Document ofThe World Bank

FOR OFFICIAL USE ONLY

Report No: 68147-IN

PROJECT PAPER

ON A

PROPOSED ADDITIONAL CREDIT

IN THE AMOUNT OF SDR 64.6 MILLION(US$100 MILLION EQUIVALENT)

TO

INDIA

FOR A

BIHAR RURAL LIVELIHOODS PROJECT

May 1, 2012

Sustainable Development DepartmentAgriculture and Rural Development UnitIndia Country Management UnitSouth Asia Regional Office

This document has a restricted distribution and may be used by recipients only in the performance of theirofficial duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective March 31, 2012)

Currency Unit = Indian RupeesUSD$ 1 = Rs. 51.185

US$ 1 = SDR 0.6554

FISCAL YEARApril 1 - March 31

ABBREVIATIONS AND ACRONYMS

BRLP Bihar Rural Livelihoods ProjectBLF Block Level FederationBRLPS Bihar Rural Livelihoods Promotion SocietyCBO Community Based OrganizationCIF Community Investment FundCLF Cluster Level FederationCO Community OrganizationCS Country StrategyEMF Environment Management FrameworkFM Financial ManagementGoB Government of BiharH&N Health and NutritionICT Information and Communications TechnologyIDA International Development AssociationMDG Millennium Development GoalM&E Monitoring and EvaluationMIS Management Information SystemNGO Non Governmental OrganizationMTR Mid-Term ReviewNREGS National Rural Employment Guarantee SchemeNRLM National Rural Livelihoods MissionPDS Public Distribution SystemRRB Regional Rural BankSHG Self Help GroupSRI System of Rice IntensificationSWI System of Wheat IntensificationUC Utilization CertificatesVO Village Organizations

Regional Vice President: Isabel M. GuerreroCountry Director: Roberto N. Zagha

Sector Director: John Henry SteinSector Manager: Simeon K. Ehui

Task Team Leader/Co-Task Team Leader: Parmesh Shah/Biswajit Sen

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INDIA

BIHAR RURAL LIVELIHOODS PROJECT - ADDITIONAL FINANCING

CONTENTS

A. Introduction .......................................................... 1

B. Background and Rationale for Additional Financing in the amount of US$100 Million............ 1

C. Proposed Changes ..................................................... 5

D. Appraisal Summary .................................................... 6

Annex 1: Project Achievements .................................................... 11

Annex 2: Results Framework-Indicators .......................................... 13

Annex 3: Governance and Accountability Action Plan............................... 21

Operational Risk Assessment Framework (ORAF) ..................................... 25

111

INDIA

BIHAR RURAL LIVELIHOODS PROJECT - ADDITIONAL FINANCING

PROJECT PAPERSOUTH ASIA - SASDA

Basic Information - Additional Financing (AF)Country Director: N.Roberto Zagha Sectors: General agriculture, Fishing &Sector Manager/Director: Simeon Ehui /John Stein Forestry Sector (70%), Other Social ServicesTeam Leader: Parmesh Shah (20%), Agriculture Marketing and TradeProject ID: P130546 (10%)

Themes: Other rural development (P); RuralLending Instrument: Specific Investment Loan services and infrastructure (S); ParticipationAdditional Financing Type: Scaling Up and Civic engagement (S); Gender (S)

Environment Category: BExpected Closing Date: October 31, 2015Joint IFC: Not ApplicableJoint Level: Not Applicable

Basic Information - Original ProjectProject ID: 090764 Environmental category: BProject Name: Bihar Rural Livelihoods Project Expected Closing Date: October 31,2015Lending Instrument: Specific Investment Loan Joint IFC: Not Applicable

Joint Level: Not ApplicableAF Project Financing Data

[]Loan [ X] Credit [ ] Grant [ ] Guarantee [ ] Other:Proposed terms: Standard IDA terms

AF Financing Plan (US$m)Source Total Amount (US $m)

Total Project Cost: 140.00Cofinancing: NABorrower: 40.00

Total Bank Financing:IBRD

IDA100.00

New NARecommitted

Client InformationRecipient: Government of IndiaResponsible Agency: Bihar Rural Livelihood Promotion Society, Department of Finance, Governmentof BiharContact Person: Mr. Arvind Kumar Chaudhary, Chief Executive Officer, BRLPSTelephone No.: 0612- 22504980Fax No.: 0612- 22504960Email: ceo(,brlp.in

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AF Estimated Disbursements (Bank FY/US$m)FY 2012 2013 2014 2015 2016Annual 10 20 30 25 15Cumulative 10 30 60 85 100

Project Development Objective and DescriptionOriginal project development objective: The project development objective (PDO) would remain thesame as in the original project: The project is to enhance social and economic empowerment of the ruralpoor in Bihar.

Revised project development objective [ifapplicable]: NA

Project description: The project has four components:Component I: Community Institution Development - This component will build and strengthen primaryand federated social and economic community institutions.Component II: Community Investment Fund - This component involves transfer of financial andtechnical resources to the Community Based Organizations on a demand driven basis as a catalyst toimprove their livelihoods.Component III: Technical Assistance Fund - This component will improve quantity and quality ofservice provision by public, cooperative, community and private service providers. The fund will alsobe used for improving the supply of key support services for the community organizations andfederations in the areas of institution building, finance and livelihoods enhancement.Component IV: Project Management - This component will facilitate overall co-ordination,implementation, financial management, and monitoring and learning of the project at state and districtlevels.

Safeguard and Exception to PoliciesSafeguard policies triggered:Environmental Assessment (OP/BP 4.01) [ x ]Yes [ ] NoNatural Habitats (OP/BP 4.04) [ ]Yes [ x ] NoForests (OP/BP 4.36) [ ]Yes [x ] NoPest Management (OP 4.09) [ ]Yes [x ] NoPhysical Cultural Resources (OP/BP 4.11) [ ]Yes [ x] NoIndigenous Peoples (OP/BP 4.10) [ x ]Yes [ ] NoInvoluntary Resettlement (OP/BP 4.12) [ ]Yes [ x ] NoSafety of Dams (OP/BP 4.37) [ ]Yes [x ] NoProjects on International Waterways (OP/BP 7.50) [ ]Yes [ x ] NoProjects in Disputed Areas (OP/BP 7.60) [ ]Yes [ x ] No

Does the project require any waivers of Bank policies? [ ]Yes [ x ] NoHave these been endorsed or approved by Bank management? [ ]Yes [ ] No

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A. Introduction

1. This Project Paper seeks the approval of the Executive Directors for additional financing fora Credit amount of US$100 million, for scaling up the ongoing Bihar Rural Livelihoods Project (Cr.4323-IN). The additional financing will support the geographical expansion of the project to coverall the blocks in the existing six districts of Bihar of the parent project and support consolidation ofthe activities undertaken. It will also scale up the activities that promote greater impact of last mileservice delivery approaches using the institutional platform of community based organizationsalready formed. This will be done through inter-sectoral convergence with various other GOI/GOBprograms and other Bank supported programs in Bihar.

2. The proposed Additional Financing (AF) will scale up the project's impact and effectivenessthrough (i) federating and building the capacity of the women managed community basedorganizations at village and block level, (ii) convergence with various ongoing schemes andprograms of the GOI/GOB in the areas of health and nutrition, social protection, rural employment,agriculture through demand side interventions and strengthening the last mile service deliverymechanisms, (iii) enhance financial and economic inclusion and capitalization of the poor throughcollaborative frameworks with a variety of private, civil society, and social enterprise partnerorganizations, and (iv) strengthen the M&E system to capture changes in social and economicempowerment in household economy and behavior.

3. The proposed additional financing is consistent with the development objective of theongoing Bihar Rural Livelihoods Project. No changes are proposed to the Project DevelopmentObjective, design or implementation arrangements of the original project.

B. Background and Rationale for Additional Financing in the amount of US$100 Million

4. Project Objectives and Scope: Government of India received an IDA credit of SDR41.4million (US$63 million) for the ongoing credit, which was approved by the Board on June 14,2007 and became effective on October 1, 2007. The project is currently scheduled to close onOctober 31, 2012. The total disbursement till March 31, 2012? is US$58.66 million (92%). TheProject Development Objective (PDO) of the parent project is to enhance social and economicempowerment of the rural poor in Bihar. The project has four components- (i) CommunityInstitution Development; that builds and capacitates women based Self help Groups (SHGs) andtheir federations, (ii) Community Investment Fund; that transfers financial and technical resourcesto these community institutions for initiating economic and social activities, (iii) TechnicalAssistance Fund; that improves the quantity and quality of service provision by public, private, andcommunity service providers and (iv) Project Management; including Human ResourceManagement, Management Information Systems, Financial and Procurement Management andMonitoring and Evaluation (M&E) systems. No change is envisaged in the PDO and thecomponents of the project in the proposed Additional financing of the project.

5. With continuous TA inputs from the Bank and capacity building of BRLPS (Bihar RuralLivelihoods Promotion Society) as a state level autonomous and professional implementinginstitution, project implementation has been satisfactory along several parameters. The project'smid-term review (MTR) mission and other implementation support missions have confirmedsatisfactory performance on both achievement of developmental objectives and implementationprogress. The Project continues to generate many lessons for design and implementation of the

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National Rural Livelihood Mission (NRLM) that are particularly relevant for high poverty states.The GOB also looks upon the project to provide the community institutional platform for severaleconomic and social sectoral programs for an effective last mile service delivery mechanism. Thepresent project is on track to achieve most of the outcomes envisaged in the PDO.

6. Project Performance to Date: Implementation Support ratings have been satisfactorythroughout the project life.

7. Instituional Development: The project has mobilized 515,000 poor women, into 46,000self help groups (SHGs) and 3500 village organizations (VOs). Of these women, more than 90%belong to vulnerable groups such as Scheduled Caste, Scheduled Tribes and Backward Castes.These community organizations are managed by a human resource pool of nearly 30,000 trainedgrassroots women leaders and 8000 para-professionals, resource persons and functionaries trainedin the areas of institutional capacity building, bookkeeping, bank linkage and livelihood supportservices.

8. Savings, Credit, Assets, Incomes and Livelihoods: These SHGs of the poor havecumulatively saved over US$5.5 million, and undertaken inter-loaning to each other of US$15.1million, to create their credit history with the commercial banks. A strong partnership with themainstream financial institutions has been built through the signing of MOU's with fourcommercial Banks and three Regional Rural Banks (RRBs). The project has made systematicefforts to enable the poor households who form the membership of SHGs become bankable clients,worked with the banking sector to change their risk perception of the poor borrowers and hasmanaged to successfully facilitate access to credit from commercial banks to the tune of US$22million of credit for the SHG members. As a result of the agriculture intervention nearly 150,000farmers have strengthened agriculture productivity. There has been an 87% increase in productivityin paddy and 97% increase in productivity in wheat. A recent independent evaluation of the impactof JEEVIKA on socio-economic outcomes based on a survey of 4,000 randomly selectedhouseholds shows that the project positively impacted the savings of the project households,reduced high cost indebtedness, led to increased food security and assetisation and has increasedwomen's empowerment significantly. More details from the impact assessment are provided inAnnex 1.

9. Accessing Social Safety Nets and Entitlements: In addition, building on the women basedcommunity institutional platform created, the project has initiated a number of interventions on apilot basis through inter-departmental collaboration and convergence with other governmentprograms and enabled access to public entitlements like Pensions, wages under National RuralEmployment Guarantee Scheme (NREGA), Public Distribution System (PDS) entitlements, HealthInsurance etc for the poor. More details are provided in Annex 1.

10. Rationale for Additional Credit: The proposed Additional Financing is intended to beutilized for (a) Scaling up of the successful investments and core project design to cover all theblocks in the six project districts to ensure a saturation approach at the district level, (b)Consolidation of the activities initiated in the BRLP in the first phase. This includes consolidatingtwo types of investments. Firstly, the investments in different livelihood sectors such as agriculture,dairying, job creation for migrant youth and nonfarm sector employment will be increased.Secondly, investments will be made in cross-sectoral delivery of services using the empoweredwomen based community federations allowing for convergence with various development

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programs, including the proposed World Bank supported projects in Social Protection andPanchayati Raj areas, (c) strengthening of partnerships for technical assistance with civil society,social entrepreneurs and private sector for embedding innovative practices for social, financial andeconomic inclusion, and (d) strengthening M&E systems to capture change along all dimensions ofproject outcomes and functional MIS for project decision making. Lessons learnt during additionalfinancing will be used to inform investments to be made for scaling up the program under theNational Rural Livelihood Mission in other districts of Bihar.

11. Scaling up of Successful Investments: This additional financing is requested to expand theproject horizontally into an additional 60 new Blocks spread across the existing 6 districts of theproject. This will allow the project to saturate all the villages in the existing districts and therebyprovide a comprehensive district wide model for poverty alleviation.

12. Finance Plus: Consolidation and Deepening of Interventions: The additional financingwould help BRLP to consolidate and deepen some of the key activities initiated in the parent projectso that the learning from these interventions would be internalized and scaled up across the state.These are as follows:

a) Scaling up access to safety nets through convergence and partnerships: One of the coreinvestments of the BRLP has been to build strong institutional platforms of the poor such aswomen's Self Help Groups (SHGs) and their federations like the Village Organizations(federation of SHGs) and federations of village organizations into Cluster/Block LevelFederations (CLF/BLF). These platforms, apart from offering a variety of livelihood services totheir members, also facilitate their access to entitlements like social security pensions, healthand food entitlements, wage employment, agriculture support services etc. These entitlementscan strengthen the household economy in terms of additional income, savings on expenditureand increased consumption, as well as provide critical services and access to such services suchas in health and nutrition, education and food security. The institutions of the poor with betteraccountability systems are ideally placed to provide an effective platform for reliable andefficient delivery of such services and entitlements. BRLP aims to further build the capacities ofthese institutions of the poor, to enable member households to access their entitlements throughcreating demand side linkages to the supply side service provisions made under differentprograms of the government. Collaborative frameworks with different departments of the GOBare already being piloted and these will be further formalized and scaled up. In addition insome of the sectors formalized coordination mechanisms with the PRI system, which is beingrevamped in Bihar, will be scaled up as the PRI system is strengthened through participation inthe Gram Sabha of the women members of BRLP.

b) Piloting of scalable models across different livelihood sub sectors: A core strategy ofBRLP is establishing a system of sustainable livelihoods in different economic sectors such asagriculture, dairying and the non-farm sector leading to income and employment enhancementof the poor. This is done through investments in end to end solutions from technologyextension to market linkages associated with specific livelihoods. The parent project hasachieved significant success in this regard in the agriculture sector with the introduction ofSystem of Rice Intensification (SRI). The proposed additional financing will enable scaling upinvestments through the Community Investment Fund (CIF) in livelihood sectors, particularlyagriculture, animal husbandry, nonfarm livelihoods, and skill development for access to skills

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and urban jobs ensuring strong rural-urban linkages. These activities will be undertaken inpartnerships with several NGOs, cooperative institutions, social entrepreneurs and privateorganizations.

c) Piloting alternate models of financial access: Greater stress is to be given for ensuringfinancial literacy and counseling for the poor households, greater access to alternative channelsof finance; including banking correspondents, micro finance institutions and innovations in ruralbanking; enabling increased access to financial services. Several pilots have been initiated inthis area in BRLP and investments are required to scale them up through the project so that theybecome an integral part of the core approach of financial inclusion supported by the project.

13. Strengthening Partnerships: The project has developed partnerships with governmentdepartments and with appropriate civil society/cooperative/private sector agencies for technicalassistance in key livelihood sectors like agriculture, dairy, fishery, bee keeping, and health servicedelivery. Additional financing will help the project to develop partnerships through the TechnicalAssistance Fund (TAF) with NGOs across different areas like institutions building, financialinclusion and livelihood promotion. Partnerships will also be developed with BankingCorrespondent, Banking facilitators and MFIs to pilot alternate models of financial access.

14. Strengthening M & E: While a robust M&E system, including a process monitoring systemby third party and a computerized MIS has been established in the BRLP, this was notcomprehensive enough to capture all the outcomes at the household level, especially relating tosocial dimensions of behavior change and empowerment. BRLP will adopt a "Social Observatory"model for its M&E. This employs a comprehensive monitoring, evaluation and learning system tomeasure change, assess the effectiveness of the project, and pinpoint design and implementationchallenges in a manner that is closely integrated with project implementation activities. Moreover,a system of learning will be developed to institutionalize the learning process and convert fieldexperiences and field actions into knowledge and knowledge products, which can be disseminatedto internal and external audiences for wider outreach and for increasing the effectiveness andefficiency of the implementation process. As part of additional financing, key information onexisting interventions in the thematic area of livelihoods, microfinance and social development willbe integrated with the core MIS; moreover, as new interventions are tested on a pilot basis, theresults from the pilots would also be integrated with the core MIS, to study the impacts before theintervention itself is finalized.

15. Relationship with CAS: The proposed additional credit is fully consistent with the currentCountry Strategy (FY2009-2012, CAS) for India which focuses on inclusive growth, sustainabledevelopment and increasing the effectiveness of public-financed service delivery. The projectwould advance inclusive growth through improved agricultural productivity, rural connectivity, andrural livelihoods and leveraging the institutional platform of the poor for vulnerability reduction andlivelihood promotion. The additional financing will facilitate public investments in education,health, and social protection.

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C. Proposed Changes

16. The Project Development Objective, basic project design and implementation arrangementswould remain the same as the original project. The additional financing will continue to be groupedunder the four existing components of the project. These are as follows:

Component I: Community Institution Development- This component will build new women'sSHGs and their federations in the new Blocks, strengthen and capacitate the existing SHGfederations, select and train community resource persons, build different types of livelihoodorganizations and vertically federate the Village Organizations formed into CLFs and BLFs. It willalso train and prepare the existing VOs to take on roles and management responsibilities in differentprogram areas such as finance and insurance, health& nutrition, monitoring of education programs

etc that converge other government programs.

Component I Community Investment Fund - This component will continue to provide capitalizinggrants to different community level organizations on both a demand driven basis and for specificpurposes such as health risk, nutrition, food security and specific livelihood sector value chains thathave emerged as priority needs during the implementation of the project till now.

Component III: Technical Assistance Fund- This component will be strengthened and investmentsincreased to provide for partnerships and collaborations with a variety of public, private, civilsociety service providers who can contribute to making the project inter-sectoral andcomprehensive for poverty alleviation. The fund will use such partnerships to continue improvingthe supply of key support services in the areas of financial inclusion and use of ICT technology,sectoral social services and entitlements, growth of livelihood sectors that employ the poor andinnovations that strengthen the governance of the community institutions and PRIs.

Component IV: Project Management- This component will continue to finance the overallgovernance and management of the project, and invest specifically in strengthening the M&E,Social Accountability and HRD functions of the project to build a dynamic and learning institutionfor the state of Bihar.

17. Implementation Arrangements under Additional Financing: Implementation arrangementsunder the proposed additional financing would remain the same as the parent project. The BRLPSociety will continue to be the project implementing agency and will continue to implement,monitor and coordinate the project. Coordination will be enhanced with selected GOB departmentsthrough both the Executive Council (EC) and selected partnerships. Critical additional staff of aprofessional nature will be hired wherever necessary. BRLPS would extensively use collaborativepartnerships following the same pattern as initiated in the parent project.

18. Project Cost: The total project cost of the original project was US$73 million out of whichthe IDA credit amount is US$63 million and government contribution is US$7 million. The projecthas already utilized US$58.66 million of the on-going credit. The project cost of the proposedadditional financing is US$ 140 million, of which the IDA share would be US$ 100 million.

19. Retroactive finance: will be available for financing eligible project expenditures, limited to10% of the project cost, incurred up to one year before credit/financing agreement signing, but on

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or after April 1, 2012. This will help the project in hiring of various services such as staffrecruitment systems, monitoring systems and MIS, technical/resource agencies to support pilots andvarious other initial activities. This will help the project save critical time and be ready to startimplementation of core project activities immediately after the project is declared effective.

Project Cost Components(in US$ million)

Component Original cost Changes with AF Revised costCommunity Institution 18 38.0 56.0Development

Community Investment 42 78.5 120.5FundSpecial Technical 5.5 12.3 17.8Assistance FundProject Management 7.5 11.2 18.7Total 73 140 213

Allocation of Additional Financing Credit proceeds by component

Component Original Credit Additional Credit TotalCommunity Institution 16.0 27.2 43.2Development

Community Investment 35.0 56.0 91.0Fund

Special Technical 5.0 8.8 13.8Assistance FundProject Management 7.0 8.0 15.0Total 63.0 100.0 163.0

20. Outcome indicators: In terms of the outcomes there would be significant enhancement interms of achievement of performance indicators related to institutions, bank linkages and newimpact indicators in terms of livelihoods turnover and access to government schemes are added.Some new indicators related to access to converged public services have been added. The detailedresults framework is provided in Annex 2.

D. APPRAISAL SUMMARY

21. Economic: The project households pooled cumulative savings of US$5.5 million andaccessed US$22 million credit from the commercial banks. Focusing on making the rural poorcredit worthy clients for the commercial banks greatly helped mitigate the exploitative influence ofmoney lenders, resulting in reduced cost of capital. The economic returns from the project havebeen significant. Monitoring and evaluation studies show economic returns above 30% for bothagriculture and dairy activities that the project has promoted. The Additional Financing is focusedon enhancing investments in these activities and in other activities which enable decrease in

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household expenditures and increase in sources of incomes. The key economic outcomes envisagedare increase in commercial credit from $22 million to $80 million, increase in savings from $5.5million to $10 million, increase in jobs created from 2000 to 20,000, and significant increases indairy and agricultural production while reducing the cost of cultivation.

22. Financial Management: The project is current in the submission of quarterly IUFRs andannual audit reports) and has provided responses, and taken timely action on audit observations.There are no funds flow constraints from GoB, with timely and adequate release of funds to theBRLP Society. For the purpose of additional financing, the current financial management practices,will be continued with certain changes at the project and community level and modifications in theIFR formats to reflect activities of higher level Cluster Level Federations and additional livelihoodinterventions. These essentially relate to consolidation of accounting centers effective April 1,2012 at the district level, thereby reducing the number to 7 instead of 49 and standardization of theoperational and financial management practices as the project moves towards achieving scale ofoperations and strengthening of financial management systems at the community level. This willfacilitate timely preparation of quarterly IUFRs, reduced idle float at blocks and strengtheningdistrict oversight over monitoring of achievement of triggers by CBOs before fund release. At thecommunity level, the findings of the audit of over 1,000 Village Organizations upto year endedMarch 31, 2011 indicated the need for strengthening internal controls in the area of recording ofdecisions by community groups, addressing issues related to payments in cash and retention of highlevel of cash balances in CBOs and weaknesses in community procurement practices. To addressthis, agreements reached with the project include (a) creation of dedicated positions of communityaccounts mangers and facilitators at districts and block level; (b) inclusion in the fund releasetriggers for all types of funds to CBOs aspects relating to (i) portfolio performance and fundutilization by VOs; (ii) governance and financial management at VOs i.e updated books of accountsdemonstrated by submission of monthly VO finance reports and no serious accountability issues inVO audit reports; (iii) Standardized systems (frequency, quantum and reporting) for fund release toVOs for CID expenditures. Tranche releases to CBOs (SHGs, VOs and CLFs) which are based onachievement of triggers and used for providing loans to beneficiaries will be recognized asexpenditure and monitoring will essentially based on financial portfolio performance of CBOs,which will be tracked through the project MIS. Transfers to livelihood interventions i.e producercompanies etc., will however be treated as advance and recognized as expenditure on utilization offunds.

23. Procurement: The Project has established satisfactory procurement managementarrangements during the last few years. Adequately equipped dedicated procurement staff is inplace at the PMU and a procurement committee headed by the Chief Executive Officer-cum-Managing Director-Jeevika provides the decision making support. Procurement Guidelines basedon the Bank's guidelines for DPCU/BPIU and Community level are circulated to all DPCUs andBPIUs. The Training Manual on Community Procurement and Contract Management guidelinesare rolled out. Progress on the procurement plan is satisfactory and most of the items listed in thefirst phase of the project are completed. Except for minor deviations reported, post procurementreviews have not revealed any significant systemic or capacity constraints in the procurementimplementation of the project. Procurement of all goods, works and non-consulting servicesrequired for and to be financed from the additional financing shall be in accordance with therequirements set forth or referred to in Section I of the "Guidelines: Procurement under IBRDLoans and IDA Credits" (dated January 2011). Procurement of consulting services shall be in

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accordance with "Guidelines: Selection and Employment of Consultants by World BankBorrowers" (January 2011) and the provisions stipulated in the Financing Agreement. CommunityParticipation in Procurement (as per provisions para 3.19 of the guidelines) will be the method to befollowed for items identified to be procured with community participation. Post reviewarrangements as applicable in CDD projects, based on the World Bank "Guidance Note ForManagement Of Procurement Responsibilities In Community-Driven Development Projects" datedDecember 2009 will be followed for fiduciary assurance. The Procurement Plan detailing theactivities to be carried out under additional financing will reflect the actual project implementationneeds. For the contracts to be financed under the project, the applicable procurement methods, theestimated costs, prior review requirements as per applicable thresholds and time frames will beagreed to between the Borrower and the Bank in the Procurement Plan. The Procurement Plan willalso indicate the contracts that will be subject to Prior and Post review.

24. Social Safeguards: Following on the recommendations of the BRLP social assessment,the project has been systematically targeting the habitations of SC, ST and extremely backwardcaste households, and mobilizing them in community institutions in the 42 project blocks. Thissocial outreach and poverty targeting methodology has resulted in significant inclusion of thepoorest and socially vulnerable households. Nearly 70% of the SC, ST and landless households inthe project villages have been mobilized into SHGs. About 40% of the SHG members that receivedthe ICF and utilized the food security funds are SCs and STs. Large numbers of SC, ST householdshave accessed the pensions and health insurance services. The project has a tribal developmentplan (TDP), specifically targeting the scheduled tribe population in Pumea, where 6% of thepopulation is tribal. In Pumea, the project has reached out to tribal habitations and mobilized SThouseholds through local community professionals and project facilitation teams, and implementedthe financial inclusion, food and health security, livelihoods and entitlements interventions. Theproject is aiming for 100% inclusion of the tribal households in the tribal clusters.

25. The existing BRLP strategies of prioritized targeting and social inclusion of women fromthe SCs, STs and landless households would be continued during the AF. The AF would expandthe social mobilization strategy in the newer blocks, and deepen the social inclusion impact in theexisting blocks. The focus on the most vulnerable sections like Mahadalits, scheduled tribes, theultra poor and landless, single women and women headed households, persons with disabilities,migrant labourers, religious minorities and communities living in difficult areas (especially floodprone, drought prone and conflict affected) would be strengthened. Specifically, the AF wouldfocus on (i) systematic identification and mobilization of left out households in project blocks; ii)targeted program for landless and ultra poor households; (iii) capacity building of VO committeeson social action, social inclusion and food security; (iv) interventions on people with disability,gender, migrant labor and others. In the tribal clusters, the project would undertake speciallybudgeted and targeted programs on: (i) outreach and communications; (ii) small ruminants,agriculture, dairy, vegetable farming etc; (iii) health and nutrition funds/centers; (iv) jobs and skills;and (v) pensions schemes (widow, old age, disability). The culture and livelihoods program wouldbe specially adapted for the tribal clusters and their cultural heritage.

26. Environment Safegaurds: Based on a review of BRLP interventions, no significant andpotentially adverse environmental impacts are anticipated. The nature and scale of the livelihoodactivities undertaken by individual households is considered environmentally benign and small-scale, and any potential negative impacts are going to be localized and manageable. However, theoverall implementation of the Environmental Management Framework (EMF) is moderately

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satisfactory. Some of the key elements in the EMF have been mainstreamed into the strategies forpromotion of livelihoods. BRLP has taken several initiatives to integrate environmentalsustainability into livelihoods enhancement interventions. It has piloted and successfully scaled upthe community managed extension system of village resource persons which have played a key rolein implementation of sustainable livelihood interventions. It has successfully piloted and scaled upthe System of Rice Intensification (SRI) in Paddy and subsequently, replicated in wheat to enhanceproductivity with nearly 1,000,000 SHG farmers. The project is currently piloting greenopportunities like the solar power based lighting solutions. BRLP has also initiated landdevelopment pilots with the Rural Development Department on convergence with MGNREGA inpilot districts. On a review of the environmental performance, a detailed action plan has beenagreed for the Additional Financing to be implemented in conjunction with the existing EMF. Thisincludes (a) Initiating a limited environmental audit by external consultants to ensure compliance ofthe activities with the regulatory requirements and safeguards policies of the World Bank and todocument the learning from the environmental friendly livelihood practices, (b) hiring a consultantat the state level to support the promotion and monitoring of Environmental Management andGreen Innovations, (c) deepening and scaling up the pilots on land development as NaturalResource Management Plans at the Village Organization (VO) level with MGNREGA convergenceand (d) scaling up the environment-friendly interventions piloted/scaled up under BRLP andintegration into livelihood interventions on agriculture, dairy, small ruminants and fisheries.

27. Governance and Accountability: The Government of Bihar has introduced severalinitiatives in the state to improve the transparency and accountability in government functioning.Some of the most important measures include: a) Implementation of the Right to Public Serviceact that guarantees the delivery of select basic public services in a time bound manner. b)Strengthening the implementation of the Right to information act. These include systematic effortsto ensure voluntary disclosure of information under the RTI act by the various department andmany initiatives to encourage citizens to seek public information. The project will ensure that itimplements these measures as an integral part of the project governance framework.28. The management and governance structure created for the parent project, through theestablishment of the autonomous BRLP Society has been a key factor in the project's effectiveperformance. The Society has a well established Executive Committee chaired by the DevelopmentCommissioner of the GOB and has representation of most of the developmental departments of theGOB. It also has representatives of the industry association, NGOs and Banks. Both the structureand operation of the society has become a model for the country and the proposed NRLM statemissions. The GOB has also given the society substantive autonomy and operational space whichis not always so in other states. The EC has also ensured that convergence with other governmentprograms is promoted with the project. BRLPS has put in place multiple initiatives across the keyareas of business processes and guidelines, project monitoring, financial management,communication and human resource management in order to ensure transparency and accountabilityin the functioning of the project and the community institutions promoted by the project. Some ofthe key initiatives include the development and adherence to service delivery standards mentionedin the project manuals, training of community institutions and staff on transparency andaccountability issues, functioning of a web based SHG level MIS, regular process monitoring by anindependent agency, regular book keeping in community institutions and independent auditing ofthe accounts of all village organizations promoted by the project. The project has put in place astrong grievance redress mechanism both at the state and district level to deal with grievances. Aspart of the additional financing the project would have a separate unit containing GAC specialist

9

and other support staff at the state level. In each district a GAC focal person will be indented andtrained properly on GAC initiatives. The project will facilitate structured community basedfeedback mechanism by implementing social accountability tools like the social audits andcommunity score cards in sample Village Organizations across all the 6 project districts. In termsof further strengthening the grievance redressal system, the project would introduce a dedicatedhelp line that includes automated registration of grievance with call and SMS integration. Annex 3shows the detailed Governance and Accountability Plan. It is both integrated in the design of theproject, especially at the community mobilization level where strong social audit norms andactivities are an integral part of the SHG/VO organizations and given special focus through anexclusive grievance redressal mechanism manned by special project staff.

10

INDIA: BIHAR RURAL LIVELIHOODS PROJECT - ADDITIONAL FINANCING

Annex 1: Project Achievements

1. Results from an Independent Mid Term Evaluation: A recent independent evaluation ofthe impact of JEEVIKA on socio-economic outcomes based on a survey of 4000 randomly selectedhouseholds from 6 districts finds that over the duration of Phase 1 from 2007-2010, the project haspositively impacted the savings of the project households, reduced high cost indebtedness, has ledto increased food security and assetisation and has increased women's empowerment significantly.The following are some of the key impacts of the project as per the study:

Savings and Indebtedness: Significant impacts have been found in savings habit with 58% morehouseholds starting regular savings in treated areas as compared to the Households (HHs) in thecontrol areas. Treated HHs have significantly less high cost debt burden on loans taken after 2007,as opposed to control HHs.

Assetisation: Project Households have significantly increased their ownership of assets like cows(by 59%) and bullocks (by 177%) compared to the control HHs.

Food Security: A significantly higher proportion of treated HHs who faced shortage in 2007 arefood secure now compared to control HHs and the average project HH has been able to reduce theduration of food shortage by 27% as compared to the control HH.

Women's empowerment: A significantly higher percentage of women in project participantvillages go to health centers and to the Panchayat meetings in the last 3 years. A higher percentageof women from treated areas provide an opinion about borrowing behavior, education of children,self-employment and politics. Whether it is some trouble with the school, PDS, or some woman invillage being beaten up, higher percentages of women in treated areas are capable to act todaycollectively, and have become willing to act over the last 3 years.

Access to Social Safety Nets, Entitlements and Social Services: In addition, building on thewomen based community institutional platform created, the project has initiated a number ofinterventions on pilot basis through inter-departmental collaboration and convergence with othergovernment programs and enabled access to public entitlements for the poor. These will be scaledup under the proposed additional financing in partnership with other Bank complementary projectson Social Protection and Panchayats. These include the following:

Access to social security pensions in partnership with Social Welfare Department - 29,000 poorhouseholds have accessed entitled pension benefits by the Village organizations linking up with thesocial welfare department.

Access to wage employment in partnership with Rural Development Department - A pilot involving30 Village Organisations (VOs) across 3 blocks of Muzzafarpur district with the objective ofensuring wage employment under the Mahatma Gandhi National Rural Employment GuaranteeScheme (MGNREGS) was initiated in partnership with the Rural Development Department in2010. 5100 SHG women members had increased access to wages under MGNREGS and nearly

11

2700 of them got full entitlement of 100 days of work. An amount of Rs 4.27 crores was accessedby these households. VO leaders and MGNREGS functionaries were trained on the process oftaking up works on private lands and subsequently work estimates on implementing these works onprivate lands where prepared by nearly 50 VOs across the five blocks. These activities wereundertaken in partnership with Panchayats.

Access to food entitlements in partnership with the Food and Civil Supplies Department - 96Village Organizations across the 6 project districts have been provided with the license to managethe Public Distribution System in their respective villages with the objective of ensuring access tofood entitlements for the poorest households. The management of PDS by the VOs in thesevillages has ensured that all eligible SHG households are able to access subsidized food grainsevery month as opposed to the limited access earlier.

Access to Health Insurance in partnership with the Department of Labor. The Rashtriya SwasthyaBima Yojana (RSBY) is one of the leading health insurance schemes of the government specificallytargeted towards the poorest households. To ensure access to RSBY for all eligible SHGhouseholds, a partnership was established with the Department of Labor. 53,000 households havebeen enrolled with the RSBY for accessing health insurance services as part of RSBY.

Piloting Community Managed Nutrition Care Centers in partnership with the Social WelfareDepartment. 60 Community managed Nutrition and Care Centers (NCCs) are set up across twoproject districts in partnership with the Department of Social Welfare. The objective of NCCs is toimprove nutrition and nutrition seeking behavior among pregnant and lactating mothers and theirchildren less than 6 months of age. This is being done through Technical Assistance from theAndhra Pradesh project.

Access to public health services in partnership with the State Health Society - A partnershipbetween BRLPS and the state health society has recently been established with the objective of a)increasing the access to public health services for the poor and b) improving the quality of serviceprovided at these public health facilities.

12

INDIA: BIHAR RURAL LIVELIHOOD PROJECT - ADDITIONAL FINANCING

Annex 2: Results Framework-Indicators

Revisions to the Results Framework Comments/Rationale for Change

PDO

Current (PAD) ProposedEnhanced social and No change NAeconomic empowermentof the rural poor in Bihar

PDO indicators

Current (PAD) Proposed change*Self managed2F' self No change NAhelp groups established,covering at least 80% ofthe target householdsAt least 50% of those No change NAreceive CIF haveincreased income by atleast 30% of the baselineAt least 50% of SHG No change NAmembers have reducedhigh cost debts frominformal sources.Intermediate Results indicators

Current (PAD) Proposed change*No of targeted poor households that are Revisedorganized into SHG represented in VOand BLF :* No. of poor mobilized into SHGs

* No of SHGs formed

*No of VO formed

* No of BLF /CLFs formed

Self managed as defined by the project's graduation indicators

13

Revisions to the Results Framework Comments/Rationale for Change

Number of Community members New This indicator will help thedeveloped as Community Professional project to focus on theincluding CRPs providing services to development of communityCBOs professional which is crucial

for future scaling upNew The indicator will help the

Cumulative membership of households project to focus onwho are members producer development of producerorganizations organizations that are critical

for the deepening of theproject

Cumulative beneficiary savings Revisedmobilized and cumulative leveragingfrom financial institutions as creditAt least 50% of the investments on No changelivelihoods CIF are made for productivepurposesFood security increased for 80% of No changetarget households

New Will help the project to trackNumber of households taking up new the expansion of theagriculture activities resulting in an agriculture intervention asincrease in income by 30% part of AF and the resulting

impact on incomesNumber of households who are part of New Will help the project to trackdiary intervention as a result of which the scaling up of the dairythere has been a 30% increase in income intervention and the resultingfrom dairy impact on income from dairyNumber of direct jobs created through Revisedproject facilitation & at least 75% ofthem are getting sustained income

Number of scalable block level projects Revised Indicator will help the. project to help identify the

in Non- farm, Small livestock sector keyjsub sectorpprojectsythatdeveopedkey sub sector projects that

developed can be scaled up in the futureNew Indicator will help the

Scalable block level models on village project to focus onlevel community managed nutrition care developing a scalable model

on village level communitymanaged nutrition carecentre

New The indicator will help theNumber of new partners inducted to project to focus onpromote financial inclusion services demonstrating alternative

financial access models

14

Revisions to the Results Framework Comments/Rationale for Change

New The indicator will help the

Percentage of member households project to focus onaccessing Social security entitlements establishing a scalable modelthrough other GoB/Gol programs on delivering a set of(MGNREGA, PDS,Pensions,) converged benefits that are

currently not accessable at________________________________the HH level

Number of Environmentally friendly New The indicator will helpinterventions piloted in each project mainstream environmentalBlock safeguard issues

Project monitoring and learning System Revised The indicator will help theestablished, including an integrated project to develop aeMIS covering all thematic interventions comprehensive MIS that

provides key data for

decision making on allinterventions

Project HR with Performance Appraisal Revised The indicator will help theSystem and on-time settlement of the project to developstaff incentives, entitlements as comprehensive HR systemsenvisaged in the HR manual established

Governance and Accountability: New Will help the project toeffective governance and accountability establish comprehensivesystem in place which includes a governance anddedicated help line for grievance and accountability mechanismsannual conduct of social audits and in the functioning of thecommunity score cards in select VOs project

15

REVISED PROJECT RESULTS FRAMEWORK

Project Development Objective (PDO):

Click here to enter the revised PDO of your operationBaseline Progress Cumulative Target Values5 Data Responsi

2 gia To Date Yr Yr 2 Yr3 End Source/ bility for CommPDO Level Results Indicators UOM, Project Frequency Data

(March Date Methodolog entsa Start 4 Collectio

(207 2012) yn(2007) nSelf managed 6 self help groups i.MISestablished, covering at least 80% Annual ii.Impact M & Eof the target households E % 5% 30% 40% 50% 80% 80% End of the evaluative Staff

Project iii. ExternalStudies

At least 50% of those receive CIF 62% of the 50 %

have increased income by at least HHs accessed HHs M&EC IF resultmng with .MIS30% of the baseline E % 00 in 30% 30% End of the i.Im staff and0 % 0% increase in increa Project ii.Impact External

income in the se in evaluation Agencyinitial 42 incomblocks e

At least 50% of SHG members50% End of the Impact External

have reduced high cost debts from % 0 15% 25% 35% 50% HHs project Evaluation Agencyinformal sources.Beneficiaries7

.. Number 900,00Project beneficiaries, 0u45er 600,000 0 1500,000 15000 4,85,000 0 000 Monthly RLMIS M&E

Number 900,00Of which female (beneficiaries) 0 4,85,000 600,000 0 1500,00 150, End of Project MIS M & E

2 Please indicate whether the indicator is a Core Sector Indicator (for additional guidance - please see http://coreindicators).3 UOM = Unit of Measurement.4 For new indicators introduced as part of the additional financing, the progress to date column is used to reflect the baseline value.5 Target values should be entered for the years data will be available, not necessarily annually. Target values should normally be cumulative. If targetsrefer to annual values, please indicate this in the indicator name and in the "Comments" column.6 Self managed as defined by the project's graduation indicators7 All projects are encouraged to identify and measure the number of project beneficiaries. The adoption and reporting on this indicator is required forinvestment projects which have an approval date of July 1, 2009 or later (for additional guidance - please see http://coreindicators).

16

Intermediate Results and Indicators

Baseline Progr Target Valuesess 1 Yr r nUnit of Original Yr1 Yr2 Yr 3 End Date ResponsibilitOrgial To YrFrequenc Daa ourceI/ o Comm

Intermediate Results Indicators Measure Project Te y Methoog y for Data~Date y Methodology entsment Start Collectionm t a(2012

(2007)

Intermediate Result 1: Formation of self reliant and inclusive community institutions including SHGs, Village Organizations & Federations

1. No of targeted poorhouseholds that are organizedinto SHG represented in VOand BLF: 900,000

* No. of poor mobilized into Number of 485,00 600,00 1500,000 15,00,000

SHGs HH 090000 Monthly RLMIS M & E staff

* No of SHGs formed Number 0 41600 60000 150000 1500009000

* No of VO formed Number 0 2774 6,000 10,000 10,000

72

* No of BLF /CLFs formed Number 0 4 36 102 102

2. Number of Communitymembers developed asCommunity Professional Number 0 10,000 20,000 35,000 60,000 60,000 Monthly RLMIS M & E staffincluding CRPs providingservices to CBOs

3. Cumulative membership of Number 0 5,000 10,000 20,000 25,000 25,000 Monthly RLMIS M & E staffhouseholds who are

17

Intermediate Results and Indicators

Baseline Progr Target Valuesess 1Yr r n

Unit of Original Yr1 Yr2 Yr 3 End Date ResponsibilitOrgial To YrFrequenc Daa ourceI/ o CommIntermediate Results Indicators Measure Project Te y Methoog y for Data~Date y Methodology ents

ment Start Collectionm t a(2012

(2007)

members producerorganizations

Savi Sayvin4. Cummulative beneficiary Sav Saving Savings

savings mobilized and US $ ngs(5 e6d, s(8), (10), Savingscumulative leveraging from million ' (40) Credit Credit (0)financial institutions as credit it(22) () (60) (80)

Intermediate Result 2: Establishment and use of community Investment Fund for food security, social services, livelihood assets and service sector investment

50%5. At least 50% of the investments for theon livelihoods CIF are made for E % 0 phase 30% 40% 50% 50% Annually RLMIS M & E staffproductive purposes 1 42

blocks

6. Food security increased for 80% End of HH impact Externalof target households Project evaluation Agency

7. Number of households taking up Annualup new agriculture activities 1,50,0 2,50,0 3,50,00 annalNumber 0 5,00,000 500000 and End of RLMIS M & E staffresulting in an increase in income 00 00 0 Projectby 30%8. Number of households who arepart of dairy intervention as a Number 0 11,000 20,00 35,000 50,000 50,000 Monthly RLMIS M & E staffresult of which there has been a 0,30% increase in income from dairy9. Number of direct jobs createdthrough project facilitation & atM&Estflesthrough p5 ofcth ar ting Number 0 2200 5,000 10,000 20,000 20,000 Monthly RLMIS M & E staffleast 75% of them are gettingsustained income

10. Number of scalable block levelprojets inon faralablebloc vl Number 0 0 3 5 5 5 Annual RLMIS M & E staffprojects in Non- farm, Small

18

Intermediate Results and Indicators

Baseline Progr Target Valuesess - 1 Y

Unit of Original Yr1 Yr2 Yr 3 End Date ResponsibilitOrgial To YrFrequenc DaaSource!/ o CommIntermediate Results Indicators Measure Project Te y Methoog y for Data ents~Date y Methodology ents

ment Start Collectionc (2012(2007)

livestock sector developed

11. Scalable block level models onvillage level community managed Number 0 0 1 2 2 2 Annual RLMIS M & E staffnutrition care centre developed I I I I

Intermediate Result 3: Establishment and operationalisation of Special Technical Assistance and Development Services

14. Number of new partnersinducted to promote financial D Number 0 0 2 4 5 5 Periodic thmic Exenalinclusion services15. Percentage of memberhouseholds accessing Socialsecurity entitlements through other ] % 0 5 10 20 30 30 Monthly RLMIS M & E staffGoB/Gol programmes

16. Number of villages whereEnvironmentally friendlyEirn ent arplodind eac Number 0 0 20 40 50 50 Periodic RLMIS M & E staff

interventions are piloted mn eachproject Block

Intermediate Result 4: Project Management

17. Project monitoring and Integlearning System established, MIS at ratedincluding an integrated eMIS the MIS Integratedcovering all thematic interventions SHG cove MIS covering Thematic External

H NA NA andVO ring all thematic Periodicl all interventions

lve them in Placeplace ai

aticinter

19

Intermediate Results and Indicators

Baseline Progr Target Values

Unit of Original To Yr1 Yr2 Yr 3 End Date ResponsibilitIntermediate Results Indicators Measure Project Te y Methoolog y for Data

Date y Methodology entsment Start Collectionc (2012(2007)

ventionsmPlace

18. Project HR with Performance HR System ofAppraisal System and on-time manual Performancesettlement of the staff incentives, prepareentitlements as envisaged in the H NA NA d and A risa ExtealHR manual established being tmePeriodic Thematic Exteal

settlement Proi hmtc Etraimplem established Studies Agenciesented

19. Governance and GrievanceAccountability effective A paper redressalgovernance and accountability based system andsystem in place which includes adedicated help line for grievance gre annuland annual conduct of social H N oe c odc fEtraredressa social Periodic Thematic Externalaccountability tools like social 1 system accountability Studies Agenciesaudits and community score cards i .

inm place tools in selectin select VOs VOs

20

INDIA: Bihar Rural Livelihood Project - Additional Financing

Annex 3: Governance and Accountability Action Plan

Governance and Accountability Risk Matrix

Key Risks Risk Level Key Mitigations Measures to be Time Linetaken

Project Risks ( Moderate 0 Defining service delivery Project periodLikely risks in standards defined & integrationProcurement, with MISFinancial 0 Development of file managementManagement, system & integrationProject 0 Development of an Online systemMonitoring for partnership managementsystems and 0 Piloting of E procurementproject processes 0 Development of specific trainingas a result of modules for GAC and training ofscaling up) state and district staff on GAC

and in using ICT toolsSImprovement in systematic project

documentation and mandatorydisplays

Grievance Moderate 0 Classification of grievances & Project periodRedressal redresses, development of resourceSystems pmaterial (FAQ, IEC, complaintEffectiveness of register)complaint and Reserve number maintained atgrievance state levelredress) Setting up of state and district

help desksConduct of outreach campaign forGRS

* Establishment of an onlineautomated GRS with SMS & voiceintegration

21

Community Moderate * Institutionalization of the Project periodlevel risks ( risks community feedback mechanismsof elite capture like social audits and communityof community score cards through regularinstitutions) conduct in select village

organizations* Development of a cadre of Para

professionals that are trained infacilitating the conduct of theabove community feedbackmechanisms

* Systematic display and regularsharing (one pagers/leaflets etc) ofkey project information at thevillage level to ensure effectivecommunication to all SHGhouseholds

22

Governance and Accountability Plan

Main Activity Sub-Activity Responsibilities

A. Prevention

1. Implementation of the Right to Public Service act that

1. Business Processes: Delivery of guarantees the delivery of select basic public services in a Thematic SPMs &

services, financial and time bound manner PMs at State,

procurement management at 2.Develop Community Operational Manuals Managers at district

u 3. Capacity Building of CBOs and committees to use and block units andCommunity Based Organizations CO .nisfntoigCO

COM mn its functioning CBOs

4. Participatory Supervision

1. Capacity Building of staff to perform as per COM Thematic SPMs &

2.Business Processes at Project 2. Annual Action Plan and Budget with monthly and PMs at State,level: Delivery of services quarterly break up Managers at district

3. Accomplishing planned targets and block units

1. Procurement Manual - Policy, Systems, Processes and

all related issues

2. Capacity Building of staff Procurement

3. Procurement 3. Develop data base & use of project website Specialist and

4. Procurement Cell to supervise, guide & settle Procurement Officer

procurement issues

5. Independent audit

1. Financial Management Manual - Policy, System,Process and rules

2. Capacity Building of staff

3. Project Financing Plan Chief Finance

4. Budgetary Allocation Officer, Finance

4. Financial Management 5. Payment validation and Time bound Bills Payment at Officer and

all levels Accountants at all

6. Time bound Record keeping, Accounts and Financial levels

Statements

7. Time bound Reports and Returns at all levels

8. Internal Audit and Control System

5. Sensitization Programmes on SPM-HRD/PM-

Governance and Accountability to 1. Programmes for poject taff SLPM

staff and Community Institutions District Training Cell

6. Disclosure of Information 1. Implementation of the right to information act.

2. Arrangements for collection and dissemination of

Information GAAP focal person

3. Capacity Building on D I at State level

4. Supervising the Supervisors

5. D I Indicators

1. Creation of vigilance Cell with an Officer responsible

for vigilance function at State levelGAAP focal person

7. Preventive Vigilance 2. Framing of policy, procedures and rules to manage at State levelvigilance cases

3. Partnering with civil society, local bodies and vigilance

23

agencies

Main Activity Sub-Activity Responsibilities

B. Detection

1.Plan for Monitoring and tracking service delivery

1. Monitoring, Evaluation and indicators SPM-M&E, PM-2. E-MIS - Data Collection and Reporting the status M&E, DPMs and

3. Monthly Review Meeting at State, District and Block BPMs

levels

1. Plan for Performance Appraisal of staff on Input and

Output Indicators SPM-HRD, PM-

2. Annual Performance Appraisal 2. Sensitization of Staff on Performance Appraisal Process SLPM, DPMs and

of Staff 3. Timely completion of PA process BPMs

4. Preparing Performance Appraisal Report

1. Establishing Feedback Mechanism to Receive Field Thematic SPMs,

4. Feedback from Field Voices PMs, SPM-M&E and2. Plan to obtain Score Cards on Community Institutions PMM&E

3. Social Audit

C. Response: Correction and Deterrence

1. Establishing Complaints Handling Unit at State, District

and Block level to address complaints and grievances of

community

2. An official at all levels will be designated with

Phone/Mobile number and address to receive

communication from CBOs and community members in Administrative

any form Officer, DPMs and

1. Complaint Handling 3. Record and maintain a log of complaints received BPMs supported by

against project and CBOs (if possible web based selected VO

complaints registration system) and respond to all committees

complaints received, in an automatic standardized format,within seven days of receipt.

4. Setting up web based grievance registration system for

Project Staff at State and District level with time bound

resolution by a committee established for the purpose

1. Plan for timely corrective action for CBOs Administrative

2. Disclosure of Information on status of investigation, Officer, DPMs and

2. Corrective Actions measures taken and corrections done in monthly reports BPMs supported byfor review in Monthly Meeting selected VO2. Performance Incentive for quick and timely corrective committees

actions

Chief Finance1. Adoption of Policy, Procedures, Rules for dealing cases Ofier Ainisra

3. Punitive Action (Sanctions and of corruption and frauds

Remedies) 2. Constitution of exclusive committee for sanctions and tive Officer &remedies Procurement

I Specialist

24

OPERATIONAL RISK ASSESSMENT FRAMEWORK (ORAF)

Stage: Appraisal

1. Fiscal and Political Risk Rating Low

Description:

Bihar has achieved much by way of reform and development The project has contributed to Bihar's development results on the ground and demonstrated results within the last five years with demonstrated success in many significant accountability. The project will continue with its efforts to further strengthen accountabilityareas. Bihar continues to be a leader is in its effort to mechanisms within its operational ambit and will also try to influence the accountability systems in context ofstrengthen accountability through the implementation of the various service delivery initiatives it is implementing in convergence with other departments.Right to Information and Right to Public Serviceslegislations and new initiatives to tackle corruption.Institutional capacity of government to respond to politicalinitiatives to accelerate service delivery and development isuneven and in many areas is inhibiting implementation.Improvements in governance over the past six years led tothe re-establishment of state functions and increasedvisibility of the State Government but also raisedexpectations of quick progress.

Fiscal space is constrained, which puts a premium on Bank continues to monitor Bihar's fiscal position.effectiveness and efficiency of public financial managementsystems to manage resources better. Growth in Bihar willcome ultimately from agriculture and private investment.The overall environment for these investments is weak andbefore locating support to a growth strategy, any externalactor will need to deal with the institutional and structuralissues facing the government. Bihar's net borrowingrequirement which was Rs 1700 crore in 2007-08 rose to Rs.8700 crore in 2010-11. In 2011-12 the financing requirementis projected at Rs. 6200 crore and poised to increase in futureyears. The increasing volume of budget spending at 24percent of GSDP and, the extra-budgetary expendituresthrough the centrally sponsored schemes, indicate that asound PFM system and institutional capacity, that ensureshigh quality of public spending, is a priority for supportingeconomic development in Bihar.

25

2. Project Stakeholder Risks Rating LowDescription : Risk Management:Unpredictable political developments and/or bureaucratic The existing project is being implemented through an autonomous, dedicated 'Society' model, which, while notdelays; and immune, has certainly demonstrated greater flexibility and greater protection from interference than utilizing

existing government departmental channels. The Society's existing approach to strategic communications,Possible movements among key staff and leadership targeting appropriate information at key stages to priority stakeholder interests, will be continued. The team willpositions. keep itself updated about political developments and maintain appropriate understanding of the political

economy.At the village level, where the primary stakeholders in the project are located, clear operational rules andprinciples, combined with practical tools of social accountability and participatory targeting methodology, asalready tested under the existing operation, are demonstrably effective means to limit interference at the locallevel.The Bank and BRLPS has already held multiple rounds of meetings with GoB where this was discussed indetail. Several collaborative agreements have been arrived at for convergence of schemes in social

All the stakeholders need to come together to enable BRLPS protection, PDS, NREGA and Health. There is a strong political and administrative support for BRLPsin coordination, management and monitoring of various delivering the government schemes through community institutions formed by BRLPsgovernment's schemes. The Bank team will itself remain engaged through regular site visits to build relations with new officials and

continue high level dialogue with Government, including through exposure visits to other livelihoods projects inthe region and conduct of workshop/conference that promotes cross learning.

Society Stage: Both during

and GOB preparation and Due Date : Continuous Status: Ongoingimplementation

Resp: Stage: Due Date: Status:

2.1. Sector/multi-sector Rating:Description: Risk Management:

Resp: Stage: Due Date: Status:

3. Implementing Agency Risks (including fiduciary)3.1. Capacity Rating: Medium I (High Impact - Low Likelihood)Description: Risk Management:While the parent project is successful, by scaling up with Adequate capacity to implement the existing project has been built at State and District levels. Nonetheless, theexpanded scope of work will place additional demands Society has revisited its organizational structure and staffing capacity to ensure that this is adequate andon the BRLP Society and may dilute the quality of sufficiently responsive to meet the additional demands of expansion and is now recruiting staff to fill additionalimplementation or the agency's capacity to monitor this positions at the State level, in line with an new organogram has been conceived keeping NRLM in perspective

quality in the field. BRLP Society is also being recognized and other staff requirement for addressing increased volume of work for additional financing activities will be

by the GoB to implement NRLM, which would put further agreed during preparation.

pressure on the implementation and monitoring capacityof the available implementation structure.

Given that large number of CBO's there is a risk of lack of Project MIS to track financial, portfolio performance of village organizations and SHGs; triggers for fundrelease to CBOs linked to institutional & portfolio performance of CBOs.

26

2. Project Stakeholder Risks Rating Lowadequate systems and oversight arrangements to facilitatemonitoring by the project

Stage: Both duringResp: BRLP Society preparation and Due Date: Continuous Status: Ongoing

implementationStatus: Ongoing for parent

Resp: BRLP Society Stage: Implementation Due Date: Continuous project, not yet due for AF

4. Project Risks4.1. Design Rating: LowDescription: Risk Management:

The Additional Financing would be used to scale-up a As noted, the Society has revisited its organizational structure and staffing capacity, to ensure that this isproven project model and design, and hence design risks adequate and sufficiently responsive to meet the additional demands of expansion and scaling-up.should be low, as long as capacity to implement and keyimplementation principles are maintained, e.g., (i) demand- Provision will be maintained for continued learning of lessons during implementation and, while clear designdriven, community-managed nature of investments; (ii) parameters have been agreed at appraisal, sufficient flexibility has been left for finer implementation details toeffective targeting the poor at all levels of the village be adjusted based on operational lessons.organizations; and (iii) financial efficiency andaccountability.

In existing project areas, the project would supportfederations of community organizations to expand and Status: Ongoing for parentsustain activities through the benefits of scale (e.g., in Resp: BRLP Society Stage: Implementation Due Date: Continuous project, not yet due for AFattracting partners and enabling greater bargaining power,broad-based representation and aggregation of demand.)

4.2. Social & Environmental Rating: LowDescription: Risk Management:

Social:The exclusion risk could undermine the poverty reach of The overall design accord highest priority to identifying and mobilizing the poorest and most excluded SC andthe project and affect benefit streams to the extremely ST households. This is the core strategy and focus on social inclusion of the SC and ST households would cutpoor. across the project interventions on informed consultations, participatory assessments, social mobilization,

institution and capacity building, and access to livelihood and employment assistance and social entitlements.

Design and implementation of Environmental Management Framework that includes: participatory developmentof environmental management plans in the livelihood plans and value chain investment plans; a regulations

27

2. Project Stakeholder Risks Rating LowEnvironment: requirements list and environmental guidelines that inform good practice measures and ensure compliance withSome of the SHG federation and/or Producer Collective the triggered safeguard policies and with relevant laws and regulations.activities carried out at cumulative or aggregate levels mayaccentuate depletion of natural resources with adverse The Framework gives emphasis on project-level and community monitoring (including monitorable indicators)impact on sustainability of rural livelihoods. along with annual external audits for Years 2-5. The audits will include an assessment of cumulative impacts.

Finally, demonstration of green practices in livelihood activities that provide income co-benefits will beproactively supported in the project.

Stage: Both duringResp: BRLP Society preparation and Due Date: Continuous Status: Ongoing

implementation4.3. Program & Donor Rating:Description: N/A Risk Management:

Resp: Stage: Due Date: Status:

4.4. Delivery Monitoring & Sustainability Rating: LowDescription : Risk Management: An improved and more robust M&E system based on a social observatory model is beingMonitoring and evaluation capacity of the project does not implemented currently by BRLPs and this will ensure that all outcomes and processes of the project is capturedadequately address the multiple programme and sector in the monitoring system. Further the ITbased MIS already in use in the project will be further strengthened tointerventions planned for capture output and outcome indicators at different levels

Resp: BRLP Society Stage: Implementation Due Date: Continuous poet, noed for aFIproject, not yet due for AF

4.5. Other Rating: Medium I (High Impact - Low Likelihood)Description: Risk Management:Non compliance with the project accounting The number of accounting centers is proposed to be reduced by changing from the block level to therequirements district level; the financial management requirement for SHG/VOs has been simplified and the finance

capacity in BRLP, especially at the district level will be strengthened further.Non compliance with agreed procurement arrangementsand project not maintaining the required procurement Prior and post review arrangements and regular supervision from Bank.capacity in the project.

Project will provide support through systematic training and capacity building of VOs for financialPoor implementation capacity of the VOs in accounts management with audit and social accountability systems in place.maintenance

Adequate capacity to implement the existing project has been built at State and District levels, however,the BRLPs is revisiting its organizational structure and staffing capacity, to ensure that this is adequateand sufficiently responsive to meet the additional demands of expansion.

Resp: BRLP Society Stage: Implementation Due Date: Continuous Sproject, not yet due for AF

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2. Project Stakeholder Risks Rating Low4.6. Other (N/A) Rating:Description: Risk Management:

Resp: Stage: Due Date: Status:

Non disclosable Information for Management Attention (Optional)N/A

Comments:

5. Project Team Proposed Rating Before Review5.1. Preparation Risk Rating: Low 5.2 Implementation Risk Rating: Medium I (High Impact - Low Likelihood)Comments: Comments: The proposed Additional Financing is on a solid base of knowledge and capacity

on implementing successful parent project. This risk template would be reviewed and updatedthroughout preparation.

6. Risk Team6.1. Preparation Risk Rating 6.2 Implementation Risk RatingComments: Comments:

7. Overall Risk Following Review7.1. Preparation Risk Rating 7.2 Implementation Risk Rating:Comments: Comments:

Note : Include on average no more than 3 Risk Management Measures per Risk Category

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