Document of

The World Bank

Report No. 17052-IN

PROJECT APPRAISAL DOCUMENT

ONA

PROPOSED INTERIM TRUST FUND CREDIT

IN THE AMOUNT OF SDR 222.5 MILLION (US$300 MILLION EQUIVALENT)

TO

INDIA

FOR A

WOMAN AND CHILD DEVELOPMENT PROJECT

MAY 27, 1998

Health, Nutrition and Population Sector UnitSouth Asia Region

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CURRENCY EQUIVALENTS(As of January 1998)

Currency Unit = Indian Rupees (Rs.)Rupees 38.6 = US$1.00

GOVERNMENT FISCAL YEAR

April I - March 31

ABBREVIATIONS AND ACRONYMS

AWC Anganwadi CenterAWTC Anganwadi Training CenterAWW Anganwadi WorkerANM Auxiliary Nurse-MidwifeCAG Comptroller and Auditor General of IndiaCARE Cooperative for Assistance and Relief EverywhereCAS Country Assistance StrategyCDPO Child Development Project OfficerCED Chronic Energy DeficiencyCPMU Central Project Management UnitDEA Department of Economic AffairsDWCD Department of Women and Child DevelopmentERR Economic Rate of RetumFRR Financial Rate of ReturnGOI Government of IndiaICB International Competitive BiddingICDS Integrated Child Development ServicesIDA International Development AssociationIEC Information, Education and CommunicationIFA Iron Folic AcidITF Interim Trust FundMIS Management Information SystemMLTC Middle Level Training CenterNCB National Competitive BiddingNGO Non-Governmental OrganizationNIPCCD National Institutional of Public Cooperation and Child DevelopmentNSS National Sample SurveyOED Operations Evaluation DepartmentORS Oral Rehydration SaltsPDS Public Distribution SystemPIP Project Implementation PlanPMU Project Management UnitPSE Pre-School EducationPRA Participatory Rural AppraisalRBI Reserve Bank of IndiaRCH Reproductive and Child HealthSA Social AssessmentSC Scheduled CasteSRS Sample Registration SurveyST Scheduled TribeTINP Tamil Nadu Integrated Nutrition ProjectUNICEF United Nations Children's FundUP Uttar PradeshUT Union TerritoryWFP World Food Program

Vice President Mieko NishimizuCountry Director Edwin LimSector Manager Richard SkolnikTask Team Leader Anthony Measham

INDIA

WOMAN AND CHILD DEVELOPMENT PROJECT

CONTENTS

A. Project Development Objectives 2

1. Project Development Objectives and Key Performance Indicators

B. Strategic Context

1. Sector-Related CAS Goal Supported by the Project 22. Main Sector Issues and Government Strategy 23. Sector Issues to be Addressed by the Project and Strategic Choices 3

C. Project Description Summary

1. Project Components 42. Key Policy and Institutional Strengthening Supported by the Project 43. Benefits and Target Population 44. Institutional and Implementation Arrangements 5

D. Project Rationale

1. Project Alternatives Considered and Reasons for Rejection 52. Major Related Projects Financed by the Bank

and/or Other Development Agencies 63. Lessons Learned and Reflected in the Project Design 74. Indications of Borrower Commitment and Ownership 95. Value Added of IDA/ ITF Support in this Project 9

E. Summary Project Analysis

1. Economic 92. Financial 113. Technical 124. Institutional 125. Social 136. Environmental Assessment 157. Participatory Approach 15

F. Sustainability and Risks

1. Sustainability 152. Critical Risks 16

G. Main Loan Conditions

1. Conditions of Negotiations 172. Other Covenants 17

H. Readiness for Implementation 18

I. Compliance with IDA Policies 18

Annexes

Annex 1: Project Design SummaryAnnex 2: Detailed Project DescriptionAnnex 3: Estimated Project CostsAnnex 4: Cost-Effectiveness Analysis SummaryAnnex 5: Financial SummaryAnnex 6: Procurement and Disbursement Arrangements

Table A Project Costs by Procurement ArrangementsTable B Thresholds for Procurement Methods and Prior ReviewTable C Allocation of Loan Proceeds

Annex 7: Project Processing Budget and ScheduleAnnex 8: Documents in Project FileAnnex 9: Statement of Loans and CreditsAnnex 10: India at a Glance

INDIAWOMAN AND CHILD DEVELOPMENT PROJECT

Project Appraisal Document

South Asia RegionHealth, Nutrition and Population Sector Unit

Date: May 23, 1998 Task Team Leader: Anthony MeashamCountry Manager/Director: Edwin Lim Sector Manager: Richard SkolnikProjectID: IN-PA-35827 Sector: Nutrition Program Objective Category: PALending Instrument: Specific Investment Credit Program of Targeted Intervention: Yes

Project Financing Data [ ] Loan [x] ITF [ ] Guarantee [] Other [Specify]Credit

For Loans/Credits/Others:

Amount: SDR 222.5 million/US$300 million equivalentProposed terms: [] Multicurrency [ Single currency, specify

Grace period (years): 10 [] Standard Variable [] Fixed [] LIBOR-basedYears to maturity: 35Commitment fee: 0.5% per

annumService charge: 0.75% per

annum

Financing plan (US$m):Source Local Foreign Total

Government of India/states 122.3 0.0 122.3IDA 300.0 0.0 300.0

Total 422.3 0.0 422.3

Borrower: Government of IndiaGuarantor: NAResponsible agency(ies): Union Ministry of Human Resource Development, Department of Women and ChildDevelopment and Departments of Women and Child Development of the five project states.

Estimated disbursements (Bank FY/US$M): 1999 2000 2001 2002 2003 2004Annual 21 68 84 65 45 17

Cumulative 21 89 173 238 283 300

Project implementation period: 5 years Expected effectiveness date: 9/30/1998 Expected closing date: 9/30/2003

OSD PAD Form: July 30, 1997

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A: Project Development Objectives

1. Project development objectives and key performance indicators (see Annex J):

* The goal is to improve the nutrition and health of pre-school-aged children and women, by increasing the quality,impact, and cost-effectiveness of the Integrated Child Development Services (ICDS) program in the states ofKerala, Maharashtra, Rajasthan, Tamil Nadu, and Uttar Pradesh. In addition, the project aims to strengthen theICDS program in the remaining states and union territories, by improving the quality of worker training in each ofthem.

Specific objectives are to:

- improve the nutrition, health and psychosocial status of children, 0-6 years of age, with particular emphasison preventing malnutrition in under-threes, and improve child care practices at the household level;

- improve the nutrition and health of women, particularly pregnant and breastfeeding mothers, and adolescentgirls; and

- empower adolescent girls, through increased awareness, to take better care of their personal and householdhealth and nutrition needs.

* Progress toward these development objectives will be monitored and assessed on the basis of the key indicatorsshown in Annex 1.

B: Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project (see Annex 1):

GAS document number: 17241-IN Date of latest CAS discussion: January 15, 1998

The Bank's CAS recognizes that India has among the lowest social indicators in the world and consequentlysupports the Government of India's attempt to accelerate the pace of social development. Specifically, the Bankgives priority to addressing nutritional issues through interventions linked with education, health and social welfareservices. The Bank's objective with regard to this is to (a) improve nutrition policies and the effectiveness andefficiency of India's nutrition-related efforts; (b) build national health capacity; (c) improve primary care; and (d)improve health systems and institution-building in selected states. Apart from this the Bank is also concerned aboutreducing the high prevalence of child labor and improving the condition of women in the country. This projectreaffrms each of these objectives.

2. Main sector issues and Government strategy.,

Malnutrition is a fundamental issue - famines no longer occur and severe malnutrition among children hasdeclined over the last four decades. However, 53% of children under four are underweight (1992-93); 30% ofnewborns are of low birthweight; and more than half of Indian women are anemic. Micronutrient (iron, iodine,vitamin A) malnutrition is a major problem. Malnutrition diminishes the human potential of half of Indian childrenborn and affects their growth, their health, and their educability. Malnutrition is a major constraint to developmentand the quality of life.

Underfunding of nutrition efforts - the levels of public sector nutrition spending have increased over the past twodecades, but remain substantially below needs, especially in the poorer states, and relative to countries which havesucceeded in lowering malnutrition more than India, such as Sri Lanka and Indonesia.

Focus on quantity rather than quality - increases in nutrition spending have gone more to expanding the coverageof the nutrition programs than to improving their quality. The ICDS program in particular has expanded faster thaninstitutional capacity to manage it, resulting in a massive backlog of untrained workers and low service quality.

Poor targeting - safety net programs, such as the Public Distribution System (PDS) of food, are not well targeted onthe poor women and children, and have relatively little impact on nutrition. ICDS services are targeted to the more

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vulnerable age group of 0-6 year olds -but currently disproportionately benefit 4-6 year-old children, at the expenseof more nutritionally vulnerable, harder-to-reach 0-3 year-olds.

Failure to replicate success - the Tamil Nadu Integrated Nutrition projects have been highly effective but have notbeen replicated in other states.

Since the Third Five-Year Plan, India has consistently accorded high priority to reducing malnutrition. A NationalNutrition Policy, approved in 1993, sets forth a comprehensive, multi-sectoral strategy to reduce poverty,unemployment, and malnutrition. GOI efforts to reduce malnutrition include food subsidies, especially via thePublic Distribution System (PDS), school feeding programs, food-for-work programs, poverty alleviation efforts,and health programs. Since 1975, India has developed the world's largest program to address directly malnutrition,providing growth promotion, supplementary food, pre-school education and health care to young children andmothers -- the Integrated Child Development Services (ICDS) program managed by the Department of Women andChild Development (DWCD). ICDS now covers about two-thirds of the development blocks in the country.

3. Sector issues to be addressed by the project and strategic choices:

The project will address the following major sector issues:

* reducing malnutrition, especially of children under three, which is a major goal of ICDS;

* underfunding of nutrition - the project will increase the unit cost norms of ICDS in order to improve programquality;

* focus on quantity rather than quality - the project will support a large-scale effort to upgrade the quality ofexisting ICDS institutions and services, and only a modest increase in coverage. Quality improvement effortswill focus on strengthening the key areas of training and supportive supervision;

n poor targeting - the project will support introduction of tighter targeting on nutritionally vulnerable 0-3 year-old children; and

* failure to replicate success - inclusion of Tamil Nadu as a project state is facilitating adoption of lessonslearned from TINP.

The ICDS program was chosen as the best means to address the above issues, for the following reasons:

* it is focused on young children and pregnant and nursing women; has a holistic approach to child development;is targeted on the poor; and uses community workers;

* evaluations show ICDS is relatively effective at reaching the poor and better targeted than the alternatives, e.g.,the Public Distribution System (PDS) of food;

* although national evaluations show ICDS suffers from implementation problems, it is more efficient and hasmore impact than the alternatives;

* ICDS is GOI's chosen instrument to address nutrition problems and has a basically sound design; and

* ICDS management is more interested in quality improvement and more open to innovation and flexibility thanwhen ICDS I and II were prepared.

Within ICDS, the project will support early childhood education, which was not done in ICDS I and II, because ofits important contribution to early childhood development. However, the project design calls for a reduction in thelarge number of tasks assigned to the village nutrition workers, in order to rationalize their workload.

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C: Project Description Summary

1. Project components (see Annex 2for a detailed description and Annex 3for a detailed costbreakdown):

Component Category Cost Incl. % of Bank- % ofContingencies Total financing Bank-

(US$M) (US$M) financing

1. Service DelivrService Quality Improvement Service Delivery 46.8 11.1 33.6 71.9

Adolescent Girls' Service Delivery 4.1 1.0 3.2 78.3EmpowermentStaffing and Infrastructure Service Delivery 167.3 39.6 100.9 60.3Development

2. Program SpprtManaging and Institutional Program Support 12.3 2.9 6.5 53.1DevelopmentCapacity Building for Program Support 7.8 1.9 6.3 80.2TrainingIEC Program Support 11.2 2.6 10.7 95.5Monitoring, Evaluation and Program Support 6.5 1.5 5.8 89.1Operational Research

3. National Training Program SupportTraining Improvement 119.9 28.4 95.9 80.0Worker Supply Improvement 42.3 10.0 33.8 80.0

4. Central Component Central ComponentCPMU Establishment 4.2 1.0 3.3 78.7

Total T 422.3 100 1 300.0 71.0

2. Key policy and institutional strengthening supported by the project:

Targeting of disadvantaged populations - The project will focus on the biologically vulnerable, particularly 0-3 yearolds and pregnant women. Further, tribal communities will also receive special attention through improved projectservices and infrastructure development.

Decentralization and community participation -To increase community participation, this project includes activitiesaimed at increasing community awareness and community use of AWCs, encouraging community management ofthe program through the creation of appropriate structures, incorporating community contributions of land, laboretc., and obtaining the beneficiary communities' feedback about program effectiveness. In addition, the projectsupports greater flexibility and variety in the state-level approaches to project implementation.

Training - Improved worker training has been recognized as crucial to the success of the ICDS program. The projectsupports this by making improved training the centerpiece of the project design, through enhanced fnancing normsfor training, increasing training capacity, support for state-wide training and IEC functions, and emphasis ontechnical capacity and delivery of quality services. The national training component will provide an important inputinto improving the quality of ICDS in all states and union territories, in addition to the five states which are toreceive a broader array of inputs.

3. Benefits and target population:

* Main project benefits will be: better nutrition, health and psychosocial development for children 0-6 years of

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age; and better health and nutrition for women, especially pregnant and breastfeeding mothers and adolescentgirls.

* Poverty alleviation: the project will focus predominantly on the poor, scheduled caste, and scheduled tribalpopulations.

* Gender equity, through special efforts to include girl children in the program; recruitment of womencommunity nutrition workers and other women program staff; and development of women's empowerment andadolescent girls' schemes.

* Improved impact and cost-effectiveness of the ICDS program in which GOI and the states invest heavily.

* Development of institutional capacity to improve program quality on a continuing basis.

* Adult women from poor households, through efforts to organize them to improve their access to informationand economic opportunities.

* Direct beneficiaries of services at nutrition centers will be mainly poor children aged 0-6 years, and poorwomen of reproductive age, and adolescent girls. The total number of ICDS blocks to be covered during theproject period is 1036 (rural old: 619; rural new: 274; urban: 38; tribal/coastal: 105). ICDS currently covers4214 blocks or 73% of the 5738 development blocks in the country. The project will cover approximately111,260 anganwadi centers and will provide services to about 18.5 million direct beneficiaries, and about 2.3million indirect beneficiaries in about 10.8 million at-risk households.

4. Institutional and implementation arrangements:

Implementation period: The project will be of five years duration, starting in fiscal year 1999and ending in fiscal year 2003.

Executing agencies: Union Ministry of Human Resource Development, Department ofWomen and Child Development, and Departments of Women andChild Development (DWCD) or Social Welfare of the participatingstates and union territories (UTs).

Project coordination: Central Project Management Unit (CPMU) in DWCD, and five statePMUs.

Project oversight (policy guidance, etc.): The Union Ministry of Human Resource Development, Departmentof Women and Child Development.

Accounting, financial reporting and auditing arrangements (see Annex 6):

DWCD and states and UTs will maintain accounts of project expenditures in conformity with the accountingstandards of the Comptroller and Auditor General of India (CAG) and acceptable to the Bank. Expendituresincurred by DWCD and the states UTs will be audited by CAG or his designated representative as in ongoingprojects, and the audit reports will be submitted annually in accordance with Bank standards. DWCD willsubmit one audit report of its own, and another, consolidated audit report for all participating states and UTswithin six months of the close of the fiscal year.

Monitoring and evaluation arrangements: CPMU and the five state project management units.

D: Project Rationale

1. Project alternatives considered and reasons for rejection:

These alternative project approaches were considered and rejected:

a) assisting GOI in its efforts to better target the food distribution system (PDS). This was rejected because theICDS approach, focused on young children - the most nutritionally vulnerable - offered a more effective way ofimproving malnutrition;

b) assisting GOI to mount a major national effort to combat micronutrient malnutrition. This was rejected becauseof relatively low GOI interest, and because the multiplicity of agencies involved posed a major barrier toeffective implementation;

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c) providing ICDS services via the private sector was explored and found infeasible, beyond the currentsubstantial training role and limited service provision from NGOs. A background paper on private sectoralternatives is in the project files; and

d) a similar approach to the proposed project was considered, but with a larger or smaller number of states. Thealternative of a smaller number of states was rejected because the potential demonstration effort was judged tobe less than necessary to have an impact on ICDS on a national scale. A larger number of states appeared to beinfeasible, given the implementation capacity of GOI, and the preparation and supervision capacity of the Bank.

Finally, no realistic alternative to the ICDS program exists to meet the proposed development objectives.

2. Major relatedprojects financed by the Bank and/or other development agencies (completed, ongoingand planned):

Sector issue Project Latest Supervision (Form 590) Ratings(Bank-financed projects only)

Implementation DevelopmentProgress (IP) Objective (DO)

Bank-Fmancd

Nutrition, early childhood Tamil Nadu Integrated Nutrition Project Completed Sdevelopment and maternal (C-1003)health Second Tamil Nadu Integrated Nutrition Completed S

Project (C-2158)Integrated Child Development Services Completed SProject (C-2173)Second Integrated Child Development S SServices Project (C-2470)

Maternal and child health Child Survival and Safe Motherhood Completed SProject (C-2300)Reproductive and Child Health Project S S(N-018)Eighth Population Project (C-2394) S SPopulation IX - Family Welfare S S(C-2630)

Health Food and Drug Capacity Building Appraised 10/97

Primary education Uttar Pradesh Basic Education Project (C- S2509)District Primary Education Project (C- S S2661)Second District Primary Education S SProject (C-2876)Second Uttar Pradesh Basic Education S SProjectThird District Primary Education Project S S

IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory)

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3. Lessons learned and reflected in the project design:

Primary lessons learnedfrom OED (general)

* Building national commitment to enhanced quality and evaluation should be given prominence in policydialogue.

* Borrower ownership is crucial. It must be nurtured. Excessive Bank involvement can crowd out Borrowerownership.

* Coordinate closely with other donors to avoid conflicting advice.* Focus on strengthening institutional capacity; it is the key to quality, sustainability and development impact.* Incorporate careful monitoring and evaluation into project design.

Lessons learnedfrom completed and ongoing projects (specific)

The design of the current project has taken into account a number of key constraints that have affected the wholesocial sector portfolio in India, such as: delays in the appointment of project management staff; a large number ofvacancies in project institutions; poor quality and management of training; slow procurement; delays in submissionof audits; and insufficient attention given by implementing agencies to improving the quality of services.

With regard to lessons from related projects, Tamil Nadu has developed one of the world's most successfulprograms to reduce malnutrition -- the Tamil Nadu Integrated Nutrition Program (TINP), and IDA has supportedTINP with two operations since 1980. An impact evaluation of TINP I demonstrate a successful achievement of theproject objectives of improving the nutritional and health status of children aged 6-36 months. Moreover, theimpact evaluation demonstrated that the project induced changes in mothers' behavior that positively affected theirchildren's health and nutritional status.

The two ICDS projects supported by IDA since 1991 (ICDS I, in Andhra Pradesh and Orissa) and 1993 (ICDS II, inBihar and Madhya Pradesh), have had mixed results: the major problems have been slow pace of implementationand inadequate staffing. ICDS I, which closed in December 1997, did not fully meet its development objectives butwas fully disbursed. The Implementation Completion Report indicated progress on three out of four key indicators:declines in infant mortality and low birth weight in both states, and an increase in the proportion of children aged 6-36 months who were normal or had Grade I (mild) malnutrition. The survey showed that severe malnutrition haddeclined in A.P., but had risen in Orissa. ICDS II is now performing better, after a slow start, especially in MadhyaPradesh, and to a lesser extent in Bihar. Progress on key indicators will be available in mid-1998 from the mid-termreview.

Numerous evaluations of ICDS have been conducted, and much has been learned through ICDS I and II. The majorfindings from these evaluations and the ways these lessons are addressed by the project follow:

Better worker training is key to improving the impact of the program: anganwadi workers (AWWs) needbetter technical training, and better organizational and communication skills; supervising cadres, too, need moretechnical knowledge, plus training in how to provide effective and supportive supervision.

Efforts to strengthen training are the centerpiece of the project design, through enhanced financing norms fortraining, strengthening training capacity for induction and refresher training, support for strong state-wide trainingand IEC functions, and emphasis on technical capacity and the delivery of quality services. In addition, the projectwill support enhanced curricula and methodology plus a systematic approach to training needs assessment. Finally,the national training component should ensure project impact throughout the ICDS program.

Better coordination of health, family welfare and nutrition services is an essential prerequisite for ICDSstrengthening, especially in enhancing the link between the services provided by the AWW and the auxiliary nurse-midwife (ANM) through joint training and joint action plans.

Coordination has improved over time, and ICDS I and II and other Bank-financed projects have contributed to thisimprovement. The proposed project, and the RCH project approved by the Board in May 1997, provide support forenhanced joint training, joint visits, and a shared set of goals and methods for these key, front-line workers.

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Focus on the biologically vulnerable. This evaluation finding is the basis for the great emphasis on childrenunder three, as well as on pregnant and lactating women. Progress is evident on this front in ICDS I and II, andespecially in TINP I and II.

The project stresses prevention of malnutrition in under-threes, and places relatively less emphasis on the 4-6-year-olds, by targeting growth monitoring mainly on the younger children, and by a greater emphasis on outreachactivities.

Better monitoring and supportive supervision for the AWWs. Evaluations of ICDS and ICDS I and II haveshown the primacy of this supportive supervision function. The project addresses it through better training forsupervisors, increasing their mobility, and emphasizing community involvement in the selection and oversight ofAWWs.

Pre-school education is valued by communities, is a key factor in early childhood development, and enhancesthe enrollment for and impact of primary education. TINP I and II and ICDS I and II did not emphasize thiscomponent of ICDS. Because of the above lessons, and the expert consensus regarding the critical nature of thisactivity, the project increases the emphasis and investment in this area.

Program evaluations and experience with IDA-financed projects have also yielded state-specific lessons onICDS. A first and obvious lesson is that all aspects of the program perform better in states with greater technicaland managerial capacity, e.g., much better in Tamil Nadu than in Bihar. Program impact has generally been higherin the more-advanced, southern states, e.g., Andhra Pradesh in ICDS I, than in more backward, northern states, e.g.,U.P. and Madhya Pradesh (although Madhya Pradesh has performed better than Bihar in ICDS II). The projectdesign response to these considerations, and a number of other findings, is to:

Keep the project design simpler in the states where capacity is limited, e.g., U.P.;

- limit reform of the project monitoring system to a small number of manageable, high priority interventions;

- adapt project design to the differing needs and capacities of the states, e.g., minimizing the operationalresearch studies to be conducted in U.P.;

- select project states, and districts and blocks within states, on criteria that balance need with capacity andprevious track record with IDA-financed projects;

- encourage decentralized approaches to project implementation, e.g., of training, to the extent feasible; and

- emphasize the development of state-wide training and management capacity over major expansion inservice delivery, especially in states where the quality of services is relatively low.

A 2 I-page paper on lessons leamed from the first twenty years of ICDS is in the project file.

Lessons learnedfrom other organizations

The National Institute of Public Cooperation and Child Development (NIPCCD), India's premier child developmentresearch and training institution, conducted a comprehensive evaluation of ICDS in 1992. The evaluation noted alower incidence of malnutrition in ICDS blocks, but pointed out some major shortcomings in the program,especially inadequate staff training and supervision, shortfalls in supplementary feeding, lack of communityparticipation, and insufficient priority being given to children under age three. In addition,the report emphasized the need to strengthen program management and to better target beneficiaries, since manyblocks with a high prevalence of malnutrition, especially among scheduled castes and tribal groups, were not fullycovered. Since 1992, the Government has endeavored to implement the key recommendations of the NIPCCDevaluation, but efforts to improve quality have been overshadowed by the priority given to universalizing itscoverage.

UNICEF has served as a partner in the project design. UNICEF's valuable technical and financial resources havefacilitated preparation, and it is expected that this will continue during implementation, especially given UNICEF'sconsiderable field capability in India. This collaboration was sought by the Bank because of the successful

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partnership in the recently completed Child Survival and Safe Motherhood project, and similar recent experience inBangladesh, Argentina and elsewhere. UNICEF's main investment in ICDS has been in training. The main lessonlearned from their experience is that, in the absence of a substantial increase in the unit cost norms for training,program quality is unlikely to increase.

4. Indications of borrower commitment and ownership:

* extensive participation of a broad range of stakeholders -- Central and state government officials, NGOs,academic institutions, field managers and workers, local government representatives, and clients -- in projectpreparation and in implementation;

* the successful social assessment process, which is gradually transforming what had generally been perceived asa top-down program;

* creativity and innovativeness demonstrated by the five project states in their project designs;

* government's willingness to substantially increase spending on service quality improvement, as well to asexpand coverage; and

* commitment by GOI of 29% of project costs, a substantially higher proportion than for most IDA-financedprojects in India.

5. Value added of IDA/ITF support in this project:

The Bank has assisted GOI and the five states in re-focusing ICDS by:* proposing the inclusion of Tamil Nadu in the project, thus facilitating the transfer of experience;

* encouraging innovation, decentralization and state-specific initiatives, and a participatory approach to projectpreparation;

* assisting the government to consider the quantity/quality trade-off posed by ICDS universalization, throughfinancial, economic, social, and institutional analysis;

* assisting in clarification of other key strategic issues, and options for addressing them, especially in the areas ofservice delivery, training, institutional development and resource allocation; and

* facilitating UNICEF participation in conceptualizing and preparing the project.

The project preparation process has already contributed to strengthening ICDS in three ways: a) catalyzing theincreased emphasis on, and additional financing for, training; b) increasing community involvement in the programthrough the social assessment effort; and c) supporting greater flexibility and variety in state-level approaches.

E: Summary Project Analysis (Detailed assessments are in the project file, see Annex 8)

1. Economic (supported by Annex 4):

[ x] Cost-Benefit Analysis - Benefit-Cost ratio = 2.3; [x ] ERR= 20%; [x ] Cost Effectiveness Analysis:

The ICDS program delivers services to reach a multitude of objectives including children's improved nutritionaland health status and development of their psychosocial competencies, and mothers' improved health andchildrearing practices. The economic assessment has focused on comparing the unit cost of delivering food in theICDS to that in alternative programs, such as the Public Distribution System (PDS): the possibilities of furtherincreasing the cost-effectiveness of the program through introducing practices adopted in the TINP program inTamil Nadu; assessing the fiscal impact of universalizing the program and simulating the effects of variousstrategies in undertaking universalization; and developing an approach to describe the productivity losses resultingfrom child malnutrition and using these to calculate the partial rate of return and benefit cost ratios for the ICDSexpenditures. The results of studies which have assessed the impact of the program on future learning achievementin schools have also been collected and summarized.

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a) The Cost-Effectiveness of the Feeding Element of the ICDS and the Public Distribution System.

Total central government expenditure in 1996/97 on the ICDS was Rs. 6.8 billion and on the PDS was Rs. 75billion. An analysis of the PDS recently undertaken by the Bank demonstrated that the cost of delivering Rs. I offood to the poor is Rs. 4.35. This compares to an estimate prepared during project preparation of delivery costs ofRs. 1.22 per Rs. of food for the ICDS - even if all of the non-food costs of the program are assumed devoted to fooddelivery. Given the health and education components of ICDS, the actual cost of delivering food will besignificantly lower than this estimate. In addition, by focusing on young children and pregnant and lactatingmothers, the ICDS is better targeted toward those who require some subsidized feeding. In the PDS, as little as 25-30 percent of foodgrains distributed reach the poorest 40 percent of the population who can be assumed to be mostnutritionally at risk. The combination of lower delivery costs per unit of food and more effective targeting of thoseat risk suggests that a transfer of resources from the PDS to the ICDS would increase levels of social welfare.

b) Cost Implications of the Tamil Nadu Selective Feeding Approach.

The Tamil Nadu Integrated Nutrition Project (TINP), while benefiting all children and mothers through careful andcontinuous growth monitoring, and health care, has focused its feeding program largely on growth falteringchildren, particularly those aged 6-36 months. This compares to the general ICDS approach which provides somesupplementary feeding to all children aged 0-6 years who attend the center. An analysis undertaken during projectpreparation of the. costs of TINP compared to those resulting from implementing the GOI ICDS feeding normsdemonstrated lower food costs and higher non-food costs in the TINP program. Extending the analysis to the foodcosts for the five project states and all-India, the potential savings of selective feeding were estimated to be up toalmost 50 percent and to substantially outweigh the additional non-food costs. A cost-effectiveness study done in1988 comparing TINP with the general ICDS approach concluded that, while overall costs for TINP and thenutritional components of ICDS were not very different, the effects of the former in reducing severe malnutritionamong the 6-36 month olds were twice as great. The higher level of efficiency of TINP is not surprising: a strategybased on feeding only the very needy will be cheaper and more cost-effective than one which aims to feed all,regardless of the degree of need.

c) The Total Cost of Universalizing the ICDS Under Current Beneficiary and Feeding Norms.

Currently there are around 4200 ICDS projects (one per block) operating nation-wide while the total number toachieve universalization would be 5738. Not all of the existing centers follow the Govermment's guidelines for thenumber and composition of beneficiaries nor the provision of food. For example, overall, 30 percent of the centersare provided with food for less than the required 25 days a month. In some states, the proportion is much lower.Government expenditures on ICDS in 1995/96 were Rs. 6.7 billion for non-food (central government) and anestimated Rs. 5.5 billion for food (state governments). The total cost of universalization, adopting both thebeneficiary and feeding guidelines of GOI, has been calculated at Rs. 9.05 billion for non-food and Rs. 14 billionfor food. Allowing for the food contributions of the WFP and CARE (for which the states pay for transport), thetotal food requirement for universalization and the total fulfillment of GOI norms would require a doubling of stategovernment expenditures. Between 1992/93 and 1995/96, real expenditures on food increased by 42 percent acrossthe country. A further doubling would require a major increase in priority. Alternatives would be to slow down thepace of expansion, particularly in those states which currently find difficulty in reaching the feeding norms, and/orto more selectively concentrate food supplementation on those children most in need. The proposed project willfocus primarily on improving the quality of the program rather than on its expansion.

d) Simulations of the Total Costs of Universalization under Alternative Beneficiary and Feeding Norms.

In the context of a required doubling of food expenditures to reach the universalization target under current norms, aset of eight alternative scenarios was costed. The scenarios considered alternative daily feeding costs, variations inthe proportion of children below three years and between three and six years receiving supplementary feeding andchanges to the number of days feeding per month. Potential reductions in food cost of selective feeding on theTINP model ranged from 15 to 54 percent.

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e) Partial Rate of Return Analysis.

An internal rate of return to investments in the ICDS program was calculated using an assessment of the impact ofincreased nutritional status on labor productivity as the measure of economic benefits. The declining incidence ofsevere malnutrition among ICDS beneficiaries (children and mothers) and the numbers of beneficiaries coveredbetween 1991/92 and 1995/96 were used to estimate deaths averted and reduced levels of frailty in the survivingpopulation. Best-estimates of the effects on labor productivity of malnutrition from the nutrition literature werethen used to quantify the potential increases in output resulting from lower levels of malnutrition using variousestimates of income and life expectancy. Using conservative assumptions, the resulting net benefit stream resultedin an internal rate of return of around 20 percent. The benefit-cost ratio was 2.3 using a three percent discount rateand 1.9 with a six percent discount rate. Few studies of this type exist for other countries. A major Bank effort hasbeen made in Uganda, though based more on estimates of the effects of nutrition programs from the literature thanon direct empirical work. Programs to relieve protein-energy malnutrition in children were estimated to have abenefit cost ratio (at three percent discount rate) of 1:2 and programs to relieve iron-deficiency anemia in pregnantwomen a ratio of 1:0. Both the Uganda study and the one undertaken for the project restricted the measure ofbenefits to increased labor market productivity. The increased value of domestic production, the less tangibleeconomic benefits from a healthier, more capable and reliable labor force plus the increased quality of life resultingfrom decreased illness and increased physical and intellectual capacity are not accounted for. The results of theanalyses demonstrate that using conservative assumptions of benefits, nutritional interventions have economicpayoffs which exceed their costs.

f) Nutritional Status and School Performance.

At least two studies have assessed the impact of the ICDS program on aspects of primary schooling. The firstpresented the percentages of children (in fourteen villages) who dropped out of school by class III according towhether they had attended ICDS centers or not. For both lower and middle caste children the differences werelarge: dropout rates of 19 and 35 percent respectively for lower caste children and 5 and 25 percent for middle castechildren. The second study compared school attendance rates and the performance on the Raven's ProgressiveColor Matrices test of socially matched groups of children who had and had not attended ICDS centers. Again, bothattendance and performance were much higher among the group that had attended the centers.

2. Financial (see Annex 5):

Fiscal impact

The ICDS is a centrally-sponsored scheme jointly funded by the central and state governments. The centralgovernment funds all expenditures apart from food items which are provided by the states, in some cases withsupport from CARE and the World Food Program (WFP). Central government allocations have increasedsignificantly in recent years from Rs. 2.4 billion in 1991/92 to Rs. 6.8 billion in 1996/97 - a 92 percent increase atconstant prices or 18 percent a year. The outlay for 1997/98 is Rs. 7.3 billion. During the period of projectimplementation, the central Government's contribution will average Rs. 767 million a year, which is equal to 34percent of total project costs and to 10 percent of the 1997/98 budget outlay. Past trends in expenditure growth (18percent a year) indicate that this financial requirement, while high, will be accommodated. Expenditures on theICDS form only 0.3 percent of total central government revenue expenditure. The overall fiscal impact of theproject for the central government would be small.

The project states will be required to provide funds for the food component of the project. Nationwide, stategovernment expenditure on food for the TCDS increased from Rs. 2.8 billion in 1992/93 to Rs. 5.5 billion in1995/96 - an increase of 49 percent at constant prices. For the individual project states, the growth rate has variedbut in each case has been substantial. Between 1992 and 1996, state government expenditures increased from Rs.450 million to Rs. 1.27 billion in Maharashtra, from Rs. 84 million to Rs. 420 million in Uttar Pradesh, from Rs. 50million to Rs. 100 million in Kerala, from Rs. 42 million to Rs. 101 million in Rajasthan, and from Rs. 7 million toRs. 250 million in Tamil Nadu. Overall across the five states, expenditures increased threefold from Rs. 696 millionto Rs. 2.1 billion. The relationship between budgetary allocations and actual expenditures are generallyencouraging. Between 1993/94 and 1995/96, in Maharashtra and Tamil Nadu expenditures were above allocations

12

in two of the three years, and in Uttar Pradesh and Kerala they averaged 98 percent and 96 percent of allocations,respectively. Only in Rajasthan were expenditures significantly below the allocations, averaging 58 percent.

The main focus of the project is to increase the quality of the existing program rather than to expand it. However, itwill also assist in establishing around 35,000 new centers in four of the five project states. On the basis of ICDSbeneficiary and feeding norms, the additional annual food cost across the five states resulting from these centers willbuild up to Rs. 900 million in the final year of the project. This would require an average annual increase of 6percent over 1996/97 expenditures. This is a growth rate above that for overall state revenue growth but is wellbelow the rate achieved between 1992 and 1996. For the individual states, the required increases, and the 1996/97expenditures are: Maharashtra Rs 450 million and Rs 1.27 billion; Uttar Pradesh Rs 170 million and Rs 420 million;Rajasthan Rs 170 million and 101 million, and Kerala Rs 100 million and Rs 100 million respectively. Thepercentage required increases are largest in Rajasthan and Kerala but in both cases the absolute amounts arerelatively small.

A complication facing Kerala, Rajasthan and Uttar Pradesh, however, is that the WFP and CARE currently providesubstantial amounts of food for ICDS centers. In these cases, the state governments are responsible fortransportation and storage costs (equal to between Rs. 0.20 and Rs 0.35 for each Rs. 1 of food). In Uttar Pradesh,WFP/CARE provided food for 42 percent of all beneficiaries in 1996/97. Taking over the WFP/CARE programwould add around Rs. 200 million to the current Rs. 420 million food expenditure. In Kerala, all food supplies arecontributed by WFP. Transfer of this activity to the state would require government allocations to increase from Rs.100 million to around Rs. 400 million. In Rajasthan, WFP/CARE provide food for 89 percent of beneficiaries,saving the state around Rs. 300-350 million compared to a current (1995/96) expenditure of around Rs. 100 million.The viability of the feeding program in each of these three states is closely linked to these donor inputs. Thoughthere are no plans to reduce support to Uttar Pradesh or Rajasthan, it is being substantially reduced in Kerala andthere are no firm plans by either agency to increase their support for the proposed new centers. All of the feedingcosts for these may have to be provided by the state governments.

Overall expenditures on food will need to be closely monitored along with the expansion of ICDS centers in theproject states. The recent indication that GOI intends to slow down the earlier planned pace of universalization ofthe program suggests that the constraints on states is appreciated. It is intended that the ITF Development CreditAgreement will include an undertaking by the GOI to monitor food expenditures in the project states and for projectstates to ensure that those expenditures meet GOI norms.

3. Technical:

The proposed project is technically sound. The integrated delivery of nutrition, health and early stimulation servicesto young children is increasingly gaining recognition as one of the most cost-effective approaches to developing thehuman resources of the poor. The project will improve the efficiency and effectiveness of the existing program byaddressing weaknesses and introducing some innovations. The project will: (i) improve targeting by focusing onthe under-threes and families most at-risk; (ii) improve task and time management of the front-line workers; (iii)strengthen growth monitoring and promotion; (iv) reform supplementary feeding; (v) improve collaboration withthe health department; (vi) rationalize the purchase distribution and use of drugs; (vii) improve referrals ofmalnourished children; and (viii) enhance pre-school stimulation. Important innovations include: (i) total qualitymanagement; (ii) enhanced community participation; (iii) nutrition, health and education inputs for adolescent girls;(iv) independent performance audits; and (v) linkages with primary education.

Focus on the under-threes and pregnant and lactating women will be central to the success of the technical packageand attention must be paid to reaching these primary target groups during implementation.

A full technical assessment is available in the project files.

4. Institutional:

a. Executing agencies: The project will be executed by the state Departments of Women and Child Development(DWCD) or Social Welfare (the nomenclature varies by state), under the overall coordination of the GOI, DWCD.

13

Institutional capacity is strong in Tamil Nadu, which has benefited from 15 years of support under TINP, butrelatively weak in other states, especially U.P. In these states, management and technical staffng is thin, and theirlimited management and training capacity has been overstretched by the recent rapid expansion of ICDS. Theproject will deal with these institutional constraints by:

* increasing management capacity in each state through creation of a project management unit integrated with theexisting ICDS program office, and including additional technical staff for nutrition, training, IEC, monitoringand evaluation; and financing of additional technical support posts at the district level;

* implementing institutional development plans for existing ICDS worker pre-service training institutions;creation of additional pre-service training institutions to reduce the training backlog; and establishment of anew in-service training system at district and block level; and

* reducing the managerial complexity of ICDS, by allowing the states to adopt simplified schemes for women'sempowerment and adolescent girls, which fit their needs and capacities, and by focusing field workers on alimited number of priority tasks.

b. Project management: Project implementation will be coordinated by project management units in Delhi and thestates. The central unit will be small and is expected to be dissolved at the end of the project. Each state unit willbe about the same size as the central unit, and will be integrated with the existing ICDS program management unit.Appropriate staffng for the ICDS program in the project states to ensure the sustainability of the qualityimprovement process, after the project ends, will be reviewed during the project implementation period.

A 12-page institutional assessment has been prepared and is available in the project files.

5. Social:

Project Preparation. Social Assessments (SAs) were carried out as part of the project preparation process withUJNICEF collaboration and financing. They involved a large number of current and potential clients of the ICDSprogram, covering the wide cross-section of people which the project is expected to reach, including women,scheduled castes, tribal people, urban slum dwellers, and other marginalized groups such as fisherfolk (e.g., inKerala) and nomads (e.g., in Rajasthan). They also involved field workers and managers and District and Statelevel officers. The assessments themselves were carried out by NGOs, academic institutions and research firms. Ineach state, the SA consisted of a literature review, field data collection on the reach and quality of ICDS servicesbeing provided, in-depth interviews and focus group discussions with clients, village opinion makers and leaders,and participatory rural appraisals (PRA) by village residents, particularly women. At each stage of the assessmentsinter-state workshops were held to cross-fertilize the efforts of the five participating states. This iterative process offield exercises and sharing workshops which took place over a period of 17 months from January 1995 through May1996 ensured widespread participation in the SA process and greatly enhanced the quality of the reports.

The SAs focused on identifying community needs, practices and preferences, and problems currently beingexperienced with the ICDS program, in order to determine what the project must do to effectively reach the sociallyand economically disadvantaged to meet their nutrition, health, survival and pre-school education goals. Thereports documented a high prevalence of malnutrition in the proposed project states, particularly in tribal areas andamong especially disadvantaged groups such as fisherfolk. Very young children (0-3 year olds) were mostsusceptible to severe malnourishment, especially during the period from 6 to 23 months of age. Girls weregenerally more nutritionally disadvantaged than boys. Tribal communities faced extreme seasonal deprivations offood. Caste factors often constrained the access of low-caste women and children to anganwadis. Adult women inpoor households were at risk of malnutrition, particularly during pregnancy when they faced traditional restrictionsin addition to low household food availability; and they had very limited access to health care. Health conditions invillages and urban slums were generally poor, encompassing a lack of access to safe drinking water, unhygienicsurroundings, and inadequate or unresponsive health facilities. Community awareness of desirable nutrition andhealth practices for young children and pregnant women, and of ICDS services, was low. In Kerala and TamilNadu, where awareness of nutrition and access to health care were generally better than in the other three states, thesevere economic limitations of target households perpetuated malnutrition.

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Overall, ICDS was found to have had little impact on household behaviors related to nutrition or health, such asintra-familial food distribution, utilization of health care (except immunization), and child care practices. Theprogram was often regarded solely as a supplementary feeding or day care program, rather than as an integratedprogram, largely on account of its weak health services or because the key anganwadi worker was not seen ascapable of delivering even basic health care. Pre-school education services were also regarded as weak due toinadequacies of space, equipment or workers' training. Service providers were often unaware of good health,nutrition or child care practices, and voiced frustrations with or criticism of the ICDS program's management orcommunity interface.

The findings of the social assessments are reflected in the strategies that evolved during project preparation,particularly for the improvement of service delivery, training, information, education and communications (IEC),and community organization and involvement. The project will focus particularly on reducing the incidence ofchild malnutrition by attention to 0-3 year-olds and pregnant women, and on strengthening health care. It willimprove worker training and coordination for these purposes, as well as to foster greater community involvement inthe program. It encompasses an IEC strategy to improve awareness of ICDS, provide community feedback, andaddress the knowledge needs of poor communities. In addition, the project includes the organization of women'sgroups and empowerment activities to address the social and economic disadvantages faced by women in the targethouseholds more broadly. Variations in the findings substantiated the need for a decentralized approach to projectformulation and implementation.

Project Implementation. The SAs also began a process of stakeholder participation which will continue throughoutimplementation to final evaluation, to ensure the delivery of community-responsive and better quality services.During the project, social assessments will be carried out regularly to obtain client and worker feedback onimplementation as it proceeds. Each state will select an agency which will be contracted on an annual basis toconduct field assessments focusing on the key activities that are proposed to take place in the period ahead (e.g.,next six months or year), and those that have been implemented to date. In this way, the project will obtainbeneficiary inputs for planning purposes as well as feedback to strengthen ongoing activities, modify strategies, etc.For example, the SAs would focus on the topic of pre-school education when the information could be utilized toimprove workers' training in this subject and/or after workers had begun to implement the improved training. TheSA agency will work in relevant project areas, varying these over time so as to maximize coverage of the state's"new" and existing project areas. The agencies will utilize the range of methods described above, ensuring thatclient mothers, community members, panchayat members, local groups, etc., participate fully in the process.

The Project Implementation Plans for each state include the state's plans for community participation in the project.They identify activities aimed at: (a) increasing community awareness; (b) enhancing community participation inand utilization of anganwadi services; (c) encouraging community management and creating appropriate structuresfor this purpose; (d) attracting community contributions of land, labor, buildings, cash or materials; and (e)obtaining community feedback (including the continuous social assessment process, above).

Tribal Strategy. The social assessments identified tribal populations in the project areas and the issues concerningtheir access to, involvement in, and benefit from the ICDS program. Subsequently the project proposals and PIPshave identified a series of actions which address the needs of and constraints faced by tribal people. For example, inthree of the four project states which have tribal populations, the access of tribal people living in hamlets wasidentified as a critical issue - and the PIPs have provided for improving access to ICDS services through increasednumbers of centers, improved infrastructure, additional workers, and so on. Issues relating to the lower literacy andawareness, and poorer health conditions of tribals have also been addressed through enhancement in training,provisions for culturally relevant educational materials, and attention to local health needs. The revised PIPsinclude a coherent tribal strategy for each state, including the tribal focus of the continued social assessmentprocess. The tribal strategies are the equivalent of the indigenous people's development plans required by OD 4.20.

A 20-page social assessment summary is available in the project files.

15

6. Environmental assessment: Environmental Category []A []B [x ] C

The proposed project investments do not raise environmental issues. The project is therefore classified underCategory C, No resettlement is anticipated as a result of the project, in which village nutrition centers and blockoffices will be constructed. Since no fixed sites have been finalized for any of these buildings, in the event of anyproblems with squatters or encroachers, alternative sites will be selected.

7. Participatory approach [key stakeholders, how involved, and what they have influenced; if participatoryapproach not used, describe why not applicable]:

Primary beneficiaries and other affected groups:

Identification/Prearation linle ienatoParticipatory Approach

Beneficiaries/community groups CON COL, MGTIntermediary NGOs COL COL, IMPAcademic institutions COL COLLocal government CON COL, MGTField workers and managers CON IMP, MGTDistrict administrators (incl. sectoral officers) CON IMP, MGTCentral and State government officials COL IMP, MGT

Key: CON=Consultation, COL=collaboration, IMP=implementation, MGT=management, SPN=supervision

F: Sustainability and Risks

1. Sustainability:

(i) Financial

Financial sustainability is an issue for both central and state governments (see para. 14). The responsibility forsustaining most of the specific project activities at the end of the project will be borne by the central government.The almost doubling of real expenditures on the ICDS between 1991/92 and 1995/96 and the policy decision touniversalize the scheme over the 9th Plan period, indicate both the intention and ability of the central government tofulfill its responsibility. Incremental recurrent expenditures for the GOI arising from the project in the yearfollowing its completion are projected to be Rs. 900 million. This is equal to 12.3 percent of its total 1996/97expenditure (Rs. 7.3 billion) on the scheme and would require an annual real growth rate ofjust 2.0 percent.Expenditures on ICDS form just 0.3 percent of the central government's total revenue expenditures.

The state governments' incremental obligation will be to ensure that food is provided for any new ICDS centersestablished and staffed within the project period over and above that required for existing centers. As such, theirfinancial obligations will progressively increase over the life of the project, rather than at the end of it, at a ratedetermnined by the establishment of new centers. During 1995/96, the five project state governments spent a total ofRs. 2.1 billion on food costs. At completion of the project, combined food costs will rise by Rs. 900 million(assuming that WFP/CARE neither decrease nor increase their current commitments in the three project stateswhere they are currently involved). To achieve this will require an annual average growth of expenditures ofaround six percent. The real growth rate across all states between 1992/3 and 1995/6 was 11 percent. Whileadequate financial provisions for food is one of the risks of the project, the requirement is feasible while WFP andCARE continue their programs in Uttar Pradesh, Rajasthan and, now, to a lesser extent in Kerala. Closure of theseprograms could threaten the state-wide ICDS activities and would require substantial increases in state governmentsupport. In the shorter term, the procedure whereby additional centers are only sanctioned alongside acorresponding increase in the budgetary allocation for food will tend to minimize the possibility of centers openingwithout adequate support.

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In sum, the project activities for which the central government is responsible are fnancially sustainable. Stategovernments are judged to be capable of providing sufficient food to the new centers if recent rates of growth offood expenditures are maintained and if, in the case of Rajasthan and Uttar Pradesh, there is a continuation ofWFP/CARE support. In the case of Kerala, where the support of WFP has been substantially reduced, the stategovernment will need to increase its recent allocations. The undertaking from the project states to provide anannual report on allocations for food will facilitate sustainability.

(ii) Instutlonal

If successfully implemented, the proposed project will create institutional structures and processes which willsubstantially increase ICDS quality during the project life, and which will endure after the project as permanentquality improvement mechanisms. The benefits will be in terms of the following structures, supported withoperational budgets:

* an improved managerial and technical staff complement at state and district levels;

* development of monitoring and evaluation cells;

* strengthening of the Middle Level and Anganwadi Worker Training Center system; and

* development of a refresher training structure at district and/or block level.

The following institutional processes will also be established or improved:

* a quality improvement planning process at district, block and village level (established);

* manpower planning and training needs assessment (established);

- convergence of ICDS, health and family welfare, and education services (improved);

- use of regular formative research to adjust IEC strategies during program implementation (established);

- continuous social assessment process (established); and

- dissemination of key performance information to management, workers and communities (improved).

The project will include measures to assure that the above benefits are realized in the critical risks section.

2. Critical Risks:

R0igk 0 Risk Rating Risk Minimization Measure

From Outputs to Objective:

Failure to improve quality of services High Putting in place a quality improvementprogram emphasizing the under-threes;and

GOI approval of enhanced financialnorms for ICDS training;

Slow implementation Substantial, Quality at entry and focusedespecially in supervision by GOI and IDA; andU.P. and Reallocate funds from low-performningRajasthan to high-performing states, if necessary,

during implementation.

17

Risk Risk Rating Risk Minimization Measure

From Components to Outputs:

Failure to increase training quality and output Moderate Technical assistance from leadinstitutions and intense supervision;

Experimenting with differentapproaches to in-service training, sothat the most feasible and cost-effectivecan be replicated.

Central Project Management Unit (CPMU) failure to Moderate Involvement of technically competentassess progress and impact of project national institutions with proven track

records.

Overall Risk Rating Moderate to Convergence of services, especiallysubstantial health, family welfare and primary

education;

Active involvement of communities;close monitoring of activities.

Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N (Negligible or Low Risk)

G: Main Loan Conditions

1. Conditions of Negotiations:

Three conditions of Negotiations have been met by GOI:

(a) appointment of key project management staff in GOI and the five project states;(b) all necessary GOI and state clearances for the project; and(c) GOI approval of the enhanced financial norms for ICDS training.

2. Other Covenants:

At Negotiations, the Government of India provided assurances that it would:

(a) implement the project in Kerala, Maharashtra, Rajasthan, Tamil Nadu and Uttar Pradesh in accordancewith the PIPs agreed with IDA as Administrator of the Interim Trust Fund (ITF), and in accordance withannual implementation plans for each state to be agreed with IDA;

(b) implement the project in the five project states according to the 18-month Plan for Introduction of Services(PIS) for ICDS;

(c) carry out baseline nutrition survey work in all five states, including data analysis and report submission, tobe completed by March 31, 1999, and an endline nutrition survey, including data analysis and submission,to be completed by the end of year five of the project;

(d) establish and operationalize in the five states by the end of year two of the project, a new in-servicetraining system at district and block level;

(e) provide all field-level functionaries in each of the five states at least one round ofjob training by the end ofyear four of the project;

(f) submit a PIP satisfactory to the Administrator for the national training component, by December 31, 1998;(g) require each state or UT participating in the national training component, to execute and furnish to the

Borrower a Letter of Undertaking;

18

(h) implement tribal strategies in accordance with the PIP for each of the five project states;(i) carry out social assessments in the five states on an annual basis throughout the project period to obtain

beneficiary and worker feedback on implementation;(j) conduct annual reviews with the Administrator of project progress, with participation of all five project

states, and carry out a mid-term review during year three of the project;(k) Monitor, on an annual basis, the expenditure for the food costs of the ICDS program in each project state,

to ensure that the annual expenditure for food costs by each project state meets the applicable GOI norms;(1) retain key Central PMU and state PMU staff during the project implementation period and, during the mid-

term review, review with the Administrator and each project state, the appropriate staffing for the ICDSprogram following the completion of the project to ensure the sustainability of the project.

(m) provide to the Administrator by May 31 of each year, an annual work plan consistent with the PIPs; and(n) ensure that no civil works which may result in involuntary resettlement of people will be undertaken under

the project.

H. Readiness for Implementation

At Appraisal, it was agreed that up to $10 million equivalent could be used for retroactively financing eligibleexpenditures under the project, within one year prior to the expected date of project signing, in order to facilitaterapid start-up of the project

I. Compliance with IDA Policies

[x] This project complies with all applicable IDA policies.

Task Team Leader: Anthony Measham

Sector Manager: Richard Skolnik

Country DirectorEd in Lim

Annex IPage I of 3

Annex 1INDIA: Woman and Child Development Project

Project Design Summary

Narrative Summary Key Performance Monitoring and Critical AssumptionsIndicators Evaluation

Sector-related CAS Goal: (Goal to Bank Mission)

Improve access to, and Reduce malnutrition in Periodic nutrition surveys.effectiveness of, key nutrition children aged 0-36 months.programs.

Project DevelopmentObjectives:

1. Improve the nutrition, (a) % severely malnourished Establish baseline. Follow-up Risk: failure to improvehealth and psycho-social status 0-36 month-old children; with implementation reports, program effectiveness andof children, 0-6 years of age, (b) % moderately malnourish- and mid-term and fnal sentinel impact.with particular emphasis on ed 0-36 month old children; (c) surveys.preventing malnutrition in 0-3 % low birth weight incidence;year olds. (d) IMR rate; (e) % of 3-6

year-old children receivingpre-school education; and(f) % enrollment of children inprimary schools.

2. Improve the nutrition and (a) % pregnant women Continuous social assessment. (a) timely completion ofhealth of women, particularly registered before 16 weeks; (b) training targets; (b) timelypregnant and lactating mothers. / eligible pregnant and procurement and distribution

lactating women regularly of iron supplements for womenreceiving supplementary food; and adolescent girls.(c) % consumption of ironsupplements for 100 days bypregnant women; (d) % ofpregnant women havingregular growth monitoring; (e)% of pregnant womenimmunized for tetanus toxoid;(f) % consumption of iron andfolic acid supplements for 100days by adolescent girls; and(g) % of beneficiaries (women,children) referred for healthservices.

3. Improve child care (a) % eligible children weighed MIS and monitoring system. State governments of the fivepractices, i.e., meet the regularly; (b) % severely and states to provide enhancednutritional, health and psycho- moderately malnourished allocations for thesocial needs of children. children receiving regular supplementary food.

supplementary food; (c) % ofmothers feeding colostrum tonew-boms; (d) % exclusive

Ibreastfeeding among 0-5

Annex IPage 2 of 3

Narrative Summary Key Performance Monitoring and Critical AssumptionsIndicators Evaluation

month-old children; (e) % 6-9month-olds receivingcomplementary semi-solidfood; (f) % use of ORS duringlast diarrheal episode; (g) %12-23 month-old children fullyimmunized; and (h) % of 3-36month-old children regularlyreceiving Vitamin A.

4. Empower adolescent girls, (a) Proportion of adolescent Continuous social assessment.through increased awareness, girls covered by awarenessto take better care of their own program; (b) % of girlshealth and nutrition needs. marrying after 1 8th birthday.

5. Strengthen community Proportion of communities Continuous social assessment. (a) active participation of thecapacity to participate in and receiving technical assistance panchayats in the program.monitor the progress of the to promote participation.ICDS program.

6. Strengthen the capacity at Number of institutes developed MIS and National Training Risk: Failure to increasecentral, state and block level to Institutes established and Monitoring System. training quality and output.provide high quality support proportion of functionariesand training to functionaries of provided training.the ICDS program.

Project Outputs:1. Increased coverage of % increase in 0-6, especially 0- Implementation progress Active center and state support0-6 age group. 3, age group beneficiaries. reports and regular crucial for successful

supervision, including mid- implementation: in provisionterm reviews and final survey. of food supplements, in

maintenance/creation ofrequisite personnel andinstitutional capacity, and inaddressing qualityimprovement.

2. Increased coverage of (a) % increase in femalewomen, particularly pregnant population with access to aand lactating mothers. health facility (b) % increase in

pregnant and lactating mothersbenefiting from service.

3. Increased coverage of % increase in blocks covered Risk: Failure of services toproject. by project. reach Hamlets.

Annex 1Page 3 of 3

Narrative Summary Key Performance Monitoring and Critical AssumptionsIndicators Evaluation

Project Components/Sub- Inputs: (budget for eachcomponents: (see Annex 2 for component)project description)

1. Service DeliveService Quality 46.8ImprovementAdolescent girls' 4.1EmpowermentStaffmg and Infrastructure 167.3Development

2. Progam SuportManagement and 12.3Institutional DevelopmentCapacity Building for 7.8TrainingIEC 11.2Monitoring, Evaluation 6.5and Operational Research

3. National TrainingTraining Improvement 119.9Worker Supply 42.3Improvement

4. Central ComponentCPMU Establishment 4.2 Central Project Management

Unit (CPMU) failure to assessprogress and impact of project.

Annex 2Page ] of 2

Annex 2INDIA: Woman and Child Development Project

Project Description

Project Component 1 - Service Delivery Strengthening US$218.2 million

a) Service quality improvement (US$46.8 million). This sub-component will strengthen service delivery at village-level byfinancing supplies, equipment, medicines and medical supplies, and incremental operating costs for the following:

(i) Nutrition:- supplementary feeding to prevent the onset of malnutrition and growth faltering. Activities would include: supplementary feeding to0-6 year olds, with particular emphasis on 0-3 age group; supplementary feeding to pregnant and lactating women; double dose ofsupplementary feeding to severely malnourished children and growth falterers; semi-annual vitamin A supplement to children 9months-6 years; and IFA supplement for at least 1 00 days to pregnant women and adolescent girls.- regular monitoring to detect malnutrition and promote growth. Activities would include: weighing of child at birth; regular growthmonitoring of 0-6 year olds; and regular weight monitoring of pregnant women.

(ii) Health:- immunization against six childhood diseases to reduce infant and child mortality. Activities would include: fixed-day strategy forANM for immunization; tetanus immunization for expectant mothers; and immunization of newborns.- provision of appropriate and timely health care to beneficiaries. Activities would include: early registration, and regular check-upsof pregnant women; use of disposable delivery kits for safe delivery; post-natal check-ups of mother and child; provision of basichealth services/first aid at AWCs, e.g., de-worming and ORS; fixed day strategy with ANMs; referral of ill and at-risk pregnantwomen, and children 0-6 years old; referral of severely malnourished children for rehabilitation; referral to private practitioners wherenecessary; and provision of medicine and travel funds for referrals.

(iii) Early childhood care and education:- to promote overall psychosocial development of the child. Activities would include: pre-school education for 3-6 year olds; earlychildhood stimulation for 0-3 age group; and awareness of the importance of early childhood stimulation for all care-providers.

b) Adolescent girls' empowerment (US$4. I million) through adolescent girls' activities, such as the provision of iron supplements andde-worming treatment.

c) Staffing and infrastructure development (US$167.3 million) Staffing would include incremental operating costs for ICDS fieldstaff. Infrastructure development would involve construction of AWCs and block offices, installation of handpumps, procurement ofequipment and vehicles.

Project Component 2 - Program Support US$37.9 million

a) Management and institutional development (US$12.3 million). The sub-component will finance supply of equipment at the levelsof district, state and central project management unit (CPMU), plus vehicles, salaries, rent and other operating costs at the district,state and CPMU level. Study tours, workshops, training and quality improvement and preparation of new projects are also supportedthrough this component.

b) Capacity Building for Training (US$7.8 million). This sub-component will support strengthening district training teams byprovision of salaries and other operating costs and training of adolescent girls.

c) Information, education and communication (IEC) (US$11.2 million). This sub-component will support material and mediaservices, communication training and campaigns and community mobilization activities, such as social mobilizers in Rajasthan. Thiswould be based on formative research, keeping in mind that development of community interest, support, and participation is crucialfor effective communications.

Annex 2Page 2 of 2

Project Component 3 - Central Project Management US$4.2 million

A Central Project Management Unit (CPMU) would be established at the center and funding would provided for overall projectmanagement, monitoring and evaluation.

Project Component 4 - National Training Com.ponent US$162.1million

The Government of India made the decision on May 8, 1998 to increase the financial norms for ICDS training throughout the country,including the project states. IDA agreed to finance training in all the other states and union territories, at the enhanced level, throughthis component.

The component inputs are aimed at improving the quality of ICDS services in the country by providing improved training offunctionaries of both new and old blocks; strengthening/establishing training centers and establishing training teams at the state anddistrict levels, developing training material, etc. The Borrower will be responsible for developing a PIP by December 31, 1998 forthis component, for ensuring that each of the states and union territories develop a training action plan and (i) implementing allproposed training under the project, including clearing the current backlog; (ii) state-specific strategies, particularly for decentralizedtraining; (iii) qualitative improvements; and (iv) planning and management of training, including long term capacity building needs.

Annex 3Page I of 1

Annex 3INDIA: Woman and Child Development Project

Estimated Project Costs

Project Component Local Foreign Total----------------------- US $ million--------------------

I. Service DeliveryService Quality Improvement 44.2 44.2Adolescent Girls' Empowerment 3.9 - 3.9Staffing & Infrastructure Development 156.9 - 156.9

II. Program SupportManagement & Institutional Development 11.5 - 11.5Capacity Building for Training 7.8 - 7.8IEC 10.5 - 10.5Monitoring, Evaluation & Operational Research 6.1 - 6.1

- _. National Training ComponentTraining Improvement 119.5 - 119.5Worker Supply Improvement 39.8 - 39.8

IV. Central Component 3.9 - 3.9

Total Baseline Cost 404.2 - 404.2

Physical Contingencies 16.1 - 16.1Price Contingencies 1.9 - 1.9

Total Project Cost 422.3 - 422.3

Annex 4Page 1 of 3

Annex 4INDIA: Woman and Child Development Project

Cost-Effectiveness Analysis Summary

Summary of Benefits and Costs:

Using conservative sets of assumptions, the study yielded an internal rate of return between 15 and 23 percent and benefit-cost ratios of between 1.7 and 2.3 with a 3 percent discount rate and 1.5 and 2.0 with a discount rate of 6 percent.

Main Assumptions:

Assessing the benefits of the program provides more problems and requires a number of assumptions. Some of these weregiven alternative values and the results re-calculated. The following steps were covered:

(a) Calculations were made of child deaths from malnutrition averted and numbers of other child beneficiaries whose frailtywas reduced. Child deaths averted were calculated using government estimates of severe malnutrition rates and theirreduction through time, total annual beneficiaries and an assumption of the proportion of the severely malnourished who die.Other child beneficiaries were calculated from program enrollment data.(b) Estimates of pregnant and lactating women finding relief from chronic energy deficiency were calculated from theprogram enrollments and government assumptions of CED prevalence. Estimates were made of the reduction in maternaldeaths resulting from malnutrition.(c) Using age specific life expectancy tables, estimates of per capita output and judgments based on the internationalliterature of the reduced levels of labor productivity resulting from malnutrition (energy deficiency), the increase in labormarket output resulting from ICDS interventions was calculated.(d) Gains were calculated using different sets of assumptions for years of working life and valuation of annual economicoutput. Streams of benefits were discounted at rates of 3, 6 and 10 percent. The results were expressed in terms of netpresent values, benefit-cost ratios and internal rates of return. Using conservative sets of assumptions, the study yielded aninternal rate of return between 15 and 23 percent and benefit-cost ratios of between 1.7 and 2.3 with a 3 percent discountrate and 1.5 and 2.0 with a discount rate of 6 percent.

It is useful to compare the methodology and assumptions behind this analysis with those used in other analyses. A muchmore ambitious and detailed Bank study of the economic returns to a planned nutrition program has recently been completedfor Uganda focusing on protein energy deficiency, iodine deficiency and anemia. A similar approach to measuring the gainsthrough the labor market was used but a greater amount of international evidence was surveyed to assess the medical andnutritional status effects of interventions. Ultimately, however, assumptions such as a reduction in the prevalence ofmoderate and mild stunting by a half and of maternal anemia by one third as a result of program interventions were utilized.Again, the general literature was used to make informed assumptions of the percentage reductions in productivity as a resultof a nutritional deficiency. The study yielded benefit-cost ratios of 2.8, 1.2 and 1.0 for the three interventions, using a 3percent discount rate. The Uganda study suggests that the approach taken in our relatively rapid analysis of the ICDSprogram is reasonable and that the results have credibility.

The cost benefit analyses do not represent all the benefits of the ICDS program. By restricting the analysis only to increasedlabor market productivity, the results anticipated from improved nutritional status fail to account for the increased value ofdomestic production and reduced costs of health care. In addition there may be less tangible but equally important economicbenefits arising from a healthier, more capable and reliable labor force such as lower absenteeism and increased innovationin individual tasks. Nor, of course, are the reductions in human costs of mortality, illness and reduced physical andintellectual capacity included. However, by using a relatively simple methodology and conservative assumptions, theanalysis demonstrates that investments in programs such as ICDS have a clear economic payoff.

Annex 4Page 2 of 3

Cost-effectiveness indicators'

The ICDS program delivers services for a multitude of objectives including children's improved nutritional and health statusand development of their psycho-social competencies, and mothers' improved health and childrearing practices. Theeconomic assessment has focused on:

(a) comparing the unit cost of delivering food in the ICDS compared to that in alternative programs such as the PublicDistribution System,(b) the possibilities of further increasing the cost effectiveness of the program through introducing practices adopted in theTINP program in Tamil Nadu,(c) assessing the fiscal impact of Universalizing the program and simulating the effects of various strategies in undertakingUniversalization, and(d) developing an approach to describe the productivity losses resulting from child malnutrition and using these to calculatethe rate of return and benefit-cost estimates for ICDS expenditures.

The results of studies which have assessed the impact of the ICDS program on future learning achievement and behavior inschools have also been collected.

The Cost-Effectiveness of the Feeding Element of the ICDS and the Public Distribution System

Central government expenditure in 1996/97 on the ICDS was Rs. 6.8 billion and on the PDS was Rs. 75 billion. Bothschemes have objectives in addition to providing supplementary feeding - for instance, health and education objectives forthe former and agricultural price stabilization for the latter - but the transfer of food to those considered most in need is aprimary objective of each. Recent Bank analysis has concluded that the PDS is not very effective and is certainly not cost-effective (Radhakrishna and Subbarao 1996, Targeting the Public Distribution System). Many of the poorest states receive amuch lower share of the central government's PDS subsidy than their share of poverty would imply: e.g. Bihar and UttarPradesh account for 35 percent of the country's poor and just 12.6 percent of subsidies. On the other hand, Kerala andAndhra Pradesh account for 7.2 percent of the poor and 22.3 percent of the subsidy. Targeting within states is similarlyweak and NSS data for 1986/87 show that subsidies were mildly regressive. The administrative costs of the PDS are veryhigh. Considering only central government expenditures, in 1986/87 the cost of delivering one rupee value of food to thepoor was Rs. 4.3 in Andhra Pradesh, including state government expenditures the cost was Rs. 6.4. The study estimated thatthe scheme incurred a cost of Rs. 1.4 to increase nutrient intake by 100kcal.

An analysis of the ICDS scheme during project preparations demonstrated its greater cost effectiveness. First, the cost ofdelivering Rs. 1 of food in 1995/96 was Rs. 1.2, considerably below the cost in 1986/87 for the PDS. This estimateincorporates all of the non-food costs of the ICDS, some of which were for health and education inputs. In addition, the PDSstudy reported that the costs of augmenting nutrient intake by 100kcal through the ICDS would cost Rs. 0.3 or just 21 percentof the cost through the PDS. Though the ICDS does not target among young children and pregnant and lactating mothers,these are known to be the groups nutritionally most at risk. Hence the scheme is better targeted than the PDS towards thosewho require supplementary food supplies.

Cost Effectiveness of Alternative Approaches to Reducing Child Malnutrition

Programs to reduce child malnutrition are, in general, very cost effective compared to other types of interventions aimed atreducing deaths. The cost per death averted is generally lower than for malaria control, polio immunization, communitywater supply and sanitation and almost all forms of hospital care. It is higher than for measles, tetanus and typhoidimmunization programs (Ho, 1983).

(a) Feeding programs and integrated programs. Some child development programs have a single focus such as directnutrition intervention and others attempt to provide an array of, hopefully, mutually reinforcing interventions. The literaturewas searched for studies comparing these approaches in India. One such study emerged carried out by the Narangwal HealthResearch Center. Similar groups of villages received different types of intervention to determine the effectiveness of a

These indicators should compare the project with a suitable comparator, e.g., unit project costs of alternative project designs orinternational standards.

Annex 4Page 3 of 3

program of nutritional education and supplementary feeding, a program of infection control and a program of the combinedinterventions in reducing the prevalence of malnutrition and infant mortality. For children over two years, the individualprograms were equally effective while for children under two years the infection control program was more effective.Interventions combining both activities were most effective for both groups of children and resulted in a 40 percent reductionin child morality.

(b) Alternative approaches to integrated programs. A study comparing the cost-effectiveness of the standard ICDSprogram and the Tamil Nadu Integrated Nutrition Program (TINP) was undertaken by Dapice for the Bank in the late 1980s.On the cost side, the study has been further developed during project preparation. The difference between the two programsconcentrated on in the study was the emphasis in ICDS of providing food to all who attend the centers compared to thegreater concentration in TINP on growth monitoring, particularly of children under three years, and providing supplementaryfood for only growth falterers. In the cost effectiveness analysis, the cost of activities such as pre-schooling not undertakenin TINP were subtracted. The cost per beneficiary of the ICDS program was estimated to be 60 percent higher than for theTINP beneficiary. In terms of the effectiveness of the two programs in reducing severe malnutrition among the 6-36 montholds, the TINP program was twice as effective. The results are not surprising. A strategy based on feeding the very needy isboth cheaper and more effective when using the food to reinforce childrearing education and change behavior than a strategywhich attempts to feed all and places less stress on monitoring and behavioral change. The 1990 Completion Report of theTINP project loan estimated that the continued effect of the program had been to reduce malnutrition by 50 percent and at acost per child 'saved' of only US$33. An update of the study for the purposes of project preparation confirmed the highercost per center of ICDS though non-food costs are higher. On average, the incidence of weighing at ICDS centers is aroundtwo thirds than at a TINP center, while feeding is universal compared to 27 percent at TINP centers. The reduction of severemalnutrition appears to continue to be higher in areas served by TINP centers than in those served by the ICDS. The lessonslearned from the TINP experience are invaluable for further development of the ICDS.

Annex 5Page I of I

Annex 5INDIA: Woman and Child Development Project

Financial Summary

Year Ending 2003(US$ million, Base Year 1999)

Implementation Period Operational Period1999 2000 2001 2002 2003 1999 2000 2001 2002 2003

Prject CostsInvestment Costs 43.5 97.6 78.9 56.5 30.9

Recurrent Costs 11.2 22.5 26.3 26.7 28.3

Total 54.7 120.1 105.2 83.2 59.2

Financing Sources (% of totalproject costs)

IDA 38 57 80 78 76

GovernmentCentral 62 43 20 22 24

Total 100 100 100 100 100 _

Annex 6Page 1 of8

Annex 6

INDIA: Woman and Child Development ProjectProcurement and Disbursement Arrangements

Procurement

Procurement methods (Table A)

IDA-financed works, goods and services will be procured using Bank guidelines of January 1995, revised January andAugust, 1996, and September 1997. The procurement methods applicable to the various expenditure categories are summarized inTable A below. For procurement under the project, the Bank's standard bid documents shall be used.

* Contracts for civil works estimated to cost each US$50,000 and over will be carried out following National CompetitiveBidding (NCB) procedures.

* Contracts for civil works estimated to cost below US$50,000 will be procured following procedures acceptable to theAssociation:

(a) under quotations solicited from at least three qualified contractors;(b) by direct contracting; or(c) through Force Account.

* Contracts for the purchase of goods valued at US$200,000 equivalent and more each would be procured throughInternational Competitive Bidding (ICB).

* Contracts valued between US$30,000 and US$200,000 may be awarded on the basis of NCB procedures acceptable toIDA. Other items or groups of items valued at less than US$30,000 equivalent per contract may be procured on thebasis of national shopping procedures.

* Since the purchase of vehicles would be dispersed throughout the country in six states (including the CPMUJ) with actualactivities' launch time varying among the sites, and in order to facilitate start-up at these various sites, vehicles would beprocured under national shopping procedures in packages below US$ 100,000 equivalent. Where packages overUS$100,000 are to be used they would be prepared using ICB procedures.

Prior review thresholds (Table B)

* All contracts for goods with an estimated value of US$200,000 equivalent and more.* All contracts for works with an estimated value of US$300,000 equivalent and more.* The first NCB contract for goods and works for each state, regardless of the amount.* Consultants' contracts with an estimated value of US$100,000 or more for firms and US$50,000 or more for individuals.* All contracts for vehicles with a value of US$ 100,000 equivalent or more.

Disbursemen

Retroactive financing is required to ensure quick project start-up. At Appraisal, it was agreed that up to $10 millionequivalent could be used for retroactively financing eligible expenditures under the project, within one year prior to the expected dateof project signing.

Allocation of loan proceeds (Table C)

Use of statements of expenditures (SOEs):* Contracts of less than US$200,000 equivalent for goods and US$300,000 equivalent for works.* Consultant contracts of less than US$100,000 for firmns and US$50,000 for individuals.

Annex 6Page 2 of 8

* Local training and workshops.* Incremental salaries, in-service training and operating expenditures, 60% of local expenditures incurred up to January

31, 2000; 40% of expenditures from February 1, 2000 until January 31, 2002; and 30% of expenditures thereafter.* Vehicle contracts of less than US$100,000 equivalent each.

Special account:Authorized allocation of US$20 million.

Financial Management System and Auditing Arrangements

DWCD should have Project Financial Management Systems designed and developed for use and operation by the projectimplementing states as well as by the DWCD as per following guidelines:

(a) The project implementing states would continue to maintain project accounting as per government accounting proceduresand controls with an added requirement that a separate budget head with appropriate sub-heads would be created in their AnnualBudget document to capture all project-related expenditures.

(b) The Project Financial Management Systems to be designed and developed by the DWCD should be a computer-based systemcapable of providing timely and reliable information to the implementing authorities in the states as also to the DWCD to facilitateeffective monitoring of the projects progress towards its agreed objectives. In particular, the accounting arrangements should be ableto disseminate data on category-wise and component-wise expenditures on the project. In addition, the availability of followinginformation from the accounting documents should be ensured:

(i) actual expenditures on the Project against budgeted expenditures for the current year and cumulative to enablecompilation of financial reports;

(ii) procurement method adopted for goods, materials and services to enable monitoring of limits of procurement laiddown in the procurement schedule; and

(iii) contract-wise expenditures according to categories and sub-categories to enable generation of the schedule ofwithdrawal of proceeds (Form IB) and Statement of Expenditures (Form IC) required for submission to the Bankfor withdrawal of Credit.

(c) The Financial Management System should be so designed, developed, so as to map financial data with the physical data formeasuring the performance of the project.

DWCD should prepare and submit to the Bank a project report on a quarterly basis, in a format, to be agreed with the Bank. Thereport should indicate both physical and fnancial progress of the project in relation to the agreed plan, duly explaining the reasons forvariations and the remedial measures proposed to be taken.

DWCD should take appropriate action to appoint consultants to design and develop the Project Financial Management System whichshould be in place at the commencement of the project. The Terms of reference of the consultants should be suitably finalized inconsultation with the Bank.

Assurances were obtained from DWCD that they will appoint consultants to design and develop the computerized project FinancialManagement System and have it in place at the start of the project.

Auditing. Project accounts so compiled would be audited by an independent auditor in accordance with standards on auditingacceptable to the Bank. The audit report would include an assessment of the adequacy of accounting and internal control systems,ability to maintain adequate documentation for transactions and eligibility of expenditures for Bank financing. The audited projectaccounts, including a summary of SOE disbursements together with the auditor's opinion on them would be submitted to the Bank notlater than six months after the close of each fiscal year by each of the participating states. The Audit report on Special Account (SA)maintained by the Department of Economic Affairs (DEA) along with a summary of SA transactions and statement of closing balancecertified by Reserve Bank of India (RBI) would also be submitted to the Bank not later six months after the close of each fiscal year.

Annex 6Page 3 of 8

Project Financial Management Responsibility

Financial Management. Keeping in view the magnitude of investment on the project, the responsibility for financial accounting,reporting, submission of withdrawal requests to the Bank and operation of the financial management system should be entrusted ineach participating state to a dedicated finance and accounting professional not less than Deputy Director rank designated and assistedby adequate staff.

Experience with Implementation of Other Projects. There is a risk that the RCH project would experience some problems of auditdelays. Keeping in view the requirement of OP/BP 10.02, the borrower and project states would be required to provide assurances atnegotiations that they will take all necessary steps to ensure compliance with the requirement that annual audits will be submitted tothe Bank within the prescribed period of six months from the close of fiscal year.

Annex 6Page 4 of 8

Annex 6, Table A: Project Costs by Procurement Arrangements'(in US$million equivalent)

Expenditure Category Procurement Metho Total Cost(including

ICB NCB Others N.B.F contingencies)

1. WorksCivil Works - 3.0 57.5 - 60.5

(2.6) (48.8) (51.4)

2. GoodsFurniture, Equipment, Toys and - 16.0 10.8 - 26.7Materials (12.0) (8.1) (20.1)

Vehicles 9.2 - 9.2(6.9) (6.9)

Medicines and Medical Supplies 13.1 48.0 - 61.1(10.5) (38.4) (48.9)

Mopeds, Motorcycles, and Bicycles 2.4 - 2.4(1.6) (1.6)

3. ServicesTraining and Workshops 130.5 - 130.5

(104.4) (104.4)

Consultancy 5.9 - 5.9(5.9) (5.9)

Media Services 2.2 8.8 - 11.0(2.2) (8.8) (11.0)

4. MiscellaneousIncremental Salaries and Operating - 115.0 - 115.0Costs (49.9) (49.9)

Total 34.3 338.1 - 422.3(27.3) (272.8) (300.0)

Note: N.B.F. = Not Bank-financed (includes elements procured under parallel cofinancing procedures, consultancies under trust funds,any reserved procurement, and any other miscellaneous items).

Figures in parenthesis are the amounts to be financed by the Bank loan/IDA credit

For details on presentation of Procurement Methods refer to OD 11.02, "Procurement Arrangements for Investment Operations."

Annex 6Page 5 of 8

Annex 6, Table B: Thresholds for Procurement Methods and Prior Review

Expenditure Contract Value Procurement Contracts Subject toCategory (Threshold) Method Prior Review I Estimated

Total Value Subject toPrior Review

US$ US$ millions1. Works

Civil Works (a) Civil works estimatedto cost the equivalent ofless than US$50,000 percontract, up to anaggregate not exceedingUS$57,500,000 may beexecuted by:

(i) direct contracting up Direct Contracting Post review only.to an aggregate notexceeding US$6,700,000;or(ii) on the basis of Solicitation of 3 Bids Post review only.comparison of pricequotations obtained fromat least three qualifiedcontractors eligible underthe guidelines;or(iii) the community for Community, Post review only.works estimated to cost Construction Procedureless than US$5,000equivalent; or

(iv) by Force Account as Force Account Post review only.a last resort up to anaggregate not exceedingUS$5,000,000 in amanner satisfactory to theAssociation.

(b) Civil works estimated National Competitive First works contract fromto cost the equivalent of Bidding each state regardless ofUS$50,000 or more per value and all contractscontract. US$300,000 or more by

prior review inaccordance withparagraphs 2 and 3 ofAppendix I to theGuidelines. All others bypost review.

Annex 6Page 6 of 8

Expenditure Contract Value Procurement Contracts Subject toCategory (Threshold) Method Prior Review / Estimated

Total Value Subject toPrior Review

US$ US$ millions2. Goods

(a) Furniture, equipment Less than US$30,000 per National Shopping Post review only.contract, up to an Procedures (includesaggregate not exceeding DGS&D Rate Contracts)US$10,800,000equivalent

US$200,000 or more per International Competitive Prior review.contract Bidding

US$30,000 or more per National Competitive First contract from eachcontract, but less than Bidding state regardless of valueUS$200,000 equivalent by prior review in

accordance withparagraphs 2 and 3 ofAppendix 1 to theGuidelines. All others bypost review.

(b) Medicines and Less than US$20,000 per National Shopping Post review only.Medical Supplies1 contract, up to an Procedures (includes

aggregate not exceeding DGS&D Rate Contracts)USS48,000,000

More than US$20,000 National Competitive First contract from eachper contract, but less than Bidding state regardless of valueUS$200,000 equivalent by prior review in

accordance withparagraphs 2 and 3 ofAppendix 1 to theGuidelines. All others bypost review.

US$200,000 or more per International Competitive Prior reviewcontract Bidding

(c) Vehicles Less than US$100,000 National Shopping Post review only.per contract, up to an Procedures (includesaggregate not exceeding DGS&D Rate Contracts)US$9,200,000

'Medicines and medical suplies (US$48,000,000 equivalent) may be procured under national shopping procedures as these are smallkits with a small number of items, de-worming drugs and IFA tables, procured at the District level. On the average, each state will bespending US$1,600,000 equivalent during the project life of 5 years or US$320,000 per year or US$16,000 per year by each district.Therefore, to call for international competitive bidding procedures for the procurement of such items at the district level is notadvised. In addition, bulk procurement under national competitive bidding may be limited, as most of the medicines have an expirydate.

Annex 6Page 7 of 8

Expenditure Contract Value Procurement Contracts Subject toCategory (Threshold) Method Prior Review / Estimated

Total Value Subject toPrior Review

US$ US$ millions

US$100,000 or more International Competitive Prior review inequivalent per contract Bidding accordance with paras 2

and 3 of Appendix I tothe Guidelines. Allothers by post review.

3. Consultancies, In accordance with US$100,000 and aboveStudies, Training, Media IDA/Bank Guidelines for firms.Services

US$50,000 and above forindividuals.

Annex 6Page 8 of 8

Annex 6, Table C: Allocation of Loan Proceeds

Expenditure Category Amount in US$million IDA FinancingPercentage

Civil Works 51.4 85

Furniture, Equipment, Toys, Materials and Vehicles 27.0 100% of foreignexpenditures, 100% oflocal expenditures (ex-factory cost), and 80%of local expendituresfor other itemsprocured locally

Mopeds, Motorcycles, and Bicycles 1.6 65

Consultancy and Media Services 16.9 100

Medicines and Medical Supplies 48.9 100% of foreignexpenditures, 100% oflocal expenditures (ex-factory cost), and 80%of local expendituresfor other itemsprocured locally

Training and Workshops 104.4 80

Incremental Operating Costs and Maintenance 49.9 60% until January 31,2000; 40% fromFebruary 1, 2000 untilJanuary 31, 2002; and30% thereafter.

Total 300.0

Annex 7Page 1 of 1

Annex 7INDIA: Woman and Child Development Project

Project Processing Budget and Schedule

A. Project Budget (US$000) Planned Actual(At fnal PCD stage)

$606,000

B. Project Schedule Planned Actual(At fnal PCD stage)

Time taken to prepare the project (months) 23 monthsFirst Bank mission (identification) 10/30/1995 10/30/1995Appraisal mission departure 10/1997 10/20/1997Negotiations 02/02/1998 05/18/1998Planned Date of Effectiveness 05/15/1998 09/30/1998

Prepared by: Government of India, Ministry of Human Resource Development, Department of Womenand Child Development; Government of Kerala, Department of Women and Child Development;Government of Maharashtra, Department of Women and Child Development; Government of Rajasthan,Department of Women and Child Development; Government of Tamil Nadu, Department of Women andChild Development; Government of Uttar Pradesh, Department of Women and Child Development;National Institute of Public Cooperation and Child Development.

Preparation assistance: UNICEF

Bank staff who worked on the project included:Name Specialty

A. Measham Task LeaderR. Sethuraman Project SpecialistM. Priyadarshi Nutrition SpecialistM. Chatterjee Sr. Social Development SpecialistS. Subramanian ConsultantM. Chand Procurement EngineerA. Singh, Krishna D. Rao Research AnalystN. Anand, N. Singh (SACIF) Technical AssistantA. Hammond Training SpecialistK. Casey Procurement SpecialistK. Hinchliffe Financial AnalystJ. Mukira Senior Staff AssistantE. Vincent (SASHP) Staff AssistantA. Berg (HDD) Nutrition SpecialistJ. Greene (ASTHR) Private Sector SpecialistJ. Balachander (AFTHR) Nutrition SpecialistK. Wentz (LEGSA) LawyerM. Png (LEGSA) LawyerH. Imamura (LEGSA) LawyerS. Gonzalez Flavell LawyerC. Perera (LOAAS) Disbursement Specialist

Annex 8Page I of 2

Annex 8INDIA: Woman and Child Development Project

Documents in the Project File*

A. Project Implementation PlansProject Implementation Plan (PIPs) for Rajasthan, Kerala, Maharashtra, Tamil Nadu, and Uttar Pradesh.Proposal for assisting Central Project Management Monitoring Unit under the WCD ProjectConsolidated PIP from Government of India.

B. Bank Staff AssessmentsBalachander, Jayshree. 1997. Background Paper on Technical Assessment.

Chatterjee, Meera. 1996. Some Lessons Learned over 20 years of ICDS.

1997. Social Assessment Summary.

Greene, J. 1996. Privatizing ICDS: Problems and Prospects.

Gupta, D.B. 1996. ICDS: Financial Analysis.

Heaver, Richard. 1997. Background Paper on Institutional Assessment.

Subbarao, K. 1989. Improving Nutrition in India: Policies and Programs and Their Impact. Discussion Paper No. 49. TheWorld Bank. Washington DC.

The World Bank. 1994. Impact Evaluation Report (India): Tamil Nadu Integrated Nutrition Project (Credit 1003-IN).Operations Evaluation Departnent, World Bank. Washington DC.

1996. India's Public Distribution System: A National and International perspective (Draft). Poverty andSocial Policy Department, World Bank. Washington DC.

C. Other

Chirmulay, D. and I.P. Bhagwati. 1997. Factors Influencing Nutritional Status of Pre-School Children from SelectedAreas in Five States of India. BAIF Development Research Foundation. Pune.

Gopalan, C. 1995. Towards India's Food and Nutrition Security. Key note address at the National Symposium on FoodSecurity for the Poor, October 1995. Nutrition Foundation of India. New Delhi.

Gorakhpur Environmental Action Group. Women and Child Development Proiect: Report based on Social Assessment inEaster Uttar Pradesh. PRA Resource Group, Gorakhpur Environmental Action Group, Gorakhpur.

Gorakhpur Environmental Action Group. Women and Child Development Project: Report based on Social Assessment inBundelkhand. PRA Resource Centre, Gorakhpur Environmental Action Group, Gorakhpur.

Government of India. 1995. National Plan of Action on Nutrition. Food and Nutrition Board, Department of Women andChild Development, Ministry of Human Resource Development, Government of India, New Delhi.

1997. Approach Paper to the Ninth Five Year Plan (1997-2002). Planning Commission, Government of India.New Delhi.

Government of Rajasthan. 1996. Social Assessment Combined Report Women and Child Nutrition Improvement Project.

Annex 8Page 2 of 2

Department of Women and Child Development, Government of Rajasthan. Jaipur.

Institute of Health Management. 1996. Maharashtra: Social Assessment -ICDS III. Institute of Health Management, Pachod, Maharashtra.

Innovative Resource partners. 1994. Impact Evaluation: CARE-India's Title II Program. Innovative Resource Partners.Larkspur, California.

Institute of Health Management. 1996. Maharashtra: Social Assessment - ICDS III. Institute of Health Management.Pachod, Maharashtra.

Kennedy, E. and A. Slack. 1993. The Integrated Child Development Services aICDS) in India: Lessons Learned andImplications for Future Policies. International Food Policy Research Institute. Washington DC.

Mode Research Private Limited. 1996. Tamil Nadu: Social Assessment. Health and Nutrition Project. Mode ResearchPrivate Limited. New Delhi.

S. Swaminathan Research Foundation. 1992. Structural Adjustment Policy and the Child in India. Seminar ProceedingsNo. 4. M.S. Swaminathan Research Foundation. Madras.

National Institute of Public Cooperation and Child Development. 1992. National Evaluation of Integrated ChildDevelopment Services. National Institute of Public Cooperation and Child Development. New Delhi.

Nutrition Foundation of India. 1988. Integrated Child Development Services: A Study of Some Aspects of the System.Scientific Report 7. Nutrition Foundation of India. New Delhi.

Pelletier, D. L., E.A. Frongillo, D.G. Schroeder and J. H. Habicht. 1994. The Effects of Malnutrition on Child Mortalityin Developing Countries. Nutrition Section, UNICEF. New York.

UNICEF. 1996. Rights and Opportunities Situation of Children in India. Draft.

*Including electronic files.

Annex 9Page 1 of 6

Annex 9INDIA: Woman and Child Development Project

Statement of Loans and Credits(As of March 31, 1997)

Original Amount Differencein US$ Millions Between actual

Loan or Fiscal Purpose IBRD IDA Cancel- Undis- and expectedProject ID Credit Year lations bursed Disbursement

No. a/

Number of Closed Loans/credits: 360

IN-PE-9872 C19230 1988 TAMIL NADU URBAN 0.00 300.20 45.47 25.98 70.51

IN-PE-9941 L30960 1989 MAHARASHTRA POWER 400.00 0.00 62.67 105.16 160.23

IN-PE-9898 L30500 1989 UPPER KRISHNA PHASE II 165.00 0.00 120.00 41.64 161.64

IN-PE-9869 L30240 1989 NATHPA JHAKRI HYDRO 485.00 0.00 0.00 227.97 214.27

IN-PE-9973 L29940 1989 STATE ROADS I 170.00 0.00 61.41 9.98 151.39

IN-PE-9990 C20080 1989 VOCATIONAL TRAINING 0.00 250.00 103.33 59.59 165.82

IN-PE-9982 L32370 1990 NOR REGION TRANSM 485.00 0.00 0.00 274.82 262.82

IN-PE-9981 L31960 1990 CEMENT INDUSTRY RESTR. 300.00 0.00 6.82 23.27 30.09

IN-PE-9895 L31190 1990 TECHNOLOGY DEVELOPMENT 145.00 0.00 10.00 28.71 38.71

IN-PE-9932 C21580 1990 SECOND TN NUTRITION 0.00 95.80 29.81 4.59 22.35

IN-PE-9940 C21330 1990 POP. TRAINING (VII) 0.00 86.70 22.74 11.44 33.36

IN-PE-9860 C21310 1990 WTRSHED PLAINS 0.00 55.00 0.00 19.56 7.79

IN-PE-9989 C21300 1990 TECHNICIAN EDUC I 0.00 235.00 24.26 62.48 73.79

IN-PE-9890 C21150 1990 HYDERABAD W/S 0.00 79.90 0.00 24.17 18.30

IN-PE-9882 C21000 1990 WTRSHED HILLS 0.00 75.00 0.00 32.76 40.51

IN-PE-9965 C20760 1990 PUNJAB IRR & DRAINAGE 0.00 150.00 4.72 38.57 29.39

IN-PE-9895 C20640 1990 TECHNOLOGY DEVELOPMENT 0.00 55.00 0.00 26.49 19.71

IN-PE-10381 L33640 1991 GAS FLARING REDUCTION 450.00 0.00 0.00 29.16 29.16

IN-PE-9906 L33340 1991 IND POLLUTION CONTROL 124.00 0.00 0.00 23.05 -9.55

IN-PE-9958 L33000 1991 AGR.DEV.I (TN) 20.00 0.00 0.00 20.00 1.25

IN-PE-9885 L32590 1991 PETROCHEMICALS 233.00 0.00 70.30 30.77 -131.93

IN-PE-9885 L32580 1991 PETROCHEMICALS 12.00 0.00 0.00 2.66 2.67

IN-PE-9906 C22520 1991 IND POLLUTION CONTROL 0.00 31.60 0.00 26.24 25.30

IN-PE-9877 C22410 1991 DAM SAFETY 0.00 130.00 0.00 99.16 110.52

IN-PE-10369 C22340 1991 MAHARASHTRA RURAL WS 0.00 109.90 0.00 42.87 44.71

IN-PE-9988 C22230 1991 TECHNICIAN EDUC II 0.00 307.10 51.37 134.35 132.61

IN-PE-9958 C22150 1991 AGRIC. DEV.I (TN) 0.00 92.80 0.00 16.94 9.63

IN-PE-10361 C21730 1991 ICDS I (ORISSA & A.P.) 0.00 96.00 21.65 22.29 37.34

IN-PE-10400 L34980 1992 MAHARASHTRA POWER II 350.00 0.00 0.00 237.75 223.75

IN-PE-9946 L34700 1992 NATIONAL HIGHWAYS II 153.00 0.00 0.00 153.00 0.00

IN-PE-9888 L34360 1992 POWER UTIL EFFIC IMP 265.00 0.00 0.00 113.25 91.15

IN-PE-9963 C23940 1992 POPULATION VIII 0.00 79.00 0.00 70.95 43.03

IN-PE-9946 C23650 1992 NATIONAL HIGHWAYS II 0.00 153.00 0.00 80.83 43.52

IN-PE-10393 C23500 1992 AIDS PREVENTION AND CONTROL 0.00 84.00 0.00 31.87 27.42

IN-PE-10391 C23410 1992 WEST BENGAL FORESTRY 0.00 34.00 0.00 4.63 -.39

IN-PE-9921 C23290 1992 SHRIMP & FISH CULTURE 0.00 85.00 48.51 24.62 56.12

Annex 9Page 2 of 6

Original Amount Differencein US$ Millions Between actual

Loan or Fiscal Purpose IBRD IDA Cancel- Undis- and expectedProject ID Credit Year lations bursed Disbursement

No. a/IN-PE-10390 C23280 1992 MAHARASHTRA FORESTRY 0.00 124.00 16.18 62.99 36.65IN-PE-10423 L36320 1993 NTPC POWER GENERATION 400.00 0.00 0.00 271.67 266.68

IN-PE-10416 L35770 1993 PGC POWER SYSTEM 3j0.00 0.00 0.00 191.79 120.99

IN-PE-10424 C25280 1993 NATL LEPROSY ELIMINATION 0.00 85.00 0.00 58.84 33.31

IN-PE-9961 C25100 1993 UP SODIC LANDS RECLAM. 0.00 54.70 0.00 33.87 8.40

IN-PE-9955 C25090 1993 UTTAR PRADESH BASIC ED. 0.00 165.00 0.00 75.73 -2.81

IN-PE-10418 C24830 1993 KARNATAKA WS & ENV/SANIT. 0.00 92.00 0.00 69.88 38.04

IN-PE-9977 C24700 1993 ICDS II (BIHAR & MP) 0.00 194.00 0.00 170.63 67.06

IN-PE-10411 C24500 1993 JHARIA MINE FIRE CONTROL 0.00 12.00 0.00 5.18 4.89

IN-PE-10410 C24490 1993 RENEWABLE RESOURCES 0.00 115.00 0.00 87.58 170.78

IN-PE-10408 C24390 1993 BIHARPLATEAU 0.00 117.00 0.00 90.15 57.72

IN-PE-10407 C24330 1993 ADP - RAJASTHAN 0.00 106.00 0.00 48.11 13.01

IN-PE-9959 C24090 1993 RUBBER 0.00 92.00 0.00 76.65 41.69

IN-PE-9870 L37530 1994 CONTAINER TRANSPORT 94.00 0.00 0.00 82.60 48.60

IN-PE-10457 C26300 1994 POPULATION IX 0.00 88.60 0.00 75.26 9.83

IN-PE-10455 C26110 1994 BLINDNESS CONTROL 0.00 117.80 0.00 100.55 16.37

IN-PE-34162 C25940 1994 MAHARASHTRA EARTHQUAKE 0.00 246.00 0.00 97.91 66.55

IN-PE-9964 C25920 1994 WATER RES CONSOLID HARYANA 0.00 258.00 0.00 199.02 40.07

IN-PE-10449 C25730 1994 ANDHRA PRADESH FORESTRY 0.00 77.40 0.00 55.53 10.33

IN-PE-10448 C25720 1994 FORESTRY RESEARCH ED. 0.00 47.00 0.00 35.00 17.82

IN-PE-10461 L39076 1995 MADRAS WATER SUPPLY II 269.80 0.00 189.30 79.56 -.94

IN-PE-10461 L39070 1995 MADRAS WATER SUPPLY II 6.00 0.00 0.00 .01 -4.98

IN-PE-10563 L38576 1995 FINANCIAL SECTOR DEV 144.00 0.00 0.00 144.00 0.00

IN-PE-10563 L38560 1995 FINANCIAL SECTOR DEV 350.00 0.00 0.00 200.00 -150.00

IN-PE-10463 L37806 1995 INDUS POLLUTION PREVENTION 50.00 0.00 0.00 46.50 -3.50

IN-PE-10463 L37790 1995 INDUS POLLUTION PREVENTION 93.00 0.00 0.00 88.00 2.86

IN-PE-10476 C27450 1995 TAMIL NADU WRCP 0.00 282.90 0.00 237.80 36.01

IN-PE-10522 C27330 1995 ASSAM RURAL INFRASTRUCTURE 0.00 126.00 0.00 108.14 12.24

IN-PE-10506 C27000 1995 M.P. FORESTRY 0.G0 58.00 0.00 44.74 .84

IN-PE-10503 C26990 1995 AGRIC HUMAN RESOURCE DEVT 0.00 59.50 0.00 49.71 14.89

IN-PE-10489 C26630 1995 AP IST REF. HEALTH SYSTEMS 0.00 133.00 0.00 117.57 15.70

IN-PE-10464 C26610 1995 DISTRICT PRIMARY ED 0.00 260.30 0.00 192.81 7.66

IN-PE-10463 C26450 1995 INDUS POLLUTION PREVENTION 0.00 25.00 0.00 24.48 25.00

IN-PE-10484 L40560 1996 U.P. RURAL WATER 59.60 0.00 0.00 57.20 -.90

IN-PE-35170 L40140 1996 ORISSA POWER SECTOR REST. 350.00 0.00 0.00 337.89 .90

IN-PE-39935 L39920 1996 ILFS-INFRASTRUCTURE FINANCE 200.00 0.00 0.00 175.00 -3.50

IN-PE-10480 L39230 1996 BOMBAY SEWAGE DISPOSAL 167.00 0.00 0.00 162.09 24.69

IN-PE-35821 C28760 1996 DISTRICT PRIMARY EDUC 2 0.00 425.20 0.00 395.33 -.99

IN-PE-43310 C28620 1996 COAL ENV&SOCIAL MITIGATION 0.00 63.00 0.00 57.02 -2.14

IN-PE-39935 C28380 1996 ILFS-INFRASTRUCTURE FINANCE 0.00 5.00 0.00 4.70 5.00

IN-PE-35825 C28330 1996 STATE HEALTH SYSTEMS II 0.00 350.00 0.00 313.64 21.59

IN-PE-10529 C28010 1996 ORISSA WATER RES. CONSOL. 0.00 290.90 0.00 236.35 -12.58

IN-PE-10485 C27740 1996 HYDROLOGY PROJECT 0.00 142.00 0.00 119.22 10.60

Annex 9Page 3 of 6

Original Amount Differencein US$ Millions Between actual

Loan or Fiscal Purpose IBRD IDA Cancel- Undis- and expectedProject ID Credit Year lations bursed Disbursement

No. a/IN-PE-10480 C27630 1996 BOMBAY SEWAGE DISPOSAL 0.00 25.00 0.00 .07 2.19IN-PE-45600 L41140 1997 TA STATES'RDINFRADEV 51.50 0.00 0.00 48.50 -3.00

IN-PE-44449 C29420 1997 RURAL WOMEN'S DEVELOPMENT 0.00 19.50 0.00 18.67 0.00

IN-PE-10473 C29360 1997 TUBERCULOSIS CONTROL 0.00 142.40 0.00 136.10 0.00

IN-PE-43728 C29300 1997 ENVIRON. CAPACITY BLDG TA 0.00 50.00 0.00 48.00 0.00

IN-PE-36062 C29160 1997 ECODEVELOPMENT 0.00 28.00 0.00 25.42 -1.27

Total 6,341.90 7,062.2 888.54 7,539.030

Active Loans Closed Loans IToalTotal Disbursed (IBRD and IDA): 4,933.18 29,245.51 34,178.69

of which has been repaid: 171.68 8,344.86 8,516.54Total now held by IBRD and IDA: 12,343.88 20,340.71 32,684.59Amount sold 0.00 133.77 133.77

Of which repaid 0.00 133.77 133.77Total Undisbursed 7,539.03 86.78 7,625.81

a. Intended disbursements to date minus actual disbursements to date as projected at appraisal.b. Rating of 1-4: see OD 13.05. Annex D2. Preparation of Implementation Summary (Form 590). Following the FY94 Annual Review of Portfolio

performance (ARPP), a letter based system will be used (HS = highly Satisfactory, S = satisfactory, U = unsatisfactory, HU = highlyunsatisfactory): see proposed Improvements in Project and Portfolio Performance Rating Methodology (SecM94-901), August 23, 1994.

c. Following the FY94 ARPP, "Implementation Progress" will be reported here.

Annex 9Page 4 of 6

INDIASTATEMENT OF IFC's

Committed and Disbursed Portfolio(As of March 31, 1997)

In US$ MillionsCommitted Disbursed

--- IFC---- -IIFCFY Company Loan Equity Quasi Partic Loan Equity Quasi Partic

Approval1964 MUSCO 0.00 .47 0.00 0.00 0.00 .47 0.00 0.001975 MUSCO 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001978 HDFC 0.00 .41 0.00 0.00 0.00 .41 0.00 0.001979 MUSCO 0.00 .19 0.00 0.00 0.00 .19 0.00 0.001981 ITW Signode 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001981 M&M 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001981 Nagarjuna Steel 0.00 .07 0.00 0.00 0.00 .07 0.00 0.001981 TISCO 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001982 Modi Cement 17.31 0.00 0.00 0.00 17.31 0.00 0.00 0.001984 Bihar Sponge 13.43 .63 0.00 0.00 13.43 .63 0.00 0.001984 India Lease 0.00 .35 0.00 0.00 0.00 .35 0.00 0.001986 EXB-City Mills .48 0.00 0.00 0.00 .48 0.00 0.00 0.001986 EXB-CECL .01 0.00 0.00 0.00 .01 0.00 0.00 0.001986 EXB-NB Footwear .19 0.00 0.00 0.00 .19 0.00 0.00 0.001986 EXB-Paharpur .22 0.00 0.00 0.00 .22 0.00 0.00 0.001986 EXB-STG .46 0.00 0.00 0.00 .46 0.00 0.00 0.001986 EXB-TAN .03 0.00 0.00 0.00 .03 0.00 0.00 0.001986 EXB-Wires & Fab. .11 0.00 0.00 0.00 .11 0.00 0.00 0.001986 GESCO 0.00 8.46 0.00 0.00 0.00 8.46 0.00 0.001986 India Equipment 0.00 .30 0.00 0.00 0.00 .30 0.00 0.001986 ITW Signode 0.00 .30 0.00 0.00 0.00 .30 0.00 0.001986 TISCO 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001987 Hindustan 8.49 0.00 0.00 0.00 8.49 0.00 0.00 0.001987 HDFC 0.00 .26 0.00 0.00 0.00 .26 0.00 0.001987 Titan Watches .97 .39 0.00 0.00 .97 .39 0.00 0.001988 GKN Invel 0.00 1.07 0.00 0.00 0.00 1.07 0.00 0.001988 Tata Telecom 0.00 .05 0.00 0.00 0.00 .05 0.00 0.001988 Titan Watches 1.99 0.00 0.00 0.00 1.99 0.00 0.00 0.001989 AEC 14.72 0.00 0.00 0.00 14.72 0.00 0.00 0.001989 Gujarat State 11.15 0.00 0.00 0.00 11.15 0.00 0.00 0.001989 JSB India 0.00 .37 0.00 0.00 0.00 .37 0.00 0.001989 Tata Electric 32.30 0.00 0.00 0.00 32.30 0.00 0.00 0.001989 TISCO 8.69 12.34 0.00 0.00 8.69 12.34 0.00 0.001989 UCAL 0.00 .63 0.00 0.00 0.00 .63 0.00 0.001990 CESC 19.05 0.00 0.00 0.00 19.05 0.00 0.00 0.001990 HOEL 0.00 .28 0.00 0.00 0.00 .28 0.00 0.001990 India Lease 1.31 .21 0.00 0.00 1.31 .21 0.00 0.001990 ICICI-IFGL 0.00 .16 0.00 0.00 0.00 .16 0.00 0.001990 ICICI-SPIC Fine 0.00 1.02 0.00 0.00 0.00 1.02 0.00 0.001990 IL & FS 12.75 0.00 1.81 0.00 12.75 0.00 1.81 0.001990 M&M 1.00 5.78 0.00 4.00 1.00 5.78 0.00 4.001990 MUSCO 0.00 .42 0.00 0.00 0.00 .42 0.00 0.001990 Tata Electric 30.26 0.00 0.00 0.00 30.26 0.00 0.00 0.001990 Tata Telecom 0.00 .02 0.00 0.00 0.00 .02 0.00 0.001990 Titan Watches 0.00 .12 0.00 0.00 0.00 .12 0.00 0.001990 TDICI-VECAUS II 0.00 1.94 0.00 0.00 0.00 1.94 0.00 0.00

Annex 9Page 5 of 6

Committed Disbursed

FY Company Loan Equity Quasi Partic Loan Equity Quasi ParticApproval1991 Bihar Sponge 0.00 .05 0.00 0.00 0.00 .05 0.00 0.001991 Block KG-OS-IV 0.00 .02 0.00 0.00 0.00 0.00 0.00 0.001991 BSES 45.00 0.00 0.00 0.00 45.00 0.00 0.00 0.001991 Gujarat State 2.65 0.00 0.00 0.00 2.65 0.00 0.00 0.001991 HDFC 40.00 .32 0.00 0.00 40.00 .32 0.00 0.001991 ITWSignode 0.00 .11 0.00 0.00 0.00 .11 0.00 0.001991 Triveni 0.00 .36 0.00 0.00 0.00 .36 0.00 0.001991 VARUN 6.25 1.35 0.00 0.00 6.25 1.35 0.00 0.001992 Arvind Mills 0.00 6.55 0.00 0.00 0.00 6.55 0.00 0.001992 Creditcapital VF 0.00 .45 0.00 0.00 0.00 .45 0.00 0.001992 CESC 30.00 0.00 0.00 67.00 30.00 0.00 0.00 67.001992 GESCO 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001992 Indus VC Mgt Co 0.00 .01 0.00 0.00 0.00 .01 0.00 0.001992 Indus VCF 0.00 1.00 0.00 0.00 0.00 1.00 0.00 0.001992 Info Tech Fund 0.00 .64 0.00 0.00 0.00 .64 0.00 0.001992 Nippon Denro 28.57 5.77 0.00 0.00 28.57 5.77 0.00 0.001992 NICCO-UCO 2.06 .15 0.00 0.00 2.06 .15 0.00 0.001992 SKF Bearings 6.70 0.00 0.00 0.00 6.70 0.00 0.00 0.001992 Tata Telecom 0.00 .03 0.00 0.00 0.00 .03 0.00 0.001992 TISCO 0.00 3.03 0.00 0.00 0.00 3.03 0.00 0.001993 Arvind Mills 0.00 10.55 0.00 0.00 0.00 10.55 0.00 0.001993 GESCO 0.00 2.56 0.00 0.00 0.00 2.56 0.00 0.001993 HDFC 0.00 1.30 0.00 0.00 0.00 1.30 0.00 0.001993 India Equipment .60 0.00 0.00 1.47 .60 0.00 0.00 1.471993 Indo Rama 21.88 9.84 0.00 8.75 21.88 9.84 0.00 8.751993 IL&FS 0.00 3.11 0.00 0.00 0.00 3.11 0.00 0.001993 ITW Signode 0.00 .60 0.00 0.00 0.00 .60 0.00 0.001993 M&M 0.00 .71 0.00 0.00 0.00 .71 0.00 0.001993 Titan Watches 0.00 .52 0.00 0.00 0.00 .52 0.00 0.001993 Triveni 0.00 .75 0.00 0.00 0.00 .75 0.00 0.001993 20TH Century .93 .80 0.00 5.87 .93 .80 0.00 5.871994 Centurion Growth 0.00 2.39 0.00 0.00 0.00 2.39 0.00 0.001994 Chowgule 15.00 4.58 0.00 27.00 6.88 4.58 0.00 12.381994 Crdcap Asset Mgt 0.00 .32 0.00 0.00 0.00 .32 0.00 0.001994 DLF Cement 15.32 0.00 0.00 17.00 15.32 0.00 0.00 17.001994 Global Trust 0.00 3.19 0.00 0.00 0.00 3.19 0.00 0.001994 Gujarat Ambuja 0.00 8.23 0.00 0.00 0.00 8.23 0.00 0.001994 GESCO 0.00 2.03 0.00 0.00 0.00 2.03 0.00 0.001994 GKN Invel 0.00 .33 0.00 0.00 0.00 .33 0.00 0.001994 GVK 40.00 8.30 0.00 38.74 30.00 8.30 0.00 38.741994 India Equipment 0.00 .14 0.00 0.00 0.00 .14 0.00 0.001994 India Lease 0.00 .30 0.00 0.00 0.00 .30 0.00 0.001994 Indo Rama 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001994 ICICI-IFGL 0.00 .14 0.00 0.00 0.00 .14 0.00 0.001994 IL & FS 15.00 0.00 0.00 10.00 15.00 0.00 0.00 10.001994 Nippon Denro 30.00 0.00 0.00 60.00 0.00 0.00 0.00 0.001994 Tata Electric 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001994 Taurus Starshare 0.00 7.17 0.00 0.00 0.00 7.17 0.00 0.001994 TCAMC 0.00 .16 0.00 0.00 0.00 .16 0.00 0.001994 TISCO 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001995 Centurion Bank 0.00 3.87 0.00 0.00 0.00 3.87 0.00 0.00

Annex 9Page 6 of 6

Committed Disbursed

FY Company Loan Equity Quasi Partic Loan Equity Quasi ParticApproval1995 Creditcapital VF 0.00 .60 0.00 0.00 0.00 .60 0.00 0.001995 EXIMBANK 25.00 0.00 0.00 0.00 25.00 0.00 0.00 0.001995 India Equipment 0.00 .33 0.00 0.00 0.00 .33 0.00 0.001995 ICICI-SPIC Fine 0.00 .86 0.00 0.00 0.00 .86 0.00 0.001995 ISIC 0.00 .32 0.00 0.00 0.00 .32 0.00 0.001995 JSB India 0.00 .84 0.00 0.00 0.00 .84 0.00 0.001995 Prism Cement 15.00 5.02 0.00 15.00 15.00 5.02 0.00 15.001995 Rain Calcining 19.25 5.40 0.00 0.00 6.00 4.72 0.00 0.001995 RPG Communicat 0.00 8.30 0.00 0.00 0.00 6.28 0.00 0.001995 SaraFund 0.00 7.02 0.00 0.00 0.00 1.10 0.00 0.001995 SRF Finance 15.00 5.00 0.00 0.00 15.00 4.39 0.00 0.001996 CVF Oil Gas-AL 8.00 8.00 0.00 0.00 0.00 0.00 0.00 0.001996 India Direct Fnd 0.00 7.50 0.00 0.00 0.00 .78 0.00 0.001996 Indo Rama 0.00 2.14 0.00 0.00 0.00 2.14 0.00 0.001996 Indus II 0.00 5.00 0.00 0.00 0.00 2.00 0.00 0.001996 Indus Mauritius 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001996 ITW Signode 0.00 .54 0.00 0.00 0.00 .54 0.00 0.001996 Moser Baer 5.70 .60 0.00 0.00 5.70 0.00 0.00 0.001996 NICCO-UCO 0.00 .22 0.00 0.00 0.00 .22 0.00 0.001996 United Riceland 10.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001996 VARUN 5.67 0.00 0.00 6.00 5.67 0.00 0.00 6.001997 CEAT 20.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001997 GVK 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001997 NICCO-UCO 0.00 .13 0.00 0.00 0.00 .13 0.00 0.001997 Owens Coming 25.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001997 WIPRO 10.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001997 20TH Century 15.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Portfolio Totals: 648.50 185.79 1.81 260.83 499.13 158.22 1.81 186.21

Pending Commitments1996 * CESC II -BLINC 0.00 0.00 0.00 37.001996 * DEV CREDIT BANK 0.00 1.89 0.00 0.001995 * IB VALLEY POWER 50.00 20.00 0.00 0.001997 * ITC CLASSIC 20.00 0.00 10.00 0.001994 * NEYVELI POWER 30.00 18.00 0.00 150.001994 * NIPPON DENRO ISP 0.00 6.00 0.00 0.001997 * NIPPON EXPANSION 15.00 6.00 0.00 25.001997 * OWENS CORNING 25.00 0.00 0.00 0.001995 * SPIC-RGHTS ISSUE 0.00 .86 0.00 0.001996 * TARUN SHIPPING 0.00 .80 0.00 0.00

Annex 10Page I of 2

India at a glancePOVERTY and SOCIAL South Low-

India Asia income Development diamond

Population mid-1996 (millions) 929.4 1,243 3,188GNP.percait1995 (US$)] 350 360 460 Life expectancyGNP 1995 (billions US$) 327.0 435 1,466

Averageannual groWth, 1990-95

population (%) 1.8 1.9 1.8 GNP GrossLabor lror (%Y) 2.1 2.4 1.9

per primaryMost recent estimate (laest year available since 1989) capita enrolimen

Poverty headcourt index (% of populaton)Urban population (% of total population) 27 26 29Lifeectayatbirth (years) 62 61 63Infant mortality (per 1,000 live births) 68 73 58 Access to safe waterChild malnutition (% of children under 5) 63 62 38Accs to safe water (% of population) 85 81 75Illiteracy (% of populaon age 15+) 48 50 34 IndiGross primary enrollment (% of school-age populaton) 102 98 105 nda

Male : 113 110 112 Low-income groupFemale 91 87 98

KEY ECONOMIC RATiOS and LONG-TERM TRENDS

1975 1985 1994 1995

GDP billions US$) 91.0 214.3 301.2 329.9 Economicnrfos^Gross domestic investmentlGDP 20.8 23.9 23.2 24.2 Openness of economyEpaorsofgoods andrnon-factorserviceslGDP 6.2 6.0 11.3 12.4Gross domestic savings/GDP 20.4 20.8 21.5 22.3Gross national savingslGDP 20.8 21.1 22.3 22.6

Current account balancelGDP -0.1 -2.8 -0.9 -1.6Interest paymentsiGDP 0.3 0.6 1.3 1.3 Savings <nvestmenTotal debtGDP 15.1 19.1 32.9 31.0Total debt service/exports 13.1 22.7 26.3 25.6Present value of debWGDP 23.5Present value of debt/exports 176.7 .InWotedness

1975-84 1985-95 1994 1995 1996-04(average annual g th) IndiaGDP (factor cost) 4.0 5.1 6.3 6.0 6.0 Low-incon7egroupGNP per capita 1.7 3.1 6.1 4.6 4.6Export ofgoodsand nfs 4.0 10.7 4.1 17.6 8.9

STRUCTURE of the ECONOMY1975 1985 1994 1995

(% of GDP) Growth rates of output and Investment (%)AgncultLue 40.5 33.0 31.1 30.3 20Industry 23.7 28.1 28.0 28.9 10

Manufacturing 16.7 17.9 17.4 18.4 0Services 35.8 38.8 40.9 40.9 0 914

-10

Private consumption 70.2 68.1 68.2 67.3 -20General govemmentconsumption 9.4 11.1 10.3 10.3 GDI GDPImports of goods and non-factor services 6.6 9.1 13.0 14.3

1975-84 1985-95 1994 1995(average annual growth) Growth rates of exports and imports (%)Agriculture 2.4 3.6 4.9 3.0 30Industry 5.2 5.9 8.3 10.0 20.

Manufacturing 5.4 5.8 9.0 12.2 20Services 4.7 5.7 6.0 5.3 10-

Private consumption 4.4 4.7 5.0 4.6 a 90 91 92 93 94 9SGeneral govemment oonsumption 6.2 4.2 3.0 6.5 .10Gross domestic investment 3.7 5.1 19.8 11.2 -20Imports of goods and non-factor services 9.3 4.7 19.8 13.7 Evo,ts ImportsGross national product 4.0 5.2 6.5 6.4

Note: 1995 data are preliminary estimates.

Annex 10Page 2 of 2

India

PRICES and GOVERITMEJ FINANCE1975 1985 1994 199S InflaUon (%)

Dwcpices

(°/o change) 15CorJsumerprioes 5.7 5.5 10.2 10.2 10 InplicitGDPdeflator -1.5 7.6 11.1 85 s

Govemmert finance(%/ of GDP) o .Current revenue .. 23.5 21.2 21.3 9s G1 92 93 94 95Current budget baance .. 2.2 0.2 -1.2 GDPdsF. CPIOverall surplus/detcit *- -10.4 -9-0 -10.3

TRADE

1975 1985 1994 1996 Export and Import levels (mill. LS$)(millions US$)Total exports (fob) .. 9,463 26,763 32,502 40,000

Tea .. 511 311 292Iron 473 413 463 30,0 -

Mn'eufactures .. 5,63 21,088 25,770Total impjorts (clf)1728 326 385 000-

Food .. 1,321 1,464 2,354 11Fuel and energy .. 4,054 5,928 6,885 6 '

Capital goods 3,503 6,366 7,152 l

E.ortpriceindex(1987=100) .. 80 118 121 89 90 S1 92 93 94 SS

Importopricindex(1987=100) .. 96 121 128 oEvoxts aelfrrpatsTerrrsoftrade(1987=100) .. 83 98 94

BALANCE of PAYNENTS1975 1985 1994 1996

(millions US$) Curnat cconht balance to GDP rao (h)Exports ofgoods and non-factorsevices 5,650 1Z773 34,047 40,971 oImportsofgoods and non-fadorservices 5,990 19,422 39,047 47,201 89 9g S 2 94 9SResource balance -340 -8,649 -5,000 -8,236 -1

Net factor inoone -191 -1,553 -3,905 -4,677Net current tansfers 470 2,207 6,200 5,499 -2

CuTent aacournt balance,before olffial bransfers -81 -6,995 -Z705 -5,414 -3 .

Finandng denm (net) 636 6,807 9,563 3,120Changes in net reserves -575 -812 4,858 2,293 -4

R u m,4Reserves induiding gdd (mnill. US$) 2,064 9,730 24,0Y79 21,930Converson rate (locaVS$) 8.7 1Z2 31.4 3Z4

EXTERNAL DEBT and RESOURCE FLOU61975 1985 1994 1996

(milions US$) C9rpositionortotalddiit 1966(mill.t.19)Total debt outstanding and disbwsed 13,708 40,971 98,990 10Z318 G A

IBRD 436 2,396 11,120 9,849 5885 AgIDA 2,809 9,750 17,656 17,499

Total debtservice 822 3,534 10,516 11,910 BIBRD 89 313 1,598 1,716 F 17499

IDA 24 124 315 357 29120

Carpositon of net resource flows COffidal grants 511 450 612 650 2719Offidal aeditors 1,280 1,424 976 1,732Private creditors 83 2,276 148 1,863 DForeign direct investrent 85 106 620 1,300 E 4843Portfolio equity 0 0 4,729 1,273 3280

WVrd Bank prgramConiribrnnts 917 Z882 2,066 1,427 A-IeBRD E- aDisburserrt 531 1,375 1,707 1,318 B-IDA D- O rwnitel F-Pr P |gPrindpal rypren 63 157 1,021 1,169 C-Iw G-S hot4tTNet flos 467 1,218 686 149 1 _

interestpaynamts 50 280 891 903Net bansfers 417 938 -205 -754

SA2CI and Inrnafonal Eomomics Ofarbmnt er