Document o f The World Bank FOR OFFICIAL USE ONLY Report No: 5 1368-IN PROJECT PAPER ONA PROPOSED SECOND ADDITIONAL FINANCING (CREDIT) IN THE AMOUNT OF SDR 62.9 M I L L I O N (US$lOO M I L L I O N EQUIVALENT) TO INDIA FOR A ANDHRA PRADESH RURAL POVERTY REDUCTION PROJECT November 23,2009 Sustainable Development Department Agriculture and Rural Development Unit India Country Management Unit South Asia Regional Office This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. I t s contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective October 3 1,2009) Currency Unit = Indian Rupees Rs. 47.02 = US$1 US$1.58989 = SDR 1 FISCAL YEAR April 1 - March 31 ABBREVIATIONS AND ACRONYMS AP Andhra Pradesh APRPRP Andhra Pradesh Rural Poverty Reduction Project CBO Community Based Organization CIF Community InvestmentFund co Community Organization cs Country Strategy DPM Deputy Prime Minister EMF Environment Management Framework FM Financial Management GOAP Government o f Andhra Pradesh H&N Health and Nutrition ICT Information and Communications Technology IDA International Development Association IHCB Institutional and Human Capacity Building IRR Internal Rate o f Return MDG Millennium Development Goal M&E Monitoring and Evaluation MIS Management Information System NGO N o n Governmental Organization NPM N o n Pesticide Management M S Mandal Samakhyas MTR Mid-Term Review NREGS National Rural Employment Guarantee Scheme SHG Self Help Group SERP Society for Elimination o f Rural Poverty TDP Tribal Development Plan uc Utilization Certificates vo Village Organizations zs Zilla Samakhyas Regional Vice President: Isabel M. Guerrero Country Director: Roberto N. Zagha Sector Director John Henry Stein Sector Manager: Simeon K. Ehui Task Team Leader: Parmesh Shah .. 11 FOR OFFICIAL USE ONLY INDIA Second Additional Financing Andhra Pradesh Rural Poverty Reduction Project CONTENTS Page A. Introduction.........,....,...........,......,,.,.,...,.,.....,....,............,.,,.,,..,.,...,.,,.....,.,,............. 2 B. Background and Rationale for Additional Financing .,..,,..,.,.,....,.........,,,,,..,.......... 2 C. Proposed Changes................................................................................................... 4 D. Consistency With Country Strategy........................................................................ 5 E. Appraisal O f The Proposed Project ........................................................................ 5 F. Expected Outcomes ......,............................................... .......................................... 8 G. Benefits and Risks...................................................................................... ............. 9 H. Financial Terms and Conditions For the Second Additional Financing..,.............. 9 ANNEX 1: FURTHER DETAILS OF PROJECT PERFORMANCE TO DATE ....... 10 ANNEX 2: SCHEDULE 1............................................................................................ 11 ANNEX 3: EXPECTED OUTCOMES OF RESULTS FRAMEWORK INDICATORS AT CLOSE OF THE PROJECT................................................................................... 12 This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. I t s contents may not be otherwise disclosed without World Bank authorization. ... 111 INDIA SECOND ADDITIONAL FINANCING : ANDHRA PRADESH RURAL POVERTY REDUCTION PROJECT PROJECT PAPER T Y 2010 2011 2012 innual 27.5 47.5 25 Levised project development objectives/outcomes: 'he project development objectives would remain the same as the original project and first additional inancing. The second additional financing would scale up the project development impacts and (ontinueto enable the rural poor households, particularly the poorest o f the poor, in Andhra Pradesh AP), to improve their livelihoods and quality o f life. Ioes the scaled-up or restructured project trigger any new safeguard policies? N.A. For Additional Financing 3 Loan [d] Credit [ ] Grant :or LoandCreditdGrants: 'otal Bank financing (US$m.): 100 'roposed terms: Standard credit, with thirty five (35) years maturity and ten (10) years grace. BRD/IDA .oca1 Communities A. Introduction 1. This Project Paper seeks the approval o f the Executive Directors to provide a Second Additional Credit in an amount o f IDA credit o f US$lOO million (SDR 62.9 million equivalent) to India for the Andhra Pradesh Rural Poverty Reduction Project, APRPRP (P071272, IDA Credit 3732-IN). The Government o f Andhra Pradesh (AP) i s willing to commit US$32.4 million and estimates access to US$338 million o f other government funds towards this additional phase o f the project. The outcome values envisaged in the first additional financing have been met. Using the institutional platform o f the poor households created during the earlier phases o f the project, the second additional financing will scale up the development impacts achieved in APRPRP and create impacts in newer areas o f human development. 2. The proposed second additional financing project will focus on: (i) higher order capacity building o f the institutions o f the poor households to perform more efficiently and effectively; (ii) leveraging Information and Communication Technology (ICT) systems for improved project implementation; (iii) ensuring inclusion o f the poorest and the most vulnerable who were left out and those who regressed back into poverty due to the recent food and financial crises; (iv) improving health and nutrition status o f the poor households; (v) expanding and strengthening their livelihood activities; and (vi) increasing their access to social safety net benefits and entitlements and creating wider convergence with the government departments implementing anti-poverty programs. As in case o f the original project and first additional financing, the project objectives and the project objectives and the components will not change under the second additional credit. B. Background and Rationale for Additional Financing 3. Project Obiectives and Scope: The original IDA Credit o f SDR 114 million for APRPRP was approved by the Board o f Directors on February 20, 2003 and became effective on M a y 12, 2003. The project development objective was to enable the rural poor households, particularly the poorest households in AP, to improve their livelihoods and quality o f life. APRPRPP expanded the geographical coverage to the entire state, focused on the poorer and more vulnerable members o f rural communities and emphasized on their livelihood issues with a focus on sustainable agriculture, value addition, job creation and non-farm employment. Piloting o f social risk management interventions such as health and nutrition programs helped the poor households achieve improved health and nutrition status and reduce health expenses. 4. The f i r s t additional finance o f APRPRP IDA Credit o f SDR 42.70 million (US$65 million equivalent) was approved on July 10, 2007 and became effective on September 6, 2007. I t was used for consolidation and completion o f interventions under the project, including investments in institutions and capacity building o f the community institutions o f the poor women to enable them t o become sustainable and self-reliant. Furthermore, investments were made in specialized institutions, such as business franchises and mainstreaming o f various successful pilot approaches. Under the first additional financing, the project objective and the components remained unchanged. The first additional financing project achieved its outcomes, including building institutions o f the poor households and their social capital, developing financial services for them, improving their livelihoods, reducing vulnerability, promoting social action on gender issues and improving local governance. The closing dates for all these credits, which have met compliance with the credit covenants, and for the proposed second additional financing will be extended to September 30,201 1. 5. The proposed second additional financing will put in place supplementary institutional and technological support systems to achieve higher development impacts. This will be achieved by fully utilizing the institutional architecture o f the community organizations (COS) o f the poor households. New 2 areas o f human development, particularly health and nutrition will be impacted. It will support the Government o f Andhra Pradesh's (GOAP) long-term rural poverty reduction program. The APRPRP Additional Financing project i s being implemented by the Society for Elimination o f Rural Poverty (SEW), an autonomous society under the Department o f Rural Development o f GOAP, as in case o f APRPRP. 6. Project Performance to Date: Supervision ratings have been satisfactory throughout the project life, for both implementation progress and achievement o f development objectives. The progress data shows that outcomes envisaged for the first additional financing have been exceeded. 7. Institutional Development: The project has mobilized 10.22 million poor women, translating to 90 percent o f the poor women in the project districts; into 850,671 s e l f help groups (SHGs), 35,525 village organizations (VOs), 1,180 Mandal Samakhyas (MSs), and 22 Zilla Samakhyas (ZSs). O f these women, 71 percent belong to vulnerable groups such as Scheduled Caste, Scheduled Tribes and Backward Castes. These COS are managed by a human resource pool o f 1.6 million trained grassroots women leaders and 125,000 community activists, para-professionals, resource persons and functionaries trained in the areas o f institutional capacity building, bookkeeping, financial management and services, marketing, livelihood support services and monitoring. 8. Savings, Credit, Assets, Incomes and Livelihoods: The institutions o f poor households have. collective internal funds (savings and corpus) o f US$ 805 million. These COS have developed commercial bank linkages worth US$ 4.3 billion. This means that every US$1 invested by the project has leveraged US$12 from the commercial banks. Additionally, Community Investment Fund (CIF) has been instrumental in enhancing the scale o f the bank linkages, capitalization o f the community based organizations (CBOs) and achieving institutional self sufficiency. Annual credit flow to poor households and their groups has increased fifty folds from less than $23 million in 2000 to $1.2 billion in 2008. The value o f assets at the household level has almost tripled i.e., from US$1032 to US$2974 on an average between years 2000 and 2006. Correspondingly, there has been an increase in income, from US$483 per annum to US$1041 per annum in the same period. In case o f the livelihoods, the community managed sustainable agriculture program led t o aggregate annual cost savings o f US$ 69.5 million and the employment generation program created 185,748 jobs for the rural youth. Meanwhile, investments have been made in the food security initiative covering 2.4 million poor families in 15,989 villages. 9. Accessing Social Safely Nets and Entitlements: Investments have been made to enable the COS to increase access to entitlements, safety nets and social security programs. Significant progress was made in access to National Rural Employment Guarantee Scheme (NREGS), where 11.90 million poor households were enrolled for job cards which resulted in j o b creation o f 734 million days for 8.10 million households in AP. Similarly, COS functioned as franchisees to distribute pensions worth US$ 208 million to 6.8 million pensioners. More than 8 million SHG women and their spouses were covered under the universal insurance scheme run by the COS acting as the franchises for the largest insurance company in India. The project has also partnered with Education Department to establish early childhood education centers and offer higher education scholarships for poor children. Innovative last mile service delivery models adopted by the COS enable poor households access public services. These include setting up service desks at commercial banks and relationship managers in primary health care centers, and running o f call centers for insurance services. All these activities are managed by community professionals paid by the COS. 10. Health and Nutrition (H&N): Piloting o f social risk management interventions through H&N programs has enabled the poor households access health services entitlements, improve their health and nutrition status and reduce health expenses. There i s significant decrease in malnutrition and infant and maternal mortality rates among mothers and children participating in the 600 Nutrition Cum Day Care Centers (NDCC) managed by the federations o f SHGs. Likewise, 99 percent safe deliveries and 90 percent 3 normal deliveries are observed among women attending the NDCCs. Activities such as community kitchens, health and education awareness communications, and involvement o f health activists and community resource persons have improved health condition o f the poor households. 11. Information and Communications Technology (ICT): APRPRP i s making strategic use o f I C T to enhance efficiency o f project implementation and promote transparency and accountability o f i t s initiatives in the scaled up context. A web enabled I T architecture has been set up to track data on SHG's financial performance and key livelihoods activities. The information on SHG bank linkages, micro-insurance, and jobs has already migrated to web-based Management Information System (MIS). Various front-end devices are being experimented to enable capture and processing o f transactional information on real time basis. The use o f I C T i s also being encouraged at the community organizations level. About 5178 VOs have become banking correspondent agents for commercial banks to deliver financial services while leveraging biometric based smart card financial technology. About 5.6 million poor clients have been enrolled by them and US$ 100 million worth transactions routed in 10,737 villages. Similarly, I C T based micro-insurance management systems have been used that seamlessly integrates call centers, online transaction processing systems and ATMs. These efforts have substantially improved efficiency and reliability o f service delivery at reduced transaction costs. Such efforts will be scaled up in the proposed project. The project performance on other key progress indicators i s found in Annex 1. 12. Rationale for Additional Credit: W h i l e the previous investments have contributed towards establishing self-reliant institutions o f the poor households and facilitated multi-layered development impacts, second additional financing will scale-up the project impacts. This w i l l be done by improving efficiency and effectiveness o f the existing institutional platform by adopting I C T and innovative service delivery models for achieving full inclusion o f the poor households. Such approach will bring higher returns on the investments already made, and scale up the outcomes achieved under the project. Hence, there i s a need to build higher order capacity o f community institutions capable o f managing scale in a sustainable and efficient manner, and dealing effectively with the commercial banks, the market institutions, public sector departments and developing new partnerships with the cooperatives and the private sector. Additional resources will help scale up successful pilot initiatives in the area o f the human development. C. Proposed Changes 13. The original project objectives and the components will not change with the proposed additional credit. Credit proceeds w i l l be applied to the following components: (i) CIF; (ii) COS' and NGOs' services for Community Institutions Development; (iii) Consultancies, Studies and Technical Assistance; and (iv) Incremental Operating Costs. The financial allocation i s available in Annex 2. The implementation arrangements o f the ongoing projects are working well and will remain the same. SEW will carry on the project management for all components as in the ongoing project. The additional financing will help finance the costs associated with scaling up the development impacts o f the current APRPRP project by building higher order capacity in community institutions so that the project can continue to be efficient and sustainable in the context o f much larger outreach than originally planned. The additional financing will support three key activities. These include additional support to poorest households to organize themselves t o access entitlements and social safety nets and access public services. The second activity would support the community institutions and federations to develop an I T architecture to manage their institutions and access financial and other livelihood support services in an efficient and effective manner. The third key activity i s scaling up the impact o f pilot approaches which have worked well in reducing malnutrition, maternal health and improving access to health care services. These activities are described in subsequent sections. The changes in the project costs and financing plan will be covered under the Financing Agreement. To ensure that these activities are carried out satisfactorily, it i s proposed to extend the project closing date to September 30,201 1. 4 14. Inclusion o the poorest and access to entitlements, safety nets and public services: Access to f social safety nets will be the core agenda in the strategy for inclusion o f the poorest households in the proposed second additional financing. Meanwhile, the proposed project will support convergence strategies with the government departments focusing on poverty reduction. Community organizations will be strengthened to facilitate increased access to the government social security schemes and entitlements. Investments will be made for qualitative improvement in delivery o f public services by building pro-poor sensitive support mechanisms. COSwill be encouraged to provide bundled services by dovetailing social safety net programs (NREGS, pensions, food security, health, education, etc.) with microfinance and other livelihood initiatives. Second additional financing aims at universalizing coverage o f poor households under food security, accessing 100 days work under NREGS and l i f e and disability insurance programs. 15. Focus on human development agendafor scaled up impacts: The proposed project aims at scaling up the health and nutrition interventions and last mile service delivery approaches, improving their monitoring and evaluation, and enhancing capacity building for improved management o f health services. This will achieve higher impacts in the health status of the poor households and their livelihoods. D. Consistency With Country Strategy 16. The second additional financing o f APRPRP i s fully consistent with the new Country Strategy (FY2009-20 12, CS) for India which focuses on inclusive growth, sustainable development and increasing the effectiveness o f public-financed service delivery. The project would advance inclusive growth through improved agricultural productivity, rural connectivity, and rural livelihoods. The proposed APRPRP's strategy o f leveraging institutional platform o f the poor for vulnerability reduction and livelihood promotion will achieve inclusive growth. The second additional financing will be helpful in priming public investments in education, health, and social protection, among others. The collaboration between COSand public service agencies aims to improve service delivery and poor people's access to public services and government schemes for poor people. Significant investment in ICT under the project i s in consonance with focus o f CS on designing implementation procedures and institutional arrangements for getting results (including accountability through beneficiary, civil society and community involvement), strengthening capacity for publicly-provided services; and enhancing private sector participation. The community managed sustainable agriculture initiative supports the CS by ensuring sustainable development goals are lined around better management o f natural resources, reducing the burden of environmental degradation on the population (especially vulnerable groups), and increasing the resilience o f people and the economy to nature-related and man-made shocks. E. Appraisal Of The Proposed Project 17. The APRPRP approach envisaged social mobilization and building institutions o f poor households to enable them to access services entitlements, skills, assets and markets. Community architecture that put the rural poor in the driving seat has been effective in implementing demand led project strategies. The strategy o f piloting, testing, standardizing and scaling up the development impacts and institutions, using network o f best practitioners and community resource persons has proved to be cost effective. 18. Economic: The project households pooled cumulative savings o f US$ 805 million and accessed US$4.3 billion credit from the commercial banks. Focusing on making the rural poor credit worthy clients for the commercial banks greatly helped mitigate the exploitative influence o f money lenders, resulting in reduced cost o f capital. The economic returns from the project have been significant. The impact evaluation studies done during the mid-term review (MTR) o f APRPRP showed that that the value o f gross assets o f the poor households have increased by 73 percent, while the movable assets increased by 144 percent. Most o f livelihood investments gave Internal Rate o f Return (IRR) o f more than 25 percent. Initiatives such as security intervention entailing collective purchase o f food grains resulted in increase in 5 food grain consumption by 25 percent. The gross margins o f farmers adopting sustainable agriculture practice increased by 70 percent due to cost savings. As a result, the annual income per household has increased in absolute terms b y 115 percent. 19. The proposed project aims to support activities which enable decrease in household expenditures and increase in sources o f incomes. The key economic outcomes envisaged are increase in commercial credit from $4.3 billion to $7 billion, increase in savings from $805 million to $1 billion, increase in jobs created from 183,000 to 300,000, and significant increases in dairy and agricultural production while reducing the cost o f cultivation. 20. Institutional: The COS have developed inclusive, participatory and transparent governance structures. The project has facilitated prudent financial systems (in terms o f leadership competence, collection performance, asset quality, accounts, audit, disclosure, etc.) in these organizations that attracted Government and mainstream players (commercial banks, cooperatives, public and private enterprises, etc.) to use them as franchisees for delivery o f a range o f social and economic services. Experience shows that in order to recover operational costs fully, these COS should earn an annual income o f US$7700. Nearly one third o f the M S s promoted under the project have crossed this threshold. The second additional financing will help the COS develop alternate revenue models and formulate business plans to achieve operational sustainability. 21. The project will invest in I C T to sustain the institutional architecture at the community level. Innovative use o f I C T will lead to result oriented decision making, better targeting o f project strategies, reduction o f transaction costs, improved business efficiency, increased outreach, enhanced accountability o f delivery systems and reduction o f leakages. At the community level, the project proposes to increase access to information, knowledge and business services for poor households. Virtual aggregation o f clients (as suppliers and consumers) using biometric based smart cards, mobile commerce, call centers, electronic milk testing, rural BPOs, etc. will enable private sector to make investments in developing new business models for making poor partners in profit. The most significant example i s the franchising o f financial services to the COS as `banking correspondents'. These will be done in partnership with I T companies and CGAP. 22. Financial Management (FA@: The overall FM arrangements in the project have considerably improved with the implementation o f the first additional financing project. The project has taken number o f measures to strengthen FM arrangements and internal controls. T o improve traceability o f project funds, multiple bank accounts at each Mandal Samakhya (MS) were closed and only three bank accounts maintained - one bank account exclusively for project funds, one bank account for non project funds and one for recycled Community Investment fund (CIF). Further, releases to M are made only after they are S registered and most M S s have been registered. This has contributed to the improved information systems on usage o f and reporting in respect o f moneys received by MSs. In respect to funds released under S various components o f the project, Utilization Certificates (UC) are obtained from ZS and M for actual expenditure. Linking the disbursement to UCs has helped improve accountability and transparency to the expenditure incurred under the categories. Web based transactions have made project information accessible in real time to both the project and the communities. In addition, there has been assurance through project auditors doing a physical field verification o f implementation o f CIF projects on a random sample basis. To create awareness among the members o f the COS on maintenance o f Books o f Accounts, the community auditors' strategy on financial management has been developed and a senior CRP strategy i s being adopted. Web based accounting software has been developed in collaboration with a leading I T provider to monitor transactions at all levels. 23. New measures to further strengthen the financing management systems have been proposed. These include undertaking a comprehensive review o f current method o f releases to the COS and assess if any 6 changes are required in the amount advanced to COS before next installment i s released. I t i s suggested that a significant percent o f the amount advanced to the COS be actually spent before the next installment i s given. The statutory audit reports have brought out key points on financial management, internal control and payment issues, and have recommended strengthening o f the FM systems for the project. As such, it i s recommended that the finance unit o f the SERF' does a pre-audit o f high value expenditure proposals before they are approved by the CEO. The value o f such expenditure proposals can be agreed between the Bank and the SEW. I t i s suggested that all the books o f accounts for the first additional financing be closed and unadjusted advances be recovered and settled before the second additional financing loan i s made effective. The balances available with the COS (as cash in hand and cash in bank) need to be fully spent as per the project guidelines by the closure o f the current project (December 2009), unspent amounts recovered by SEW and claims made against these advances, if any, should be adjusted in the final claims. A separate set o f books as also separate bank accounts should be opened for the second additional financing project. Audit observations o f the 2008-09 audit report need to be satisfactorily addressed by 31'' March 2010 and the Bank informed o f it. Additionally, audit sub- committees in the COS should review the transactions and the books o f accounts o f the COS and provide their comments and social audit process should be strengthened. There i s also a need to fill all vacant positions o f D P M (Finance) and sensitization o f the supervisory staff on financial management and control o f funds. 24. Procurement: All goods, works and services under the second additional financing o f the project will be procured in accordance with the World Bank's "Guidelines: Procurement Under IBRD Loans and IDA Credits" dated May 2004 and revised in October, 2006 (Procurement Guidelines); and "Guidelines: Selection and Employment o f Consultants by World Bank Borrowers" dated M a y 2004 and revised in October, 2006 (Consultancy Guidelines). The procurement activities undertaken in APRPRP (additional financing) will include procurement o f goods and services. N o work procurement i s envisaged under second additional financing. The threshold and all other procurement arrangements for goods and services under the project remain unchanged and shall be in accordance with the APRF'RP. The procurement plan will be updated as required to reflect the actual project implementation needs and improvements in institutional capacity. For each contract to be financed by the credit, different procurement methods or consultant selection methods, the estimated costs, prior review requirements, and time frame are agreed between the borrower and the Bank in the procurement plan. To ensure consistency in procurement and firther mitigate risks, if any, the project under second additional financing has prepared a procurement manual which will be followed by all implementingentities for any procurement activity under the second additional financing o f project. I t i s agreed that dedicated Procurement officer at SPMU will be appointed for the project who will undergo procurement training. 25. Indigenous People: The project has provided special focus on development o f tribal people in a culturally appropriate way in AP. Tribal Development Plan (TDP) adopts saturation mobilization strategy for the tribal poor and building their exclusive institutions to enable them access to services entitlements, skills, credit, land, productive assets and markets. Restoration o f legal land rights to the tribal i s one o f the key contributions o f the project in reducing land alienation. The project has mobilized about 669,088 tribal households into 52,904 tribal SHGs, 3274 VOs and 78 MSs. The tribal SHGs have saved US$ 20 million and generated a corpus o f US$ 44 million. More than 8 percent o f the total CIF disbursement has been channelized to the tribal SHGs and nearly 85 percent o f the tribal SHGs have accessed bank loans. This has reduced the influence o f moneylenders in the project areas. Increased access to markets have lifted incomes and strengthened the bargaining capacity o f the tribal poor. Health and education interventions form important part o f TDP. Special initiatives have allowed the tribal households to participate in design and implementation o f innovative projects like agri-marketing infrastructure, community-managed ambulance services, scholarships for higher education for girl-child, etc. The project has taken specific steps to engage tribal communities in implementation and monitoring o f the project activities, and established the Tribal Management Project Units (TPMU) in coordination with the state government for implementation o f the TDP. 7 26. Environmental: The project has developed an Environment Management Framework (EMF) that can address environmental aspects with clarity and simplicity for the vast range o f livelihood activities. This framework i s embedded in micro-planning processes o f the COS. Cadres o f community resource persons that facilitate micro-planning processes are trained in this framework. The COS have been encouraging use o f alternate fuel sources, stall fed goat rearing and restricting sheep rearing to available grazing area. The project has taken several pro-active measures to promote clean environment. More than 2 million acres o f land i s being cultivated by poor communities using sustainable agriculture practices (without use o f chemical pesticides and fertilizers). Other initiatives include application o f tank s i l t for enhancing soil fertility; promotion o f community kitchen gardens; and fodder cultivation to reduce grazing and thereby soil erosion. 27. Governance and Accountability: The second additional financing component will help scale up the governance and accountability innovations through web-based technology for reporting, information dissemination and monitoring; call centers for grievance redressal and information access; social audits; and standardized reporting at the mandal level through set templates. These will be catalytic in introducing governance measures in other large public investment programs in AP. Social audit process will be institutionalized in the project. Demand side governance has been built in through Right to Information provisions in the project. A detailed governance and accountability plan has already been developed by a the project for the second additional financing and h s been included in the Project Implementation Plan.. 28. Social: The proposed project will strategically target the poorest and the most vulnerable communities who are either l e f t out or have now become very vulnerable due to adverse impact o f global food and financial crises. An estimated number o f 0.82 million poorest households will be covered under the additional financing. The project will incorporate household level mobilization approaches; develop new financial products to enable them t o access savings, credit and other public services; and use innovative I C T decision support systems for including all poor households in the project framework. F. Expected Outcomes 29. The project management has outlined plans and actions to achieve the desired outcomes for the project by the end o f September 201 1. The project has also evolved a set o f indicators which define the scaling up and sustainability o f different tiers o f institutions and the services they manage. This requires building more sophisticated managerial capacity and institutions o f higher order which can execute and monitor the program in an efficient and sustainable manner. The project has a functional monitoring and evaluation (M&E) system that i s currently tracking implementation progress and the outcomes. The independent evaluation and impact studies have shown significant progress on various aspects o f the project. However, the M&E system need t o be strengthened by leveraging I C T technology to track real time status o f the project supported institutions and their livelihoods related activities with respect to key outcome indicators. Key outcomes with respect to institutional performance and quality have been identified and agreed with the project. Revised L o g Frame for the proposed project i s found in Annex 3. 30. N o significant change will occur in the results framework for the project but new impact indicators will be added on new human development outcomes. Through H&N intervention the second additional financing will target meeting the Millennium Development Goal o f no perinatal and neo-natal mortality in 4000 villages and get 100 percent children's immunization in 150 mandals. Major change will be in the extent o f achievement o f performance indicators related to institutions, bank linkages, livelihoods turnover, inclusion, and access to government schemes and welfare benefits. The project has already organized more than 90 percent o f the poor households into groups. Hence, the quantitative coverage o f the poor households will improve marginally. But significant change in the quality, viability and 8 sustainability o f community institutions, and leveraging the ability o f institutional platform will be achieved. G. Benefits and R i s k s 31. Risks: The scaling up and consolidation o f the APRPRP faces three key risks that need to be addressed but are considered manageable. S. No. Risk Mitigation Risk Rating 1. Adverse effects o f global Enhanced targeting mechanisms focusing on Low financial and food crises the bottom 10 percent o f the poor and resulting in most facilitating access to entitlements and public vulnerable people lapsing services will blunt the impact o f shocks. back into poverty Knowledge and skill gaps Retooling/ re-skilling o f project staff and Moderate in the facilitation community professionalswith clarified arrangements performance measurement processes will mitigate this risk effectively. On the demand side, the community institutions will be empowered with advanced knowledge and skills to manage higher order issues. Political and bureaucratic The commitment o f the GOAP has been Moderate commitment to sustained in light o f the recent elections and address the needs continuation o f the favored public policy for o f the poorest i s not poor. With the COSgaining strength and sustained influence in ensuring the implementation o f various development initiatives, GOAP i s strategically converging poverty proofing initiatives with livelihood interventions run by them. Hiring an additional CEO has assured continuitv o f Droiect leadershb. H. Financial Terms and Conditions F o r the Second Additional Financing 32. India i s eligible for IDA financing. The second additional financing will take the form o f an IDA Credit, complying with the standard terms o f 35 years to maturity, including a grace period of 10 years. 9 ANNEX 1: FURTHER DETAILS OF PROJECT PERFORMANCE TO DATE Livelihoods: Under APRPRP poor households have diversified and strengthened their livelihoods. The CIF, which supports micro-credit plans to improve livelihoods, has benefitted 2.4 million families. Dairy intervention through value-addition and marketing services has benefited 1.2 million dairy farmers, fetching them 30 percent higher prices. The community managed sustainable agriculture program designed to reduce the cost o f cultivation for the farmers led to aggregate annual cost savings o f U S $ 69.5 million. Commodity marketing intervention helped tilt the terms o f trade in favor o f the poor farmers. Likewise 185,748 jobs have been created for rural youth. Reducing Vulnerability o the Poor People: More than 8 million SHG women and their spouses are f covered under the universal insurance scheme run by COS that act as the franchises for the largest insurance company in India. Investments have been made in the food security initiative covering 2.4 million poor families in 15,989 villages. Similarly, investments have also been made to ensure access to scholarship for children, pension or social assistance for destitute and women in old-age and designing offering co-contributory pensions for women in SHGs. 0 Gender: T h i s aspect o f the program plays an important role in enabling poor women to access and control over assets, incomes, and public services available. I t helps women increase their understanding o f intra family equity issues, independent decision making, free mobility and necessity o f building a safe environment and get legal help. COS are pro-active to address gender issues such as violence against women, early girl child marriage, female infanticide, etc. For this social action committees are set at every VO and dedicated `help-lines established which provide counseling and mediation services to their members on need basis. O f the 17,602 cases dealt with by these committees and counseling centers, 12,488 cases have been resolved. 0 Improving Governance and Accountability: By standardizing processes, issuing guidelines and setting norms, institutionalizing governance and accountability practices and building CBO capacity, the governance and accountability risks have been mitigated. Performance based rating mechanisms; participatory identification o f the poor and wealth ranking; leadership rotation; consensual decision making; community monitoring and auditing; and public disclosure o f SHG accounts serve as strong mechanisms for good governance practices. Similarly, project level fiduciary mechanisms, external community auditors, limiting o f cash transactions at the community levels, photo-documentation o f all procured assets and computerization o f all transactions have further strengthened governance and accountability in the project. The project i s currently piloting a number o f cutting edge I C T innovations for enhancing effectiveness o f governance and accountability systems. These include call centers and help lines for handling complaints and disseminating information, biometric readers to track CBO transactions and monitor payments, real time online C B O progress reporting via websites, and social audits for participatory monitoring. These have shown good preliminary results at both the CBO and project levels. 0 Other Achievements under the First Additional Financing: The project made good progress under the Land Access Program by increasing awareness on legal rights and entitlements o f poor and putting in place a sensitive support mechanism in the form o f land centers and legal-clinics for the poor. About 383 para- legal workers and 473 community surveyors are supporting COS in managing land issues. Altogether, 23 1,000 case related to land issues have been resolved, leading to accessibility o f 253,000 acres o f land to the poor. 10 ANNEX 2: SCHEDULE 1 SECOND ADDITIONAL FINANCING PROJECT INDIA: ANDHRA PRADESH RURAL POVERTY REDUCTION PROJECT ~ Amount of the Amount o f the %of Additional Second Additional Expendi- CatePorv Financing Credit tures Allocated Allocated e (expressed in (expressed in Financed SDR Equivalent) SDR Equivalent) 1. Community InvestmentFund 90% 2. Goods, Equipment (including 166,000 5,760,000 90% Material and Vehicles) other than under Part B of the Project 3. CBOs' and NGOs' services 19,035,000 20,760,000 90% for Community Institutions Development 4. Consultancies, Studies and 842,000 4,500,000 90% Technical Assistance 5. Training Workshops, study 11,762,000 3,180,000 90% tours 6. Incrementaloperating costs 2,095,000 10,600,000 90% I I TOTAL 42,700,000 62,900,000 11 ANNEX 3: EXPECTED OUTCOMES OF RESULTS FRAMEWORK INDICATORS AT CLOSE OF THE PROJECT ~~ Outputs according to Key performance Expected Achievements till Expected PAD Results indicators outcomes for June 2009 Outcomes till Framework lstadditional Sep 30,201 1 financing 1.To enable the rural a. Institution building poor and the poorest o f 1.No. of poor 6 million 10.2 million 11 million the poor in AP to mobilized into SHGs improve their 2.No. of SHGs formed 475,000 850,671 930,67 1 livelihoods and quality 3.No. of VOs formed 18,462 35,525 37,000 o f life 4.No. of M S formed 594 1099 1099 5. No. o f ZS formed 16 ?? LL 22 6. No. o f trained 160,000 125,000 160,000 grassroots functionaries supporting CBOs I 7. Person with PWD I 213,197 300,000 in SHGs 2.Self reliant and self b. Saving and credit managed CBOs o f the 8.Corpus o f saving of US$ 30( U S $ 805 million US$ 1 billion poor established and SHGs million with relationships with 9.No. of SHGs linked 300,000 437,003 800,000 social and economic to Banks service providers 10.Percentage o f POP 60% groups linked to banks 11.Amount of credit $1 billion $4.3 billion US$ 7 billion given by Commercial banks 12. No. of financially 432 500 sustainable M S s 13. Jobs created for 183,89 1 300,000 rural youth *Note 1 below 14. Area of land I 1.3 million acres 3 million acres covered by N P M 15.Area of land 253,021 acres 300,000 acres accessed by the poor 16. Collection of milk 257,000 liters of 500,000 liters in per day from dairy milk per day in peak peak season and farmers season and 180,800 300,000 liters in liters i low seasons n lean season 17. Annual turnover U S $ 120 million US$200 from community million managedprocurement centers 18. No. o f households 2.4 million 3 million benefitting from food households households security 19. No. of SHG 8 million 15 million 12 Outputs according to K e y performance Expected Achievements till Expected PAD Results indicators outcomes f o r June 2009 Outcomes till Fr amework lstadditional Sep 30,2011 financing members and their *Note 2 below spouses covered under life and disability insurance 20. No. o f SHG members participating *Note 3 below n i the "Co- contributory" Pension Scheme 2 1. No. o f mandals with 100% children immunization (below 1 year) and full A N C check-up for women 22.No. o f villages 600 4000 achieving the MDG indicators (perinatal and neo-natal mortality) 23. No. o f children in early education I 2 17,500 l - - I 20,000 students facilitated to j o i n corporate colleges N o t e 1: The jobs program was started in 2006 only. Hence, 183,000 jobs were created in the last 2.5 years only. Considering that the jobs program has been running well and the operational structures are well in place, a conservative target o f 120,000 jobs has been set for the next two years. Note 2: The spouses of the SHG members will now be enrolled in the l i f e and disability insurance program versus only SHG members as before. This leads to a conservative estimate of doubling of the participantsfrom 8 million to 15 million. N o t e 3: Co-contributory pension scheme has been universally implemented in Andhra Pradesh by the state government. Hence, we anticipate at least 6 million women to be enrolled in it. 13