carried out for the proposed RKP. The purpose of the Technical Assessment was to evaluate the adequacy of Program arrangements across four aspects: (a) strategic relevance and technical soundness, (b) Expenditure Framework, (c) Results Framework and M&E capacity, and (d) economic justification. This annex presents a summary of the Technical Assessment. A Technical Assessment report is part of the Program documentation. Detailed climate vulnerability context and specific climate adaptation and mitigation actions supported by the Program are presented in Section B.3 of the Technical Assessment dated April 2021 24. B. Strategic Relevance 2. Kerala is highly vulnerable to natural disasters and changing climatic dynamics given its location along the seacoast and steep gradient along the slopes of the Western Ghats. The State Disaster Management Plan identifies 39 types of known and reported hazard types in the State that may turn disastrous in the event of lack of proper preparedness and risk reduction planning. According to climate projections for 2021–2050, the State’s annual average maximum temperature is projected to increase by 1.3°C and the annual average minimum temperature is to increase by 1.1°C. Further, the models point to an increase in erratic diurnal rainfall with reduced monsoon rainfall, which could increase flooding and surface run-offs and reduced groundwater recharge from rainfall. 3. Kerala has been severely affected by the COVID-19 pandemic and is vulnerable to zoonotic diseases. The State has experienced recurrent outbreaks of zoonotic diseases during the past decade including Nipah virus, H1N1, and Kayasanur forest disease. The State also experiences recurrent outbreaks of chikungunya and dengue. The ongoing COVID-19 pandemic has clearly demonstrated the vulnerabilities of Kerala to future disease outbreaks. Its large forest cover increases Kerala’s vulnerability to disease outbreaks, especially zoonotic diseases. 4. Disasters have a significant impact on Kerala’s fiscal resilience and economic development. The State has run high fiscal deficits in recent years, which has resulted in a steady increase in the public debt- to-GSDP ratio. The COVID-19 pandemic has significantly affected the near-term growth outlook for Kerala and deteriorated its fiscal prospects. Tourism and remittance income, which are the key revenue streams, have faced the direct impact of the pandemic. 5. Reducing vulnerabilities and building resilience to disasters and disease outbreaks in Kerala requires a multidisciplinary and multi-pronged approach. The RKDP, which was developed by the GoK in 2019 and is the State’s road map to a green and resilient recovery, is anchored in a common but differentiated approach that (a) recognizes common vulnerabilities and threats to communities and assets from disasters and climate change and (b) also considers the different levels of vulnerability, development, and coping capacities across the various sectors and districts. The multi-pronged approach envisaged under the RKDP encompasses (a) tiered engagement—state, district, and local levels; (b) multisectoral engagement with policy and institutional reforms, capacity building, and investments; and 24 See Technical Assessment (prepared by the World Bank, dated April 2021), Section B.3. on Climate Change Co-benefits of the Program and Table 1: Climate Adaptation and Mitigation Actions by DLI. Page 55 The World Bank The Resilient Kerala Program (P174778) (c) leveraging of a broad coalition of public, private, and civil society-based stakeholders for the rebuilding efforts. In the aftermath of COVID-19, Kerala is committed to implement the ‘One Health’ approach to address structural challenges in early surveillance and coordinated responses to pandemics. 6. The proposed RKP is an important step in a programmatic engagement between the GoK and the World Bank and other partners. The Program is aligned with the priorities of the RKDP and driven through the RKI institutional framework. While the RKDP has a broader mandate, the World Bank support is focused on cross-cutting areas and critical sectors where the impact on enhancing resilience will be most significant and this support would provide the greatest value addition. The Program builds on the prior actions of the past DPO, a broader set of sectoral engagements and investment projects, a programmatic TA program, and partnerships. The Program’s contextual relevance is amplified due to exigencies arising from COVID-19. Thus, the Program’s strategic relevance is deemed high. C. Program Description 7. RA 1: Strengthening transversal systems for resilience. The results will focus on strengthening transversal systems—both foundational areas and cross-cutting elements—of resilience to help the State prepare and respond systemically to the challenges posed by exogenous shocks from climate change, natural disasters, or disease outbreaks. Key objectives include (a) financial protection against disasters through sustainable fiscal and debt management, (b) a comprehensive disaster risk financing (DRF) and social protection system, and (c) disaster preparedness through mainstreaming climate and disaster risk- informed urban and DRM planning. Enhanced financial protection against disasters will be achieved through the following activities: (a) Sustainable fiscal and debt management. Kerala’s limited fiscal space and high levels of debt have severely constrained its ability to deal with major exogenous shocks. Initial steps were undertaken in the DPO to enhance revenues through a masala bond issue and a flood cess. The RKP will strengthen the GoK’s ability to deal with contingent liabilities due to natural disasters and disease outbreaks. The Program will support establishment of a debt management unit in the Department of Finance (DoF) and implement a debt management plan to scale down the State’s debt-to-GSDP ratio to a sustainable trajectory. The Bank will support through technical assistance (TA) activities to enhance the capacity of this unit to strengthen revenue mobilization and expenditure management. (b) Comprehensive disaster risk finance and social protection system. The existing system for DRF has several issues. Delays in delivering timely and adequate assistance to affected and vulnerable households is a key issue, along with the increasing burden on the State’s financial resources. The RKP will support the GoK to develop a comprehensive DRF framework that bolsters the financial resilience of the Government and the communities; build a unified database of vulnerable households and a payments platform which triggers post-disaster safety net payments to the bank account of eligible beneficiaries on time; 25 roll out modified crop risk insurance with risks transferred to the insurers; and mobilize market- based resources, over and above the State Disaster Relief Fund, either through issuance of bonds or purchase of (re)insurance. The Program envisages disbursing disaster-related 25 With adequate protection of the personal data collected, integrated, and processed. Page 56 The World Bank The Resilient Kerala Program (P174778) payments to the bank accounts of the female head of eligible households. Global evidence suggests that when women in the household receive funds, household spending patterns tend to shift toward consumption goods that are more beneficial to children, 26 and women’s relative bargaining power is strengthened. 27 Complementing the above, decision-making capabilities and financial literacy of women will be enhanced through (i) conducting information dissemination drives for women on post-disaster safety net payments and (ii) creating help desks at the community level to achieve full coverage of bank accounts for women to receive and access payments. In doing this, the RKP will rely on programs such as Theeramythri that support self-employment and empowerment of fisherwomen. To address potential shifts in intra-household power dynamics and risks of GBV/SEA and partner violence due to channeling entitlements into bank accounts of women, the Program will strengthen community-level support systems for GBV/SEA prevention and provide referral support to victims of domestic violence. (c) Risk-informed urban master plans for cities and towns. Unplanned developments and lack of investments in resilient urban infrastructure and services increased the impacts of 2018 and 2019 floods and landslides. Through the earlier DPO and TA, the Town and Country Planning Act (TCP Act) was amended by the GoK to mandate risk-informed master plans by urban local bodies (ULBs), and guidelines for the use of annual plan funds were restructured to enable and encourage multi-year investments in urban infrastructure. The RKP will support rollout of these reforms across the State and incentivize the ULBs in the Pamba River Basin districts for adoption of risk-informed master plans and priority action plans. Beyond the Program, building on experience, the state department will support ULBs across the State to adopt risk-informed master plans. (d) Risk-informed local disaster risk management plans. The World Bank, through the National Cyclone Mitigation Project 2 and the DPO, has been supporting the Kerala State Disaster Management Authority (KSDMA) to establish norms, systems, and capacities for strengthening local level disaster risk planning and management across the State. The RKP will build on this and support the formulation/updating of DRM plans with local-level climate risk information, for all the 263 Local Self-Government Institutions (LSGIs) in the Pamba River Basin districts. The Program will include (a) the development of technical tools and training in DRM, (b) multi-year investment planning integrating climate risk information at the local level, and (c) support for the development of a scoring matrix called the Disaster and Climate Action Tracker (DCAT) to evaluate local investments which are climate and disaster risk informed. DCAT will be used by the Local Self-government Department (LSGD) to establish a performance- and reward-based system for incentivizing LSGIs that mainstream climate and disaster risk in their development and investment planning. 8. RA 2: Embedding resilience in key economic sectors. This results area aims at embedding standards, norms, and practices of resilience in a sample of socioeconomic sectors—health, WRM, 26 Behrman, J.R. and Hoddinott, J. (2005). Programme Evaluation with Unobserved Heterogeneity and Selective Implementation: The Mexican PROGRESA Impact on Child Nutrition. Oxford Bulletin of Economics and Statistics, 67: 547-569. https://doi.org/10.1111/j.1468-0084.2005.00131.x 27 Independent Evaluation Group (2014). Results and Performance of the World Bank Group 2014. https://ieg.worldbankgroup.org/sites/default/files/Data/Evaluation/files/rap2014.pdf Page 57 The World Bank The Resilient Kerala Program (P174778) agriculture, and roads—to demonstrate an integrated approach to build multisectoral and multidimensional resilience. Key objectives and interventions to achieve the envisaged results are detailed as follows: (a) Resilient public health systems. High population density, large number of non-resident citizens and international travelers, aging population with co-morbidities, and large forest cover increase Kerala’s vulnerability to large-scale disease outbreaks, especially zoonotic diseases, such as Nipah and COVID-19. Critical bottlenecks in the GoK’s preparedness for disease outbreaks and pandemics include lack of health surveillance, coordination, and critical infrastructure systems at the district and local levels. The RKP intends to strengthen the public health systems of the GoK for disease outbreak preparedness and prevention. Specific activities include (a) operationalizing integrated public health laboratories (IPHLs) supporting disease surveillance and enhanced clinical case management in the Program districts; (b) establishing a One Health platform to strengthen coordination, collaboration, networking, joint surveillance, preparedness, and response to counter health hazards; and (c) implementing community-based One Health surveillance practices by LSGIs. An IT- enabled platform will be established for community-level networking of Prevention of Epidemics and Infectious Diseases (PEID) cells at medical colleges to undertake operational and applied research to inform State disease containment policies. (b) Integrated and sustainable water resources management. Declining ground water levels and high variation of rainfall over the years exacerbated by climate change have increased water vulnerability. There is a need for integrated water resource management (IWRM) to unlock the development potential of water resources, including making more productive use for hydropower, agriculture, fisheries, energy, and domestic needs, and reducing water- related risks and vulnerability to floods, erosion, sedimentation, environmental water stress, and pollution. A draft River Basin Conservation and Management Authority (RBCMA) Act was prepared under the DPO. The RKP will support the establishment of the RBCMA to institutionalize integrated reservoir operations, water monitoring, data collection, knowledge management, flood forecasting, and evaluation of environmental flows, for ensuring more efficient and sustainable water allocation to agriculture, irrigation, domestic, industrial, and other uses. The RBCMA will foster multisectoral and interagency coordination to build climate resilience and improve IWRM in the State. An integrated river basin plan and flood forecasting system is being prepared for the Pamba River Basin and it will be used for developing detailed investment plans that will be supported under the RKP to mitigate impacts of climate-related events. (c) Sustainable and resilient food systems. Kerala’s agriculture faces persistent climate risks, affecting predictability in returns and viability of farming. Over the last two years, through the DPO engagements, the GoK has adopted an agroecological zone (AEZ) approach to the agriculture sector by delineating the State into five AEZs and 23 agroecological units (AEUs), based on geographic and climatic factors. It further aligned the planning, budgeting, and implementation architecture in the sector with AEZ-based approaches. To support this shift and to move toward precision farming, an Integrated Agricultural Management Information System (IAMIS) is being developed. In parallel, new guidelines for establishing crop-based Farmer Producer Organizations (FPOs) have been rolled out to promote aggregation of Page 58 The World Bank The Resilient Kerala Program (P174778) produce, to create volumes, and to access emerging markets. The Program will support the GoK to strengthen 16 AEUs in the Program districts to facilitate implementation of AEZ- based approaches. Further, a new agri insurance product will be developed based on a recently completed study on AEZ-based crop insurance. The Program will also support increased women’s participation in agricultural activities, which has been on the decline in the State. It will ensure greater representation of women on the boards of FPOs. Targeted support would be provided to small and scheduled caste/scheduled tribe (SC/ST) women farmers through common service center kiosks to access IAMIS for information, benefits, and other services. Priority will be given to include members of Kudumbashree’s joint liability groups and ‘sangha krishis’, who had suffered huge losses post the recurring floods, in the FPOs. In addition, business development and leadership training will be provided for women farmers to strengthen their capacities to support FPO operations. AEU staff will be sensitized to support these initiatives. (d) Climate resilient road infrastructure. The road network of the State is susceptible to natural disasters due to intense rainfall and unique terrain features. There is no integrated geographic information system (GIS)-based vulnerability and hazards risk mapping of the asset stock to develop a resilience framework for the roads sector. Additionally, a low capital outlay creates challenges for financing road improvement projects to meet resilient standards. Due to limited mechanization and poor capacities of local contractors, the State has not been able to fully adopt modern and green construction technologies. Through the DPOs and with Kerala State Transport Project (KSTP) support, the Public Works Department (PWD) has notified the core road network (CRN) of 7,000 km and established a GIS-based Road Maintenance Management System (RMMS). The CRN would entail enhanced budgetary provisions and improved climate- and disaster-resilient standards. The RKP will support upgrade of 400 km of CRN in the Program districts which shall be contracted adopting output- and performance-based road maintenance contracts (OPBRC), to address higher disaster and climate risk vulnerability. The RKP shall also support establishment of a fully staffed RMMS cell to plan and roll out similar climate-proof designs, budgeting, and implantation for the entire road sector in the state. D. Technical Soundness 9. The Program’s design rests on solid technical bases and global best practices. The PforR rests on the accepted premise that sustainable recovery to natural disasters and disease outbreaks requires a concerted effort with focus on public institutions, sectoral plans, social protection, and infrastructure investments. A set of shared design principles ensures Program coherence across sectors: (a) a focus on addressing the fundamental causes for stresses, (b) democratized bottom-up resilience plans, and (c) combination of investments with policies and institutional strengthening. The PforR operation also builds on lessons learned from similar World Bank projects, that coordination across multiple sectors supported at the highest levels of government is the most effective approach for shaping a program of resilient investments. The presence of RKI, with mandate and demonstrated ability to coordinate across sectors, provides a solid foundation for the operation. The RKDP, which was prepared based on detailed sector- specific analysis, forms the primary technical foundation of the Program. Each of the sectors has built their technical design based on analytics performed for the DPO, analytical studies, sector-specific TA activities, Page 59 The World Bank The Resilient Kerala Program (P174778) and lessons learned from past World Bank-funded programs in Kerala, including pertinent national-level operations. 10. Under RA 1. The result on debt sustainability is underpinned by the fiscal sustainability analysis (FSA) carried out during the preparations of the Resilient Kerala DPOs and reports on State finances produced by the State Planning Board, the DoF, and the Reserve Bank. The results on DRF have been informed by the ongoing work on Developing a State Disaster Risk Financing Strategy; analytical work on safety nets in the State; consultations with relevant departments and other public stakeholders; and global lessons in DRF, including country examples from the Caribbean and elsewhere. The results on master planning and local DRM planning are products of extensive analytical work and TA as well as consultations with LSGIs, professional bodies, and the civil society over the past two years. The TA provided to the DoF by the World Bank is in the form of a customized FSA tool that has been adapted for use at the subnational level. Local-level DRM plans, to be institutionalized under the Program, are being prepared based on the vulnerability and disaster risk profiles developed with hazard and vulnerability grid maps prepared by the KSDMA. 11. Under RA 2. The COVID-19 response and the One Health approach have drawn on various GoK and GoI documents, including Development of One Health Governance in Kerala (COHEART/KVASU 2018); Containment Plan for Large Outbreaks; Novel Coronavirus Disease 2019 (GoI 2019); guidelines, circulars, and government orders by the GoK for COVID-19 response and recovery; and consultations with stakeholders in the Pamba districts. The World Bank’s long track record in WRM and roads in the State through policy dialog, investment projects, and analytical work have informed the results in these sectors. They also draw on global and pan-India good practices in river basin planning and management, reservoir management, flood protection, among others, in WRM and construction and maintenance of resilient road infrastructure, use of performance contracting, green value engineering and construction technologies, climate proofing and adaptation, among others, in roads. Finally, the results in agriculture were derived from statewide consultations; studies by the World Bank on Transforming Kerala Agriculture: Rapid Assessment of DoA Structure (2020); Agriculture Management Information System for Kerala Government (2020); and studies on AEZs, FPOs, and agri-risk insurance. The AEZ-based approach to agriculture is accepted as a step-up in agriculture planning from traditional soil-based or climate-based crop promotion of cropping systems to an agro-meteorological approach that is combined with economic factors. 12. The geographic boundary selection of the Pamba River Basin is appropriate. The River, approximately 176 km long, encompasses a basin area of about 2,235 km2 and stretches over four key districts of the State—Idukki, Kottayam, Pathanamthitta, and Alappuzha. The Pamba Basin was also one of the most affected with 34 percent of fatalities recorded in the catchment area, in addition to large losses in agriculture, livestock, houses, and infrastructure. The area is a microcosm of the State, with tropical monsoon forests, dense urban settlements, and the rice bowl of Kerala in its lowlands and is therefore an appropriate canvas where a multisectoral and integrated resilience approach can be tested, which can then have a demonstration impact across the State. 13. Beyond the broader approach to technical soundness, the specific sector approaches also build on ongoing government analytics and priorities. To share a few examples: Page 60 The World Bank The Resilient Kerala Program (P174778) • The fiscal pillar aims to improve sustainability of Government finances and thereby increase resilience to external shocks. This objective is closely aligned with the priorities of the RKDP in terms of enhancing the resilience of the State’s fiscal framework. This priority is amplified by the exigencies arising from COVID-19, which have put the State, in general, and, more specifically, the implementation of the resilience reform program under enormous fiscal and operational stress. Policy reforms that are critical to fiscal resilience, identified under the RKDP, were initially supported under the DPO. In preparing the second phase, the GoK deepened this set of policy reforms through prior actions on macrofiscal management, including revenue-enhancing measures. The need for improving the sustainability of Government finances has also emerged from the FSA of the State carried out by the World Bank. The proposed Program will support the Government to improve debt sustainability and strengthen the functioning of the DoF in general. • A comprehensive DRF and insurance strategy is critical for Kerala. The frequency of floods and extreme precipitation events has substantially increased under the warming climate. As climate change intensifies weather-related hazards, the Government faces the twin challenges of strengthening the State’s resilience to disasters and other climate-induced changes and ensuring it has enough reserves to respond when disasters strike. Additionally, recognizing that many households, especially poor households, are not insured, both the State Disaster Management Plan as well as the Disaster Management Act 2005 have rules/guidelines to partially compensate uninsured victims of disasters (against loss in principal residence and permanent disability/death). This compensation scheme makes the GoK implicitly bound to compensate uninsured victims of disasters. The GoK recognizes the urgent need to invest in climate adaptation and disaster resilience and to set aside funding for disaster response. To do this in fiscally prudent ways, the GoK must develop appropriate risk transfer mechanisms and leverage the markets for effective DRF. • Institutionalization of DRM and climate considerations in the State’s development process is central to the resilience agenda. As a first step, the RKDP identified the key challenges in DRM in the State. Subsequently, the GoK updated and published the State Disaster Management Plan, incorporating disaster risk reduction and climate resilience principles and policies, including emergency management and outreach to vulnerable communities. Over the past year, the GoK has initiated a process to develop DRM plans incorporating protocols for emergency response. Given the decentralized nature of planning and development in the State, the GoK, through the RKP, will create an incentive mechanism that encourages its local bodies to adopt and implement local development plans that incorporate DRM and climate consideration. Though ambitious, this is an important reform that will change the way development is approached at the grassroot level in the State. • The Program incorporates three significant departures from the current approach that the GoK has adopted in the local level DRM and planning process. First, the local-level DRM plans, the first of their kind in the Country, are being developed based on local-level risk profiles. These plans include emergency protocols and a list of resources available locally. Second, Kerala is the first state in India that intends to downscale climate models and use that information at the local level for planning and development. The granularity of the information that will be provided to the local bodies through this process will enable them to identify and prioritize investments that help reduce their vulnerability to climate change. Third, the GoK is planning to develop the CAT tool that will allow it to track investments toward climate change that are made by the local bodies. Page 61 The World Bank The Resilient Kerala Program (P174778) To start with, the GoK will conduct an assessment to understand what portion of the total investments at the local body level are climate sensitive. In the subsequent years, after training the representatives of the local bodies, the GoK will incentivize local bodies to increase the total percentage of investments that are climate sensitive. This will be done by providing untied funds beyond the devolved funds. • The Program’s river-basin-based approach to addressing WRM is important to mitigate climate risks in Kerala. The Pamba River Basin, among others in Kerala, experienced catastrophic flooding in August 2018 and 2019. Post-flooding assessments suggest that some of the damage was caused by uncoordinated and poorly timed (and communicated) releases from the Pamba Dam, Kakki Dam, and Anathode Dams and widespread unregulated construction and poor management of the basin. Currently, limited modeling tools are being applied to manage the State’s water resources, and there is no uniform or consistent platform for the WRD to perform water balances, assess land-use change scenarios, or plan and address climate change impacts to increase resilience. Further, there are no models linked to reservoir operations to support planning and management of storage, water supply, flood management, or plan for environmental flows. 14. Additionally, the State Partnership has led to iterative strengthening of financing, policy, and institutions for resilience in Kerala. Table 4.1 highlights the sectoral progress achieved through the programmatic engagement. E. Implementation Arrangement 15. The RKI was established after the 2018 floods to facilitate long-pending policy and institutional reforms that address the drivers of natural disaster and climate change risks and better prepare the State against future disasters. It is mandated to help identify critical reforms and investments across sectors and departments, drive the change process within the Government and across the State, and collaborate with various development partners and civil society entities. RKI is headed by a chief executive officer. Its functioning is overseen by the HLEC, headed by the Chief Secretary, which acts as the Steering Committee for the Program. The HLEC reports to the Council of Ministers. 16. The RKI will serve as the PMU, responsible for management, coordination, and M&E of the Program. The participating sector departments shall be the Program Implementing Units. The RKI shall collaborate with and coordinate across key departments, such as Finance, Revenue, LSG, Health and Family Welfare, Water Resources, Agriculture and Public Works, agencies such as the KSDMA and KILA horizontally, and LSGIs and district administrations in the Program area vertically, to implement the Program. The RKI will be supported on field-level coordination and implementation monitoring by the DDMA in each district. The DDMA is an existing statutory body, headed by the District Collector and having key district- and local-level institutional stakeholders, coordinating disaster related efforts at the district level. The DDMA will ensure coordination across departments and with LSGIs, as well as help address implementation issues, as they come up, in its respective districts. The overall institutional framework for implementing the Program is presented in figure 1. Page 62 The World Bank The Resilient Kerala Program (P174778) Figure 4.1. Institutional Framework for Implementing the RKP 17. The RKI is supported by a Project Management Team providing PMSS. PMSS includes technical, management, and administrative support to the RKI, line departments, technical agencies, and other partner institutions in investment planning, technical studies, development of policies and training, and capacity building, in addition to Program M&E, progress monitoring, reporting, communications, and grievance redress for projects funded under the RKDP. In the field, the DDMAs, other IAs, and the LSGIs will be provided targeted technical, operational, and/or administrative support, as needed, during Program implementation. 18. Participating departments and line agencies associated with each results area will be responsible for achieving the agreed results. The principal and supporting departments and line agencies associated with each DLI and their respective roles are noted in table 4.2. The principal department will be responsible for coordinating with other relevant departments, line agencies, and local governments to implement the Program and achieve the agreed results. The principal department will also be responsible, either directly or through coordination and oversight, for ensuring compliance with the relevant fiduciary, E&S safeguards rules, norms, and systems of the GoI/GoK during project implementation. Page 63 The World Bank The Resilient Kerala Program (P174778) Table 4.1. Progress Made through Resilient Kerala Program Progress under DPO and Other Baseline Aim of PforR Trajectory of Actions and Expected Results Engagements Transversal systems for resilience: Through the proposed RKP, earlier DPO, and TA, the aim is to establish a solid Statewide foundation for disaster risk planning, management, and financing, and thus enhance the State’s capabilities to mitigate causes of major disaster and disease outbreak events, prepare better for any such events, and respond more effectively should such events materialize. Highly stressed state Revenue mobilization was Debt sustainability will be enhanced by These measures together with TA for finances with no enhanced by establishing a flood establishing a debt management cell in strengthening expenditure management systems in place and cess and mobilizing long-term the DoF and implementing a debt and PFM systems will ensure that the GoK Fiscal limited fiscal space to resources from markets. Outside management action plan. The GoK will is better positioned to deal with respond to large-scale the DPO, the GoK took steps to also leverage markets for risk financing contingencies arising from disasters and exogenous shocks. raise $305 million through a masala and strengthen adaptive safety net other shocks bond in May 2019. systems. Weak state-level Norms, systems, and capacities for All 263 Pamba Basin local governments Risk-informed master plans and local-level systems and absence strengthening local-level DRM (LGs) will undertake local DRM plans and DRM plans that integrate climate, disaster, Management Disaster Risk of local-level across the State were put in place. multi-year investment planning, and disease outbreak information will form preparedness to Emergency protocols at State level integrating climate risk information and the bedrock of a holistic local system of mitigate and respond were improved to include climate applying DCAT. resilience planning, management, and to disasters and change and disease outbreaks. ULBs in Pamba Basin will be capacitated in investments. They will also serve to inform disease outbreaks. risk-informed master planning, and four and strengthen resilience aspects of local- Lack of master Amendments to TCP Act were ULBs will adopt master plans. LSGD will level sectoral plans. These plans will bring planning, major proposed to mandate risk-informed provide block grant incentives to LGs that together technical experts, elected infrastructure gaps, master plans by ULBs, and enhance climate and risk sensitivity in representatives, and the community in and weak controls guidelines for the use of annual their capital investments and ULBs that their formulation, implementation, and caused unchecked and plan funds by ULBs were adopt risk-informed master plans. monitoring. haphazard restructured to support multi-year Technical tools and training in DRM and development in urban investments in resilient urban DCAT to evaluate local investments that Urban areas, contributing to infrastructure. are climate and disaster risk informed will greater disaster risks. be developed at the State level. Page 64 The World Bank The Resilient Kerala Program (P174778) Progress under DPO and Other Baseline Aim of PforR Trajectory of Actions and Expected Results Engagements Enhancing resilience in key socioeconomic sectors. Building on the transversal systems, key socioeconomic sectors, namely health, WRM, agriculture, and roads, will embed resilience principles in their planning and investments and strengthen their institutional capacities to address challenges of climate change, disasters, and disease outbreaks. Not only will each sector become more resilient but also at the local level, synergies will be drawn across sectors to bring to bear an integrated approach to resilience in planning, institutional capacities, and investments. High vulnerability to The State has recognized the Public health systems will be strengthened Improved capacity to track and respond to zoonotic diseases, and importance of GoI’s One Health to identify and manage disease outbreaks zoonotic disease outbreaks of human while the State- approach but no local-level in Pamba districts by operationalizing importance on time. The disease outbreak Health managed Nipah coordination platform or IPHLs for better disease surveillance and surveilance and response platform together outbreak well, it community-based surveillance clinical case management and by rolling with local DRM systems forms the needs integrated systems exist. out the One Health platform to enhance vanguard of local resilience, bringing disease surveillance Not part of DPO engagement. coordination, collaboration, surveillance, together LGs, line agencies, and and response systems. preparedness, and response at local level. communities. Lack of IWRM, Draft RBCMA Act was prepared to The RBCMA will be established and Major rivers and river basins across the including weak establish RBCMA, which will operationalized at the State level for State will benefit from improved planning, coordination among manage river basins and water integrated reservoir operations, river management, and investments. agencies, low resources more strategically. basin planning, and IWRM. Pamba Basin districts will benefit from institutional Further, work was started on Integrated river basin management plan early warning services and flood protection capacities, and gaps in integrated river basin management for Pamba will be implemented, including measures and more prudent use of water critical investments, plans and flood forecasting systems critical investments. resources that will benefit agriculture, WRM contributing to water- for Pamba and Periyar River Basins. industrial, human, and other water uses. related disaster events, and poor economic and ecological management of water resources. Page 65 The World Bank The Resilient Kerala Program (P174778) Progress under DPO and Other Baseline Aim of PforR Trajectory of Actions and Expected Results Engagements Climate- and disaster- Move to ecological agriculture AEZ-based approach will be rolled out Shift to agriculture practices based on local vulnerable agriculture practices through adoption of the statewide, including shifts in budgets, ecology and stregthening agri-value chains practices and lack of AEZ-based approach, delineating personnel, extension services, and will enhance resilience of farming and food risk protection, the State into five AEZs and 23 mainstreaming of IAMIS for farmers. security, while expanding agri-risk Agriculture affecting food security agro-ecological management units 16 AEUs in Pamba districts and associated insurance will better prepare farmers and poor viability of (AEMUs), and shifting budgets to FPOs will be supported end-to-end to against exogenous shocks. farming in the State. support new approach. effect the change to AEZ-based approach, IAMIS established and guidelines and agri-risk insurance expanded and for establishing crop-based FPOs deepened to farmers in these districts. was rolled out. Road networks, A 7,000 km CRN, which is critical for An RMMS cell will be operationalized in More resilient construction, rehabilitation, especially CRN, in the the State, was designated, and the PWD to plan and manage resilient and maintenance standards will reduce the State are poorly resilient standards were adopted road network across the State, and the vulnerability of road network to climate constructed and for the CRN. RMMS cell will develop an FWP for the change and natural disaster events. maintained, making A GIS-enabled RMMS was CRN. CRN improvements in Pamba districts will Roads them highly established in the PWD. At least 400 km of CRN in Pamba districts ensure that they are operable during future vulnerable to climate A performance-based road will be upgraded and maintained to disasters, enhance farmer access to change and disasters maintenance contract model was resilient standards with provisions for markets, and reduce vehicle operating and rendering them adopted to apply to select CRN disaster response modules through long- costs and travel times and serve as a model inoperable during corridors. term performance-based contracts. for the CRN in the State. emergencies. Page 66 The World Bank The Resilient Kerala Program (P174778) Table 4.2. Institutional Arrangements for Implementing the Resilient Kerala Program DLI Principal Supporting Remarks Agency Agencies Program RKI All The RKI will be responsible for program management and Manage- participating coordination, fiduciary/environmental/social safeguards oversight, ment departments M&E, reporting, liaison with HLEC and higher levels of the and agencies Government, communications, public outreach, coordination with the GoI and development partners, and so on. DLI 1 DoF — The DoF will be responsible for carrying out an FSA, developing a debt management plan, establishing adequate institutional arrangements, and executing the debt management plan. DLI 2 DoF DoR The Department of Revenue (DoR) will coordinate with the DoF in the development of the Unified Database of beneficiaries and roll out the beneficiary payments to eligible beneficiaries in a disaster or disease outbreak. DLI 3 DoF DoR, DoA, The DoF will be responsible for coordinating with the DoA in the KSDMA restructuring/development of an agriculture insurance program as well as in rolling out the revamped agriculture insurance program in the Pamba River Basin districts. DLI 4 LSGD ULBs, DTCP, The LSGD will coordinate the rollout of risk-informed master planning KSDMA, KILA by ULBs. The Department of Town and Country Planning (DTCP), which operates under the LSGD, will be responsible for developing norms and guidelines for risk-informed master plans, technical coordination with ULBs, review and oversight of the master plan preparation process, and compliance. The KSDMA will provide relevant risk information for master plans, while KILA, which is under the LSGD, will coordinate training and capacity-building efforts. Selected ULBs in the four Pamba River Basin districts will be responsible for developing and notifying their respective master plans. DLI 5 LSGD KSDMA, The LSGD will be responsible for the development and implementation LSGIs, KILA of local-level DRM plans by LSGIs. DLI 6 DoHFW DoECC, The DoHFW will coordinate the establishment and operationalization DoAH, LSGD, of the One Health platform in the four Pamba Basin districts. It will LSGIs work closely with the Department of Animal Husbandry (DoAH), the DoECC, and the LSGIs in the four districts. DLI 7 RBCMA/ KSDMA, DoA, The WRD will be the IA until RBCMA is operationalized. Upon RBCMA WRD LSGD being operationalized, it shall work closely with the DoF and interface its system with all other relevant line departments, as required from time to time. DLI 8 DoA Kerala The DoA will be the lead implementation of AEU operations and Agriculture formation of FPOs and shall ensure rollout of the IAMIS. Kerala University, Agriculture University shall support DoA and LSGIs at the field level in WRD, LSGD implementation. DLI 9 PWD KHRI, KSTP, The PWD will work with the KHRI, the KSDMA, and the KSTP to roll out KSDMA CRN standards and systems across the State and will directly manage the contracting and monitoring of the 400 km of upgraded CRN in the four districts. Page 67 The World Bank The Resilient Kerala Program (P174778) F. Expenditure Framework 19. The cost of the Government reform program for FY2021–26 is estimated at US$1.7 billion. The Government reform program converges with the broad umbrella of the GoK’s ongoing RKDP, launched following 2018 floods to enhance resilience to disasters and climate change. The early response to the ongoing global COVID-19 pandemic required Kerala’s disaster and emergency response systems to be triggered and pandemic management and better preparedness to identify and prevent disease outbreaks have been added under the broader concept of disaster and emergency management. The duration of the operation will be five years from FY2021–22 to FY2025–26. This provides adequate time for implementation of reforms, allows progression in the results, and ensures that the World Bank’s implementation support is available throughout to the point when reforms should have been institutionalized. 20. The total cost of the RKP is estimated at US$530 million, of which the IBRD financing is US$125 million, representing 24 percent of the Program cost. The AIIB will also support the Program with a financing of US$125 million, and AFD plans providing €100 million (US$120 million equivalent) 28. The remaining US$160.02 million, which is 30 percent of the Program, will be financed by the GoK. 21. The Government program boundary is based on associated institutional transformations, incremental initiatives and leveraging influence of the Program’s results. The Government program is derived by identifying the cost of ongoing activities which are essential for achievement of the Program results across the six participating departments. Further, the boundary includes the cost of ongoing activities which will potentially be affected by the achievement of Program results in terms of enhanced service delivery, in particular, for the DoHFW, giving due regard to the Program scope, a subset of activities implemented under ‘Public Health’ head of the GoK’s budget, such as ‘Prevention and Control of Diseases, ‘Public Health Laboratories’, and ‘Public Health Education and Training’. Because these major budget heads cover several activities beyond the scope of the operation, the boundary is limited to expenditures which directly or indirectly contribute to the Program results. For LSGD, the Program boundary includes investments in the Pamba Basin which will be enhanced on account of climate-sensitive DRM plans and annual/multi-year investment plans. For the agriculture sector, the Program focuses on promotion and strengthening of FPOs and AEZ-relevant farming and systems strengthening, including the Krishi Padasala scheme focused on farmer capacity building and the Punarjani scheme centered on post-COVID-19 economic recovery. For the roads sector, the Program boundary includes heads such as the Centre of Excellence, special repairs, critical road network in the Pamba Basin, and post-flood project support. 22. The Program Expenditure Framework is derived based on current baseline and associated estimations for interventions. The expenditure program is based on departmental-level work plans designed to achieve the DLIs and the overall results. The expenditure proposed for individual activities is commensurate with their scale and complexity and facilitates efficient execution. The Program cost primarily comprises associated incremental costs and essential activity support cost included in the government program. Specifically, the Program expenditure includes proportionate expenditures toward system establishment for unified beneficiary database, debt management, and DRF; identified departmental modernization and capacity building; incremental performance grant to ULBs and LSGIs in the Pamba Basin; building of key roads such as the Sabarimala roads in the Pamba Basin; agriculture 28 The proposed AFD co-financing of €100 million is subject to approval by the Department of Economic Affairs (DEA). Page 68 The World Bank The Resilient Kerala Program (P174778) transformation support in the four Pamba Basin districts, 16 AEUs, and 264 Krishi Bhavans (local bodies); and promotion and strengthening of the ‘One Health’ approach health systems for pandemic readiness. 23. A large part of the funding will be directed toward institutional strengthening, systems development, and resilient investments. Program expenditure will primarily include departmental modernization cost, capacity building, capital expenditure support, financing access, IT hardware, software development, training and capacity building, and essential operational costs of IAs as well as minor or high-priority investments to demonstrate integrated multisector resilience in the Pamba Basin. Given the critical importance to establish resilient approaches by the GoK in a sustainable manner, it is critical to build capacity. Hence, the Program Expenditure Framework includes salary cost of key departmental human resources which represent 22 percent of the Program cost. Direct investments including goods and works constitute 43 percent of the Program, while consulting services and goods to inform and facilitate investments are 14 percent and goods 6 percent. 24. In addition to the above, the Program expenditures include (a) TA, planning, and capacity- building activities; (b) infrastructure investments and their operations and maintenance (O&M); (c) goods and works for systems development; and (d) program management. TA expenditures would include (a) technical studies (for example, studies on debt restructuring and climate enhancement of State roads) and (b) consulting services for planning and capacity-building activities (for example, development of master plans and DRM plans, capacity building for integrated river basin planning, flood forecasting, and integrated reservoir operation systems). Infrastructure investments would be limited to the Pamba River Basin (for example, flood protection works on the Pamba River, upgraded equipment for district health centers/hospitals, climate proofing of select CRN, and certain climate-resilient investments that are part of LSGI DRM plans and ULB master plans) and eligible O&M expenditures (for example, delivery of public health services, staffing, performance-based management contracts for road asset management, and staffing costs for preparing local DRM plans and risk-informed master plans). Systems development expenditures would include goods and equipment for IDSP, unified online database, all types of management information systems for local DRM plans and urban master plans, and agriculture information systems. 25. The Program Expenditure Framework has been established along the economic classifications emerging on account of the different stratification measures required to achieve the PDO. Table 4.3 shows the overall Program expenditure composition by entity involved and economic classification of expenditures as well as nature of expenditure items and budget codes that they are anchored to. Annual projections can also be seen in the table. 26. Funding predictability is high. Risks to the Program Expenditure Framework arising out of budget constraints are low. The RKP cost constitutes a relatively small portion of the overall budgeted departmental spending of the participating departments and is well aligned with the GoK’s priorities both at the State and departmental levels. For FY20/21, the total budget allocation of the six Resilient Kerala Program implementing departments and the RKI is US$5 billion. Further, considering that the participating departments represent core sectors, on an average over the next five years, the budget levels are very likely to be maintained. Hence, the RKP’s estimated Program cost (US$530 million) represents only 2 percent of the total estimated budget allocations of US$25 billion of the six Resilient Kerala Program implementing departments and RKI for FY2021–26. The extraneous factors affecting overall Government Page 69 The World Bank The Resilient Kerala Program (P174778) expenditure are unlikely to affect budget allocations to the Program. There is a high level of commitment and ownership within the GoK. 27. Expenditure framework, yearly projections, and assumptions are found to be reasonably adequate to achieve the Program results. Table 4.3 provides the yearly projections for each IA, per economic category and linked to their budget lines. The expenditure projection is deemed to be reasonably adequate to support the Program framework. For each sectoral DLI, expenditure estimation and projection have been carved out giving due regard to both incremental and underlying expenditures considered essential for conducting anticipated activities required for DLI achievement. Further, for deriving estimations, reliance has been placed on baselines such as actual cost of interventions in other World Bank projects, market trends, cost trends of ongoing interventions, and so on. Page 70 The World Bank The Resilient Kerala Program (P174778) Table 4.3. Detailed Program Expenditure Framework for FY2021–26 (US$, millions) by IAs, Economic Classification, and Expenditure Components Government PforR Program 'big P' Program (US$, millions) Economic Implementing Nature of Expenditure and Expenditure ‘small p’ FY Classification Agency Components (with Budget Codes) FY 2021– FY 2022– FY 2024– FY 2025– (US$, 2023– Total 22 23 25 26 millions) 24 Consultancies, IT hardware, software development, training, salaries, and 92.03 9.75 15.59 17.85 16.56 11.70 71.45 operational costs Modernization and Training of Staff (2052- 1.23 0.12 0.12 0.12 0.12 0.12 0.62 Transversal 00-090-90) DoF Salary &Wages (2052-00-090-96 -01; 2052- Systems 23.64 2.61 2.87 3.16 3.47 3.82 15.92 00-090-96 -02) Management of Debt (2049-01-305-98) 31.15 3.42 3.59 3.77 3.96 4.16 18.92 Consultancies for evaluation and 36.00 3.60 9.00 10.80 9.00 3.60 36.00 modernization support Creation of Capital assets, Performance 748.49 21.63 25.40 36.23 31.38 30.10 144.74 grants, and salary and wages Funds for Development Expenditure - 5th LSGD SFC Recommendations - Grants for the 575.75 — — — — — — including 319 Creation of Capital Assets LSGIs in Engineering Wing for Local Self Government Pampa Basin Institutions (staff cost to support Pamba 56.49 9.63 10.40 11.23 12.13 13.10 56.49 Region) (2515-00-001-92) Resilient Performance Incentive Grants 116.25 12.00 15.00 25.00 19.25 17.00 88.25 Institutions Consultancies, IT hardware, software development, training, and maintenance 79.37 2.89 6.98 4.08 14.88 13.14 41.98 cost Minor irrigation program: Green Kerala 14.59 — — — — — — WRD Modernization of the Department and E- Governance, Design Wing and Hydro 28.34 0.89 0.98 1.08 1.19 1.40 5.54 Information System (2701-80-001-92-99; 2701-80-005-92; 2701-80-005-93) Page 71 The World Bank The Resilient Kerala Program (P174778) Government PforR Program 'big P' Program (US$, millions) Economic Implementing Nature of Expenditure and Expenditure ‘small p’ FY Classification Agency Components (with Budget Codes) FY 2021– FY 2022– FY 2024– FY 2025– (US$, 2023– Total 22 23 25 26 millions) 24 Consultancies for evaluation and 36.44 2.00 6.00 3.00 13.70 11.74 36.44 modernization support Consultancies, minor infrastructure support, Financing access, IT hardware, software 440.89 9.02 9.40 8.17 7.49 7.03 41.11 development, training and capacity building, and operational costs Crop Development Programs (Rice Development, Vegetable promotion, Pulses 319.88 — — — — — — and Tubers, Coconut Development, Spices Development) Soil Health Management, Productivity Improvement and Augmenting production of 60.16 3.19 3.23 3.27 3.31 3.36 16.35 DoA planting materials through departmental farms. (2401-00-800-28; 2401-00-104-91) Agro Service Centers and Service Delivery 3.36 1.13 0.56 0.28 0.28 0.28 2.54 strengthening (2401-00-113-83) Krishi Padasala- Approach to promote AEU 3.80 0.58 0.68 0.78 0.88 0.88 3.80 based cultivation. (2401-00-109-60) Office Automation and IT infrastructure 19.66 1.50 1.00 0.70 0.50 0.50 4.20 (2401-00-001-86) Value Addition program support to FPOs in post-COVID assistance and economic 34.03 2.62 3.93 3.14 2.52 2.01 14.22 recovery (2435-01-800-94) Consultancies, infrastructure support, Financing access, IT hardware, software 122.25 22.15 22.71 22.71 22.71 23.59 113.86 development, training and capacity One Health building, salary, and operational costs DoHFW Approach Prevention and Control of Diseases (2210-06- 101-98; 2210-06-101-94; 2210-06-101-91; 72.72 14.54 14.54 14.54 14.54 14.54 72.72 2210-06-101-89; 2210-06-101-80; 2210-06- 101-49; 2210-06-101-45; 2210-06-003-99) Page 72 The World Bank The Resilient Kerala Program (P174778) Government PforR Program 'big P' Program (US$, millions) Economic Implementing Nature of Expenditure and Expenditure ‘small p’ FY Classification Agency Components (with Budget Codes) FY 2021– FY 2022– FY 2024– FY 2025– (US$, 2023– Total 22 23 25 26 millions) 24 Public Health Training (2210-06-003-97; 30.13 4.01 4.21 4.21 4.21 4.65 21.31 2210-06-003-90; 2210-06-003-89) Public Health Laboratories (2210-06-107) 19.40 3.59 3.95 3.95 3.95 4.39 19.84 Construction and maintenance, consultancies, IT hardware, software 208.64 21.10 36.30 32.40 11.78 5.27 106.85 development, training and capacity building and operational costs Modernization of KHRI (Centre for 19.57 1.80 1.80 1.80 1.80 1.80 9.00 Resilient Excellence) (5054-80-004-98) PWD Infrastructure Sabarimala Roads Project: Capital 30.82 3.85 11.55 11.55 3.08 0.77 30.80 expenditure (5054-04-337-89) Special Repairs to Communications (OPBRC) 30.00 3.75 11.25 11.25 3.00 0.75 30.00 (3054-03-337-97) Post Flood Projects Under the Rebuild Kerala 128.25 11.70 11.70 7.80 3.90 1.95 37.05 Initiative (5475-00-115-94 - 03) Consultancies, IT hardware, software RKI 10.00 2.00 2.00 2.00 2.00 2.00 10.00 Program development, and training (Department Management Program management and other of Planning) 10.00 2.00 2.00 2.00 2.00 2.00 10.00 consultancies support (5475-00-115-94) Total 1,701.65 88.54 118.37 123.44 106.80 92.84 530.00 Page 73 The World Bank The Resilient Kerala Program (P174778) G. Monitoring and Evaluation 28. Program monitoring will comprise standard progress monitoring, verification of results by IVA, and impact evaluations. Regular progress monitoring will be undertaken by RKI during Program implementation to address implementation issues and ensure that the Program is on track. RKI has put in place a robust management information system, Kerala Rebuild Information System, to oversee the implementation of a diverse set of investments supported by the RKDP, which will be used by departments to report progress in implementation. Information derived from progress monitoring will inform biannual progress reports by the PMU. The approved biannual Program Results Report shared with the DEA, the World Bank, AIIB, and the AFD shall include status of achievement of the PDO, intermediate results indicators, results related to DLIs, and evidence of PAP compliance requirements. 29. RKI shall procure an IVA to assess the achievement of DLIs, according to verification protocols agreed with the World Bank. The IVA shall conduct annual/biannual assessments of DLRs/DLIs and prepare a consolidated report furnishing evidence concerning achievement of DLRs and providing recommendations for drawdown of funds. This report shall be submitted to RKI for review and upon final approval of the HLEC, submit to the World Bank and other financing partners to initiate disbursements. The IVA report shall be the basis for triggering disbursement of funds based on achievement of results. 30. The RKI shall support the following impact evaluation activities with the technical support of the World Bank and shall include but are not limited to (a) Program Impact Evaluation to assess the development impacts of the operation with baseline, midterm, and end-of-Program surveys; (b) sectoral/thematic evaluations, as required, to assess innovations; (c) process monitoring and tracking surveys to assess the key assumptions of the Theory of Change; and (d) compilation of good practices emerging from the Program for knowledge sharing among stakeholders within the State and outside. H. Economic Justification 31. The following summarizes the quantitative economic analysis conducted for this assessment. It complements the qualitative summary of key findings of the full economic analysis in the main text. The full economic analysis is included in the TA report, which is part of the Program documentation. 32. The Program supports actions to advance policies and strengthen institutions Statewide for attaining multidimensional resilience and pilots to embed resilience in an integrated manner across key economic sectors at the local level. Policy and institutional changes under RA 1 are less amenable to cost-benefit analysis for a variety of reasons, including attribution. The primary focus of the quantitative analysis is on the four pilot investments under RA 2 on roads, agriculture, IWRM, and health. The targeted beneficiaries of all four pilots are the population of Idukki, Kottayam, Pathanamthitta, and Alappuzha districts. 33. Road, agriculture, and water sector investments are economically viable, delivering economic rates of return of 15 percent, 44 percent, and 22 percent, respectively. The health sector investments are cost-effective in addressing disease outbreaks. The agriculture sector investments are demand driven and not amenable to conventional economic analysis, but the selected program has the potential to deliver based on the Kerala context and the values in a similar program in a neighboring state. Page 74 The World Bank The Resilient Kerala Program (P174778) Road Sector 34. The road sector investments rehabilitate about 400 km of roads to climate-resilient standards for a total investment of US$110 million in the four selected districts. The engineering, procurement, and construction contracts for these roads are currently being tendered with item rate contracts of 18–30 months duration and 5- year maintenance periods. The economic analysis is conducted using the Highway Development and Management Model (HDM-4) model and based on the applicable guidelines from the Indian Road Congress. The quantifiable benefits include reductions in vehicle operating costs and time savings in moving passengers and freight. The unquantifiable benefits include increased road safety, reductions in GHG emissions, job creation, and reductions in disease and disaster response times. The analyses are carried out over the assumed lifetime of the road asset of 25 years, with investment phasing of 40 percent in Year 1 and 60 percent in Year 2 and delivering benefits starting in Year 3. 35. The above investments complement policy and institutional reforms to build climate and disaster resilience to the CRN,[3] as envisioned in the RKDP. In early 2020, the PWD Maintenance Wing updated the CRN (7,000 km) through a scientific assessment. It adopted a new contracting model for long-term maintenance of the CRN to climate-resilient standards. The PWD also developed a web- and GIS-based RMMS with a climate module, which is expected to be operational in 2021. The RMMS will guide the statewide sector planning and budgeting for the CRN. Initially, around 380 km of the CRN with an investment of about US$42 million is expected to be contracted under 7-year OPBRCs. This includes around 283 km of roads with an investment of US$30 million in the Pamba Basin. The internal rate of return (IRR) for all roads is 15 percent or higher and yields a total NPV of INR 4,791 million, indicating the economic viability of proposed upgrades (see note). The NPV is calculated using a 12 percent discount rate for all roads except for Idduki (9 percent).[7] The IRR is always greater than 12 percent except for three roads in the worst case when it is between 10 percent and 12 percent. The latter consists of simultaneous increases of 15 percent in the capital costs and vehicle operating costs and decrease of 15 percent in the value of travel time saved and traffic volume growth rates. 36. An economic cost-benefit analysis is used to assess the viability of each road separately based on its respective economic internal rate of return (EIRR) and economic net present value.[4] All the analyses use the HDM-4 model and follow the overall guidelines stipulated by the Indian Roads Congress. 37. All the roads are designed and costed to (a) meet projected traffic volumes over the next 30 years, with capacity augmentation when needed[5] and (b) withstand projected rainfall intensity and flooding over the project lifetime. Bridges are upgraded to withstand 100-year floods and culverts and drainage systems are upgraded for 24-hour discharges with 25-year return periods in urban areas and 10-years in rural areas. Details of traffic volume projections are in the full report. 38. Sensitivity analysis shows that the economic viability of the road projects is robust to changes in assumptions. Table 4.4. Economic Returns of Select Roads Total Project Base Case Worst Case Road Road Length District Cost (INR, EIRR NPV (INR, EIRR NPV (INR, No. (km) millions) (%) millions) (%) millions) 1 Kottayam 20.2 10,800 17.5 475.5 12.5 39.9 2 Kottayam 22.5 10,880 17.5 472.4 12.2 13.9 3 Pathanamthitta 28.2 10,320 15.8 308.1 10.9 −95.3 4 Pathanamthitta 23.1 10,400 14.8 238.2 10.3 −153.2 Page 75 The World Bank The Resilient Kerala Program (P174778) Total Project Base Case Worst Case Road Road Length District Cost (INR, EIRR NPV (INR, EIRR NPV (INR, No. (km) millions) (%) millions) (%) millions) 5 Pathanamthitta 7.9 2,940 16.5 101.2 11.6 −9.4 6 Idukki 31.9 15,020 37.9 1,916.0 27.2 1,349.0 7 Alappuzha 18.7 11,340 16.8 414.5 12.1 4.9 8 Alappuzha 21.5 10,910 19.9 865.2 14.4 257.7 Total 173.9 82,900 4,791.1 1,407.5 Health 39. The health intervention aims to increase resilience to outbreaks of zoonotic diseases using the One Health approach. Control of a zoonosis requires early and rapid actions. Kerala is particularly vulnerable to zoonotic disease outbreaks due to the size of its livestock population, climate, forest cover, and high incidence of domestic and international travel. The One Health approach involves collaborative efforts of multiple disciplines working together to attain optimal health for people, animals, and the environment. Case studies show that the collaboration across service providers in multiple disciplines introduces efficiencies in service delivery resulting is cost savings of 10 percent to 15 percent. 40. Assessing the costs and benefits of a control program for zoonotic disease is challenging for several reasons—rapid onset of the disease, the high and immediate cost of controlling it, and the limited information on the epidemiology of new diseases. Worldwide experience indicates that losses from the last six major outbreaks could have been averted by a third to half through up-front investments in disease surveillance and diagnosis. Case studies show that the typical country needs investments of US$1 to US$2 per veterinary livestock unit per year to put in place a robust system of surveillance and diagnosis for controlling all outbreaks. For the four districts of the Pamba Basin, this translates to a need for US$84 to US$168 million. Controlling disease outbreaks has a number of indirect benefits such as fewer economic disruptions and losses in economic growth, decreased poverty and inequality, and decreased productivity losses and service delivery costs. Lessons learned from the One Health approach in the Pamba Basin will inform the rest of the State. Agriculture 41. The agriculture program aims to increase farmer incomes through support for FPOs and the strengthening of crop insurance programs. The Program will support the strengthening of 13 existing FPOs in the Pamba Basin. Conventional ex ante cost-benefit analysis is not applicable to this intervention because of its demand-driven nature. The economic analysis comprises two parts—(a) an assessment of the types of support that may increase farmer incomes and their resilience to shocks in the context of the current agricultural practices and (b) review of the actual values that have been added through a similar World Bank-funded program in neighboring Tamil Nadu. The crop insurance program was not analyzed as a part of this economic analysis. 42. The Kerala agricultural sector is particularly vulnerable to flooding and climate change. Despite increasing productivity levels of some key crops, overall production has declined over the last decades. Cash crops account for a larger share of the cropped area compared to food crops, leading to the import of rice and vegetables from neighboring states. Land fragmentation constrains the expansion of mechanization and threatens the sustainability of small landholders. There is wide variation in the cost of production and profit margins per hectare, indicating the scope to support farmers through more targeted ways. Changing climate has created new opportunities for value addition through technical support packages that guide farmers to crops more suitable for each AEZ. Agricultural extension services are currently fragmented, and its consolidation could add further value to FPO support programs. Page 76 The World Bank The Resilient Kerala Program (P174778) 43. The ex ante economic analysis developed models for three crops (millet, dairy, and coir) production and processing. Interventions assessed included TA to improve farming practices, provision of improved inputs (seed and breed), equipment and support services for aggregation, cleaning, processing, and business support services. The analysis indicates that every unit of investment would generate 0.73 in incremental revenue and 22 additional days of work per year for farmers. The corresponding numbers for FPOs are 0.45 per unit of investment and 119 days of additional work. If similar results were to hold for the agriculture program under this PforR, the Program would benefit 12,500 farmers. With a total economic cost of US$14 million program of support to FPOs, inclusive of Government and PforR contributions, the NPV of this component is US$21 million. This translates to IRR of 43 percent using a 12 percent discount rate, assuming an analysis period of 20 years and survival rate of 70 percent. Water 44. The water sector interventions focus on operationalizing an IWRM program for the Pamba River Basin, including a flood forecasting and early warning system. The direct benefits would come from improvements in water allocation efficiencies, reduced economic damages, reduced loss of life and people affected from floods, and extreme precipitation events. The economic analysis has adopted and updated the methods and approaches used in the ongoing India National Hydrology Project to the current project context. 29 The costs and benefits of the IWRM plan are not included in the analysis as the specific contents of the plan will only be known toward the end of the project. Instead, the analysis focuses on the flood forecasting and early warning capacities of the Program districts. These enhanced capacities are expected to be operational within two years and begin delivering forecasts in Year 3. The associated equipment is assumed to require annual O&M costs of 10 percent. The portion of the analysis is carried out over the 10-year lifetime of the equipment. 45. The avoided damages and losses attributed to the improved forecast are estimated using a modified sectoral approach. It separately estimates the proportion of damages and losses that are preventable and the proportion of those preventable losses that are avoidable with the hydromet system for different sectors. 30 The National Hydrology Project II data indicate that 24-hour forecasts are 90 percent accurate. However, the literature suggests that only a fraction of the affected people take aversive action to protect themselves. As a conservative estimate, the analysis assumes that only 50 percent of lives are saved from a 24-hour forecast, and lives saved are valued at US$263,000, based on the benefits transfer approach, yielding an average annual benefit of US$3.18 million. Given controversies around VSL, these estimates are not used in the base case of the cost-benefit analysis. 46. The analysis indicates that the flood forecasting and warning part of the IWRM component investments delivers a return of 22 percent and an NPV of 1 million using a discount rate of 12 percent. The Central Water Commission attributed much of the 2018 floods to high precipitation. Under those circumstances, the full extent of the damages is ‘preventable’ given a reliable forecast and a sufficient lead time. The baseline annual average losses from floods are estimated from historical losses. Reliable 24-hour forecasts and warnings provide people the option to take aversive actions, which can reduce damages by 10 to 35 percent. 31 Sensitivity analysis indicated that the result is robust to changes in assumptions. The program is also expected to result in large productivity gains from the integrated management of water resources, which were not quantified. 29 The National Hydrology Project focused on standardizing and integrating hydrological data and models across the country for use in water resource planning & management. It covered 11 states & several union territories, following two phases of the Hydrology project. 30 Using this approach, benefits can be measured without the need for detailed data and complex models that would be required for the conditional probability approach while still grounded on the local context. 31 Hallegatte, Stéphane. 2012. “A Cost Effective Solution to Reduce Disaster Losses in Developing Countries: Hydro-Meteorological Services, Early Warning, and Evacuation.” Policy Research Working Paper; No. 6058. World Bank, Washington, DC. © World Bank. https://openknowledge.worldbank.org/handle/10986/9359. Page 77 The World Bank The Resilient Kerala Program (P174778) ANNEX 5. SUMMARY ENVIRONMENTAL AND SOCIAL SYSTEMS ASSESSMENT 1. Objectives, scope, and World Bank requirements. This ESSA identified the key E&S risks that may adversely affect the achievement of the PDOs. Given the ongoing strategic engagement between the GoK and the World Bank since 2018/19, this ESSA was informed by previous assessments that have been commissioned to assess the system performance of different sectors in the state. Further work was carried out to meet the various World Bank requirements that include preliminary screening, stakeholder engagement, analysis around consistency with core principles, effectiveness of grievance mechanisms, recommendations on program actions and exclusions, and disclosure requirements. 2. Methodology. The ESSA was carried out by a team of E&S specialists from the World Bank. It used secondary information including applicable policies, acts, rules, government orders, circulars, notifications, and guidelines as well as evaluations (on institutional or scheme performance), websites, internal assessments, reports, and studies to assess borrower capacities and performance. One-to-one discussions with state-level stakeholders across implementing departments were conducted both by the World Bank team (virtually) and by KILA, which was commissioned to conduct consultations (both virtually and in-person) on behalf of the World Bank. KILA conducted in-person consultations in the four districts, covering 328 community members at 16 different locations (3 ULBs and 13 Gram Panchayats) in the Pamba Basin, where most investments are planned. This also included eight dedicated consultations with women and eight exclusive ones with the poor and socially vulnerable. Information from the secondary literature review and meetings were analysed to determine the adequacy of the GoK and its implementing departments’ environmental and social systems to manage the effects under this Program. The ESSA reports have been structured into three parts: Part A - ESSA Summary Report, Part B - ESSA Environmental Report, and Part C - ESSA Social Report. 3. Disclosure. The draft ESSA reports were disclosed seeking feedback from interested citizens and stakeholders This was done on February 8, 2021 (English version) and February 13, 2021 (Malayalam version of the ESSA Summary Report alone). Further, these draft ESSA reports were sent to the invitees in advance of the stakeholder workshop for prior review and preparation. Two state-level disclosure workshops were organized on February 18 and 22, 2021 where the findings of the ESSA were shared with the state-level stakeholders to seek their comments and feedback before appraisal. The final ESSA, after incorporating stakeholder comments, will be disclosed on the RKI website as well as the World Bank external website. Print copies of the ESSA will be made available upon request at the RKI Office. Environmental Assessment 4. Risk screening. Each sector Program was screened to determine the environmental risks. The DRFI, Social Protection, and Fiscal had no environmental risks. Whereas agriculture, DRM, and urban have no environmental risks, there are construction related EHS impacts in the health, roads, and WRM sectors. All of these civil works- related impacts will be minor, localized, generic, and reversible and can be mitigated effectively through management measures. 5. Regulatory. There are different national- and state-level legislation that are applicable to all the sectors in the Program. Further, there are other legislation that are relevant only to particular sectors. The assessment revealed that all of these legislations—cross-sector and those relevant to particular sectors —are well-developed. The appropriate legislations will be sufficient to address any of the environmental impacts in these sectors. The borrower’s regulatory agencies such as the DoECC (Directorate and the different authorities), State Forest Page 78 The World Bank The Resilient Kerala Program (P174778) Department, and the SPCB are well established and their functions were found to be streamlined. As the Program activities have only limited environmental impacts, these do not entail any up-front environmental clearances. There are only certain procedural requirements such as obtaining consents before the commencement of civil works. These are contractor responsibilities that will have to be supervised by the respective implementing departments. 6. Institutional. The various GoK implementing departments have adequate capacity to address the environmental risks and also to enhance their environmental performance where opportunities exist. As the environmental impacts are limited, the existing staff were found to be sufficient. In the institutional development activities (agriculture, DRM, health, urban, and WRM), the training and capacity-building opportunities should be gainfully used to address environmental content as well. In the sectors involving civil works (health, roads, and WRM), the implementing departments need to ensure that their bid/contract documents have sufficient EHS provisions, and they ensure monitoring and supervision. This has already been planned in the roads sector and will have to be suitably incorporated in the health and WRM sectors. Overall, the assessment concluded that their institutional capacity is adequate to manage the environmental issues, if any. 7. Core principles. The environmental assessment focused on borrower’s environmental management systems (Core Principle 1), natural habitats and cultural resources (Core Principle 2), and public and worker safety (Core Principle 3). The applicability of the legal framework is limited and only pertaining to the civil works proposed in the PWD, MoHFW, and WRD. The capacity to ensure legal compliances requirement exists in the regulatory and implementing departments. The Program activities do not include environmental effects on natural habitats or cultural heritage sites. The regulatory systems pertaining to natural habitats, particularly forests and eco-sensitive areas, were found to be adequate if unexpected effects occur. The regulatory systems pertaining to worker safety were found to be adequate. Worker and public safety are generally managed through provisions in the bid/contract documents that the implementing departments—having civil works—will include. Overall, the ESSA confirmed adequacy and consistency with these core principles. 8. Stakeholder consultations. State-level and community feedback revealed that there are environmental issues that need to be addressed through the institutional development initiatives in the agriculture, DRM, health, urban, and WRM sectors. Building awareness and competence of implementing agencies in dealing with the environmental issues (such as water pollution, waste management, soil run-off, pesticide/fertilizer use identified by stakeholders) through training and capacity building is critical. And, in the sectors involving civil works, particularly roads, the importance of having scientific pre-investment studies and proper management of construction related EHS issues were emphasized. The overarching feedback about adopting an integrated approach between implementing departments and involving civil society organizations were highlights of the community-level consultations. All of the feedback was reviewed to ensure that these are adequately addressed in the Program design and gaps, if any, were included in the PAP (Annex 6). Table 5.1 includes the list of activities to be undertaken toward environmental systems’ strengthening as ESSA recommendations. Table 5.1. Overall Recommendations for Strengthening Environmental Systems Sector Description Timeline Indicator for Completion Agriculture Develop relevant environmental content in the End of Year 1 and Evidence of the conduct training and capacity building to be given to AEMUs the rest of project of training that includes and FPOs. Conduct such training for mainstreaming period environmental content environmental considerations. Health Review and strengthen the bid/contract provisions End of Year 1 Standard bid/contract Page 79 The World Bank The Resilient Kerala Program (P174778) pertaining to EHS for civil works when the new or documents of the DoHFW expansion of PHLs is undertaken. include EHS provisions Health Develop and conduct focused staff training to End of Year 1 and Evidence of the training streamline BMW management systems in the new or the rest of project material and the conduct expanded PHLs. period of training in PHLs WRM Develop relevant environmental content in the Throughout the Evidence of training training and capacity building pertaining to project period conducted that includes institutional development and investment planning. environmental content Conduct such training for mainstreaming environmental considerations. Environment Facilitate a regular dialogue between the Throughout the Evidence of the periodic environmental sector institutions such as the DoECC project period conduct of the dialogue and SPCBs and sector institutions to enable two-way capacity building. RKI Monitor and report the progress on environmental Quarterly and Evidence of the periodic performance of the Program activities as a part of the throughout the environmental overall Program reporting project period performance reports 9. Exclusions. The assessment confirmed that the activities do not include those not eligible for PforR financing. There are no potentially significant, adverse environmental impacts in the Program. In particular, this was confirmed in the roads, WRM and health sectors. These are not in the vicinity of any natural habitats or cultural heritage sites. There are no such workplace conditions prone to health and safety risks and, no significant, cumulative, induced, and indirect impacts in the Pamba River Basin. During the implementation, it will be required to ensure that all such activities not eligible for PforR financing remain excluded. 10. Environmental Inputs to the PAP: Based on the ESSA recommendations, the Program Action Plan has environmental activities which is included in the following table 5.2. Table 5.2. PAP Activities for Strengthening Environmental Systems Action Description Source DLI# Responsibility Timing and Completion Measurement Tasks Incorporating ESSA NA RKI and Continuous Incorporation of environment environmental implementing and to safeguards compliance in plans, management through plans agencies commence bid documents for the civil and / or bid documents in within three works / investments. civil works / investments, months of and environmental loan Inclusion of environment safeguards content in effectiveness safeguard modules in training & training & capacity building capacity building programs programs 11. Implementation Support. The Bank’s Program focuses on institutional development, investment planning and capital investment activities. Of these, the Bank’s implementation support should focus largely on further building the environmental management capacity as a part of the institutional development. With regard to the capital investments, theSectoral and community consultations showed clarity of understanding among implementing agencies regarding social challenges to implementation, including their limited capacities to engage with communities, and the importance of making services inclusive and accessible for vulnerable communities. Page 80 The World Bank The Resilient Kerala Program (P174778) Community consultations showed understanding of how vulnerable communities get excluded from the process of receiving services (tenants or sharecroppers in agriculture sector), denial of voice and positional roles in community institutions (such as in FPOs), or during preparation of sectoral plans (such as exclusion of tribal habitations during selection of road alignments owing to their high costs and topographical challenges). 12. Exclusions. Two kinds of activities are proposed to be excluded from current investments: (a) considering the nature of operations (PforR), any road repair and maintenance works requiring large-scale resettlement and removal of structures (on a single alignment/package), affecting more than 50 persons and (b) any ULB master plan that is likely to have an impact on tribal settlements or common property regimes near or within their municipal limits will be excluded from being selected as a pilot for city or town master planning, if it is likely to adversely affect the settlement or common property regimes. 13. Recommendations. Recommendations were received during the consultation process for increased role for local governments considering their strong community engagement capacities and experience. Overall recommendations emerged from the consultations are included in table 5.3. Table 3. Overall Recommendations for Strengthening Social Systems Recommendation Description Strengthening capacities for Overall capacity of the state on participation needs to percolate to sector institutions inclusive and participatory through focused capacity enhancement on social management. planning in different sectors Improved capacities of Key partnering departments need to bolster their capacities for citizen’s engagement, sectoral institutions on gender mainstreaming, making existing services more inclusive and accessible. social issues Fair working conditions for Field-level cadres of key departments who are mostly women are overburdened and frontline staff and outreach understaffed and may see expansion in current responsibilities for greater citizen workers engagement. Sectors need to assess staff arrangements, capacity needs, and working conditions to evolve specific measures for their safety, including GBV/SEA. Stronger and dedicated It is proposed to create strong department-level GRMs in all participating GRM sectors/departments or explore creating a central program-level GRM for the current operation to enhance accountability. Stronger legal framework Many sectors such as water, agriculture, urban development, and social protection have for social accountability multiple institutions with overlapping mandates. For example, in agriculture insurance, the operating framework is skewed against small and marginal farmers and needs reengineering. Likewise, in master planning, the LSGD is made accountable with no accompanying powers for enforcement of timelines and regulation This required a stronger legal regime with clear assignment of roles and responsibilities to help fix responsibility. Land management. There is a gap in the land management practices of the GoK, specifically PWD, in its treatment of non-titleholders (encroachers and squatters), which needs to be aligned with the World Bank’s Policy. 14. Table 5.4 includes the list of activities to be undertaken toward social systems’ strengthening as part of the ESSA PAP. Page 81 The World Bank The Resilient Kerala Program (P174778) Table 5.4. PAP Activities for Strengthening Social Systems Action Description Source DLI# Responsibility Timing and Completion Measurement Tasks Incorporating social ESSA NA RKI and Continuous and Incorporation of social management through implementing to commence safeguards compliance in plans, plans and / or bid agencies within three bid documents for the civil documents in civil works / months of loan works / investments. investments, and effectiveness environmental safeguards Inclusion of social safeguard content in training & modules in training & capacity capacity building building programs programs Strengthen existing ESSA NA RKI and Within one year Data detailing grievances grievance redress implementing from the date received and resolved mechanism at state, agencies of loan maintained by the depts and department and local effectiveness RKI. levels to enhance transparency and responsiveness by enabling creation of an open log of grievances and redressal actions. Page 82 The World Bank The Resilient Kerala Program (P174778) . ANNEX 6. PROGRAM ACTION PLAN Action Description Source DLI# Responsibility Timing Completion Measurement Notify Program, Technical RKI Other Within one Government Order/ Gazette geographical month of notification issued coverage, loan institutional and effectivenes fiduciary s arrangements for implementation Continue Program Technical RKI Recurrent Continuous Progress reports/M&E reports Management from RKI with PMSS support Support Services (PMSS) support to Rebuild Kerala Development Programme (RKDP) Operationalize the Other RKI and Implementing Recurrent Continuous Reports on ACG implementation of Agencies implementation to be shared the Anti-corruption with the WB as part of the Guidelines by regular implementation performing actions support reviews agreed as per the Program Operations Manual (POM) Finalize the ToR Fiduciary RKI Other Within six Program Internal Audit team in and team Systems months place for submission of semi- composition (from from the annual internal audit reports Implementing date of loan for the Program to RKI Agencies) of effectivenes Program Internal s; Biannual Auditors for conducting the Program internal audit covering all Program participating departments Include ‘Financial Fiduciary LSGD Other Within six Guidelines for incremental Audit’ review Systems months performance grants issued to clause in the from the LGs. The clause will detail the comprehensive date of loan requirement and procedure for guidelines for effectivenes review of annual audited eligibility of s Financial Accounts and audit incremental opinion for continuity and performance Page 83 The World Bank The Resilient Kerala Program (P174778) incentive grants for material misstatement. promoting local capital investments to tackle climate change under the Program. Develop and Fiduciary GOK Other Within six Notification issued to implement Systems months implementing agencies, guidance to from the providing guidance on address issues of date of loan transparency and accountability transparency and effectivenes in procurement accountability in s procurement, including streamlining complaint handling and debarment processes Mainstreaming of Environmental RKI and implementing Other Continuous. Incorporation of environment environmental and and Social agencies To and social safeguards social management Systems commence compliance in plans, bid through plans and within three documents for the civil works / bid documents in months of investments. Inclusion of civil works, and loan environment and social integration of effectivenes safeguard modules in training & environmental & s capacity building programs. social safeguards and social inclusion content in capacity building programs Strengthen existing Environmental GoK Other Within one Data detailing grievances grievance redress and Social year from received and resolved mechanism at Systems the date of maintained by the state, department loan Implementing Agencies/RKI and local levels to effectivenes enhance s transparency and responsiveness by enabling creation of an open log of grievances and redressal actions. . Page 84 The World Bank The Resilient Kerala Program (P174778) ANNEX 7. SUMMARY FIDUCIARY SYSTEMS ASSESSMENT 1. The IFSA 32 of the Program arrangements concludes that the present systems together with proposed mitigation measures will provide reasonable assurance that financing proceeds will be used for the intended purpose, with due attention to the principles of economy, efficiency, effectiveness, transparency, and accountability. The IFSA followed the World Bank’s Policy for PforR and the related directives, identified key fiduciary risks that may affect the Program’s development outcomes, and recommended system improvement and capacity-strengthening mitigation measures that will be implemented during the life of the Program. The scope of the IFSA is limited to the boundaries of the proposed Program Expenditure Framework and was conducted through virtual meetings and discussions with the officials of the GoK. 2. Based on the IFSA, the fiduciary risk of the Program is assessed ‘Substantial’. Given the decentralized nature of the Program, with activities being implemented by multiple agencies at the state, district, and sub- district levels, there is an inherent risk associated with variations in fiduciary capacity and compliance to agreed FM and procurement processes. The actions to mitigate the fiduciary risks have been included in the PAP. With the implementation of recommended mitigation measures, before or during the program implementation, the capacity and performance of the Program implementing agencies will be adequate to provide reasonable assurance that the Program funds will be used for the intended purposes. If any significant issues come to the knowledge of the World Bank during the Program implementation, additional mitigation measures will be put in place in consultation with the GoK. 3. Procurement exclusions. The Program is not expected to procure any large contracts valued at or above the OPRC thresholds (US$75 million for works, US$50 million for goods and non-consulting services, and US$20 million for consultant services), which are based on a Substantial risk rating. This conclusion is based on analyzing procurement data of the four agencies assessed for procurement. The IAs shall report to the World Bank if any large contracts appear during Program implementation. In addition, the World Bank team will analyze and monitor the Program budget execution reports, the Program performance of fiduciary systems, and contract management reports to identify any large‐value contracts that may appear throughout the Program implementation. 4. Institutional arrangements for Program activities will follow the existing scheme for implementing the GoK’s constituent functions and is reliant on the use of country systems. At the apex level, the RKI will serve as the PMU and shall be responsible for management, coordination, and M&E under the Program and management and monitoring of procurement activities. Consistent with this role, the RKI will collaborate with, and coordinate across, departments such as the DoF, DoHFW, WRD, DoA, PWD, LSGD including LSGIs, and district administrations under these departments in the Program area. The six participating sector departments shall be the Program IAs and shall fulfill the procurement requirements. Some technical agencies (non-fund-handling agencies) such as DoR, KSDMA, and KILA are also envisaged to support Program implementation. 5. Program Expenditure Framework composition. 33 The Program Expenditure Framework primarily includes expenditure toward modernization of specific departmental function; capital expenditure support; enhancement of financing access; performance incentive grant; IT hardware and software development, training, and capacity 32 This annex provides summary of findings and should read along with the stand-alone ‘IFSA’ report which presents a detailed analysis of the GoK’s larger PFM environment, existing FM and procurement systems, and their performance toward ensuring proper utilization of Program funds. The detailed IFSA will be publicly disclosed along with the PAD. 33 Refer Annex 3 of the IFSA Report for detailed list of the GoK’s budget heads included in the Program Expenditure Framework. Page 85 The World Bank The Resilient Kerala Program (P174778) building; and essential salary and operational costs for implementing agencies. It also includes minor and/or high- priority investments to demonstrate integrated multisector resilience in the Pamba Basin. Key aspects of the Program Expenditure Framework for the six participating departments are as follows: • DoHFW. The Program expenditure boundary is limited to expenditures contributing to promotion and enhancement of the One Health platform at the local level. This primarily includes a subset of activities essential for enhancing ‘Prevention and Control of Diseases’, ‘Public Health Laboratories’, and ‘Public Health Education and Training’. • LSGD. The Program expenditure boundary primarily comprises TA, capacity building initiatives and incremental performance incentive grants. These grants will be disbursed to 316 LSGIs in the Pamba Basin on achievement of specific results forming part of DLIs 4 and 5. Hence. The performance grant to LGs is provided for the purpose of incentivizing them to align their overall yearly plans to the objectives of mainstreaming disaster and climate risk. The qualifying criteria for the LGs to receive these grants is 30% Co-Benefits in year 3 and 50% in year 5. Therefore, its embedded in the mandate that overall budget of the LGs including the performance grants is used to further improve on their Co-Benefit score. LSGIs have an established system of functioning and have a well-defined fiduciary framework. Further, because the incentive grant is a new initiative and specifically flows as part of the Program, there is a possible risk of lack of established standards for incentive grant eligibility. Therefore, to mitigate this risk, ‘LSGI- Comprehensive Evaluation Guidelines’ will include include requirement of (a) no financial audit pendency and (b) audit report with no ‘disclaimed’ or ‘adverse’ audits opinion (PAP actions). • DoA. The Program focuses on the cost of supporting promotion and strengthening of FPOs, AEZ relevant farming and systems strengthening, and includes newly launched Krishi Padasala scheme focused on farmer capacity building and the Punarjani scheme centered on post-COVID-19 economic recovery in the agriculture sector. The Program Expenditure Framework primarily includes expenditures toward agriculture transformation support in the Pamba Basin, covering four districts (16 AEUs, associated FPOs, and 264 Krishi Bhavans) and its associated offices. • PWD. The Program boundary comprises expenditures toward enhancing the Centre of Excellence, building critical road network (such as Sabarimala), and supporting special repairs in the Pamba region including post-flood project support. • DoF. The Program boundary includes expenditures toward promotion, enhancement, and establishment of systems such as unified beneficiary database, debt management system, DRF, identified departmental modernization, and capacity building. • WRD. The Program expenditure mainly focuses on department modernization and capacity building. 6. Procurement expenditure profile and capacity assessment. From the broad outline of Program expenditure (‘Big P’) related to procurement, it is noted that there will be negligible procurement in the Program at the level of the LSGD and major procurements for the DoF shall be handled by the RKI. Procurement assessment has therefore been carried out of the other four departments, namely the DoA, DoHFW (KMSCL), 34 PWD, and 34 All procurements for the MoHFW are handled by the KMSCL. Therefore, the KMSCL has been assessed for MoHFW procurements. Page 86 The World Bank The Resilient Kerala Program (P174778) WRD. A brief assessment has also been carried out of the RKI, consistent with its role of coordination across departments including management and monitoring of procurement activities. 7. Procurement processes. The assessment noted that procurement processes across all the four implementing departments are similar, but the practice of the applicable rules and regulations may slightly vary across them. Procurement is mainly governed by Kerala Financial Codes, Kerala PWD Manual, Kerala Stores Purchase Manual, delegation of financial powers, government orders issued from time to time, and Kerala Government Servants Conduct Rules. The DoHFW procurements are handled by the KMSCL, which is fully owned by the State Government. The KMSCL applies GoK regulations, including Kerala Stores Purchase Manual and is overseen, like the other state government departments, by State Vigilance and Anti-Corruption Bureau and so on. All four agencies use the National Informatics Centre (NIC) e-portal, their own standard bid documents, GeM portal of the Central Government, and CPRCS for IT-related requirements. 8. The FM systems in the GoK are well established and have undergone several reforms over the last decade. These include (a) developing and rolling out the IFMIS (budget formulation, budget execution, payments, and account preparation); (b) implementing an e-payment system to ensure quick and transparent disbursements; (c) upgrading its human resource management system; (d) strengthening financial reporting to make them real time and support decision-making; (e) computerizing pension payment systems; (f) strengthening the State Accounts Department; (g) strengthening the internal Financial Adviser system; and (h) providing training and capacity building to all Treasury, finance, and accounts officers of the State. This has helped the GoK to introduce a system-based budgetary and financial control environment with improved timeliness of financial information on budget utilization, cash management, and accounting. The RKP will be embedded within the State PFM systems. The observations of the assessment across the PFM cycle, as will be applicable to the Program, are summarized as in the following paragraphs. 9. Planning and budgeting. The framework for planning and budgeting by the GoK is elaborate, with comprehensively documented rules and regulations and significantly automated processes operating within the overarching mandate enshrined in the Constitution of India. The GoK has an established budget preparation and approval process (detailed in the Kerala Budget Manual, Kerala Treasury Codes, Kerala Accounts Codes, General Financial Rules (GFR)-2017, and annual state budget instruction circulars), which is working well at multiple tiers of implementation. Further, the budget classification system (five-tier, 13-digit code system) of the GoK is well defined, and uniformly applied across the state. Annual budget estimates are prepared before the start of a respective financial year, as observed on review from FY17/18 to FY21/22, where budget estimates were publicly presented to the State Legislature (through budget speech) in the month of January or February (last quarter of the previous year). 10. Procurement planning. Annual works programs determine the procurements to be done and are prepared by the concerned departments based on priorities. These plans are consolidated by the DoF for approvals and budgeting. All the works to be covered in the annual procurement are then decided based on priorities, budget allocation, and availability of funds. Annual works programs are available in System for Progress Analysis and Concurrent Evaluation (PLANSPACE), a web-based application for monitoring of plan schemes by the Planning Board of Kerala. The annual works programs are not disclosed on the departmental websites. 11. Procurement profile of the Program. Based on the activities identified in the Program scope, the main procurable items include (a) goods: machinery, equipment, materials, and supplies for health, IT hardware, software, and office equipment required by participating departments and provisions for the Centre of Excellence Page 87 The World Bank The Resilient Kerala Program (P174778) at the KHRI; (b) works: contracting and upgrading of CRN, special repairs to communications (OPBRC), system establishment and incremental program support for the WRD, and post-flood projects under the RKI; and (c) consultants: for modernization of the DoF and training of staff, support to social registry and disaster risk, training support for the Institute of Health and Family Welfare, modernization of WRD, consultancy/capacity building for WRD, support for Centre of Excellence at the KHRI, and other program activities. 12. Adequacy and reliability of budgets. The consolidated position of the original and revised budgets and actual expenditures for budget heads forming part of the Program Expenditure Framework is shown in table 7.1. Table 7.1. Budget and Revised Estimates as Compared to Actual Expenditure FY17/18 to FY19/20 Particulars FY17/18 FY18/19 FY19/20 (INR, millions) Original budget estimates (BE) 7,805.22 8,059.38 10,460.73 Revised budget estimates (RE) 7,204.66 7,422.93 7,337.65 Actual expenditure (AE) 7,126.20 7,464.99 7,583.65 Budget outturn (BE) 91.30 92.62 72.50 Budget outturn (RE) 98.91 100.57 103.35 13. The revised budget estimate-based budget outturns are significantly improved as compared to the outturns computed on original budget estimates. For example, during FY19/20, the outturn improved from 72.5 percent to 103.35 percent. Similarly, during the previous two years, the outturns have increased by around 7 percent to 8 percent. At the State budget level, this is suggestive of large savings in budget allocations and significant adjustments through the revised budget. Further, the C&AG’s State Finance Audit Report 35 and Performance Budget 36 reflect that in addition to garnering resources, the State needs to adhere to fiscal targets, improve effectiveness of its planning and budget execution processes, and bring in efficiencies in public investment management. 14. Notwithstanding the above, funding predictability for the Program is high. Risks to the Program Expenditure Framework arising out of budget constraints are low. The total budget allocation of the six program implementing departments and the RKI, for FY20/21 is US$5 billion, which when extrapolated for the program period reflects estimated budget allocations of US$25 for FY2021–26. The RKP’s estimated Program cost (US$530 million) is estimated to represent only two percent of the total estimated budget allocations of the participating departments. Hence, there is a reasonable expectation that the required resources for the Program will be adequately appropriated, when required. In addition, the DoF, GoK, and RKI will regulate and monitor the Program budget planning and allocations throughout the life of the Program. 15. Program budget and fund flow. The Program expenditure will be budgeted in annual State budget across multiple budget heads, operated by the Program implementing departments. The Program budget allocation and fund flow system will follow a dual approach and thereby ensure adequate fund availability for Program activities: 35 The State Finance Audit Report of the C&AG: Chapter II (Financial Management and Budgetary Control), paragraph 2.8 (Conclusions and Recommendation) page 75, page 81, and page 63 in audit reports for FY18/19, FY17/18, and FY16/17, respectively. 36 Performance Budget (of demands/appropriations) is prepared by the GoK from FY13/14 for three departments: Agriculture Development and Farmers Welfare, Forest and Wildlife Department, and WRD. The Performance Budget issued by the Finance (Performance Budget - A) Department, GoK for FY18/19 was reviewed in detail. Page 88 The World Bank The Resilient Kerala Program (P174778) (a) Departmental budget allocations. The six participating departments will receive allocation under the budget heads identified under the Program Expenditure Framework, based on work plans and activities approved by the RKI. (b) Budget allocations to RKI. The RKI, the Program nodal agency, has an existing operational head for externally added projects (5475 and/or 3475 - post-flood projects under the RKI 37 Plan). The Program funds shall also be routed through this existing budget head. Funds will be annually budgeted based on the Program plan approved by HLEC. For devolution of Program funds, the RKI will observe the following detailed mechanism to ensure smooth and timely fund availability. (c) The department does not have a functional head for the Program activities/initiatives for a particular DLI. The implementing department may be crossmapped under the RKI head, and they may be allotted requisite funds under such head, which they can operate and incur expenditure. (d) The Department already has an operational head of account for an existing activity under a particular DLI. In such cases, the funding that will happen either through funds will be budgeted in the existing budget lines based on work plans and activities approved by the RKI or through re-appropriation between the allocations under the department head and the RKI head. 16. The Program Expenditure Framework includes certain activities such as surveys, performance incentive grant, stand-alone system establishment consultancies, etc. For these expenditures, the respective department does not have an existing functional head; hence, a new budget head may be needed for incurring these expenditures. The RKI, in consultation with respective participating departments, will finalize the budget and fund flow procedure for these new categories of Program incremental activities. 17. Budget transparency. The GoK makes public the annual budget allocations and utilizations details of the State budget on adoption by the State Legislature. 38 The annual budget speech details the budget strategies with due emphasis on the State’s development focus and fiscal position. In addition, gender budget and child budget, detailed demand for grants, performance budgets, supplementary budgets, and audited state financial statements are duly made public. District-level budgets are also made public through LSGIs, albeit with time lags. 18. Budget execution (Treasury management and fund flow). The GoK has implemented an end-to-end IFMIS for strengthening FM including Treasury operations of the State. The IFMIS implementation is under way since April 2016 and major application modules for expenditure management and Treasury bill processing in the IFMIS have been rolled out and is fully functional. Integration of Treasury bill generation and submission modules, 39 that is, BIMS, BAMS, SPARK, EMLI, and SAANKHYA with e-kuber for payments to beneficiaries/vendors, helps in effective fund management on a real-time basis. This also supports monitoring/tracking timeliness in government payments and implementing proactive measures for reducing delays in payment. End-to-end automation of Treasury operation also helps in enhancing transparency in the government payment process. 37 Within these two major heads, which are already operational for the RKI, the GoK will introduce a program-specific budget lines at minor head/ sub-head level of budget classification. If at any point, the need for separate budget line arises, the GoK may open the same in consultation with the World Bank. 38 These are accessible on the website of the DoF (www.finance.kerala.gov.in). 39 BAMS: Budget Allocation and Monitoring System; BIMS: Budget Information and Management System (contingency bills); Service and Payroll Administrative Repository of Kerala (SPARK - employee/personal claims); Effective Management of Letter of Credit Issuance (EMLI -contractor bill payments of works/engineering department such as Public Works, Irrigation, Harbour Engineering, and so on); Sankhya (for LSGIs claims); e-kuber: Reserve Bank of India’s online system. Page 89 The World Bank The Resilient Kerala Program (P174778) 19. Treasury performance. As part of the FSA, budget allocations and time frame of Treasury payment were assessed on a sample basis for the budget heads forming part of the Program Expenditure Framework. Findings are shared briefly below: • Budget allocations are timely. The budget allocations move through either exigent/prioritized track or BAMS and are mostly triggered on an automated basis within the set framework. No substantive delays were discovered. • Bill payment by Treasury. During FY20/21, on an average, the payments are made by respective Treasury within 10 days from receipt of the payment request. • Exception to bill payment by Treasury. During FY20/21, the maximum average holding period of bills outstanding at Treasury on account of unresolved objections for final payment is 80 days. The overall impact of such bills is insignificant when compared to the total quantum, both in value and numbers. • Payment cycle. In the PWD, the total payments outstanding (as of February 10, 2021) toward contractor work bills are 75 percent outstanding for less than six months and 25 percent outstanding for about one year. The prolonged payment cycle is a systemic feature across all engineering departments of the GoK. However, there is continuous real-time monitoring and regulation of contractor work bills payments by the DoF, GoK. In this light, the World Bank will also follow up on the status of vendor payments for program expenditures on a biannual basis during the program life. In case of persistent issues affecting the result achievement, the related payments shall be routed through the Treasury channel of the PMU (RKI). Further, for all other Program expenditure heads, the average payment cycle is two to three months. • Annual independent review of Treasury functioning. The Annual Treasury Review report 40 for FY18/19 points out the deviations such as delay in submission of monthly accounts, non-receipt/delay in receipt of awaited vouchers; unreconciled differences of Reserve Bank deposits; delay in adjustment of balance under suspense and remittance heads; noncompliance of requirement for monthly physical cash balance verification, and so on. The observations highlighted are transaction based and do not indicate material deviations affecting the overall functioning of the Treasury, GoK. Notwithstanding, the Treasury Annual Review report shall be reviewed each year to monitor the observations and the potential impact on the Program Expenditure Framework. 20. The Program reliance. The GoK Treasury framework and functioning is considered adequate for associated functions under the Rebuild Kerala PforR Program. The expenditure under the Program will be incurred both at the PMU (RKI) and the participating departments and LGIs in the districts. All Program expenditures units will follow the GoK’s Treasury channel for incurring expenditure along the Program Expenditure Framework. 21. Accounting and financial reporting. The framework, prescriptions, and procedures on accounting, bookkeeping, and financial reporting by the State departments are contained in the State Accounts Code, Kerala Treasury Code, Financial Code, Budget Manual, Public Works Account Code, and other manuals implemented in addition to the periodic directions issued by the DoF. The accounts of the GoK are compiled by the Accountant General (AG) (A&E), Kerala discharging duties and exercising powers entrusted to the C&AG in the Constitution of India for preparation and submission of annual accounts to the State Legislature. On the other hand, the 40The Accounts General (A&E), Kerala conducts periodic review of the working of the Treasury and submits an annual Review Report to the State GoK. The review is detailed and evaluates various aspects of functioning covering areas like internal controls, IT controls, physical safeguard, and core departmental functioning including transaction audit. Page 90 The World Bank The Resilient Kerala Program (P174778) treasuries, offices, and/or departments functioning under the control of the GoK are primarily responsible for the preparation and correctness of the initial and subsidiary accounts as well as ensuring the regularity of the transactions in accordance with the applicable laws, standards, rules, and regulations relating to such accounts and transactions. Accounting is done on a cash basis with the exception of certain book adjustments. 22. With the implementation of IFMIS/PLANSPACE, accounting and financial reporting are fully automated and near real time. Monthly accounts and fiscal indicators are now available, a half-year review of state finances is published and available in the public domain, year-end financial statements are now tabled in the Legislature immediately in the next Assembly session and are more easily available to the public. These systems have in-built controls and have the ability to record the financial transactions of the GoK and also generate reliable financial reports at an aggregate and disaggregate level, depending upon the user needs. Further, the real-time state treasury expenditure for plan heads has been integrated with PLANSPACE for strengthened monitoring and comparison of expenditure. 23. Timelines and completeness of accounting. The actual date of submission of monthly accounts during FY20/21 for the six participating departments has generally been within the established timelines of 25th of the next month with exception for the months of August and October 2020 which witnessed a delay of under 30 days due to festivals holidays and spike in COVID-19 cases. To ensure completeness of accounts, prescriptions on reconciliation of accounts maintained by the departments, Treasury, and AG (A&E) are contained in the Kerala Budget Manual and Kerala Treasury Code. As part of the IFMIS initiative, GoK, with effect from October 1, 2020, has implemented an online process of reconciliation of accounts and submit reconciliation certificates digitally to the AG office. This will strengthen the existing process and reduce delays in the respective treasury as they would now be reconciling the accounts directly on the accounting portal of AG (A&E). 24. The Program will follow the extant practices of accounting and financial reporting. GoK’s initiative of online reconciliation of accounts is expected to reduce process delays and will be monitored during Program life for effectiveness in implementation. Consequently, in respect of the budget heads of account included in the Expenditure Framework, the expenditure reported in the monthly accounts prepared by the AG (A&E), Kerala, will be shared with World Bank along with status of Treasury and AG reconciliation on a biannual basis. Additionally, MIS generated from IFMIS and/or PLANSPACE will also be shared with the World Bank during period of Program implementation in formats and frequency as mutually agreed within six months of Program effectiveness. 25. Procurement processes and procedures. There is a fair and transparent procurement process with the objective of achieving best value for money. Open tendering is the preferred method of procurement, and lower thresholds are laid down for limited and direct procurement in specified circumstances. All tenders above Rs 0.5 million are required to be handled on the e-portal. The KMSCL uses e-procurement for all cases above Rs 0.1 million. The GoK has stipulated use of GeM (GoI portal) and CPRCS for IT-related items. Depending upon the value, agency, and category of purchase, 7 to 30 days are provided for submission of bids. Timelines for various other activities have also been specified. Bids are required to be opened publicly. All the four agencies use their respective standard bid documents. The provisions require that unbiased technical specifications shall be prepared, and tender documents shall clearly indicate the qualification (or class of registration) and evaluation criteria. Specified preferences are applicable to Make in India; micro, small, and medium enterprises (MSMEs); public sector undertakings; and state labor contractors. Negotiations after opening of tenders are discouraged/not permitted. Under exceptional circumstances, if negotiations are allowed, these are to be held with L1 bidder only. Page 91 The World Bank The Resilient Kerala Program (P174778) 26. The assessment reviewed procurement performance of all four agencies based on analysis of sample review data. This analysis reveals that (a) all cases were open tender cases through the e-portal, (b) average bidding time varied between 10.8 (KMSCL) to 14.4 (PWD) days, (c) average number of bids received varied from 2 (WRD) to 9.5 (KMSCL), (d) average length of procurement process varied from 49.5 (KMSCL) to 116 (PWD) days, (e) average time for bid evaluation varied from 38.4 (KMSCL) to 106 (PWD) days, (f) processes cancelled varied from 4.2 (PWD) to 14.47 KMSCL) percent, and (g) there is a pendency of about 11 months in payment of bills of the PWD and WRD. 27. In the absence of an overarching legislation on public procurement in the State, contract administration between two parties takes place in line with provisions agreed by the parties during the tender process and as incorporated in the resulting contract agreement. Both Kerala Stores Purchase Manual and Kerala PWD Manual have provisions related to requirement assessment, specifications, technical approvals, registration of suppliers/ contractors, tender conditions, contract conditions, delivery of goods/ works, quality control, terms of payment, termination, and dispute settlement. 28. Internal controls. There are appropriate controls on transaction-level expenditure, which are largely exercised. The GoK has mandated and documented prescriptions on various aspects of FM, which set the tenor, regulations, and procedures of a well-defined and reasonably comprehensive internal control framework in government financial matters. Key prescriptions applicable to the Program participating departments are Kerala Budget Manual, 41 Kerala Financial Code, Kerala Treasury Code, Kerala Account Code, Kerala Public Works Department Manual, Kerala Public Works Account Code, Procurement of Goods and Services in Local Self Government Institutions of Kerala and GoK Circulars, Government orders, and other manuals/guidance, for example, delegation of powers, PWD Quality Control Manual, Stores Purchase Manual, and so on. Further, the oversight arrangements for district and sub-district level operations are exercised by the district administration (well established) of the participating departments. In addition, for the RKP, an IVA will be engaged to monitor, evaluate, and validate Program results through a credible verification process. Overall, there is adequate control over and stewardship of Program funds, with well-defined delegation of authority. 29. Control framework for LSGI. The LSGD, GoK, through the Directorate of Urban Affairs and Directorate of Panchayats, administers the ULB and the PRIs in accordance with the constituting Acts and the directions of the GoK. Funds devolved to LSGI average approximately 7.44 percent of the total State expenditure. Funds are allotted in three instalments during a year by the DoF (SFC). Budget utilization during FY19/20 was around 58 percent of the original estimates (95 percent in FY18/19) and 69 percent of the revised estimates (119 percent in FY18/19). Prescriptions of the constituting statutory laws read with underlying accounts rules (separate for ULBs and PRIs) and government order provide framework for accounting including policies, detailed coding structure, and financial reporting requirements. Computerized accounting in Saankhya accounting software is uniformly done on accrual basis following the double entry system. The Municipal Accounts Manual for ULBs drafted on the basis of the National Municipal Accounts Manual formulated by the Ministry of Urban Affairs, GoI, is duly implemented by ULBs. The GoK has also instituted a monthly performance audit system for PRIs and ULBs. Performance audit of gram panchayats has been completed till November 2019. 30. Annual audit is conducted using the Audit Information Management Software application and annual financial statements are submitted electronically by LSGIs for audit by Kerala State Audit Department (KSAD). Annual audit stands completed till FY18/19 and individual audit reports of each LSGI issued in local language are 41 Third edition embodying corrections up to June 30, 1982. Page 92 The World Bank The Resilient Kerala Program (P174778) accessible on the KSAD website. A consolidated report, issued in the local language, on accounts audited by the KSAD is tabled annually before the Legislative Assembly and examined by the Legislative Committee on Local Fund Accounts. The report for FY18/19 has been issued and is accessible to the public on the KSAD website. As part of the IFSA, 42 a detailed FM system assessment of the LSGI is conducted. It is concluded that, for Program activity, LSGIs have established a system of functioning and a well-defined fiduciary framework. 31. Internal Audit. The GoK has an Internal Audit wing functioning in various departments for conduct of audit in the department offices with an Internal Audit cell in the DoF for supervision and oversight. However, the internal audits are not regular or timely. In addition, the function is short of skilled staff and uses antiquated audit techniques. Therefore, as a Program mitigation measure, it has been agreed that a separate internal audit will be conducted for the expenditure forming part of the Program Framework. The audit will be conducted by the central Internal Audit housed in the DoF in collaboration with the respective Internal Audit wings in the six Program participating departments, as per the agreed ToR with the World Bank (PAP action). 32. Program audit. The consolidated Program financial statements of the RKP will be audited by the State AG, Kerala, following the ToR adopted by the C&AG for audit of World Bank-supported projects. The budget heads forming part of the Program Expenditure Framework spread across the seven Program participating departments. The financial statements of the Resilient Kerala Program budget lines will be prepared by the RKI within four months from the end of each fiscal year. Hence, the Program consolidated audit will be conducted by the State AG and the audit report will be submitted by the RKI to the World Bank within twelve months from the end of each fiscal year (that is, by March 31 of the subsequent calendar year). RKI, GoK, and the World Bank during the first year of Program implementation will enhance the ToR with specific reference for a PforR operation, if deemed necessary. 33. Procurement and FM staffing. The existing FM staff strength in RKI and the participating departments are adequate for managing the FM aspects of the Program. However, a nodal office for FM needs to be engaged at the PMU level. The appointments will be based on the ToR agreed with the World Bank. Also, the arrangement of functional responsibilities of existing departments (at the RKI and participating departments) finance and accounts staff for supporting the RKP needs to be clearly established and shall be reviewed as part of the first supervision mission. The procurement staff strength is adequate in the four departments assessed. The RKI does not have a procurement specialist available, including in the PMSS Consultancy, which only has a part-time procurement expert. The RKI would need to have a full-time procurement specialist for management and monitoring of procurement activities and application of Anti-Corruption Guidelines under the Program. 34. Anti-Corruption Guidelines. To operationalize implementation of the various areas covered in the Anti- Corruption Guidelines, the RKI shall maintain and compile a quarterly report of complaints related to the Program and share it with the World Bank (based on the agreed format incorporated in the Program Operations Manual [POM]) and incorporate the World Bank’s listing of ineligible firms in the filter used by implementing agencies when they conduct due diligence. This list is available at the following website: http://www.worldbank.org/debarr. This list is incorporated into the filter mentioned above the World Bank’s suspension list that will be obtained from the World Bank team by the Program Team periodically. A report is provided quarterly stating that none of the contract awards under the Program are made to any of the ineligible/suspended firms. 42 Refer to Annex 1 of IFSA Report for a detailed FM assessment of the LSGI. Page 93 The World Bank The Resilient Kerala Program (P174778) 35. For every bidding opportunity under the Program, each participating bidder shall submit (as part of the bidding process) a self-declaration that the firm is not subject to ineligibility or has not been sanctioned under the World Bank system of debarment and cross-debarment. Program audit will also review and certify the above aspects. 36. Program systems and capacity improvements. Table 7.2 outlines the main weaknesses identified in the FSA and proposed mitigation actions, some of actions included in the PAP to address the weaknesses. Table 7.2. Main Weaknesses in the FSA and Proposed Mitigation Actions Risk Mitigation Action Appropriate budget heads for new The RKI, in consultation with respective participating departments, finalizes category of Program incremental the budget and fund flow procedure for these expenditures. activities expected to be under way by the end of the first year of effectiveness. Delays in IA and IA not being Finalize the ToR and the composition of the IA team for conducting the commensurate to the size of business Program IA covering all Program participating departments. Pendency in payment of bills by the The RKI, in consultation with Finance, to finalize the budget and fund flow for PWD and WRD specifically for Program these expenditures, and pendency brought down to 2 months by the end of boundary of ‘Big P’ Year 1 after effectiveness. Requirement for comprehensive Finalize evaluation guidelines for Performance Incentive Grant including guidelines for eligibility of incremental requirement of up-to date external audit with no ‘disclaimed’ or ‘adverse’ Performance Incentive Grants under external audits report. the Program to select the LSGD and ULBs Absence of comprehensive The RKI to develop general guidance on procurement process for goods and procurement guidance for goods and services and include it in the POM. services Transparency Implement (a) preparation and publication of procurement plans; (b) audit of sample of contracts by the auditors; and (c) disclosure policy covering procurement plans, contract award, contract performance, complaints redressal, audit reports, appeals and their disposal, and so on. Absence of model bidding documents The RKI to develop model bidding documents for procurement of goods and for goods and services leads to weak services for consistency. contract management Lack of staff capacity related to The RKI to hire a full-time procurement specialist and organize regular training procurement and contract programs on procurement and contract management for procurement staff of management implementing agencies. Inadequate complaint handling system The RKI to develop standard procedures for handling procurement complaints including timelines for (a) submission of complaints and appeals, (b) decision of institution in charge and appeals body, and (c) public disclosure in an effective manner. Debarment provisions Comprehensively specify the debarment process at one place for ready reference by implementing agencies. Make a list of debarred firms and individuals readily accessible to procuring officials as well as bidders/contractors/suppliers for consistent application. Page 94 The World Bank The Resilient Kerala Program (P174778) 37. Implementation support. The World Bank task team will carry out regular implementation mission to support the implementing agencies to achieve results and for monitoring changes in fiduciary risks to the Program and, as relevant, comply with the fiduciary provisions of legal covenants. The World Bank Task Team would review key documents generated by implementing agencies under the Program such as procurement progress, contract management, complaints, and adherence to Anti-Corruption Guidelines, and give its suggestions for improvement. The progress on agreed PAP (Annex 6) will be reviewed and any changes to the action plan will be made during the implementation phase. Page 95 The World Bank The Resilient Kerala Program (P174778) ANNEX 8. IMPLEMENTATION SUPPORT PLAN 1. The objectives of the Implementation Support Plan (ISP) are: (i) to monitor implementation progress of the Program (including its PAP) and the implementation of the risk mitigation measures defined in the technical, fiduciary, environmental and social assessments, and (ii) to provide the counterpart with the technical advice necessary to facilitate the achievement of the PDO and contribute to the quality of the capacity building of stakeholders by providing best practices, benchmarks and training. 2. The Bank will provide regular implementation support to the Program as appropriate, including for the implementation of the PAP. Formal implementation support missions and field visits will be carried out semi- annually. The focus of the implementation support, task team skill mix requirements and the role of partners are summarized at the below table. Focus of Implementation Support Resources Time Focus Skills Needed Estimate Partner Role (US$) 0–12 Technical support and International experts to provide technical 850,000 AIIB and AFD will months capacity building for RKI assistance on global best practices on all provide overall and all implementing sector specific and crosscutting areas support agencies including public finance and debt management, social protection, disaster risk KfW will provide financing, urban development, disaster and recipient executed climate risk management, health, water TA support in resources management, agriculture, selected areas transport and roads. Support for RKI and implementing agencies on the technical topics summarizes above. Capacity Building in Social and environmental experts environmental and social management, of the technical staff of IAs and other stakeholders involved in the Program implementation Fiduciary support and Procurement and Financial Management monitoring experts 12–48 Technical Support and Technical experts in program areas and 1,500,000 AIIB and AFD will months capacity building operational experts provide overall support. Fiduciary Support and Procurement and Financial management capacity building experts KfW will provide recipient executed Environmental and Social Environmental and Social development TA support in management support and experts selected areas capacity building Overall M&E M&E experts Other Potential temporary local Institutional development or operations 300,000 hands on support expert Page 96 The World Bank The Resilient Kerala Program (P174778) Task Team Skills Mix Requirements for Implementation Support (Annual) Number of Number of Skills Needed Comments Staff Weeks Trips 2 TTLs based in Task team leaders 8 3 headquarters, 1 TTL based in India Disaster risk management specialist 10 3 Based in India Disaster risk financing specialist 6 2 Based in headquarters Financial management specialist 6 2 Based in India Social protection specialist 6 2 Based in India Urban development specialist 6 2 Based in India Health specialist 6 2 Based in India Water resource management specialist 6 2 Based in India Agriculture specialist 6 2 Based in India Transport specialist 6 2 Based in India Environment specialist 4 2 Based in India Social specialist 4 2 Based in India Procurement specialist 3 2 Based in India Financial management 3 2 Based in India Local STCs for environment, social, operations, and M&E 12 10 Based in India Role of Partners in Program Implementation Name Institution/Country Role KfW Germany Joint financing for DPL 2, TA grant to GoK for PforR AIIB China Joint financing the PforR AFD France Joint financing the PforR Provide sector experts, capacity support, and change Infrastructure Development India management expertise to the GoK in priority sectors and Finance Company areas of resilient development over a two-year period. 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