Document of The World Bank FOROFFICIAL USE ONLY ReportNo: 47771-IN PROJECTAPPRAISAL DOCUMENT ON A PROPOSEDCREDIT INTHEAMOUNT OF SDR127.3MILLION (US$197MILLION EQUIVALENT) TO THE GOVERNMENTOF INDIA FORAN UTTAR PRADESHSODIC LANDS RECLAMATION 111PROJECT June 5,2009 SustainableDevelopmentDepartment Agriculture and RuralDevelopmentUnit IndiaCountryManagementUnit SouthAsia Region This document has a restricted distribution and may be usedby recipients only inthe performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective May 31,2009) Currency Unit = IndianRupee (Rs.) Rs.47.18 = US$1 US$1.55 = SDR 1 FISCAL YEAR April 1 - March 31 ABBREVIATIONS AND ACRONYMS ResultsReport ID IrrigationDepartment UPBSN UttarPradeshBhumiSudharNigam IDA InternationalDevelopment UPSLRIIIP Uttar Pradesh Sodic Lands Association ReclamationI11Project IESA IntegratedEnvironmentaland Social WUG Water User Group Assessment Vice President: Isabel Guerrero Country Director: N.Roberto Zagha Sector DirectodManager: John Henry SteidGajanand Pathmanathan Task Team Leader: AnimeshShrivastava *. 11 FOROFFICIAL USE ONLY INDIA Uttar PradeshSodic Lands ReclamationI11Project CONTENTS Page A. STRATEGIC CONTEXT AND RATIONALE ................................................................. 1 1. Country and Sector Issues................................................................................................ 1 2. Rationale for Bank involvement...................................................................................... 3 3. Higher level objectives to which the project contributes................................................. 4 B. PROJECT DESCRIPTION................................................................................................. 5 1. Lendinginstrument.......................................................................................................... 5 2. Program objective and phases.......................................................................................... 5 3. Project development objective and key indicators........................................................... 5 4. Project components .......................................................................................................... 5 5. Lessons learned and reflected inthe project design......................................................... 8 6. Alternatives considered and reasons for rejection........................................................... 9 C. IMPLEMENTATION ......................................................................................................... 9 1. Partnership arrangements (ifapplicable) ......................................................................... 9 2. Institutional and implementation arrangements............................................................... 9 3. Monitoring and evaluation o f outcomes/results............................................................. 11 4. Sustainability .................................................................................................................. 13 5. Critical risks and possible controversial aspects ............................................................ 14 6. Credit conditions and covenants .................................................................................... 17 D. APPRAISAL SUMMARY............................................................................................... 19 1. Economic and financial analyses................................................................................... 19 2. Technical........................................................................................................................ 20 3. Fiduciary ........................................................................................................................ 21 4. Social.............................................................................................................................. 23 5. Environment................................................................................................................... 24 6. Safeguard policies.......................................................................................................... 24 7. Policy Exceptions and Readiness................................................................................... 26 This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. Its contents may not be otherwise disclosed without World Bank authorization. Annex 1: Country and Sector or Program Background ......................................................... 27 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies .................31 Annex 3: Results Framework and Monitoring ........................................................................ 36 Annex 4: Detailed Project Description ...................................................................................... 42 Annex 5: Project Costs............................................................................................................... 51 Annex 6: Implementation Arrangements ................................................................................. 52 Annex 7: Financial Management and Disbursement Arrangements ..................................... 62 Annex 8: Procurement Arrangements ...................................................................................... 71 Annex 9: Economic and Financial Analysis ............................................................................. 76 Annex 10: Safeguard Policy Issues ............................................................................................ 84 Annex 11: Governance & Accountability Action Plan (GAAP) ............................................. 93 Annex 12: Project Preparation and Supervision ................................................................... 111 Annex 13: Documents in the Project File ............................................................................... 112 Annex 14: Statement of Loans and Credits ............................................................................ 113 Annex 15: Country at a Glance ............................................................................................... 118 IBRDMap IND36870 ............................................................................................................... 120 V INDIA UTTAR PRADESH SODIC LANDS RECLAMATION I11PROJECT PROJECT APPRAISAL DOCUMENT SOUTH ASIA SASSD Date: June 5,2009 Team Leader: Animesh Shrivastava Country Director: N.Roberto Zagha Sectors: Irrigation and drainage (75%); Sub- Sector Director: John Henry Stein national government administration (20%); Other Sector Manager: GajanandPathmanathan social services (4%); Agricultural extension and research(1%) Themes: Technology diffusion(P);Rural services and infrastructure (P);Other rural development (P);Land administration and management (P);Participation and civic engagement (S) Project ID: P112033 Environmentalscreening category: Partial Assessment Lending Instrument: Specific Investment Loan (SIL) ProjectFinancing Data' > . . , . i [ 3 Loan [XI Credit [ 3 Grant [ ] Guarantee [ 3 Other: For Loans/Credits/Others: Total Bank financing: SDR 127.3 million (US$197 million equivalent) Proposedterms: IDA StandardCredit with a maturity of 35 years including a grace period of 10 years. I BORROWERRECIPIENT I 49.20 I 0.00 I 49.20 1 I International Development Association (IDA) I 193.10 I 3.90 I 197.00 Community (Beneficiary Farmers) 25.80 0.00 25.80 Total: 268.10 3.90 272.00 Borrower: Departmentof Economic Affairs, Ministry o f Finance, Government of India, New Delhi- 110001,India Responsible Agency: Uttar PradeshBhumi Sudhar Nigam (UPBSN) and Government of Uttar Pradesh vi Annual 5.00 10.00 25.00 37.00 40.00 40.00 40.00 Cumulative 5.00 15.00 40.00 77.00 117.00 157.00 197.00 Does the project depart from the CAS incontent or other significant respects? Ref:PADA.3 No Does the project require any exceptions from Bank policies? Re$ PAD D.7 [ ]Yes [XINO Have these been approved by Bank management? [ ]Yes [ IN0 I s approval for any policy exception sought from the Board? [ ]Yes [XINO Does the project include any critical risks rated "substantial" or "high"? [ ]Yes [XINO Re$ PAD C.5 Does the project meet the Regional criteria for readiness for implementation? Re$ PADD.7 [XIYes [ ]No Project development objective Re$ PAD B.3, TechnicalAnnex 3 The project development objective (PDO) is to increase agricultural productivity of degraded lands in selected areas o f UP. The objective would be achieved by reversing water-induced land degradation, enhancing soil fertility, and improving the provision o f agriculture support services. Project descriptionRe$ PAD B.4, TechnicalAnnex 4 The project will havethe following five components: On-Farm Development and Land Treatment (Base cost US$170.7 million): The objective o f this component i s to sustainably reverse water-induced land degradation-salinization, sodification and water-logging-through carefully sequenced technical interventions on about 130,000 ha o f sodic lands. The component includes a pilot on ravine reclamation. Improvement o f Drainage Systems (Base cost US$39.2 million): The objective of this component i s to improve the drainage networks in the project area to remove/leach effluents, excess rain, and irrigation water from reclaimed and adjoining areas. Agriculture Support Services (Base cost US$9.4 million): The objective o f this component i s to increase agricultural productivity by promoting improved technology, better agronomic practices, and more effective provision o f key support services. Institutional Strengtheningand Capacity Building for Market Access (Base cost US$9.7 million): The objective o f this componenti s to improvethe profitability o f farm production and enhance livelihoods o f the poor through improved marketing, value addition and enhancement o f skills. Project Management (Base cost USs22.9 million): The obiective of this comDonent i s to vii ensure smooth implementation o f all project activities, monitoring o f project implementation progress, and outputs/outcomes, and learning from project experience. Which safeguard policies are triggered, if any? Re$ PAD D.6, TechnicalAnnex 10 Environmental Assessment (OP/BP/GP 4.01) Natural Habitats (OP/BP 4.04) Pest Management (OP 4.09) Involuntary Resettlement (OP/BP 4.12) Significant, non-standard conditions, if any, for: Re$ PAD C.6 Boardpresentation: None Credit effectiveness: None Covenants applicable to project implementation: (i) Uttar Pradesh will make available to UPBSN, as a grant and in a timely manner, the proceeds o f the Credit made available to Uttar Pradesh by the Borrower. Uttar Pradesh and UPBSN shall: maintain, at all times during Project implementation, an implementationteam (IT) within UPBSN's regular structure, with a structure, functions and responsibilities acceptable to the Association, including, inter alia, the responsibility ofthe said team to coordinate and monitor the carrying out o fthe Project; ensure that the IT is, at all times during Project implementation, led by a managing director and i s assisted by adequate professional and administrative staff (including procurement and financial management specialists and senior environmental and social managers), in numbers and with experience and qualifications acceptable to the Association, operating under terms o f reference satisfactory to the Association; maintain at all times during Project implementation a State Steering Committee, headed by Uttar Pradesh's Chief Secretary, with responsibilities and functions satisfactory to the Association, including, inter alia, reviewing overall Project implementation and ensuring effective coordination betweenUttar Pradesh's participating line departments; continue to keep the Agriculture Production Commissioner as the chairman o f the board o f UPBSN; maintain a Project Implementation Plan, satisfactory to the Association, containing, inter alia, specific provisions on detailed arrangements for the carrying out o f the Project, including: (a) the procurement, financial management and disbursement requirements thereof; (b) criteria for the identification, selection and planning o f reclamation sites under the Project; (c) the ESMF, Resettlementand Rehabilitation Policy and Entitlement Framework, the Procurement Plan, the Procurement Manual and the Financial Management Manual; and (d) the Key Performance Indicators; ... Vlll carry out the Project in accordance with the Project Implementation Plan. Except as the Association shall otherwise agree, UPBSN and/or Uttar Pradesh shall not amend or waive any provision o f the Project Implementation Plan without the Association's prior written approval;. in case o f any conflict betweenthe terms o f the Project Implementation Plan and those o f the Project Agreement and o f the FinancingAgreement, the terms o f Project Agreement andof the Financing Agreement shall prevail; carry out (a) Component A o f the Project with the assistance o f Uttar Pradesh's Remote Sensing Applications Center (pursuant to the Cooperation Agreement [MOU]); (b) Component B o f the Project with the assistance o f Uttar Pradesh's Irrigation Department (pursuant to the Cooperation Agreement [MOU]); (c) Component C o f the Project with the assistance o f Uttar Pradesh's Agriculture Department and Animal Husbandry Department (pursuant to the Cooperation Agreement [MOU]); and (d) Component D of the Project with the assistance o f Uttar Pradesh's Panchayati Raj Department (pursuant to the Cooperation Agreement [MOU]); maintain at all times during Project implementation a District Implementation and Coordination Committee, with responsibilities and functions satisfactory to the Association, including, inter alia, overseeing Project implementation at the district level and coordination among participating government departmentsand other stakeholders; ensure timely release o f funds for maintenance o f drains inproject areas; ensure that the Project i s carried out in accordance with the provisions o f the Anti- Corruption Guidelines and the GAAP; carry out the Project in accordance with the agreed ESMF, Resettlement and Rehabilitation policy and Entitlement framework and implement proposed mitigation measures provided in the Integrated Environmental and Social Assessment in a manner satisfactory to the Association; and ensure that the environmental and social screening criteria are updated regularly, and are at all times consistently and satisfactory applied; monitor and evaluate the progress o f the Project and prepare Project Reports on the basis o f the Key Performance Indicators. Each such Project Report shall cover the period o f one calendar semester, and shall be furnished to the Recipient not later than one month after the end o f the period covered by such report for incorporationand forwarding by the Recipient to the Association o f the overall Project Report; maintain a financial management system and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Association, both in a manner adequate to reflect the operations and financial condition o f UPBSN, including the operations, resources and expenditures related to the Project; have its financial statements referredto above audited by independent auditors acceptable to the Association, in accordance with consistently applied auditing standards acceptable to the Association. Each audit o f these financial statements shall cover the period o f one (1) fiscal year o f UPBSN. The audited financial statements for each period shall be furnishedto the Association not later than six months (6) after the endo fthe period; and ensure that all goods, works and services required for the Project and to be financed out o f the proceeds of the Project Financing shall be procured in accordance with the provisions described inthe Procurement Guidelines, or Consultant Guidelines, as the case may be. ix A. STRATEGIC CONTEXT AND RATIONALE 1. Countryand Sector Issues 1. Uttar Pradesh (UP) i s the most populous state in India with a population o f about 166 million (2001 census) living on an area o f about 241,000 km2.In2006-07 the per capita income in UP was less than 50% of the national average. This huge disparity is attributed to divergent growth patterns between UP and most o f India. For example, between 2002 and 2007 UP achieved growth rate o f 5.3% compared to the national growth rate o f 7.7%. With relatively sluggish growth, poverty has tended to persist, and about 25-35% o f the rural population was below the poverty line in 2004-05, which i s equivalent to between 35 and 50 million poor people. 2. Nearly 80% o f the population inUP lives inthe rural areas and about two-thirds (66%) of them are dependent on agriculture for their livelihoods. Over the years, the share of agriculture in the state domestic product (SDP) has declined from about 33% in 1999-2000 to 26% in2007-08. Similarly, per capita land availability has declined and the area under marginal farmers (4ha) has increased from 25% in 1980-81 to 37% in 2000-01. Nevertheless, UP agriculture has recently grown at a relatively higher rate than the national average, 2.10% in 2002-2007 compared with the national average o f 1.10% during the same period, which underscores the potential for UP agriculture to grow at an even higher rate if targeted investments are made to address sector issues that constrain growth. 3. Sector Issues: Both structural and institutional issues limit the performance of UP agriculture and some o f the most important problems include: (a) Low productivity: Land productivity varies widely between the major agro-ecological zones inUP, and on average the yield gap i s about 45% for rice, 50% for wheat, and 30% in maize. The main causes of low productivity are sodicity, water-logging, lack of assured irrigation, imbalanced use o f chemical fertilizers, unavailability o f organic manure, andpoor agronomic practices. (b) Land degradation: About 5,140,000 ha o f agricultural land in UP (nearly one-sixth of cultivable land) i s facing a variety o f land degradation problems, including sodic lands, ravines lands, alkali soils, and water logging. Yields in degraded lands are characteristically low and stagnant - for example, yields under sodic lands are less than one-third o f an already low average for the state. Typically, degraded and barren lands are predominantly owned by households that are very poor, including scheduled castes, scheduled tribes, and so-called "backward" communities. Going forward, land degradation will continue to pose serious natural resource management challenges given the pressure exerted by the growing population (1.8% p.a.). This challenge needs to be met with a sustainable natural resource management framework that also pays due attention to developmento f rural livelihoods. (c) Small land holdings: The poor not only occupy degraded lands but also suffer from small land holdings. UP has the highest percentage of marginal farmers in the country with about 76.9% o f farmers owning less than 1 ha o f land. Average land-holding stands at about 0.8 ha per farmer and continues to decline because o f growing population and this further undermines rural livelihoods. Weak dissemination of agricultural technology: The root cause appears to be poor capacity in the Agriculture Department, which i s the main extension agency, especially regarding preparing grassroots extension workers so that they could support farmers in applying both new and existing productionmethods. Weak systems for delivering agricultural credit: Despite a two-fold increase in the volume o f agricultural credit between2002 and 2005, it i s estimated that less than 20% o f farmers in UP are reached by this network, which suggests that small and marginal farmers who form about 80% o f the farming population are largely excluded. 4. GovernmentActions: The Government o f Uttar Pradesh (GOUP) has undertaken several initiatives to address technology dissemination, productivity, and soil fertility problems inarable lands. Some o fthe major ongoing schemes include: Macro-management of agriculture: This scheme covers all the districts and focuses on improved crop husbandry and natural resource management practices, including integrated nutrient management for protecting the environment and promoting sustainable food production. The total outlay o f the scheme for 2007-2012 is about US$ 168 million, with about 10% contribution coming from the state o f UP and the remainder from the central government. Technology mission on oilseeds, pulses and maize: This scheme puts together a number o f programs to promote crop diversification on the basis o f agro-ecological conditions across UP. The budget for 2007-2012 i s about US$45 million with 25% contribution coming from the state. The programcovers all districts. Kisan Mitra (Farmer's friend) scheme: The purpose o f this scheme i s to establish effective agricultural extension mechanisms at the grassroots level, with village level agriculture graduates and persons experienced in agriculture selected to deliver extension advice and support to farmers. The program covers all districts and its budget for 2007- 2012 i s about US$18 million, all covered by the state. Support to program for extension reforms: This scheme aims to introduce demand- driven, farmer-led, decentralized, integrated extension services in agriculture through a variety o f approaches, including bottom up planning, exposure visits, trainings, demonstrations, private extension providers, and use o f media and information technology. The budget for 2007-2012 i s about US$73 million and the state contributes 10%. Improving soil health: The main objective o f this scheme i s to address the problem o f deteriorating soil health due to imbalanced use o f fertilizers, unavailability o f organic manure, and poor agronomic practices. The main activities include supplementing soil 2 macro/micro nutrients to conserve soil health and strengthening soil testing laboratories. The budget for 2007-2012 is about US$74 millionall covered by the state. Enhancing Rabi pulses production: This scheme aims to achieve 5.1% growth rate in pulse production through: expansion o f area under pulses crops, enhancement o f production level, enhancement o f seed production and seed distribution, farmers' training, and capacity building for departmental staff. The scheme i s fully funded by the state and budget for 2007-2012 i s about US$46 million. Seedproduction through farmer participation: The aim of the scheme is to foster seed production at farmer level to improve the seed replacement rate. The scheme i s wholly fundedby the state with a budget o f about US$9 million. Drains maintenance: In order to prevent re-sodification and continuous cropping o f reclaimed sodic lands, the GOUP has put into operation a drain maintenance policy with 90% budgetary support and 10% contribution by the farmers. An endowment fund entitled "Anurakshan Nidhi" has beenestablished to meet farmer contribution. 5. The actions outlined above go a long way to encourage efficient use o f natural resources for agricultural production. However, there are very large areas inthe state where intervention i s critical if agriculture i s to achieve the target growth rate o f 4%. These include: (i) physical reclamation o f large tracts o f land facing a variety o f degradation problems; (ii) provision o f support services to predominantly small and marginal farmers who cultivate about 60% o f arable land; (iii)improving access to production inputs such as seeds, fertilizers and credit; (iv) strengthening o f farmer organizations, especially producer groups and water user groups (WUGs); (v) improving physical facilities for marketing o f agricultural produce and linking farmers to remunerative value chains that provide opportunities for post-harvest value addition. 6. Intervening in these areas will require significant resources. However, recent figures suggest that only about 2.5% o f UP development expenditure was disbursed to agriculture in 2007-08, despite the sector's 26% contribution to the SDP. It i s unlikely that budgetary allocations will change substantially in the years ahead and hence there i s the need to mobilize external resources for agriculture. 2. Rationale for Bank involvement 7. The proposed project addresses the core challenges mentioned above. It aims to sustainably reclaim 130,000 ha o f predominantly barren and low productivity sodic lands, which would improve household food security through increased productivity and cropping intensity. By focusing on degraded lands cultivated by the poorer section o f farmers, the project will contribute to sustainable alleviation o f poverty because the productive capacity o f land will be raised significantly with little risk o f re-sodification. This i s extremely important given that UP agriculture suffers from very highproductivity gaps o f more than 50% inkey crops such as rice and wheat. In addition to physical land reclamation and on-farm development, the project will provide a variety o f support to the farmer groups, both in input delivery and output marketing. This will include support services infarmer extension, better water management practices, use o f improvedinputs (seeds and fertilizers) and enhanced market access. 8. The Bank support to this project is critical because of its historic role in land reclamation efforts in UP and the technical expertise and knowledge it can provide. As the key partner o f GOUP in sodic land reclamation over the last 15 years, the Bank has helped develop and refine the intervention model, including investments in state-level institutions and strengthening the capacity o f WUGs. The Bank i s in a unique position to assist GOUP's land reclamation efforts through: (i)technical advice and assistance towards development o f appropriate management solutions for different categories o f degraded lands, based on international experience; (ii)strengthening community participatory processes based on proven methodologies learned from Bank-funded livelihoods projects; (iii)design of marketing support services and linking farmers to new and remunerativevalue chains; and (iv) enriching the interventionmodel to move beyond land reclamation to agricultural livelihoods development primarily through investing in community institutions. Furthermore, given that GOUP's share o f development budget to agriculture remains low (2.5%) relative to the sector's contribution to SDP (26%), the IDA resources are critical for continuing the program o f land reclamation inUP. 9. Although previous Bank-funded Sodic Lands Reclamation Projects (UP Sodic Lands Reclamation Project 1993-2001 [Pilot project] and UP Sodic Lands Reclamation I1Project 1999- 2007 [UPSLRIIP]) have demonstrated enormous success, the Bank continues to enrich the interventionmodelbased on lessons learned inother Bank-assisted poverty alleviation programs. Key achievements o f UPSLRIIP include: (a) ut the aggregate level: project ERR was 19.3%; (b) at the jeld level: paddy yields on reclaimed lands increased from 0.9 tonsha to 3.5 t/hq wheat yields from 0.4 t/ha to 2.7 t/ha; and cropping intensity from 63% to 198%; and (c) at the benejkiary level: farm income from an average size farm o f 0.4 ha grew by Rs 5947 (rural poverty line in UP was Rs 4800 p.a.); 93% o f project beneficiaries were small and marginal farmers; about 67% o f the reclaimed land was cultivated for the first time after project intervention; and poverty rate dropped much more sharply in project area compared to neighboringnon-project areas. 3. Higher level objectives to which the project contributes 10. The central vision o f India's Eleventh Five Year Plan is to promote inclusive growth so that the benefits are shared by all people. In line with this vision, the key thrust in the India FY09-12 country strategy (CAS) i s to provide support for programs that: (i) address rising inequality, (ii) sustainable development, and (iii)enhance access to services by the poor. ensure By focusing on increasing the productive capacity o f degraded sodic lands, which are predominantly cultivated by low-caste low-income groups, UPSLRIIIP will contribute towards addressing income inequality in a state where incomes are low. Results from previous sodic lands reclamation projects showed that the intervention model achieved enormous success in raising incomes of the poor. In addition to increasing the productive capacity o f land through reclaiming sodic and ravine lands, the projects package includes strengthening WUGs and producer groups. It i s envisaged that stronger local organizations will provide alternative and effective channels for provision o f agriculture support services to the poor, including extension programs, credit, and marketing o f agricultural produce. 4 11. The richer states inIndia already have incomes that are five times higherthan those inthe lagging states, and the past trends indicate that economic growth barely trickles down on its own to lower income households. Giventhis background, the project's interventions, which primarily involve raising returnsto assets o f the poor, especially the degraded sodic and ravine lands, i s a sound strategy for reducing inequality and poverty. Furthermore, the reduction in poverty and income inequality i s expected to be permanent in nature because the risk o f re-sodification i s minimal. B. PROJECT DESCRIPTION 1. Lendinginstrument 12. The project proposes to use the instrument of a Specific InvestmentLoan (SIL)to support GOUP's efforts to reclaim sodic lands in the state. This is an appropriate instrument given that the instrument is well definedand can be implementedover a finite time period. 2. Programobjective and phases 13. Not Applicable 3. Projectdevelopment objectiveand key indicators 14. The project development objective (PDO) is to increase agricultural productivity o f degraded lands in selected areas o f UP. The objective would be achieved by reversing water- induced land degradation, enhancing soil fertility, and improving the provision o f agriculture support services. 15. Key performance indicators to measure achievement o f the PDO will include increased productivity o f rice and wheat, increased cropping intensity, and increased crop incomes per unit land. 16. The primary target group o f the project will be farmers in the selected project areas, especially small and marginal farmers. 4. Projectcomponents 17. The project will have the following five components: Component A: On-FarmDevelopmentand LandTreatment (Base cost US$170.7 million) 18. This component is central to the project and accounts for about 68% of project costs. Its objective i s to sustainably reverse water-induced land degradation-salinization, sodification, and water-logging-through carefully sequenced technical interventions. Activities to be financed under this component include (a) mobilization o f village communities; (b) detailed 5 mapping and classification o f sodic lands; (c) formation o f water user groups (WUGs); (d) on- farm development through land-leveling, bunding, and linking field drains to link and main drains; (e) provision o f shallow tube-wells to help in reclamation operations and provide irrigation; and (f) application o f chemical/organic amendments and plant nutrients to the soil; and (g) cultivation o f rice-wheat-green manure crop. About 130,000 ha o f sodic lands covering about 25 districts will be reclaimed under this component. As in the case o f the previous sodic projects, this project will operate within the existing land titling and land administration framework o f the state. It will strengthentenure security by helping to clarify and confirm land titlesholdings as part o fpre-reclamationactivities. 19. The reclamation model to be followed has been developed and validated in the earlier phases o f Sodic Lands Reclamation Projects. The expected results from this component are: (a) improved soil quality; (b) increased productivity; and (c) higher cropping intensity. 20. A pilot on ravine reclamation covering an area o f about 5,000 ha would also be included under this component. The pilot will follow a watershed development approach, focusing on in situ moisture conservation, local water harvesting, reducing soil erosion, improving natural vegetation, and enhancing crop and livestock productivity. ComponentB: Improvementof DrainageSystems (Base cost UW39.2 million) 21. The objective ofthis component is to improve the drainage networks inthe project area to remove/leach effluents, excess rain, and irrigation water from reclaimed and adjoining areas. The activities to be financed include: (a) rehabilitation o f main drains; (b) maintenance o f main drains; (c) training and capacity building o f Uttar Pradesh Bhumi Sundar Nigam (UPBSN) and Irrigation Department(ID) staff on technical and management aspects, and training of WUGs for appropriate O&M o f drainage network. The expected results from this component are: (a) improved drainage capacity o f the drainage network; and (b) reduced water-logging in adjacent land area (with resultant improvement in land productivity). For reclamation o f about 130,000 ha o f sodic lands under Component A, about 5,700 km o f the drainage network would require rehabilitation. 22. The re rehabilitation o f main drains will be undertaken by the ID, in collaboration with UPBSNthrough participatory processes that involve stakeholder consultation inplanning, design and execution o f the physical works. Maintenance o f the rehabilitated main drains and their connectivity with the link drains will be done by the ID and monitored by the UPBSNthrough its staff supported by external technical assistance consultants. The relevant WUGs and Site Implementation Committees (SICS) will maintain link and field drains. ComponentC: Agriculture Support Services (Base cost US$9.4 million) 23. This component will aim at increasing agricultural productivity through introduction of improved technology, better agronomic practices, and more effective provision o f key support services. The activities to be financed include: (a) training farmers in effective land and water management practices; (b) dissemination o f improved agricultural technology and production practices through on-farm demonstrations; (c) support for livestock production, including dairy 6 development and small ruminants as appropriate; (d) exposure visits, farmer fairs, animal health camps and other "means" for rural communication and outreach; and (e) training and capacity building of line department staff and other relevant providers o f support services to farmers. The expected results are: (i)increased productivity; (ii)greater cropping intensity; and (iii) agriculture diversification (crops, vegetables and livestock). Component D: InstitutionalStrengtheningand Capacity Buildingfor Market Access (Base Cost US$9.7 million) 24. The objective o f this component is to improve the profitability o f farm production and enhance livelihoods o f the poor. This would be achieved through better input-output market linkages, more efficient and effective delivery o f key support services and augmentation o f community level capacities as well as provision o f some productive infrastructure. The activities to be financed include: (a) mobilization and capacity building o f community based institutions like SHGs and producer groups (PGs); (b) support to cluster levelproducer groups for productive assets; (c) investment support for productive assets (d) improving rural market infrastructure; and (e) organization o f innovation forums. The expected results are: (i) increased share o f produce marketed (by project area farmers); (ii) access to non-traditional markets; and (iii) mobilization o f landless families to form SHGs for livelihood activities. Component E:ProjectManagement(Base cost US$22.9 million) 25. This component will ensure smooth implementation o f all project activities, monitoring of project implementation progress and outputs/outcomes, and learning from project experience. This will be achieved through ensuring fully functional project units at the state and district levels, providing technical assistance and training to improve implementation, ensuring adequate monitoring and evaluation as well as documentation o f project experience and its dissemination to the wider development community, and liaising with project partner organizations, support organizations and external professional agencies, Activities to be financed include: (a) establishing and supporting project units at the state and district levels; (b) specialized support services relating to key activities such as independent external M&E', external audit, financial accounting, procurement and social audit; (c) technical and other training o f staff involved in project implementation; and (d) learning from and dissemination o f project experience. 26. At the central level, the main implementing agencies are UPBSN, Departments of Agriculture, Animal Husbandry, Panchayati Raj and Irrigation, and the Remote Sensing Applications Centre (RSAC). At the local level Site Implementation Committee will be established at Village Panchayat and coordination committees will be established at district levels, with a convergence plan developed to help these committees interact better with existing public institutions as well as government development programs at these levels. ' The ICRR for UPSLRIIP has explicitly endorsedthe usefulnesso f having an independentM&E agency for appropriatemonitoringandmanagementof projectimplementationprogress. 7 5. Lessonslearnedand reflectedin the projectdesign 27. The design of UPSLRIIIP incorporates lessons learned from previous Sodic Lands Reclamation Projects and the Diversified Agricultural Support Project inUP and various Bank- assistedrural livelihoods projects inIndiaand other countries of South Asia. Lesson Key design feature 1. Involving beneficiaries in the design and Once target villages have been selected, there will be implementationimproves local ownership an elaborate awareness campaign in each village, and encourages capacity building. which will culminate into the formation of a village level Site Implementation Committee (SIC), whose membership includes all beneficiaries and is chaired - by the electedGram Pradhan. 2. Communities in reclaimed areas need to Designingand planningof agriculturesupport services be better supported by a flexible, needs- will follow a participatory approach that puts based provision of agriculture support community level organizations at the forefront. This services. will ensure that priority is given to the highly demanded services. 3 Focused attention should be given to Project design now includes a full-fledged component marketingof agriculturalproduce. focused on institutional strengthening for improved market access. The major activities under this component include strengthening of sodic haats, and creationof investment sumort fund. 4. Greater attention should be paid to Improving soil health is an important goal of the improvingsoil fertility/quality. project and soil quality indicators like pH and organic matter content are part of intermediate outcome indicators. 5. Independent, third party M&E greatly An independent M&E consultant will be hired by helps in project implementation and UPBSN to work within a results monitoring achievement o f project development framework that emphasizes both learning among objectives. implementingagencies and feedback loops to project - management, 6. Community mobilization and preparatory Campaigns will be organized in each project village activitiesare essential for successful sodic prior to implementation, and an elaborate process of land reclamation. participatory monitoring will be adopted whereby beneficiaries will provide feedback on all activities under the project, including land reclamation and - drainage works. 7. It is important to develop a robust The GAAP anticipates financial management and governance and accountability procurement risks based on past experiences, and then framework, with particular focus on puts into place elaborate measuresfor their mitigation. - financial managementandprocurement. 28. The ICRR for UPSLRIIP shows that the project surpassed target outcomes in most indicators and the impact on poverty was remarkable. This is because land reclamation projects are bound to achieve enormous success given that they put previously unusable land into agricultural production. About 67% of the reclaimed land was cultivated for the first time after 8 UPSLRIIP intervention. Barrenand low productivity sodic lands inUP are predominantly owned by households that are very poor, and inUPSLRIIP, about 78% o f beneficiary farmers belonged to scheduled castes, scheduled tribes and other "backward" communities. 6. Alternatives considered and reasons for rejection 29. With regard to the efforts being made inUP to reverse land degradation, the Bank has two strategic options: (a) to pull out following the successful completion o f UPSLRIIP, in the hope that the technical and institutional lessons learned from the previous projects will be self- sustaining and will be adopted on a wider scale; or (b) to continue with the program for reclaiming the remaining sodic lands inthe state. Inproposing the present project, the Bank has opted for the latter with a clear intention o f building on the success already registered. The earlier projects have demonstrated a successful approach to land reclamation technically, financially and institutionally, which could be applied to the remaining sodic lands in UP. In view of the success and poverty focus of the earlier projects, there is a strong GO1 and GOUP interest and commitment inthis follow-on project. 30. An alternative considered was a project which focuses only on land reclamation. While this would have simplified project design, it would not have been possible to optimize improvements in farm incomes associated with land reclamation without complementary investments and efforts in agriculture intensification and diversification, animal husbandry, marketing and other livelihood support activities. Leaving these to a separate project or to other government programs has not worked in the past since there was no coordinated effort to ensure maximization o f development outcomes. Hence the decision to have a multi-disciplinary integrated approach. The project design has been simplified from UPSLRIIP by dropping rural roads and adaptive research components. 31. From the governance and anti-corruption perspective, UPSLRIIP did not have any significant negative experiences in so far as procurement or financial management i s concerned. Interms of governance related risks, the main concern of elite capture and political interference was mitigated by the use o f satellite imageries, predominantly C class barren sodic lands (mainly belonging to small and marginal farmers) and other objective and transparent criteria for selection of sodic lands to be taken up for reclamation. Community based SIC will be involved inthe distribution of gypsum andother inputsinan open andtransparent manner. C. IMPLEMENTATION 1. Partnership arrangements (ifapplicable) 32. Not applicable 2. Institutional and implementationarrangements 33. The project will be implemented over a period o f six years. Institutional and implementation arrangements for UPSLRIIIP build on the successful structures and practices o f the first two phasesof the Sodic LandsReclamationProjects. However, some changeshave also 9 been introduced. For example, at the local level, the project seeks to augment community participation in project planning, implementation and evaluation; and focuses more strongly on community capacity building through partnerships with a range o f service providers. At the district and state levels, project implementation teams are being strengthened through the addition o f experts inenvironment management, participatory management and marketing. 34. State Level. At the state level, UPBSN, an autonomous corporation established by GOUP, will have overall responsibility for project implementation. Staffing needs for the project will be met through a mix of government appointments and market-based recruitments. The Board of Directors o f UPBSN, which i s chaired by the Agriculture Production Commissioner, GOUP, and comprises representatives from GOUP and relevant line Departments, will have the responsibility for reviewing implementation progress, enforcing operational guidelines for project management, deploying project staff as needed, and approving the annual plan, including the budget. The State Steering Committee, headed by the Chief Secretary, GOUP, and including secretaries o f relevant departments, will have the responsibility for overall review o f implementation progress and strategy, and ensuring effective coordination between the line departments involved. 35. Within the UPBSN, project implementation will be the overall responsibility of the Managing Director (MD) o f UPBSN. The MD will be assisted by Joint Managing Director(s) as well as division heads for land reclamation, finance, procurement, technical services, management services, drainage and minor irrigation. At the field level, in addition to UPBSN, the Departments of Irrigation, Agriculture, Panchayat Raj and Animal Husbandry and the Remote Sensing Applications Centre (RSAC) will also be involved in project implementation. Steps have been taken in implementation design to ensure effective coordination, including appointment o f Nodal Officers, and for regular review meetings involving all the concerned departments and institutions. For Component BydesignatedDrainage Divisions inthe Irrigation Department will carry out the work o f rehabilitation o f main drains in the project area. Quarterly coordination meetings will be held by the Engineer-in-Chief, Irrigation Department, to review the progress ofdrainage works. 36. District Level. A District Implementation and Coordination Committee (DICC) will be constituted at district level to oversee project implementation and coordination among the various government departments and other organizations. This committee will be chaired by the District Magistrate and the Senior Project ManagedProject Manager, UPBSN will be its convener. Zonal Officers at UPBSN headquarters will manage and coordinate activities in 4-5 districts. Each district will also have a District Project Unit (DPU). The DPUs inthe five districts where the first phase o f landreclamation activities will be undertaken, have already beenstaffed. Staffing o f the other DPUs i s inprogress. 37. Sub-District Level. Within each district, several swb-unit offices, each headed by a Deputy Manager, will coordinate and supervise implementation for a specified number o f villages. 38. Village Level. In each project village, the project will support the formation and development o f SIC, WUGs and SHGs. The formation and development o f WUGs and SHGs 10 will reflect lessons learned from UPSLRIIP and several Bank-funded livelihoods projects in the region. 39. Site Implementation Committees: A site implementation committee (SIC) will be formed ineachproject village underthe chairmanship o fthe Gram Pradhan. The SIC is the village level body to coordinate project activities and distribute gypsum and other inputs. A proposal would be moved by the villagers at the end of awareness campaign to establish the SIC. The SIC will comprise all project beneficiaries, representative o f the participating NGO, Mitra Kisan and Mahila Mitra Kisan, village level functionaries o f rural development, irrigation and other line departments. The Assistant Manager, UPBSN, will be SIC convener. After implementation, the SIC will be amalgamated into the Water Management Committee o f Gram Panchayat and will be responsible for the maintenance o f link drains. 40. Water User Groups. A WUG will comprise neighboring landholders operating around a common shallow tube well in sodic lands that are to be reclaimed under the project. WUG will be the primary unit of implementationo f land reclamation activities, and will be responsible for executing all project activities within a command area o f about 4 ha. As the members o f the WUG begin farming on their reclaimed land, the project will help them to form aggregate institutions to leverage goods, services and finance, and to access output markets. 41. Self-Help Groups. The project would providelivelihood support to the landless poor, (who cannot directly benefit from landreclamation activities) and those having less than 0.1 hectare o f land in the project villages. They will be encouraged to form SHGs to undertake animal husbandry and other non-land based economic activities. 42. Producer Groups. As the project progresses, those members o f WUGs and SHGs that are undertaking productive activities will be encouraged to form producer groups. The project will provide technical and investment support for these institutions to develop their productive activities and access profitable markets. Project support will be available based on eligibility criteria that emphasize the needddemand and the capacity or strengths o f the producer groups. The criteria will be explicitly specified inthe relevant operational manual. 3. Monitoringand evaluationof outcomes/results 43. A systematic monitoring and evaluation o f project activities and outcome indicators will be carried out to assess the effectiveness o f the project during implementation and at completion. The overall responsibility for Monitoring and Evaluation (M&E) o f project implementation and progress will remain with the UPBSN, which will establish an M&E Unit. The project has adopted a three pronged approach towards M&E processes: (i) internal monitoring by each line department and agency involved in project implementation; (ii)participatory monitoring by beneficiaries and beneficiary organizations, including WUGs and other groups supported by the project; and (iii) external M&E to be conducted by an independent agency hiredby the UPBSN under terms o f reference agreed between the IDA and GOUP. The role of independent M&E agency i s critical for providing timely and accurate verificatiodvalidation o f crucial information on project activities, processes and outputs. The independent M&E agency will also cover and 11 report on the ravine pilot. The usefulness o f the role o f independent M&E agency in enhancing project management quality and effectiveness was experienced inthe second sodic project. 44. Data Collection: For internal monitoring, all implementing units, including line departments and agencies, will collect data on inputs (physical, technical, financial, etc.) and output indicators related to their respective implementation activities. The external M&E agency will be responsible for conducting surveys to collect relevant data for the project, monitor implementation progress, and assess project outputs/outcomes at mid-termand the end o f project implementation. Due to the recently closed UPSLRIIP, a good baseline data i s already available for key parameters. In addition, a consultancy i s currently underway to obtain more refined estimates o f the relevant indicators from proposed project sites (as well as "without project" control sites in neighboring locations). Data for participatory monitoring will be collected by project beneficiaries through the use o f detailed activity schedules and community score cards, and will be used to provide feedback on implementation progress and project outputs. The M&E unit in UPBSN will have overall responsibility for facilitation and coordination of the various data collection activities. The unit will ensure that: (i) data collected by various units and agencies capture all aspects o f the project; (ii) are collected in a timely manner with due data regard to quality issues and "control samplesyy,where appropriate; and (iii) data are duly the recorded and enteredinto the M&E information system. 45. Capacity Building: Inaddition to collecting data for monitoring and impact evaluation, the external M&E agency will be responsible for building capacity to support internal and participatory monitoring processes. This will be a continuous exercise that will involve assisting implementing units in: (i)designing formats and gathering data during each M&E phase; (ii) trainingsonusingtheM&Einformationsystem;(iii) formal formulating a participatory self- assessment process; (iv) data analysis and reporting results; and (v) preparing and disseminating learning notes to the implementingunits and beneficiaries. 46. Data Analysis and Reporting: Systematic data analysis and reporting are designed to ensure that feedback from timely M&E o f project activities, outputs, and outcome indicators is used to take informed management actions, including remedial measures, if necessary. Each unitlagency conducting M&E activities will be requiredto analyze the data collected and prepare simple, informative, and user-friendly reports that will be submitted to the UPBSN M&E unit and distributed to all levels o f project management and implementation. The M&E unit will be responsible for ensuring that sufficient capacity exists for data analysis and reporting at the requiredlevels as stipulated inAnnex 3. 47. Mid-Term and FinalImpact Evaluation: There will be a mid-term review (MTR) o f the project based on monitoring reports to date and mid-term impact evaluation completed by the external M&E agency. The MTR will evaluate the project in accordance with the results framework stipulated in Annex 3 and the review will be used to devise mid-term corrections in project design and implementation, if necessary. A final impact evaluation will be conducted by the external M&E agency uponcompletion ofthe project. 12 4. Sustainability 48. Sustainability i s a core project principle and has been factored into project design through the following design features and/or expected measures. 49. Institutional sustainabilitv. At the ground level, project activities will be implemented primarily through beneficiaries groups. The following steps have been planned to ensure that the key activities will continue to beperformed by relevant groups inthe post-implementationstage: WUGs will be provided training indrain maintenance; and the SIC will be amalgamated into the Water Management Committee o f the Gram Panchayat to continue its role in maintaining link drains and ensuring availability o f tube well water. 0 Producer groups to be supported under the project will be selected on the basis o f clear eligibility criteria, which include willingness/capacity o f the community organizations, and economic business model (to avoid "supply-driven" formation o f group aggregates). 0 Project will help in identifying and supporting innovative service providers and potential business partners who would work with productive groups formed under the project and help spur their growth. Project will facilitate linkage o f eligible SHGs with banks and other formal sources o f credit to ensure they can continue to undertake micro-enterprise activities after project closure. 50. Financial Sustainabilitv: The main issue with financial sustainability arises potentially with regard to funds for maintenance o f rehabilitated main drains. A mechanism has been agreed whereby 90% o f the funds are to be provided by GOUP to the ID (through a special budget line in the ID budget) and 10% of the fund is provided through UPBSN's corpus fund called "Anurakhshan Nidhi." Mechanism has beenput inplace to monitor timely release o f earmarked funds by GOUP and their exclusive use for the maintenance o f drains in the reclaimed sodic lands. 51. Technical Sustainabilitv: The project will undertake the following activities to enhance technical sustainability: (i) technical training will be providedto WUGs for field and link drain maintenance; (ii)WUGs and SHGs, and their aggregate institutions, will be provided intensive capacity building and technical assistance support; (iii) UPBSN will work with the private sector, district level Agricultural Technology Management Agencies and the relevant state line departments to strengthen a farmer-centered, market-driven, integrated extension system; and (iv) technology dissemination at the ground level will be done by farmer-led mechanisms rather than external service providers. 52. Social and Environmental Sustainabilitv: Socially, the project will target the poor, the landless and socially disadvantaged and vulnerable groups, through a variety o f mechanisms: at least 65% o f the lands to be reclaimed will be o f Class C category, which are owned primarily by small and marginal farmers; landless poor will be organized into SHGs in order to provide them livelihood support; and many activities such as livestock rearing will be designed to target mainly the poor. Safeguard action plans will reduce tension and help manage any potentially 13 negative social and environmental impacts. The M&E system will track social development indicators. 53. Monitoring and Evaluation: A strong monitoring system will assist in monitoring and assessingthe sustainability o f investments made underthe project. 5. Critical risks and possible controversial aspects 54. The matrix below lists key risks to the achievement o fPDO at the project level and outputs and outcomes at the component level. The project design has also focused on key governance risks likely to arise during implementation, including problems in transparency and accountability, ineffective grievance handling mechanism, and poor procurement or financial management system. To address these weaknesses the project has developed a detailed governance framework, including a time bound action plan reported in the GAAP (see Annex 11). RiskAfter Risks RiskMitigation Measures Mitigation Greater emphasis i sThe project is enlarging the scope o f agriculture, Low placed on physical market development and livelihood support activities aspects o f land to be undertaken under components C and D. It will reclamation than on also support training and capacity buildingo fproducer enhancing agricultural groups and SHGs, as well as cluster level institutions, production and in order to ensure that livelihood concerns are productivity, linking adequately reflected in site implementation plans. It producers to markets and will also seek to work with new partners (service strengthening the providers or innovative businesses) to enhance agricultural livelihoods activities inthis regard. base. Coordination between Implementationarrangements have been augmented to Moderate line departments is weak ensure effective coordination: the State Steering or ineffective, adversely Committee o f the project comprises representatives impacting from all related departments to oversee project implementation. development and implementation; departments involved in project implementation have appointed a nodal officer in UPBSN to help coordinate planning and implementation o f project-related activities; and District Implementation and Coordination Committee, which includes district level departmental officials, will coordinate and monitor project implementation at the district level. Project benefits are An information and education campaign will be Low captured by local elites undertaken in the project area to explain the due to weak selection projects objectives, activities, and the selection tx-ocessesholitical 14 RiskAfter Risks RiskMitigationMeasures Mitigation interference. criteria, well before the actual selection o f beneficiaries. Farmedsite selection will be based on clear and objective criteria (see Annex 4) using satellite imageries. The criteria lead to pro-poor selection. In particular, experience has shown that focusing on "Class C" lands (barren sodic lands) mitigates elite capture because such land i s typically owned by small/marginal farmers or those from backward/disadvantaged social groups. Criteria will be widely advertised and the final farmers participating in the project activities will be selected by the Site Implementation Committee (SIC) inan open meeting. The beneficiary list will be prepared and publicly displayed in appropriate places, including the project website, prior to the commencement o f reclamationworks. Project staff or staff o f a support NGO will monitor all selection processes to ensure it i s transparent and conforms to agreed procedures. To Project Components Poor quality o f on-farm Building on lessons from earlier project, project Low development affects design and implementation arrangements will success o f land strengthen the following land reclamation reclamation (e.g., sodic processes: patchesremain). 0 Reclamation works will be plannedon smaller-size plots. 0 Training o f farmers in land leveling and building bunds will be strengthened. The monitoring process will focus on ensuring lands slope, without undulation, for adequate drainage. Salt crust will be scraped from the top of the soil so that it does not use up the gypsum on application. The quality and quantity 0 Representatives o f relevant government Moderate 3 f goods and services implementingagencies or a hired external agency :ould be low due to lack will provide pre- and post-inspectiono f goods and Ifprocurement standards works. Pre- and post-dispatch examinations o f md weak monitoring. goods, for example rake point verification o f gypsum samples by trained specialists, will ensure item-specific quality standards. 15 RiskAfter Risks RiskMitigationMeasures Mitigation Participatory Monitoring and Evaluation Committees will also monitor and report on the quality o f goods and services delivered in their village. Drainage works delayed Operational links (including Nodal officers) Low and not completed between UPBSN and Irrigation Department have before land reclamation beenstrengthenedto ensure that annual work plans due to weakness in and detailed activity schedules reflect the planning, delay in bid appropriate sequencing o f activities. Also, field processing, and delay in level staff from the two agencies will meet completing civil works. periodically to pursuejoint implementation. Project MIS and reporting systems will also be used to enforce appropriate sequencing o f these activities. Preparation o f bid documents and bidding will be conducted well before the start o f land reclamation. Bidders will be made aware o f the scope and schedule o f works in pre-bid meetings including detailed construction programs with milestones. Office o f the Chief Engineer responsible for drainage works will provide constant oversight on Procurement and contract administration. Market linkage and Capacity o f UPBSN i s beingaugmented to address Low livelihoods development, the new focus areas of institutional development aimed for in the project and market access, including relevant staffing and through investing in training. community institutions, Support organizations will be hired to mobilize may suffer due to lack o f community groups and build their capacities to relevant skills/capacities implementrelevant project activities. in UPBSN (which Partnerships will also be sought with innovative traditionally focused on private sector players, especially through the land reclamation). proposed Innovation Forum. A program o f training and cross-learning from other successful community-focused livelihoods projects, will be developed to build skills and capacities o f project implementation staff at the field level. Group formation and community institution building will follow a "graduation model", with clearly demarcated stages allowing for capacity assessment. and mid-course corrections. Frequent changes and D Consistent remesentation has been made to GOUP Moderate 16 RiskAfter Risks RiskMitigationMeasures Mitigation high turnover o f staff in at the highest level regarding the importance o f implementing agencies continuity in staffing. Bank will continue to and support organiza- emphasize this point. tions impede project For staff involved in project implementation, the implementation. following mitigation strategies will be emphasized to ensure staffing continuity: (i)recruitment from broad-based pool o f technically qualified personnel; (ii)use o f performance-related incentives, where possible; and (iii)attention to staff training to enhance skills where appropriate. Aggregated Explicit attention will be paid to capacity building Moderate institutions-WUG and needs at the federation or cluster level (e.g., in SHG federations1 cluster operations management, conflict resolution, etc.). organizations-may be Where feasible, long-term arrangements for weak and ineffective. technical backstopping will be made with relevant line departments and/or public agencies. A cadre of community based para-professionals would be mobilized. These would continue to support the groups even after the project closure. Depending upon the nature o f their business transactions, cluster-level organizations will be facilitated to enter into partnerships with private sector firms, banks and other formal financial institutions. Project will facilitate registration o f cluster-level institutions o f the poor-commodity-based and SHG federations-under either the Companies Act or the Societies Act. 6. Credit conditionsand covenants 55. N o condition i s envisaged for effectiveness. The key covenants applicable to project implementation include the following: (i) Uttar Pradesh will make available to UPBSN, as a grant and in a timely manner, the proceeds o f the Credit made available to Uttar Pradesh by the Borrower. Uttar Pradesh and UPBSN shall: (ii) maintain, at all times during Project implementation, an implementation team within UPBSN's regular structure, with a structure, functions and responsibilities acceptable to the Association, including, inter alia,the responsibility ofthe said team to coordinate and monitor the carrying out o f the Project; 17 (iii) ensurethattheImplementationTeam is, atalltimesduringProjectimplementation, led by a managing director and i s assisted by adequate professional and administrative staff (including procurement and financial management specialists and senior environmental and social managers), in numbers and with experience and qualifications acceptable to the Association, operating underterms ofreference satisfactory to the Association; maintain at all times during Project implementation a State Steering Committee, headed by Uttar Pradesh's Chief Secretary, with responsibilities and functions satisfactory to the Association, including, inter alia, reviewingoverall Project implementationand to ensure effective coordination betweenUttar Pradesh's participating line departments; continue to keep the Agriculture Production Commissioner as the chairman o f the board o f UPBSN; maintain a Project ImplementationPlan, satisfactory to the Association, containing, inter alia, specific provisions on detailed arrangements for the carrying out o f the Project, including: (a) the procurement, financial management and disbursement requirements thereof; (b) criteria for the identification, selection and planning o f reclamation sites under the Project; (c) the ESMF, Resettlementand Rehabilitationpolicy and Entitlement framework, the Procurement Plan, the Procurement Manual and the Financial Management Manual; and (d) the Key Performance Indicators; (vii) carry out the Project inaccordance with the Project Implementation Plan. Except as the Association shall otherwise agree, UPBSN and/or Uttar Pradesh shall not amend or waive any provision o f the the Project Implementation Plan without the Association's prior written approval; incase o f any conflict betweenthe terms o f the Project Implementation Plan and those o f this Agreement and o f the Financing Agreement, the terms o f this Agreement and ofthe FinancingAgreement shall prevail; (viii) carry out (a) Component A o f the Project with the assistance o f Uttar Pradesh's Remote Sensing Applications Centre (as per the relevant MOU); (b) Component B o f the Project with the assistance of Uttar Pradesh's Irrigation Department (as per the relevant MOU); (c) Component C o f the Project with the assistance o f Uttar Pradesh's Agriculture Department and Animal Husbandry Department (as per the relevant MOU); and (d) Component D o f the Project with the assistance o f Uttar Pradesh's Panchayati Raj Department (as per the relevant MOU); maintain at all times during Project implementation a District Implementation and Coordination Committee, with responsibilities and functions satisfactory to the Association, including, inter alia, overseeing Project implementation at the district level and coordination among participating government departments and other stakeholders; ensure timely release o f funds for maintenance o f drains inproject areas; ensure that the Project i s carried out in accordance with the provisions o f the Anti- Corruption Guidelines and the GAAP; (xii) carry out the Project in accordance with the agreed ESMF, Resettlement and Rehabilitation policy and Entitlement framework, and the and implement proposed mitigation measures provided in the Integrated Environmental and Social Assessment in a manner satisfactory to the Association; and ensure that the environmental and social screening criteria are updated regularly, and are at all times consistently and satisfactory applied; (xiii) monitor and evaluate the progress o f the Project and prepare Project Reports on the basis o f the Key Performance Indicators. Each such Project Report shall cover the period o f 18 one calendar semester, and shall be furnished to the Recipient not later than one month after the end o f the period covered by such report for incorporation and forwarding by the Recipient to the Association of the overall Project Report; (xiv) maintain a financial management system and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Association, both in a manner adequate to reflect the operations and financial condition o f UPBSN, including the operations, resources and expendituresrelated to the Project; (xv) have its financial statements referredto above audited by independent auditors acceptable to the Association, in accordance with consistently applied auditing standards acceptable to the Association. Each audit o f these financial statements shall cover the period o f one (1) fiscal year o f UPBSN. The audited financial statements for each period shall be furnishedto the Association not later than six months (6) after the end ofthe period; and (xvi) ensure that all goods, works and services required for the Project and to be financed out of the proceeds o f the Project Financing shall be procured in accordance with the provisions described inthe Procurement Guidelines, or Consultant Guidelines,as the case may be. D. APPRAISAL SUMMARY 1. Economicand financial analyses Economic analysis: NPV= Rs.9.5 billion; ERR=25.1% 56. Economic analysis is undertaken with respect to project investments in rehabilitating sodic lands and OFD, main drains improvement, agriculture support services and improved market access, accounting for 87% o f the project costs. Major sources o f benefits included inthe analyses are: land reclamation benefits, agriculture intensification and diversification benefits, improvedmain drain benefits and improved rural haat benefits. 57. Landreclamation benefits are derivedfrom incremental crop production arising from crop area expansion, increased cropping intensity, and enhanced crop productivity. They accrue from improved agriculture management in the reclaimed Class C, Class B and Class B+ sodic lands. Main drain beneJits are estimated from wheat crop area expansion in the reduced water logged areas and enhanced wheat productivity due to early planting in the areas with reduced flooding duration. Agricultural diversification beneJits are assessed based on the crop diversification towards non-cereal crops and vegetables in both the treated sodic lands and non-sodic lands operated by the project beneficiaries. Enhanced milk productivity due to breed improvementand health care; and improved small ruminant production units (goat and pig) are also estimated and includedunder the diversification benefits, 58. Overall, the project's ERR i s 25.1%. The ERR i s 20.9% when only agriculture intensification with land reclamation and OFD i s considered. The ERR goes up to 22.8% with the inclusion of agriculture diversification and further improves to 25.1% with the inclusion of benefits from the improved drains and rural haats' infrastructure. For the project as a whole, the FRR is estimated at 24.5%. Sensitivity tests and risk analysis indicate that the project is able to 19 withstand substantial negative impacts and still generate robust ERRS.For example, the project can sustain significant decreases in benefits and/or increases in costs. Various scenarios like increase incosts by 25%, or decrease inbenefits by 25%, or delay inimplementationand benefit realization by one year, do lower the ERR significantly, but it still remains much above 12%. Risk analysis simulated an expected ERR of 16.4%, the realization of which is most likely and also predicted that in any case, the project's ERR i s not likely to fall below 13.6% as the probability o f negative outcomes i s estimated to be zero. 59. The project has potential to: (i)increase farm financial income by 80%; (ii) income redress inequality (because 87% share in the incremental project benefits will go to small and marginal sodic farm families); (iii) alleviate the incidence o f poverty among resource poor small sodic farm families by about 30% at full project development; and (iv) provide rural farm jobs for 26,260 persons annually which will benefit 10% o f landless households inthe project areas. Financial analysis: NPV= Rs.8.8 billion; FRR=24.5% 60. Financial Analysis: The financial analysis was conducted based on the same assumptions used for the economic analysis. Annual incremental financial benefits to be realized at full project development are estimated at Rs 3,652 million. For individual activities the estimated financial rates o f return are as follows: sodic land reclamation and OFD by class C land 31.1%, class B land 36% and class B+ land 26.9%, overall land reclamation and OFD 30.7% and main drain rehabilitation 13.4%. Overall project's FRR i s 19.8% when only agriculture intensification with land reclamation and OFD is considered, which went up to 21.8% with the inclusion o f agriculture diversification and further improved to 24.5% with the inclusion o f benefits from the improved drains and rural haats. In calculating the project FRR, all project costs were included, and set against the incremental benefits arising from reclaimed sodic lands, improved main drain catchments, agriculture support and improved rural haats. Financial returns for a representative farm, with an average holding size of 0.94 ha, which includes0.50 ha of sodic lands, is analyzed. Per farm financial benefits from agriculture intensificationand diversification activities increased from Rs. 14,700 (WOP) to Rs. 26,500 (WP), representing an increase o f about 80% with full project development. An estimated 95% o f the incremental financial benefits will come from the reclamation sodic lands covering 53% o f the average small farm holding size 2. Technical 61. The project adopts the cost effective sodic land reclamation technology, based on extensive research and field testing by national and international institutions. The reclamation process consists of on-farm development works (Le. field leveling and bunding, laying o f irrigation channels and development o f drainage network), application o f chemical amendments and ponding o f water (through shallow tube wells) for leaching o f effluents. The chemical amendment used is gypsum the most commonly recommended inorganic amendment available - in India. The quantity of gypsum to be applied is precisely determined for each field. Special attention will be paid to scrap salt crust, better land leveling, making small sub-plots and double flushing off salts prior to gypsumapplication for improving reclamation efficiency. As a result of these refinements in technology, the average amount of gypsum applied would be reduced from 9.5 tons/ha in UPSLRIIP to about 9 tons/ha. To further reduce costs and build up organic matter 20 inthe reclaimed lands, the use ofpressmud2,organic wastes, crop residues, green manureswould bepromoted. 62, Appropriate methods have been developed in the previous projects to construct and maintain field and link drains by project beneficiaries. Link drains would be completed prior to the application of gypsum. Rehabilitation ofthe main drains would be carried out by the IDwith dedicated divisions. This i s expected to facilitate and expedite project implementation. Project activities will be phased insuch a manner that rehabilitation o f the maindrains and their linkages with the link drains would be completed prior to land reclamation to ensure free flow of the effluents from the leaching process. 3. Fiduciary Financia1Management 63. Overall, financial management arrangements as proposed for the project are considered to be adequate. UPBSN is the entity responsible for project implementation. UPBSN is a fully Government o f UP owned Limited Company as per provision o f the Indian Companies Act, 1956. It follows the Accounting Standards issued by the Institute o f Chartered Accountants of India. The Company has also been responsible for implementation o f the earlier two Bank- fundedprojects which were similar indesign. 64. A Financial Management Manual (FMM) has been prepared to help ensure consistency and quality in the financial management function across the project. The FMM comprises accounting policies and procedures, funds flow arrangements, chart o f accounts, and procedures for internal control. This FMMwill be applicable to all the implementingagencies including the Departments o f Irrigation, Animal Husbandry, Agriculture and Panchayati Raj as well as the Remote SensingApplications Centre. 65. At the State level, the project's financial requirement would be budgeted in the GOUP's annual budget; project funds will further be provided to UPBSN and other entities for implementation. 66. UPBSN will report on ,project activities under a system o f quarterly Interim Financial Reports (IFRs). The IFRs would provide information on expenditure made in the previous quarter and forecast for two subsequent quarters. Quarterly disbursements would be made based on these IFRs, providing funds for two subsequent quarters after adjustment for past disbursements. 67. The finance function at UPBSN is staffed by a Controller (Finance) supported by a team o f accountants. This team will be strengthened with additional Accounts Managers/Accountants * Pressmud is aby-product o f sugar cane processing.The use of pressmud can reducecosts o f reclamation, enrich soils with organic matter and reducesodicity in the long-term. 21 with knowledge of computerized accounting packages. The Internal Audit function under the project will be entrusted to a firm o f Chartered Accountants (CAS). The audit will be on a periodic basis and would cover all project locations/ implementingentities. Resultsof this audit would form the basis for management action. 68. The external audit of UPSLRIIIP will be carried out by a firm o f Chartered Accountants as per a terms o f reference agreed with the Association. This audit will provide a certification o f the project financial statements. The report will be due within 6 months of closure of the financial year. 69. The overall financial management risk is ratedto be substantial. Procurement 70. Procurement activities will cover all five components o f the project: on-farm development and land treatment; improvement o f drainage systems; agriculture support services; institutional strengtheningand capacity building for market access; and project management. Based on these components, procurement will be complex affair covering a whole gamut o f processes from International Competitive Bidding (for inputs like gypsum) to National Competitive Bidding, Shopping and community level procurement. Based on experience from earlier projects, the procurement arrangements will require considerable strengthening and modifications. The procurement process will need to adapt the Framework Contracting concept for procurement o f key landtreatment inputs e.g. gypsumand fertilizers, since there will be repeated procurement o f these inputs during project implementation. This approach will lower procurement transaction costs while at the same time ensure that inputs are available when needed. Procurement for the project would be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated May 2004 and revised October 2006; and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated May 2004 and revisedOctober 2006, and the provisions stipulated inthe Legal Agreement. 71. Procurement activities will be carried out by UPBSN, a Company created under Companies Act and autonomous for procurement decisions, Departments o f Agriculture, Animal Husbandry, Irrigation and Panchayati Raj, and Remote Sensing Applications Centre. UPBSN handledthe earlier project, but most staff moved on after project completion. An ex-post review for UPSLRIIP was carried out by an external auditor appointed by the Bank for FY 2007, before closure o f the project. The findings do not bring out any serious deviations or anomalies. However, for procurement under this project, the findings have been used in developing the Procurement Manual and Project Implementation Plan for the project duringproject preparation. 72. UPBSN appears to have transparency and accountability in its internal procurement process and manages its procurement cycle well. However, it does not show adequate capacity with regard to contract management. For instance, UPBSN does not have a disclosure mechanism and complaint handling system in place. Various mitigation measures have been worked out to address the gaps. 22 4. Social 73. The core principles in the implementation o f the project are that the project communities: (i) anactiveroleinplanningandimplementingprojectinterventions; (ii) play vulnerable groups have opportunities to participate in the process of planning and implementingproject activities; and (iii) those affected by project interventions, will be supported to mitigate adverse impacts. i) Project communities play an active role in project implementation: The project i s aimed at assisting poor rural people through development o f their sodic land (including land to be allotted to landless families), increased agricultural production, and enhanced access to agricultural markets and expansion o f livelihoods opportunities. Under the project, beneficiaries will be organized into groups and facilitated by UPBSN and NGOs in planning and implementingdifferent components o fthe project at the village level. ii) Vulnerable groups have equal opportunities toparticipate in theproject: The project will ensure that its benefits reach the marginalized and vulnerable sections in the project areas. The beneficiaries will be organized into WUGs and SICs which will then decide the specific project interventions, target groups and help vulnerable people access project benefits. iii) Supporttoaffectedpeople: Projectwillbuildinmitigationmeasuresagainstanyadverse impact on local people dependent on landproposed for development and, where required, specific resettlement plans will be prepared. 74. Integrated Environmental and Social Assessment (IESA): As part o f project preparation, a comprehensive IESA has undertakenwhich (i) identified social and environmental impacts o fthe proposed project interventions; (ii)established the baseline social and environmental information; and (iii) developed an Environmental and Social Management Framework (ESMF) for systematic management of . On social aspects, the ESMF includes a resettlement and rehabilitation (R&R) policy and an R&R entitlement framework, a gender development strategy and strategies to address issues related to vulnerable groups and communicatiodconsultation with project stakeholders. The ESMF activities would be integrated with the overall project cycle to ensure that social and environmental aspects are systematically identified and addressed through sub-project cycle indifferent project components. 75. Women and vulnerable sections: The project specifically targets on vulnerable groups including women, scheduled castes, marginalhmall farmers and landless and they constitute more than 90% o f the beneficiaries. Their adequate representation will be ensured in WUGs and SICs - the main community institutions responsible for planning and implementing project activities at the village level. In order to promote active involvement o f women, one o f the key members of an NGO will be a woman candidate inaddition to `female motivators' of facilitating NGOs. Registration o f new land allotted will be inthe joint ownership o f the allottee and spouse which will help improve their involvementindecision making process. 76. Stakeholders' consultation: As part of the IESA, stakeholder consultations were organized with local communities and other stakeholders (both at the village and district levels) to inform them about the project and its likely impacts (both positive and negative). The project stakeholders included local farmers, potential project beneficiaries, women and other vulnerable 23 groups, NGOs, representatives o f Panchayat Raj Institutions, staff o f relevant line departments and others. Feedback from these consultations provided input inpreparing the ESMF and various strategies to address social and environmental aspects for the project. 5. Environment 77. Few adverse environmental impacts are foreseen, since the project's principal objective relates to improving land-based productivity by reversing water-induced land degradation. However, adverse impacts may arise ifdue caution i s not exercised while implementingthe `land reclamation model' that has been tested and verified under the earlier two sodic projects in the state. 78. The project investments are likely to have some direct or indirect adverse environmental impacts related to: (i)development and rehabilitation o f link and main drains that may arise due to earth excavation, movement and disposal; (ii)possible impacts on nearby water bodies, notably seasonal and/or permanent wetlands and associated aquatic biodiversity and other surface waters as well as groundwater; and (iii) limiteduse of fertilizers and/or pesticides due to demonstrations for improvingon-farm practices, which may increase use o f these agro-chemicals locally. 79. The IESA has identified possible adverse (and positive) environmental impacts, suggested appropriate mitigation measures and provided an ESMF that not only minimizes any negative impacts, but also suggests ways to enhance positive environmental gains from the project. Key impacts identified include possibility o f draining o f natural wetlands and impact on water quality. However, these aspects were closely and scientifically monitored during the second sodic project in the state and provide a good comfort level that these aspects were not significantly impacted and could be mitigated. As a result o f IESA, an impact identification tool has been developed and the ESMF includes detailed steps to ensure that impacts are identified in the pre-implementation stage and appropriate mitigations measures are put inplace to minimize any adverse impacts. Specific strategies including an Integrated Pest Management (IPM), an Integrated Plant and Nutrient Management (INPM) and a notified Wetlands Monitoring Plan, have beendevelopedto limit the adverse and enhancethe positive impacts. 6. Safeguardpolicies 80. This is a category B project. The safeguard policies on Environmental Assessment (OP/BP/GP 4.01), Natural Habitats (OP/BP 4.04) and Pest Management (OP 4.09) are triggered, inaddition to Involuntary Resettlement (OP/BP 4.12). An ESMF would ensure that appropriate environmental and social mitigation measures and processes are incorporated into the project design, planning and implementation. An Integrated Environmental and Social Assessment (IESA) report and the project specific strategies (includingResettlement and Rehabilitation) was disclosed to Info-Shop on May 2009. At this time the IESA report along with the Executive Summary in Hindi was disclosed on the UPBSN website, and a notification about the disclosure was sent to the press for publication indicating therein that the IESA report may be accessed at UPBSN Head Office Lucknow, District Project Units, Offices o f the Divisional Commissioner and DistrictMagistrates o fthe Project Districts. 24 SafeguardPoliciesTriggeredby the Project Yes No Environmental Assessment (OP/BP 4.01) [XI [ I Natural Habitats (OP/BP 4.04) [XI [ I Pest Management(OP 4.09) [XI [ I Physical Cultural Resources (OP/BP 4.11) [I [XI Involuntary Resettlement(OP/BP 4.12) [XI [I Indigenous Peoples (OP/BP 4.10) [I [XI Forests (OP/BP 4.36) [I [XI Safety o f Dams (OP/BP 4.37) [I [XI Projects inDisputedAreas (OP/BP 7.60)3 [I [XI Projects on International Waterways (OP/BP 7.50) [I [XI 81. EnvironmentalAssessment (OP/BP 4.01): This is triggered given the project's focus on restoring land productivity through reclamation o f water-induced land degradation (sodic and ravine lands). Besides, the project would be spread over large geographic areas, covering multiple districts, and will also support rehabilitation of the existing drainage network (link and main drains). While issues related to earth movement, deposition o f excavated soil, likely impacts on notified wetlands (permanent and/or seasonal) etc are possible, the potential for adverse environmental impacts on resource use are expected to be limited. The project also offers possibilities to increase the sustainability o f resource use and improving overall soil productivity. 82. Natural Habitats (OP/BP 4.04): This policy is triggered because the project will operate in areas that are in the vicinity of many seasonal and some permanent wetlands, besides includinghabitats that are known to provide food and shelter to both migratory and Indianlocal migrant bird species, most noteworthy o f which i s the Sarus crane. If drainage improvement works are not carried out carefully, there i s likelihood that the outfall from these drains with leachates could adversely impact notified wetlands and surface water quality. There i s also a remote possibility that improvement in drainage could drain-out certain wetlands resulting in conversion o f habitat. 83. Pest Management(OP 4.09): While the project is not financing any direct procurement of pesticides, except for some demonstrations o f better farm practices, it i s likely that with additional land for wheat and rice cultivation, some farmers may undertake crop diversification 3By supporting theproposedproject, the Bank does not intend toprejudice thefinal determination ofthe parties' claims on the disputedareas 25 on non-sodic farmlands owned by them.This could include vegetables, horticultural produce and other cash-crops. Therefore, it i s possible that farmers may increase land-based productivity o f both sodic and non-sodic lands through application o f fertilizers, pesticides and other agro- chemicals. For this reason, Pest Management safeguard policies are triggered. The IESA would suggest appropriate measures to mitigate adverse impacts, including a Pest Management strategy that would outline training and capacity building needs, as well as safety measures in applying pesticides. 84. InvoluntaryResettlement(OP/BP 4.12): The results of the IESA reveal that the project i s not expected to involve any major new land acquisition or physical displacement. However, encroachment in project area i s not ruled out. Based on the findings of the IESA, an R&R entitlement framework has been developed which will be applied during the course of project implementation. The approach proposed i s that wherever adverse effects result from the proposedproject interventions, those affected will be helpedto at least restore their livelihoods. UPBSN i s in the process o f strengthening its institutional arrangement for social and environmental management under the project. 7. PolicyExceptionsandReadiness 85. N o policy exception i s sought. Key elements o f project readiness include: A multi-disciplinaryproject implementation team inUPBSN is inplace, headed by the Managing Director ofthe rank of Secretary to GOUP. Institutionalstructures for project implementation and fund flow arrangements have beendefined and agreed with the Government. A Procurement Planfor the first eighteenmonths o fthe project has beenprepared. A Project Implementation Plan has been prepared which provides detailed operational guidelines for implementation o f the project Key performance monitoring indicators together with their quantitative targets have beenfinalized and agreed (Annex 3). A Baseline Survey has already been commissioned and the report is expected within weeks. Disclosure requirements have beenmet. Project costs for the first year have been fully provided for inthe UPBSN's budget. Five District Project Units (out o fa total o f20 required) are inexistence. Positions required to fulfill the incremental staffing needs o f UPBSN (761 posts) have beensanctioned by the Government. 26 Annex 1: Countryand Sector or ProgramBackground INDIA: Uttar PradeshSodic LandsReclamationI11Project Background 1. Uttar Pradesh is the most populous state in India with a population o f about 166 million (2001 census) living on an area o f about 241,000 kms2. There are 70 districts in the state and about 52,028 village Panchayats. The state i s often characterized as one o f the "lagging regions" due to, among other reasons; relatively low per-capita incomes. While the national per-capita income stood at US$450 p.a. in2005-2006, average per-capita income inUP remained relatively low at about US$238 p.a. The income disparity is due to divergent growth paths betweenUP and most o f India. For example, between 1997 and 2002, UP achieved a growth rate of 2.4 % compared to the national average o f 5.5 %. However, most recent data (2002-2007) suggests that the gap could be narrowing with UP growing at 5.3% compared to a national average of 7.7%. This trend suggests some potential for accelerated growth which could be captured through strategic investments in UP'S growth sectors. Because o f sluggish, and often unshared growth over the past years, poverty has tended to persist and the rate o f poverty in UP i s now among the highest in the country. In 2004-05, between 35 to 50 million rural households or about 2535% o f the rural population in UP was living below the poverty line. 2. About 80 % o f the population i s rural and dependent on agricultural production for their livelihoods. Agriculture employs about 66% o f the labor force, primarily in rice and wheat cultivation. Overall, U P Agriculture contributes about 20% o f the national food grain production. Among food crops, wheat contributes the largest share o f about 36% o f the national production in 2003-04. Although UP lags the rest of India in overall growth, the state's agriculture sector has recently been growing faster than most o f the country, with a growth rate o f 2.10% in2002- 2007 compared to the national average o f 1.10% during the same period. Nevertheless, the share o f Agriculture in the GDP o f UP has been declining steadily, from about 33% in 1999-2000 to 26% in 2007-08. This trend i s particularly worrying given that more than two-thirds o f the population relies on agriculture for their livelihoods. Agricultural productivity has remained low for a very long time and it i s reported that the gap between potential yields in major crops such as wheat and rice has remained over 50% on average, but with significant variation across agro ecological zones. Furthermore, GO1 estimates show that disbursements o f developmental expenditures to agriculture has remained under 3% in UP since 2005, which i s disproportionate to agricultures contribution to GDP (26%). Landdegradation 3. Inaddition to inadequate public expenditure allocations, UP agriculture is fraught with a host o f structural challenges that jeopardize its potential to serve as a vehicle for massive poverty reductions. Per-capita availability o f land i s low (0.14 ha in 2001-02) and ownership i s highly skewed. Furthermore, poor households in rural UP not only own small pieces of land, but also their landare often degradedandproductivity is characteristically low. Important sources of land degradation include salinization, sodification, water-logging, and loss o f soil fertility due to sustained removal o f nutrients associated with intensive cultivation and inappropriate use o f 27 heavily subsidized nitrogenous fertilizers. Low productivity sodic lands, with yields typically less than one-third of the state average, comprise 10% o f total cultivable area o f the state. The total land area with various degradation problems amounts to about 5,140,000 ha. Land degradation i s part o f an increasingly serious natural resource management challenge faced by the state given the pressure exerted by the growing population (1.8% pa) on its natural resource base. Agricultural credit 4, The financial services network inthe state includes 43 lead commercial banks, 36 RRBs, and 50 district cooperative banks. It i s estimated that less than 20% o f farmers inUP are reached by this network, which suggests that small and marginal farmers who form about 80% o f the farming population are largely excluded. This is despite a two-fold increase in the volume o f agricultural credit between2002 and 2005. Duringthis period o f tremendous increase inthe flow o f credit to agriculture, the amount o f loan per farmer increased from 3,924 to 6,884 rupees, and a large share o f it went towards crop production. Nevertheless, agricultural loans disbursedinUP have remained under 6% o f the total agricultural loans disbursed in India, even though UP contributes about 20% o f national food production. This suggests a large unexploited lending space inUP agriculture which needs to be met with, among other strategies, increased supply of credit. The project design includes a multipronged strategy to improve delivery o f credit to beneficiaries and will: (i)support thrift and savings groups for generating internal pooled resources and become bankable entities; (ii)link beneficiary groups with formal sources o f finance; and (iii)assist groups to secure development credit from other sources, including government sponsored programs. Extension 5. The State Agriculture Department is the main extension agency and its efforts are complemented by parallel activities o f the Departments o f Horticulture, Soil and Water Conservation, and Watershed Development. As part o f a national effort to improve delivery o f extension services, the World Bank funded the National Agriculture Technology Project with several innovative approaches, including the formation o f Agriculture Technology Management Agency (ATMA) ineach district. Going forward, the A T M A model i s set to be the focal point o f extension services delivery in UP, and the new Agriculture Policy emphasizes this approach in order to advance need-based development and dissemination o f new technology, soil and water conservation, integrated plant nutrient management (IPNM), and restoring soil health through use o f biotic resources. Seeds and fertilizers 6. There has been a significant improvement in the seed replacement rate for wheat and paddy; the major food crops, from about 15% in 2002 to 22% in 2007. With this improvement, seed replacement patterns in UP now follow closely the national average. In2004-05 about 50% o f farmer households purchased seeds and the rest used seeds saved from past year harvests. However, less than 20% o f farmers replace the seeds every year, and about 40% replace every other year. Despite recent improvements in seed replacement, there i s need for increased efforts 28 ininputdelivery becauseonly about 14% offarming households can accessimproved seeds from within their villages. Fertilizer use in UP has been on a growth trend in recent years and it appears that the main problem i s that o f imbalanced use. In 2004 the proportion o f NPK consumption inthe state was 13:4:1compared to the ideal standard o f 4:2: 1, Inappropriate use of heavily subsidized fertilizers continues to cause deterioration of agricultural soils and reversing this trendwill be a major challenge inyears ahead. Low productivity: 7. Land degradation, deteriorating soil health, and poor agronomic practices are some o f the major causes o f low productivity inUP agriculture. Landproductivity varies widely between the major agro-ecological zones inUP and on average the yield gap i s about 45% for rice, 50% for wheat, and about 30% inmaize production. Changingclimateand irregularmonsoon: 8. There have been marked delays o f the monsoon in the past five years and also the gap between two rains has tended to be unusually long. These trends have tended to raise temperatures in Rabi, especially during the milking stage o f the wheat crop, and also increased the incidence ofpests and diseasesthus affecting crop productivity. Governmentactions goingforward 9. The 2009-10 Agriculture Annual Plan for UP puts special emphasis on the following; extension, irrigation and water management, soil health and fertility, seed management, agriculture marketing, mechanization, agriculture research and diversification. The plan will be implementedthrough a variety o f interventions inthe key areas and it is expected that the efforts will provide a platform for agriculture to attain 5.1% growth rate by 2012. The strategy will involve: (0 converting small and marginal farmers into profit making units, mainly through promoting water user groups, self-help groups, graduating into and producer groups, which would then provide sufficient scale for efficient delivery of inputs (seeds, fertilizers), support services, and output marketing; (ii) improvingsoilhealth; (iii) acceleratingthepaceoflanddevelopmentprograms; (iv) strengthening technology dissemination systems, including farmer field schools, and expansion of state agricultural extension systems as directed by the National Development Council; (VI integrated pest management; (vi) agricultural research systems; (vii) public private partnerships for inclusive growth and overall agricultural development; (viii) the National Development Council has also directed state governments to accord the highest priority to seed distribution in the EleventhFive Year Plan (2007-2012) and to ensure close liaison between all stakeholders including state agricultural universities and the private sector. 10. Some o f the programs the UP government i s using to achieve these objectives include: (a) Macro-management o f agriculture: this scheme covers all the districts and focuses on improved crop husbandry and natural resource management practices, including integrated nutrient management for protecting the environment and promoting sustainable food production. The total cost outlay o f the scheme for 2007-2012 i s about US$168 million, with about 10% contribution coming from the state o f UP and the remainder from the central government. (b) Technology mission on oilseeds, pulses, and maize: This scheme puts together a number of programs to promote crop diversification on the basis of agro-ecological conditions across UP. The budget for 2007-2012 i s about US$45 million with 25% contribution coming from the state. The program covers all districts. 30 v) v) M 8: VI E v) v) ._ M v) a g Y E v) 3 d im 2 ZT. c5 xr: V i .- 3 : 9 v) v) v) v) v) v) v) VI m" N m" 3 8 N (/I E v) v) v) 3 v) VI m m z x 2 9 s 0 - 'C 9% m o NN v) v) I n 2 m v) v) B d m vl m N f N" N Annex 3: Results Frameworkand Monitoring INDIA: Uttar PradeshSodic LandsReclamationI11Project Results Framework PDO ProjectOutcome Indicators Use of ProjectOutcome Information Agriculture productivity Increase inproductivity of wheat and rice 0 Improvedmanagementof increases in targeted degraded (tondyear) project activities lands Increase incroppingintensity; 0 Designingfuture % increase incrop incomes per unit land interventions % increase in landvalue IntermediateOutcomes IntermediateOutcome Indicators Use of Intermediate OutcomeMonitoring; Component 1:Landtreatment and on-farmmodernization 0 Degraded landsreclaimed 0 Soil quality improved(pH level, EC leveland 0 Improveddeliveryof organiccontent) projectactivities Area reclaimed(ha) 0 Improvedcoordination Area reclaimedthrough press-mudtreatment with component 2 (ha) 0 Supervision planning 0 Potentialfor tube-well Area under assuredirrigation(ha) irrigationincreased Component2: Improvement of drainage systems Improveddrainage Lengthof maindrains rehabilitated(kms) 0 Improveddeliveryof network Lengthof maindrains maintained (kms) projectactivities Assessingproject sustainability Component3: Agriculture sup,3ortservices Improvedcrop Increaseinproportionof farmers adopting 0 To determine effectiveness managementpractices improvedseedvarieties (%) of trainingprograms and Increase in seed replacement ratio (%) needfor re-design Area under IntegratedPestManagement 0 Outlining additionalneeds (IPM) (ha) of projectbeneficiaries Area under improvedirrigationpractices (ha) IntermediateOutcomes IntermediateOutcomeIndicators Use of Intermediate OutcomeMonitoring B Improvedanimal % increase inmilk productivity husbandry (litres/lactatingcow/year) P Diversificationin crop % of Gross CroppedArea (GCA) under oil production seeds andpulses % of GCA under vegetables Zomponent 4: InstitutionalStrengtheningand Capacity Building for Market Access Improvedaccess to Numberof farmers accessingnew marketing Assess progresstowards markets channels PDO No. of SHGs formed Assess needfor additional activitiesoutside project design 1. The framework for project monitoring, learning, and evaluation (MLE) is designed to facilitate: (a) a results-based management approach that i s informed by feedback from timely monitoring o f project activities, processes, outputs, and outcome indicators; (b) continued capacity building and learning through a mix o f formal trainings and participatory processes such as joint assessments between various implementing units, self-ratings and reviews; (c) impact evaluation, which primarily involves measuring the impact o f the project on a clearly defined set o f indicators and using appropriate methods, properly chosen control group, and good baseline data. Arrangementsfor results monitoring 2. Institutional issues: Institutional arrangements for MLE are designed to ensure an effective system that offers continued strengthening o f project implementation, project management, and the relationships between various implementing units and the beneficiaries. The MLE unit in the PMU will have overall responsibility for planning and coordinating MLE activities. To ensure effective performance o f its responsibilities, the unit will be adequately staffed with at least one MLE expert and a sufficient number o f supporting staff to help in data analysis, preparing monitoring reports, and documentation. In this role, the MLE unit will coordinate M&E activities under three clusters o f processes: (i) internal monitoring by line departments and agencies that are implementing the project at the state and district levels; (ii) participatory monitoring by beneficiaries, mainly WUGs and various project-supported farmer interest groups; and (iii)external M&E to be undertaken by a consultant whose responsibilities will also include capacity building for both internal and participatory monitoring processes. The P M U will have overall responsibility for developing systems and facilitating all three sets o f monitoring processes in order to ensure that: (i) each monitoring phase, the data in collection formats and surveys capture all aspects o f the project, including physical, productivity, financial, social, environmental and institutional performance targets; (ii) data i s collected in a timely manner and properly entered in the systems; (iii)reports o f appropriate contents and quality are generated in a timely manner and made accessible as per the Governance and Accountability Plan and RTIAct 2005. 3. Data collection: All implementing agencies, including line departments, field level project staff, and external implementing agencies will be responsible for collecting data and reporting information on physical, technical, financial, procurement inputs, and output indicators related to their respective implementation activities. For each monitoring phase, the implementing units and agencies will work closely with the M&E unit to ensure that relevant data i s collected for each activity. o The external M&E agency will also collect primary data for monitoring implementation progress and evaluating the impact o f the project on selected indicators. Towards this effort, the M&E agency will develop a sound survey strategy and sampling methodology that will form the foundation o f M&E work for the entire duration o f the project. Four types o f surveys will be conducted by the M&E agency: (i)baseline survey to capture the indicators beforeproject implementationfor both target and control households; (ii) monthly surveys for field-level verification and monitoring o f implementation progress and outputs; (iii) impact evaluation surveys at 37 mid-term and completion of the project. The baseline and impact evaluation surveys must be conducted on a consistent sample of households in order to allow a robust estimation strategy for measuring the project's impact. o Inaddition to data collectedthrough implementingunitsand external M&E agency, a complimentary process o f structured participatory monitoring will be put into practice. Participatory monitoring will primarily involve obtaining feedback from beneficiaries regarding implementation activities and outputs. The main tools for data collection will include detailed activity schedules and community score cards. The results o f participatory monitoring will mainly be used for the following purposes: (i)improved implementation o f project activities; (ii) assess compliance o f project to to various safeguards policies and legal frameworks e.g. RTI Act 2005; (iii) outreach and capacity buildingfor project beneficiaries. 4. Data Validation and Entrv: The results monitoring framework will develop a process to insure integrity of data andto ensure that data collectedby various agencies is accurately entered into the PMIS. The responsibility for data quality belongs to the respective data collection agencies, but the external M&E agency and the M&E unit will provide oversight during the entire data collection exercise, including visiting the project area to undertake field-level verification o f data already collected. The external M&E agency will be responsible for designinga series o f codes or processes for conducting checks on formats/questionnaires during data collection and cleaning the data after entry. After all checks have been conducted, the data will be transferred into a computerized Project Monitoring Information System (PMIS) that will be designed, hosted, and maintainedby the PMU. 5. Capacity Buildingand Learning: The M&E agency will constantly provide support to all implementing units and agencies during their internal monitoring processes, especially designing data collection formats and the actual process o f gathering data on activities and physical outputs. In addition, the external M&E agency will provide training on the use o f PMIS to educate project staff about implementing units and agencies, including generating standard reports and conducting workshops to disseminate monitoring and evaluation results and project learningnotes. With the facilitation o f the M&E unit at the PMU, the external M&E agency will also be involved in the participatory monitoring process in order to obtain feedback on the functioning o f WUGs and suggestions for improvements/adjustmentsto steer the project towards its development objectives. Discussions with WUGs should cover issues relating to the quality o f main drains rehabilitated and maintained through the project, results o f community score cards, changes incropping patterns, and other relevant subjects. 6. Data Analysis and Reporting o f Results Monitoring and Evaluation: The data analysis and reporting function i s designed to ensure that simple, informative, and user-friendly reports are prepared to enable feedback on project implementation and management. The following reports will form the backbone o f results monitoring: (i) district level monthly reports on the status o f implementation activities and outputs will be prepared by the DPU based on information from internal monitoring activities o f implementingunits and agencies; (ii) monthly reports will be prepared by an external M&E agency on its monitoring activities, including findings from oversight on internal monitoring processes and progress on capacity building 38 activities; (iii)six-monthly consolidated reports produced by DICC at the district level, and by the external M&E agency and PMU at the project levels, primarily to inform performance reviews that will be undertaken jointly by the Bank and the PMU; (iv) mid-term impact assessment by the external M&E agency and mid-term implementation report by PMU; and (v) final impact evaluation report to be prepared by an external M&E agency at project completion and PMU's consolidated project implementation and assessment report, both of which will form an integral part o fthe Project Implementation Completion Report (ICR). o The key characteristics common to all monthly, bi-annually, and mid-term reports are: (i) will describe the status of the project in terms of implementation they activities and progresstowards achieving the expected outputs and outcomes, (ii) they will identify the factors which delay implementation activities or prevent the achievement of outputs and outcomes, and (iii) will identify corrective actions they and summarize lessons learned. o The six-monthly report submittedby PMU to the bank will include: (i)comparison a betweentarget levels and up-to-date physical outputs and financial expenditures data; (ii)achievements on project indicators compared to annual and end o f project targets; (iii) socio-economic and environmental impacts of the project; and (iv) problems encountered duringthe reported period, remedial actions, and successes. 39 0 d- .-C vc v V m m s 8 S 8 0 2 s m N W m 3 d 8 W Annex 4: DetailedProjectDescription INDIA: Uttar PradeshSodic LandsReclamationI11Project 1. The project development objective (PDO) is to increase agricultural productivity of degraded lands in selected areas o f UP. The objective will be achieved by reversing water- induced land degradation, enhancing soil fertility, and improving the provision o f agriculture support services. The key performance indicators to measure achievement o f the PDO include: (i)increased productivity of rice and wheat; (ii)diversified agricultural production; and (iii)increasedcropincomesperunitland.Theprimarytargetgroupoftheprojectwillbefarmers inthe selectedproject areas, especially small and marginal farmers. 2. The key principles underlying the project designare: 0 Active farmer participation in planning, implementing, and evaluating project interventions will increase adoption o f innovations and contribute to sustainability o f the land andthe local institutions supporting farmers. 0 The reclamationprocess shouldadhere to transparent land selection criteria and meetthe highest standards in terms o f technical quality and attention to social, environmental and fiduciary considerations. 0 For improving land productivity and incomes, farmers need improved technology, better management practices, restoration o f soil fertility, and access to markets in addition to landreclamation. 0 Investment in group and community level institutions, capacities and productive assets provides a strong and sustainable basis for livelihoods enhancement by allowing beneficiaries to achieve scale, access markets on more favorable terms, and organize more effectively to receive public services. Component A: On-farm Developmentand LandTreatment (Base cost US%170.7million) objective i s to sustainably reverse water-induced land Box 1. Land Classification degradation (salinization, sodification, and water-logging) on about 130,000 ha o f sodic lands covering about 25 C class land: barrensodic land, soil districts o f UP. The expected results are: (i) reclaimed land pH >8,5 andmaygo upto ll,o; B class land: single sodic cropped returned to productive use; (ii)higher cropping intensity; land, productivity very low, soil pH and (iii) improved soil quality. Selection o f lands will follow >8.5; a multi-stage targeting process starting with geo-physical B+ land: criteria. Patches o f sodic lands will be identified using sodic land, low productivity, soil pH >8.5. 42 well water, existence o f drainage network, sodic patches o f sufficient size (at least 40 ha) inthe selected villages, and exclusion o f absentee farmersU4 4. The project's reclamation model has been developed and refined in the earlier Sodic Lands ReclamationProjects. However, UPSLRIIIP will emphasize innovative land treatment and management including scraping salt crust before starting on-farm development (OFD) works; better land leveling; making small sized sub-plots; double flushing o f salts; and using, inaddition to gypsum, press mud, organic residues, and wastes-to further improve efficiency and lower costs. The basic reclamation unit will consist o f a water user group (WUG) formed around a shallow tube well covering about 4 ha o f sodic lands. These lands will be predominantly C class barren sodic lands, and the adjoining B and B+ class lands will be included only to form a compact contiguous reclamation unit.There will be about 33,000 WUGs. 5, Beneficiary participation i s sought at every stage o f survey, planning, implementation and monitoring o f reclamation activities. The identification o f sodic villages i s done jointly by the UPBSN and RSAC using remotely sensed data and "ground truthing" involving village communities and NGO following the selection criteria given above. Once the sodic villages where land reclamation will be taken up have been identified, awareness campaigns are organized by the UPBSN and NGOs to motivate the farmers to participate in the project. The beneficiaries assist the project staff in all engineering surveys and planning o f on-farm works. Site implementation plan (SIP) i s prepared for each project village and is approved by the SIC. The SIP includes information on area to be reclaimed and responsibilities o f UPBSN, participating farmers and the NGOs, and i s signed by all parties. Each farmer i s given a letter specifying that he/she has been selected by the project. It also gives details o f inputs to be received by the beneficiary; and the labor and other inputs which are to be provided by himher. Beneficiaries form their WUG, decide the site and install tube well, procure pumpset, develop irrigation channels, field and link drains, fix water charges, water sharing and distribution intheir 4 ha reclamation unit. The farmers level their fields, apply gypsum and undertake all reclamation operations and crop production activities. The Mitra Kisan (MK) and Mahila Mitra Kisan (MMK) help in technology dissemination with technical backstopping by UPBSN and line departmentstaff. Reclamation Process 6. On-Farm Development, Irrigation and Drainage System. After demarcation o f sodic field o f an individual farmer, a bund (0.18 cum) i s constructed around each field. A network o f irrigation channels and field drains i s then laid out for the 4 ha reclamation unit. The layout and engineering aspects (grade and capacity) o f irrigation and drainage network are designed by UPBSN staff. The field drains are connected to main drains through link drains in a continuous flow. One four inch diameter PVC/metallic pipe tube well i s drilled for each 4 ha unit. This tube well forms the nucleus o f WUG and i s operated by a 5-8 HP diesel or 5 HP electricity operated 4Since sodic lands are typically owned by small and marginal farmers andor farmers from backward or disadvantagedsocial groups, the project is also likely to benefit these groups proportionately more. Evaluation ofthe UPSLRIIP showed that it had a strong pro-poor and social impact: 93% of the project beneficiarieswere small and marginal farmers, and one-third were from scheduled castes. 43 pump. After scraping the salt crust, each field is ploughed to a depth o f 10-15 cm, properly leveled and a slope of 0.1% is giventowards the field drains. Each field is divided into sub-plots for achieving better land leveling for improving irrigation and reclamation efficiency. 7. Reclamation Operation. The field i s flooded to a depth of 8-10 cm and drained after two days to flush the soluble salts. The standing water also helps in determining relatively low and high spots in the field and further improving land leveling. After the field has dried and again leveled (ifneeded), the requisite quantity of gypsum as per soil test is mixed with soil to a depth o f 6-8 cm. This i s followed by ponding o f water to a depth o f 10 cm for about 10 days, more water is added to maintain this water level. The surface water i s then drained carrying with it salts and reaction products o f reclamation. The land i s now ready for the first crop o f rice. 35-40 days old rice seedlings are transplanted and the field is again kept flooded for 10-15 days, followed by irrigation at regular intervals depending on monsoon rains. Fertilizer and zinc sulfate are applied to the crop as per recommendeddose. After the harvesting o f rice, wheat i s grown in the following Rabi season followed by a green manure crop Dhaincha. This is followed by cultivation o f rice-wheat-green manure crop in a sequence during the following 2-3 years but without any financial support from the project. After 3-4 cycles of rice-wheat cultivation, other crops can be cultivated on the reclaimed lands. 8. Withdrawal Strategy. The withdrawal strategy includes actions and mechanisms to be followed for ensuring sustainability o f the impact created when the project closes. The sustainability i s dependent on continuous crop production in the reclaimed lands; capacity o f beneficiaries to adopt new technologies; maintenance o f infrastructure like drains, borings and pump sets; effective functioning of WUGs, SHGs and SICS; availability of credit for crop production and other enterprises and linkages with concerned departments for technical support. Duringthe 5thyear o fthe project implementation, an evaluation will be made to assess the status o f reclaimed land, crop production, functioning o f beneficiary institutions, maintenance o f infrastructure created, etc.; and appropriate steps will be undertaken to address the identified weaknesses. 9. Site identification, community mobilization, and OFD activities will start about 18 monthsbefore the application of gypsumand leaching o f effluents. Activities to be financed will include: (a) mobilization of communities and building social capital; (b) detailed mapping, classification and selection o f sodic lands for reclamation; (c) social mobilization, formation o f water user groups (WUGs) and empowerment o f communities; (d) on-farm development through land-leveling, bunding and improved drainage network (linking field drains to link and main drains); (e) provision o f shallow tube wells to help in reclamation operations and irrigation; (0application of gypsum, other amendments and plant nutrients to the soil; (g) cultivation of rice-wheat-green manure crop in a sequence; and (h) withdrawal strategy to ensure continuous cultivation o f the reclaimed lands and sustainability o f the institutions and infrastructure created by the project. The reclamation cycle will span about 30 months (18 months of preparatory activities followed by 12 months o f cropping). About 130,000 ha o f sodic lands will be reclaimed infour reclamation cycles. 44 RavineReclamationPilot 10. A pilot on ravine reclamation covering an area o f about 5,000 ha will be undertakenin two districts where sodic landreclamationactivities will also be performed. The pilot will follow a watershed development approach, focusing on in situ moisture conservation, local water harvesting, reducing soil erosion, improving natural vegetation, and enhancing crop and livestock productivity. In order to optimize benefits from the pilot project, special attention will be paid to the convergence and integration o f proposed ravine reclamation activities with the ongoing programs in the state. Depending upon the experience gained from the pilot, various alternatives available for scaling it up can then be considered, including reclamation o f additional area. ComponentB: Improvementof DrainageSystems (Base cost US$39.2 million) 11. The objective o f this component is to improve the ability o f drainage networks in the project area to remove/leach effluents, excess rain, and irrigation water from reclaimed and adjoining areas. The expected results are: (a) increased drainage capacity o f the rehabilitated and improved drainage network; and (b) reduced water-logging in adjacent land area (with resultant improvement in land productivity). For reclamation o f about 130,000 ha o f sodic lands, about 5,700 km o f the drainage network would require rehabilitation.. 12. The rehabilitation o f main drains will be undertaken by the ID, in collaboration with UPBSN, through participatory processes that involve stakeholder consultation in planning, design, and execution o f the physical works. Maintenance of the rehabilitated drains will be done by the ID and monitored by the UPBSN through its staff who will be supported by external technical assistance consultants. The relevant WUGs and SICS will maintain link and field drains. 13. Rehabilitation of Drains: Rehabilitation of drains will involve (a) removing vegetation - water hyacinth, cutting and removing o f grass (such as behaya and elephant grass); (b) de-silting; and (c) providing or rehabilitating drainage sections and embankments. Rehabilitation o f existing maindrains will also include repair and/or provisionof appropriate crossings and roadbridgesto guarantee unimpeded access. In addition, a profile (pucca) o f either precast blocks or cement concrete will be constructed every 500 meters along the main drains to help remind fanners and maintenance crew o f the once rehabilitated level and profile o f the main drain. Also, outfall structures will be constructed wherever required. 14. Maintenance of Drains: Maintenance o f drain works will start one year after rehabilitation. At the completion o f the project, about 5,700 km o f newly rehabilitateddrains will be added to about 10,680 km o f drains rehabilitated under the earlier projects. Maintenance works will follow norms established by ID. Main drains will be maintained by ID. GOUP has provided the commitment to finance the maintenance o f drains with funds from the GOUP budget (provided to ID under a dedicated budgetary line item for maintenance o f rehabilitated "sodic lands" drains). The current mechanism i s that 90% of requiredmaintenance funds will be provided to the ID through budget support and 10% o f the maintenance through UPBSN's corpus fund, the "Anurakhshan Nidhi." UPBSN will closely monitor the timely release o f the 45 earmarked budget to ID, as well as its timely use exclusively for the purpose o f maintaining the relevant drains. 15. Training: Training provisions will be made for ID and UPBSN staff and WUGs. For ID staff, training would include design, construction and O&M o f drainage works as well as relevant management information system and contract management. Relevant local training will be given to WUGs and NGOs/support organizations that might be engaged in drainage works, especially with regard to building their capacity to organize, monitor and implement maintenance o f main drains. 16. The activities to be financed include (a) rehabilitation o f main drains; (b) maintenance of main drains; and (c) training and capacity building o f UPBSN and ID staff on technical and management aspects; and training of WUGs for appropriate O&M o f drainage network. ComponentC: AgricultureSupportServices (Base cost USS9.4 million) 17. The main objective of this component is increased agricultural productivity by introducing improved technology and agronomic practices, and more effective provision o f key support services. The expected results are (i)increased productivity; (ii)greater cropping intensity; and (iii)agriculture diversification (crops, vegetables and livestock). This component includes the following activities: 0 Natural Resource Management: This includes interventions relating to integrated plant and nutrient management (IPNM); integrated pest management (IPM); NADEP and vermiculture; use o f green manures; and improved water management practices; 0 Crop Diversification: After 2-3 cycles o f paddy-wheat rotation on the reclaimed lands, demonstrations for crop diversification will be conducted across crops and districts in consultation with district project units and the department o f agriculture. The demonstrations will cover pulses, oilseeds and vegetable crops. Additional crops will be selected based on demand from farmers. 0 Seed Village: To ensure that quality seeds for paddy and wheat are locally available in adequate quantity and timely manner, the concept o f `Seed Village' will be promoted in selected project villages. Willing farmers will be identified and selected for seed production in close consultation with the concerned Seed Certification Agency. Foundation seed will be obtained from state agricultural universities, institutes o f Indian Council o f Agricultural Research, and seed corporations. 0 Livestock Development: This will include interventions relating to improvement in animal nutrition (fodder seed demonstration, mineral mixture demonstrations); improvement in animal health (vaccination campaigns, organization o f animal health camps and Pashupalak Gosthi, breed improvement through artificial insemination and through natural services and promotion o f small ruminants and pig rearing. 0 Training and Capacity Building: This will include training o f farmers, exposure visits, demonstrations, farmer fairs and field days. 0 Crop Cutting Experiments: Inorder to determine the productivity levels achieved by the farmers, crop cutting experiments will be undertaken on the farmers' fields. 46 18. The activities to be financed include: (a) training farmers in effective land and water management practices; (b) dissemination o f improved agricultural technology and production practices through on-farm demonstrations; (c) support for livestock production, including dairy development, small ruminants, pig, etc; (d) exposure visits, farmer fairs, animal health camps and other "means" for rural communication and outreach; (e) training and capacity building o f line department staff and other relevant providers o f support services to farmers; and (0institutional strengthening for betteragriculture support services. 19. The expected results are: (i)increased productivity; (ii)greater cropping intensity; and (iii)agriculture diversification (crops, vegetables and livestock). 20. In terms o f the overall approach, the component adopts a participatory approach in planning and implementation o f the component activities relating to provision o f agriculture support services and livestock development. It focuses on moving from a cropping system approach (with focus on diversification and intensification o f the cropping system) to a farming system approach (taking initiatives for development and strengthening o f the whole farming system comprising o f crop husbandry and animal husbandry). It aims at "technology inclusion" o f the resource-poor project area farmers by disseminating relevant technologies pertaining to agriculture and livestock activities through training and demonstration. It also aims to improve sustainability o f agriculture by taking initiatives to improve soil health. Finally, it adopts a demand-driven approach, introducing new crops in the project area in accordance with local agro-climatic environment and market trends, Component D: InstitutionalStrengtheningand CapacityBuildingfor Market Access (Base cost US$9.7 million) 21. This component would improve the profitability o f farm production and enhance livelihoods o f the poor. This would be done through better input-output market linkages, more efficient and effective delivery o f key support services and augmentation o f community level marketing capacities as well as provision o f some basic infrastructure. Activities under this component will involve mobilization and strengthening o f SHGs from earlier projects as well as from this project to achieve the necessary scale and critical mass for input procurement (e.g. seeds, fertilizers) and output marketing. The activities to be financed include: (a) mobilization and capacity building of community based institutions like SHGs; (b) support to cluster level producer groups; (c) investment support for productive assets; (d) improving rural market infrastructure; and (e) organization o f innovation forums. The expected results are: (i)increased share o f produce marketed (by project area farmers), (ii) access to non-traditional markets, and (iii)poorest families organized to form SHGs. 22. This component will support the formation and development o f SHGs and producer groups in the project area. The roles, responsibilities, and entitlements o f these groups are explained in Annexure 6. This component will have four subcomponents; (a) Institution Building, (b) Community Investment Fund, (c) Community Infrastructure Fund, and (d) Innovation Fund. 47 Institution Building 23. This subcomponent would primarily focus on formation and strengthening o f Self Help Groups. It will also support around 5500 SHGs inapproximately 2600 project villages. Activities supported would include; (a) mobilization o f the poorest/landless/women into SHGs, (b) training o f groups for micro planning and financial management, (c) hiring o f specialized business support organizations to help W G s / SHGs insetting up producer companies, and (d) organizing exposure visits to other similar projects. 24. SHGs will be the village-level groups o f the poor. The target audience for SHG support under this component would include beneficiaries from this and the earlier sodic project. The SHGs supported by the project will follow the standard SHGparameters o f forming around some social affinity and mutual trust basis; same gender, regular savings, and inter-loaning. One SHG will have 10-15 members. These groups will be provided support in developing group norms, financial management capacity, and development o f group solidarity and access skills. Once the SHGs are a year old, they would formulate a livelihood plan. Livelihoods experience o f other Bank supported livelihood projects shows that the SHGs start off by engaging in savings and credit work through rotating their own money, but then start to engage in specific livelihood activities. The livelihood activity is selected based on beneficiaries' assessment o f market opportunities, natural resources, and their own skills and aspirations. 25. This subcomponent would be implemented in a phased manner. The first phase would include building self managed primary institutions like the SHGs. During the second phase, some o f these mature primary level institutions would federate at appropriate levels and engage inlivelihood enhancement and income generation activities described inthe next subcomponent. Detailed criteria and indicators would be developed to rank these groups. An incentive structure would be put in place to help them graduate to higher levels o f organization and access funds both from the project and other sources. CommunityInvestment Fund 26. The focus of this subcomponent is to organize members of WUGs and SHGs into higher level institutions (such as cluster level producer groups) and develop their capacity and skills for marketing. It i s expected that aggregation will bring economies of scale inprocurement o f inputs and marketing o f agricultural produce, thus enabling access to wider markets.These cluster level producer groups (PGs) will be an important vehicle for promoting market-orientedproduction in their geographical jurisdiction and can act as centers for technology dissemination and input- output marketing. Beneficiaries from earlier sodic land reclamation projects will also be motivated to join PGs. This process would be facilitated by the specialized business support organizations and the marketing cell in the DPU. PGs would be financed on a demand-driven basis. At critical stages, the project will use appropriate indicators, such as membership attendance, membership strength, record keeping, growth in membership, retention o f members, and volume and value o f marketedproduce for assessing group maturity. 27. Such producer groups will essentially be community owned business entities who will undertake various activities such as bulk purchases o f inputs and delivery to individual members, 48 marketing o f produce, grading and quality control and first level processing through value chain investments and linkage to markets. The federations will also provide a comprehensive package o f economic and technical services to all its members in a particular livelihood activity. The benefits to individual members o f such producer groups will be both through sharing o f profits and lower cost inputs and services due to aggregation. Some o f these activities may be decentralized to the village level depending on the specific business needs and maturity o f the institution buildingprocess. 28. PGs will take the form o f producer companies or societies, depending under which Act they will be registered with. The project will finance: (a) Hiring o f business support organizations to formulate business plans; and (b) initial expenses associated with the formulation and registration o f the cluster level PG. It i s envisaged that about 100 such PGs will be registered. The expected results from this sub-component are; (i)better alignment of production with market signals, (ii) improved incomes due to reduction o f input costs and access to better markets, and (iii)creation o f community owned enterprises in the form o f Producer Companies. Improvementof Rural Market Infrastructure 29. The focus o f this subcomponent is to strengthen the rural market infrastructureto support land reclamation and crop diversification efforts, and to provide multiple marketing points for the producers in the project area. Under this subcomponent, improvement in the basic infrastructure o f about 125 haats (village markets) would be taken up inareas where sodic land i s being reclaimed. This component would also support development of model haats on a pilot basis in three zones. The selection criteria includes, among others: (a) villages should be under the proposed project or in the previous project where reclamation activities have been undertaken; (b) at least one weekly market i s organized inthe haat; (c) village Panchayat should have land for constructionand willing to take up maintenance; and (d) annual turnover o f at least 100 tons o f marketedcommodity. Although the infrastructure that would be needed inthe haats will emerge from the market needs assessment through participative consultation, illustrative infrastructural facilities that would be provided inthe haat include (a) covered shed (b) platforms (c) toilets and (d) handpumps for safe drinkingwater. Innovation Support Fund 30. The project will support innovative pilot activities that have potential for scaling-up and replication. Key activities that could be supported include the piloting o f innovative approaches for building business based federations o f the rural poor, new methods of linking up the poor to modern markets, organizing o f forums and platforms that promote innovations and market linkages with new partnerships. Two forums would be organized to scout for innovative proposals and approximately twenty five proposals would be funded. Inaddition, the component will also facilitate and promote people-private sector partnerships through facilitating linkages with private businesssector includingco-financing options. 49 Component E: ProjectManagement(Base cost US$22.9 million) 3 1. This component will ensure smooth implementation o f all project activities, compliance with social and environmental safeguards, meeting agreed financial management and procurement requirements,monitoring o f project implementation progress and outputs/outcomes, and learning from project experience. Activities to be financed include: (a) establishing and supporting project units at the state and district levels; (b) creating a project monitoring, evaluation, and learning systemto regularlyinform project staff and stakeholders o f progress and processes; (c) engaging the services o f an external M&E agency to track project progress and confirm reporting from the project system; (d) monitoring o f reclaimed lands; (e) technical assistance to improve implementation and nurture innovations in that regard; (f) liaising with project partner organizations, support organizations, external professional agencies and the World Bank; and (g) documentation o f project experience and its dissemination to the wider development community. 32. Project management design i s based on the principle o f active farmer participation in planning, implementing, and evaluating project interventions. For long-term sustainability, as well as to ensure a credible exit strategy, the project will also use existing line departments, where feasible, to implement and technically backstop the project operations. 50 Annex 5: ProjectCosts INDIA: Uttar PradeshSodic Lands ReclamationI11Project Local Foreign Total ProjectCost By Component andor Activity US$ million US$ million US$million A. On-farmDevelopmentand LandTreatment 167.3 3.4 170.7 B. Improvementof Drainage Systems 39.2 39.2 C. Agriculture Support Services 9.2 0.2 9.4 D. InstitutionalStrengtheningandCapacity Building for 9.7 9.7 ImprovedMarket Access E. ProjectManagement 22.8 0.1 22.9 TotalBaselineCosts 248.2 3.7 251.9 PhysicalContingencies Price Contingencies 19.9 0.2 20.1 TotalProject Costs" 268.1 3.9 272.0 TotalFinancingRequired 193.1 3.9 197.0 * Identifiable taxes and duties are US$2.7 million, and the total project cost, net o ftaxes, i s US$269.30 million. Therefore, the share ofproject cost neto ftaxes is 1%. 51 Annex 6: ImplementationArrangements INDIA: Uttar PradeshSodic LandsReclamationI11Project 1. The project will be implemented over a period o f six years. Institutional and implementation arrangements for the project build on the successful structures and practices o f the first two phases ofthe Sodic Lands ReclamationProjects. However, some changes have also been introduced. At the local level, the project seeks to augment community participation in project planning, implementation and evaluation; and to focus more strongly on community capacity building through partnershipswith a range o f service providers. At the district and state levels, project implementation teams are being strengthenedthrough the addition o f experts in safeguards, management and marketing. 2. The sections below give details o f implementation arrangements with regard to: (i)governance and oversight (ii)project management (at different levels) (iii)community institutions in project implementation, (iv) different components and (v) Bank implementation support. I. GovernanceandOversight 3. State Level. Governance arrangements at the state level are designed to ensure collaboration and shared responsibility across the various line departments and agencies involved in land reclamation and agricultural productivity in UP, and to provide oversight o f project activities. 4. State Steering Committee. The State Steering Committee (SSC) will be headed by the Chief Secretary, GOUP. Its members will include: Agriculture Production Commissioner; Principal SecretariedSecretaries o f Parti Bhumi Vikas, Finance, Planning, Panchayati Raj, Irrigation, Externally Aided Projects, Public Enterprises, Animal Husbandry, Forest, Environment, Rural Development, Science and Technology and Institutional Finance; Member (Land Records), Board o f Revenue; Managing Director, UPBSN; Joint Secretary, Agriculture (GOI); Director General, UP Council o f Agricultural Research; Directors o f Agriculture, Animal Husbandry, Groundwater, Environment and RSAC; and Chief Conservator, Forest. The functions o f this committee would include project oversight, review o f policies for the state's reclamation programs and inter-agency coordination The committee would meet at least once a year. 5. District Implementation and Coordination Committee. District Implementation and Coordination Committee (DICC) will be constituted at district level for smooth coordination among the line departments. This committee would be chaired by the District Magistrate and the Senior Project ManagedProject Manager, UPBSN would be its convener. The other members o f the committee would be the district level officials including: Chief Development Officer, Sub- Divisional Magistrates, Deputy Director (Agriculture), District Agricultural Officer, District Livestock Officer, Assistant Engineer (Minor Irrigation), Plant Protection Officer, Executive Engineer (Drainage), Divisional Forest Officer, ExecutiveEngineer (Public Works Department), 52 representative o f UP Agro-Industries Corporation, District Panchayati Raj Officer, Additional District Development Officer, SociaUHarijan Welfare Officer, District Project Coordinator, UPDASP, Chairman, Regional Rural Bank, District Manager, UP Agriculture and Rural Development Bank, District Manager, NABARD, District Soil Conservation Officer, and representatives o fNGO working inthe district and farmer's organization. 6. The Senior Project ManagedProject Manager, UPBSN will be the member secretary responsible for convening the meeting, preparing the agenda and follow-up actions. This committee would meet at least once in every three months. The committee will be responsible for coordinating the project activities o f various departments and overseeing the progress o f the project implementation. It would also review the progress of land allotment to beneficiaries, resolve inter-departmental problems and conflicts, and fix dates for credit camps. 11. Project Management State Level 7. The Board o f Directors o f UPBSN will serve as the project management committee and will meet at least biannually to review progress on each project component. The Board is also responsible for reviewing and approving the operational guidelines for project management, approving the annual plan (including the budget), and deploying project staff. 8. Project implementation would be under the overall responsibility o f the Managing Director (MD) o f UPBSN. The MD will be assisted by Joint Managing Director(s) and Heads o f Reclamation, Finance, Procurement, Technical Services, Management Services, Drainage and Minor Irrigation Divisions inthe UPBSN. Project implementation will be undertakenjointly by UPBSN, RSAC and Departments o f Agriculture, Animal Husbandry, Irrigation and Panchayat Raj,GOUP. The implementationarrangements for the project are shown inFigure 6.1. 9. Coordination: To coordinate implementation o f different components/sub-components with the associated departments and agencies, regular review meetings will be held at the UPBSN headquarters. Inthese meetings, Project Managers, NGO Coordinators, Nodal Officers o f associated line departments, RSAC, External M&E agency, and representatives of banks and other credit institutions would participate. Quarterly review meetings will also be held by the Engineer-in-Chief, Irrigation Department, for reviewing the progress o f the drainage works. Separate Drainage Divisions in the Irrigation Department will undertake rehabilitation o f drains inthe project area. District and Sub-District Level 10. The district project unit (DPU) will manage all project activities within the district (s). It will be headed by a Senior Project ManagedProject Manager assisted by a team of office and field staff. The Senior Project ManagedProject Managers will be responsible and accountable for the implementationof all activities related to the project intheir concerned district(s). 53 Figure6.1: ImplementationArrangements I State Steering Committee I UPBSN Board of Directors I STATE I State UPBSN I Departments/Agencies II I Husbandry - Drainage I DISTRICTI I District Implementation UPBSNDPU and Coordination Committee -I Producer groups IVILLAGE I t Site Implementation Committee U lmplem ntatii Supp rand Moni oring Implementation Self Help Water User Support and Monitoring Groups Groups 54 11. Each district will be divided into sub-units where a project team will be established with an office headed by a Deputy Manager and supported by Implementation Assistants and other staff. Sufficient administrative powers will be delegated to the Deputy Managers who will be provided with essential infrastructure to coordinate and implement project activities. The sub- units will be further divided into circles, each having one Implementation Assistant. The Implementation Assistant will be responsible to look after all villages in the circle for implementation and follow-up o f reclamation activities for the entire project period. 12. Between four to five project districts will be grouped into zones to facilitate better management, supervision, and coordination. Senior officers at UPBSN headquarters will be designated as Zonal Officers and will be responsible for effective project management in all o f the project districts inaparticular zone. 13. Service Providers. In addition to the above, NGOs will be contracted to support implementation in the areas o f community mobilization, building up social capital, information and communication, training, formation o f cluster level organizations o f SHGs and producer groups, etc. Where possible, results-based contracts will be usedto ensure that service providers focus on results and impacts for the benefit o f project beneficiaries. VillageLevel 14. Site Implementation Committee (SIC) will be constituted ineach project village at the end o f an extensive awareness campaign. The Implementation Assistant, UPBSN would be the SIC convener. Its other members would include: all project beneficiaries, representative o f the participating local NGO, Mitra Kisan and Mahila Mitra Kisan, village level functionaries o f Rural Development, Irrigation and other concerned departments namely Lekhpal, Seenchpal, Panchayat Secretary, and Kisan Sahayak. The committee would meet once in a fortnight in the first two years and thereafter as per need. 15. The SIC will be chaired by the GramPradhan, an elected village leader, and it would be a formal sub-committee o f the Gram Panchayat. This i s considered important since (a) maintenance o f drains and other infrastructure will require participation not merely by sodic land holders but all the households o f a village; and (b) the Panchayats have gained legitimacy in the wake ofthe Constitutional (73rd) Amendment Act. 16. The main function o f the SIC would be to provide a forum for regular interaction betweenthe project staff, NGOs and beneficiaries. Inparticular, it would prepare and approve site implementation plan, including monthly time frame o f OFD, reclamation and crop production activities; oversee maintenance o f field and link drains; distribute gypsum and other inputs; and resolve local problems likewater sharing. It would also provide a platform to review implementationplans and to introduce necessary changes in relation to the expressed needs of beneficiaries. The SIC would also encourage sharing of experience among farmers. Main roles and responsibilities o f the SIC at the planning, implementation and post-reclamation stages are given inAttachment 1. 55 111. CommunityInstitutionsin Implementation 17. The project will promote a community institutional model which enables beneficiaries' groups and community institutions to take on greater roles and service functions within the project. An important objective i s to develop an institutional architecture that i s sustainable beyond the project period. The project will support the formation o f two kinds o f community groups at the village level-water user groups (WUGs) and self help groups (SHGs) -to assist in project implementation. 18. WUGs. The WUG will be the primary unit o f implementation o f land reclamation activities, and they will be responsible for executing all project activities within a command area o f about four hectares. A WUG will comprise neighboring landholders operating around a common shallow tube well in sodic lands that are to be reclaimed under the joint name o f the beneficiary and hidher spouse. It i s mandatory to include both the male and female members in the WUG where the landholding is in the Project beneficiaries will form WUGs after agreeing with the concept and principles. They will decide the group name, open a bank account and elect office bearers (president and two bank signatories). WUGs will be facilitated in defining their roles and responsibilities, pre-reclamation work such as bunding and drainage, and post- reclamation work such as improved agricultural practices. They would also be provided with a vision o f what WUGs can achieve inthe long run. There will be about 33,000 WUGs. 19. Each WUG will be strengthened through training o f its members on their roles and responsibilities. Each WUG, through the help o f a facilitator, will undertake a systematic planning exercise to produce a micro plan which will include both what they need to do for successful reclamation o f their land and other agricultural activities to be taken up. Cropping and technology alternatives will also be discussed. The planning process will also include inputs requirementsand their expected costs (including assets, trainings and capital). 20. The project will provide intensive hand-holding support to WUGs to help them graduate to more stable groups that can not only carry out sodic reclamation work, but also take up agriculture productivity enhancement activities. WUGs will be encouraged to follow a clearly laid-out path o f graduation that will include management o f group based activities such as pooling o f savings, and where feasible, joint purchase o f inputs and joint marketing o f farm produce. Some o f the members o f the WUGs may form producer groups, and register as producer companies. Each WUG will be assessed during different stages to assess their capacity to determine eligibility for investment support from the project for different types o f activities. It i s envisaged that formation o f WUGs across the project will create substantial social capital that will provide the foundation for higher level community institutional structures. 21. SHGs. In order to extend project benefits beyond the land-holding population, the landless women and other disadvantaged groups (including landed households having less than 0.1 hectares o f land) will be encouraged to form SHGs. SHGs will be formed using intensive group building and mobilization processes and will be supported for non-land based economic activities such as animal husbandry and non-farm livelihoods. The NGOs hired for land reclamation work would also be used to mobilize the SHGs. These SHGs would be encouraged to undertake thrift and credit activities with their own resources. The NGOs would train them in 56 the various group functions including book keeping.Facilitation would be provided to link them with commercial banks and leverage additional funds. Formationo f SHGs will not be universally applied across the project but will be based on the demand for participation and support in specific project villages. The objective here i s to ensure equity and inclusion o f the project's benefits within specific village communities. 22. The NGOs would help SHGs in making microplans for taking up livelihood generation activities. SHGs meeting certain eligibility criteria defined in the Community Operational Manual would be eligible to receive project funds as grants for productive assets. 23. Producer Groups. The WUGs and SHGs will be supported to federate at higher levels and undertake various functions in a self sustainable manner. These federated structures- referred to as producer groups-will enable the project area beneficiaries, especially the poor, to achieve both economies o f scale and greater voice innegotiatingbetter services. 24. The size and scope o f a particular producer organization will not be predeterminedbut will follow a demand-led process. Depending on the capacity, maturity, and common needs of several WUGs inadjoining villages, the WUGs will be federated to form a producer organization that takes up a specific set o f mutually agreed activities and functions. This process would be facilitated by the project NGOs and the marketing cell in the DPU. At critical stages, NGO and DPUstaff will use appropriate indicators, such as membership attendance, membershipstrength, record keeping, membership growth and retention o f members, and volume and value o f marketed produce to assess group maturity and stability. Specific steps to support the formation o f producer groups will be outlined inthe community operational manual. 25. Community Resource Persons. The above institutional model will also be usedto create a pool o f community based service providers inthe areas o f agriculture extension. They will act as the extension arm o f various inputs to be provided to the WUGs, SHGs, and producer groups. They will be community members who excel at various aspects o f project operation, including mobilization, bookkeeping, participatory monitoring and evaluation, and they will include the Mitra KisadMahila Mitra Kisan and will be given special training and charged with the responsibility o f providing knowledge services to farmers in new technologies and on field problem solving. IV. Component Specific ImplementationArrangements 26. Component A: This component will be implemented mainly by the UPBSN with appropriate support from RSAC. The UPBSN and RSAC will select the sodic villages to be taken up for reclamation using satellite imageries and available soil maps. This will be followed by ground truthing with the help o f project NGOs and village communities. Once the sodic villages meeting the selection criteria have been identified, awareness campaigns will be organized. RSAC and UPBSNwill prepare detailed maps o f the sodic lands to be reclaimed. The UPBSNand Lekhpal will demarcate the fields o f individual farmers. If common property sodic lands are available for allotment in a particular village, UPBSN field staff will work with the Revenue Department to get these lands allotted to landless, marginal and small farmers as per allotment criteria approved by GOUP. 57 27. The UPBSN field staff and NGOs will assist the village communities in (i) forming SIC and WUGs, identifying Mitra Kisan and Mahila Mitra Kisan, and preparing detailed site implementation plans; (ii)undertaking various OFD operations; (iii) application o f gypsum; and (iv) cultivation o f rice-wheat-green manure crop. The project inputs like PVC pipes, reflex valves, gypsum, fertilizers and seeds will be procured by UPBSN, suppliedat the project sites in a timely manner, and distributed to the beneficiary farmers in a SIC meeting. Regular technical backstopping to the WUGs and SICS will be provided by UPBSN and NGO staff. On the maturity rice and wheat, crop cutting experiments will be conducted by the Department o f Agriculture. Specific attention will be played to the pilot on ravine reclamation in terms o f its design and implementation arrangements, and to customizing monitoring and evaluation systems with a view to generating lessons for any future scaling up ofthe ravine reclamation model being tested. 28. Selected reclamation sites will be monitored by RSAC to assess the quality o f reclamation, continuous cultivation o f the reclaimed lands, and quality o f tube well and drainage waters, etc. 29. Inthe beginning of 5th year o f the project, UPBSNwill undertake an assessment of the reclaimed areas, identify weaknesses and implement remedial measures, if any, as per details given indescription o f this Component inAnnex 4. 30. ComponentB: Although UPBSN i s the main implementation agency for the project, the main agency responsible for implementation o f this component will be the Irrigation Department. The role o f UPBSN will mainly be that o f coordinating the activities o f this component with Component A, and sanctioning for this component and the UPBSN will perform these functions at both the headquarters and district level. 31. There will be a technical cell at the headquarters level handling issues related to the drainage component, including implementation planning, issuing o f financial approvals o f works, coordination and monitoring o f progress, and liaising with the Irrigation Department. At the district level, selection of drains, vetting of feasibility reports, monitoring o f progress and coordination with the Irrigation Department and other district authorities will be carried out by the Project Managers of UPBSN, who will be assisted by Deputy Managers (Drainage) of the project unit. 32. Within the Irrigation Department, the Chief Engineer, will be the apex technical official for monitoring and timely execution of this component. He will be responsible for proper planning, coordination and liaison with UPBSN and the State Government to implement the project in a timely manner. Two dedicated Superintending Engineers, reporting to the Chief Engineer, will have operational responsibility for this component. They will have the responsibility for regular monitoring o f the ongoing works, periodic inspection o f sites, and issuanceo f inspectionnotes to rectify any defects. 33. UPBSN will employ technical consultants for the drainage component to ensure quality o f works and effective overall monitoring. 58 34. Component C: UPBSN and the Department o f Agriculture will be responsible for implementation of various activities related to crop sector, whereas the livestock development activitieswill be the responsibilityofthe DepartmentofAnimal Husbandry.UPBSNwill play its implementationrole through its district and sub-district and village level project functionaries, including the Project Manager, Deputy Manager, Assistant Manager, NGO supervisor, Master Trainers of Farmers Field School, Site Implementation Committee, Mitra Kisan, Mahila Mitra Kisan, and leadersof Self-Help Groups. 35. In the Departments of Agriculture and Animal Husbandry dedicated Project ImplementationUnitswill be established.The proposedPIUswould be strengthenedto carry out the implementationresponsibilities.A Nodal Officer will be appointed by these departmentsto effectively liaise with UPBSN. 36. Procurementof inputs for different activities relatedto agriculture support services will be the responsibilityo f the concernedline departments. 37. Component D: The activities o f this component will be implementedby UPBSN with the help of specialist NGOs and relevant service providers. Panchayat Raj Department will be responsiblefor improving infrastructureinhaats.A dedicated"Marketing Cell" will be createdat UPBSN headquarters with appropriate staffing to coordinate and manage various activities. Marketing Executives will be deployed in selected district project units. They will work with appropriate NGOs or specialist service providers to assess the scope for local area market development, and to develop innovative business models/partnerships for the project area farmedbeneficiaries. V. BankImplementationSupport 38. The Bank will review project implementation and provide support on a regular basis. Project implementation would be reviewed on a semi-annual basis by Bank implementation support missions.These would be complementedby short visits by individual team members to follow up on specific issues as needed.The implementationsupport strategywould be basedon a combination of site visits and proactive follow-ups on relevant information from multiple sources. 39. Bank supervisionmissions will visit selected reclamation sites to assess and physically verify work financed under the project. These site visits will include interaction with concerned WUGs, producer groups, SHGs and NGOs involved in community mobilization and capacity building. Land reclamation sites will be selected for such visits based on a combination of the following criteria: (i)random selection from a district-wiselist of reclamation sites providedby the project; and (ii) specialemphasis on sites identifiedby the grievancehandlingsystem, and on larger pocketso f sodic lands. 40. Information obtained from visits to specific reclamation sites by Bank missions will be supplemented, at the district level, with feedback obtained from a larger set of project beneficiaries through meetings/workshops convened with a cross-section of WUGs. NGOs and 59 privatesector partnersworking onthe projectwill also be invitedto these meetings/workshopsto gain additional perspective. All project districts will be covered by rotation during supervision missions with priority accorded to: (a) districts with relatively large areas of sodic lands being reclaimed; and (b) `problem' districts as identifiedby the grievancemonitoringsystem and other information sources. The Bank missions would participate in presentations from consultants undertaking(a) third-party quality assurance, and (b) externalM&E. 41. Regular feedback on project performance will be obtained through progress reports preparedby the M&E unit of UPBSN, periodic reports to be producedby the independentthird- party external M&E agency, and through reports o f any other consultants hired. Key issues identified in these reports will be followed, including through additional short visits to the state as necessary. 42. Fiduciary reviews during supervisionmissions will include reviews o f a random sample o f contracts and spot checks o f accountingrecords and financial reporting systems at the state, district and villagelsite levels. Reports o f the project's internal auditors will be reviewed and meetingsheldwith them to gainadditionalperspective.Issues identifiedwill be recordedinaide memoiresand followedup post-mission. 60 Annex 6: Attachment 1 Main Roles of the SIC duringprojectimplementation 1. PlanningStage 2. ImplementationStage 3. Post ReclamationStage 0 Selection o f sodic area and 0 Resolution o f disputes. 0Ensureparticipation of beneficiaries. beneficiaries inmaintenance 0 Reviewof OFD works, o f drainage system. 0 Allotment and possession o f including link drain Gram Sabha lands. construction. 0Ensureavailability ofwater to WUG members 0 Selection o f Mitra 0 Distribution o f inputsas KisadMahila Mitra Kisan. per programo f 0Reviewgroup-wise UPsLRIIIP. programs o f crop production 0 Formationo f Water User management and provide Groups and Self-Help Groups. 0 Ensureproper utilization of technical guidance on inputs. important points. 0 Issue o f Chayan Patra (selection letter)/ID card to 0 Technology dissemination 0Selection o f individual beneficiaries. about crop production, groups for establishment o f management, plant agriculture input centre at 0 Selection o f leaders of Water protectionetc. village level according to the User Groups. project guidelines. 0 Promotion o f savings in Orientation and training to self-help groups. Reviewthe progresdstatus beneficiaries. o f savings inself-help Selection o f animators groups. Selection o f boring/pump set (Literacy, Health, Animal mechanic/animators, etc. Husbandry,etc) at the 0Review o f unsuccessful village level according to reclamation cases, borings Collection o f soil samples. different social and and drop outs, andtake economic needs. appropriate remediation Topographical survey measures. 0 Monitoring o f payments to B Approval o f Site Water Users' Groups. Implementation Plan. B Preparation o f plan maps and thenapproval. B Selection of demonstration plots. BReviewo f on-farm developmentworks. 61 Annex 7: FinancialManagementand DisbursementArrangements INDIA: Uttar PradeshSodic LandsReclamationI11Project FinancialManagement(FM)Assessment of UP SLRP I11 1. The FMassessment o fthe project has includedthe following activities with the following conclusions. 2. A report titled State Financial Accountability Assessment for Uttar Pradesh was published by the Bank in 2004. This was the result of a detailed study o f finances o f the state (departments), public enterprises, local bodies, etc. The report listed specific strengths5 and weaknesses6 o f the system but concluded that due to serious weaknesses in procurement, widespread irregularities and the lack o f prompt and predictable corrective action, overall level o f fiduciary risk was high. The evaluation was on similar lines for publicly funded bodies as well. Since 2004, the State Government has taken several steps towards improvement of its financial management systems. These include: (a) revisiodmodemization o f the public financial management architecture; the Budget Manual, Financial Handbook and Treasury Rules are being revised; (b) a high level PFM Steering Committee has beenformulated and this may be the key vehicle for the way forward on PFM reforms; (c) a computerized treasury system i s running successfully and the level o f disclosure o f financial information i s significant; and (d) revision o f curriculum for training to the State Finance Cadre i s underway. However, some o f the concerns as mentioned inthe 2004 report are still valid due to the implementation challenges faced by the state. 3. A review of the State Audit Reports issued by the C&AG for the past few years was carried out. The audit includes a transaction audit, and sometimes a performance audit o f select departments each year. The review brought out the following weaknesses for the various implementing entities. It mentioned instances o f improper planning and budgeting, non- compliance with statutory provisions, weak internal controls leading to mis-utilization o f funds, etc for the Irrigation Department. It referred to unplanned procurement for the Animal Husbandary Department and weaknesses inimplementation of the FA Software for UPBSN. 4. The Bank has had an active portfolio on Investment Lending Projects inthe state. These include the ongoing Projects in the Roads Sector being implemented by Public Works Department (P067606) and Water Sector Restructuring Project being implementedby Irrigation Department (P050647), as well as the UP Sodic Land Reclamation I1(P050646) project, closed inSeptember 2007, and the UPHealth (P050657) project, closed inDecember 2008. Keylessons learned from the implementation o f these projects have been: (a) due to implementation Strengths - well established regulatory framework for financial management and clear assignment o f control responsibilities, independence and expertise o f audit function, public access to information, etc. 6Weaknesses - diffused accountability due to fragmentation o fthe public sector, procurement is very loosely controlled, penalties for irregularities either delayed or uncertain, monitoring and control mainly focused on compliance o f individual financial transactions, etc. 62 challenges, disbursement on the projects has been low inthe initial years and as a result project have frequently been extended; (b) various aspects o f internal controls like reconciliations, controls over payments, physical verification o f assets, adequacy o f financial management supervisiodoversight needstrengthening; and (c) sometimes compliance with agreed actions has not been satisfactory. 5. However, the performance o f UPBSN during implementation o f the UPSLRII project has generally' been satisfactory. Based on past implementation experience, the following will be the key characteristicdareas needing focused attention during the proposed project: (a) Inventory: procurement, stock management and accounting will be an important part o f the project. Cost o f gypsum i s expected to account for a significant part o f the project cost and accounting for consumption and inventory requires a relatively sophisticated knowledge o f book-keeping; (b)Number of implementing entities: these are expected to be around 70 in number and will require a significant amount o f supervisory resources; (c) Beneficiary contribution: some o f this i s expected to be received in kind and will have to be recorded and presented as non-cash information; and (d) Capacity building: will require constant attention during the entire course o f the project. Country Issues 6. The issue applicable to this project is the timely availability o f funds. State level projects have proven more vulnerable to this problem. This was highlighted during project preparation and GOUP has assured that project implementing entities will be provided sufficient funds in timely manner. In the past, too, the Bank-fundedprojects in the state have generally not been short o f funds. RiskAssessment and Mitigation 7. The risks listed below emanate from the environment in which the project will be operating (Inherent Risk) as well as the specific aspects o f the project where risk i s identified (Control Risk) and the requiredmeasures for mitigation worked out. Risk Risk RiskMitigating Measures Incorporatedinto Rating ProjectDesign State Level: Fiduciaryrisk in the state is S High standardsof transparency and disclosure of consideredsignificantmainly due to physicalandfinancial information. weaknesses in practices(implementation)of financialmanagementrather than Intensiveimplementationsupport from the Bank, inadequacy of rules and guidelines. includingcapacity building as well as transactionalreviews and audits. 7 Exceptfor a briefperiod in 2005, the ratingoffinancial management functionofthe project as per the Bank's ISR systemhas been `satisfactory' during the entire durationof the project. 63 Risk Risk Risk MitigatingMeasures Incorporated into Rating Project Design ProjectLevel: Largenumberof S Developmentand use of a FinancialManagement implementing entities from various Manual (FMM). departments with funds flowing down to the lowest levels. The implementationof Utilizing common funds flow arrangements to the accountingnorms at each office may vary extent possible. due to lack of familiarizatioddifferent interpretation. InternalExternal Audit arrangementsto cover all locations. Common accountingsoftwarefor recordingand reporting. ControlRisk Accounting: The following requirea M Focus of training on these aspects. Coverage in sophisticated understandingof accounting F M Manual. principles: (a) inventory management; and (b) accrualconcepts. Thus apotential for inaccurate recordkeepingexists. Delayedpayments could delay project M Appropriate circulars and guidelines issued, progress. including clauses outliningpunitive actions against defaulters. Funds flowing to community organizations S District and sub-district levels staff will monitor (Le. the investment support grant to cluster the flow and use of funds by cluster organizations) could be misdirectedor organizations; further releaseswill be reported zmbezzled without appropriatemonitoring through the public disclosure. and transparency. Funds flowing to communities will move through an electronic fund transfer mechanism. Social audits will be organized at where the public and project stakeholders will be encouragedto attendand provide their assessment. Grievance redressal system and M&E system will strengthenmonitoring 3verall Risk Rating I S 8. The overall financial management risk is rated to be substantial. This is on account of the following factors: firstly, the inherent risk i s consideredrelatively higher due to factors including the large number of implementing entities, involvement of several departments and hnds flowing down to the large number of community groups for implementation. The wealth of experience gained during the earlier project has been partially lost due to change in financial management staff as a result o f a gap between the earlier and this Project. Secondly, this conservative risk rating is also a result o f experience gained during implementation of earlier/ other projects in the state where a much higher level of Bank support has been found necessary 64 to support the states' own implementation capacity and to maintain financial management performance at a satisfactory level. Finally, the risk will be constantly evaluated and restated if implementationexperience so warrants. Strengths 9. The project has the following strengthsinthe area o f financial management: 0 The main implementing agency for the project is UPBSN which is a company registered under the Companies Act, 1956 and, therefore, needs to comply with the regulatory framework on preparation, audit and submission o f financial statements as per the Companies Act. This includes compliance with the Accounting Standards prescribed by the Instituteo f Chartered Accountants o f India. 0 UPBSN has implemented two earlier series o f projects namely the UP Sodic Land Reclamation Projects Iand I1 and, therefore, is familiar with the Bank's reporting requirements. 0 The FM Manual will serve as a useful document for project implementation and monitoring. 0 Use o f an off the shelf accounting package. Weaknesses and Action Plan Significant Action Responsible Completion Weaknesses Person UPBSNinternal audit Finalize and Finance Integratedinto project systems needto be implement reasonable Controller implementationand strengthened internal audit monitoring arrangements arrangements Implementing Entity 10. UPBSN i s the entity responsible for overall project implementation. It i s a fully Government o f UP owned Limited Company as per provision o f the Indian Companies Act, 1956. It follows the Accounting Standards issued by the Institute o f Chartered Accountants o f India. The Company has also been responsible for implementation o f the earlier two projects which were similar indesign. 11, Part o fthe implementationwill also be responsibility o f field offices o f Irrigation, Animal Husbandry, Panchayat Raj and Agriculture Departments. However in continuation o f the earlier practice (as in Sodic I1 Project), these offices will follow the project implementation arrangements as documented inthe PIP and the FMManual. 12. The HQteam of UPBSN will: (i) annually prepare and submit next year's budget during the normal budgetingcycle to GOUP for approval; (ii) payments to contractors/ suppliers make after applicable deductions; (iii)transfer funds to other implementing entities under the project; 65 (iv) compile, prepare and submit quarterly Interim Financial Reports to GOUP/Bank; and (iv) prepare (and submit for audit) Annual Financial Statements. Budgeting 13. At the State level, the project's financial requirement would be budgeted inthe GOUP's annual budget under Agriculture Department. This will be based on estimates provided by UPBSN. At UPBSN a detailed annual work plan and budget (consistent with the Project Implementation Plan) will be maintainedto monitor progress. Accounting 14. To ensure consistency and quality in the financial management function across the organization, UPBSN has prepared a Financial Management Manual (FMM) which will be applicable to all the project implementing entities including offices o f the other departments/ agencies. The FMM covers (a) budgeting, flow o f funds and banking; (b) accounting policies/ procedures including chart o f accounts; (c) inventory control; (d) internal control, internal audit, external audit; (e) reporting, disclosure and governance aspects. Key aspects o f financial management under the project are as follows: 0 All payments to contractors, consultants and suppliers will be considered as expenditure, other transfers to be treated as advances. 0 StandardBooks o f Account/ Records will be maintained. A register o f fixed assets, indicating assets created/acquired through the project will also be maintained. All sources of funds and all expenditure, advances will be reflected in the Entity Financial Statements. All purchases of gypsum and other items of inventory will be recorded at "free on rail/ road" basis or alternatively "landed cost". 15. Water User Groups (WUGs): For Sodic Land reclamation the farmers will be federated into WUGs; each covering approximately 4 hectares each'. As per the World Bank Guidelines on community driven development, any releases by the project to the WUGs will be considered eligible for reimbursements. However various monitoring mechanisms will be exercised to ensure that the funds are spend for intended purposes: (a) release o f funds will be made on installments after confirmation o f progress by DPU; (b) NGOs will monitor progress; (c) the Site Implementation Committee (SIC) which i s a sub-committee o f the gram panchayat, will ensure adequate transparency; (d) M&E agency will review implementation effectiveness periodically; and (e) a significant part o f the project cost at WUG level i s consumption o f material; this will be monitored by internal audit when it reviews inventory management practices including physical verification o f stock. Further, an element o f beneficiary contribution will be captured inthe form o f a Management Information System to be maintained at level o f each District Project Unit of 8Basedon cost data preparedat time of project preparation, each WUG is expectedto receive Rs. 40,000 inits bank, Rs. 160,000 in form ofmaterial like Gypsum etc and is expectedto provide its own contribution inkindworth Rs. 1,40,000 over the project lifetime. These are standard, indicative amounts. 66 the UPBSN. This will be recorded as a formula of work done into the standard rates of labour contributed. The MIS will be kept separate and distinct from the financial accounting system. However the overall output on the project (on component 1) will be a sum total o f the expenditure incurred (as captured by the financial accounting system) and the beneficiary contribution in-kind(as captured by the Management Information System). 16. Staffirzg: The finance function at UPBSN i s headed by a Controller (Finance) supported by a team o f accountants. This team will be strengthenedwith additional Accounts Managers/ Accountants with knowledge o f computerized accounting packages. To ensure effective discharge o f duties, the finance staff will be required to regularly attend relevant trainings/ seminars. Nodal offices o f other departments will also have adequate supervisory capacities. 17. Training: Dueto the inherent, decentralized nature o f the project a significant effort will be requiredto constantly train staff. Consultants are already in place to provide training for the first year o f the project. However training modules covering procurement, financial management and aspects o f FA software will be delivered periodically, throughout entire duration o f the project. This will assimilate new developments, and learning from implementation experience. 18. Software: Presently, UPBSN is using customized software in a limited form but now proposes to use `Tally' accounting software for financial accounting. This software will be installed/ used at all project implementing accounting locations. This software i s considered adequate in context o f UPBSN's financial disclosure requirements as per Schedule VI o f the Companies Act. A common `Chart o f Accounts' will be loaded at all locations to ensure uniformity inaccounting for and reporting on project activities. InternalControl,Other Assurances, and InternalAuditing 19. Project FM guidelines will include arrangements regarding internal controls including: (a) operation o f a budgetingsystem and regular monitoring o f actual performance with budgets; (b) clear and transparent financial accounting policies; (c) at the transaction level; checking of expenditure, appropriate documentation, levels o f authorization, bifurcation o f duties, joint signature o f two officers on all payments, periodic reconciliations and physical verification etc. 20. The Internal Audit function under the project will be entrusted to a firm o f Chartered Accountants (CA). Qualifications o f the C A firm would be subject to review by the Bank. Similarly, Terms of Reference o f the auditors will be prepared by UPBSN and approved by the Bank. The audit will be on a periodic (quarterly or semi annually) basis and would cover all project locations; the review i s expected to focus on: (a) testing implementation o f internal controls as per project FM Manual; (b) review o f procurement practices; (c) inventory management including physical verification o f assets, reconciliation o f transfers from one location to another etc.;(d) other like inter-unitaccounting, operation o f the financial accounting software, timeliness o f releases/ reporting etc. Results o f this audit would form the basis for management action and any such action taken by management will be reviewed by the Bank duringregular project supervision. 67 21. Memorandum of Understanding (MoU): As in the earlier project; MoUs will be signed betweenthe UPBSN and the departments implementing the project. This is important since the offices o f the other departments like Agriculture, Irrigation, Animal Husbandry, Panchyat Raj, and Remote Sensing Application Centre are not under the administrative control o f UPBSN and therefore the M o U i s important to confirm obligations o f the departments towards the project objectives including applicability o f the FM and procurement requirements. The MoUs include clauses relating to reporting obligations, monitoring mechanism, resolution o f differences, etc. 22. Other guidelines: The following project documents are expected to strengthen controls and governance: (a) Procurement Manual; (b) Community Operational Manual (to be finalized soon after effectiveness). FundsFlow and DisbursementArrangements 23. Fundswill flow from the Bank to the GO1and on to the GOUP. A special account would be opened by GO1 with the Reserve Bank of India to receive funds under the project and any unutilized balance at completion o f project activities would be repaid to the Bank. Under the back to back funding arrangements o f GOI, the funds will be immediately transferred to UP as per the ACA release mechanism. Inthe GOUP's budget, Project funds will be budgetedunder the Agriculture Departmentg however to ensure timely availability o f funds, the Finance Departmentwill transfer funds directly to the implementingagency i.e. UPBSN. 24. Dueto its corporate status, UP BSNLtd. uses commercial banking channels for receipts and payments. These channels will continue to be used during this project as well. It i s negotiating with key public sector banks to avail o f the latest banking facilities, these will include (a) instant electronic fund transfer from one accounting location to another using the RTGSNEFT system; (b) a significant value/volume of payments to contractors and suppliers will be made using the RTGSNEFT system; (c) availability o f information on all bank accounting through the Bank's MIS facilities; (d) Nilor low transaction costs. UnderGrantNo. 11as per budgetcode 2402 -00 - 103 -97 -04. Infuture years this budget may be allottedto the Departmentof Sodic LandDevelopment. 68 - UPSLRP111,FundsFlow Arrangements World Bank . Government ofIndia GOUP FinanceDepartment, 1 Departmentof Sodic Land Development,GOUP UttarPradeshBhumiSudhar NigamLtd.(UPBSNltd.) 20 district Project 7 Divisionsof 20 DPUs of 20 DPUs of Units @PUS) of IrrigationDept. Animal Agriculture Panchayat UPBSN Husbandry Dept. RSAC Raj Dept. Dept. 25. UPBSN will report on project activities under a system of quarterly Interim Financial Reports (IFRs). The IFRs would provide information on expenditure made in the previous quarter and forecast for two subsequent quarters. Quarterlydisbursementswould be made based on these IFRs, providing funds for two subsequent quarters after adjustment for past disbursements. FinancialReporting 26. Informationon project relatedto advances, expenditures, and balanceswill be compiled by UPBSNand will be utilized to preparequarterly IFRs as per agreed formats for the projectas well as Annual Financial Statements (AFS). AFS will include a statement o f sources and utilizationof funds, including funds receivedand expenditure and assets/ liabilities. The project AFS will bepresentedto and adoptedby the Boardof Directors. Auditing 27. A firm of Chartered Accountants appointed on a competitive basis with emphasis on quality, will be appointedas external auditors for the project and carry out the audit each year of 69 the project (delivered within 6 months ofthe end of the audit period). Audit will be as per TORS that have been agreed with the Bank; selection o f Auditor will be with prior approval o f the Bank. The audit will cover the operations o f UPBSN Ltd. as well as the other implementing entities. The audit report would consist o f (i)financial statements; (ii)an audit opinion confirming whether the project financial statements give a true and fair view o f the operations o f the project during the year; and (iii) withdrawals from the credit made on the basis o f IFRs can be reliedupon. Additionally the auditor will provide a management letter to project management. The audit report will be submitted to the Bank within six months of the close of the financial year; concurrent with this the entire report will also be made available on the project website. The following audit reports will be monitoredinARCS. ImplementingAgency Audit Auditors UPBSNand other departments/agencies EntityAudit Report CharteredAccountant firm Departmento f Economic Affairs of GO1 SpecialAccount CAG 28. Additionally, a Chartered Accountant appointed by the C&AG carries out an Audit o f the Company and the AG in the State carries out a Balance Sheet Audit o f UPBSN and provides comments under section 619 (4) o f the Companies Act. The AG further has the right to review transactiondfiles o f UPBSN (in the nature o f a Propriety Audit) and prepare an Audit and InspectionNote. Copies o f these documents will be shared with the Bank. Disclosure of informationand CorporateGovernance 29. With implementation o f the Rights to Information Act, 2005, the UPBSN will abide by disclosure requirements. Inaddition, the agency will disclose on its website (a) Annual Audited Financial Statements; and (b) Minutes o f Annual General Meetings. 30. Audit Committee: An audit committee will be established and will have the following members: Managing Director, two members from the Board of Directors, including a representative o f the Finance Department, Nodal Officers o f other departments (Irrigation etc.) and with the Finance Controller being the convener o f the Committee. The committee i s expected to look into auditor appointment, internal/ external audit findings, monitoring compliance with special focus on remedial action required in context o f systemic issues identified by audit. SupervisionPlan 3 1. From a financial management perspective, the project i s expected to require bi-annual reviews looking at internal controls, fund flows, and banking and auditing arrangements. This will be through a combination o f desk reviews and field visits. Special focus will be given to building of staff capacity and timely compilatiodsubmission o f financial information. Supervision will also be dependant o f developments/changes in the areas of Public Financial Management and financial management performance of other projects inthe State. 70 Annex 8: ProcurementArrangements INDIA: Uttar PradeshSodic LandsReclamationI11Project A. General 1. The procurement activities will cover all components o f the project i.e. (i)on-farm development and land treatment, (ii) improvement o f drainage system, (iii) agriculture support services, (iv) institutional strengthening and capacity building for market access, and (v) project management. Because o f the nature o f activities in these components, the procurement process will be a complex affair covering a whole gamut o f procurement processes, including International competitive bidding for inputs like gypsum N C B, shopping, and community level procurement. Procurement arrangements from the previous project will require considerable strengtheningand modifications. There is need to adapt ways to reduce procurement transaction costs and at the same time ensure that the inputs can be made available without much delay whenever they are needed. Procurement for the proposed project would be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated May 2004 and revised October 2006; "Guidelines: Selection and Employment o f Consultants by World Bank Borrowers" dated May 2004 and revised October 2006; and the provisions stipulated inthe Legal Agreement. For each contract to be financed by the Credit, the following aspects will be agreed between the Borrower and the Bank in the Procurement Plan; (i)different procurement methods or consultant selection methods, (ii)the need for pre- qualification, (iii)estimated costs, (iv) prior review requirements, and (v) time frame. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementationneeds and improvements ininstitutional capacity. 2. Procurement of Works: Works procured under this project would mainly include Improvement and maintenance o f drainage works. International Competitive Bidding is not envisaged because the works will not only be dispersedin scattered locations but also fall below ICB threshold currently used in India. Procurement of works will be done using the National SBD agreedwith (or satisfactory to) the Bank and satisfyingthe followingNCB conditions: 0 Only the model bidding documents for NCB agreed with the Government of India Task Force (and as amended from time to time) shall be used for bidding 0 Invitations to bid shall be advertised in at least one widely circulated national daily newspaper and at least 30 days prior to the deadline for submission o f bids; N o special preference will be accorded to any bidder either for price or for other terms and conditions when competing with foreign bidders, state-owned enterprises, small-scale enterprises, or enterprises from any given State; Except with prior concurrence o f the Bank, there shall be no negotiations o f price with bidders,even with the lowest evaluated bidder. 0 Extension o f bid validity shall not be allowed without the prior concurrence o f the Bank (a) for the first request for extension if it i s longer than four weeks; and (b) for all subsequent requests for extension irrespective of the period (such concurrence will be considered only in cases o f Force Majeure and circumstances beyond the control o fthe purchaser or employer). 71 0 Re-bidding shall not be carried out without the prior concurrence o f the Bank. The system o f rejecting bids outside a pre-determinedmargin or `bracket `of prices shall not be used. 0 The two-or-three envelope system will not be used. 0 Rate contracts entered into with the Director General o f Supplies and Disposals (DGS&D) are not acceptable as substitute for N C B procedures. Such contracts will be acceptable for any procurement under shopping procedures. 3. The Shopping procedure may be followed, but infew cases and when the value o f works i s small, perhaps due to remoteness o f locations. Component 1 envisages procurement o f very small works by Communities/Water User Groups like land leveling, bunds, linking o f field drains to main drain etc. These will be done by communities themselves through contributions or contracts to qualified contractors awarded on the basis o f quotations in response to written invitations. The procedure o f such procurement will be elaborated in C O M and agreed with the Bank. 4. Procurementof Goods: Goods procured under this project would include procurement o f gypsum, PVC pipes, zinc sulphate, reflex valves, dhaincha seeds etc. The procurement will be done using the Bank's SBD for all ICB and National SBD agreed with or satisfactory to the Bank and satisfying NCB conditions listed in Para 2 hereinabove. Since there will be repetitive procurement o f inputs, innovative ways such as using framework contracting, pre-qualification, or phasing delivery against a single procurement will be explored. A study on gypsum procurement in earlier projects shows that despite the ICB procedure, only few suppliers in India bagged all the orders. Furthermore, there had not been any international participation. This could be due to the bulky nature o f items minedunderground and the resultant shippingissues. There is need to explore ways to increase competition. However, it must be noted that India has very large deposit o f Gypsum and i s exporting to other countries. The DGS&D rate contract or shopping will be used for procurement o f office equipments, vehicles etc falling within the shopping threshold o f $ 20,000. The project may procure goods like satellite imagery, aerial photography books, periodicals, software, seeds, fertilizers etc on direct contract if such procurement satisfies the circumstances in the Guidelines. Details o f direct contracting will be disclosed as provided inthe Guidelines. 5. Procurement of non-consultingservices: The project will require local transportation services (for bulk items like gypsum, fertilizers, PVC pipes) from supplier factory/port o f entry to project site/warehouses, including loading and unloading, rebagging, storage, issue to beneficiaries,. Third parties specializing in logistics or inventory and stores management will be contracted for suchjobs. 6. Selection of Consultants:The project has already proceeded with procurement of few consultancies covering IESA Studies, base line studies, preparation o f FM & Procurement Manual etc using Bank's procedure and SRFP documents. Few other consultancies for audit and M&E are under procurement. Short lists of consultants for services estimated to cost less than $ 500,000 equivalent per contract may be composed entirely o f national consultants in accordance with the provisions o f paragraph 2.7 o f the Consultant Guidelines. The project will engage the services o f NGOs for facilitation services after NGOs are trained for such services. 72 To the extent feasible, the NGO selection will be on an all India basis satisfying specific performance criteria. A manual for selection and operation o f NGO will be developed and agreed with the Bank.The manual will containprovisions ofperiodic performance reviews ofNGOs. 7. Operating Costs: The project will support all expenses such as salaries of agreed incremental positions, office expenses, etc as a part o f project implementation provided such costs are incurred using the implementing agency's administrative procedures and found acceptable to the Bank. 8. Others: Established institutions will be engaged for training with prior agreement with the Bank. Training details will be included in the annual plan which would include details such as fees, number o f persons being trained etc. B. Assessment of the agency's capacity to implement procurement 9. Procurement activities will be carried out by UPBSN - a company created under the Companies Act and autonomous for procurement decisions. Although UPBSN also handled the earlier projects, the procurement team moved on at project completion. A new procurement specialist i s now in place and UPBSN has already trained two staff members in Bank-funded procurement at ASCI. The findings o f an ex-post review that was done by a Bank appointed external auditor, for procurement done in UPSLR I1 for the FY 07 do not suggest material anomalies. However, some o f the findings will be used to strengthen the Procurement Manual and the Community Operation Manual duringproject preparation. 10. An assessment o f the capacity of UPBSN to implement procurement actions has been carried out by Sr. Procurement Specialist during project preparation. The assessment reviewed the organizational structure for implementingthe project and the interaction between project's staff responsible for procurement and the other staff responsible for other project activities. The assessment indicates that UPBSN has shown to have transparency and accountability in its internal procurement process and to manage its procurement cycle well. However, it does not indicate adequate capacity with regard to contract management, including disclosure mechanisms and compliant handlingsystem. 11. Below are some o f the key issues and risks inprocurement. Risks Rating Mitigation Measures Non familiarization o f the Substantial UPBSNhas undertaken capacity building staff inBank procedures. measuresto train its key staff. Furthermore, an extensivetraining plan for all staff is under preparation and will be monitored on a quarterly basis as agreed with the Bank Absence o f disclosure Substantial Develop disclosure mechanism mechanism Absence o f fully functional Medium Develop and demonstrate fully functional web t web site site Absence o f comdaint I Substantial I DeveloD comdaint handling: mechanism 73 I Risks Rating I MitigationMeasures handling system Absence o f full staffing at Substantial Staffing plan to be agreed UPBSN Decentralized Procurement High Procurement Manual to be prepared Procurement training to be organized for line deDartments on auarterlv basis Involvement o f Community Substantial Community manual to be prepared and agreed inprocurement with bank Involvement o fNGOs High INGO Manual to be prepared NGO Training to be organized Inadequate competition infew High Capacity assessment o f the potential suppliers key input procurement globally Create enablinn comDetitions C. ProcurementPlan 12. The Borrower will develop a procurement plan for first eighteen months by project appraisal. This plan, which i s already under discussion, will form the basis for procurement. The plan will be agreed betweenthe Borrower and the Project Team and will be available at UPBSN office, TC 19V, Vibhuti Khand, GomtiNagar, Lucknow. It will also be available inthe project's database and in the Bank's external website. The Procurement Plan will be updated annually, or whenever necessary, to reflect the actual project implementation needs and improvements in institutional capacity. D. Frequencyof ProcurementSupervision 13. An assessment of the capacity o f the Implementing Agency has recommended two supervision missions to visit the field to carry out post reviewo f procurement actions, inaddition to the prior review supervisionthat i s to be carried out by the Bank. E. Detailsof the ProcurementArrangementsInvolvingInternationalCompetition 1. Goods, Works, andNonConsultingServices (a) List o f contract packages to be procured following ICB and direct contracting: Ref. Contract Estimated Procurement P-Q Domestic Review Expected No. (Description) Cost Method Preference by Bank Bid- (US$ (yedno) (Prior/ Opening million) Post) Date 1 Procurement 9.28 ICB No N o Prior 30.09.09 of Gypsum 2 Procurement 0.734 NCB No No Prior 25.02.10 o f Zinc Sulphate 74 b) List of contract packages to beprocuredfollowing direct contracting: Ref. Contract Estimated Procurement P-Q Domestic No. (Description) Cost Method Preference Bid- (US$ (yes/no) million) 1 Procurement 0.06 1 DC No No of DAP (Kharif) 2 Procurement 0.466 DC No N o of Urea (Kharif) 3 Procurement 0.340 DC No No of DAP (Rabi) (c) ICB contracts estimated to cost above US$200,000 per contract and all direct contracting will be subject to prior reviewby the Bank. 2. ConsultingServices (a) List o f consulting assignments with short-list o f international firms. 1Ref. No. Descriptionof Estimated Selection Review Expected Assignment cost Method by Bank Proposals cuss (Prior / Submission million) Post) Date 1 Monitoring and 1.89 QCBS Prior 28.08.09 EvaluationConsultant 2 Consultancy Services 1.46 QCBS Prior 22.08.09 for supervision quality and quantity/ progress of drainage work (b) Consultancy services estimated to cost above US$lOO,OOO per contract and all single source selection o f consultants (firms) for assignments will be subject to prior review by the Bank. (c) Short-lists composed entirely o f national consultants: Short- lists o f consultants for services estimated to cost less than US$500,000 equivalent per contract may be composed entirely o f national consultants inaccordance with the provisions o f paragraph 2.7 o f the Consultant Guidelines. 75 Annex 9: Economic andFinancialAnalysis INDIA: Uttar PradeshSodic LandsReclamationI11Project I. ProjectBenefitsandExpectedReturns 1. The Project focuses on improving agricultural productivity in the selected sodic land areas o f U.P. The main project activities are reclamation and OFD in 130,000 ha sodic lands, improvement o f 5740 km long main drainage system network; provision o f agriculture support services and improved market access to directly benefit 327,500 farmers in the project area. About 240,000 farmers will benefit from reclamation o f sodic lands and OFD interventions, and another 87,500 farmers will benefit from improvement o f main drains. There are four major types o f benefits, namely land reclamation (including OFD) benefits, main drain benefits, agriculture diversification benefits and improved market access benefits. 2. Land reclamation benefits are derived from incremental crop production arising from expansion of crop area, increased cropping intensity, and enhanced crop productivity, all o f which follows from improved agriculture management in the reclaimed Class Cy Class B and Class B+ sodic lands. Main drain benefits accrue from incremental crop production due to reduced water logging and annual flood duration in catchment areas. Main drain benefits are estimated from expansion o f wheat crop area in formerly water logged soils and enhanced wheat productivity due to early planting in areas where flooding duration will be reduced. Agricultural diversification benefits are estimated from beneficiaries moving to non-cereal crops and vegetables in treated sodic lands and as well as non-sodic lands. Diversification benefits also include enhanced milk productivity due to breed improvement and health care; and improved goat and piggery production systems in the sodic villages. The actual impact under UPSLRPIIP was usedto quantify project benefits whenever applicable. Inaddition, data collected during the UPSLRIIP ICR mission, together with studies undertaken during UPSLRIIP, and secondary data from publishedsources have beenusedto assess "with" and "withoutyyproject benefits situations. 3. Most o f agriculture intensification gains would be driven by improvements in cropped area, crop productivity, cropping intensity and crop diversification. These benefits are captured usingrepresentative crop budgetsfor paddy, wheat and dhaincha (green manure crop) inclass C, class B and class B+ sodic lands. Appropriate crop budgets were developed for oilseed crops (mustard), pulses (bengal gram, green gram and black gram), and vegetables (potato and garlic) based on observed choices by farmers. The analysis was carried out separately for quantifying the benefits from (i)class Cy class B and class B+ sodic reclaimed lands; (ii)main drains improvement; (iii)agriculture diversification including livestock development; (iv) improved rural haats; and (iv) the overall project. The assessed project benefits cover four types o f investments namely; land reclamation and OFD, main drain improvement, agriculture support services and improved rural haat infrastructure. These components alone account for 87% o f the total project costs, including contingencies. Import/export parity prices are estimated for the internationally traded farm commodities and inputs. The project analysis was done for 25-year period at 2009 prices using a SCF o f 0.9 for farm inputs and commodities that are not traded internationally and 12% opportunity cost o f capital. Incremental benefits due to improved 76 livestock in the project areas are quantified based on activity models for paravet, milch cowand small ruminant units (goat and pig). A. Sodic Land Reclamation and OFD 4. Agriculture intensijkation benejts: The project will reclaim 130,000 ha o f sodic T-1Agriculture intensification and diversificationimpacts lands and invest in OFD and irrigation Crops/Sodic Land Crop area, ha development (T-1). The following is a WOP WP breakdown o f degraded lands that will be Cereals 58000 247000 reclaimed under the project; class C lands Paddy, C class land 84500 (84,500 ha), class B lands (32,500 ha), and Wheat, C class land 76000 class B+ lands (13,000 ha). The project i s Paddy, B class land 32000 32500 also designed to support ground water Wheat, B class land 29300 irrigation in about 98,000 ha, out o f 130,000 Paddy, B+ class land 13000 13000 ha that will be reclaimed under the project. Wheat, B+ class land 13000 11700 Incremental benefits arise from increase in Diversification crop area, cropping intensity, crop Mustard 5200 productivity and crop diversification. Under Pulses 4550 "without project" (WOP) situation, class C Vegetables 3250 lands are not cropped; class B lands are Land area 130000 130000 cropped only in kharif (paddy) and class B+ Gross croppedarea 58000 260000 lands are cropped in both kharif (paddy) and Cropping Intensity 45% 200% rabi (wheat) seasons. Following reclamation o f sodic lands and OFD, all categories o f lands (C, B and B+) will be brought under improved management, and therefore the "with project" (WP) situation i s such that, paddy will be cultivated in kharif and wheat in rabi seasons. Weighted cropping intensity will improve from 45% (WOP) to 200% (WP). Paddy yield increase inthe reclaimed sodic lands is expected to fall within 52% to 150% dependingon the class o f landclass and wheat yield is expected to improve by 50%, compared to the WOP yield levels. 5. Returns to land reclamation and OFD investments are estimated using representative farm models for small farms (0.94 ha) and large farms (3.53 ha) and aggregated for the whole reclaimed sodic land area using farm size distribution as weights. The proportion o f sodic lands i s highest in small farms (53%), followed by large farms (35%). Land reclamation and OFD interventions are expected to benefit 240,000 farmers, out o f which 94% are small farms (<2 ha) and the rest 6% are large farms (> 2 ha). The only impact assessedon non-degraded normal lands i s crop diversification in 15% o f the area. 6. Economic analysis has been conducted with respect to major crops namely: paddy, wheat, mustard, pulses and vegetables (potato and garlic)-which together dominate the gross cropped area for representative farms. Major crops (e.g. paddy and wheat), are differentiated by land class types and with appropriate crop budgets to represent different land classes namely Cy B and B+ lands. It is expected that major expansions will occur inkharif and rabi cropped area after reclamation o f class C lands. Reclaimed class B lands are additionally cropped in rabi season. The simulated impacts on crop productivity are 1.1 to 3.5 t h a inpaddy and 1 to 3 t h a in 77 wheat, depending on land class, which respectively increase returns for the project beneficiary farms by Rs.6,118 to 11,795 per ha for paddy and by Rs.7,774 to 14,440 per ha in wheat for the project beneficiary farms (T-2). At full development, agriculture activities in reclaimed sodic lands and OFD would generate incremental economic benefits o f Rs. 3 128 million annually due to expansion o f crop area and intensification. B. Agriculture Support Services 7. Crop diversiJication benefits: The project is expected to deliver over 40,000 demonstrations covering pulses, oilseeds, Land / Crops Yield, t/ha Returns, Rsha vegetables and improved management like WOP WP WOP WP IPM, IPNM, vemicompost andNadep. The Cereals demonstrations would be delivered through Paddy, C class land 3.5 11795 trainings and exposure visits to encourage Wheat, C class land 3 14144 adoption of better farming practices, both Paddy, B class land 1.4 3.5 2508 11771 in reclaimed sodic lands and non-sodic Wheat, B class land 3 14440 lands in the project villages. Based on the Paddy, B+class land 2.3 3.5 5773 11891 Wheat, B+ class land 2 3 8727 16501 experience in UPSLRIIP, crop diversification i s estimated to occur in 10% Diversification Mustard 1.2 18276 o f the reclaimed sodic lands (13,000 ha) Pulses 1.2 18616 and 15% of non-sodic lands (20,006 ha). Vegetables 15.5 42190 The crop diversification benefits are Livestock (l/day/cow) estimated using farm budgets for the Average milk productivity 2.5 8.0 4535 9838 following crops: mustard for oilseeds, Bengal gram and green gram for pulses and potato and garlic for vegetabledspices. Crop diversification in reclaimed sodic lands, will start after three cropping seasons and i s expected to follow the current cropping pattern - paddy followed by wheat. At full development, agriculture crop diversification activities in reclaimed and OFD benefited sodic lands as well as in non-sodic lands in the project area would generate incremental economic benefits o f Rs.210million annually. 8. Live stock benefits: The most important benefit from livestock i s expected to be increased milk yield from cattle, due to better genetics, animal health management, and interventions in nutrition and fodder management. The project will activate and support about 100 paravets. Assuming 2000 breedable cattle population per paravet, it is estimated that about 1000 artificial inseminations (AI) per year would be achieved by each paravet by the end o f the project. Further assumptions made in estimating livestock benefits include: 31% success rate in AI operations, 15% calf mortality and 5% adult mortality. The dropout rate for paravets is assumed to be about 25% and the remaining 75 project-trained paravets are expected to continue their services beyond the project period with an annual capacity o f producing 8560 crossbred lactating cows in the project area. The latest livestock census data suggests that indigenous cows produce 2.5 l/d for an average lactation period o f 200 days, while crossbred cows produce 8 l/d per day for a lactation period o f 250 days. This suggests that introducing one cross bred cattle in one farm family would generate an incremental financial income o f Rs 5,300 per year, which would be sufficient to permanently lift at least one membero f the poor family above poverty line. With the 78 overall farm size being 1.1 ha and that o f small farmers being 0.94 ha, supplementing farm income with live stock income i s critical to alleviate poverty in resource poor sodic households in the project area. At full development, incremental economic benefits from improved cross bred cattle would reach Rs 54 million annually. 9. Small ruminants: The project would support 1500 goat rearing groups and 590 pig rearing groups inthe sodic villages mainly targeting the women and landless poor families. Each goat rearing group will have 10 members; one goat per member and one buck for breed improvement to be available for the group as well as for the village in which the group i s identified. Each pig rearing group will have 10 members; one female pig per member and one male pig for breed improvement to be available for the group as well as for the village in which the group is identified. At the end of one cycle covering six years, each member inthe group will be able to generate incremental financial benefits to the tune o f Rs 16600 per year from goat unit and Rs 19500 per year from pig unit. Since this intervention i s targeted towards landless poor families, incremental benefits from small ruminants will improve equitable distribution o f project benefits and alleviate poverty incidence in these families. If these units are sustained after the first cycle by maintaining optimal stock size, at least three persons in each project benefited landless poor family can be lifted above poverty line. Incremental economic benefits from goat rearing units are estimated at Rs 66 million and from pig rearing units at Rs 38 million per annumat full development. C. MaindrainBenefits 10. The project will rehabilitate 5740 km o f main drainage network. Average catchment area i s 197 ha per km o f the main drain. By design, the sodic land area selected for reclamation treatment excluded the areas susceptible to water logging. Remote sensing studies estimated that due to improved main drains, 20% of the catchment area is benefited by reduction in water logged areas. 95% o f such benefited area will come under early planting o f wheat with 5% increase in wheat yield over the existing B+ class land wheat yield o f 2 t/ha. Rest 5% o f the benefited area will be planted in time with wheat as a new crop in rabi to yield 2.1 tha, which was not previously feasible due to prolonged water logging conditions. Early planting of wheat will cover 215,000 ha of existing wheat cropped landarea and 11,300 ha o f rabi fallow landarea following reduced water logging due to the improved main drains. Based on these, incremental benefit from rehabilitated main drains i s quantified and included as project benefits. At full development, improved drains would generate annually, Rs 332 million worth o f economic benefits at 2009 prices, out o f which 65% will come from the existing wheat area and the rest 35% from additional wheat area inrabi fallow lands. D. RuralHaatsBenefits 11. The project will improve the infrastructure in 125 rural haats inthe project villages. Based on UPSLRIIP experience, one rural haat i s handling about 5 MT per market day. Food grains account for 25%, vegetables (including potato) 53% and rest are shared by other products. Average price realization for the farmers has gone up by about 4.5% mainly due to the reduced transportation and wastages and the volume o f commodities traded inthe improvedrural haat has also gone up by 2.5% per annum. Average fee collection per market day has more than doubled 79 inthe improved rural haats due to increase inthe participating traders and annual increase infee collection in the improved rural haats i s estimated at Rs 17,530. Assuming a transaction o f 260 MTper year per haat, the turnover is assessed at Rs 2.3 million. 4.5 YOofthis turnover is taken as the incremental benefits to capture the reducedtransportation and spoilage benefits, which works out to Rs 0.1 million per year per haat. Incremental benefit due to increased fee collection i s assessed at Rs 0.02 million per year per haat. Based on this, annual incremental economic benefit due to improvedhaats is modestly estimated at Rs 16million. 11. ProjectCosts 12. All project costs, including contingencies, relating to the four project components have been accounted for in estimating the project's internal rate o f return. Total project costs, including contingencies, i s estimated at Rs 13,328 Million. Land reclamation and OFD alone accounted for 68% o f the total project cost followed by drainage improvement (15%), project management (9%) agriculture support services (4%) and institutional strengtheningfor improved market access (4%). However, for economic analysis, price contingencies and taxes, accounting for about 7% of the total project costs, have beennetted out from the project costs. Inestimating rates o f return on project activities, investment and recurrent costs are included for the project implementationperiod while need-based O&M costs are includedfor the post-project years. 111. ProjectEvaluation 13. Economic Analysis: Estimates o f comparative project benefits, costs, and returns are given in T-3. Annual incremental economic benefits to be realized at full project development T-3 UPSLRIIIP:EconomicAnalysis, 2009 prices, Rs Billion are estimated at Rs 3827 million. For individual activities the estimated rates o f return are as Class C Land follows: Sodic land reclamation and OFD by Class B Land class C land (3 1.4%), class B land (33.5%), class Class B+ Land 30.6 B+ land (30.6%), over all land reclamation and Land Reclamation & OFD I 9.7 I31.8 OFD (3 1.S%), and main drain rehabilitation MainDrainRehabilitation I (0.0) I11.9 (11.9%). The overall project's ERR i s 20.9% Overall Project when only agriculture intensification with land Agriculture intensification 6.1 reclamation and OFD i s considered, which goes 20.9 Plus Diversification 7.7 22.8 up to 22.8% with the inclusion of agriculture Plus Drains diversification, and to 25% with the inclusion o f improvement 9.5 25.0 benefits from the improved drains, and further PlusMarket access 9.5 25.1 improves to 25.1% with the inclusion of improved rural haat benefits. The estimated overall project's ERR i s higher than the ERR estimated for UPSLRIIP (19.3%) during the ICR. The reasons are; (i) international price for paddy has gone up by 18%, (ii) price has come urea down by 18%, (iii)diversification benefits covering crops, milch animals and small ruminants alone contributing 9% share in annual incremental benefits, to increase the ERR by about 2 percentage points; and (iv) reduced per hectare reclamation investments by budgeting for land class specific gypsum requirements. These positive impacts have more than offset the fall inthe international price o f wheat, and increase the price of DAP and MOP to generate a higher rate o f 80 returnas compared to the ICR estimate. All project costs are included incalculating the over all project's ERR and netted against the incremental benefits arising from reclaimed sodic lands, improvedmaindrain catchments, agriculture support and improvedmarket access. 14. Financial Analysis: The financial analysis was conducted based on the same assumptions T-4 UPSLRIIIP:FinancialAnalysis, 2009 prices, RsBillion used for the economic analysis. Annual NPV FRR(?/o) incremental financial benefits to be realized at Class C Land 6.3 31.1 fullproject development are estimated at Rs 3652 ClassB Land 2.4 36.0 million. For individual activities the estimated Class B+ Land 0.4 26.9 financial rates o f return are as follows (T-4): Land Reclamation & OFD 9.0 30.7 Sodic land reclamation and OFD by class C land Main DrainRehabilitation 0.1 13.4 31.1%, class B land 36% and class B+ land Overall Project 26.9%, over all land reclamation and OFD 30.7% Agriculture and main drain rehabilitation 13.4%. intensification 5.2 19.8 Plus Diversification 6.7 21.8 PlusDrains improvement 8.7 PlusMarket access 8.8 15. Over all project's FRR i s 19.8% when only agriculture intensification with land reclamation and OFD i s considered, which went up to 21.8% with the inclusion o f agriculture diversification and to 24.4% with the inclusion o f benefits from the improved drains and further to 24.5% with the inclusion o f rural haat benefits. In calculating the project FRR, all project costs were included, and set against the incremental benefits arising from reclaimed sodic lands, improved main drain catchments, agriculture support and improvedmarket access. Financial returnsfor a representative farm, with an average holding size o f 0.94 ha, which includes 0.50 ha o f sodic lands, i s analyzed. Per farm financial benefits from agriculture intensification and diversification activities increased from Rs 14700 (WOP) to 26500 (WP), representing an increase o f about 80% with full project development. An estimated 95% o f the incrementalfinancial benefitswill come from the reclamation o f sodic lands covering 53% o f the average small farm holding size. V. Sustainability 16. Efficiency in utilization o f sodic lands i s ensured through a sequence o f farmer-led land reclamation processes (i) to restore productivity in 130,000 ha o f sodic land; (ii)additional support in ground water irrigation to cover 98,000 ha o f the reclaimed lands; (iii) continuous cropping in both kharif and rabi seasons with a cropping intensity o f 200%, and (iv) green manure based farming systems on reclaimed land. Rehabilitation of main drains i s expected to advance early wheat sowing inRabi by a week which i s then estimated to increase yield by 5%. 17. Sustainability o f the project benefits i s through community level participatory institutions for maintaining irrigation and drainage infrastructure. Implementation monitoring and M&E study on post-project sustainability o f UPSLRIIP revealed: (i) continuous cropping inabout 90% o f the treated sodic lands; (ii) works showed marginal deterioration in the maintenance o f OFD bunds and irrigation channels, and (iii)failure of bore wells at 1.1YO;These shortfalls in the 81 realization o f targets approximately translate into a fall inthe benefits inthe range o f 15 to 20% and to account for this, sensitivity analysis is done with incrementalbenefits discounted by 25%, slightly on the higher side than what has beenobserved. Scenarios for the project ERR(YO) NPV-25 yrs, FRR (YO) NPV-25 yrs, Rs Billion Rs Billion Base Level 25.1% 9.5 24.5% 8.8 Escalation in costs Costs at 125% of the base level 20.4% 11.5 19.8% 6.5 Erks in Reclamation benej5t.r Benefits at 75% of the base level 19.7% 5.3 19.1% 4.7 Risksin Divers$cation ben@ Benefits at 75% of the base level 24.7% 9.1 24.0% 8.4 Delqedimplementation Benefit lagged by one year 21.0% 7.3 20.5% 6.7 Changesin costs and benefis Costs at 125% & Benefits at 75% of base level 1 5 . 2 ~ ~ 2.6 14.7% 2.1 diversification benefits and main drain benefits are NPV ERR (RsM) considered. By considering 25% increase in costs Expected)ia,ue sis 16.4% and 25% decrease in benefits on the relevant risk 3,908 Standarddeviation 0.9% 769 variables, Monte Carlo simulation was done (1000 13.6% 1,466 runs) to capture their combined effects on the Maximurn 19.1% 6,151 projected results (T-6). The simulated ERRSranged Coefficient of variation 0.055 0.197 from 13.6 to 19.1% with a coefficient o f variation o f Probability o f neg. outcome 0.0 0.0 82 VI. ProjectImpacts 20. Farm Income and Poverty alleviation: Small farms operating on an average 0.50 ha o f sodic lands now generate an annual gross margino f about Rs.1000 from cropping. It i s estimated that small sodic farms will generate Rs.12,000 per annum from cropping inthe reclaimed sodic lands. The incremental financial farm benefits, due to the project, for the small farms operating 0.50 ha o f sodic lands are estimated at Rs 11,000 per Fig1 UPSLRIIIP Cumulattve Distrrbutionof ERR annum. The poverty line for - 100% rural UP at 2008/09 prices i s Rs.5,480 per capita per annum For an average small sodic farm holding, .. depending only on own farm income, the incremental financial farm income generated by the project 14% 15% 16% 17% 18% 19% 20vu would bejust sufficient to lift about two members o f the family above poverty line. Average rural family size inthe state is six members.About 94% of the project beneficiaries under land reclamation and OFD interventions are the small holders. This suggests that the project will benefit about 451,000 poor inthe project area, which i s equivalent to about 30% o f the population inthe project benefited families. 21. Equity Impacts: Overall average farm holding size i s about 1.1 ha, out o f which 49% comes under sodic lands and the rest under normal land area. 94% o f the farmers are small farmers with an average holding size o f 0.94 ha and the rest are large farmers with an average holding size o f 3.53 ha. The project will benefit about 240,000 families, most o f whom are poor, occupying about 65% share o f class C lands inthe reclaimed sodic lands and 94% share o f small farm holders among the project beneficiaries. Inthe small farm holding, 57% o f the land comes under sodic land and in the large farm holding, 35% o f the land is sodic lands. Within sodic lands, 67% are class C lands in small farms and 57% are class C lands inlarge farms. The project at full development will generate incremental financial gross margin due to agriculture intensification and diversification to the tune o f Rs 3,088 million annually. Out o f which small farmholders will realize 86% o fthe share inthe incrementalgross margin per year while the rest 14% will go to the large farmers. In addition to this, 20,900 landless poor households will be supported with small ruminant production units which will help in lifting at least 62,700 rural poor in the sodic villages out o f poverty cycle. The distribution of post reclamation incremental benefits is in favor o f resource poor small sodic farm families, which is expected to reduce the income inequality as witnessedinthe UPSLRIIP project benefitedvillages also. 22. Production and Employment effects: The project would incrementally produce 1026,000 M T o f food grains, 16,300 MT o f pulses, 14,200 MT o f oilseeds, 140,000 MT o f vegetables and 17 million litres o f milk from the project area. Additional rural jobs for 26,260 persons will be generated annually from the expansion in crop area and intensification in the reclaimed sodic lands. This would increase the income o f landless labor households which comprise about 10% o f the rural households inthe project area. 83 Annex 10: SafeguardPolicy Issues INDIA: Uttar PradeshSodic LandsReclamationI11Project Introduction 1 . The proposed project follows two earlier Bank-assisted sodic lands reclamationprojects; UPSLRIP (1993-2001) and UPSLRIIP (1997- 2007). These predecessor projects were successful in improving land productivity which translated into significant socio-economic impacts inthe project areas. Environmental and social safeguard issues, in the context o f this project largely relate to land reclamation, improved drainage through rehabilitation and maintenance works, agricultural diversification and greater access to markets. On the environmental side, there could be potential impacts on wetlands with a risk o f draining o f wetlands due to improved drainage and increased use o f agro-chemicals due to improved land productivity. On the social side, there may be a risk o f impacting encroachers, particularly inlink drains who may lose their livelihoods due to project interventions. There is also a need to ensure that vulnerable among the project communities have greater access to project benefits, both during and after project interventions. 2. Integrated Environmental and Social Assessment (IESA): While the earlier two projects had good socio-economic impacts on project communities, there was no systematic approach to address social and environmental concerns. Therefore, as part o f project preparation, a comprehensive IESA was undertaken which: (i) identified social and environmental impacts o f the proposed project interventions; (ii)established the baseline social and environmental information; (iii) developed an Environmental and Social Management Framework (ESMF) for systematic management o f the anticipated impacts; and (iv) developed specific strategies to address social and environmental concerns o f the project. The ESMF provides a set o f measures to minimize the adverse impacts and enhance the positive impacts which will be adopted in the project implementation. On social aspects, specific strategies include a resettlement and rehabilitation (R&R) policy framework, strategy for gender development, vulnerable group development and communication with stakeholders. On environmental concerns, ESMF includes an Integrated Plant Nutrition Management (IPNM) strategy and an Integrated Pest Management (IPM) strategy besides a Wetlands Monitoring Plan. The ESMF activities would be integrated with the overall project cycle to ensure that social and environmental aspects are systematically identified and addressed during all the phases o f the sub-project cycle o f different project components. 84 Potential Environmental and Social Impacts of the Project 3. While there i s a good learning on the positive social and environmental impacts from two earlier projects, there are some environmental and social concerns which need to be addressed in project components involving investment support - On Farm Development and Land Treatment (Component l), Improvement o f Drainage Network (Component 2) Agriculture Support Services (Component 3) and Institutional Strengthening and Capacity Building for Market Access (Component 4). The fifth component on Project Management i s unlikely to result in any adverse impact. 4. The potential adverse impacts identified (in IESA report) which are expected to result from the proposed project interventions are presentedbelow. Summary of Social and Environmental Concerns Social Concerns Environmental concerns *Encroachment o f the land proposed 0Lack o f environmental for drain rehabilitation awareness 0Elite capture o f project benefits *Likely use o f higher quantities o f agro-chemicals 0Poor participatiordconsultation and involvement o f vulnerable groups due to improved land (SC, landless, women, marginal and productivity and change in small farmers, minorities) cropping pattern *Need for collective action - Likely impacts during drain WUG, SIC, SHG rehabilitation from earth excavation and disposal .Conflicts on water use and management Likelihood o f draining out o f notified wetlands within 0WUG management o f irrigation project area from improved wells and regular O&M drainage network and Maintenance o f drainage network associated impacts on biodiversity, including Sarus .Use o f reclaimed land and impact on cranes. livelihoods The nature and scale o f environmental and social impacts, their severity, extent and the duration will vary dependingon the type, size, and location o factivities. The findings o fthe ISEA report indicate that while the proposed project interventions are expected to result inoverall social and environmental improvements inthe land management, potential adverse impacts, where they occur, would need to be addressed with properly designed mitigation measures. Baseline environmental and social information About 93% o f the beneficiaries belong to vulnerable groups (including 92% marginal/small farmers, 1% landless). 85 In terms o f social structure in sodic villages, 35% are scheduled castes, 37% backward castes and the remaining 28 belong to general castes category while inravine villages the distribution i s 47%, 45% and 8% respectively. The average holding insodic villages is 0.9 ha (0.55 ha marginal, 1.33 ha small and 3.33 large farmers). Average wages are less than the minimumwages. Use o f fertilizer i s unbalanced but use o f farmyard manure i s currently low. In sample villages, the project interventions may not result any resettlement and rehabilitationissues. Indigenous people (referred as tribals) are not significant in number in project villages. These tribal people, where present, do not live as cohesive units. Discrimination o f wage payment to women workers in village particularly in farming operations and unorganized sectors. There is no well defined communication strategy: as a result significant number of peoples are not aware o f the government programs. In 16 out o f 34 sampled villages covered under IESA, the flow in main drain was impededon account of weed growth and siltation. Water logging is reported ina number o f villages. Major vector-borne diseases in sample villages are Japanese Encephalitis, Malaria and Dengue. Stakeholder Consultations and Participation 4. As part o f IESA, stakeholder consultations were undertaken with farmers, women groups, and members o f Gram Panchayat, and functionaries o fNGOs, Cooperatives, ATMA, and staff o f implementingDepartments (Agriculture, Animal Husbandry, Irrigation, and Panchayati Raj) and UPBSN (both at the project and district levels). The stakeholders' consultation workshops were organized at village and district levels. In addition, focus group discussions were held with various vulnerable groups to assess their concerns and suggestions. The feedback from these consultations provided input to the preparation o f ESMF and specific strategies to address social and environmental aspects o f the project. These consultations will continue, particularly at the village level, during the course o f project implementation. Site Implementation Plans (SIP) will be developed mainly through participatory process where Site Implementation Committee (SIC) and Water User Groups (WUG) take the lead and will be facilitated by NGOs and DPU functionaries. Social Management 5. The project development objective is to achieve greater agricultural productivity through reversal o f water-induced land degradation, enhancement o f soil fertility and improved agriculture support services. Expected social outcomes include empowering and strengthening community institutions and ensuring that vulnerable sections (landless, marginal and small farmers, women, scheduled castes, and minorities), who constitute an overwhelming proportion o f the project communities, will have easy access to the opportunities under the project and benefitthe most from the project. 6. The core principles inthe implementation of the project are that (i) communities project play an active role in planning and implementingproject interventions; (ii) vulnerable sections 86 among project communities have equal opportunities to participate in the process o f planning and implementingproject activities; and (iii) individuals, if affected by the project interventions will be supported underthe project to mitigate any adverse impacts. Project communities play an active role in project implementation: The project i s aimed at assisting poor rural people through land allotment and development, increased agricultural production and enhanced access to agriculture markets. Under the project, beneficiaries will be organized into groups - SIC, WUG and SHG. Facilitated by UPBSN and NGOs, these groups will be responsible for planning, implementing and monitoring different components o fthe project at the village level. Vulnerable groups have opportunities to participate in the project: The project aims to ensure that benefit streams do reach the marginalized and vulnerable sections inthe selected areas o f the project. Identified beneficiaries take active role in project activities. This will provide `voice' to them in decision making process, better targeting and accessing project benefits. Affected people will be supported to mitigate any adverse impact: Project has developed measures to mitigate any adverse impact on individuals/communities dependent on land proposed to be developed under the project. Where, required, specific resettlement plans will be prepared which will form an integral part of SIP. SafeguardPolicies Triggered 7. Based on the previous experiences o f the land treatment process, drainage improvement and people's participation, this project is classified as a category B project. However, an exhaustive IESA o f the project has been completed which confirms that this i s a category `By project. The safeguard policies on Environmental Assessment (OP/BP 4.0l), Habitats Natural (OP/BP 4.04) and Pest Management (OP 4.09) are triggered besides Involuntary Resettlement (OP/BP 4.12). OP 4.10 on Indigenous Peoples (referred as tribal in India) i s not triggered since there are no significant tribal populations inproject districts. 8. EnvironmentalAssessment (OP/BP 4.01): This is triggered given the project's focus on restoring land productivity through reclamation o f water-induced land degradation manifesting in the form o f sodic lands. Besides, the project would. be spread over large geographic areas, covering multiple districts and will support the rehabilitation o f existing drainage network (field and main drains). While issues related to earth movement, deposition o f excavated soil, likely impacts on natural wetlands (permanent and/or seasonal) etc are expected, potential adverse environmental impacts on resource use are expected to be limited. The project also offers possibilities to increase the sustainability of resource use and improving overall soil productivity. 9. Natural Habitats (OPBP 4.04): This policy is triggered because the project operates in areas that are in the vicinity o f many seasonal and some permanent wetlands, besides including habitats that are known to provide food and shelter to both migratory and Indian local migrant bird species, most noteworthy o f which is the Sarus crane. If drainage improvement works are not carried out carefully, there i s likelihood that the outfall from these drains with leachates could adversely impact notified wetlands and surface water quality. There is also a remote 87 possibility that improvement in drainage could drain-out certain wetlands resulting inconversion o f habitat. 10. Pest Management(OP 4.09): While the project i s not financing any direct procurement o f pesticides, except for some demonstrations o f better farm practices, it i s likely that with additional land for wheat and rice cultivation, some farmers may undertake crop diversification on non-sodic farmlands owned by them. This could include vegetables, horticultural produce and other cash-crops. Farmers, therefore, could tendto increase land-based productivity o f both sodic and non-sodic lands through application of fertilizers, pesticides and other agro-chemicals. Therefore, Pest Management i s triggered. The IESA would suggest appropriate measures to mitigate adverse impacts, including a Pest Management strategy that would outline training and capacity building needs as well as safety measures inapplying pesticides. 11. InvoluntaryResettlement(OPBP 4.12): Thoughthe project is not expected to involve any new land acquisition or any major physical displacement but this i s not totally ruled out. Encroachment by local people o f sodic land identified for reclamation and drains proposed for improvementand development o f rural markets (haat) is an issue under the project. Based on the findings o f IESA, and provisions o f National R&R policy 2007 and the R&R entitlement framework applied inother Bank projects inthe state, an R&R policy framework including R&R entitlements has been developed and presented below. Type of Impact Unit of Entitlement 1. Loss of Structure (i) Owned structure Family Compensation for structure as per Land Acquisition (LA) Act Alternate site free o f cost (for below poverty line and homeless families) Livelihood support: Projectwill providetraining for locally marketableskills Project will include them in livelihood support programshncomegeneratingactivities Project will facilitate linkage with micro-finance and micro enterprise schemes operatingin the area Project will give preference, as feasible, to these individualsin project implementationactivities Dovetailwith governmenthousingschemes (ii) Structureswith no Affected family Not eligible for compensationfor the structure legal titles Providealternatesite and link to the housingloan Dovetail government housingschemes Livelihood support: Projectwill providetraining for locally marketableskills Project will include them in livelihood support programslincomegeneratingactivities Project will facilitate linkage with micro-finance and micro enterpriseschemes operatinginthe area Project will give preference, as feasible, to these individualsin project implementationactivities 88 Type of Impact Unit of Entitlement (iii) Tenantsilease holders Family Reimbursement for unexpired lease from the compensation due to the owner 2. Loss of Agricultural LI d (i) Owners (with valid Titleholders family The affected families will receive cash compensation as determined title) by authorities under the L A Act. If alternate land is allotted, price fixed by Govt. for this landwill be deducted from the Compensation. The families will also be provided Livelihood support as follows: 0 Projectwill provide training for locally marketable skills 0 Project will include them in livelihood support programs/incomegeneratingactivities Project will facilitate linkage with micro-finance and micro enterprise schemes operating in the area Project will give preference, as feasible, to these individuals in project implementation activities (ii) Occupiers with no Family Although, these families are not eligible for any compensation, they legal title will be provided Livelihood support as follows: 0 Projectwill provide training for locally marketable skills 0 Project will include them in livelihood support programsiincomegeneratingactivities Project will facilitate linkage with micro-finance and micro enterprise schemes operating in the area Project will give preference, as feasible, to these individuals in project implementation activities 3. Loss of Other Assets Owner Cash compensation as per L A Act 1. Loss ofAccessto Common Property Resources(CPR)/ Facilities i) Loss of CPRs Community Replacement/augmentationof common property resources ii) Ci\,ic amenities and Community Replacementlaccessto equivalent amenities services services With valid title Family cultivating For either category, only the cultivator will get compensationas per land LA Act. 12. Accordingly, a resettlement plan would be prepared where required. The approach proposed i s that wherever adverse effects resulting from the proposed project interventions appear inevitable, those affected will be helped to improve or at least restore their livelihood level. Adequate institutional mechanism will be in place to ensure that adverse impacts are identifiedand appropriate plansare prepared. 13. Gender Development: Some o f the important observations from the consultations with women groups are presentedbelow. 0 Low women participation indevelopment programs: 0 Women play an important in agriculture and other economic activities and most often these are not considered productive. 89 0 Women have limited access to employment opportunities and quite often they are denied when ever such opportunities arise. 0 The wages paid are more often far less that the minimumwages and less than the wages paid to male labour 0 Relatively very little land holding among women inthe project area - inmajority o f cases land ownership lies with men 0 Women have limitedaccess to market for their agriculture/animal husbandryproduce. While, it is unrealistic to expect the project to address all issues and concerns o f women, however a right approach i s to focus on specific issues that relate to project and could be tackled under the project. The approach, therefore, is to formulate sub-project specific interventions focusing on women. Efforts are requiredto dovetail the existing relevant government programs for the socio-economic benefit o f the women members. These are discussed in the Gender Development strategy included inIESA Report. 14. Vulnerable groups: Inthe context of this project, besides women, the vulnerable groups are those who are socio-economically backward and are generally marginalized in the decision making process and these include scheduled castes, minorities, marginalhmall farmers and landless families. Majority o f these people are poor and constitute significant proportion o f village population. Keeping their interest and concerns, a vulnerable group development strategy has been developed to enhance their participation in the project and to ensure that they have access to project benefits at par with others. The strategy proposes three approaches: (i) dovetail the on-going government programs for socio-economic development of vulnerable groups; (ii) undertake specific programs to help them; and (iii)support these groups to access project benefits, on a preferential basis. The latter includes their access to wage employment under the project and specific income generation activities proposed under the project. The detailed strategy i s presentedIESA report and PIP. 15. Institutional arrangement: Social and environmental issues and concerns identified could affect the performance project components: land reclamation, development and restoration o f link drains, and agriculture support program. This essentially requires appropriate institutional arrangements, including adequate staffing with specialization in social and environmental management. Accordingly, UPBSN has engaged one social and one environmental management socialist at the Project level and they are part o f the project team and are responsible for addressing social and environmental concerns o f the proposed project interventions. At the district level, the project envisages DPUs with similar arrangement with Training and Communication Advisor responsible for addressing social and environmental aspects of the project. At the sub-unit level, these responsibilities will be vested with NGOs and SIC/WUGs. The TOR for NGO will include specific responsibilities to manage social and environmental management activities. The project will develop capacities at all levels -project, district and sub- district or sub-project levels, WUGs and NGOs through training to plan and implement social and environmental management activities. 90 Capacity buildingplan 16. Skill and capacity-building requirements may be different for different levels of stakeholders. Capacity-building o f stakeholders will therefore be done at (a) Community level - WUG, SIC and SHG, (b) District level - DPU and NGO, and (c) State level - PMU and other implementingagencies. A training and capacity development plan has been prepared which will be implementedthrough the course o fproject implementation. NotifiedWetlandsMonitoringPlaninthe ProjectArea 17. As part o f the completed IESA and as a specific strategy, a detailed monitoring plan for notified wetlands i s provided with emphasis on monitoring the current status o f existing notified wetlands in the project area, including monitoring o f wetland's water quality and biodiversity. The monitoring plan is based both on precautionary principle to avoid direct impacts on notified wetlands and also suggests interventions to prevent damage to notified wetlands within the project area. The monitoring plan i s to be adopted, as appropriate, dependingon the geographic location of the wetlands and is, therefore, emphasizing on location specific approach. IntegratedPest Management 18. The IESA includes an I P M strategy to ensure that use o f agro-chemicals, particularly pesticides and fertilizers does not increase disproportionately due to land reclamation efforts resulting in additional cropping area. Therefore, a comprehensive strategy is developed with clear time lines for implementation and includes guidance on training and awareness building o f concerned stakeholders. IntegratedPlantand NutrientManagement(IPNM) 19. Since sodic and soils o f ravine lands are nutrient poor with low organic matter, IPNM approach would be useful for building soil productivity and improving crop yields. IPNM i s an approach for maintenance or adjustment o f soil fertility in relation to plant nutrient supply at an optimum level for sustaining desired crop productivity. This i s done through optimization o f the benefits from all possible sources o f plant nutrientsin an integrated manner. Maintenance o f soil healthwith maximum use of organic manureand recycling of organic waste along with chemical fertilizers and bio-fertilizers in an integrated manner i s environmentally sound and cost effective alternative. The IESA report includes a step-wise strategy to introduce and upscale IPNM. Monitoring o f ESMF Activities 20. Monitoring o f ESMF activities will be done both through the internal monitoring system and external M&E arrangement throughout the project period. The monitoring will involve not only the progress on activities and inputs but generating learning on results and outcomes o f project interventions on social and environmental issues. The arrangement for M&E o f ESMF activities under the project i s presented below. 21. Internal monitoring: This is done at three levels: (i)WUG level - as a part of participatory monitoring, the representatives o f M I C and WUGs, facilitated by NGO, will monitor the implementation progress and report to M I C and DPU; (ii) District level DPU with - the help of NGO will monitor the implementation o f social management plans (RAP, VDP and GAP) and prepare and submit quarterly progress reports to PMU; and (iii) level - P M U will state monitor implementation o f the project and its ESMF activities and this will be included in the report prepared by P M U and submittedto the Bank.Both at DPU and PMUlevels the respective 91 Social Environmental Units will be overall responsible for monitoring o f implementing o f the ESMF. 22. External Monitoring: The project monitoring will include implementation o f ESMF activities and will be an integral part o f the overall M&E system at the project level. Inaddition, a half-yearly social and environmental auditing will be carried out focusing ESMF implementation under the project. There will be a mid-term and end evaluation to draw lesson from the ESMF implementation. The social and environmental auditors will build on the monitoring indicators inthe IESA report. 92 Annex 11: Governance & Accountability Action Plan (GAAP) INDIA: Uttar PradeshSodic LandsReclamationI11Project I. OVERVIEW 1, A strategy for good governance and anti-corruption is integral to any development effort. This is because corruption and weak governance diverts resources away from intendeduses and beneficiaries thus risking poor outcomes, public outrage, and ultimately feeble and unsustainable development impacts. For this reason, both donors and recipients have a direct interest to ensure good governance and to control corruption. The Bank has a fiduciary obligation, enshrinedinits Articles o f Agreement, to ensure that Bank funds are used for their intendedpurpose. 2. The project has proactively designed a governance and accountability framework to improve project governance and implementation, and to reduce the risk o f corruption. The framework mainly involves institutionalizing systems o f consultation, monitoring, and feedback, all within a holistic disclosure o f project information that "empowers" the beneficiaries and the civil society to participate in project planning, implementation, and oversight. The framework also involves enhancing fiduciary controls through linkages with beneficiaries and civil society. In addition, project design is informed by a risk assessment that was carried out to identify corruption and implementation risks in various project processes. Finally, the framework also involves an attempt to build up the demand side o f governance through communication and awareness campaigns among beneficiaries, especially regardingtheir rights and roles. 3. The following key governance risksapply to the project: 0 The project processes may not detect and address problems related to transparency and accountability and may not facilitate full information flow (as requiredby India's Right to Information Act) e Lack o f adequate safeguards may cause violation o f norms and/or corruption e Weak or ineffective complaint and grievance handling mechanism may affect transparency and contribute to unfair and manipulative practices e Weaknesses in procurement and financial management systems may result in mismanagement o f bidding and spendingo f funds 0 Weak implementationarrangements may adversely affect project processes andresults Failure in these areas would compromise project outcomes because it undermines (a) project targeting and delivery o f intended benefits; (b) quality of goods and services delivered; and (c) project sustainability, especially if investments in critical infrastructure, processes, and institutions are compromised. 4. To mitigate these perceived risks, the project has prepared a comprehensive governance and accountability strategy that rests on four pillars (see section I1below). The strategy is further translated into a Governance and Accountability Action Plan (GAAP), which lists time-bounded steps to be taken in implementing the strategy. The GAAP i s presented in section I11 below. Overall, the expected results from the project's governance and accountability strategy and its 93 action plan (GAAP) are that (a) the roles and responsibilities o f key stakeholders are clearly defined; (b) there is adequate oversight o f project processes and decision-making mechanisms; (c) the use o f funds by project functionaries and contractors are clearly outlined along with sanctions for misuse; and (d) key stakeholders, especially beneficiaries, can easily report problemsandhave grievances addressedina timely and appropriate manner. 11. STRATEGY TO ENSUREGOVERNANCE AND ACCOUNTABILITY 5. The project's governance and accountability strategy is built around the following four pillars: A. HolisticDisclosure of ProjectInformation: a. Suo moto disclosure o f information in compliance with Right to Information Act (RTIA) b. Disclosure o f (additional) information as demandedby interestedparties c. Building up "demand side" o f governance through communication and awareness campaigns B. Strong Beneficiary Involvement in Enhanced Governance, Monitoring, and OversightArrangements: a. Building a value chain o f governance that brings together implementing agencies and relevant stakeholders to enhance oversight o f project implementation; b. Independentmonitoring andevaluation by an external third-party M&E agency; c. Use o f social accountability structures and tools to involve communities in the management and monitoring o f project progress, and to promote social ownership and accountability. C. Grievance Redressal System: An effective system to respond to issues o f mis- management, corruption, and other problems that may be identified during implementation. D. RisWulnerability Mappingand Mitigation:Assessment of each project process with regardto key categories o frisks and designing suitable mitigation measures. PILLAR 1:HOLISTICDISCLOSUREOFPROJECTINFORMATION 6. The project is designed to help provide beneficiaries and other stakeholders with information that will enable them to ask questions, identify problems, and recommend and/or demand remedies. A key goal o f information disclosure arrangements i s compliance with India's much-welcomedRTI Act, which establishes the citizens' "right to know". Inaddition, the project GAAP attempts to proactively enhance transparency and accountability arrangements, so that beneficiaries are enabled to move beyond the "right to know", to a situation where they can effectively exert an oversight role, which inturn improves implementationbehavior. 94 7. RTI Act and Suo Mot0 Disclosureof Information. India's Rightto Information (RTI) Act guarantees citizens the right to secure information controlled by public authorities as a means to promote transparency and accountability within the public sector. Under RTI, public authorities are bound to respond to information requests within the stipulated time. Furthermore, RTI shifts the information paradigm to one of suo mot0 provision o f information, in addition to timely response to public queries. In line with this paradigm, UPBSN will publicly display information related to the release o f funds, expenditures, and progress on financial and physical aspects o f project implementation, and other relevant issues. At the community level, information will be displayed through wall boards, etc. At the sub-unit and district level, copies o f primary project documentation (see attachment 1) will be available in project offices for public review. At the national level, UPBSN will form a transparency cell that will provide written materials for the public and maintain a Web site with updated project information and documentation. 8. Suo mot0 literally means `on its own motion', or without external prompting or explicit demand. India's Right to Information Act calls for Suo mot0 proactive information sharing on the part of the public sector. Inline with this requirement,the UPBSN has developed a Suo mot0 Information Disclosure Plan which i s elaborated inAttachment 1. 9. As required by the RTI Act, the project has appointed a senior officer as the Public Information Officer (PIO) o f UPBSN, and assigned a project officer in each field office who will be responsible for responding to information requests within agreed service standards (see grievance redress system below). Any request for information under the RTI Act will be forwarded to the P I 0 at UPBSN. The P I 0 will direct the request for information to the concerned sectiodofficer who will provide the information, and then the P I 0 will deliver the information at the front office within the stipulated time. The information seeker can obtain the information from the front office anytime after the stipulated timeframe. 10. A Central Information Commission and State Information Commissions have been constituted to enforce the RTI Act. These commissions can be approached by an information seeker whenever any public authority (including UPBSN) does not provide the requested information within the stipulated time or provides incomplete information. In such cases, the commissions will issue directives to the concerned authority to provide the information being requested. 11. Disclosure of Information on Demand. In addition to proactively disclosing information, UPBSNhas designed a mechanismto disclose information-on-demand via internet, in-person service, and post/fax: 0 Online. The project website will feature an automated user-friendly system to register requests for information. The system will assign a query number and indicate the tentative timeframe for a response so that information seekers can track their queries. Alternatively, information seekers can send an email to UPBSN. . 0 In-person through front office. Any person seeking information about the project can walk to the UPBSN front office and submit hisher query or request for information inan input form that will be printed in English and Hindi. The input form will be simple 95 enough for common people to understand and will also contain a clear timeframe for receiving a response from UPBSN. The input form will be completed in duplicate (through carbon copying) so that the information seeker can retain a copy. Post/fax/telephone(toll-free state number). Information requests can also be submitted by post or fax directed to the staff in the UPBSN front office. There will also be an automated phone system to record requests for information. , Regardless o f the medium or technology used to submit a request, information seekers will be able to receive an acknowledgment o f their request via the same technology with a query number and expected response time. 12. UPBSN will engage a dedicated computer person to operate the online system and front office staff will manage the in-person, post, phone, and fax requests. Once a request i s received (online or otherwise), it will be assigned to the appropriate team expert and forwarded to the Public Information Officer for confirmation o f the assignment. The P I 0 will forward queries to the concerned unit, which will then send the responseto the P I 0 for delivery to the requester by the computer personor front office staff. 13. Document Management and Dissemination System. To document and consolidate responses to all requests for information (both proactive and on-demand), UPBSN will develop a document management and dissemination system that will ensure quality standards for accuracy and presentation are met on each document. A committee at UPBSN headquarters will review documents produced by the project to ensure that required standards are met. The specialist for each thematic area will be responsible for signing off on the accuracy and quality o f all content intheir particular area. 14. All queries and responses will be classified according to task and/or project components and appended to a Frequently Asked Questions (FAQ) file that will be readily available to project functionaries and also available online. Documenting queries and responses will enable different units at headquarters to promptly reply to queries that had been raised before. In addition, it will improve learning o f other sections/officers in the headquarters and district project units. Moreover, the FAQ file will educate all the project functionaries about the concerns o f the general public regarding the project. As a result o f this awareness, it i s expected that project functionaries will become more proactive indisseminating information to satisfy the concerns o f the public. 15. Building the Demand Side of Governance. The proposed arrangements for obtaining information from UPBSN (the Information Disclosure System above) and registeringcomplaints (the Grievance Redress System below) will be widely publicized through print and electronic media, wall writing, posters, banners, and one-to-one contact between farmers and field staff. This communications campaignwill be part o fthe community mobilization process, which is the first step inthe project and will continue throughout the life o f the project. The main objective i s to clearly outline the roles and responsibilities o f UPBSN, its staff, and the project, and to encourage the public to demand information from UPBSN. The communications campaign will also keep UPBSN alert in planning, implementing, and documenting project activities and processes. 96 PILLAR 2: STRONG BENEFICIARY INVOLVEMENT IN ENHANCED GOVERNANCE, MONITORING ANDOVERSIGHT 16. Proper oversight o f project decision-making and implementation at the state, district, and local levels are central to the effectiveness and efficiency o f UPSLRIIIP. UPBSN has created oversight mechanisms at each level for this purpose. 17. Value Chain of Governance. At the state level, the State Steering Committee and UPBSN Board o f Directors bring together stakeholders from the involved government departments and other sectors to oversee the project design and implementationprogress. At the district level, district implementation and coordination committees provide similar forums for representatives o f government, the project, and farmers to track progress and flag issues. At the village level, the site implementation committees, whose membership includes farmer beneficiaries, will monitor the progress o f works. The project will also draw on the experience o f rural livelihoods development programs and use particularly well-skilled beneficiaries-such as the Mitra Kisan (MK) and Mahila Mitra Kisan (MMK)-to help in oversight, including on supervision missions (see Lessons Learned section). The details on the roles and responsibilities o f the various stakeholders and committees are given in Annex 6 (on Implementation Arrangements). Attachment 2 below illustrates the governance chain for the project. 18. Internal Monitoring & Evaluation System. To enhance timely and qualitative implementation, the project has strengthened its internal monitoring and management system so that all project activities will be reviewedweekly at the sub-unit level, fortnightly at the district level, and monthly at the state level. The management structure to support this work will be: 0 Zonal Officers. The 25 project districts will be grouped into five zones, each of which will be headed by a senior officer at the state level. Zonal Officers will facilitate monitoring and learning inthe districts and will be responsible for effective management o f those districts. 0 District Project Managers. The pro'ect has 20 district offices, each o f which will be headed by a district project manager." The District Project Manager will be responsible for planning, execution, monitoring and evaluation. 0 Sub-unit Managers. The entire project area is divided into sub-units, with a Deputy Manager and Assistant Managers. The Assistant Managers will monitor all activities within a 150 hectare area of sodic lands (referred to as a circle). They would alternate their circles annually so that they can monitor the progress o f other circles and move knowledge and learning across circles. 19. Independent, Third-party Monitoring. UPBSN will hire an independent external organization to undertake concurrent monitoring and evaluation o f project activities. The external M&E organization will provide an un-biased evaluation o f project performance interms I OSome district offices will manage implementationintwo small, adjacent districts, which accountsfor 25 implementationdistricts, but only 20 district offices. 97 o f achieving established targets and adhering to the recommended processes and quality parameters within the purview o f overall project objectives. The external M&E organization will undertake two main broad groups of activities-concurrent implementation monitoring and agricultural and socio-economic impact evaluation. 20. Participatory Monitoring and Evaluation (PME). The project will mobilize and strengthen representative community groups that will play an active role throughout implementation and contribute to the sustainability o f the project. * The project's monitoring system will seek to go beyond the simple extraction o f information from these groups, to a participatory process where stakeholders at the community level will be involved in measuring results, evaluating achievements, and learning from the project experience(as joint originators and evaluators o f information). This will also help build local capacity to identify and analyze problems, to propose solutions, to take actions, and it will also give voice to small and poor farmers. The PME system i s expected to tap into the local knowledge o f farmers and their proximity to project activities. It will help beneficiaries to keep track o f implementation progress while building a sense of ownership among them. The PME system is also expected to transfer technical knowledge to farmers that participate inmonitoring and evaluation. 21. Under the PME, community members will collaborate with project staff to review and monitor schedules, collect data, and ensure that quality goods and services are delivered in a timely manner. These arrangements will facilitate quick corrective actions because communities are the first to see problems and often know the best remedy. 22. Use o f social accountability structures and tools. The participatory nature o f the project i s meant to create positive social capital at the local level to allow for change and development. Each beneficiary will be a member o f at least one local organization, where decisions on water, land, savings, etc. are taken collectively. The social pressure created inthese groups helpsto ensure that individuals are accountable to achieving the group's goals. 23. The project will use community scorecards at regular intervals to assess the performance o f local project units. Should problems emerge, project fwnctionaries can intervene to help restore proper functioning o f groups. Similarly, community scorecards will be used to assess the performance o f project staff, government functionaries, and private suppliers o f goods and services. 24. Farmer checklists will be used to determine when steps inthe reclamation process have been taken in a satisfactory manner. The flow o f funds for project activities will be triggered whenthe farmer's checklist system finds the steps to be satisfactory. 25. Social audit will also be used during the project to assess progress towards objectives, to check the quality o f financial management systems, and to guard against any corrupt activities. IIRoles and responsibilitieso f these groups at the local level are elaboratedin chapter 7 of the Project ImplementationPlanand in PAD Annex 6 on ImplementationArrangements. 98 PILLAR3: GRIEVANCEREDRESSAL SYSTEM 26. The project has designed a dedicated grievance redressing system, which will be closely linked to the Information Disclosure System, to allow for feedback and complaints to reach senior project officials-via dedicated phone number, fax number, and self-addressed stamped postcards, and the internet. The grievance redressing system goes beyond information disclosure and includes allegations o f mismanagement, corruption, and other problems that can emerge during implementation. Attachment 3 gives tools and channels for information flow that link the information and governance systems. 27. The crucial link between the grievance system and the information disclosure system are the communication channels that the grievance system uses and the service standardsto which it adheres. Inaddition to the established grievance system, each selected beneficiary will be given a pre-addressed and pre-stamped postcard that they can use to mail in grievances and/or allegations. Stakeholders can also submit complaints in a compliant box that will be placed at the entry of each sub-unit and district office, and which will be checked twice weekly to ensure timely response. 28. District and sub-unit offices will notify the P I 0 and Zonal Officer at UPBSN headquarters o f all complaints they receive, and they will address grievances that are not specifically about someone in that office whenever they have the resources to do so. All other responses will be handled from UPBSN headquarters. Dependingon the nature and severity o f a complaint, a team o f inquiry will be constituted by the Managing DirectodJoint Managing Director to address the matter. The inquiry team will produce a report and necessary action will be taken on the basis o f the report-including the notification o f legal authorities if required- and the same will be communicatedto the complainant. PILLAR4: RISKNULNERABILITY MAPPING MITIGATION AND 29. During the design o f the project, various project processes have been assessed with respect to major categories o f risks and vulnerabilities. The resulting risk and vulnerability map, which is given in Attachment 4, outlines those risks and the mitigation measures to be taken by the project and the Bank. Additionally, a more detailed list o f risks to be monitored during implementationwill be developed for each component manager. 30. The issues outlined inseveral project documents (risk matrix inattachment 4, risk matrix in the critical risks section of the PAD, and in the Risk Identification Worksheet) will be monitored through the UPBSN MIS, the external monitoring agency, internal and external auditors, steering committees at the state and district level, and participatory monitoring and evaluation committees. 3 1. Duringsupervision missions, the Bank team along with UPBSNwilljointly agree on the governance related issues that need further analysis and develop a clear Terms o f Reference for initiating independent external evaluations, if needed. This will be done on a regular basis depending on the gravity o f issues and frequency o f these external evaluations will be decided accordingly. 99 111. THE GOVERNANCEAND ACCOUNTABILITY ACTION PLAN 32. Inorder to implementthe above strategy, the matrix below summarizes the problemsto be addressed, key actions to be taken, the date by which they are expectedto be taken, and the authority responsible for taking the action. It is important to note that this is intended to be a "living" action plan which will be reviewed and updated periodically based on implementation experience. Anticipated Responsible Problem Action To Be Taken Deadline for Action 1. Designing project processesto support better accountability and transparency The project Ensurethat UPBSN businessprocesses are in line with RTIA roles processes will and responsibilities for public authorities including establishinga As of project effectiveness, ongoing not detect and disclosure policy that specifieschannels for information queries UPBSN through project address and roles and responsibilities of staff at state, district, and subunit implementation problems levels relatedto transparency Clearly communicatetechnical criteria and participatory process As of project UPBSN, and effectivenessand for identifying sodic lands to be reclaimed among all project DPU, accountability ongoing through stakeholders Subunits and will not project implementation facilitate compliance Based on experience from the first two phases of the project and UPBSN, with Indian an assessment during project preparation, flag areadactivities most Ongoing through DPU, NGOs, regulations on at risk for leakagesand monitor them closely via MIS, third party project implementation Subunits right to monitoring, Bank supervision missions, and social audit. information By 31"March, 2010 and within two months Conduct training on RTIfor staff, officials of project Gram of entry in any village; UPBSN, DPU Panchayats, and office bearers of site implementation committees, with refresher and subunits WUGs, SHGs knowledge sharing and training for new staff continuing UPBSN, Maintain proper case database at project level and use it to As of project effectiveness, and DPU, enhance public disclosure progressively bringing down caseload ongoing Subunits 2. Strengthening preventive actions against improper use o f funds/resources Lack of Clearly communicateproject rulesfor managingproject funds, adequate UPBSN, procuring goods, and exercising powers by project related By 3 Is'March, 2010, DPU, and ongoing Subunits of norms and 100 Anticipated Responsible Problem Action To Be Taken Deadline for Action Party improper use of Upon project UPBSN, funds/ effectiveness DPU, resources Empowerprojectstaff and beneficiariesto report instancesof Subunits improper use of funddresources. (especially managers) Strengthenparticipatory audit andmonitoringexercises to track UPBSN, problemareas identified during implementation By 3l"March, 2010 DPU, Subunits Commissionthird party monitoringreportsto track Ongoingthrough UPBSN implementationprogressand identify areas of deviationmissedby project implementation standard projectmonitoring 3. Strengthening complaint and grievance handling system at the project level A weak Finalizeandtest computerized system for registering, tracking and 31 March, 2010 UPBSN complaintand monitoringof complaints grievance handling mechanism may affect transparency Devisecriteriato segregate complains in order of gravity and 30 June, 2010 UPBSN and contribute disposal in specifiedtimeframeby designatedauthorities to unfair and manipulative practices 4. Strengthening Project Procurement Management System Weak Projectshouldhave a transparentprocurementpolicy basedon Uponproject procurement establishedbest practicesand strict compliancewith agreed Bank effectiveness, and UPBSN management procedures. ongoing system could result in Upon project Procurementplan and policiesandbiddingdocuments postedon mismanagemen effectiveness, and UPBSN project web site t o f biddingand ongoing spendingof funds Bidding documentsas per model Bank Clear eligibility criteriafor biddersand product quality needs will be standardized in the project procurement manuals documents, UPBSN procurement manual finalized Clearly outlinethe criteria and process for disqualificationof bidderswho engage in misrepresentationor other fraudulent and By 31"March, 2010 UPBSN corruptpractices 101 Anticipated ResponsibIe Problem Action To Be Taken Deadline for Action Party I 5. StrengtheningProject FinancialManagement System It may be The financial management plan/manualshouldbe inplaceto Uponproject difficult to ensurethat funds are usedonly for the intended purposes in an UPBSN effectiveness ensure efficient and economical way as per budget approvals transparency and DPU and Sub-unit offices should enforce financial management UPBSN, accountability safeguards at their level and generatefinancial progress reports in Throughout project DPU, in financial the prescribedformat capturing relevant parametersas laid down implementations Subunits transactions in inthe project implementation plan (PIP) the absence of a comprehensive Regular financial and procurement-relatedaudits to be conducted Annually starting one financial and any deviations from establishedplardprocedures, if any, year after project UPBSN management should be explained in stipulatedtimeframe fixing responsibility effectiveness for explanation and disciplinary action on concernedpersons Project review missions to review F M and procurementprogress Twice yearly during UBBSN, and inquire about any identified instances ofmisuse of supervision missions World Bank funddresources and how they havebeen addressed. Quarterly starting 6 UPBSN, Feedback receivedfrom participatory monitoring exercises should months after DPU, be incorporated in the financial reviews at quarterly intervals effectiveness Subunits I 6. StrengtheningSystems and Processes for Project Management Finalize Project MIS design as well as monitoring and review By 31'' March,2010, UPBSN, implementation arrangements. The database should be linked to online reporting and ongoing subunits, line arrangements arrangements for quick review and follow up action. departments may adversely affect project processes and results Strengthen multi-stakeholder coordination arrangements including From start of the UPBSN, line departments, financial institutions and technical resource project onwards DPU, line agencies at state and district departments 102 Annex 11,Attachment 1 Suo Mot0 InformationDisclosurePlan Party Responsiblefor Suo Mot0 Disclosure Requirements Disclosure Location Creating and Updating 1. InstitutionalGovernanceStructure The particulars of the organization, its functions and UPBSN headquarters, project Company Secretary duties Web site The rules and regulationsfor discharging its functions UPBSN headquarters, district Jt. MDKompany management units, project Secretary/Manager hub offices, project Web site (Personnel) A statement of the categories of documents that are UPBSN headquarters, project Jt. MD/Company held by it or under its control Web site SecretaryNanager (Personnel) The particulars of any arrangement that existsfor UPBSN headquarters, district Jt. MD consultation with, or representationby, the members managementunits, project of the public in relation to the formulation of its policy hub offices, project Web site or implementation thereof A statement ofthe boards, councils, committeesand UPBSN headquarters, project Company Secretary other bodiesconsisting of two or more persons Web site constituted as its part or for the purpose of its advice, and as to whether meetingsof those boards, councils, committeesand other bodies are open to the public, or the minutes of such meetings are accessible for public A directory of its officers and employees UPBSN headquarters, project Manager (Administration) Web site 2. Financial Management, Procurement I The budget allocation, indicating the particulars of all UPBSN headquarters FinanceController plans, proposed expenditures, and reportson disbursements made The manner of executionof subsidy programs, UPBSN headquarters, project Finance including the amounts allocated and the details of Web site, DPU ControllerParticipatory beneficiaries of such programs ManagementCell Particularsof recipients of concessions, permits, or UPBSN headquarters, DPU Finance ControllerDPM authorizationsgranted by it 3. General Information Access The particulars of facilities available to citizens for UPBSN headquarters, district Public Information Officer at obtaining information, including the working hoursof managementunits, project UPBSN headquartersDPU a library or reading room, if maintainedfor public use hub offices, project Web site 103 Party Responsible for Suo Mot0 Disclosure Requirements Disclosure Location Creating and Updating The names, designations and other particulars of the UPBSN headquarters, district MD/Jt. MD Public Information Officers management units, project hub offices, project Web site Such other information as may be prescribed, and UPBSN headquarters, district Public Information Oficer at thereafter update these publications every year. management units, project UPBSNheadquartersDPU hub offices, project Web site 104 Annex 11,Attachment2 ProjectGovernanceChain 105 w > m 3 Annex 11,Attachment 4 RiskAssessment Matrixwith MitigationMeasures Staffing and Project Coordin 3I1 . Frequent changeshigh Consistentrepresentation hasbeen madeto GOUP at State PAD. Annex 6 turnover of staff in the highest levelregardingthe importanceof continuity . implementing agenciesand instaffing. Bankwill continueto emphasizethis point. support organizationsimpedes For staff involved inproject implementation, the project implementation following mitigation strategies will be emphasized to Risk Rating after Mitigation: ensure staffing continuity: (i)recruitment from broad- Moderate based pool of technically qualifiedpersonnel; (ii)use of performance-relatedincentives where possible; and (iii) attention to staff training to enhance skills where - appropriate Poor coordination between line Operational links (includingNodal officers) between State PIP departments and the project UPBSNand Irrigation Department(ID) strengthened to District Procurement could negatively impact the ensure that annual work plans anddetailed activity Plan timeliness and quality of land schedules reflect the appropriate sequencing of Village reclamation. activities; field level staff from two agencies to meet PAD Risk Rating after Mitigation: . periodically to pursuejoint implementation. Annex 6 Low Technical aspects and technical requirementsare Annex 8 defined properly along with clear technical specifications inthe detailed work plans, which will be Section IIIC . tracked as part of the project MIS. Constantmonitoringisupervision to be carried out at several levels, including by communities, to ensure quality of construction and the timely delivery of services. Lack of sufficient field staff of m Full staffing of all district Project ImplementationUnits State PIP UPBSNwith adequate training (PIUs) for all first cohort areas has been done by leads to delays and poor UPBSN, and staffing for the other districts is underway quality in implementation (with preference being given to those who worked in Risk Rating after Mitigation: . the earlier sodic projects). Low Other key positions inUPBSN are being filled either through deploymentfrom a governmentdepartmentor . through a competitive market process. Roles and responsibilities for staff at various levels are clearly defined inthe project implementation manual. Appropriate actions will be proposed against non- performing personnel. 12Table Key: PIP=Project Implementation Plan, PAD=Project Appraisal Document; COM=Community Operational Manual; FM=Financial Management Manual; PM=Procurement Manual; PP=Procurement Plan 107 Elite Capture Projectbenefits are captured Communication campaignwill explain the project State PIP by local elites due to weak objectives, activities, andthe selectioncriteriato District COM selection processesipolitical concerned stakeholders. interference. Village PAD: Annex 6 Farmerkite selectionwill be basedon clear and Risk Rating after Mitigation: objective criteria. The criteria, especiallythe focus on Low "Class C" (barren sodic) lands and exclusion of absentee farmers, lead to pro-poor selection,. Satellite imageries showing clear signatures of sodic lands are usedfor identification of lands to be reclaimed. The beneficiary list will be preparedjointly by UPBSN, SOs and village community, and publicly displayed in appropriateplaces, including the project website, prior to the commencement of civil works. Project staff or staff of a supportNGO will monitor all selectionprocesses to ensure it is transparent and abides by agreed procedures. Capacity for planning and m Capacity of the implementing agencieswill be State PIP implementing social activities improvedthrough training at different levels over the NGO Manual is weak project period, including exchange visits with other Risk Rating after Mitigation: projects, appropriatecommunity operational manuals, Low etc. NGOs will be hiredto assist in community mobilization and capacity building efforts. --- Grieranre Systems . __ .- Absence of complaint handling A grievance system is being developedto operate at State PIP resulting inreduced every level of the project inorder to keep track of all District PAD: Annex 6 competition and increasedrisk complaints receivedand respondedto inatimely . o f collusion manner. Sub-unit Risk rating after mitigation: The names, address and telephone number of public Moderate information officers (PIOs) will be displayed at all prominent places inthe project. Financial Rlanagenient Weak implementation capacity ' Periodic InternalAudits by auditors satisfactory to the State PIP :o handle afinancial Bank, under agreed terms of reference, ensure that District COM nanagement system, internal controls are being maintained as intended :specially in a decentralized during the design stage or further strengthened Village PAD jystem with about 40-50 wherever needed. Annex 6 spendingunits, and funds m The information disclosuresystem will keep updated nowing down to the grassroots Annex I financial information inthe public domain on aregular xganizations. basis, including posting of community organization Section IIIC Risk Rating after Mitigation: expenditures publicly within villages. Moderate A strongManagement Information Svstem is being 108 designed to producetimely and accurate information, including financial information, to enable effect project management. Appropriate circulars will be issued and operational manuals will be developedto address timely disbursement of payments. Such circulars will have clear clause outlining punitive actions against defaulters. Funds flowing to community The release of funds will be handledelectronically and State PIP organizationscould be reportedthrough the public disclosureand audit system, District COM misdirectedby different actors so all funds will betraceable, and project staff at the without close monitoring. district and sub-unit levels.Participatory monitoring & Village PAD: Annex 6 Risk rating after mitigation: evaluation committeesat the local level will also Moderate monitor spending and ensure that funds are spent according to plan. A system of public disclosure, financial audit, social audit, and a grievance systemwill help ensure proper use of funds. An independent externalM&Eagencywill conduct systematic assessment of project activities and impacts twice during the project period, before the mid-term review and at project completion. A program of capacity buildingwill help SHG and other groups receivingfunds to plan and use those funds efficiently and effectively, and groups will be closely supportedand monitored by the District Coordinator and the Training and Communication Organizer. Procurement Weak institutional capacity for Assessment of institutional capacity has been carried State PM procurement could lead to out during project preparationand aplan for its District PP instanceso f fraud, corruption, strengtheninghas been worked out. This exercise will md or mismanagement. be repeatedperiodically. Village PIP Risk rating after mitigation: 1 A dedicated `ProcurementCell' inUPBSNwill manage PAD: Annex 8 Moderate and/or monitor all procurementactivities by the project unit. UPBSNhas prepared athorough procurement plan for major works managed by the project implementation units that include a clear time schedule, and forward contracting of major goods like gypsum to . lock in favorable prices. Staffs of UPBSNand counterparts inthe relevant line departments have receivedtraining at ASCI in . Hyderabad. Independentauditors will be appointedto check quality of assets, accounting of assets and utilization 109 Project Supervision Annex 12: ProjectPreparationand Supervision INDIA: Uttar PradeshSodic LandsReclamationI11Project Planned Actual PCN review 07/17/2008 0711712008 Initial PIDto PIC 07/23I2008 07/23/2008 Initial ISDSto PIC 07/28/2008 07/28/2008 Appraisal 05/12/2009 0511112009 Negotiations 08/03/2009 06/04/2009 BoardJRVPapproval 0911512009 Planneddate of effectiveness 10101l2009 Planneddate ofmid-termreview 0913012012 Plannedclosingdate 12131/2015 Key institutions responsible for preparationof the project: Uttar PradeshBhumiSudharNigam, IrrigationDepartment, Department of Agriculture, Departmento f Animal Husbandry and Remote SensingApplications Agency. Bankstaffand consultants who worked on the project included: Name Title Unit Animesh Shrivastava Task Team Leader SASDA Paul Singh Sidhu Sr. Agricultural Specialist SASDA Shyam Sundar Ranjitkar Sr. IrrigationEngineer SASDA DebabrataChakraborti Procurement Spec. SAWS Anupam Joshi EnvironmentalSpec. SASDI Tanuj Mathur Sr FinancialManagementSpec SARFM Elliot WambokaMghenyi Young Professional SASDA ReenaGupta NRMSpecialist SASDA Biswajit Sen Sr. RuralDevelopment Spec. SASDA MohammedHasan Sr. Social Develop.Specialist SASDI Melissa Williams Operations Officer SASDA ManivannanPathy Sr. Agricultural Specialist SASDA S. Selvarajan Economist FAOJCP Jacqueline Julian Sr. ProgramAssist. (Costab) SASDA Jai Mansukhani ProgramAssist. SASDA Lilac Thomas ProgramAssist. SASDA Bank funds expendedto date on project preparation(US$): 1. Bank resources: US$228,000.00 2. Trust funds: 0.00 3. Total: US$228,000.00 EstimatedApproval and Supervision costs: 1. Remaining costs to approval: US$407,000.00 2. Estimated annual supervision cost: US$140,000.00 111 Annex 13: Documents in the ProjectFile INDIA: Uttar PradeshSodic LandsReclamationI11Project 1. Project ConceptNote 2. Project Implementation Plan 3. Inception Report for the IESA Study by WAPCO 4. The evaluation studies conductedby Evaluation Division, State Planning Institute, U.P., Lucknow. 5. Project Economic and Financial Analysis 6. Durability andbio-diversity studies were conductedby RSAC andNBRI(National Botanical ResearchInstitute). 7. Draft FinalReport IESA submittedby WAPCOS. 112 Annex 14: Statement of Loans and Credits INDIA: Uttar Pradesh Sodic Lands Reclamation I11Project Difference between expected and actual Original Amount in US%Millions disbursements Project FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. Rev'd ID PO93478 2009 Orissa Rural Livelihoods Project 0.00 82.40 0.00 0.00 0.00 72.67 -3.09 0.00 PO96023 2009 Orissa State Roads 250.00 0.00 0.00 0.00 0.00 250.00 0.00 0.00 PO94360 2009 National VBD Control&Polio Eradication 0.00 521.00 0.00 0.00 0.00 479.73 11.67 0.00 P100735 2009 Orissa Community Tank Management 56.00 56.00 0.00 0.00 0.00 103.80 -2.83 0.00 Project P101653 2008 Power System Development Project I V 1,000.00 0.00 0.00 0.00 0.00 753.31 77.48 0.00 P102547 2008 Elementary Education (SSA 11) 0.00 600.00 0.00 0.00 0.00 354.45 2.47 0.00 P102737 2008 Bihar DPL 150.00 75.00 0.00 0.00 0.00 112.02 111.10 0.00 PO95114 2008 Rampur Hydropower Project 400.00 0.00 0.00 0.00 0.00 318.30 2.63 0.00 PO78538 2007 Third National HIV/AIDS Control 0.00 250.00 0.00 0.00 0.00 196.46 106.73 0.00 Project PO78539 2007 TB I1 0.00 170.00 0.00 0.00 0.00 112.22 -15.56 0.00 PO90768 2007 TN IAM WARM 335.00 150.00 0.00 0.00 0.00 425.10 97.86 0.00 PO90764 2007 Bihar Rural Livelihoods Project 0.00 63.00 0.00 0.00 0.00 58.09 3.06 0.00 PO90592 2007 Punjab Rural Water Supply & Sanitation 0.00 154.00 0.00 0.00 0.00 138.18 79.68 0.00 PO90585 2007 Punjab State Roads Project 250.00 0.00 0.00 0.00 0.00 143.81 -16.29 0.00 PO83187 2007 Uttaranchal RWSS 0.00 120.00 0.00 0.00 0.00 108.28 46.30 0.00 PO75174 2007 AP DPL 111 150.00 75.00 0.00 0.00 0.00 76.02 -77.33 0.00 PO75060 2007 RCH I1 0.00 360.00 0.00 0.00 0.00 218.20 59.87 0.00 PO96019 2007 HP State Roads Project 220.00 0.00 0.00 0.00 0.00 195.63 22.41 0.00 PI02768 2007 Stren India's Rural Credit Coops 300.00 300.00 0.00 0.00 0.00 285.19 113.58 0.00 PO99047 2007 Vocational Training India 0.00 280.00 0.00 0.00 0.00 210.43 -4.31 0.00 P100789 2007 AP Community Tank Management 94.50 94.50 0.00 0.00 0.00 175.06 19.38 0.00 Project PO71160 2007 Karnataka Health Systems 0.00 141.83 0.00 0.00 0.00 81.60 -15.69 0.00 PO86414 2006 Power System Development Project 111 400.00 0.00 0.00 0.00 0.00 28.96 -131.04 0.00 PO92735 2006 NAIP 0.00 200.00 0.00 0.00 0.00 173.67 59.87 0.00 PO93720 2006 Mid-Himalayan (HP) Watersheds 0.00 60.00 0.00 0.00 0.00 33.00 2.61 0.00 PO78832 2006 KamatakaPanchayats Strengthening Proj 0.00 120.00 0.00 0.00 0.00 79.92 -33.93 0.00 PO79675 2006 Karn Municipal Reform 216.00 0.00 0.00 0.00 0.00 176.47 68.81 0.00 PO79708 2006 TNEmpwr & Pov Reduction 0.00 120.00 0.00 0.00 0.00 83.21 26.91 0.00 PO83780 2006 TNUrbanI11 300.00 0.00 0.00 0.00 0.00 199.87 100.62 0.00 PO86518 2005 SME Financing & Development 520.00 0.00 0.00 0.00 0.00 400.00 0.00 0.00 PO73370 2005 Madhya Pradesh Water Sector 394.02 0.00 0.00 0.00 0.00 309.34 217.91 0.00 Restructurin PO73651 2005 DISEASE SURVEILLANCE 0.00 68.00 0.00 0.00 0.00 52.55 43.83 0.00 PO84632 2005 Hydrology I1 104.98 0.00 0.00 0.00 0.00 86.14 72.36 41.74 PO84792 2005 Assam Agric Competitiveness 0.00 154.00 0.00 0.00 0.00 91.64 69.56 0.00 PO84790 2005 MAHAR WSIP 325.00 0.00 0.00 0.00 0.00 246.64 139.30 0.00 113 Difference between expected and actual Original Amount in US%Millions disbursements Project FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm.Rev'd ID PO75058 2005 TN HEALTHSYSTEMS 0.00 110.83 0.00 0.00 20.06 41.54 48.25 23.86 PO77977 2005 Rural Roads Project 99.50 300.00 0.00 0.00 0.00 111.18 63.86 0.00 PO77856 2005 Lucknow-Muzaffarpur National Highway 620.00 0.00 0.00 0.00 0.00 248.00 81.33 0.00 PO94513 2005 India Tsunami ERC 0.00 465.00 0.00 0.00 0.00 390.45 388.18 0.00 PO73776 2004 ALLAHABAD BYPASS 240.00 0.00 0.00 0.00 0.00 25.16 23.56 0.00 PO50655 2004 RAJASTHAN HEALTH SYSTEMS 0.00 89.00 0.00 0.00 0.00 38.80 32.52 0.00 DEVELOPMENT PO78550 2004 Uttar Wtrshed 0.00 69.62 0.00 0.00 0.00 34.95 1.23 0.00 PO82510 2004 Karnataka UWS Improvement Project 39.50 0.00 0.00 0.00 0.00 7.58 7.58 1.73 PO71272 2003 AP RURAL POV REDUCTION 0.00 215.03 0.00 0.00 0.00 26.19 -58.48 0.00 PO67606 2003 UP ROADS 488.00 0.00 0.00 0.00 0.00 105.29 105.29 0.00 PO50649 2003 TNROADS 348.00 0.00 0.00 0.00 0.00 64.96 63.29 0.00 PO73094 2003 AP Comm Forest Mgmt 0.00 108.00 0.00 0.00 0.00 19.89 0.16 0.00 PO76467 2003 Chatt DRPP 0.00 112.56 0.00 0.00 20.06 49.62 56.50 0.00 PO72539 2002 KERALA STATE TRANSPORT 255.00 0.00 0.00 0.00 0.00 93.72 93.72 0.00 PO71033 2002 KARNTank Mgmt 32.00 130.90 0.00 0.00 25.07 109.06 51.30 -5.74 PO69889 2002 MIZORAMROADS 0.00 78.00 0.00 0.00 0.00 15.99 -13.12 0.00 PO40610 2002 RAJWSRP 0.00 140.00 0.00 0.00 25.84 42.58 30.05 0.00 PO50668 2002 MUMBAIURBANTRANSPORT 463.00 79.00 0.00 0.00 0.00 257.95 245.85 99.43 PROJECT PO50653 2002 KARNATAKA RWSS I1 0.00 151.60 0.00 0.00 15.04 16.98 5.17 0.00 PO50647 2002 UPWSRP 0.00 149.20 0.00 0.00 40.11 73.38 85.16 0.00 Total: 8,050.50 6,413.47 0.00 0.00 146.18 8,603.23 2,567.33 161.02 INDIA STATEMENTOF IFC's Heldand DisbursedPortfolio InMillions ofUSDollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. 2005 ADPCL 39.50 7.00 0.00 0.00 0.00 0.00 0.00 0.00 2006 AHEL 0.00 5.08 0.00 0.00 0.00 5.08 0.00 0.00 2005 AP Paper Mills 35.00 5.00 0.00 0.00 25.00 5.00 0.00 0.00 2005 APIDC Biotech 0.00 4.00 0.00 0.00 0.00 2.01 0.00 0.00 2002 ATL 13.81 0.00 0.00 9.36 13.81 0.00 0.00 9.36 2003 ATL 1.oo 0.00 0.00 0.00 0.68 0.00 0.00 0.00 2005 ATL 9.39 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2006 Atul Ltd 16.77 0.00 0.00 0.00 0.00 0.00 0.00 0.00 114 Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. 2003 BHF 10.30 0.00 10.30 0.00 10.30 0.00 10.30 0.00 2004 BILT 0.00 0.00 15.00 0.00 0.00 0.00 15.00 0.00 2001 BTVL 0.43 3.98 0.00 0.00 0.43 3.98 0.00 0.00 2003 Balrampur 10.52 0.00 0.00 0.00 10.52 0.00 0.00 0.00 2001 Basix Ltd. 0.00 0.98 0.00 0.00 0.00 0.98 0.00 0.00 2005 BharatBiotech 0.00 0.00 4.50 0.00 0.00 0.00 3.30 0.00 1984 Bihar Sponge 5.70 0.00 0.00 0.00 5.70 0.00 0.00 0.00 2003 CCIL 1.50 0.00 0.00 0.00 0.59 0.00 0.00 0.00 2006 CCIL 7.00 2.00 0.00 12.40 7.00 2.00 0.00 12.40 1990 CESC 4.61 0.00 0.00 0.00 4.61 0.00 0.00 0.00 1992 CESC 6.55 0.00 0.00 14.59 6.55 0.00 0.00 14.59 2004 CGL 14.38 0.00 0.00 0.00 7.38 0.00 0.00 0.00 2004 CMScomputers 0.00 10.00 2.50 0.00 0.00 0.00 0.00 0.00 2002 COSMO 2.50 0.00 0.00 0.00 2.50 0.00 0.00 0.00 2005 COSMO 0.00 3.73 0.00 0.00 0.00 3.73 0.00 0.00 2006 Chennai Water 24.78 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2003 DQEL 0.00 1.50 1.50 0.00 0.00 1s o 1.50 0.00 2005 DSCL 30.00 0.00 0.00 0.00 30.00 0.00 0.00 0.00 2006 DSCL 15.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2005 Dabur 0.00 14.09 0.00 0.00 0.00 14.09 0.00 0.00 2003 Dewan 8.68 0.00 0.00 0.00 8.68 0.00 0.00 0.00 2006 Federal Bank 0.00 28.06 0.00 0.00 0.00 23.99 0.00 0.00 2001 GTF Fact 0.00 1.20 0.00 0.00 0.00 1.20 0.00 0.00 2006 GTF Fact 0.00 0.00 0.99 0.00 0.00 0.00 0.99 0.00 1994 GVK 0.00 4.83 0.00 0.00 0.00 4.83 0.00 0.00 2003 HDFC 100.00 0.00 0.00 100.00 100.00 0.00 0.00 100.00 1998 IAAF 0.00 0.47 0.00 0.00 0.00 0.30 0.00 0.00 2006 IAL 0.00 9.79 0.00 0.00 0.00 7.70 0.00 0.00 1998 IDFC 0.00 10.82 0.00 0.00 0.00 10.82 0.00 0.00 2005 IDFC 50.00 0.00 0.00 100.00 50.00 0.00 0.00 100.00 IHDC 6.94 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2006 IHDC 7.90 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2006 Indecomm 0.00 2.57 0.00 0.00 0.00 2.57 0.00 0.00 1996 India Direct Fnd 0.00 1.10 0.00 0.00 0.00 0.66 0.00 0.00 2001 Indian Seamless 6.00 0.00 0.00 0.00 6.00 0.00 0.00 0.00 2006 JK Paper 15.00 7.62 0.00 0.00 0.00 7.38 0.00 0.00 2005 K MahindraINDIA 22.00 0.00 0.00 0.00 22.00 0.00 0.00 0.00 2005 KPIT 11.oo 2.50 0.00 0.00 8.00 2.50 0.00 0.00 2003 L&T 50.00 0.00 0.00 0.00 50.00 0.00 0.00 0.00 2006 LGB 14.21 4.82 0.00 0.00 0.00 4.82 0.00 0.00 2006 Lok Fund 0.00 2.00 0.00 0.00 0.00 0.00 0.00 0.00 2002 MMFSL 7.89 0.00 7.51 0.00 7.89 0.00 7.51 0.00 2003 MSSL 0.00 2.29 0.00 0.00 0.00 2.20 0.00 0.00 2001 MahInfra 0.00 10.00 0.00 0.00 0.00 0.79 0.00 0.00 Montalvo 0.00 3.00 0.00 0.00 0.00 1.os 0.00 0.00 115 Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. 1996 Moser Baer 0.00 0.82 0.00 0.00 0.00 0.82 0.00 0.00 1999 Moser Baer 0.00 8.74 0.00 0.00 0.00 8.74 0.00 0.00 2000 Moser Baer 12.75 10.54 0.00 0.00 12.75 10.54 0.00 0.00 Nevis 0.00 4.00 0.00 0.00 0.00 4.00 0.00 0.00 2003 NewPath 0.00 9.31 0.00 0.00 0.00 8.31 0.00 0.00 2004 NewPath 0.00 2.79 0.00 0.00 0.00 2.49 0.00 0.00 2003 Niko Resources 24.44 0.00 0.00 0.00 24.44 0.00 0.00 0.00 2001 Orchid 0.00 0.73 0.00 0.00 0.00 0.73 0.00 0.00 1997 Owens Corning 5.92 0.00 0.00 0.00 5.92 0.00 0.00 0.00 2006 PSL Limited 15.00 4.74 0.00 0.00 0.00 4.54 0.00 0.00 2004 Powerlinks 72.98 0.00 0.00 0.00 64.16 0.00 0.00 0.00 2004 RAK India 20.00 0.00 0.00 0.00 20.00 0.00 0.00 0.00 1995 RainCalcining 0.00 2.29 0.00 0.00 0.00 2.29 0.00 0.00 2004 RainCalcining 10.00 0.00 0.00 0.00 10.00 0.00 0.00 0.00 2005 Ramky 3.74 10.28 0.00 0.00 0.00 0.00 0.00 0.00 2005 Ruchi Soya 0.00 9.27 0.00 0.00 0.00 6.77 0.00 0.00 2001 SBI 50.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1997 SREI 3.21 0.00 0.00 0.00 3.21 0.00 0.00 0.00 2000 SREI 6.50 0.00 0.00 0.00 6.50 0.00 0.00 0.00 I995 Sara Fund 0.00 3.43 0.00 0.00 0.00 3.43 0.00 0.00 2004 SeaLion 4.40 0.00 0.00 0.00 4.40 0.00 0.00 0.00 2001 Spryance 0.00 1.86 0.00 0.00 0.00 1.86 0.00 0.00 2003 Spryance 0.00 0.93 0.00 0.00 0.00 0.93 0.00 0.00 2004 SundaramFinance 42.93 0.00 0.00 0.00 42.93 0.00 0.00 0.00 2000 SundaramHome 0.00 2.18 0.00 0.00 0.00 2.18 0.00 0.00 2002 SundaramHome 6.71 0.00 0.00 0.00 6.71 0.00 0.00 0.00 1998 TCW/ICICI 0.00 0.80 0.00 0.00 0.00 0.80 0.00 0.00 2005 TISCO 100.00 0.00 0.00 300.00 0.00 0.00 0.00 0.00 2004 UPL 15.45 0.00 0.00 0.00 15.45 0.00 0.00 0.00 1996 United Riceland 5.63 0.00 0.00 0.00 5.63 0.00 0.00 0.00 2005 United Riceland 8.50 0.00 0.00 0.00 5.00 0.00 0.00 0.00 2002 UshaMartin 0.00 0.72 0.00 0.00 0.00 0.72 0.00 0.00 2001 Vysya Bank 0.00 3.66 0.00 0.00 0.00 3.66 0.00 0.00 2005 Vysya Bank 0.00 3.51 0.00 0.00 0.00 3.5 1 0.00 0.00 1997 WIV 0.00 0.37 0.00 0.00 0.00 0.37 0.00 0.00 1997 Walden-Mgt India 0.00 0.01 0.00 0.00 0.00 0.01 0.00 0.00 2006 iLabs FundIl 0.00 20.00 0.00 0.00 0.00 0.00 0.00 0.00 Total portfolio: 956.52 249.41 42.30 536.35 604.74 175.91 38.60 236.35 116 Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic. 2004 CGL 0.01 0.00 0.00 0.00 2000 APCL 0.01 0.00 0.00 0.00 2006 Atul Ltd 0.00 0.01 0.00 0.00 2001 Vysya Bank 0.00 0.00 0.00 0.00 2006 FederalBank 0.01 0.00 0.00 0.00 2001 GI Wind Farms 0.01 0.00 0.00 0.00 2004 Ocean Sparkle 0.00 0.00 0.00 0.00 2005 Allain Duhangan 0.00 0.00 0.00 0.00 Total pendingcommitment: 0.04 0.01 0.00 0.00 117 Annex 15: Country at a Glance INDIA: Uttar PradeshSodic LandsReclamationI11Project Lower- POVERTY and SOCIAL South middle- levelopment diamond' India Asia income 2007 Population,mid-year(millions) 1123.3 1520 3,437 GNIpercapta (Atlas method, US$) Lifeexpectancy 950 860 1887 GNI(Atlas method, US$ billions) 1069.4 1339 6,485 Average annual growth, 2001-07 Population (%) 14 16 11 Laborforce(%J 18 2.1 15 Gross prima4 M o r t recent estimate (latest year available, 2001-07) :apita enrollment Poverty(%ofpopulationbelownafionalpo vertyline) Urbanpopulation(%of totalpopulation) 29 29 42 Lifeexpectancyat birth(pars) 64 64 69 Infant mortality(per lOOOlivebirths) 57 62 41 Childmalnutrition (%ofchildrenunder5) 44 41 25 Access to improvedwatersource Access to an improvedwatersource (%ofpopulation) 89 87 88 Literacy(%ofpopulafion age 59 61 58 89 - Gross primaryenmllment (%of school-age population) I12 0 8 111 lndia Male 1M I11 112 -Lower-middleincome group Female 0 9 a 4 a 9 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1987 1997 2006 2007 Economic ratios' GDP (US$ billions) 2760 40.9 96.3 into Gross capital formaiionlGDP 22.0 23.9 36.0 38.2 Eports of goods andserviceslGDP 57 a.0 22.1 213 Trade Gross domestic savingsiGDP 20.6 22.6 33.0 35.1 Gross nationelsavingslGDP 20.9 24.7 35.3 37.2 Currentaccount balancelGDP -19 -14 -11 -2.1 Capital interest paynents/GDP 0.7 11 0.7 Domestic savings formation Total debtlGDP 20.1 23.0 6.7 Total debt servicelexports 29.7 216 7.5 Present value of debVGDP 12.7 Present value of debtlexports 48.5 indebtedness 1987-97 1997-07 2006 2007 2007-11 (average annualgrovdh) GDP 5.5 6.9 9.7 9.0 6.5 -India GDP percapita 3.5 5.3 6.2 7.7 7.2 -Lowermiddle-inco megroup Eports of goods andservices TI5 154 18.9 7.5 0.8 STRUCTURE of the ECONOMY I 1987 1997 2006 2007 (%of GDP) Growth o f capital and GDP (K) Agriculture 294 261 183 17.8 30T Industry 263 268 29 3 29.4 Manufacturing 6 4 6 4 6 3 6.4 Services 443 47 1 52 4 52.8 HousehoIdfinal consumptionexpenditure 671 60 56 7 54.8 Generalgov't final consumptionexpenditure 123 114 a 3 a.1 Imports of goods and sewices 71 121 25 1 24.4 1987-97 1997-07 2006 2007 (averageannualgro vdh) Growth of exports and Imports (Oh) Agriculture 3 5 2 7 3.8 45 6o T Industry 6 3 7 2 110 8 5 Manufacturing 6 6 6 8 12.0 8 8 Services 6 6 8 5 111 0 8 Householdfinal consumptionexpenditure 5 5 5 8 0.3 7 3 I I Generalgov't final consumptionexpenditure 42 3 9 6.2 5 5 02 03 04 05 06 Gross capital formation 6 8 110 M.3 0 3 -Exports -o-lrQortr Imports of goods and services 123 148 24.5 7 7 O7 Note:2007data arepreliminaryestimates. This tablewas producedfrom the Development Economics LDB database. 'Thediamonds showfour keyindicators inthecountry(inbo1d)comparedwith its income-group average. K data aremissing, thediamondwill India PRiCES and GOVERNMENT FINANCE 1987 1997 2006 2007 Domesfic prices (%change) Consumer prices 7 8 7 0 67 5 3 Implicit GDP deflator 9 3 6 5 5 6 4 3 :L Government finance (%of GDP,includes current grants) Current revenue 194 I74 206 224 02 03 04 05 06 07 Current budget balance -2 7 -3 5 -44 -16 I -GDPdefiator -CPI I Overall surplusideficit -9 2 -8 3 -65 -56 T R A D E 1987 1997 2006 2007 Export and i m p o r t levels (US$ mill.) (US$ miliionsj Total exports (fob) r2.644 35,680 128,083 146,632 300,000 T Marine products 411 1,207 1744 I Ores and minerals 600 1,061 7,033 Manufactures 8,85 26,547 82,818 91,657 200 000 Totalimports (cif) 19,8P 51,187 191.254 238,296 Food 1,141 1,483 3,291 100000 Fuel end energy 3,118 8,154 57,074 Capital goods 5,064 9,796 52,944 71311 0 01 03 06 07 Export price index(2000=170/ m llj 02 04 05 Import price index (2000-00) 115 1x) I Exports gln-ports Terms of trade (2000-00) 97 136 B A L A N C E of PAYMENTS 1987 1997 2006 2007 (US$ miliionsj Current account balance to GDP (%) Exports of goods and services 8,215 45,2)9 204,264 246,071 3 T Imports of goods and services 22.839 59,297 235,625 297,009 Resourcebalance -6,623 -14,188 -31,361 30,?76 Net income -1,337 -3,521 8,573 Net current transfers 2.698 11,830 27,941 30,06 Current account balance -5,262 -5.879 -9,993 -24,408 Financing items (net) 4,526 9,772 46,599 44,282 Changes in net reserves 736 -3,893 -36,606 -8.874 Memo: Reserves including goid (US$ millionsj 6 223 29,367 198,713 218,582 Conversion rate (DEC. local/US$) 230 37.2 45.2 40.3 EXTERNAL D E B T and RESOURCE FLOWS 1987 1997 2006 2007 (US$ miilions) Composition of 2006 debt (US$ mili.; Total debt outstanding and disbursed 55,570 94,317 153,075 iBRD 4,709 8,l38 6,177 7,040 I IDA 11,615 I7,9r2 24,059 26,5r2 G. 11,971 A:6'v7 8: Total debt service 5,686 a , 4 0 0,879 IBRD 808 1413 597 739 IDA E6 381 841 915 Composition of net resourceflows Official grants 531 549 873 Official creditors 2,498 406 2,144 Privatecreditors 2,877 1,089 15,097 Foreign direct investment (net inflows) 2r2 3,577 17,453 Portfoiio equity (net inflows) 0 2,556 9 549 World Bank program Commitments 3,504 2,306 1228 3.v4 A-IBRD E- Bilateral Disbursements 2,2Q 1,372 1787 1,905 B - IDA D Other mltilateral - F Private - Principal repayments 499 1,070 942 1089 C-iMF G Short-ten - Net flows 1,714 302 845 815 Interest payments 476 721 496 566 Net transfers 1238 -419 349 251 Note This table was producedfrom the Development EconomicsLDB database 9/24/08 119 MAPSECTION IBRD 36870 INDIA UTTAR PRADESH SODIC LANDS RECLAMATION III PROJECT C H I N A PROJECT DISTRICTS DISTRICT CAPITALS STATE CAPITAL DISTRICT BOUNDARIES STATE BOUNDARY INTERNATIONAL BOUNDARIES SAHARANPUR SAHARANPUR Saharanpur Muzaffarnagar BIJNOR BIJNOR MUZAFFARNAGAR MUZAFFARNAGAR Bijnor Bagpat MEERUT MEERUT Jyotibafule BAGHPAT BAGHP Nagar Meerut RAMPURRAMPUR JYOTIBAJYOTIBA Moradabad Ghaziabad GHAZIABADGHAZIABADPHULENAGARPHULENAGAR Rampur N E P A L Pilibhit Noida Bulandshahr MORADABADMORADABAD PILIBHIT PILIBHIT BAREILLYBAREILLY BULAND- BULAND- Bareilly GAUTAMGAUTAM SHAHAR SHAHAR KHERIKHERI BUDH BUDH BUDAUN BUDAUN NAGAR NAGAR SAHAJAHANPURSAHAJAHAShahjahanpur NPUR Lakhimpur ALIGARHALIGARH Budaun Aligarh BAHRAICH BAHRAICH MATHURA MATHURA HATHRASHATHRAS ETAH ETAH SITAPURSITAPUR SHRAWASTI SHRA ASTI Bahraich Hathras BALRAMPUR BALRAMPUR Etah Mathura FARRUKHABAD ARRUKHABAD Sitapur Hardoi Shravasti Balrampur Fatehgarh Sidhartnagar Firozabad Mainpuri GONDAGONDA HARDOIHARDOI MAHARAJGANJ MAHARAJGANJ Agra SIDDHARTHNAGAR SIDDHARTHNAGAR FIROZABADFIROZABAD MAINPURIMAINPURI Gonda Kushinagar KANNAUJKANNAUJ BARA BANKI BARA BANKI Maharajganj AGRAAGRA Kannauj LUCKNOWLUCKNOW Bara Banki KUSHINAGAR KUSHINAGAR Etawah Auraiya BASTIBASTI Kabit Faizabad Basti Nagar Gorakhpur ETAWAHET AH LUCKNOW KANPURKANPUR Unnao FAIZABAD AIZABAD AURAIYA AURAIY DEHATDEHA Ambedkar Kanpur UNNAOUNNAO Nagar GORAKHPUR GORAKHPUR SANTSANT Kanpur Deoria RAE BARELI RAE BARELI SUL ANPUR SULTANPUR AMBEDAKERAMBEDAKER KABIRKABIR (Rural) KANPURKANPUR NAGARNAGAR DEORIA DEORIA NAGAR NAGAR NAGARNAGAR Sultanpur Rae Bareli Jalaun Azamgarh Maunath Bhanja JALAUNJALAUN Hamirpur Fatehpur PRA APGARH PRATAPGARH Pratapgarh AZAMGARHAZAMGARH MAU MAU BALLIA BALLIA FATEHPUR TEHPUR JAUNPURJAUNPUR Ballia Jaunpur Ghazipur JHANSIJHANSI HAMIRPURHAMIRPUR KAUSHAMBI KAUSHAMBI GHAZIPURGHAZIPUR Jhansi Banda Kaushambi Allahabad Ravidas Nagar VARANASI ARANASI MAHOBAMAHOBA BANDABANDA Varanasi Mahoba CHITRAKOOTCHITRAKOOT Chitrakoot ALLAHABAD ALLAHABAD Mirzapur Chandauli MIRZAPURMIRZAPUR CHANDAULI CHANDAULI Lalitpur SANT SANT RAVIDAS RAVIDAS SONBHADRASONBHADRA LALITPURLALITPUR NAGAR NAGAR Sonbhadra This map was produced by the Map Design Unit of The World Bank. 0 25 50 75 100 Kilometers The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. 0 25 50 75 100 Miles APRIL 2009