Document of The World Bank

Report No: 27288

IMPLEMENTATION COMPLETION REPORT(CPL-40560; SCL-4056A)

ON A

LOAN

IN THE AMOUNT OF US$40.7 MILLION (ORIGINAL AMOUNT: US$ 59.6 MILLION)

TO THE

STATES OF UTTAR PRADESH AND UTTARANCHAL

FOR

UTTAR PRADESH AND UTTARANCHAL RURAL WATER SUPPLY AND ENVIRONMENTAL SANITATION (SWAJAL) PROJECT

November, 2003

Energy and Infrastructure UnitSouth Asia Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective September 2003)

Currency Unit = Rupee Rs.1.0 = US$ 0.022

US$ 1.00 = Rs.45.93

FISCAL YEARApril 1 to March 31

ABBREVIATIONS AND ACRONYMSANR - Assisted Natural RegenerationARWSP - Accelerated Rural Water Supply ProgramCAPW - Catchment Area Protection WorksCAS - Country Assistance StrategyCCL - Cash Credit LimitDPMU - District Project Management UnitERR - Economic Rate of ReturnFAO - Food and Agriculture OrganizationFM - Financial ManagementGOUP - Government of Uttar PradeshGOI - Government of IndiaGP - Gram PanchayatIBRD - International Bank for Reconstruction and DevelopmentICR - Implementation Completion ReportJPS - Jal Prabandhan SamitiLACI - Loan Administration Change InitiativeMIS - Management Information SystemM&E - Monitoring and EvaluationNGO - Non Governmental OrganizationO&M - Operation and MaintenancePMU - Project Management UnitPSR - Project Status ReportPRIP - Private Rural Initiatives ProgramQAG - Quality Assurance GroupRWSES - Rural Water Supply and Environmental SanitationSAR - Staff Appraisal ReportSHG - Self Help GroupSEE - Sustainability Evaluation ExerciseSOs - Support OrganisationsSWSM - State Water and Sanitation MissionTA - Technical AssistanceUA - UttaranchalUP - Uttar PradeshVWSC - Village Water and Sanitation Committees

Vice President: Praful PatelCountry Director Michael Carter

Sector Director Vincent Gouarne Task Team Leader/Task Manager: Deepak Ahluwalia

INDIAUttar Pradesh & Uttaranchal Rural Water Supply and Environmental Sanitation Project

CONTENTS

Page No.1. Project Data 12. Principal Performance Ratings 13. Assessment of Development Objective and Design, and of Quality at Entry 24. Achievement of Objective and Outputs 35. Major Factors Affecting Implementation and Outcome 106. Sustainability 127. Bank and Borrower Performance 148. Lessons Learned 169. Partner Comments 1710. Additional Information 19Annex 1. Key Performance Indicators/Log Frame Matrix 20Annex 2. Project Costs and Financing 22Annex 3. Economic Costs and Benefits 23Annex 4. Bank Inputs 34Annex 5. Ratings for Achievement of Objectives/Outputs of Components 37Annex 6. Ratings of Bank and Borrower Performance 38Annex 7. List of Supporting Documents 39Annex 8. Studies funded under the Project 40Annex 9. Borrower's Contribution 51Annex 10. Sustainability Evaluation Exercise Analysis 66Annex 11. Summary of Stakeholder Workshops held in Uttar Pradesh and Uttaranchal 68Annex 12. Swajaldhara Program - Memorandum of Understanding (MOU) 71Annex 13. Uttar Pradesh Water Supply and Sanitation Mission - MOU 77Annex 14. Decisions of the Government of Uttaranchal for initiating Process of Reform in the WATSAN sector

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Project ID: P010484 Project Name: Uttar Pradesh & Uttaranchal Rural WaterTeam Leader: Deepak Ahluwalia TL Unit: SASRDICR Type: Core ICR Report Date: November 17, 2003

1. Project DataName: Uttar Pradesh & Uttaranchal Rural Water L/C/TF Number: CPL-40560; SCL-4056A

Country/Department: INDIA Region: South Asia Regional Office

Sector/subsector: Water supply (35%); Sanitation (35%); Sub-national government administration (16%); Other social services (14%)

Theme: Rural services and infrastructure (P); Gender (P); Environmental policies and institutions (P); Participation and civic engagement (P)

KEY DATES Original Revised/ActualPCD: 06/28/1991 Effective: 08/28/1996 08/28/1996

Appraisal: 02/29/1996 MTR: 10/19/1999 10/19/1999Approval: 06/25/1996 Closing: 05/31/2002 05/31/2003

Borrower/Implementing Agency: GOI/PMUOther Partners:

STAFF Current At AppraisalVice President: Praful C. Patel Joseph WoodCountry Director: Michael F. Carter Heinz VerginSector Director: Vincent Gouarne Shawki BarghoutiTeam Leader at ICR: Deepak Ahluwalia Xavier A. LegrainICR Primary Author: Midori Makino; Tashi Tenzing;

Shankar Narayanan; Tim Lamrock

2. Principal Performance Ratings

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)

Outcome: S

Sustainability: L

Institutional Development Impact: SU

Bank Performance: S

Borrower Performance: S

QAG (if available) ICRQuality at Entry: S

Project at Risk at Any Time: No

3. Assessment of Development Objective and Design, and of Quality at Entry

3.1 Original Objective:3.1.1 Uttar Pradesh (UP) and Uttaranchal (UA) Rural Water Supply and Environmental Sanitation Project is commonly called “Swajal” which signifies “one’s own water” in Hindi and has two main objectives: (i) deliver sustainable health and hygiene benefits to the rural population through improvements in water supply and environmental sanitation services which will increase rural incomes through time savings and income opportunities for women, test an alternative to the current supply driven service delivery mechanism and promote sanitation and gender awareness; and (ii) promote the long-term sustainability of the rural water supply and sanitation sector by providing assistance to Government of Uttar Pradesh (GOUP) to identify and implement an appropriate policy framework and strategic plan.

3.1.2 Given that; (a) over half of project beneficiaries (approximately 1.2 million rural inhabitants) would be in the poverty group; (b) there was an acute water / infrastructure shortage in the project villages; and (c) the existing providers possessed weak capacity to meet the growing demand, the Project was regarded as highly responsive to borrower circumstances and development priorities. The introduction of a demand driven and participatory approach and the creation of a state policy framework were crucial for the country and the sector at the time of appraisal. The project objectives were also fully consistent with the Bank’s Country Assistance Strategy (CAS) that focused on the need for state-level reform interventions and poverty alleviation through increasing the role of beneficiaries and support organizations (SOs). The Project’s objectives are also consistent with the Bank and Government of India (GOI)’s current country and rural water sector strategies, which have mainstreamed the demand driven, participatory and cost sharing approaches to service delivery.

3.1.3 The first development objective, however, seems relatively long and complex, containing several possible indicators of benefits. This could have been formulated in a simpler manner by only focusing on the principal outcome of the Project resulting from the activities directly financed by the Project.

3.2 Revised Objective:3.2.1 The objectives have not been revised. However, in order to facilitate management and speed up development of larger states in India, the Government created three new States of Jharkhand, UA, and Chhattisgarh which were carved out of Bihar, UP, and Madhya Pradesh in November 2000. This bifurcation of UP into two states; UP and UA (which then became the 27th state of India) influenced the second objective, which led to development of policy framework and strategic plan for the two new state governments of UP and UA.

3.3 Original Components:3.3.1 The original project components consist of; (i) strengthening and operation of the Project Management Unit (PMU) ($8,300,000); (ii) selection and construction of water supply and environmental sanitation facilities for single and regional schemes ($61,200,000); and (iii) studies and sector development (2,460,000).

3.3.2 The components were reasonably related to achievment of development objectives. The Project design had taken into account the relevant lessons learned from prior rural water projects implemented in Maharashtra and Karnataka; and in a neighboring country (Nepal) where a similar approach was pilot tested, including; (i) importance of a coherent community participation approach with the community at the center stage; (ii) role of women and other key stakeholders in the sector; (iii) emphasis on Operations and Maintenance (O&M) cost recovery and capital cost sharing and (iv) integration of water supply service delivery with environmental sanitation through awareness creation.

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3.4 Revised Components:3.4.1. The main components have remained the same throughout the Project. However, as the Project had been designed to accommodate changes based on lessons of previous batches, new proposals and ideas for improvement were tested and implemented during the project period, including additional studies, an experimental batch, and creative tools to enhance community mobilization.

3.5 Quality at Entry:3.5.1 The Quality Assurance Group (QAG) did not evaluate the Project at any time. However, based on team member and client interviews as well as review of project preparation and appraisal documents, this Project’s quality at entry is rated satisfactory. The reasons are: First, as described in section 3.1, the Project’s objectives were consistent with CAS and GOI priorities at the time of appraisal. Second, the project design captured the essence of rural water sector reform. Third, analysis on possible environmental and social issues as conducted and showed that the proposed Project should not have any negative impacts. Fourth, many of the major issues and risks were identified during project preparation, including (i) resistance to the demand driven approach; (ii) excessive time and effort to build capacity in SOs, communities, and PMUs; (iii) failure in maintaining financial sustainability of the schemes; and (v) resistance to carry out statewide sector study and development of strategic plan. The Project preceded the introduction of Bank's Loan Administration Change Initiative (LACI) guidelines on financial management and reporting and no formal financial management assessment was conducted at the appraisal stage.

3.5.2 Sufficient resources had been allocated, proper monitoring and evaluation (M&E) plans had been developed, and flexibility in the design had been embedded in the Project to minimize the identified risks. However, as mentioned in section 3.1, the development objectives could have been simplified, and if the emphasis on "increase in rural incomes through time savings" would be stated as a direct link in the objective, stronger consideration should have been given to develop income generating activities and/or to establish linkages with other agencies involved in income generating activities in the design of the components to ensure that the beneficiaries could make productive use of the time saved to earn extra income and to achieve the objectives fully.

4. Achievement of Objective and Outputs

4.1 Outcome/achievement of objective:4.1.1 The Project’s outcome is satisfactory, as it achieved most of its major relevant objectives. The Project is also likely to achieve substantial development results without major shortcomings.

4.1.2 The first objective has been achieved substantially, as described in detail in section 4.2. Delivery of sustainable health and hygiene benefits to the rural population has been achieved through the village communities' change in attitude, which are demonstrated by the significant improvements in performance indicators, including (i) incidence of diarrhoea in children under five (from 14% to 3.6% in UA and from 13% to 5.4% in UP); (ii) washing hands before eating (59% to 85% in UA, 22% to 67% in UP); (iii) safe use of water (43% to 90% in UA, NA to 92% in UP); (iv) safe disposal of infant excreta (41% to 44% in UA , 3.8% to 57% in UP); and (v) use of latrines (16% to 99% in UA, 3.8% to 31% in UP).

4.1.3 The physical achievements are demonstrated by the number of infrastructure facilities constructed in the states’ 19 districts (12 in the hills of UA, including Almora, Bageshwar, Pithoragarh, Nainital, Champawat, Udham Singh Nagar, Tehri, Chamoli, Rudraprayag, Srinagar, Dehradun, and Uttarkashi and 7 in the Bundelkhand region of UP, including Hamirpur, Jalaun, Lalitpur, Jhansi, Mahoba, Banda, and Chitrakoot) by Project closure, which exceeded the targets set at appraisal. In addition to the 1,214 villages

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served, a large number of villages are continuing to show interest to participate in the schemes, as they hear success stories from the project villages.

4.1.4 The demand driven and participatory approach, which has been tested as an alternative to the traditional supply driven service delivery, has shown successful results. The Project, through establishing the Village Water and Sanitation Committee (VWSC) as a legally constituted sub-committee of the Gram Panchayats (GP), have allowed the village communities to fully participate in the process and gain a sense of ownership of the infrastructure schemes constructed under the Project. The VWSCs, with assistance from the SOs, have prepared the design of the schemes, managed the investment funds, procured materials, managed the construction, and undertaken O&M by themselves. The concept of O&M cost recovery and capital cost sharing has been introduced and practiced through the village communities’ cash and labor contribution.

4.1.5 In addition to the hardware component, a large number of software programs, including: (i) training and capacity building for the PMUs, SOs, VWSC and other beneficiaries and (ii) awareness building / communication of health and hygiene benefits and role of women through media campaigns have delivered health and hygiene benefits to the broader rural population in UA and UP.

4.1.6 In terms of women's involvement in the communities, the Project has not only increased the number of women as members of the VWSCs, but also focused on Non Formal Education (NFE), hygiene and environmental sanitation awareness (HESA) and Women's Development Initiatives (WDIs) towards: (i) improving the literacy levels of women participating in the NFE activities; (ii) focusing on the need for health, hygiene and environmental sanitation awareness amongst villagers through regular conduct of HESA camps; and (iii) enabling access of women to credit through encouraging the formation of Self Help Groups (SHGs) as forum that allowed women to come together, discuss issues, save money, and explore possible income generating activities. The time saved through improvements in infrastructure has allowed women to actively participate in these activities, which have contributed to greater empowerment of women in the Project communities of UA and UP.

4.1.7 The second objective has also been achieved, as the Project has contributed to the formulation of long term sector policies and strategies in both UP and UA. Most of the key lessons learned from the Project have been incorporated in the sector policy, in the form of draft “cabinet notes”. They include; (i) integration of water supply and environmental sanitation, using community management of the schemes and bottom-up planning; (ii) cost recovery through gradually increasing cost sharing to 50%, phased financing strategy for the sector, provision of institutional/local loans and credits for users, and better flow of funds; and (iii) focus on improving existing schemes, piped water supply, protection of water sources, and institutional support structure comprising small, independent service oriented agencies.

4.1.8 The innovative features and success of the Project have attracted a lot of attention, and influenced the Government of India (GOI) to introduce a major policy change in 1999 in its rural water and sanitation program. The Sector Reform Project, which incorporates the key principles of the Swajal Project was introduced in 1999 and is being implemented in 67 districts spread over 27 states across the country. India’s national sector strategy has also allocated 20% of GOI plan funds for nationwide rural water supply program called “Swajaldhara” which came in effect in December 2002 (details in Annex 11). In addition, the Planning Commission, GOI, has named the Swajal Project as one of the successful governance initiatives from Indian States.

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4.2 Outputs by components:

Component 1: Strengthening and Operation of the Project Management Unit (PMU)

4.2.1 This component is rated as highly satisfactory for both UP and UA. Since its creation on November 7, 1994 as an autonomous institution under the Societies Registration Act 1860, the PMU has been the overall implementing agency of the Project. The PMU has been headed by a Director and organized into five relevant units- operations, monitoring and evaluation, human resource development, technology, and finance and administration/MIS, using appropriate gender balance and skill mix from the public sector, private sector, and NGOs. The PMU/DPMUs have been responsible for; (i) selecting the SOs using transparent eligibility criteria; (ii) helping communities prepare and implement infrastructure schemes with the SOs; (iii) appraising, selecting, and financing schemes that fulfill eligibility criteria; and (iv) monitoring major scheme related activities.

4.2.2 After the bifurcation of the state in November 2000, the PMU split in two: part of the PMU remained in Lucknow and focused on the new UP, and another PMU was formed in Dehradun to cover the state of UA. In total there have been five project directors during the project implementation period of seven years, and many staff that stayed with the Project from the beginning to the end. In addition, there are eight District Project Management Units (DPMU)s in UA (Dehradun, Chamoli, Srinagar, Uttarkashi, Bhimtal, Almora, Pithoragarh, and Bageshwar) that have covered 857 villages, mostly located in the hill areas, and two DPMUs (Jhansi and Banda) in UP that have covered 357 villages in the Bundelkhand plain areas.

4.2.3 Project documents and interviews with various stakeholders indicate that the competence and motivation of the staff at PMUs and DMPUs were highly regarded from the Project start and continued despite the challenging nature of the Project, bifurcation of the state, and changes in project directors. This can be explained partly by the economic incentives provided to the staff recruited from the private sector and NGOs which included performance based bonus systems. However, most of the PMU and DPMU staff, including the government employees seemed to be genuinely interested and committed to the Project because of their passion and belief in the project concept. Despite the long working hours and limited length of job security, the overall staff turnover rate has been very low and their job satisfaction has been rated very high throughout the Project.

Component 2: Selection and Construction of Water Supply and Environmental Sanitation Facilities

4.2.4 This component is rated as satisfactory. The indicators set at appraisal were revisited and revised at mid term review (see annex 1) to better monitor the Project’s development outcomes, and the results have shown that most of the indicators outperformed the targets by Project closure. The pace of progress differ between the states mainly due to the lower baseline in UP compared to UA, as well as the implementation delays experienced in UP (details are discussed in section 5.3.4). At appraisal, both single and regional schemes had been incorporated in the project design, but due to the complexities involved with multi village schemes and delays in developing the models for such schemes, the Project was mostly focused on constructing single village schemes.

4.2.5 Regarding the hardware component, against the appraisal estimate of constructing drinking water supply schemes in 1,000 villages (650 in UA and 350 in UP) covering a beneficiary population of 785,000, schemes in 1,214 villages (857 in UA and 357 in UP) covering a beneficiary population of 992,000 have been completed under the Project. O&M has been taken over fully by the communities, and most of the schemes are functioning well. Nearly 54,000 latrines have been constructed, raising latrine coverage in project villages from 4% to 29% in UP and from 16% to 63% in UA, against an end-project target of 50%.

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In addition, 186 drainage works and 35,778 soak pits, garbage pits, and compost pits have been completed. In UP, a drive to increase sanitation works, including latrine construction was carried out in the consolidation phase of the Project, where latrine construction picked up at a rate way above that during the earlier phases due to increased marketing of the cash incentives provided to the VWSCs with high latrine coverage. While this cash incentive scheme has contributed to achieving physical results, concerns remain that this would cause doubts in the sustainability of the schemes and feasibility of scaling up, as it might erode the concept of the demand driven participatory approach which expects incentives to be perpetrated through understanding, need, and commitment.

4.2.6 In addition to improvements in water supply and environmental sanitation services, community development activities were included in this component to promote active participation of the communities in all stages of decisions about the planning, construction, and management of their schemes, to increase local ownership, effective use, and sustainability. Other software activities included; a community self-monitoring tool called Healthy Home Survey (HHS) and Information Education and Communication (IEC), which was developed to promote behavioral changes with regards to health and hygiene issues in the communities.

4.2.7 In the VWSC, women (38%) and persons from scheduled castes/tribes (30%) are strongly represented. Consultant studies confirm substantial time savings accruing in a sample of water supply schemes financed under the Project, and over 1,500 functioning women’s SHGs under the Project with accumulated savings of Rs 13.8 million. Providing the women the option to perform SHG activities, where they can form their own forum to get together, discuss issues, save money, act on O&M of the infrastructure schemes etc., has greatly strengthened women's role in the communities and their capacity to access the formal credit system. These may not have been quantifiable benefits, but are significant achievements that have contributed to gender equity in the rural communities of UP and UA.

Component 3: Studies and Sector Development

4.2.8 This component is rated as satisfactory. One major output of this component was a policy study to assist the state governments to identify the issues affecting sector performance and formulate appropriate policy reforms for the sector. The two studies have been completed in time, and the two state governments have utilized them to develop strategic plans for their rural water supply and sanitation sectors, summarized as cabinet/policy notes (attached in Annex 11). Key policy decisions already taken include:

Communities will bear at least 10% of capital cost and 100% O&M expense for all future single lvillage and handpump water supply schemes in both states;All existing handpumps to be transferred to Gram Panchayats (GP) for O&M. The transfer has already ltaken place in UP and a decision to do so has been taken by UA;Sanitation and RWS merged into one government department in UA, planning stage in UP;lThe PMUs established under the Project will continue in both states with government funding as State lWater and Sanitation Mission and coordinate GOI sector reform program and Swajaldhara program.

4.2.9 In addition, a total of 40 studies have been conducted under the Project, most of which have been proposed and prepared during the implementation period (list attached at Annex 8). The breakdown of the categories shows that twelve studies are in the human resource development / health & hygiene category, thirteen studies are in the operations / M&E category, eight are in the technical category, five are in the institutional / financial category, and the remaining two are in the environmental category. Many studies were conducted repeatedly to enable comparison of results over time. Most of the studies have produced useful results and recommendations which have been taken into account in the Project’s later batches and in

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formulation of sector policies.

4.2.10 As evidenced in the previous sections, the Swajal Project has greatly benefited the rural communities of UA and UP, and contributed significantly to India's RWSS sector reform program. However, some issues would need to be tackled in scaling up the Swajal approach to the entire states. The constitutional amendment (section 29 of the UP Panchayat Raj Act) that took place in July 1999 by the UP Legislature has allowed GPs to only set up a limited number of sub committees, including Jal Prabandhan Samiti (JPS) which will be responsible for drinking water and irrigation. The VWSCs created under the Swajal Project retained the decision making power and ownership of infrastructure throughout the Project, however, the full responsibility of the infrastructure service delivery have formally transferred to the GPs, which currently have very little capacity or experience to deliver the services. While the new model of empowering the GPs has proved to be effective in some states that have tested it, capacity building of the GPs and formalization of the village participation for example through by-laws between VWSCs and the GPs would be important to retain the Swajal concepts.

4.2.11 Another issue that needs to be incorporated in replicating the Swajal concept to the entire states relates to the two public providers that have not played a large role in the Project; (i) Jal Nigam that is mandated to prepare, execute, promote, and finance schemes and also to operate, run, and maintain schemes if and when directed by the Government; and (ii) Jal Sansthan that is mandated to plan, promote, and execute schemes and to operate an efficient system of water supply. Although the state governments in UA and UP have identified the need for restructuring these two institutions in scaling up the demand driven approach, the restructuring process has been very slow especially due to the large number of staff employed by the two institutions. The public providers' continuing power has the risk of interfering with the formulation of the future sector. The essence of the Swajal appproach is that the participating communities are given options to make informed choices of the service levels and technology they can afford with full knowledge of implication of their choices. This concept would be somewhat foreign to the technically oriented Jal Nigam culture and way of doing business and it could land up making decisions for the communities, particularly on the choice of technology. Therefore, significant amount of capacity building in the area of community mobilization would have to be embedded in their restructuring efforts.

4.3 Net Present Value/Economic rate of return:4.3.1 Based on the appraisal method and assumptions, the overall economic rate of return (ERR) for Component B of the Project was 19.5%, compared with appraisal estimates of an average of 26%, taking both the software and hardware costs into account. The lower than expected rate of return is mainly due to the reduced time savings compared to estimates at appraisal. Based on hardware costs only, the ERR was 27% compared to 31% at appraisal. The benefit of reduced hardware investment costs involved was more than offset by the reduced value of time saved as mentioned above. For the overall Project, including the costs of Component A and Component C, the ERR at Project closure was 13.2% compared to an appraisal estimate of 20%, with a benefit/cost ratio of 1.07, compared with 1.51 at appraisal.

4.3.2 These results are based on an estimate that 54% of the time saved (a seasonal adjustment to the opportunity cost of labor) can be used in economic activities. The rates of return are highly sensitive to the extent to which opportunities exist for time saved to be applied to economic activities. Field surveys indicate that limited opportunities exist in many of the remote villages for incremental income generating activities due to constraints other than time/labor (e.g. land, capital and market access), and that the extent to which the saved time was applied to economic activities is less than 54%. For UA the surveys indicated about 30% of the time saved was applied to economic activities, and for UP, whilst no specific figures were obtained, the survey teams observed little additional income generating activities, except for the SHG work and O&M tariff collection for the infrastructure schemes. If 30% of the time saved was used in economic

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activities, then the overall ERR of the Project would be as low as 8%.

4.3.3 The analysis method overstates the economic impact on this basis (see Annex 3), but the exclusion of the value of other benefits that have been achieved underestimates the overall impact of the Project. The analysis followed the ERR analysis method used at appraisal, where health and other benefits the women would gain through time savings were not estimated. However, the large impacts the Project has given on reducing the incidence of diarrhea and increasing women's confidence/independence through allowing them to participate in community, O&M, and SHG activities, would have contributed to a higher overall return if these benefits had been incorporated in the analysis.

4.4 Financial rate of return:4.4.1 The Project’s financial rate of return was not calculated, however, analysis on willingness to pay and affordability was done at appraisal. The expected upfront cash contribution to capital costs, and the monthly charges for O&M that the villages would have to pay to participate in the schemes were compared with the estimated income and affordability for the various beneficiary groups. Because of the demand driven and participatory concept and the flexible technology options used in the Project, the usual risk of imposing an unaffordable scheme was thought to be reduced since all costs, commitments, and obligations would be fully discussed and approved by the community before any work would be undertaken.

4.4.2 At Project closure, the financial viability of the villages’ infrastructure schemes was reviewed. The specific indicators of financial sustainability have shown less than anticipated contributions to O&M, especially due to the over-estimation of the target O&M figures which were based on Jal Nigam estimates. Results show that the proportion of completed schemes where more than 90% of O&M target tariffs are being collected after one year is about 60%, and the proportion of completed schemes where more than 90% of O&M target tariffs are being collected after three year ranges from 45% in UA to 60% in UP. As described in section 6.1.3, the O&M tariffs included all the O&M expenses and 10% reserves for future repairs. As many of the villages accumulated large reserves without the need of tapping them, the VWSCs in some cases decided to charge lower O&M tariff charges, which resulted in misleading collection performance.

4.4.3 It is early in the operational phases of the schemes implemented under the Project, and experience elsewhere has shown that the longer-term financial sustainability of these types of schemes depends on the willingness-to-pay of the beneficiaries which in turn depends on longer-term changes in practices and attitudes which evolve in relation to the water supply service. The sustainability also depends on the real ownership of the scheme by the community; how transparently the VWSC manages the funds and also on whether a policy/practice exists of availing external assistance for rehabilitation/reconstruction of schemes let to run down.

4.4.4 A crucial factor will be the time and money costs of obtaining water from other (previous) sources. Where there is unemployment and limited income generating opportunities, the beneficiaries may perceive these costs to be lower than the contributions they are required to make for the services provided under the Project, and this will be particularly so when the household cash position is stretched. This is seen to be a constraint in UP – Bundelkhand, but to a lesser extent in UA where households are widely supported by external cash remittances. However, poorer households also tend to be more willing to pay than better-off households, and this is reflected in the indicators above when comparing UP and UA, where UA households have higher incomes, remittances, and better employment opportunities.

4.4.5 The operating costs of the hills and foothills schemes (mostly gravity-based) are lower than those in Bundelkhand (mostly pumping schemes), but are exposed to greater risk of destruction due to natural

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calamities, such as landslides. The introduction of an insurance scheme facilitated by the PMU to cover these risks is seen as a positive move to cover the financial costs of reconstruction in these events. However, with the motorized pumping schemes in Bundelkhand, the replacement costs of the machinery involved are not being reserved for in the current level of contributions and, in the event of failure and need for replacement of the machinery, it is uncertain where the funds for this would be sourced. If there is a perception amongst the communities that government institutions have some responsibility in this event, then there will be a reduced willingness to pay.

4.4.6 In summary, most of the Project villages have been successful in collecting the O&M target tariffs, especially compared to the traditional schemes where the public sector continues to provide the services. As for the long term financial sustainability of the village schemes, it would be too early to judge at this stage due to the reasons mentioned above, however, it is more likely in the hills of UA than in Bundelkhand – UP.

4.5 Institutional development impact:4.5.1 The institutional development impact has been rated as substantial. The Project has improved PMU/DPMUs' ability to make effective use of its human and financial resources. Since the Project was a new concept in India, it required high quality and motivated personnel at the implementing agency level to face the many challenges and to develop creative and appropriate solutions along the way. During the project implementation period, not only the PMU/DPMU staff, but also the SOs and the VWSC members had to fight against the resistance to implement a new approach.

4.5.2 Since it was recognized that the SOs would play the key role in achieving effective community participation, efforts were made to ensure that they would be selected and trained in an appropriate manner. The SOs were selected based on the following criteria; (a) evidence of legal registration; (b) constitutional provision to engage in RWSS delivery and related activities; (c) audited and certified accounts; (d) proven track record of at least three years' experience in RWSS or community development activities evidenced by the satisfactory completion of a participatory and demand driven project; and (e) demonstrated staffing capacity to carry out the proposed services or ability to procure such staffing capacity; followed by due diligence. At first, some difficulties were encountered in identifying suitable SOs, as there were few qualified candidates. However, with the training and support offered by PMUs/DPMUs, as well as the trusting relationship built with the Project villages, many of the SOs built their capacity to successfully implement the schemes and expressed interest to cover additional villages in the follow-on batches.

4.5.3 According to the Swajal concept, the ultimate responsibility for the construction and management of the infrastructure schemes was given to the villages themselves. The schemes were selected by the SOs using the transparent eligibility criteria, including; (i) need and economic viability; (ii) technical feasibility; and (iii) sustainability and willingness to pay. Once the schemes were selected, the village communities, through formation of the VWSCs played the central role in implementing them. By preparing the design of the schemes, managing the investment funds, procuring materials, managing the construction, undertaking O&M, and by sharing a significant share of the costs, the villages have not only gained ownership but also the knowledge and skills which would be valuable resources for the future replication of the Swajal concept and for other activities in the villages.

4.5.4 The government has demonstrated its commitment to maintain the valuable human resources and the institutional memory to ensure future sustainability and scaling up. As an evidence, respective state governments have appointed the PMUs established under the Project to continue with government funding as state missions for RWSS sector. The missions have been appointed to coordinate the ongoing GOI sector reform program, and the respective PMUs will coordinate the newly launched GOI Swajaldhara program.

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5. Major Factors Affecting Implementation and Outcome

5.1 Factors outside the control of government or implementing agency:5.1.1 Bifurcation of the state of UP was outside of implementing agency control, although state and national governments would have had some control over it. Significant time and effort were spent in bifurcating project costs, establishing a PMU in the new state, UA, and setting up systems to effectively transfer responsibilities from PMU Lucknow to the new PMU Dehradun. The one year extension granted to the project, as well as the flexibility and motivation by the Project staff contributed to a well managed and relatively smooth bifurcation, despite the complexities and difficulties encountered in the process.

5.1.2 Natural calamities like earthquakes and flash-floods which risked the success of the schemes especially in the hills could not be controlled by the implementing agencies. However, a mitigation plan was developed by the PMU to adopt the “insurance” option during the course of the Project. In total, 112 VWSCs have insured their water supply schemes for three years and have paid their share of Rs 4.41 lakhs to the insurance company. 33 villages affected by incidents of natural calamity managed to obtain funds from the insurance company to repair the schemes to make them functional again. During the first three years, the VWSCs are only required to pay 50% of the premium as the rest are being paid by the Project under state share. However, there are doubts about the VWSCs' capacity and willingness to continue to insure the assets when they are required to pay the full premium after the first three years, particularly since the premium is for the full scheme including the distribution system which has much less risk of being affected by natural disasters.

5.1.3 The increasing problem of source depletion would have affected the water availability in the hills of UA. This was also addressed by the implementation of Catchment Area Protection Works (CAPW) in 162 villages and Assisted Natural Regeneration (ANR) works in 67 villages. The measures included forestry works such as plantation, grass patches, soil conservation work such as check dams and gabions, and rehabilitation of existing Khals (ponding structures). However, these activities would need to be linked to broader watershed management efforts if a large impact on integrated catchment protection is expected.

5.2 Factors generally subject to government control:5.2.1 Government commitment has been demonstrated through the development of the sector policies and the formalization of the PMUs as state missions under the government structure. Despite the bifurcation that took place in the middle of the implementation period, the two state governments of UP and UA have managed to develop respective policies and comprehensive strategic future action plans for the sector.

5.2.2 However, as mentioned in the previous sections, some issues identified in the government plans would need to be addressed properly to scale up the concept. They include lack of capacity at the GP level to take on the role of a service provider, their possible political influence on the community schemes, and allocation of sufficient resources for the software activities to ensure village ownership/management of the schemes.

5.2.3 Maintaining a uniform service delivery approach for the state would have been subject to government control. During Project implementation, it was noticed that some interference were made by Jal Nigam, for example, through construction of new schemes without requiring any cost sharing from the villages. Such contravention of earlier Government Orders will undermine Swajal efforts. The government would need to ensure consistency in its policy and manage the relationship between the traditional service provider, Jal Nigam, and the new approach of community managed schemes.

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5.3 Factors generally subject to implementing agency control:5.3.1 Management effectiveness and staffing for the PMUs have been generally subject to implementing agency control. As mentioned in section 4.2, the PMUs/DPMUs have been staffed with a mix of competent and motivated people from the public sector, private sector, and NGOs. Although the turnover of the Project director for UP was high, PMU/DPMU staff turnover was relatively low, and the Project culture promoted transparency and an environment that allowed creative suggestions for efficiency improvement from any stakeholder level.

5.3.2 The Project cost estimates at appraisal for the hardware component (based on Jal Nigam estimates) were significantly higher than the actual Project costs, which resulted in two cancellation of funds (refer to section 5.4 and Annex 2). The reduction in costs resulted from lower than expected village demand for funds due to popularity in low cost technology options. The types of schemes offered in the hill region comprised of; (i) gravity (open/closed) with spring/stream sources designed and operated for continuous supply; (ii) electric pumping from spring/stream sources; (iii) hand pumps from groundwater sources; and (iv) catchment schemes from rainwater sources. For the Bundelkhand region, (v) hand pumps from groundwater sources; and (vi) electric tubewell pumping from deep aquifers were offered. The per capita expense for the high cost options (approx. Rs1,200 - 2,400) would typically cost two to five times more than the low cost technology options (approx. Rs200-400), but the main reason for the low cost technology selection by the communities was the unreliable and expensive power supply to run alternative schemes. However, according to some DPMU staff, low cost technology options were chosen because the decisions were made by the male household members who had the economic power, despite the high demand of piped water supply expressed by women.

5.3.3 Scheme Cycle was planned to span 33 calendar months and included three main phases - pre-planning, planning, and implementation. The pre-planning phase of 7 months included the pre-qualification of the SOs, pre-feasibility study preparation and assessment, and signing of planning phase contract. The planning phase of 12 months included orientation and training for SO staff, community action planning, and finalization of implementation phase proposal. The implementation phase of 14 months included the training of SO staff, construction planning, and construction of the scheme. During Project implementation, the consolidation/O&M phase was added to allow the stakeholders to complete the schemes behind schedule and to draw lessons from their schemes, identify quantifiable output targets, and make monitoring plans for the future. This phase has allowed the Project villages to complete their schemes, strengthen their O&M systems, and to ensure sustainability of their infrastructure schemes.

5.3.4 Implementation delays were experienced during the Project period, especially for the Bundelkhand region in UP. UA's superior performance can be explained by its greater community cohesion/involvement, partly due to its smaller village sizes, more homogeneity, and greater degree of hardship faced by hill communities for accessing infrastructure facilities, which created stronger demand for project interventions. In order to catch up with the exit dates, the PMU of UP took actions, including; (i) allowing flexibility in the scheme cycle to meet Bundelkhand specific situations, (ii) management changes in DPMUs; and (iii) better marketing of the incentive systems to motivate the DPMUs, SOs, and the participating villages to complete their schemes on time.

5.3.5 Community mobilization innovations were made by the PMU in UP, as its population was rather heterogeneous comprising several socio-economic subgroups, and rendered mobilizing the entire village and designing a single water supply scheme for the village a difficult task. Multi-mini water supply model, which led to construction of separate water supply schemes for each cluster of homogeneous households was adopted successfully. As these are groundwater pumping schemes, it would be necessary to continue to

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monitor their performance over several years of commissioning of the schemes to learn from this innovation.

5.3.6 An experimental Batch (3x) was introduced during project implementation, between the planned third and fourth batches, as the Project recognized that the limited number of capable NGOs would make future scaling up difficult. The experimental batch 3x included the private sector, public sector such as Jal Nigam, and GPs as SOs. Lessons learned from this experiment would feed into the future development of the sector.

5.3.7 Dropping out of villages from the Project schemes was partly subject to the implementing agency control. The actual drop out rate of 15% was not far from the appraisal estimate of 13%, and an independent study revealed that many of the causes were related to source and community disputes that should have been solved at the community level. However, the causes related to; (i) SO's failure in facilitating the process of community mobilization; and (ii) intervention by Jal Nigam and Jal Sansthan during the planning stage, could have been avoided if the Project had better clarified and enforced the roles and responsibilities of the various stakeholders and ensured sufficient capacity of the SOs.

5.4 Costs and financing:5.4.1 At appraisal, the Project size was estimated to be Rs. 3,007.6 million ($71 million equivalent) of which IBRD loan would be $59.6 million. However, during the implementation period, there were significant cost savings due to higher demand in usage of low-cost technology options, as well as the movement in the $/Rupee exchange rate. This resulted in cancellations of $7.23 million in June 2000 and $11.7 million in December 2002, reducing the loan amount from $59.6 to $40.7 million.

5.4.2 The studies and sector development expenses, as well as the combined cost of operating the two PMUs in UA and UP exceeded the SAR estimates because of the costs associated with the bifurcation of the state that took place in November 2000. This, coupled with the lower than expected investment expenses have resulted in a smaller relative share of the hardware component, compared to the software components. The final expenditure figures are attached at Annex 2.

5.4.3 The Project's disbursement and procurement performance were monitored by financial specialists throughout the implementation period. Records show that the audit reports for the Project have been received on time as stipulated under the loan agreement and no major accountability problems have been noticed.

6. Sustainability

6.1 Rationale for sustainability rating:6.1.1 The overall sustainability rating is likely, as there is a large probability of maintaining the achievements generated in relation to the Project objectives. In addition to the success in Project outcome described above, the rating is supported by the clear commitments demonstrated by the governments of UA and UP through creation of policy environments and appointment of the PMUs to continue as state missions for the RWSS sector.

6.1.2 A Sustainability Evaluation Exercise (SEE) has been developed as a tool to assess the impact of the Project on the community and facilitate the community to plan, develop, and implement interventions to redress the problematic areas. So far, six such SEE have been conducted by the PMU. All participating villages have been rated according to the sustainability index developed by the PMUs, and the parameters for the index include; (i) the status of water supply structures (25%); (ii) O&M / chlorination and filtration

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status (10%); (iii) O&M tariff collection (35%); (iv) functioning of VWSC (10%); and (v) sustainability of software status / latrine usage and health benefits (20%). About 5% of the villages scored less than 49, and were considered Least Sustainable (LS), about 57% of the villages scored between 49-74 and were placed under Moderately Sustainable (MS), and 38% of the villages scored above 74 and were justified as Highly Sustainable (HS). The villages that scored LS were evaluated on a quarterly basis and possible interventions were implemented on a village-wise basis. The table below shows the results of the latest SEE conducted in March 2003 (detailed results are in Annex 9).

Uttar Pradesh Uttaranchal TotalHighly Sustainable 206 (58%) 237 (29%) 443 (38%)Medium Sustainable 137 (38%) 523 (64%) 660 (57%)Least Sustainable 11 (3%) 53 (7%) 64 (5%)Total (%) 354 (100%) 813 (100%) 1167 (100%)

6.1.3 The results of the SEE and discussions with the stakeholders reveal some key issues that need to be addressed in the future to ensure sustainability of the schemes constructed, and the new concept introduced under the project. In addition to the points raised in section 4.2., the following issues have been identified.

(i) Proper chlorination - for water chlorination to be an effective disinfection method, bleaching powder as well as hydrogen sulphide strips need to be easily available to the villagers. The village maintenance workers should also be well trained to fix the correct dosing rate and check correctly for residual chlorine;

(ii) Collection of O&M - the proportion of completed schemes where more than 90% of O&M target tariffs are being collected have decreased over time partly due to over-estimation of the target O&M figures (which includes chlorination costs, power charges for the pumping schemes, expenses for ensuring proper maintenance, and 10% reserve for repairs). In many cases where simple schemes were built, the reserves were never spent and therefore kept accumulating. Having demonstrated the cost sharing principles to the communities, many VWSCs gained confidence in collecting funds in the event of future repair and therefore decided to charge lower O&M tariffs. The collection performance appears to have worsened also due to the fact that the O&M targets initially set were based on Jal Nigam estimates. Given that full cost recovery of the O&M is the central principle of the Swajal concept, and the heavy weight given to this indicator, lessons to accurately estimate the O&M requirements should be taken into account in monitoring the future performance indicators.

(iii) Institutional model - the government plans to formalize the PRIs' role to be the SOs in future schemes, a shift from the mainstreamed NGO model used in the Swajal Project. While the PRI model appeared to cost less than any other institutional models that were tested, experience shows that the DPMU staff provided significant technical backstopping when implementing the PRI model. The comparative assessment of SOs has also shown that the PRI model tends to suffer from lack of SO capacity and strong political influence by the Gram Pradhans. In order to scale up the Swajal concept using the PRI model, it would be important to ensure that proper capacity building programs are in place and political influence in decision making is minimized.

6.2 Transition arrangement to regular operations:6.2.1 As mentioned above, the respective state governments have made appropriate transition arrangements for the Project’s future operation by appointing the PMUs created under the Project to serve as the key policy implementation missions in the rural water sector. The Government of UP and UA have made a provision of Rs.10 crores and Rs.4.65 crores in the state budget of 2003/04 and would also meet any Project spillover costs and the costs of maintaining the state and DPMUs. The new state missions intend to

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continue with the SEE studies described under section 6.1 to maintain the M&E system.

7. Bank and Borrower Performance

Bank7.1 Lending:7.1.1 The Bank’s performance during preparation is rated satisfactory. Records show that the Bank supported the traditional supply driven approach which lacked sufficient emphasis on efficiency improvement and community participation during many years of project preparation without any progress. However, the task management shifted along with the scope of the Project, and a demand driven aspect was introduced during the 11th mission. According to the team that took the Project to the Board, the Project was conceived in an era when the demand driven concept was not the mainstream approach in the rural water sector. Despite huge resistance from the supporters of the traditional approach, both in and outside of the Bank, the new Bank team at appraisal performed with persistence and patience. They believed in the new Swajal concept which had been pilot field tested in similar situation in Nepal and demonstrated successful results. They worked hard at establishing good coordination with key staff from the counterpart team who shared the same commitment to the new concept.

7.1.2 The Project took into account major relevant aspects and ensured consistency with the Bank’s fiduciary and safeguard policies. The implementation plan was well thought through, relevant lessons learned from past projects were taken into account in the design, and potential risks and measures to address them were considered.

7.2 Supervision:7.2.1 The Bank’s performance during supervision is rated satisfactory. Supervision missions maintained continuity in team members, included the required expertise, were conducted regularly, and provided adequate reporting and filing of documents. Despite the fact that the project villages were located in remote and rural areas, each Bank mission took the time and effort to split into smaller groups and visited many of the villages to see the implementation progress in the fields. In addition to reviewing documents and interacting extensively with the PMUs, visits to the field provided insights and richer experience for the mission members to learn about the real benefits and issues faced by the local communities.

7.2.2 The performance ratings given in PSRs have been realistic, and sufficient attention was given to the likelihood of the Project’s development impact. The Bank monitored the loan covenants/agreed actions, but acted as a partner to the implementing agencies, and made creative proposals for new studies and approaches to facilitate /improve project implementation including; (i) piloting of different SO models to test options for scaling up; (ii) monitoring and evaluation including SEE exercises; (iii) adoption of the insurance scheme for natural calamities which was the first ever attempt in India; (iv) health impact assessments; and (v) research and social marketing based IEC campaigns by bringing in a private sector advertising company. According to some project directors, “despite the many arguments and difference in opinion, the Bank team and the PMU staff always developed mutually agreed solutions, which transformed their professional relationships into personal friendship”. The quality of advice given by the Bank to the implementing agencies were perceived to be highly useful and follow-up on agreed actions timely and adequate. Many of the senior managers of the Bank visited the project villages to review the progress and learn from success cases, but major intervention by Bank management was not necessary during the implementation period.

7.3 Overall Bank performance:Because of the factors mentioned above, the overall Bank performance has been rated satisfactory.

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Borrower7.4 Preparation:The Borrower participated fully in project preparation, and its performance is rated satisfactory. Although the Project took over three years to prepare, the Government maintained its commitment and made available resources required to materialize the Project. Especially when the demand driven approach was introduced, rather than being risk averse to the new concept, the Government promptly appointed a reform minded project director and allowed him the autonomy and flexibility to develop a team to finalize the project preparation.

7.5 Government implementation performance:The Government implementation performance is rated satisfactory. The Government managed to provide adequate support to the PMUs at the same time as granting autonomy for their day to day operation. The Government commitment was demonstrated through development of the sector policies with assistance from the Project’s TA component, and through creation of a strategic plan to implement the policy. The state Governments managed to appoint competent project directors and transferred the human resources management to the PMU level. In addition, adequate counterpart funds were provided at all times, and good governance was maintained.

7.6 Implementing Agency:7.6.1 The respective PMUs and the DMPUs’ performance as implementing agencies is rated highly satisfactory since they discharged their responsibilities promptly with due diligence. As mentioned in section 5.3, human resource has been managed well and implementation delays encountered during the Project have been managed promptly. The Project has met most of the performance targets and complied fully with legal and financial covenants. The financial management (FM) arrangements have been considered satisfactory through the life of the Project. An off-the-shelf computerized accounting package was used quite successfully by the project staff to maintain their accounts and financial reports generated from the system has been considered adequate for project management purposes. A major challenge during the life of the project was the challenging task of transferring the assets and liablities and settling the accounting and disbursement issues, that arose as a result of bifurcation of the states. However, the project staff managed this quite admirably and successfully. The Bank FM Team assisted and guided the project teams in this difficult task. FM staff participated in the Supervision Missions, including the field visits and had wide consultations with the VWSCs, SO staff, project staff and the project auditors. Financial performance by way of flow of funds, timeliness of submission of audit reports remained satisfactory. The final audit reports have been submitted and no audit observations or disallowances remain pending on this date.

7.6.2 The PMU has also been successful in disseminating information and marketing the Swajal approach. The progress of the Project and the concept of Swajal were promoted through newspaper articles, monthly newsletters, and media campaigns throughout the states of UA and UP. The Project attracted many national and international visitors who came to the Swajal villages to study the schemes and to meet the communities.

7.6.3 Proper M&E was done for the Project, including; (i) compliance; (ii) process and development; (iii) community; (iv) impact; and (v) strategy. These issues were monitored through regular supervision missions, regular visits to the schemes by PMU and service agency staff, scheme completion reports prepared by SOs and service agencies, and audits conducted by independent auditors. Six monthly sustainability evaluation exercise of completed schemes were carried out to assess the impact and identify

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sustainability issues.

7.6.4 Despite the large number of stakeholders involved, the PMU/DMPUs have managed the governance aspects of the implementation process very well. The SOs were selected based on transparent eligibility criteria and the technology options were presented to the villages using the manuals that contained detailed designs for all infratstructure schemes with adequate instructions and design criteria relating to environment, health, safety, O&M, and techonology. Tripartite agreements (IPTA) were signed between the VWSC, SO, and DPMU after the completion of the planning phase and any issues between them were settled amicably without diluting the provisions made in the IPTA. The study on community contracting revealed that the extent of transparency was high in almost all villages, and the community procurement rates were sometimes lower than those of Jal Nigam, as the village purchase committees had stronger incentives to find the appropriate materials at lower costs.

7.6.5 Given the community driven nature of the Project, the village communities themselves can also be characterized as implementing agencies in addition to being the beneficiaries, as they have played the main role in implementing the Project. Significant awareness and capacity building for the communities have contributed to proper book keeping and O&M at the village level which enhanced accountability, cost savings, value addition, and effective operations of the constructed infrastructure schemes.

7.7 Overall Borrower performance:Given the reasons above, the overall borrower performance has been rated satisfactory.

8. Lessons Learned

8.1 Key lessons learned from the project include the following:

Development Objective should be Formulated Clearly: In order to facilitate progress monitoring and lmeasuring of the Project objective achievements, it is crucial to formulate the development objectives clearly. The objectives should be simple, focusing on the Project's principal outcomes that are direct results of the activities financed by the Project.

Community Participation and Empowerment are Keys for Sustainability: The Project achieved lsatisfactory and sustainable outcomes primarily because it empowered the communities and women stakeholders through making them the decision makers and operators of the infrastructure schemes. Such empowerment efforts have led to the choice of more affordable and appropriate technological options that are better suited to the needs of the villages, reduction of drudgery, and increase in the villagers' ownership and motivation to perform O&M of the schemes. In addition, allowing the communities to manage funds, maintain books of accounts, and carry out procurement, contributed in cost reduction of the schemes. Cross visits among communities also proved to be an effective method for creating awareness, learning lessons, and adopting changes among stakeholders.

Basic Principles of Proven Approaches should Not Be Diluted when Scaling Up Reforms: GOUP land GOUA plan to scale up the Swajal concept in rest of the states. In implementing such reforms, GPs will be the implementing agencies and Jal Nigam will play the SO role. Significant capacity building for both GPs and Jal Nigam, and continued involvement and empowerment of the village communities will be important to maintain the Swajal principles.

High Quality Staff, their Ownership, and an Enabling Environment are Keys to Success: lSignificant investments in the human resource development brought about high quality leadership and

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teams of dedicated and competent professionals. The clients' ownership and commitment to the Project contributed to development of a sound Project design and well managed implementation process. Adequate attention paid to skill development of the Project staff / stakeholders was also a key factor in implementing innovative and path-breaking principles such as cost sharing of RWSS services.

Community Mobilization Efforts and Implementation Cycles Differ Depending on the Scheme lChosen: The Project should accommodate the time it takes to plan and implement different technological options, such as tube-wells, dug-wells or piped water supply schemes. It is also important to adopt different community mobilization efforts that could vary depending on the technical options - for example, the level of awareness required of the village communities could be different for a dug well serving a few households, compared to a gravity system serving the whole village.

9. Partner Comments

(a) Borrower/implementing agency:

Comments on ICR from the Government of Uttaranchal:

I acknowledge with thanks the receipt of Electronic Version of Implementation Completion Report of Swajal Project. I have to submit a few discrepancies which are as below:-1. Currently Dr. R.S. Tolia is the Chief Secretary of Government of Uttaranchal instead of Mr. Madhukar Gupta.2. You have been kind enough to rate this project “Satisfactory” Category. However, I would like to draw your kind attention to the Para 4.1.8 of ICR which is reproduced below:-“The innovative features and success of the Project have attracted a lot of attention, and influenced the Government of India (GOI) to introduce a major policy change in 1999 in its rural water and sanitation program. The Sector Reform Project, which incorporates the key principles of the Swajal Project was introduced in 1999 and is being implemented in 67 districts spread over 27 states across the country. India’s national sector strategy has also allocated 20% of GOI plan funds for nationwide rural water supply program called “Swajaldhara” which came in effect in December 2002 (details in Annex 11). In addition, the Planning Commission, GOI, has named the Swajal Project as one of the successful governance initiatives from Indian States.”3. Needless to mention that this project was implemented without prior experience of community Participation and Demand Responsive Approach.

Hope you will be kind enough to incorporate for the above-suggested changes.

(Gambhir Singh)Director, Swajal, Uttaranchal

Comments on ICR from the Government of Uttar Pradesh:

We are in receipt of your e-mail dated 31.10.2003 and we thank you for the same. As regards the Project being rated as 'Satisfactory' on the basis mentioned in the para 4.2.11 & 4.2.12 of the ICR, it definitely is the prerogative of the Bank to assign the rating. But nevertheless we wouldfurther like to clarify the two issues to review the rating in the light of position stated below:-

Section 4.2.11Some clarification appears to be necessary regarding VWSC as formed in Swajal project and the Jal

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Prabandhan Samiti (JPS) to be constituted under the amended Panchayati Raj Act. As per Act, JPS is a committee of Gram Panchayat responsible for water and will have a Chairman and six members of the Gram Panchayat. To ensure sufficient representation of the community/user groups, a provision has been made to co-opt seven members from the village community/water user groups. This JPS will take over the role of VWSCs under the Swajadhara sceme.

Since JPS is a committee of the Gram Panchayat itself, the question of formalization of the village participation through byelaws between the VWSC and GPs does not arise. This committee will be headed by the Gram Pradhan and would have total freedom for decision making by virtue of its constitutional status. Ownership of the water supply infrastructure would rest in the Gram Panchayat, which is the only statutory and elected body representing the entire village community. In fact, the assets created during the Swajal Project have also been transferred to the Gram Panchayats. We would like to reiterate that involvement /ownership by the Gram Panchayats is the only replicable and sustainable option for future service delivery which has also been proposed by us in the Swajal's follow-on project.

As regards the capacity or experience of the Gram Panchayats to deliver the services is concerned, it may be noted that even the Swajal VWSCs had absolutely no experience in implementing water supply schemes. Their capacity had to be built up through various training programmes. Similarly there is adequate provision for Capacity Building of the Gram Panchayats and JPS/VWSC under the Swajaldhara scheme.

Section 4.2.12The roles of the two Public Sector Undertakings i.e. Jal Nigam and Jal Sansthan have been defined in the Swajaldhara programme as that of a Support Organisation/ Service Agency who could assist the Gram Panchayat, if the GP so desires, to plan and execute their project. The role of Jal Sansthan is now limited to urban areas. UP Jal Nigam has already oriented its approach in line with Swajal concept wherein no water supply schemes are undertaken without community participation. It has set up a Community Participation Directorate for ensuring Community participation as a mandate under ARWSP. Under Swajal project UP Jal Nigam carried out planning and implementation activities in about 60 villages of District Lalitpur. On account of this venture, this organisation has gained some experience of community based and demand responsive approach and is applying these concepts in ARWSP program also. However, ARWSP will gradually get replaced within a period of 04 years with the Swajaldhara program, which has the mandate of demand responsive solutions and community participation through out the scheme cycle of the project.

Also, we would like to state that restructuring of UP Jal Nigam was never a mandate of the Swajal Project as such. The recommendations of sector studies have been sent to Jal Nigam for necessary follow up action. The issue of restructuring arises subsequent to the experience gained during implementation of Swajal and must not be considered while rating the Swajal Project.

At last I would like to mention the fact that Swajal has been categorized as one of the most successful projects of the World Bank. The lessons learnt from the project have completely changed the approach of the Government of Uttar Pradesh and the GOI and have ultimately led to launching of the Swajaldhara Programme by GOI to replace all existing rural water supply schemes in India gradually. It indeed would be a tragedy if such a landmark project were to be rated as merely 'Satisfactory'!

With regards

(Arun Singhal)Director, Swajal, Uttar Pradesh

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(b) Cofinanciers:NA

(c) Other partners (NGOs/private sector):NA

10. Additional Information

See Annexes.

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Annex 1. Key Performance Indicators/Log Frame Matrix

Key Development Objective Indicators

S.NO. Indicators Target BaselineUA UP

1 % Persons washing hands before eating 75% 54% 85% 82%2 % Households using safe water for drinking and cooking

purpose 65% 45% 90% 80%3 % Mothers with infant children who practice safe disposal

of infant excreta 50% 32% 44% 71%4 % Children under five years suffering from Diarrhea

during the last two weeks 4% 13.9% 3.6% 5.5%5 % Households using latrines (Latrine coverage

in completed village) 50% 12% 63% 31%6 % Schemes with potable water quality 100% N.A. 100% 100%7 Average actual time saving per household as

result of scheme >2.5Hrs. N.A. 3.5 hrs NA8 % VWSC members trained 100% N.A. 100% 100%9 % SC/ST VWSC members >20% N.A. 22% 48%10 % VMW trained 100% N.A. 100% 100%

11 Cross visits to successful schemes (average per schemes

>2 N.A. 2.4 2.0

12 % Villages where community contribution to capital cost fully received 100% N.A. 100% 100%

13 % Female VWSC members >30% N.A. 40% 36%14 Average Number of functional woment SHGs 1 per Village N.A. 1.1 1.415 # Schemes commissioned 1000 N.A. 857 35716 % of completed schemes where actual B.C.

Ratio is less than 1.5 (B1,B2,B3 Schemes Time Saving Study) <5% N.A. 20% NA

17 % schemes in operation after 1yr. 100% N.A. 98% 100%18 % schemes in operation after 3yrs. 100% N.A. 97% 99%19 Tapstand in working condition after 3yrs. 100% N.A. 97% 99%20 # of drainage schemes constructed 290 N.A. 99 8721 % of drainage schemes with clean drains after

1 year 100% N.A. 98% 53%22 % completed schemes where O&M collection is

more than O&M expense after 1 year 100% N.A. 100% 100%23 % completed schemes where more than 90% of O&M

target tariffs are being collected after 1 year 100% N.A. 63% 58%24 % completed schemes where more than 90% of O&M

expenses are being collected after 3 year 100% N.A. 45% 60%25 Sector Study submissions:

(I) Inception Report(ii) Draft Report(iii) Final Report

Final report to

be completed by March

2001

N.A. Final Report Submitted

Final Report Submitted

26 Preparation of Strategic Sector Plan Jun-01 N.A. Prepared Prepared

Achievement

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Physical Progress Indicators

UA UP Total UA UP TotalPart A : PMU OperationNo. of DPMUs Nos. 8 2 10 8 2 10Audit Nos. 1031 1256 2287 1174 1254 2428Site Appraisal Villages 2178 392 2570 2178 456 2634SO & SA Training Participants 2850 1222 4072 8325 4731 13056PMU/DPMU Trg and Comm. Participants 274 118 392 962 375 1337Part B : Software ActivitiesParticipating SOs Number 68 25 93 68 50 118Selection of Villages Villages 860 357 1217 857 405 1262VWSC formed & Functional(Excl. PRI)Villages 822 347 1169 819 347 1166HESA-Health Home Surveys Villages 860 357 1217 857 357 1214VEAP- Cleanup campaigns Villages 860 357 1217 857 357 1214DPRs prepared Villages 822 347 1169 819 353 1172SHG Formed Number 860 357 1217 1046 504 1550Part C : Construction ActivitiesWater Supply WorksUnder Construction VillagesCommissioned Villages 860 357 1217 857 357 1214Drainage WorksUnder Construction VillagesCommissioned Villages 203 87 290 99 87 186Household LatrinesLatrines Constructed Number 28000 26054 54054 31549 22163 53712Environmental Management Works(VEAP)Soak Pits Constructed Number 6900 2910 9810 6647 5330 11977Garbage Pits Constructed Number 6500 2735 9235 5823 6194 12017Compost Pits Constructed Number 6400 2636 9036 7590 4194 11784Part D : Sector Development StudiesMulti village schemes Stage of

ContractComplete Ongoing

Time Saving Study Number 4 4 3 3

Next Project Preparation Stage of Contract

To be initiated

after Sector Study

To be initiated

after Sector Study

Initiated Initiated

Sector Studies Stage of Contract

To be completed

by

To be completed

by

Completed Completed

State Wide Media Campaign Stage of Contract

Dissemin. to end by June

2000

Dissemin. to end by June

2001

Dissemin. complete

Dissemin. complete

Revised end-Project Target End-project AchievementItem Description Unit

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Annex 2. Project Costs and Financing

Project Cost by Component (in US$ million equivalent)Appraisal Estimate

Percentage of

Component US$ millionUP UA Total

A. Strengthening and operation of the PMU

8.32 6.7 2.79 9.49 114%

B. Selection and construction of water supply and Environmental sanitation

60.21 22.1 13.68 35.78 59%

C. Studies and sector development

2.47 1.7 1.66 3.36 136%

Total Project Cost 71 30.5 18.13 48.63 68%

Latest Estimate

US$ million

Project Financing by Component (in US$ million equivalent)

UP UA Total UP UA Total

World Bank Loan 59.6 22.8 29.6 52.4 25.9 14.8 40.7GOUP/GOUA 3.8 1. 96 2.15 4.11 1.69 1.48 3.17Community Contribution

7.6 2.61 4.3 6.91 2.91 1.85 4.76

Total Project Cost 71 27.37 36.05 63.42 30.5 18.13 48.63

Estimates after IInd Cancellation 12/02

  Source SAR Estimates

Estimates after Ist cancellation

06/00

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Annex 3. Economic Costs and Benefits

Introduction

1. At appraisal, the project was justified in economic terms by both direct and indirect benefits. A target population of 800,000 rural inhabitants (rising to 1.2 million as populations rise to design level) would be directly benefited through the time and effort saved in collecting water, and would become healthier because of more and cleaner water, improved health knowledge and better sanitation and hygiene practices. The SAR pointed to indirect benefits (unquantified) of enhanced operational capacity of NGOs in the project areas, improved practices and techniques for cost-effective water and sanitation services through R&D, and the development of procedures for public funding of demand driven water and sanitation services. The first of the project’s development objectives was “the delivery of sustainable health and sanitation services which will increase rural incomes through time savings and income opportunities for women” and so the economic and financial outcomes of the project are central to the overall assessment of achievement of the objectives of the project.

2. This annex undertakes the ex-post evaluation of the economic benefits of the project on the same basis as that undertaken at appraisal (the ICR requirement), makes some further comment on the basis of the SAR analysis, and makes suggestions for improvement in the analysis of these types of interventions in the future. This Annex was prepared with the assistance of the Investment Centre Division [T. Lamrock, TCIP] of FAO under the World Bank/FAO Co-operative Programme during the ICR mission of the project in May/June 2003.

The SAR Economic Evaluation Method

3. The economic analysis at appraisal estimated the value of the benefit of time saved in water collection, and the value of increased water consumption. The SAR identified the time savings and the value of increased water as the only reliably quantifiable benefits, and the project design included rural surveys to monitor and measure the time saved due to the water supply schemes. This time saved was then valued at an opportunity cost of non-skilled casual labor, seasonally adjusted to reflect varying opportunities for the productive use of time during the year. A standard cost/benefit analysis method was used. Whilst it was recognized that health benefits would also result, the SAR did not attempt to value benefits that would derive from the improved health status of the beneficiaries. However, studies on health status and practices, and in particular, on the incidence of diarrhoea in young children, were conducted through the project implementation period.

Data for the ICR Analysis

4. The data for the ICR analysis was collected during two independent surveys, covering each Uttaranchal and Uttar Pradesh, conducted during the final months of project implementation. (Report on Final Round of Time Saving Study with Sample Cutting Across All Batches – Dalal Mott MacDonald, May 2003; and Time Saving Study in Swajal Villages – Redecon (India) Pvt. Ltd). The survey in Uttaranchal covered a total of 85 villages, approximately 10% of the total villages in the project, and that in Uttar Pradesh covered 65 villages, approximately 20% of those involved (In the latter survey some village data was deemed unreliable and a final sample of 48 villages was analyzed). The purpose of the surveys was to measure the actual time savings that have resulted from better accessibility to drinking water compared to the baseline data for the pre-project level of consumption, and to measure the actual incremental consumption that the improved water services have delivered. During these surveys, the actual skilled and un-skilled wage rates were collected, as well as an indication of to what purposes the time saved was put at household level.

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Time Saved

5. The following table gives the results of the time savings surveys for the two states compared with those estimated at appraisal.

Hills and Foothills(Uttaranchal)

Bundelkhand(Uttar Pradesh)

Appraisal ICR Appraisal ICRTime spent collecting water before the project

4.9 4.7 3.5 2.5

Time spent collecting water after the project

1.1 1.9 0.8 1.1

Time saved per household 3.8 2.8 2.7 1.4

6. In both regions, the time savings were over-estimated at appraisal. The time actually spent in collecting water after the project remained higher than anticipated, and the appraisal over-estimated the time spent collecting water before the project in the Bundelkhand villages.

Incremental Consumption

7. The SAR noted that reduced time in collecting water will increase consumption, and that previous studies had indicated an arc elasticity of demand of -0.54. However, supply constraints of water, particularly in the drier seasons, limit consumption and a figure of 20% additional time savings was assumed to accrue to incremental consumption. This assumption was borne out in the surveys in Uttaranchal where detailed data was collected on incremental consumption. Because of the less than anticipated overall time savings, the time values of incremental consumption at completion were less than that at appraisal, as indicated below:

Hills and Foothills(Uttaranchal)

Bundelkhand(Uttar Pradesh)

Appraisal ICR Appraisal ICRTime value of Incremental consumption

0.8 0.50 0.60 0.31

1 Data for the actual incremental consumption was not collected for UP; consultants estimated that time taken for

incremental consumption was 20% of the time saved in collecting water after the project.

Value of Time Saved

8. The time saved was valued at appraisal at the opportunity cost of labour. The unskilled wage rate was used as the basis of valuation, adjusted to reflect that the opportunity costs are higher in the dry season compared to the wet season. For the time saved to have a value, it is not necessary for this time to be actually spent undertaking economic activities, but there must be an opportunity cost – income lost in foregoing other economic activities. Therefore, to use this as an appropriate basis of valuation, alternative economic opportunities must exist, either to reduce costs, or to increase income, using this time.

9. The appraisal methodology looked at the seasonal variations in opportunity costs – higher in the dry and mid season when harvest activities take place but when the greatest time is spent collecting water

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away from the household, and conversely lower in the wet season. Assumptions were made about the time saved using private house connections compared with standposts/wells. These assumptions have been reviewed during the ICR and found to be valid, with the exception that the proportion of time previously spent that was saved through the project is the actual figure which is 58% overall, and the proportion of private connections was around 15%. The “annualized factor” which adjusts the opportunity costs depending on seasonal variations was 54.3% at appraisal, but has reduced to 39.6% at ICR due to the actual time saved being less than that estimated at appraisal.

10. The calculations for this “annualized factor” are contained in the following table:

11. At appraisal, the unskilled wage rate was approximately Rs. 35 per day. With adjustments for the seasonal variations on alternative income generating opportunities, the opportunity cost of time saved was valued at Rs 2.38 per hour. At completion, the unskilled wage rate averaged Rs. 60 and Rs 49 per day in UA and UP respectively. With seasonal adjustments updated in line with data obtained during the ICR mission, the opportunity cost of time saved was Rs 2.97 per hour and Rs 2.43 per hour in UA and UP respectively. The analysis further adjusts these values by the standard conversion factor of .9 to estimate a shadow price. Using these hourly rates applied to the time saved and incremental consumption value, an average was taken, weighted by the number of schemes in each state to estimate the value of time saved per household and per capita. At appraisal, the time saved and incremental consumption per capita p.a. were valued at Rs 461 and Rs 104 respectively. At ICR, the figures were Rs 360 and Rs 68. The details are as follows:

12. Costs per capita for Component B – construction of water supply and environmental sanitation schemes - were obtained from the surveys in which the cost data for all selected schemes was available individually. These were significantly lower than estimated at appraisal for the hardware elements. This was particularly so for the pumping schemes in the Bundelkhand where the hardware costs were one-third that estimated. However, the costs for the community development activities in Uttaranchal were significantly higher than estimated, but lower in Bundelkhand. For the ICR analysis, a weighted average was taken. The following table sets out the comparison of investment costs at appraisal and at the ICR:

13. For the overall costs of the project, the data was taken from the overall financial reports from the PMU, adjusted by the inflation rates for India (provided by the Bank), and further adjusted by the standard conversion factor of 0.9.

Cost and Benefits Streams

14. The analysis considered firstly the impact of Component B separately, and then included the costs of Component A – Strengthening and Operation of the Project Management Units – and Component C – Studies and Sector Development. The cost and benefits streams were reconstructed on the same basis as at appraisal. The actual investment costs were valued in economic terms for both the hardware and software elements, with an allowance for 2% and 5% of the hardware capital cost for operation and maintenance of gravity/hand pump schemes, and for electric pump schemes respectively, in accordance with norms specified by the PMU. The benefits per household of the time saved and incremental consumption were valued taking into account increases in village populations served leading up to the design capacity of the schemes.

Overall Results

15. The ex-post analysis undertaken on a sample of project villages indicates that the majority of

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schemes indicate positive economic returns. However, some 25% to 40% of schemes have not resulted in sufficient value of time savings to satisfy the test of an economic rate of return of greater than 10%, with some 12% of schemes with rates of return of less than 5%. The average ERRs for both states were however 19.5%. The results are shown in the following table:

16. The overall economic rate of return for Component B of the project was 19.5%, compared with appraisal estimates of an average of 26% taking both the software and hardware costs into account. This is mainly due to the reduced time savings compared to estimates at appraisal. Based on hardware costs only, the ERR was 27% compared to 31% at appraisal. The benefit of reduced hardware investment costs involved was more than offset by the reduced value of time saved as mentioned above.

17. For the overall project, including the costs of strengthening and operating the PMUs and for the studies and sector development activities, the economic rate of return at ICR was 13.2% compared to an appraisal estimate of 20%, with a benefit/cost ratio of 1.07, compared with 1.51 at appraisal.

Sensitivity

18. The results of the analysis depend totally on, and are very sensitive to, valuations placed on time saved. At appraisal, the hourly unskilled wage rate was adjusted by 54% to take into account seasonal variations in opportunities for utilizing time saved. The ICR has adjusted this to 39.6% in line with the updated assumptions derived from the surveys and experience during the project. Had this assumption not been adjusted (annualised factor remains at 54%), the rates of return for the project would have been similar to those at appraisal - the effects of reduced time saved being offset by lower investment costs - with an overall rate of return of 20%

19. The vehicle for support to income generating activities was the self-help groups (SHGs), formed primarily to take responsibility for the operation and maintenance of the schemes and the associated financial responsibilities. The design of the project also anticipated that these groups would be assisted in savings and inter-loaning activities, and with forming linkages with the banks. In addition, during the implementation of the project, the groups were assisted with training in income generating activities. A report prepared for Uttaranchal indicated over 1,000 SHGs had been formed and that training had been provided for activities such as pickle making, sewing, vegetable production, fruit preservation, candle making, etc. The report noted that approximately 23% of the SHGs had undertaken various activities for income generation, with the predominant activities being vegetable production, dairy, and mini tent houses. The savings and loan activities were reported to be functioning well with loans being mostly for domestic expenditures as opposed to investment or working capital for new enterprises.

20. During field work for the ICR surveys, it was observed that incremental income generating opportunities were limited in project villages. It was observed that, whilst some extra time is spent on increased vegetable and milk production in some of the villages, and some small nurseries have been established, there was little or no inflow of cash from time saving. The field visits undertaken during the ICR indicated that households often use the saved time for own consumption or other activities even if the returns are low, and that much of the saved time was spent on domestic activities. The following table gives the only data available on how time saved was used. This was obtained from the Uttaranchal survey:

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Alternative Use of Time Saved %Educating child 0.5Farm work 17.9Household work 39.5Leisure 8.7Livestock rearing 11.9Village activities 1.3Studies 17.3Self Help Groups 4.3

21. This would indicate that 30% of the time saved was used in some economic activity but it does not give any indication of the extent to which this is incremental, or to its value. If, however, all of this time is incremental and can be realistically valued at the unskilled labour rate, and is the same for all villages in the project, the ERR for the project would be 8.4%.

22. The table below shows these results:

NPV (@12%) B/C Ratio (@12%)

Component B All costs Hardware OnlyAt Appraisal 26.1% 30.8% 1,278,122 2.01 ICR 29.4% 42.1% 2,081,159 1.90

Total Project (Rs,000)

At Appraisal 20.4% 755,921 1.51 ICR 19.9% 630,417 1.47

NPV (@12%) B/C Ratio (@12%)

Component B All costs Hardware OnlyAt Appraisal 26.1% 30.8% 1,278,122 2.01 ICR 13.0% 18.3% (64,058) 1.05

Total Project (Rs,000)

At Appraisal 20.4% 755,921 1.51 ICR 8.4% (256,654) 0.81

NPV (@12%) B/C Ratio (@12%)

Component B All costs Hardware OnlyAt Appraisal 26.1% 30.8% 1,278,122 2.01 ICR 17.7% 24.6% 553,270 1.30

Total Project (Rs,000)

At Appraisal 20.4% 755,921 1.51 ICR 12.0% (1,381) 1.00

Sensitivity to Adjustments in Opportunity Cost of LabourEconomic Rate of Return Summary - Annualised Factor 54%

Economic Rate of Return Summary - Annualised Factor 30%

Economic Rate of Return Summary - Annualised Factor 37%

23. With the annualised factor adjusted to 37%, the project just satisfies the test of an ERR of 12% - the base acceptable level. The question now is whether in excess of 37% of the time saved has been

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realistically utilized in incremental economic activities with a value of the unskilled labor rate, or whether all the time saved has been utilized in incremental economic activities with a value of 37% of the unskilled labor rate, or some combination of these. If this is the case, then the project can be said to be justified. If not, then the project cannot be economically justified using this measure alone.

Comments on the SAR/ICR ex-post Evaluation Method

24. There are two limitations in using these results to determine the economic impact of the project. The first concerns issues relating to the economic value of time saved, and the second is the non-inclusion of the economic value of benefits of improved health and lifestyles.

Economic Value of Time Saved

25. Using opportunity cost as a valid basis of standard economic valuation does not require that the opportunities are actually taken advantage of. However, at the ex-post stage, it is important to be able to determine to what extent incremental economic output was achieved, and what financial improvements were made to household incomes, which justifies the investments made. This is crucial for Government to know when making public investment decisions based on economic analysis and is also necessary in determining to what extent poverty has been addressed in the project. Whilst better health and living conditions are part of improving the poverty status of people, improvement in real household incomes and village economies are always central objectives.

26. As mentioned above, for the time saved in water collection to have a value, there must be either an incremental economic output using this time, or there must be an opportunity cost – income lost in not utilizing this labor for other activities that are available to produce incremental economic output. In circumstances such as these, it is appropriate to use the concept of opportunity cost but to make the valuation valid, a confirmation must be made that alternative economic opportunities exist, for how long during the year they are available, and what value should be put on each unit (hour or day) of time.

27. Using the unskilled labor rate as the basis for the economic valuation of time, the underlying assumption in the analysis is that opportunities for incremental economic gain would be available using this extra labor. This is an appropriate valuation if labor is a constraint to the fulfilment of economic opportunities. The appraisal methodology correctly looked at the seasonal variations in opportunity costs, and made adjustments to the standard unskilled wage rate. The assumption was that employment opportunities were higher in the dry and mid season when harvest activities take place but when the greatest time is spent collecting water away from the household, and conversely lower in the wet season. However, the reality is that this is not necessarily the case in isolated agricultural communities where the agricultural resources are already fully utilized. During harvest time when labor is required, this labor is not in effect an incremental requirement producing an incremental economic output – the work is shared around members of the village to do the same work on the same land.

28. The isolated nature of some of the villages in the project also limits interaction with economy outside the village and is a constraining factor for opportunities for incremental economic output to be sold into markets outside the villages.

29. There are also some practical considerations that prevent saved time from being converted into economically productive time. For example, women from upper castes (with higher social status) do not go for wage employment or labor as per socio-cultural norms. The time saved is spread over the whole day as women collect water depending on the demands on their time for other household activities. Thus, women

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find it difficult to take up jobs or other productive work since the time is disjointed during the day.

30. Without further data on the opportunities for actual new economic activities undertaken during the project or likely in the future, it is not possible to evaluate the real incremental economic benefits derived from using time saved. However, the surveys and field observations indicate that the constraints to incremental economic output (and household incomes) relate to more lack of physical resources (land), lack of capital (investment and working) and restricted market opportunities, as opposed to lack of time or labor. Therefore, it would be reasonable to conclude that, in most of the villages in the project, the opportunities for incremental economic output (or costs saved) using the time saved are extremely limited in the presence of these other constraints. (This, of course, has flow on financial impacts for household incomes out of which additional O&M costs burdens have to be met.) Consequently the opportunity cost of labor (in relation to time saved) is likely to be far less than that assumed in the analysis. The conclusion is that it is likely that less than 37% of the value of saved time was, or could be in the future, applied to incremental economic activities, the minimum level to achieve the required benchmark of 12 % ERR.

31. Unemployed people will take longer to carry out work in the absence of other demands on their time than those employed specifically to undertake that work. In addition, unemployed people will undertake both market and non-market activities with much lower return than would otherwise be expected to be feasible – other better return activities are not available. Using the unskilled wage rate in the absence of real alternative employment opportunities to value time saved does not reflect the diminishing (or zero) economic returns to household labor engaged in non-market activities, overstates its value, and portrays households to be better off than they really are. Therefore, even if 37% of the time was or could be applied to economic activities, its valuation at the unskilled labor rate may overstate the real economic impact, and the analysis would then indicate that the project did not achieve a minimum ERR of 12%

32. A far more accurate and realistic way to value time is through output-based valuations of the time saved with reference to the limited real employment and market access opportunities of the beneficiaries. A further alternative basis for valuing benefits could also be surveys of beneficiaries of their willingness to pay for services using contingent valuation methods. This would then reveal values of benefits from these types of projects (e.g. convenience, cleanliness) that are real outcomes, but often overlooked in the more standard types of analysis. However, the perceptions of beneficiaries in this case would be clouded by the significant subsidy element in the capital costs of the schemes, and it hence would be difficult to gauge the real willingness of beneficiaries of this project to pay in the absence of the subsidy.

33. Uncertainty concerning the validity of assumptions underlying the analysis undermines the confidence of using the results of the “time saved at opportunity cost” method of economic evaluation alone. For future water supply projects in rural economies similar to those of this project, this would also be an invalid basis for justifying the investments and activities, as it is likely to overstate the benefits of the project. Theoretical economic assumptions about opportunity costs at appraisal need to be realized during project implementation for these types of projects to have a real impact on household incomes, and the economies of the villages and states involved. This further emphasizes the link that must be made between saved time, and the creation of opportunities for income generation using this saved time, in the design of projects in isolated rural communities.

Health Benefits

34. The appraisal recognized the health benefits that would result from the project but did not attempt to put any value on this significant impact of the project. Therefore, at this stage, it is not possible to determine the full economic impact of this project. It has been observed during the health surveys carried

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during project implementation that some or all of the following benefits have resulted to some extent:• Improved quality of life• Improved life expectancy• Reduced medical costs• Reduced time spent in care• Reduced costs of travel in relation to medical care

35. Better practices are evolving to address the difficult issues in valuing these benefits where market-based valuations are not possible. Alternative measures of willingness to pay using contingent valuation methods should be considered in the analysis of these types of projects.

Summary

36. The ex-post evaluation of the project (using the value of time saved as the adjusted unskilled labor rate and strictly on the appraisal basis) would indicate that the economic return from the use of time saved is sufficient to justify the investment. This would be the case if labor was a constraint to incremental income generating or cost saving activities that was removed as a result of time savings from water collection. However, there is lack of clear evidence that time is indeed a constraint to incremental economic activities in the rural villages involved in the project, and that opportunities for economic output to this value have been realized, or will be in the future. Therefore this analysis overstates the economic impact. On the other hand, there are many other benefits that have resulted and have a value, which are not included in the analysis. In these areas, this analysis underestimates the economic impact. Overall, the outcome is inconclusive, and the experience cannot provide Government with the full information it requires in determining and prioritizing future expenditure patterns on water and health services in rural areas.

37. An interesting aspect that evolves from the above considerations is under what circumstances can rural water and sanitation projects realistically bring about improvements in incomes, and whether these projects should be justified in terms of economic use of time saved. It can be argued that the benefits of these projects in isolated, rural areas of high unemployment are more social and life quality-related, rather than economic or financial. But where time is the main constraint on incremental economic activity, then the objectives of increased incomes, and justification of projects based on the economic benefits that flow from time savings, are most appropriate.

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SUPPORTING TABLES – COST/BENEFIT STREAMS

Basic Cost parameters Basic population parametersStandard Conversion Factor 0.9 Population Growth 2%

Planning horizon (years) 20Ajdustment for constant prices 1996 5.9 % Household size 6.1 UA

(Indian Inflation) 1997 5.2 % 5.5 UP1998 6.9 %1999 3.5 %2000 6.2 %2001 5.2 %2002 2.4 %2003 4.5 %

Recurrent O&M 5% of hardware costs in UP2% of hardware costs in UA

Economic Costs per capita Present populationAt Appraisal (1996

Rs)At Appraisal

(2003 Rs)At ICR -

UttaranchalAt ICR - Uttar

PradeshICR Weighted

averageSoftware 322 474 884 386 670

Hardware 1854 2733 2582 927 1872Total 2176 3207 3465 1313 2542

Economic Costs per schemeSoftware 223,492 329,343 883,653 385,760

Hardware 1,288,828 1,899,246 2,581,815 927,013 Total 1,512,320 2,228,589 3,465,468 1,312,772

Annualised Factor to adjust opportunity cost of labourSeason Wet Dry Other

Activities Non-harvest HarvestHarvest/Non-

harvestOpportunities for alternative income generating activities Low Medium HighMonths 4 4 4Proportion of daily water requirements to be obtained away from household 25% 100% 80%Type of connection House 30% 30% 30%

Standpost/well 70% 70% 70%Proportion of time previously spent obtaining water that can be saved through the project House 90% 90% 90%

Standpost/well 75% 75% 75%Weighted average of time saved by type of connection House 6.75% 27.00% 21.60%

Standpost/well 13.13% 52.50% 42.00%Annualised factor to adjust market wage (opportunity cost of labour House 2.25% 9.00% 7.20%

Standpost/well 4.38% 17.50% 14.00%Annualised Factor at Appraisal 54.33%

Season Wet Dry Other

Activities Non-harvest HarvestHarvest/Non-

harvestOpportunities for alternative income generating activities Low Medium HighMonths 4 4 4Proportion of daily water requirements to be obtained away from household 25% 100% 80%Type of connection House 15% 15% 15%

Standpost/well 85% 85% 85%Proportion of time previously spent obtaining water that can be saved through the project House 58% 58% 58%

Standpost/well 58% 58% 58%Weighted average of time saved by type of connection House 2.18% 8.70% 6.96%

Standpost/well 12.33% 49.30% 39.44%Annualised factor to adjust market wage (opportunity cost of labour House 0.73% 2.90% 2.32%

Standpost/well 4.11% 16.43% 13.15%Annualised Factor at ICR 39.63%

At ICR

At Appraisal

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Benefit EstimatesOpportunity cost of labour (financial) 35 Rs per day 52 Rs per day

Annualized factor 54.3% 54.3%Value of time saved 2.38 Rs per hour 3.50 Rs per hour

Opportunity cost of labour (financial) 60 Rs per day 49 Rs per dayAnnualized factor 39.6% 39.6%

Value of time saved 2.97 Rs per hour 2.43 Rs per hour

Hours per day Financial Value Financial Value Economic ValueTime Savings 3.6 8.4 513.0 461.7

Incremental consupmtion 0.8 1.9 115.6 104.1

Weighted averageBenefit per cap

Hours per day Financial Value Financial Value Economic Value Hours per day Financial Value Financial Value Economic Value Economic ValueTime Savings 2.76 8.21 545 491 1.43 3.46 207 186 360

Incremental consupmtion 0.51 1.53 101 91 0.29 0.69 41 37 68

Year Hardware Software O&M Total Costs Value of Value of Total Net Hardware PopulationCosts Costs Costs Time savings Incremental Benefits Benefits Only Served

consumption1 558 - 558 (558) (558) 2 6,047 13,754 - 19,801 - (19,801) (6,047) 3 113,161 48,251 3,007 164,419 14,978 2,995 17,973 (146,446) (98,195) 563464 303,315 81,269 13,218 397,802 66,908 13,381 80,289 (317,513) (236,244) 2431985 450,332 94,481 29,842 574,655 160,783 32,156 192,939 (381,716) (287,235) 5121546 540,496 40,664 52,927 634,087 285,572 57,114 342,686 (291,401) (250,737) 8169047 - - 52,927 52,927 357,381 71,476 428,857 375,930 375,930 8331988 52,927 52,927 392,402 78,481 470,883 417,956 417,956 8498479 52,927 52,927 400,286 79,757 480,043 427,116 427,116 866923

10 52,927 52,927 408,310 81,356 489,666 436,739 436,739 88430011 52,927 52,927 416,448 82,977 499,425 446,498 446,498 90192512 52,927 52,927 424,764 84,634 509,398 456,471 456,471 91993613 52,927 52,927 433,267 86,328 519,595 466,668 466,668 93835014 52,927 52,927 441,966 88,061 530,027 477,100 477,100 95719015 52,927 52,927 450,788 89,819 540,607 487,680 487,680 97629716 52,927 52,927 459,788 91,613 551,401 498,474 498,474 99578917 52,927 52,927 468,981 93,444 562,425 509,498 509,498 101569918 52,927 52,927 478,350 95,311 573,661 520,734 520,734 103598919 52,927 52,927 487,891 97,212 585,104 532,177 532,177 105665420 52,927 52,927 497,632 99,153 596,785 543,858 543,858 107774921 52,927 52,927 507,574 101,134 608,708 555,781 555,781 109928222 52,927 52,927 517,773 103,166 620,939 568,012 568,012 112137023 52,927 52,927 527,475 105,099 632,574 579,647 579,647 114238324 52,927 52,927 534,850 106,569 641,418 588,491 588,491 1158354

NPV @ 12% 807,989 171,169 278,526 1,227,843 2,337,647 466,347 2,503,567 1,007,484 1,178,654 B/C Ratio= 2.0 ERR= 26.4% 32.8%

Benefits per hh Benefit per cap

At appraisal (1996 Rs)

Benefits per hh Benefit per cap

At appraisal (2003 Rs)

At ICR - Uttar Pradesh

At ICR - Uttaranchal At ICR - Uttar Pradesh

At ICR - Uttaranchal

At appraisalBenefits per hh Benefit per cap

Apprasial Benefit Streams - Component B - All Schemes (Rs '000)

- 32 -

Year Project Overhead Scheme Total Costs Scheme TotalCosts Costs Benefits Benefits

1 19,328 558 19,886 - (19,886) 2 72,341 19,801 92,142 - (92,142) 3 90,874 164,419 255,293 17,973 (237,320) 4 83,326 397,802 481,128 80,289 (400,839) 5 45,815 574,655 620,470 192,939 (427,531) 6 40,596 634,087 674,683 342,686 (331,997) 7 27,491 52,927 80,418 428,857 348,439 8 52,927 52,927 470,883 417,956 9 52,927 52,927 480,043 427,116

10 52,927 52,927 489,666 436,739 11 52,927 52,927 499,425 446,498 12 52,927 52,927 509,398 456,471 13 52,927 52,927 519,595 466,668 14 52,927 52,927 530,027 477,100 15 52,927 52,927 540,607 487,680 16 52,927 52,927 551,401 498,474 17 52,927 52,927 562,425 509,498 18 52,927 52,927 573,661 520,734 19 52,927 52,927 585,104 532,177 20 52,927 52,927 596,785 543,858 21 52,927 52,927 608,708 555,781 22 52,927 52,927 620,939 568,012 23 52,927 52,927 632,574 579,647 24 52,927 52,927 641,418 588,491

NPV @12% 251,564 1,227,843 1,479,407 2,235,327 755,921

NPV= 755,921 B/C Ratio= 1.51 ERR= 20.4%

Year Project Overhead Scheme Total Costs Scheme TotalCosts Costs Benefits Benefits

1 57,217 1,153 58,369 - (58,369) 2 65,926 14,701 80,627 922 (79,705) 3 68,620 92,357 160,977 13,241 (147,736) 4 69,759 208,661 278,420 45,156 (233,264) 5 55,564 385,756 441,321 108,742 (332,578) 6 90,121 592,103 682,224 213,302 (468,922) 7 76,845 362,394 439,238 285,807 (153,432) 8 107,801 107,801 307,531 199,731 9 37,095 37,095 313,682 276,587

10 37,095 37,095 319,956 282,861 11 37,095 37,095 326,355 289,260 12 37,095 37,095 332,882 295,787 13 37,095 37,095 339,539 302,445 14 37,095 37,095 346,330 309,236 15 37,095 37,095 353,257 316,162 16 37,095 37,095 360,322 323,227 17 37,095 37,095 367,528 330,434 18 37,095 37,095 374,879 337,784 19 37,095 37,095 382,377 345,282 20 37,095 37,095 390,024 352,929 21 37,095 37,095 397,825 360,730 22 37,095 37,095 405,781 368,686 23 37,095 37,095 413,897 376,802 24 37,095 37,095 422,175 385,080

NPV @12% 308,765 1,041,912 1,350,677 1,445,326 94,649

NPV= 94,649 B/C Ratio= 1.07 ERR= 13.2%

Appraisal Benefits Streams - Total Project Rs ('000)

ICR Benefits Streams - Total Project Rs ('000)

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Annex 4. Bank Inputs

(a) Missions:Stage of Project Cycle Performance Rating No. of Persons and Specialty

(e.g. 2 Economists, 1 FMS, etc.)Month/Year Count Specialty

ImplementationProgress

DevelopmentObjective

Identification/Preparation10/09/1990 2 SOCIAL SCIENTIST (1), SR.

SAN. ENGINEER (1)04/10/1991 3 SR. SAN. ENGINEER (10, SAN,

ENGINEER (1), SOCIAL SCIENTIST (1)

09/04/1991 4 SAN. ENGINEER (1), SOCIAL SCIENTIST (1)

07/01/1992 2 SAN. ENGINEER (1), SR. SAN. ENGINEER (1)

04/30/1993 3 SAN. ENGINEER (1), ECONOMIST (1), SOCIAL SCIENTIST (1)

11/10/1993 3 SR. SAN. ENGINEER (1), SAN. ENGINEER (1), SOCIAL SCIENTIST (1)

09/04/1994 8 SR. SAN. ENGINEER (1), SOCIAL SCIENTISTS (2), SAN. ENGINEER (1), PROCUREMENT SPECIALISTS (2), FMS (1), TRAINING SPLST (1)

12/08/1994 3 SR. SAN. ENGINEER (1), SOCIAL SCIENTIST (1), SAN. ENGINEER (1)

08/05/1995 10 SR. SAN. ENGINEER (1), SOCIAL SCIENTIST (1), SAN. ENGINEER (1), ECONOMIST (3), SR. IRRIGATION ENGINEER (1), ENVIRONMENT SPLST (1), PROCUREMENT SPLST (1), FMS (1)

12/17/1995 9 SR. IRRIGATION ENGINEER (1), PRINCIPAL ECONOMIST (1), INST. DEV. SPLST (1), SR. SAN. ENGINEERS (2), ENGINEER (1), NGO SPLST (1)

Appraisal/Negotiation04/1/1996 9 SANITARY ENGINEER

(2), ECONOMIST (2), ANTHROPOLOGIST (1), INST. DEV. SPLST (1),

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ENVIRONMENT SPLST (1), ENGINEER (2)

Supervision

02/15/1996 3 TEAM LEADER (1); SOCIOLOGY (1); ENGINEER (1)

HS HS

09/22/1997 4 TEAM LEADER (1); PROCUREMENT (1); SANITATION (1); SOCIOLOGY (1)

HS HS

04/08/1998 6 TEAM LEADER (1); PROCUREMENT (1); ENGINEERING (1); SOCIOLOGY (1); INSTITUTIONAL (1); M&E, TRAINING (1)

HS HS

09/29/1998 7 TEAM LEADER (1); INSTITUTIONAL (1); SOCIOLOGY (1); ECONOMIST (1); PROCUREMENT (1); ENGINEERING (2)

HS HS

04/23/1999 7 TEAM LEADER (1); SECTOR STUDY (1); SOCIOLOGY (1); PROCUREMENT (1); ENGINEERING (2); FINANCIAL (1)

HS HS

MTR MISSION11/01/1999

6 SR. SAN. ENGINEER (1), ECONOMIST (1), SOCIAL DEV. SPLST (1), INST. BLDG SPLST (1), FMS (1), ENGINEERING SPLST (1)

S HS

05/19/2000 7 ECONOMIST (1), SOCIAL DEV. SPLST (1), SR. WATER SUPPLY SPLST (1), SR. SAN. ENGINEER (1), SR. HEALTH SPLST (1), FMS (1), PROCUREMENT SPLST (1)

S S

12/23/2000 5 SR. ECONOMIST (1); SOCIAL SCIENTIST (1); SANITARY ENGINEER (1); FINANCIAL MANAGEMENT (1); WATER RESOURCES ENGINE (1)

S S

06/08/2001 7 TASK MANAGER/ECONOMIST (1); SOCIAL DEVELOPMENT SP. (1); SANITARY ENGINEER (1); FINANCIAL MANAGEMENT (1); PROCUREMENT SP. (1); ENGINEERING CONSULTANT (1);

S S

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ENVIRONMENTAL SPECIALI (1)

11/09/2001 5 SR. ECONOMIST (1); SOCIAL SPECIALIST (1); IRRIGATION SPECIALIST (1); FINANCIAL MGMT (1); PROCUREMENT SPECIALIST (1)

S S

05/10/2002 5 SR. ECONOMIST/LEADER (1); SOCIAL DEVELOPMENT SP. (1); SANITARY ENGINEER (1); FINANCIAL MANAGEMENT (1); WATER RESOURCES ENGINE (1)

S S

11/01/2002 5 MISSION LDR/ECONOMIST (1); SOCIAL DEV. SPL (1); PROCURMENT SPECIALIST (1); ENGINEERING & O&M SPL. (1); SANITARY ENGINEER (1)

S S

ICR05/31/2003 6 ICR TEAM LEADER (1)

ECONOMIST (2); FINANCIAL MGT SPLST (1); SOCIAL DEV SPLST (1); WATER SUPPLY ENGINEER (1)

S S

(b) Staff:

Stage of Project Cycle Actual/Latest EstimateNo. Staff weeks US$ ('000)

Identification/Preparation 73.5 180.2Appraisal/Negotiation 38 64.7Supervision 229.17 278.29ICR 37.56 57.8Total 378.23 580.99

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Annex 5. Ratings for Achievement of Objectives/Outputs of Components(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)

RatingMacro policies H SU M N NASector Policies H SU M N NAPhysical H SU M N NAFinancial H SU M N NAInstitutional Development H SU M N NAEnvironmental H SU M N NA

SocialPoverty Reduction H SU M N NAGender H SU M N NAOther (Please specify) H SU M N NA

Private sector development H SU M N NAPublic sector management H SU M N NAOther (Please specify) H SU M N NA

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Annex 6. Ratings of Bank and Borrower Performance

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)

6.1 Bank performance Rating

Lending HS S U HUSupervision HS S U HUOverall HS S U HU

6.2 Borrower performance Rating

Preparation HS S U HUGovernment implementation performance HS S U HUImplementation agency performance HS S U HUOverall HS S U HU

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Annex 7. List of Supporting Documents

Annex 8. Studies funded under the Project

Annex 9. Borrower's Contribution

Annex 10. Sustainability Evaluation Exercise Analysis

Annex 11. Summary of Stakeholder Workshops held in Uttar Pradesh and Uttaranchal

Annex 12. SWAJALDHARA Programme - MOU

Annex 13. Uttar Pradesh Water Supply and Sanitation Mission (WSM) - MOU

Annex 14. Decisions of the GOUA for Initiating Process of Reform in the WATSAN Sector

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Additional Annex 8. Studies funded under the Project

S. No

Name of the Study & Cost

Conducted by Agree-ment No.

Start Date Comple-tion Date

Main Findings Uses made of the Study

Institutional & Financial1. Organizational

Development Exercise.Rs. 13,62,500

Administrative Staff College of India (ASCI), Hyderabad

427 25.02.1999 31.05.1999 1.Swajal's greatest strength lies in the public image it has created because of the way it has functioned.2. The image of the SWAJAL is one of incorruptibility and Transparency.3. Community contribution & participation facilitated by SWAJAL is one of its greatest strengths.4. Financially, the project has been handled with sufficient cost consciousness.5. Even though the personnel of the project came from different organizations there is a great amount of interest in integrating the functioning.6. Swajal performance orientation without compromising the basic philosophy of the mission is a refreshing change and will stand in good stead in the long run.7. Investment in Human Resource Development, through training, innovation and flexibility in working, have led to a bank of talent which may be unique in India, & probably elsewhere in the world in the area of rural WATSAN which is not only demand driven but also requires the commitment of the rural communities.8. Selection of Women specialists in different disciplines has been given due considerations.9. Unlike other institutions in the country SWAJAL society can be dissolved without hurdles once it believes that its mission is over.10. The quantum and level of decision making at DPMU is not high. There is a tendency to look up to the PMU for all kinds of decisions, especially by the SO.

1. The emphasis on training specially for motivational and attitudinal changes of PMU/DPMUs staff were further increased and courses like ‘Art of living’, ‘Blue Print of Success’ were conducted for the staff. 2. The open door policy at all level was adopted to ensure the transparency.3. The emphasis was given to out sourcing of the services rather than engaging manpower in house. The PMU/DPMUs can be dissolved without any hustle. However, the investment in Capacity Building of staff would be protected by utilizing their services in Swajaldhara project, Sector Reform Project, Total Sanitation Campaign and Follow on Project.4. The powers were delegated to the Additional Director and Finance Controller and Project Managers of DPMUs. 5. The system of portfolio management was revamped by involving specialist of all the discipline.

2. Rural Water Supply & Environmental Sanitation Sector StudyRs. 78,66,018

M/s DHV Consultants BV, the Netherlands

809 27.04.2000 31.03.2001 The objective of the study was to promote the long term sustainability of the RWSS sector by providing assistance to State Governments to identify and implement an appropriate policy framework and strategic plan. The recommendations of the sector study report are:1. Focus on improvement of piped water supply through individual private connections.2. Community management of RWSES.3. Government role from sole provider to facilitator & Co-financier4. Involvement of PRIs

1. Both the states have developed their long term Strategic Plan for Rural Water Supply & Sanitation Sector.2. The study report was useful for developing project reports of Follow on Projects for both the States.

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5. Bottom-up planning.6. Integration of WS and ES.7. Protection of water sources.8. Rejuvenation/upgrading of existing schemes with improved service level.9. Institutional support structure comprising small, independent service-oriented agencies.10. Gradually increase capital cost sharing to 100%11. Better flow of funds for the sector through RWSS fund.12. Cost recovery13. Phased financing strategy for the sector.14. Encourage provision for institutional and local loans and credits for users.15. Merger of Jal Nigam and Jal Sansthan.

3. Assignment of Study on Efficacy of Community Contracting in Swajal ProjectRs. 4,75,000

M/s Avinash K. Rastogi & Asstociates CA, Lucknow

370 (UA) 01-03-2003 15-05-2003 Community procurement has been made at relatively reasonable prices as compared to centralized procurement to centralized procurement by Jal Nigam. Further it is the opinion of the Consultants that for non local materials which cost more than 50% of the water supply project cost there should be continuous process of market survey being conducted at DPMU level in order to keep a rate bench mark at DPMU/PMU levels and it should be strictly monitored at PMUI level.

The recommendations of the consultant will be used while preparing the follows –on Project.

4 Impact Evaluation of Mass Media Campaign

Dr. J. S. Yadav, Uma YadavM/s CMFD-7/7490, Basant Kunj,New Delhi.Ph.: 011-26121035

1678 30.10.2002 27.05.2003 The objective of the report was to assess the Impact of media campaign and subsequently to the action Plan for the fourth coming follow-on Project find the study of : - IEC activity were found to be planned coordinated, monitored and well engineered resulting in good social mobilization. - IEC tools like SARAR, HESA, NFE, and facilitated involvement and participation, dialog and decision-taking in small group, but face to face inter personal communication were far more effective in motivating, organization and enabling community members. - Wall writing power found be major source of Swajal show casing.

Media plan for the follow-on Project will be based upon primary findings of the study.

5 Assignment of Study on Efficacy of Community Contracting in Swajal ProjectRs. 3,85,000/-

M/s Avinash K. Rastogi & Asstociates CA, Lucknow

1755(UP)

4/7/2003 31/5/2003 The analysis of data reveals that for each and every item, materials have been purchased of the same quality as prescribed in the DPRs. In case any item was found not up to the mark then it was replaced by the suppliers with standard quality materials as prescribed in the DPRs. The Process of community procurement as adopted in the Swajal villages has been found to be quite

The recommendations of the consultant will be used while preparing a follow up project.

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efficient and has resulted in purchase of standard materials of good quality (ISI marked).

HRD/H&H 6 Baseline study

of Knowledge Attitude and PracticesRs. 4,96,285

Operation Research Group, Lucknow

422 01-10-1998 28-01-1999 NA

7 State wide media campaign on sanitation and gender issue (Assessment Phase)Rs.21,68,769

M/s Thompson Social, New Delhi

161 26.02.1998 NA NA

8 Folk Media CampaignRs. 9,99,200

M/s Aarambh, Lucknow

759 09-12-1999 08-06-2000 NA NA

9 Baseline study for evaluation of Health Benefits in the Swajal Project

Department of Community Medicine(SPM)KGMC, Lucknow

818 1/8/2002 11/15/2000 The baseline study established the baseline status of certain health and hygiene indicators in 10 Swajal and 10 non-Swajal villages located in 2 districts of Banda and Jhansi, before the water supply and sanitation schemes were established in the Swajal villages. The base-line status established that though the average no. of HPs per 100 hhs. did not differ much between the Swajal and non-S villages, the number of latrines was significantly higher. Though the % hand-washing practice after defecation (S*-29.4, N.S*-24.9) and before meals (S*-21.6, N.S*-11.6) was much higher in Swajal villages, the incidence of diarrhea was higher in Swajal than in non-Swajal villages(S-13.6, N.S-9.8). This was due to the fact that, though their health and hygiene practices had improved due to the health education and IEC inputs received due to the Swajal project strategy, because the drinking water available was not safe for consumption, the incidence of diarrhea was higher.

Findings shared with DPMU and revised HESA strategy formulated for implementation in the field

10 Repeat Comparison study of Health Benefits in the Swajal Project

Findings shared with DPMU and revised HESA strategy formulated for implementation in the field

1499 8/30/2001 1/31/2002 The analyses of data collected in the First Repeat Comparison Study which was conducted in the same sample Swajal and non-Swajal villages, revealed that there was reasonable increase in better health and hygiene practices, particularly in terms of use of safe drinking water (as the water supply and sanitation facilities were in place), hand washing practices (after defecation: S-68.9, N.S.-36.4), use of sanitary latrines etc. in the Swajal villages as compared to Non-swajal villages, in the repeat study when compared with the baseline. It was also

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observed that there was a decrease in the incidence of diarrhea in the Swajal villages when compared from baseline to repeat study (S-7.2, N.S-9.2). This was mainly due to the Community Empowerment and HESA strategies followed, the increased latrine coverage per 100 hhs. (S-28.7, N.S-4.4) and IEC inputs given by the project in the village communities.

11 Contract for consultants services for Mass Media Campaign (Campaign Phase)Rs. 2,39,60,049

M/s Thomson social enkay center

13-03-2000 22-05-2000 NA NA

12 Mass Media Campaign during O&M Phase in UttaranchalRs. 5,75,000

Mr.J.K. Dhaondiyal A-702, river View Apartment Mayur Vihar Phas-1 Ext. Delhi

195(UA) 24-05-2002 23-11-2002 The Consultant has developed scripts and CDs for Radio jingles, designs for posters, wall writing and hoardings on the O&M issues including role of Village Maintenance Worker, regular chlorination regular collection of water changes, transparency, accounts keeping etc.

1. The radio jingles have been broadcasted from Feb to May 2003 from Radio Nazibabad to cover entire Uttaranchal2. Tin & paper posters were distributed to Swajal villages for dissemination.3. Wall painting as per design of consultants were painted in Swajal villages4. Hoardings were placed at Vikas Bhawan in every district.

13 2nd Repeat Comparison Study on Health benefits in Uttaranchal Rs. 9,65,635

Department of Community Medicine KGMC, Lucknow

200(UA) 13.08.2002 20.01.2003 1.There was a reasonable increase in the health and hygiene practices such as use of safe drinking water, hand-washing practices used by Swajal villages as compared to non-Swajal villages.2. It was also observed a decrease in the indicidence of diarrhea

The study has proved beyond doubt that the project was successful in attaining its main objective of providing sustainable health and hygiene benefits to rural communities

14 2nd Repeat Comparison study of Health Benefits of Bundelkhand Rs. 4,79,875

Department of Community Medicine KGMC, Lucknow.

1660 (UP)

22.10.2002 31.01.2003 The analyses of data collected in the Second Repeat Comparison Study which was conducted in the same sample Swajal and non-swajal villages, revealed that there was reasonable increase in better health and hygiene practices, particularly in terms of use of safe drinking water (as the water supply and sanitation facilities were in place), hand washing practices (after defecation: S-97.7, N.S.-49.1), use of sanitary latrines etc. in the Swajal villages as compared to Non-swajal villages, in the second repeat study when compared with the first. There was also a significant increase in the % of those disposing off infant faeces properly in Swajal villages (Baseline: 3.8, 2nd Repeat: 56.9) hand-washing after cleaning infant faeces in Swajal villages from the Baseline to the second repeat study (Baseline: 36.8, 2nd Repeat: 96.3) It was also observed

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that there was a considerable decrease in the incidence of diarrhea in the Swajal villages when compared from the first and second repeat studies (S-5.4, N.S-12.9). This was mainly due to the Community Empowerment and HESA strategies followed, the increased latrine coverage per 100 hhs. (S-28.8, N.S-3.9) and IEC inputs given by the project in the village communities.

15 Assessment of Community Development Trainings Conducted by CDS, UPAA, Nainital for Batch 1 and Batch 2 SO’s Rs. 75,000

Professor J.V. Vaishampauan Deptt. Of Applied Economics, Lucknow

165 25.05.1998 24-06-1998 NA

16.

Assessment of Impact of Community Development Trainings Rs. 5,78,000

M/s Giri Institute of Development Studies

1506 08.11.2001 28-03-2002 Study Canceled

17 Assessment of impact of technical trainingsRs10,51,859

Department of Civil Engineering, IIT, Kanpur

1503 07-11-2001 25-01-2002 1. The overall impact of the first three training programmes i.e. “Survey Training, Feasibility Design and Cost Estimation training and the TOT on Construction Technology” was significantly positive.2. The impact of the “construction supervision” training was positive and the impact of the TOT on “Operational and Maintenance’ was “marginally positive”

The suggestions given by the consultant on various training are being used for trainings for Sector Reform Project and will be used for formulating “Follow on Project” & “Swajaldhara”.

Operations & M&E

18. Economic criterion study to access whether significant numbers of schemes are likely to meet the initial viability criteria.Rs. 1,46,750

M/s Giri Institute

2 09.01.1996 31-08-1997 NA

19. Process monitoring of Planning Phase in Batch-1 Villages

Centre for Development Studies UP Academy of Administration, Nainital

42 31-07-1997 01-09-1997 1. Active involvement of community especially women2. Meetings of VWSC regularly held with good attendance of SC/ST and women3. Plan for cash and labour and O&M contribution prepared by villagers4. Community feels that Planning Phase is too long5. Though women and SC/ST members are present for meetings but contribution

Trainings of CW, CF and CDS was held together in future batches

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towards planning and decision making is low6. WDI activities not taken off fully7. Awareness created using Wall paintings and posters8. CWs play a critical role in the Planning Phase9. Paper work of CF and CW should be reduced10. Training of CW, CF and CDS to be held together11. Women are keen for NFE

20. Process monitoring of Batch-2 Implementation PhaseRs. 4,11,000

Department of Anthropology University of Lucknow

424 01-04-1999 31-05-1999 Merits:1. Communities full involvement2. Full transparency3. Ownership on the community on the water supply schemes constructed4. Execution of construction works with highest quality of workmanship5. Effective role of SO6. High commitment of PMU/DPMU staff7. Effective monitoring systemSuggestions for further improvements:1. Habitation should be the unit for planning and implementation instead of revenue village2. 6 months O&M support should be given to VWSC3. The posts of CDS and CF should be merged4. Power tariff rates should be subsidized in case of PWS schemes5. VWSC meetings should be held in toks on rotation basis6. IEC through Beating of drums in villages be encouraged7. Paper work at SO and DPMU level be reduced

1.Planning and Implementation was encouraged to be done at Cluster level in future batches. 6 months O&M Phase was undertaken in all batches. The posts of CDS and CF were merged to that of CO (Community Organiser) and MPR formats were revisited to reduce papaer work.

21. Concurrent monitoring of Batch 3 along with Process Documentation of PMU/DPMURs. 9,47,000

M/s Environment Resource Management India Pvt. Ltd, New Delhi.

428 (UP) 03-03-1999 31-01-2001 Findings indicate a positive trend in field of trainings, Community Procurement, maintenance of records by VWSC, Healthy Home Surveys, Clean up Campaigns and transparency in maintenance of records by VWSC. The area of concerns were:1. Delay in implementation of scheme cycle by a few months.2. Discontinuity of NFE.3. SO payments are linked only with quantum of work and not with processes adopted by SO.4. Absence of Legal status of VWSC.5. Emphasis on Simplification of monitoring system.6. The Consultant has produced a historical development of PMU & DPMUs and complied all the important documents produced during the process of development.

1. The monitoring information was used and acted on: for checking and control; for problem solving and planning, as tool for management by staff.2. Monitoring information was used to improve current performance and results. The Monitoring information was acted on at the lowest level possible/referred to other levels as needed to someone who was to act.

22. Concurrent of Department of 803 (UP) 23-03-2000 31-12-2000 Deficiencies: 1. The monitoring information

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Monitoring of Batch 3x PPRs. 8,75,150

Anthropology University

Scheme Cycle not followed, gap between PP and IP, HH coverage in Water Supply is as low as 1/3, VWSCs not actively involved in DPR preparation.Strengths:HESA, SHGs and Women empowerment is substantial, good latrine coverage. The grading between the various models tried in 3X is NGO, Government Corporations, Private Firms.

was used and acted on: for checking and control; for problem solving and planning, as tool for management by staff.2. Monitoring information was used to improve current performance and results. The Monitoring information was acted on at the lowest level possible/referred to other levels as needed to someone who was to act.

23. Concurrent Monitoring of Implementation Phase of Batch 3X in UttaranchalRs. 9,98,000

Department of Anthropology, University of Lucknow, Lucknow

1497 (UP)

16.08.2001 15.05.2002 1. The community was satisfied fully to a great extent with the institutional arrangements made in most of the villages.2. The position of the involvement of the community in the process of decision making in various activity of the Swajal project was not very good.3. The sustainability of the WSS in the long run was highly probable.4. There has been an increase in the income of the people and decline in the interest taken by the VWSC.5. The extent of awareness about IPTA, DPR was generally poor.6. The level of momentum of the Swajal Project was very good at the start of Implementation Phase but it was not so at the last stage of the Implementation Phase.

1. The monitoring information was used and acted on: for checking and control; for problem solving and planning, as tool for management by staff.2. Monitoring information was used to improve current performance and results. The Monitoring information was acted on at the lowest level possible/referred to other levels as needed to someone who was to act.

24. Process Documentation of Planning Concurrent Monitoring of Implementation Phase of PRI villagesRs. 7,04,950

M/s Department of Aanthropology University of Lucknow, Lucknow

1498 (UP)

16.08.2001 15.05.2002 1. Except for a few cases the activity of Soak pit, Compost Pit and Garbage pits was not popular in villages.2. Awareness in community about the Swajal Project was very good. The people were impressed with the approach of community involvement and transparency exhibited under the project.3. The level of involvement of women in the decision making process was not very good.4. The salient features of IPTA should be summarized in 2-3 pages and a copy of the same should be supplied to all the members of GPs in local language.5. The members of GPs should have been involved in the preparation of DPR and it should be in Hindi Language.6. It was noted that GP had not played the role of an effective SO independently and were largely dependent on DPMU.7. The involvement of MPW in the question of SWAJAL funds had not worked well.8. Pradhans of the GPs had misutilised the funds and had lost the confidence of the community.9. Some of the GPs had appointed the staff

1. The monitoring information was used and acted on: for checking and control; for problem solving and planning, as tool for management by staff.2. Monitoring information was used to improve current performance and results. The Monitoring information was acted on at the lowest level possible/referred to other levels as needed to someone who was to act.

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on consideration other than the merit basis.10. The Community expressed that it will be difficult for the community to pay the O&M charges in case of lift.

25. Time Savings Study Batch 1, 2 and 3 villagesRs. 5,04,350

M/s Uttar Pradesh Development Systems Co-orporation (UPDESCO), Luvknow

434(UP)

02.06.1999 31.07.1999 1. In general, the methodology adopted for finding time saving is in order. Howerver, proper documentation of observations and calculation sheets has not been maintained in the prefeasibility forms.2. The time taken, in most cases was calculated based on simple averages instead of weighted averages.3. Assumption in the Time Saving Methodology that Time spent to collect water in post project scenario will be 1 hour does not seem true and a database on this needs to be developed.4. The assumption of 25:100:80 ratio for water brought from outside in the Wet:Dry:Other seasons is not correct. The ration of 60:100:70 is more approximate.5. Benefits accruing due to health benefits need to be added as a third element of time saving in working out the ERR and BC ratios.6. BC ratios for smaller villages is low and have been selected not based on time saving criteria but on other criterions.

26. Time Saving Study Batch 3X and 4 villagesRs. 6,82,000

M/s Uttar Pradesh Development Systems Co-orporation (UPDESCO), Lucknow

1500 (UP)

03.09.2001 29.12.2001 1. The time required for collection of water before the project needs to be assumed as the overall assumption of 4 hours in Uttaranchal per household per day is very close to the empirical values.2. Post project time of one hour needs to be modified as the time taken increases as community hand-pumps area used instead of private water source.3. Appropriateness of 12% as social discount factor is not there so it has to be adjusted to sustainability lower figure.4. The observed wages rate is higher than the official wages rate. The crucial factor is the annualisation factor of 54.325%.5. The incremental consumption in Hill region is 25% as compared to 20% assumed in SAR. In BCR and ERR computation this empirical evidence may be incorporated in future Planning.6. Benefits accruing due to health benefits need to be added as third element of time saving in working out the ERR as an BC ratio.

27. Time Saving Study sample cutting across all BatchRs. 9,00,000

M/s Dala Mott MacDonald Pvt. Ltd, Noida

367 31.01.2003 15.05.2003 1. The pre-project average time required per households per litre was 0.032 hours, which in the post-project scenario is 0.009 hours. The effectiveness average time saved due to the project is 0.023 hours per litre per household.

The study findings would be useful as an input into the ICR. The findings would provide essential material for evaluating achievement of development objectives and re-estimating the

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2. The overall project EIRR is 25.47% and the BC ratio is 3.43 after exclusion on PMU/DPMUs operation cost alongwith studies cost.3. The overall project EIRR is 28.29% and BC ratio is 3.45 after exclusion of PMU/DPMUs operation cost alongwith studies cost.4. The sensitivity analysis of the project reveals that the timesavings component of the Swajal Project has provided the maximum benefits. The range of EIRR% under difference conditions lies 5. The time saved by the women due to the Swajal Project is mainly utilized in household work (40% of saved time).6. 90% o the respondents opened that they were satisfied with the quality of Swajal water.

project rate of return.

28. Time Saving Study sample cutting across all BatchRs. 5,80,754

M/s Redecon India Pvt. Ltd.

1753(UP)

24/3/2003 31.05.2003 Final Report to be submitted

29. Dropping of VillagesRs. 9,87,925

M/s Knowledge Links Private Ltd.

198 (UA) 08.07.2002 9.10.2002 1. The percentage of dropping of villages is 15% as compared to 13% indicated in SAR.2. SO functionaries failed in dropped villages to facilitate the process of community mobilization which led to the lack of understanding of the project intent and processes at the community level.3. Gaps in Prefeasibility study and site appraisal4. Source Dispute.5. Community Dispute.6. Intervention by Jal-Nigam/Jal Sansthan during Planning.

1. GPs have been taken as units in future planning.2. GPs self-selection has been proposed for future Water Supply and sanitation Projects.3. The household survey will be included in pre-feasibility. The time for Prefeasibility will be increased to 7 days for better assessment.4. Sector Institutions will be involved in the process of project planning.

30. Comparative Study on approaches followed in different batchesRs. 1,75,000

Dr. M.S. Verma, Lucknow

368 (UA) 01-02-2003 30-04-2003 1. In the matter of grass root linkages, the PRI model appears to be better.2. As regards the availability of field based development exercise, the NGO were in a better position.3. The NGO system proved to be better in the matter of accounts keeping.4. The weakness of the GP in the field of software activities should be overcome by providing adequate training to GP and its staff by the experienced NGOs.5. The role of the NGOs should be limited to providing training to GP and its staff in the PRI-NGO model.6. The NGOs having good past record under Swajal Project should also be given a chance to work as SO independently. In short, NGO model should be continued.

The findings of the study report would be given due consideration while preparing the Project Implementation Plan of Follow-on -Project.

Technical31. Preparation for

standards Dr. H.C. Srivastava,

3/(UP) 10-01-1996 10-02-1996 1. Prepared basic rates of material and labour required for preparation of

1. In Batch 1, based on market rates the schedule of rates was

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prices and rates schedule Rs. 99,000

Director, IERT, Allahabad

estimates.2. Prepared schedule of rates for different items of work on the basis of basic rates of material and Labour using standard analysis of rates.

prepared for estimation of cost of works by the SOs/DPMUs on the basis of document prepared by IERT.2. In subsequent batches, the district wise rates were finalized accordingly for preparing DPRs.

32. Preparation of Technical Manuals for use by support organizationsRs. 4,73,000

Director, IERT, Allahabad

34/(UP) 10-01-1996 30-06-1996 Prepared technical manual for water supply, VEAP, Prefeasibility and feasibility manuals

The Manual was used as stepping stone by NIDC to finalize the Technical Manual.

33. Preparation of Technical Manuals for UPRWSES ProjectRs. 8,00,000

Director National Industrial Development Corp. Ltd., Delhi

6/(UP)

01-04-1996 30-09-1996 Prepared detailed technical manuals with drawings and bill of quantities for various works under water supply and environmental sanitation

1. The Manual was extensively used as reference book for engineering works in the project.2. SOs used details in preparation of Detailed Project Report as per technology option chosen by the community.3. Various guidelines were issued by technical unit using the system proposed in the Manual & field experience.

34. Development plan for regional schemesRs. 1,27,25,923

M/s DHV Consultants BV The Netherlands in association with MDP Consultant (P) ltd.

810/(UP)

27.04.2000 31.10.2001 1. Multi-village water schemes at present are not providing services in all the villages covered under the scheme.2. Operation and maintenance of these schemes is in very poor state.3. Cost recovery against O&M expenses is hardly twenty percent of the total O&M cost.4. Based on experience with MVWS community wants single village piped water supply schemes.5. Community is eager to improve the existing O&M situation in these schemes.6. A few villages have agreed to take up MVWS with village OH Tanks on consideration of reduced capital and O&M cost.

1. Rejuvenation of existing MVWS is taken on demand basis as per Swajal Principles.2. New MVWS is taken up on demand basis and community participation a per Swajal principles.

35. Appropriateness of Water Tariff during Operation and maintenance phase of Swajal Village UttaranchalRs. 6,66,550

M/s FEEBDBACK HSS integrated

39 (UA) 11.01.2002 11.09.2002 1. The norms for annual maintenance cost of the rural water supply schemes are high for many Swajal villages for the initial years.2. In the handpump schemes no collections are being made.3. The changes in tariff have largely been made to match expenditure levels and it is also influenced by the community perception of maintenance needs.4. Most of the expenditure in the Swajal Villages has been on maintenance and electricity.

1. The study report will be used in finalizing the O&M tariff in community based water supply system.2. The norms used by line department for tariff fixation will have to be amended in Community Managed Schemes as per the recommendations of the study.

36. Water Quality Monitoring in Bundelkhand regionRs. 52,28,750

M/s Tata Energy Research Institute, New Delhi

1630/UP 02-08-2002 In Progress 1. Detailed physical, chemical and bacteriological tests carried out for all water sources in Swajal villages of Bundelkhand shows no serious water quality problem as regards to physical,

1. Community motivated for regular chlorination and check for quality of water.2. More people trained on water quality monitoring.

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chemical quality of water2. In few cases bacteriological contamination in handpump water supply was observed and through sanitary survey and disinfections remedial measure taken.3. Community concern on water quality is confined to taste only and awareness to taste only and awareness on other aspects have to be generated.

3. Increased awareness of the community on quality aspects of water.

37. (ii) Water Quality Monitoring & surveillance in Kumaon regionRs 54,66,840

(iii) BHEL, Haridwar

(iv)322

(UA)

(v)

30.09.2002

(vi)30.03.2003

(vii) N/A (viii) NA

38. (ix) Water Quality Monitoring & surveillance in Garhwal regionRs 36,68,625

(x) M’s Feedback, HSS integrated

(xi)321

(UA)

(xii)23. 9.2002

(xiii)30.03.2003

(xiv) NA (xv) NA

(xvi)Environmental Expert

39. Strategy for preparation of village environmental management planRs. 1,21,800

Sri A.K. Roy, Director, Hazard’s Center, New Delhi

429/(UP) 04-03-1999 05-04-1999 1. Depending upon local site conditions of the village proper village environment plan to protect source and ensure sustainability of its discharge could be prepare.2. The plan should be village specific and full use of community experience and knowledge be taken while preparing it.3. Community has to continuously remain vigilant as regards to village environment and should develop its own rules and regulations4. Micro shed development plan and community approach towards it.

1. The study was used initially for preparing Catchment Protection Works Plans. 2. After creation of Uttaranchal, the report was used for developing CAP Strategy3. The study report will form the basis for developing plan for Multi Village Schemes.

40. Consulting services training of village environment plan for Batch 3 & 4Rs. 7,24,640

GB Pant Institute of Himalayan Environment and Development

811 (UP) 09-05-2000 07-07-2000 1. Depending upon local site conditions of the village proper village environment plan to protect source and ensure sustainability of its discharge could be prepare.2. The plan should be village specific and full use of community experience and knowledge be taken while preparing it.3. Community has to continuously remain vigilant as regards to village environment and should develop its own rules and regulations.

Training received by SOs and PMU staff was used in preparing community environment plan.

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Additional Annex 9. Borrower's Contribution

Introduction

1.1 The World Bank assisted Uttar Pradesh/Uttaranchal Rural Water Supply and Environmental Sanitation (The Swajal) Project, has been implemented in 1214 villages of Uttar Pradesh (357 village against the target of 350) and Uttaranchal (857 villages against the target of 650) against the target of 1000 villages. The Project covered 7 districts of Bundelkhand region of Uttar Pradesh namely Hamirpur, Jalaun, Lalitpur, Jhansi, Mahoba, Banda, Chitrakoot and 12 districts of Uttaranchal namely Almora, Bageshwar, Pithoragarh, Nainital, Champawat, Udham Singh Nagar, Tehri, Chamoli, Rudraprayag, Srinagar, Dehradun and Uttarkashi. The project involved rural communities in planning, implementation and operation & maintenance of water supply & environmental sanitation structures constructed and augmented pre- Swajal schemes under the project. Initially the project period was from July 1996 to May 2002, which was extended upto May 2003 on the request of State Governments to combat the time loss due to bifurcation of states, achieve more in Catchment Area Protection of water sources and monitor the critical O&M activities. The project was implemented through a Project Management Unit, Lucknow registered under Societies Registration Act, 1860 supported by 10 District Project Management units. A separate Project Management Unit, Dehradun, was formed as society on 5th March 2001 (which started functioning from 01.06.2001) after the bifurcation of the state on 9th November 2000.

1.2 The total project cost (Uttaranchal and Uttar Pradesh) was envisaged to be US$71.0 million, out of which, the World Bank loan was US$ 59.60 million. The loan amount was revised to US $ 40.7 million after two partial cancellations of US $ 7.2 million and US $ 11.7 million on 5th June 2000 and 3rd December 2002 respectively. The Project cost as estimated at various stages is given below:

(In million US$)S.No. Source SAR

Estimates Estimates after 1st

cancellation (06/00)

Estimates after 2nd cancellation (12/02)

UP UA Total UP UA Total 1. World Bank loan 59.60 22.80 29.60 52.40 25.90 14.80 40.702. GOUP/GOUA 3.80 1.96 2.15 4.11 1.69 1.48 3.173. Community

Contribution7.60 2.61 4.30 6.91 2.91 1.85 4.76

4. Total Project Cost 71.00 27.37 36.05 63.42 30.50 18.13 48.63

1.3 Though the number of villages in Uttaranchal is more than that of U.P., the reason for lesser share after second cancellation, is because the expenditure prior to 9/11/2000 (Out of a Total of US$ 21.53 million, US$ 5.24 million in UP and US$ 15.29 million in UT) incurred by erstwhile Uttar Pradesh was reimbursed to it as per MoU signed between the two states. The Component wise outlay at various stages is detailed below:

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(In million US$)Part Components Estimates After 1st

Cancellation After 2nd Cancellation

UP UA TotalA Strengthening and operation of

the PMU8.32 8.25 6.70 2.79 9.49

B Selection and construction of water supply and Environmental sanitation

60.21 52.72 22.10 13.68 35.78

C Studies and sector development 2.47 2.45 1.70 1.66 3.3671.00 63.42 30.50 18.13 48.63

1.4 As against the SAR target of US $ 71.0 million (Rs. 3007.6 million), the likely project completion cost is US$ 48.63 million. The cumulative expenditure (un audited) till 31st May 2003 is US$ 46.996 million (US$ 29.426 in UP and US$17.57 in UA). Reimbursement claims for a cumulative amount of US$ 37.866 million (US$ 23.786 in UP and US$ 14.08 in UA) have been submitted to GOI /World Bank. An amount of US$ 37.866 million (US$ 23.786 in UP and US$ 14.08 in UA) has been reimbursed so far.

2. Project Achievements

2.1 The project objectives are: (i) to deliver sustainable health & hygiene benefits to the rural population, through improvement in water supply and environmental sanitation services, which will increase rural incomes through time savings and income opportunities for women, test an alternative to the current supply driven service delivery mechanism and promote sanitation and gender awareness; and (ii) to promote the long term sustainability of the rural water supply and sanitation sector by providing assistance to State Governments to identify and implement an appropriate policy framework and strategic plan.

2.2 The Project has not only achieved its overall development objectives but it has also registered significant achievements in influencing National Policy on RWSES in the country. The project achievements are described below with respect to the various (underlined) components of the objectives: -

A. Delivering sustainable health and hygiene benefits to the rural population

A.1 Till the advent of the Swajal, providing safe drinking water was considered as an end in itself .The project made successful attempt to integrate construction of drinking water supply and environmental sanitation services with health and hygiene awareness.

A.2 The project emphasized that availability of safe and adequate water may not be enough to provide sustained health benefits, unless the users are educated to properly handle the potable water, its safe storage and disposal of wastewater. Therefore the project also aimed at educating people about the importance of personal and domestic hygiene for better environmental sanitation. The findings of the base line study and two repeat Health Benefit Studies undertaken by KGMC revealed considerable improvement in Key Development Objective indicators such as (i) washing hands before eating (from 59% to 85%), (ii) safe use of water (from 43% to 90%), (iii) safe disposal of infant excreta (from 41% to 44%), (iv) use of latrines (from 16% to 99%), in Uttaranchal and as (i) washing hands before eating (from 21.6% to 66.9%), (ii) safe use of water (from NA to 91.8%), (iii) safe disposal of infant excreta (from 3.8% to 56.9%), (iv) use of latrines (from 3.8% to 30.59%), in Uttar Pradesh.

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A.3 This also resulted in reduction in incidence of diarrhea from 14% to 3.6% in Uttaranchal, 13% to 5.4% in Uttar Pradesh as per the findings of the report.

A.4 The project had been a pioneer in the development of a Community Self-Monitoring tool called Healthy Home Survey. This tool was effectively used by the community especially women to regularly monitor personal, domestic and environmental hygiene and to promote behavioral changes.

B. Improvements in Water Supply Services

B.1 The number of villages to be covered under the project as per SAR was 650 for Uttaranchal and 350 for Uttar Pradesh. The project has covered 857 villages in Uttaranchal and 357 village in UP, which is an achievement of 121.14% in terms of village coverage. In terms of population coverage, the achievements were 12.97 lakhs (3.96 lacs in Uttaranchal and 9.01 lacs in Bundelkhand) against the targeted design population of 7 lakh indicating 185.29% greater achievement than the target. The communities (the unit being revenue village) were selected following transparent criterion based on their need, economic viability, technical feasibility, sustainability and willingness to pay. Implementation of project in six overlapping batches helped in applying the lessons and experiences of previous batches to the subsequent batches.

B.2 An innovative feature of the project worth replicating for RWSES sector is the Feasibility Process culminating in “Agree to do” meetings. Depending upon the age and the condition of the pre Swajal water supply system, the village communities were motivated to reorganize or augment the existing schemes in 100% villages, wherever feasible. The Feasibility Manual was developed and refined by the project for finalizing a community decision on technology option for the schemes. An emotional Exit of SO and DPMU takes place passing through the various processes of planning, designing and implementation, the “Atmarpan” of scheme by the community to itself. An Exit policy was evolved with the interaction of all the stakeholders.

B.3 Based on specific local conditions, the project has implemented diverse technical water supply options in the project villages, which were technically feasible and economically acceptable to the community. In Uttaranchal 1116 schemes and 357 schemes in Uttar Pradesh were constructed using both the conventional options and the innovative options. The conventional options included gravity water supply from springs and Gadhera (Rivulets) sources, deep bore India Mark II/III hand pumps schemes and Tube wells with Overhead tank in foothills and Bundelkhand. The innovative options included Rooftop Rainwater harvesting, Hydraulic Ram (Hydrams) scheme, Infiltration wells (IW schemes) and French wells (Uttaranchal Well) scheme. The upgradation of traditional water sources such as Naulas in Uttaranchal and dugwells as well as mini piped water supply in Uttar Pradesh were also attempted in some villages.

B.4 Water supply schemes have been constructed as per the Water Supply Manual published by the GOI. The Project has also developed its Technical Manual and guidelines for designing, construction, monitoring, and material testing etc. for ensuring quality of construction & material.

B.5 Rigorous quality control of construction materials viz. pipes cement; steel etc. has been adhered to. The material testing was done at standard laboratories of the region namely IIT, Roorkee, G.B. Pant University, Pant Nagar, HBTI, Kanpur and IIT-Kanpur. Besides the trainings to the engineers of Support Organizations and to Community members, the construction supervision by service agencies had also been done for ensuring quality of construction works and material.

B.6 While planning a water supply scheme, the water from the source was analyzed for its physical,

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bacteriological and chemical parameters as per requirement to ensure that it is safe for drinking as per the Indian Standards. Water Quality Monitoring and Surveillance by the community has been made an integral part of Project Implementation. In post Implementation Phase, consultants were engaged to facilitate regular chlorination, testing of residual chlorine in piped water supply systems and H2S strip testing for hand pump systems to ensure bacteriologically safe water. In the process they had to train the community on proper chlorination and H2S strip testing and establish regular Water Quality monitoring and surveillance system in all the project villages.

C. Improvement in Environmental Sanitation Services

C.1 The environmental sanitation in the project has four components namely - Human Waste Disposal (Household Sanitary Latrines), Solid Waste Management (compost pits and garbage pits), Waste Water Management (Drains and Soak pits) and Catchment Area Protection of water sources tapped for water supply. To motivate people in constructing individual works of environmental sanitation, subsidy approximately 40% of indicative cost of item for APL families and 60% for BPL families has been given. In practice, people contributed the balance amount between actual capital cost and the subsidy.

C.2 The unique achievement of the project was inculcating habit of using latrines (more than 99%) and achieving more than the SAR target of 50% coverage for latrine construction. In Uttaranchal, around 31,549 twin- pit latrines were constructed raising the coverage from 10% to 61% and 31,957 latrines in raising coverage from pre-project 3.8% to 29.37% in UP.

C.3 Drainage is not much of a problem in the Uttaranchal and in rocky areas of Bundelkhand. The drainage systems have been built in around 99 villages mostly in foothills of Uttaranchal and in 87 villages with clayey strata of Bundelkhand. Total 37,504 meters in Uttaranchal and 19,880 meters in Uttar Pradesh drains have been constructed as means of mosquito and disease control measures. The construction of drains was around 64 % of MTR target (49% Uttaranchal and 100% in Uttar Pradesh).

C.4 Where construction of long drains was uneconomical, 5330 soak pits in UP and 6647 in UT for disposal of wastewater in household were constructed so that wastewater did not create environmental nuisance. The total achievement is 123% of MTR target (105% in UT and 157% in UP).

C.5 In Uttaranchal, 7590 and in UP 4194 compost pits for safe disposal of organic solid wastes have been constructed, which is around 110% of the MTR target (98% in UT and 131% in UP).

C.6 For non-organic solid waste disposal, 5823 garbage pits were constructed in Uttaranchal and 6194 in UP against the MTR target of 5689 & 3064 respectively. The overall achievement is 137%, 102% in UT and 202% in UP.

C.7 In Uttaranchal, the full-scale CAP activities were taken during last two years of the project by identifying vulnerable villages where source has depleted below 15 lpm or reduced by 50% of previous measurements. The interventions under CAPW in 162 villages were of aforestation around Catchment of source and site-specific interventions for preventing erosion and recharging for surface sources. In 67 villages Assisted Natural Regeneration activities were undertaken. In Bundelkhand, massive plantation drive was taken up on the eve of birthday of Mahatma Gandhi in year 2002 (about 100,000 plants) in villages and surrounding areas. Deepening of ponds were also taken up as water recharging system. In Bundelkhand, an effort for locating water recharge structure through ground water modeling system (GMS-a computer software) and with GIS is being made considering underground strata information gathered from bore details of successful and failed handpumps bores.

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D. Increase in Rural Incomes through time savings and income generation activities for women

D.1 The Project had conducted Time Saving Study prior to Appraisal Mission on the basis of which economic analysis was undertaken in SAR. Subsequently the project has undertaken three Time Saving Studies (First after Batch 1,2 and 3, second after Batch 3X and 4 and final round cutting across all batches), to assess the sensitivity of Time Saving estimates of the SOs and to identify more scientific and exact methods of assessing Time Saved. The final round of Time Saving Study cutting across all batches has revealed that the benefit cost ratio was found to be greater than 1.5 in majority of the villages. The study has also revealed that the time saved by communities (3.5 hrs in Uttranchal and 1.59 hrs in U.P.) is much greater as compared to SAR estimates of 0.5 hrs for Hand Pump schemes and 2.5 hrs for Pipe Water Supply schemes. As a result of improved water supply & sanitation service, women saved considerable time in the project villages. Time thus saved is being utilized for supplementing the household income and childcare.

D.2 The project has encouraged and facilitated formation of Women self-help Groups in Project villages. Nearly 1045 women Self Help Groups have been formed in Uttaranchal and around 504 in UP. In U.P., these groups have saved Rs.40 lakh in all and engaged Rs.20. lakh amount in interloaning to encourage their members in income generation activities. An amount of Rs18.95 lakh was given to SHGs under Private Rural Initiative Programme (PRIP) . Based on the needs emerging from the grass root level, the women’s skills resources and backward and forward linkages readily available in the concerned areas, an Action Plan for the “Economic Empowerment of Women in Swajal Villages” was formulated. This Plan was linked to the PRIP scheme and the Linkage of SHGs to local banks for availing the Cash Credit Limit (CCL) facility for setting up micro-enterprises in rural areas having forward and backward linkages with the private sector.

D.3 The construction work done by community in the project has generated employment at local level. A rough estimate of skilled and unskilled labour (beside contribution) generated was around Rs 3 millions. Moreover, the savings in medical expenses and reduction in loss of man hours due to improved health cannot be quantified but has certainly improved the quality of life in Swajal Villages.

E. Test an Alternative to current supply driven service delivery mechanism

E.1 The innovative features and success of the project had attracted national and international attention. Many teams and individuals, including research scholars have visited the project. After observing the success of the Swajal Project, the GOI introduced a major policy change in the year 1999 in its Rural Water Supply and Rural Sanitation Programme. Sector Reform Project is currently being implemented in 67 districts spread over 27 States across the country on the principles of the Swajal Project. The Government of India has earmarked 20% of the funds under ARWSP for implementing projects in the Swajal way Now the Government of India has launched SWAJALDHARA all over the country from 25th December 2002. The testimony of performance of the borrower and implementing agencies can be gauged from the extract given below of Rajiv Gandhi National Drinking Water Mission guidelines.

“The rural water supply and environmental sanitation project of Uttar Pradesh (inclusive of Uttaranchal) namely the Swajal Project, is pioneer in the field of community empowerment, involvement of women in the process and community contracting. The present project (Sector Reform Project) owes a lot from all these projects.”

Furthermore, the Planning Commission, Government of India in its recent publication titled “Successful Governance Initiatives and Best Practices: Experiences from Indian States” has included a

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comprehensive write-up on the Swajal Project. The Planning Commission has aptly remarked, “ By introducing several innovations in a hitherto stagnant situation, the project has proved to be not only applicable but also replicable”

The main strength of Swajal had been transparency right from the Pre-feasibility stage to O&M stage transparency in dealings and dissemination of maximum information through all modes and mediums.

E.2. The challenges before the project was to develop a system, which embodies the philosophy of demand responsive approach, and provide an alternative to supply driven services delivery mechanism. The challenges before the PMU were to act as a facilitator and co financer (to provide assistance at appropriate time and ensure capital cost sharing by the community), as a monitor (the process and the progress) and as an agency to ensure the standards of construction, accounts and community development activities. The innovations and interventions at various levels are discussed in following paragraphs.

E.3 Interventions and Innovations at village level

E.3.1 Formation of Village Water and Sanitation Committees (VWSCs) as representative of users at the lowest appropriate level institution for managing WATSAN schemes and its linkage with GP is the major breakthrough in the project. Initially the “VWSC” was constituted as a sub-committee of GP under section 29(6) of United Provinces Panchayati Raj Act, 1947, which was repelled in the year 1999. In UP, the Jal Prabandhan Samiti (JPS) a committee of GP was authorized to look after all water supply matters. The VWSC members have been co-opted in JPS for effectively participating in all drinking water supply issues. The Government of Uttaranchal has agreed in principle to accord the legal status to VWSC as subcommittee of the Gram Panchayat in the forthcoming Panchayati Raj Act of Uttaranchal state. Moreover, the VWSC adopted byelaws in all 357 villages of Uttar Pradesh.

E.3.2 The Swajal Project for the first time introduced a Community Contracting model, which enabled the user communities to procure the construction material, services and works with the assistance of SO.

E.3.3 The management of investment funds by the community is a great leap towards the concept of community management of RWSES schemes. Representative of VWSC & SO operates the Joint Account for all the construction and community development activities during implementation phase. The VWSC and community have independently operated O&M accounts from the very beginning of Implementation Phase.

E.3.4 The capacity of VWSC & Community has increased in various dimensions such as account keeping, dispute resolution, technical aspects, maintenance of records, working together etc. The most important of all is that their knowledge is now a tool and they are not only users but also managers.

E.3.5 Mobilization of 84.93 million in Uttaranchal and Rs. 63.04 million in Uttar Pradesh as community share towards partial capital cost of the project is an achievement directed towards development initiatives of the user community. Users are paying towards water charges and VWSCs are maintaining O&M account on their own. Even the users of public stand posts and handpumps in project villages are paying towards water charges, which is a unique achievement, as so far payment of water charges by such section of community was not forthcoming. It is worth mentioning that about 88% of the O&M charges have been collected in UT and 83.13% in U.P. by the community and deposited in their bank accounts, which is also 57.4% higher in UT and 61.89% higher UP, than the actual expenditure on O&M.

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E.3.6 For the first time, Swajal Project has facilitated insurance to cover damages to structures during the post- implementation phase, as a sustainability initiative which would help the communities to protect investments in the event of natural disasters, which are quite common in many parts of Uttaranchal. Around 112 VWSCs have purchased insurance policies with the facilitation by PMU. The annual premium is around 0.34 % of cost of Water Supply schemes. The insurance is initially for 3 years, for the total cost of the completed water supply scheme. The 50% of premium was paid by the VWSC and 50%by the project under state share. After 3 years, if the VWSC wants to extend the insurance of their scheme they will have to pay 100% of the premium. In Bundelkhand and foothills the need for insurance was not felt, as most structures are not susceptible to natural calamities

E.3.7 During sustainability monitoring, it was realized that sustainability of water source is of prime concern. In Uttaranchal, 229 schemes were identified where source discharge has reduced from 15 lpm or by 50% of the recorded discharges at various occasions. As such Catchment Area Protection Works as an intervention in the shape of micro water shed development works were undertaken during the last one and a half year of the project. Thus linking catchment area protection works with water supply is an important lesson. The GOUA has taken policy decision in this respect.

E.3.8 “Water Metering System” in one of the villages of Bundelkhand region has been established with all Stand posts and Private Connections having a water meter. Primary findings reveal that this has led to minimization of wastage of water to a large extent.

E.3.9 Community Action Plan: During the planning phase, the community with the assistance of SO, prepares three-action plan for the implementation phase namely: Technical Plan (for water supply, Latrines and environmental sanitation facilities), Contribution and managements Plan (for cash and labor contribution, monitoring and evaluation and operation & maintenance), community empowerment Plan (including plans HESA, WDI, NFE).

E.3.10 The incentive for early completion of schemes was given to the community. Some communities reflected high level of motivation and eagerness to execute the work before the scheme cycle without flouting the process. In Batch 3X and 4 villages, out of 357 villages, 158 villages commissioned their schemes on time where as 09 villages commissioned their schemes before the stipulated scheme cycle. For these villages, an award of Rs 15000/- was announced.

E.4 Interventions and Innovation at SO/ Intermediary level

E.4.1 Beside NGOs, who were engaged as Support Organizations in 73.67% of villages in UP and 89.26% in UT. The Private sector firms, Government Organizations and Gram Panchayats have also acted as SO in the experimental Batch 3x. The experiment with other SOs had been imperative because of lack of eligible NGOs. GPs are owners of water supply assets under the 73rd Constitutional Amendments Act, and are closer to communities compared to the NGOs. However, experience has shown that each type of approach has its own merits and demerits such as GPs have fallen short in community development & accounts keeping in comparison to NGOs. The comparative study of alternate SO models under the project has helped us in identifying appropriate policy framework for upscaling reforms in the entire state.

E.4.2 The project has provided extensive software and hardware trainings to SO staff for their capacity building. Due to this the fund handling capacity, engineering skills and community mobilization skills of SOs have increased considerably. Furthermore, this increased capacity will have long run benefits for other similar community based projects.

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E.4.3 The project did not prescribe the practice of maintaining Measurement Book during construction. Alternatively, the system of monitoring through milestones and ensuring concurrent supervision of construction was introduced to avoid bureaucratization of procedures. The cost control was exercised through standardization of unit design, bill of quantities and recording deviations, if any, as per local site conditions, preparing work account, conducting joint inspection by VWSC, SO, & SA. However, in later batches, some of the SOs have adopted the time tested measurement book system.

E.4.4 A very significant participatory tool was used by the SO to mobilize the community and get the beneficiaries to start acting together in group activities, known as SARAR (Self Esteem, Associative Strength, Resourcefulness, Action Planning and Responsibility) tool. Basic concept was to activate the community to identify their problems, get necessary information, analyze them, find solutions, decide the action plan and take responsibility to implement it.

E.4.5 Establishing O&M system during Implementation Phase by the SOs in the villages was intervention tried in last two batches. Refresher O&M training, folk media and mass media campaign further reinforced the process.

E.5 Interventions and Innovations at PMU/DPMU level

E.5.1 The six monthly Sustainability Monitoring during post Implementation Phase is a new concept developed through phases, which has undergone three transformations. From “Sustainability Monitoring Exercise (SME): through Village Immersion Programme (VIP) to Rapid Sustainability Appraisal (RSA) to Sustainability Evaluation Exercise(SEE). The SEE/RSA was developed as a participatory tool for assessing sustainability of completed schemes in terms of technical, financial and institutional aspects of O&M. A comprehansive Sustainability Index (SI) was formulated, on a scale of 100.A process to rank the villages as Highly sustainable (HSV), (SI >75%), Moderately sustainable (MSV), (SI between 50-75%) and Least sustainable (LSV), (SI <50%), was done to identify low performing villages and taking mid-coarse corrective actions. The analysis of this exercise revealed that a majority of the schemes (74% in UT and 58% in UP) are HSV. 24%in UT and 39% in UP fall in the category of MSV and 20% in UT and 3% in UP are LSV.

E.5.2 A Management Information System (MIS) was introduced in the Project from the start of Batch 1. This comprehensive MIS was unique for implementation of any rural development project. The computerization helped a lot in timely generation of reports viz. activity wise summary, activity wise detailed reports of each village, village wise report on all activities, status of SHGs, contract management, accounting, training’s and CAP activity etc. SO wise reports, reports for decision making at PMU/DPMU level and report for World Bank/ State Government/ Dignitaries.,

E.5.3 A system of motivation of staff of PMU/DPMU was designed. Besides fringe benefits to the deputationist, performance based annual salary increase for consultants and equivalent pay package for hired staff was formulated. The skill mix of government sector with private and NGO sector and gender balance in staffing along with motivational courses were the ingredients of the personnel management system.

E.5.4 The IEC strategy has three distinct components viz. Inter personal communications, Folk media campaign & mass media compaign.

E.5.5 The PMU had conducted Concurrent and Process Monitoring of Batch-2 Implementation Phase, Concurrent Monitoring of Planning Phase and Implementation Phase of Batch-3, 3X, PRI and Batch-4.

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The major objectives of these assignments were to monitor and also document the process in respect of scheme cycle, so that the effectiveness, usefulness and momentum of the approaches advocated by the project could be assessed and lessons could be drawn for further improvements. These studies helped a lot in improving the approaches, procedures and project interventions from one batch to next. These interventions ensured that the axiom of Mahatma Gandhi that "Purity of process is much more important than the work itself" is fulfilled.

E.5.6 The PMUs have conducted various studies like Concurrent monitoring of Planning Phase and Implementation Phase activities in villages of all Batches, impact on Health, impact of technical trainings etc. and used their findings in future implementation.

E.5.7 The innovative features and success of the project had attracted national and international attention. Many teams and individuals, including research scholars had visited the project. They had met the village community, interacted with them and given their valuable comments, besides their increased self-learning in the process.

E.5.8 The Swajal Project has provided technical assistance to various Government of India programs such as Swajaldhara, Sector Reform Project (Jal Nidhi) and the Total Sanitation Campaign.

E.6 Interventions & Innovations cutting across all the levels

E.6.1 The Project has developed agreements for execution of Planning Phase which were signed between SO and PMU and Implementation Phase, which were signed by SO, PMU and VWSC. Transparency had been the main tool of Swajal approach. It was adhered to at every level. Swajal gave due importance to the transparency in dealings and in dissemination of information through public meetings, interactive discussions and wall writings. The spin-off effect was that the villagers insisted on transparency in other developmental programmes too.

E.6.2 Capacity building at various levels was an important component of the project. It was designed to improve the capacity and capabilities of village community staff of SO and personnel of PMU/DPMUs for the efficient implementation of the project. In the initial four years, the capacity-building strategy included the hiring of the Centre of Development Studies, Administrative Academy, Nainital, to undertake the Community Development trainings, and, I.I.T. Roorkee for technical & engineering trainings. The actual participant days in various trainings were two times greater as compared to the SAR target of participant days.

E.6.3 International and national cross training visits by Project Staff helped a lot in internalizing the demand responsive approach in Watsan Sector.

F. Promoting Sanitation

F.1 Open defecation in field is the common practice in villages. This results into unsanitary conditions in the village. Though women and older disabled persons felt the need for household latrines, yet this required a behavioral change as regards to the habit of open defecation. The intervention of cross-visits to other villages and incentive to VWSCs for 100% latrine coverage were factors, which were instrumental in enhancing the communities' demand for household latrines. An intensive drive through Inter Personal Communication was carried out. The training of village masons preceded by successful IEC campaign has been instrumental in wide acceptability of household latrine raising the latrines coverage from 10% to 61% in Uttaranchal & 3.8 % to 30.58% in Bundelkhand.

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F.2 The community-based tool of Healthy Home Survey, which monitored behavioural aspects like washing hands after defecation (which rose from 29.4% to 97.7%), washing hands before eating (which rose from 21.6% to 66.9%), safe use of water (which rose from NA to 91.8%), safe disposal of infant excreta (which rose from 3.8% to 56.9%) and use of latrine (which rose from 3.8%. to 16.7%).

F.3 The incentives were also given as a part of the HESA(Hygiene and Environmental Sanitation Awareness) strategy. The individual households were motivated to construct sanitary latrines. The incentive amount was paid to the VWSC to achieve more than 60% latrine coverage. Maximum incentive for the VWSC was Rs. 25000/-. Till date, 101 villages have received the incentive and have used the incentive amount for O&M or development work.

G. Promoting Gender Awareness

G.1 The women being the main stakeholder of WATSAN sector, the project conceived the “Women Development Initiatives” component which focused on strengthening the role of women at all stages of the scheme cycle to increase their capacity and empower them to participate in an informed and decisive manner in the project planning and implementation, for the project’s long-term sustainability. The project promoted the role of women in six important areas namely-(i) representation of women in VWSC, (ii) Focus on women in HESA and NFE (Non-formal education), (iii) Skill and management training,(iv) Access of SHGs to formal credit system, (v) Formation of tap stands groups, and (vi) Female village maintenance worker. In addition to several trainings and workshops conducted under the WDI component at the state, district and block-level; 'melas' and ‘cross visits’ to women's empowerment projects in other states, were organized for further exposure and experience-sharing. The above interventions have enhanced the capacity of rural women who are now demanding to be included in all the decision-making relating to the project.

G.2 Women’s representation in VWSC (the major stakeholder of this project) has been outstanding. There are a few VWSCs in which all members are women. The women representation in VWSC happens to be around 40% against the provision of 30%. In majority of the villages, the ‘Treasurer’ of the VWSC is a woman. Enhanced women participation has improved the management of schemes.

G.3 The project has celebrated International Women’s Day on 8th March every year by involving women SHG members in cultural activities/ functions.

G.4 The involvement of women at every level i.e. Village, SO & PMU/DPMU level, has increased the sustainability of the project. At the village level, women representation in VWSCs and activation of SHGs have increased the income of women and made a dent in the power structure at local level. At SO level, around 490 Woman month of employment was generated with an average monthly income of Rs. 4000/-. At PMU/DPMU level, 1105 woman month of employment with an average of Rs. 12,000/- per month was generated. To put it differently, the project has successfully played the role of a catalyst in empowering the women in project villages.

H. Long term policy framework and strategic plan for the Sector

H.1 The study to prepare long-term policy framework and to develop a strategic plan for the sector was assigned to M/s DHV Consultant, B.V. the Netherlands in April 2000. The Consultant has submitted the final report for both the states in July 2001.

H.2 The GOUP/GOUA have formulated a Vision Document for the RWSES sector outlining the policies to be followed in the sector. The policies enunciated in the Vision Document are largely influenced

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by the outcomes of the experiments piloted in the project and recommendations of the Sector Study. The salient features of the Vision Document are as under:

Integration of water supply and environmental sanitation facilitieslEnsuring availability of potable water and bringing water to the doorsteps in all 97084 villages of the lStateSafe disposal of human excreta by raising the level of sanitation from 19% to 100% by providing lSanitary Latrines to individual householdsCost sharing of schemes by the communitieslGovernment to solve Drinking Water Quality problemlIn order to protect the endangered and scarce water resources, the government to formulate an lintegrated ecological management perspective plan for implementation on cost sharing basisHandpump installation on initiative and cost of the community and Government to ensure their source lsustainabilityPriority to be given to the under-served communities and rehabilitation and reorganization of existing lschemesScheme ownership with Panchayats while day to day management with Village Water Supply & lSanitation Committees (Water Management Committees of Gram Panchayats) for Single Village Schemes and Regional Water Supply & Sanitation Committees for Multi Village schemesState Water & Sanitation Mission (SWSM) to function as a Sector Advisory Body to the GovernmentlSelection of Water Supply and Sanitation Service Agencies by Panachayats in Open Competition lReorganized Jal Nigam and Jal Sansthans will aim at lower overhead, less bureaucracy, and faster and lmore efficient delivery and installationSubsides will be temporary and scheme-based lMarket development for sanitary goods and services- The government will in collaboration with lmanufacturers and suppliers, formulate and implement an action plan for market development for sanitary equipment and wares, to make it attractive for the private sector to make the related goods and services available in the rural areasGovernment to launch strong IEC Campaign to motivate and educate the rural communities and all lother stakeholdersGovernment to conduct capacity building program for the community and Panchayats at all levelslThe government will contribute to an enabling environment by introducing and/or strengthening lrelevant legislation

The total cost of Rural Water Supply and Environmental Sanitation facilities for 21 years of the Action Plan is Rs. 700.3210 billion in the state of UP. The share of the different funding agencies will be in the following proportions:-

Community 31.04%1.Government Of India 22.24%2.Government Of Uttar Pradesh 9.61%3.World Bank 10.12%4.Other Donar Agencies like UNICEF, Danida etc. 8.45%5.Panchayati Raj Institutions 11.59%6.Private Sector 6.96%7.

The mopping of the private sector will be the hallmark of this Action Plan, due to the provision of lsingle village water scheme, which would be bankable Proposition.The private sector will be attracted to take up infrastructure development while financial institutions lshall be geared to provide financial backup to the private sector

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Apart from community contribution towards the cost of infrastructure development, PRIs will also be lrequired to contribute a portion of their income from other sources. Government will facilitate to bridge the gap of finances if any, by arranging loan from banks, financial institutions to PRIs.

H.3 Both the State Government has submitted the proposals for follow on project for scaling up the Swajal philosophy. The proposals are under the consideration of the Bank.

H.4 The PMU has given the assignment of preparation of Development plan for regional scheme (Regional Study) to M/s DHV Consultant, BV, the Netherlands for the Bundelkhand region. The technical and financial aspects of Multi village scheme and most importantly the institutional arrangements for ushering concepts of community participation and cost sharing were studied.

3. Project Constraints & Areas of Concern

1. The creation of a separate state- Uttaranchal on 9.11.2000 and the subsequent bifurcation of the project affected the speed of project implementation. Significant time and effort had been lost in bifurcating project costs, establishing a Project Management Unit (PMU) in Uttaranchal, and setting up systems to effectively transfer responsibilities from PMU, Lucknow to PMU, Dehradun reconciling & setting the accounts between two units, signing amended legal documents with the World Bank.

2. The project implementation structure was independent of Panchayat Raj Institution and line departments, like Jal Nigam, various Jal Sansthan, Panchyati Raj Department. Operationally independent project structure might have facilitated a better implementation, but it has not tested the replicability of the model for scaling up by using existing sector institutions.

3. Inspite of having demand and a felt need for water and willingness to pay, some villages could not be taken up in Swajal owing to high per capita cost and benefit cost ratio less than 1.5. The selection criterion for villages needs to be reviewed critically.

4. The project had trained Village Maintenance workers for the operation and maintenance of schemes. However, quite a large number of VMWs got employment elsewhere. This necessitated training of new VMWs or preferably a group of people from each village.

5. As per the loan agreement para 31 of schedule-1, since the development plan for regional multi village schemes is not developed, the regional schemes could not be taken up under the project the plan in form of findings of the study were made available for Implementation in late 2001. Based on the study, two multi-village water supply schemes have been taken up in UP where work is in progress. In Uttaranchal, few joint schemes covering two to four villages for water supply schemes have been taken.

6. Natural disasters such as landslides, cloudburst, earthquake etc. are quite common in many parts of Uttaranchal. Natural disasters caused damages to 30 water supply schemes, which were under O&M phase. These schemes are spread over across the state. These schemes had to be rehabilitated under mitigation plan with higher cost sharing (35%).

7. Depletion of Ground Water table and Chemical Contamination problems are specific constraints in the Bundelkhand region. The depletion of natural water sources in the hills is of prime concern. Out of the 857 villages taken up in Swajal Project, 79 villages have exhibited a discharge depletion of more than 50%. Further in 189 villages the source discharge has decreased below 15 lpm. In these villages, the Catchment Area Protection interventions were executed to sustain the water sources. Even in the Bundelkhand region

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the Ground Water table is lowering.

8. The contagious effect of non-payment of water tariff or payment at much lower rates in non-project villages threatens the operational sustainability of the Swajal schemes in the future.

9. An analysis of the SAR shows that ideally the ratio between software and hardware cost was around 40:60. However, the actual figures are 31:69 in case of Uttaranchal and 49:51 in case of U.P. Higher software cost is the foremost concern for replicability.

10. The Swajal is a subset of “Gram Sawarajya ”, a dream of Mahatma Gandhi. A lot is still to be achieved, to realize this dream. However, the strength of project lies in converting concerns and constraints into credentials

4. Lessons Learnt

1. The effective and efficient functioning of PMU/ DPMUs has reinforced the hypothesis, that proper orientation and training, a mix of skills, experience and gender can work in tandem to achieve positive results.

2. It has been proved that the partnership between village communities, NGOs and the government, where the government takes the role of facilitation and co-financing, has worked successfully.

3. The SOs and VWSCs were given unsecured advances. The PMUs, being a registered society, do not have the legal protection under Land Revenue Act. Though the project has successfully recovered the unspent/ overspent money from the defaulting SOs/ VWSCs.

4. The project has demonstrated that the communities can efficiently and effectively handle dispute resolutions, material procurement, financial transactions and record/ book keeping in a satisfactory manner, when properly trained.

5. Catchment Area Protection Works and water supply scheme construction works should be implemented simultaneously so that the sustainability of the tapped water source could be monitored during the project period itself.

6. The project has largely demonstrated that as long demand responsive approach is adopted, the communities are willing to contribute towards capital cost and plan implement, operate and maintain their own schemes.

7. The project has demonstrated that the alternative delivery system vis-à-vis the present top down government-dominated system is not only desirable but also feasible in the sector.

8. A 13% village drop out rate was envisaged in the SAR. However, the experience has shown a higher drop rate of 15% (UP+UT) at end of the project. The reasons for village drop out are manifold and range from genuine community level problems (such as source dispute, social dispute etc.)

9. There is an enormous amount of capacity building in communities and the NGOs. The methodology of the project can be successfully carried over to other development areas.

10. A gender balance approach is important to ensure that both women and men have the same

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opportunities to influence and control the new services and share its benefits.

11. Observation Study Tour and Exposure visits have been found to be an effective tool in creating necessary awareness and in changing mindset of policy makers.

12. The possibility of misappropriating and misusing the funds is minimal if transparency at each stage is adhered to and monitored.

13. Convergence with other development programmes is desirable. For proper utilization of resources and to avoid duplication of efforts, project components like WDI, NFE, HESA, VEAP, catchment protection etc. should be done in collaboration with other government/non-government departments and agencies.

14. Irrespective of source of funding there should be uniform policy as regards to capital cost sharing as well as operation and maintenance. Otherwise the current systems are unsustainable.

5. Bank's Performance

5.1 Bank performance in project identification, preparation assistance, appraisal and supervision has been Highly Satisfactory. Visits of the Supervision Missions were of great help in expeditious implementation of the project components. The field visits by the Mission Members provided objective and useful feedback for remedial measures. On vital issues, concurrence of the Bank was received expeditiously.

5.2 The Task Managers never felt tired to impress upon the GOUP and GOUA in wrap up meetings and meetings with the Chief Secretary/ Agriculture Production Commissioner and various Secretaries, Finance Secretary/Principal Secretary to support the project philosophy. It was owing to the pragmatic approach of the Bank that the Project was extended for a year more, so that the CAP works could be under taken and six monthly monitoring O&M phase activities through RSA was possible.

6. Borrower's Performance

9.6.1 Performance of borrower and implementing agencies in preparing and implementing the project has been Highly Satisfactory. Fund flow never remained a problem through out the project. Without any formal power and authority, both the PMUs played a meaningful role in maintaining co-ordination with line-departments.

7. Looking Forward

7.1 There is no subject more important than water (except air). Access to water distinguishes the poor from the non-poor. If the water supply systems are not managed properly, it is the poor who would suffer the most. Higher level of water supply with adequate reliability and equitability is no more a commodity for charity. Proper management of water supply systems needs treating water as a common property and water supply services as an economic activity meant for economic good rather than conventional thinking that water is a natural gift and that water supply should be free of cost. The Government of Uttar Pradesh and Uttaranchal are committed to the following VISION:

“The States shall facilitate the increase in service level of potable drinking water by installation of one tap in each household of each village, mainly through Single Village Pipe Water Supply schemes, and simultaneously ensuring water quality and source - sustainability; and, increase in level of

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household sanitation coverage to at least 100%, there by making villages free from open defecation, along with bringing about behavioral change for improved hygiene habits, under demand- driven and community managed schemes, for achieving sustainable health benefits, and reducing incidence of Diarrhea to below 4%, amongst children below five years, by the year 2025, through Information, Education, Communication, Capacity Building and Empowerment of communities and Involvement of Panchayati Raj Institutions, NGOs, Private Sector, and the Financial Institutions.”.

7.2 The Government of Uttaranchal is committed to the following vision:

" The rural local government in partnership with rural communities; shall plan, design, construct, operate and maintain their water supply and environmental sanitation services as per their changing demands; for attaining sustainable health and hygiene benefits and ever increasing quality of life; with the assistance of government through its self sustaining sector institution (s), which shall act as facilitator and co-financer".

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Additional Annex 10. Sustainability Evaluation Exercise Analysis

Sustainability Evaluation Excercises (SEE) is a methodology to assess the existing status of Project villagees on certain pre-defined parameters where water supply and sanitation schemes have been completed. The objectives of SEE are as under:

To assess the status of schemes completed for six months or more lTo categorize the villages on a sustainability scalelTo make micro-level interventions in the villages falling in various scales of sustainabilitylTo make macro-level policy adjustments at DPMU/PMU levels on the basis on feedbackl

lSEE Methodology

Conduction of SEE by DPMU stafflFormation of teams at the DPMU levellAlloting villages to each team along with date of visitslAdvance intimation of VWSC regarding date of visitlData collection through observation, FGD and semi-structured SEE questionanairelParticipatory evaluation through SEE indexlData analysislFeedback to the VWSC on problems, issues and interventions planned at the village levell

A Service is sustainable when:It functions and is being usedlIt is able to deliver an appropriate level of benefitslIt remains operational beyond the life cycle of the initially installed equipmentlIt has all its O&M cost recoveredlIts management is institutionalizedlIt requires feasible external support onlyl

These qualifications point to different aspects of sustainability under each of which number of issues need to be addressed.

Longitudinal Analysis of SEE (Uttar Pradesh)Indicator SEE SEE SEE SEE SEE

2 3 4 5 6April 2001 Oct 2001 April 2002 Oct 2002 March 2003

SEE villages (No.) 53 68 229 243 357Fully Functional Schemes 86.8% 98.27% 98.11% 95.68% 97.19%Partially Functional Scheme 13.2% 0% 0% 2.56% 1.43%Non-functional Scheme NIL 1.73% 1.89 1.77% 1.38%Chlorination practices 40% 33.6% 10.5% 22.63% 63.87%Coverage of HSL (No.) 2190 3508 12205 14252 20631Use of HSL 99% 99% 95.3% 91.85% 98.20%O&M Collection after Commissioning against Target

24.26 50.63 29.09 65.63 81.77

O&M expenditure against collection (cumulative)

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Indicator SEE SEE SEE SEE SEE2 3 4 5 6

April 2001 Oct 2001 April 2002 Oct 2002 March 2003HP 4.9% 23.6% 5.58% 11.93% 13.90%Tube well/ Pumping 40.06% 23.74% 31.45% 36.70%Mini Pipe Water Supply 16.85% 5.11% 1.17% 15.62%No. of SHGs 32 59 83 177 280% Highly sustainable village NA 13.24% 5.68% 21.40% 58.19%% Medium sustainable village NA 54.41% 48.47% 47.74% 38.70%% Least sustainable village NA 32.35% 45.85% 30.86% 3.11%

Longitudinal Analysis of SEE (Uttaranchal)Indicator SEE SEE SEE SEE SEE

2 3 4 5 6April 2001 Oct 2001 April 2002 Oct 2002 April 2003

SEE villages (No.) 113 258 304 474 648Fully Functional Schemes 85 96 83 87 92Partially Functional Scheme 12 3 15 12 6Non-functional Scheme 3 1 2 1 2Chlorination practices 44 55 52 68 82Coverage of HSL (No.) 3659 8879 11068 16026 2285

1Use of HSL NA NA 54.88% 57.82% 60.39%O&M Collection after Commissioning against Target

NA NA NA 40.00 115.87

O&M expenditure against collection (cumulative)HP 3% 20% 10% 40% 15%Rain water harvesting - - - - 26%Gravity 20% 35% 29% 75% 27%Mixed - - - - 33%Pumping 68% 44% 58% 114% 45%No. of SHGs 40 194 343 701 1046% Highly sustainable village NA NA 27 31 29% Medium sustainable village NA NA 46 58 64% Least sustainable village NA NA 27 11 7

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Additional Annex 11. Summary of Stakeholder Workshops held in Uttaranchal and Uttar Pradesh

Stakeholder workshops with Swajal stakeholders comprising representatives of Support Organizations, Village Water and Sanitation Committees, Self Help Groups and District and State level Project Management Units were organized on 22nd May 2003 (Kathgodam) and 24th May 2003 (Dehradun) in Uttaranchal and on 30th May 2003 at Lucknow in Uttar Pradesh. to obtain feedback on the planning and implementation process adopted in the project, essential lessons learnt, and suggestions for further improvements that could be achieved to make the Swajal approach even more effective. Following is a summary of the main conclusions and recommendations emanating from the discussions in each of the 3 stakeholder meetings, with focus on "suggestions for improvements":

Planning Phase Issues

Selection of Villages:Need to prioritize medium and small sized villages with acute problem of safe water and sanitation, lhigh percentage of Schedule caste and backward population.Choosing a cluster of villages in one geographical area for better coordination and management of lvillagesNeed to give higher priority to community demand for inclusion in the project. lNeed to adhere to project guidelines on village selection like time saving, availability of water less than l15 lpcd, willingness to pay and demand for water supply and sanitation.

Community Mobilization:Importance of ensuring equal accessibility to all caste groups and emphasis on overcoming political lrivalries.Importance of promoting healthy and discouraging unhealthy practices through pictorialslMeaningful representation of SC/ST not possible in few cases because of strong social hierarchy in lsome villages and inability to pay in many cases.Short scheme cycle -a constraint for SOs to devote adequate time towards ensuring effective lparticipation of underprivileged such as SC/ST.Importance of exposure visits as an integral part of community mobilization.lImportance of cluster meetings and regular village level meetings.lEffective use of mapping to involve communities and through ASARDAR tools, folk media, drama, lvideo shows and wall writings.Importance of HESA, WDI, NFI, functional literacy initiatives and involving children in clean village lcampaigns for effective community mobilization.Need to ensure greater involvement of children in project activities and continue NFE through out the lscheme cycleNeed to ensure greater involvement of DPMU in the program.l

Performance of Community Worker (CW)/Community Technician (CT) in the project:CW/CT could devote more time and were accessible during and after project as they came from village litself.In villages with political rivalries and social complexities, it might be better to have CW/CT from loutside to be able to take an objective stance without getting embroiled in the politics.VMW should necessarily be from the village.l

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Technology choice in villages:Various technologies discussed with communities in villages on parameters like appropriateness, ease lin operation and maintenance, cost of operation and maintenance and capital contribution etc.Options on various models of sanitation also discussed with communities (e.g capsule model of HSL)lCluster approach discussed with communities which resulted in communities choosing Mini Pumping lschemesWater recharge and Water Management Plan should be essential component of the programlRainwater harvesting and plantation should be promoted for source protectionl

Implementation Issues

Technology choice in villages:Quality testing of materials should be done prior to its delivery at villages.lCommunities should take time and discuss before finally selecting their optionlProblems of dry bore and decline in water table in certain areaslSites had to be changed on account of unavailability of good source which resulted in problems in limplementation phaseCommunities lack of trust on certain technologies in spite of best information furnished by SOslResistivity survey should be done in Planning phase itself.lAll members of VWSC should be involved and cluster groups should play more active rolelMaintenance of Hand pumps installed by external agencies is a problem.lWater tariff should be based on no. of persons in a household in case of PWS schemes.lBefore technology choice communities should be taken on exposure visitsl

Financial Management:It should be ensured that learned/experienced people become part of the purchase committeelTraining module should be developed for imparting training to purchase committeelCommunities with learned/experienced members are procuring goods without the support of SOs but lwhere members are not literate are still seeking support of SOs.Need for high priority to ensuring transparency in all dealings related to the project.lNeed for continued training on accounts bookkeeping and following it up.lBook keeping training should be done on a regular basis.lTraining should be based on needs, and capacity of available of trainers. It should be followed up by lrefresher training and its impact should be evaluated.VWSC Accounts maintenance should not be joint as VWSCs get reluctant to take responsibilities and lexcessively dependent on SOs.

Hygiene and Environmental Sanitation Awareness (HESA):Priorities shifted across the scheme cyclelInterventions should be based on capacities and choices of communitieslVillage influencers like Tai (Community Health worker) etc should be involved in the projectlContinued interventions required for behavioral changelWDI Plan should be implemented across each clusterlOne SHG per cluster should be formed and these groups should be strengthenedlOutput of PRIP should be closely monitored.lHealthy Home Survey should be supplemented with Health Camps and people observing sound lpractices should be recognized and awarded.The concept of Swajal Saheli Samooh could not find enough strengthl

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SHG has resulted in better coordination amongst women, increase in their self confidence and decision ltaking capacitySHG exposure visit should be arranged more oftenlMore number of trainings should be organized for capacity augmentation of SHGslSHG formation should not be done in a hastel

Efficacy of incentive scheme (in UP):This resulted both as a motivator and a de-motivatorlIncentive should be based on targets given.lEven communities should be involved in incentive schemelThis has adversely affected the implementation process and affected the quality of the program and lrelationship amongst VWSC, SOs and DPMU. Incentive should be based on both timely completion and quantum of works donelThe geographical conditions should be kept in mind while deciding incentiveslIncentives resulted in motivation of VWSCs and some VWSCs got 100% sanitation coveragelIncentives should be given in villages itself, which would mean recognition amongst own people.l

Constraints felt by Support Organizations:Inordinate delays in final settlement of VWSC accounts (particularly in UP) on account of lack of lPMU responsiveness. Responsivness of PMU and DPMU highly dependent on proactive and dynamic leader.lLot of time and energy spent responding to the requirements of PMU and DPMU.lSuggestions and feedback given to PMU were not always taken into considerationlNeed for greater emphasis on gender sensitization and O&M planlProactiveness of DPMUs not always matched by PMU. l

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Additional Annex 12. SWAJALDHARA Programme - MOU

The State Govt. has prepared a comprehensive Vision Statement, Action Plan, and agreed Time Frame for initiating and scaling up reforms in the sector addressing institutional reforms, Integration of water sanitation and hygiene, capital coast sharing principles, water tariff, Operation and Maintenance of the system and institutional mechanism for implementation, role of Panchayat Raj Institution, NGO,s and CDOs, water quality, water conservation measures including legislative action . The highlights of Vision Document 2025 and Action Plan for 21 years have been given in para 8.02 of borrower's evaluation.

In order to avail funds under Swajaldhara I and II, the State Governments would enter into Memorandum of Understanding (MOU) with the Department of Drinking Water Supply, Ministry of Rural Development, and Govt. of India. There would be commitment of the State Govt. to the reform principles in the Water and Sanitation Sector, to be promoted through out the State.

The said the draft MOU takes into account the state specific factors and incorporates milestones which are in consonance with the reforms principles laid down in Vision Document 2025 and 21 years Action Plan. MOU lays stress on adherence to the reform principles by all the stakeholders and incorporates action points, which address the issues of quantity, quality conservation and sustainability of drinking water sources and improved sanitation and hygiene in the community. Action points for all stakeholders and implementation time frame has been laid down in MOU, which shall be put up to the State Cabinet for clearance before the same is entered into, with the Govt of India. Copy of the Draft MOU is as follows:

Draft for Memorandum of Understanding (MOU) to be signed between GOUP and Government of India for

Implementation of SWAJALDHARA Programme

Memorandum of Understanding

This MEMORANDUM OF UNDERSTANDING (MOU) is made on the --- day of July 2003 BETWEEN the Governor of Uttar Pradesh through Dr. Rita Sharma, Principal Secretary, Rural Development, GOUP (hereinafter called GOUP which expression shall where the context so admits or implies be deemed to include his successors in office) of one part and the President of India through Mr. Palat Mohan Das, Secretary, Department of Drinking Water Supply, Ministry of Rural Development, GOI (hereinafter Called “ Government of India” which expression shall where the context so admits or implies be deemed to include his successors in office) of the other part.

WHEREAS, GOUP in pursuance of para 4.2 and 4.3 of guidelines of GOI Department of Drinking Water on Swajaldhara envisages that the State Government may avail funds under Swajaldhara I and II, after entering into a Memorandum of Understanding (MOU) with the Department of Drinking Water Supply, Ministry of Rural Development, Government of India and that there would be commitment of the GOUP to the reform principles in the Water and Sanitation sector and shall promote through out the State the Swajaldhara principles.

AND WHEREAS, GOUP has made a vision statement to the effect to facilitate the increase in service level of potable drinking water by installation of one tap in each household of all village of Uttar Pradesh, mainly through Single Village Pipe Water Supply schemes, and simultaneously ensuring water quality and source - sustainability; and, increase in level of household sanitation coverage to at least 90%, there by making villages free from open defecation, along with bringing about behavioral change for

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improved hygiene habits, under demand- driven and community managed schemes, for achieving sustainable health benefits, and reducing incidence of Diarrhea to below 4%, amongst children below five years, by the year 2018, through Information, Education, Communication, Capacity Building and Empowerment of communities and Involvement of Panchayati Raj Institutions, NGOs and the Private Sector.

AND WHEREAS, GOUP Keeping in view the exigencies of ensuring sustainability for the sector, a vision has been outlined for 2018 in a comprehensive Vision Document (Annexure-1) indicating State vision, identified road map and milestones, action plan and agreed time frame for initiating and scaling up reforms, institutional reforms, integration of Water, Sanitation, and Hygiene, Capital Cost Sharing principles, Water Tariff, Operation and Maintenance of systems, role of Panchayati Raj Institutions, NGOs, CBOs, Water Quality, Water Conservation and Recharge Measures, including Legislative Action, Performance Indicators.

GOUP's Vision Document incorporates action points, which address the issues of quantity, quality, conservation and sustainability of drinking water sources and improved sanitation and hygiene in the community. For achieving these, the vision document envisages action points for all stake holders, strategy and implementation time-frame.

NOW, therefore, parties to this MOU agree as follows:

A. The GOUP

1. That the GOUP shall implement State’s Vision for 2018 in which every household has its own source of drinking water supply. Due to financial and technical constraints in the short and medium term, this is translated into a goal to "bring drinking water to the doorstep". This involves supporting the communities in obtaining public piped water supply systems with capacity for 100% household connections. The decision to install individual connections will be up to the individual households concerned. This policy will apply to all development, whether for rejuvenation, rehabilitation, reorganization, or construction of new schemes.

2. That the State Water and Sanitation Mission here by shall be called SWSM as an advisory body to GOUP shall coordinate and monitor activities under rural water supply and sanitation sector and will give necessary feed back with regards to rural water Supply and sanitation Programmes implementation in the State Also at District level District water Supply and sanitation Mission hereby shall be called DWSM will function as an advisory body to Zilla Panchayats.

3. That under the Gram Panchayats, responsibility for day-to-day management of the schemes at village level is entrusted to Jal Prabhan Samities of Gram Panchyats. The prime function of Jal Prabhan Samities of Gram Panchyats is to ensure, through participatory decision making, that the user communities feel that they share the ownership of the system and as such accept the responsibility to sustain it through payment of agreed tariff. The Jal Prabhan Samities of Gram Panchyats may outsource the physical operation and maintenance of the schemes to private individuals, community groups, or the organized business sector. This may involve all or part of the tasks involved in production, treatment, and major maintenance of drinking Water Supply and Sanitation works. In the case of multi-village pipe water supply schemes the technical O&M function at scheme level is always contracted out to a competent technical organization.

4. That the GOUP shall promote safe water supply and environmental sanitation in the interest of private

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and public health. However, in principle these services are geared to private needs and benefits. Therefore, the Government will gradually withdraw from financing the sector. Effective demand of the user community will be the guiding principle, the GOUP will only support schemes if the community is willing to share the cost. This will initially involve at least 10% of capital cost by communities where minimum needs not met and least of 20% of capital cost by communities where minimum needs have been met in addition to 100% of O&M cost by communities. Ultimately, the capital cost share of the community shall be increased to 50%. The GOUP will formulate guidelines for the application of the norms where technical requirements result in investment and operating cost significantly than the average for the region and also with regard to users ability to pay.

5. That the ownership of the public schemes shall be with the Panchayats, as shall be the financial-economic responsibility for their operation. The focus of ownership at local level is crucial as it sensitizes the communities to the need for adequate O&M funded by adequate resources generated through user charges. The formulation of workable tariff structures and effective collection and sanction mechanisms is part of the decision-making process in which the community and the Panchayats elect the desired type and level of service. Consequently, any operational deficits must be made up through increase in user charges and/or contributions from the Panchayat funds.

6. That for multi-village schemes, Regional Water Supply and Sanitation (RWSC) committee decides on investments and policies. The RWSC will contract competent technical organization that will act as "operator" of the scheme. The “operator” will be responsible for day-to-day operation at scheme level and for delivery of agreed quantity of water to the participating villages at bulk rates. Jal Prabhan Samities of Gram Panchyats will be responsible for local distribution, maintenance, retail billing, and collection in the villages.

7. That comprehensive Water Quality Survey for 100% habitation of state Shall be done for Identification of those habitations where ground water quality is not satisfactory due to chemical contamination on account of Iron, Fluoride, Nitrate and total Dissolved Solids being more than the permissible limits . GOUP shall promote low cost treatment technologies and/or alternate safe sources of Drinking Water shall be identified.

8. That GOUP shall protect the endangered and scarce water resources, the GOUP shall formulate an integrated ecological management perspective plan. The enforcement of the UP State Water Policy would be under the State Water Board which would have a State Water Resources Agency, a Water Resources Data Center and an MIS system for water resources planning, monitoring, and management.

9. That to date the GOUP has concentrated on meeting the basic need of water supply to the population by installing handpumps wherever feasible. Thus basic need is now essentially met. The ownership of handpumps has been transferred to the Panchayats, along with the responsibility for O&M. The GOUP shall further strive to have the Operation and Management of handpumps transferred to community/user groups, while ownership of all handpumps shall remain with the gram panchayats. This is in line with the policy to henceforth leave all further investment in handpumps to the private initiative of user groups or individuals and local suppliers/drillers. The GOUP will stimulate local availability of the relevant parts and services.

10. That the adoption of more private handpumps would demonstrate an effective demand for having an individual source of water supply. As this demand grows, and private pumps need to be replaced, piped systems with individual household connections become financially viable. The information shall stress the need to boil and/or filter water from shallow handpumps, or alternatively use public India Mark-II

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handpumps for drinking purposes.

11. That the GOUP shall strive to inculcate an appreciation and understanding of the need for safe water and sanitary disposal of human excreta liquid and solid wastes disposal among users in support of public and individual health. In this connection, Govt. will conduct awareness and information campaigns, make arrangements and create facilities to test drinking water at both the scheme and user levels, and carry out demonstration projects.

12. To ensure sustainability of sources the GOUP shall promote low-cost recharge interventions through checkdams, excavation of ponds and tanks fallen into disuse, and research and development for and introduction of low-cost filtration/treatment facilities wherever feasible. This will also involve promotion of awareness campaigns, logistical support, and facilitation. In areas where water level depletion beyond handpump depth is more than the potential increase in water level due to recharge, the GOUP further assigns priority to support financially, the recharge intervensions. Similarly, the GOUP shall further assign priority financial support for research and development into installation of low-cost filtration / treatment facilities. The financial support of recharge or installation of filtration/treatment facilities shall be on the basis of cost sharing norms.

13. That though the basic need is essentially met, there are still some under-served habitations. Priority will be given to fulfill the basic need program in such habitations. For habitations villages with a demonstrated inability to pay the GOUP shall select to subsidize both capital and O&M cost the system.

14. That because piped schemes have generally been constructed only where Hnadpmps are not feasible, the need in areas already served with Pipe Water Supply is greatest where existing schemes have gone defunct. To meet this need, the government shall place priority on rehabilitating defunct or under performing existing schemes. Wherever possible, this will involve reorganization of the schemes into single-village schemes.

15. That the basic financial viability of schemes in large part depends on reliability of performance. This is most seriously affected by irregular power supply. Therefore, rehabilitation incorporates diesel generators or other alternative source of energy where power supply is irregular. No new pumping schemes are being developed without a dependable source of power.

16. That for outsourcing of scheme operations Jal Prabhan Samities of Gram Panchyats and Regional Water Supply and Sanitation committees need access to a support infrastructure that is responsive to local decision-making and expressions of demand. The Water supply support orginasitations shall be selected by GPs /RWSCs by open competition. The State owned agencies like Jal Nigam , UP AGRO etc may also participate in the open competition along side the private sector.

17. That GOUP shall reorganize Jal Nigam and Jal Sansthans, aiming at lower overhead, less bureaucracy, and faster and more efficient delivery, installation and more responsive to community.

18. Water Supply and Sanitation Support Organizations created out of Jal Nigam and Jal Sansthans at district level shall be self-supporting in accordance with the Water Supply and Sewerage Act of 1975. Only where the cost of service provision demonstrably exceeds the ability of the user community to pay may the GOUP decide to provide financial relief. This relief will be temporary and will not take the form of subsidizing the Water Supply and Sanitation Support Organization, but will involve scheme-based subsidies only, combined with a specific subsidy reduction path for each scheme. The GOUP will review the Act and bring it up to date with the needs of its drinking water policy.

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19. That GOUP shall involve integrated planning of water supply and environmental sanitation aspects in all rehabilitation of all existing defunct schemes and development of new schemes. This planning will, in physical and financial terms, at least involve drainage and pavement of lanes and by lanes. Whereas drainage related to water supply and sanitation is to be funded from the schemes themselves, pavement of lanes and by-lanes and construction of other drains is funded under existing village local area development programs. In this case the main effort is in dovetailing of investments under different programs. Beyond this, plans for development and rehabilitation of schemes are only eligible for approval if they include adequate provisions for other sanitation aspects, such as sanitary latrines, compost pits, and solid waste management. Communities are expected to tap local and other resources to finance and develop the related small and medium-scale investments.

20. That GOUP shall] for sanitation interventions of individual nature, the implementation of relevant activities leave to private initiative. Nevertheless, improvement of this aspect of sanitation contributes to public health and is therefore of concern to the GOUP. Hence, the government vigorously supports community initiatives through information and awareness campaigns on sanitation and its integration with water supply, technical guidance, and help in arranging finances. The GOUP will also, in collaboration with manufacturers and suppliers, formulate and implement an action plan for market development for sanitary equipment and wares, so as to make it attractive for the private sector, to make the related goods and services available in the rural areas. The government will monitor the development of environmental sanitation and from time to time evaluate both its own efforts and the involvement of the private sector.The GOUP will contribute to an enabling environment by introducing and/or strengthening relevant legislation.

B. The GOI

1. That GOI is in agreement with GOUP state vision for Rural Water Supply and Sanitation outlined for 2018, which conforms to Sector Reform principles laid down by GOI for ensuring sustainability for Rural Water Supply and Sanitation.

2. That GOI shall provide funds to the tune of Rs. 10,495.79 crores as GOI share for implementation of Water Supply and Sanitation schemes against its total requirement of Rs. 35,338.86 crores.

3. That GOI shall assist GOUP in securing financial assistance from World Bank and other donor agencies for achieving the targets stipulated in the action plan.

4. That GOI shall give adequate financial assistance to GOUP under various programme current and future related to Water Supply and Sanitation sector.

5. That GOI shall provide financial incentives or otherwise stipulated in pera 4.3 of Swajaldhara Guideline of GOI.

6. That GOI shall extend financial assistance for GOUPs endeavor to remove water quality problem within next two years.

7. That GOI shall facilitate GOUP in providing fiscal incentives under Union list for creating enabling environment for attracting Private Sector investments in Rural Water Supply and Sanitation Sector.

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8. That GOI shall initiate measures for extending priority lendings from nationalized banks to entrepreneurs/PRI institutions for their bankable projects on Water Supply and Sanitation.

IN WITNESS WHEREOF the parties hereto have set and subscribed their respective initial on the day and the year first herein before written.

(Dr. Rita Sharma) (Palat Mohan Das)Principal Secretary SecretaryRural Development Department of Drinking Water SupplyGOUP Ministry of Rural Development

Government of India------------------------------------For and on behalf of the -----------------------------------Governor of Uttar Pradesh For and on behalf of the

President of India

Witnesses: Witnesses:

1. 1.

2. 2. (Signature, Name and address) (Signature, Name and address)

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Additional Annex 13. Uttar Pradesh Water Supply and Sanitation Mission (WSM) - MOU

Memorandum of Understading1. Name of the Society: The name of this society shall be Uttar Pradesh Water Supply and Sanitation Mission (hereinafter referred as WSM)2. Location: The WSM shall have its head office in Lucknow with implementing units at district level.3. Address of the society:

Uttar Pradesh Water Supply and Sanitation Mission,3, Fawn Brake Avenue Sarojini Naidu Marg, Lucknow- 226001.

4. Area of operation: Uttar Pradesh

5. Objectives: The WSM shall be an independent and autonomous body and it shall act as an advisor, supervisor and facilitator for implementing community based rural water supply and total sanitation campaign in the selected districts of U.P . The following are the main objectives of the mission.

To bring about an improvement in the general quality of life in rural area with the help of Community a.Based Rural Water Supply & Total Sanitation Campaign.To create awareness for sanitation and safe drinking water.b.To facilitate the conditions to provide safe drinking water in rural areas.c.To create demand for sanitation hardware.d.Accelerating coverage of rural population.e.Covering schools in rural areas with safe drinking water and sanitation facilities.f.Encouraging suitable cost effecting and appropriate technologies.g.Consequently bringing about a reduction in the incidence of water and sanitation related diseases (as h.evinced by fall in the infant/child morality rates and incidence of diarrheal diseases.)To provide sustainable safe drinking water schemes and to provide sustainable environment sanitation i.facilities (like sullage drains, private latrines etc.) for all project villages through Community Based Rural Water Supply & Total Sanitation Campaign ( CBRWSTSC)Strengthening water quality monitoring systems and leakage control measures:j.To promote hygiene and environmental sanitation awareness to village communities;k.Institutional strengthening including greater community participation at the grassroots level;l.To promote a participative process by which eligible village communities; as defined can make all key m.decision concerning their schemes.

6. Functions: To achieve the above objective the mission shall carry out following activities.

To identity and select Districts for the Community Based Rural Water Supply & Total Sanitation I.Campaign ( CBRWSTSC)Ensure establishment of Distt level water and sanitation mission.II.To ensure execution of Community Based Rural Water Supply & Total Sanitation Campaign ( III.CBRWSTSC) in a time bound manner.Greater house-hold involvement ( Demand Driven Approach )IV.Technology improvisations according to customer preferences and location specific.V.Stress on software : intensive IEC campaign closer liaison with Prasar Bharti and other media.VI.Emphasis on school sanitation and safe drinking water.VII.Seek international finances for latrine unit production centers and rural sanitary marts.VIII.Involve cooperatives, women groups, self-help groups NGOs etc.IX.

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Development of backup services centres sanitary ware production centers PCs at Dist/Block level X.rural sanitary marts (RSMS) as retail outlets, Trained masons.Act as motivator advisor and facilitator for Community Based Rural Water Supply & Total XI.Sanitation Campaign ( CBRWSTSC) and RWS.To undertake all activities that may be necessary for the implementation of the project and in XII.particular for the achievement of the objectives referred to in article 5 above.Coordination and monitoring of the activities for implementation of the project;XIII.To coordinate and monitor setting up water quality laboratories and including procurement of lab XIV.equipment and instruments.To obtain assistance of private consultants.XV.Review of water supply scheme design.XVI.Environmental sanitation design.XVII.Water quality monitoring system.XVIII.Community participation and health education activities.XIX.Construction supervision, monitoring leak detection survey and supervision;XX.Coordination and management of training program’s for personnel of WSM, District Water & XXI.Sanitation Mission(DWSM) and others e.g. village water and sanitation committees, village facilitators, NGO’s and village communities including Gram Pradhans and primary school teachers;To secure active involvement and participation of NGO’s committee to the cause of rural water XXII.supply and environmental sanitation;To organise conferences, symposia, workshops etc. on matters related to the project;XXIII.To make rules and regulations for the conduct of the affairs of the WSM and add or amend, vary or XXIV.rescind them from time to time.To establish its own salary structure and benefit structure and to employ, retain or dismiss personnel XXV.as required in WSM.To accept, make, enclose or otherwise execute cheques, drafts, receipts, bills of exchange of other XXVI.instruments and securities as are required for the conduct of the WSM or DWSM.To undertake any legal action that may be necessary to ensure the fulfillment of contract’s mode XXVII.between the WSM’s business.To enter into contracts without a requirement for government approval, other than by government XXVIII.representative on the WSM and others.To accept or to provide any grant of money, loan, securities or property of any kind and to, XXIX.undertake and accept the management of any endowment trust, fund or donation not inconsistent with the objectives of the WSM.To incur expenditure after drawing up a budget and due regard for economy and propriety.XXX.To prepare annual report and account of the WSM.XXXI.To purchase, hire, take on lease, exchange or otherwise aquire property, movable and construct, after XXXII.and maintain any building or building or building as may be necessary for carrying out the objectives of the WSM.To take all such action and to enter all such actions as may appear necessary or incidental for the XXXIII.achievement of the objects of the WSM.Implement GOI's Sector Reform (Jalnidhi) Project, Swajaldhara Programme and Total Sanitation XXXIV.Campaign.Prepare a comprehensive vision statement, action plan and agreed time frame for initiating and XXXV.scaling up reforms in the sector. Provide policy guidance to Swajaldhara and Total Sanitation Campaign Projects.XXXVI.Integration of water conservation and rainwater-harvesting schemes with the drinking water supply XXXVII.schemes.Integrate & implementation of rural drinking water, Health, and Hygiene programes in the State.XXXVIII.

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Preparation of State Project plan for community Based Rural Water Supply, Water conservation XXXIX.measures through rain water harvesting and ground recharge system & Environmental Sanitation. To seek funds from GOI, State Govt., National/International organizations, philanthropic organizations, financial institutions, NRIs and Industrial Houses.Implement GOI's Sector Reform principles in the water supply and sanitation sector and promote XL.through out the state the Swajaldhara principles. Implement all schemes pertaining to rural water supply and sanitation sector programmes funded wholly or partially by the Government of India or the External Funding Agencies (including ARWSP, Sub-Mission, TSC)To ensure convergence of water supply and sanitation activities including Special Projects.XLI.Coordinate with various State Government Departments and other partners in relevant activities. XLII.Monitoring and evaluation of physical and financial performance and management of the rural water XLIII.supply and sanitation projects in the State..Ensure supervision of quality of construction of all programmes such as Sector reform project, XLIV.Swajaldhara programme and Total Sanitation Campaign.Integration and operations of communications and capacity development programmes for both water XLV.supply and sanitation in the State.To create investor friendly climate in the State for Rural Drinking Water Supply & Sanitation Sector XLVI.to attract Private Investments.Development of innovative low cost community acceptable technology and techniques.XLVII.

7. The first members of Executive CommitteeThe names, addresses, occupations and designation of the first members of the executive committee of the WSM to whom by the rules and regulations of the WSM the management of its affairs is entrusted as required under section 2 of society registration Act. 1860(No. XXI of 1860) are as follows:

Three members as specialist in Information Communication and Education(IEC), Monitoring and Information System(MIS) & Non-Governmental Organizations(NGOs) shall be nominated by the Executive Committee. A copy of the rules of the WSM certified to be correct copy by three members of the executive committee is filed along with this memorandum of association.

8. We, the several persons whose names and addresses are given below having associated ourselves for the purpose described in this memorandum of association do hereby subscribe name to this memorandum of association and set our several and respective hands here unto and form ourselves into a society under the societies registration act, 1860(no. xxi of 1860). This 16th August 1999 at LUCKNOW:

Sl. No.

Names Occupation & Address Designation of members

1. Secretary Rural Development Chairman2. Director Panchayati Raj Member3. Director Social Welfare Member4. Director General Medical & Health Member5. Director Basic Education Member6. Director Information Member7. Director Swajal Member8. Director HRD Cell, Jal Nigam Member9. M.D. Jal Nigam Member10. Commissioner Rural Development Secretary/Executive

Director

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Three members as specialist in Information Communication and Education(IEC), Monitoring and Information System(MIS) & Non-Governmental Organizations(NGOs) shall be nominated by the Executive Committee. A copy of the rules of the WSM certified to be correct copy by three members of the executive committee is filed along with this memorandum of association.

9. We, the several persons whose names and addresses are given below having associated ourselves for the purpose described in this memorandum of association do hereby subscribe name to this memorandum of association and set our several and respective hands here unto and form ourselves into a society under the societies registration act, 1860(no. xxi of 1860). This 16th August 1999 at LUCKNOW

Sl. No.

Names Occupation, Address of Members Designation Signature

1. Sri Rajendra Bhonwal Secretary, Rural Development Chairman2. Sri Shyam lal Kasarwani Director, Panchayati Raj Member3. Sri Kapil deo Director, , Social Welfare Member4. Dr. H.C.Vaishya Director General, Medical & Health Member5. Dr. M.C.Pant Director, Basic Education Member6. Sri Sanjay B.Reddy Director, Information Member7. Sri S.Raju Director, Swajal Project Member8. Sri Majhar Alikhan Director, HRD Cell, Jal Nigam Member9. Sri V.K.Gupta M.D., Jal Nigam, UP Member10. Dr. Naseem Zaidi Commissioner, Rural Development Secretary/

ED

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Additional Annex 14. Decisions of the GOUA for Initiating Process of Reform in the WATSAN Sector

A meeting under the Chairmanship of the Chief Secretary was held on 24 January 2003. The agenda of the meeting was to discuss the policy and strategies for ushering sector reform process in the state as well as develop broad guidelines for the implementation of the Swajaldhara Project. The decisions taken in the meeting were later approved by the Minister, Rural Development and Drinking Water and the Chief Minister of the state. The policy decisions of the Government are as under:

1. Status of Rural Water Supply Schemes

1.1 There are around 6975 Gram Panchayats, 15651 revenue Villages and 31008 habitations in the state. Out of total water supply schemes constructed in the state, 2969 single village have been transferred to the Gram Panchayats for operation and maintenance and the remaining 6395 schemes (out of these 2500 are single village schemes) are maintained by Jal Nigam and Jal Sansthan. Out of total schemes constructed, 3500 schemes require immediate reorganization since they have crossed the design period. 2969 schemes. 1482 single village schemes out of 2969 schemes that have been transferred to Gram Sabha have become partially or non-functional. The GOI has allocated Rs 30.80 crore under ARWSP for construction and augmentation/rejuvenation of water supply schemes. GOI has allocated 20% of ARWSP budget allocation for Swajaldhara Project. The total allocation under the ARWSP is Rs 2235 crore which also includes some other projects. As a result, the total budget available under Swajaldhara Project is Rs 400 crores (maximum limit) out of which the State share would maximum be around Rs 10 crore. Subsequent to the Sector Reform policy of the GOI, the ARWSP would be extendable after 2003-2004, in order to scale up demand driven approach in the sector.

1.2 Status of NC/PC habitations in the state

In the State, there are 1015 NC/PC habitations in the state. For providing drinking water to these habitations, around 117 crore would be required and the schemes could be commissioned by 2005. In the current year, 375 such habitations have been proposed to be covered with water supply scheme. Under ARWSP, the GOI has allocated Rs 30.80 crore. Since the state has been newly carved out and the per capita construction cost is higher in the hilly areas due to inaccessible terrain, the GOUA has requested the GOI to enhance the budgetary provision under the ARWSP. Similarly, the allocation of development fund for the state based on per capita cost should be reconsidered since the density of population is very low in the state. In this context, the Hon’ble Prime Minister during his visit to Nainital had announced that norms/standards would be relaxed considering the geographical condition of the hilly states such as Uttaranchal.

1.3 Under the Swajal Project, 857 villages have been covered out of which majority of them are single village schemes. In the Follow-on of Swajal Project, 2500 additional villages have been proposed to be covered with the financial assistance from the World Bank. The 12th World Bank Supervisory Mission had indicated that the support for the Follow-on Project would largely depend upon the commitment of the GOUA for adopting sector reform approach in the state. It as apparent that the GOI funded Swajaldhara Project is based on the same principles and the state has to adopt sector reform approach in order to avail funding under Swajaldhara Project.

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2. Reassessment of Water Supply & Sanitation Component

2.1 In a meeting chaired by the Chief Minister, it was decided to reassess the status of NC/PC/FC habitations in the state. The RGNDWM, Government of India, has issued fresh guidelines to assess the status of rural water supply and environmental sanitation in the state. The Department of Drinking Water will conduct survey on prescribed format provided by the GOI to assess the status of rural water supply and also obtain additional information about the status of sanitation in order to integrate both these components. This will help in formulating strategy for targeted investment in the rural water supply and sanitation sector.

3. Prospective Plan for Water Supply Sector in the State

3.1 In the above context, it is clear that not only remaining NC/PC habitations are to be covered by the support from the RGNDWM but also heavy investment is required for covering partially functional and non-functional schemes as well as for schemes where there is decline in source discharge. Approximately, Rs 700-800 crore would be required for covering NC/PC habitations as well as reorganization of partially and non-functional schemes, excluding the administrative and miscellaneous expenditures. The future funding in the sector will largely depend upon the adoption of Sector Reform principles, as reflected in the Swajaldhara Project launched by the Hon’ble Prime Minister. It is apparent that funding from GOI would be inadequate and the state has to seek external financial support to meet the demand in the rural sector. The World Bank in its meeting with the Chief Secretary during World Bank Mission had shown interest for widening the prospect of Swajal Project II, i.e. Rs 500 crore, for covering 2500 villages, if the GOUA agrees in principle to adopt sector reform approach. The tenets of the Sector Reform Approach are demand based selection of village, community participation in planning & implementation, community contribution towards capital cost of water supply, ownership, operation and maintenance of the scheme by the community and in this context, required changes in the role of Jal Nigam and Jal Sansthan. The State has to adopt the broad Sector Reform Principles as mentioned above.

3.2 The GOUA has also submitted a proposal for Watershed Development Project to the World Bank. The cost of the project is Rs 450 crore. There are indications that the World Bank may not support two large projects in the State. In this context that, the Chief Minister has already sent a letter to Union Finance Minister regarding the need for both the projects in view of geographical and economic condition of the state.

4. Guidelines for Implementation of Swajaldhara Project

4.1 In Swajaldhara Project and the Swajal Project, the unit of planning is to be defined. In the current project, revenue village was considered as the unit of planning by forming User Water & Sanitation Committee (UWSC), which operated their own Bank accounts. In the context of 73rd CAA, the GP has to take up the role of UWSC. Under the UP Panchayati Raj Act, the Jal Prabhadhan Samiti (JPS) has been constituted for management of drinking water, watershed, irrigation and environmental sanitation activities. At the GP level, JPS will be responsible for management of water supply and other related activities.

4.2 In a GP, there could be more than one habitation. Therefore, apart from JPS, it is also necessary to institutionalize User Groups as sub-committee of the Gram Panchayat. The UWSC will represent the actual users and the number of UWSC will depend upon the number of schemes in the GP. The roles and responsibilities of UWSC will be as follows:

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(i) Planning and construction of scheme at cluster level(ii) Collection of community contribution for water supply and related works(iii) Fixation of tariff duly approved by the GP and operation and maintenance of scheme(iv) Collection of tariff from users and proper maintenance of accounts(v) Operation of Bank account and presentation of accounts to GP as per norms(vi) For the functioning of UWSC, model bye-laws will be prepared and duly adopted by the

GP

4.3 Institutional Arrangement for Multi-village Scheme

Since the rural community is better able to maintain single village scheme, priority should be given to such community-friendly schemes instead of multi-village schemes.. However, in case, the multi-village scheme is inevitable, it is necessary to study institutional arrangement for operation and maintenance of these schemes. The Jal Nigam and Jal Sansthan would identify one multi–village scheme from each block and study the institutional and financial viability and explore the mechanism for reorganizing these schemes in smaller units for replicability in other multi-village schemes.

4.4 In the rural sector, pumping schemes should be avoided as far as possible since in the community based schemes, the cost, type and quality will vary remarkably with respect to scheme planned by the government departments. In this context, large pumping schemes will be required mainly in urban areas, which need to be looked separately.

4.5 The UWSC will fix and collect user charges, deposit in the Bank account operated by them and will be responsible for operation and maintenance of scheme from the user charges collected. However, it is possible that in case of major repairs the users may not be able to bear the cost. As per the recommendations of 11th Finance Commission, the state has to apportion certain percentage of the fund to the Gram Panchayat for local development activities. Approximately, Rs 27-28 crore will be devolved to the Gram Panchayats every year and the Gram Panchayats will have to contribute 25% of the matching grant. However, the majority of the Gram Panchayats may not be able to provide the matching grant. The state shall provide 25% of the contribution to the Gram Panchayat and there will be no need for providing separate fund for Panchayat Ghar, drains and Kharandja. The fund made available to the Gram Panchayat by the state Government can be earmarked for the identified activities. In case of major repairs, a portion of the fund made available to the GP will be earmarked for major repairs of water supply scheme.

5. Nomination of District Implementing Agency for Implementation of Swajaldhara Project.

5.1 As per the guidelines of the RGNDWM, GOI, the Sector Institutions in the State shall function as District Implementing Agencies (DIA) for the implementation of Swajaldhara Project. In future, Swajaldhara Project will replace ARWSP. Presently, the Jal Nigam is implementing the ARWSP project. It has been decided that Jal Nigam shall delegate its twelve divisions as DIAs for the implementation of Swajaldhara Project. The Jal Nigam will adopt Sector Reform principles for implementing water supply works under the project. Details of activities to be performed by the Jal Nigam are as under:

Pre-feasibility studylCommunity mobilisation for collection of upfront 10% capital costlPreparation of preliminary estimate of water supply for funding from the RGNDWMlFacilitate in the formation of UWSCl

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Facilitate in the preparation of Community Action PlanslManagement of joint Bank account with UWSC in the Implementation PhaselEnsure community contracting at the GP levellBuild the capacity of UWSC and the GPlConduct hygiene and environmental sanitation awareness programmelTransfer of existing water supply scheme to the GPlFacilitate the GP/UWSC in the construction of water supply and sanitation schemeslTransfer technical skills to the GP/UWSC for operation and maintenance of water supply lschemeTrain the GP/UWSC members for proper up-keep of documents and records l

5.2 The Uttaranchal Peyjal Nigam and Uttaranchal Jal Sansthan shall be re-grouped according to rural and urban sectors since the needs, socio-economic and geographical conditions of the Urban and Rural Sectors are different and diverse. The reorganization of Uttaranchal Peyjal Nigam and Uttaranchal Jal Sansthan shall also avoid confusion due to multiplicity of organizations working in the same sector. The issue of reorganizing erstwhile Jal Nigam and Jal Sansthan was strongly advocated in the Sector Study Report. A detailed proposal would be prepared for reorganizing Jal Nigam and Jal Sansthan for urban and rural areas.

6. Role of PMU in the context of Swajaldhara Project.

6.1 The Project Management Unit (PMU) under the Swajal Project is functioning as State Water & Sanitation Mission for the implementation of Sector Reform Project in the district Haridwar. The PMU and its 8 DPMUs will provide technical, monitoring and evaluation support for the implementation of Swajaldhara Project. The DPMUs will provide community development support to the DIAs. The channelisation of the Swajaldhara fund shall be routed through PMU (SWSM)/DPMU to DIAs, GP and UWSC. PMU and DPMUs will also work on the preparation for the follow-on project

7. Contractual Engagement of staff from the NGOs for Community Development Activities.

The Jal Nigam may have to engage professionals for providing training to the staff working in the DIAs as well as for community development activities. The DIAs may engage professionals for which contractual agreement could be made with the NGOs. This will not create any long-term financial burden on the State Government. The NGOs can be entrusted with activities like training, process monitoring, etc. The surplus staff could also be trained for undertaking community development activities.

8. GP Selection Criterion under the Swajaldhara Project.

8.1 The following self selection process would be adopted by the GPs for its inclusion in Project:

(a) Need: Any habitation in the GP receiving water less than 40 lpcd orthe water is polluted orthe community demands for higher level of service and willing to contribute higher capital cost sharing.

(b) Necessary Condition: If a GP fulfills any one of the above needs, its selection shall depend upon the fulfillment of the following necessary conditions: willing to contribute at least 10% of capital cost for minimum level of service and higher

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costsharing for higher level of service; and,own up the scheme for 100% operation and maintenance.

(c) Prioritization: Priority shall be given to those GPs who show commitment for:

(i) Taking over existing schemes (ii) Constructing 100% latrines by the households (iii) Willing to augment/rejuvenate existing schemes instead of constructing new scheme

(iv) Apportioning identified proportion of the fund received from the State as corpus for WATSAN Sector

9. Integration of water supply, sanitation, source protection, health and hygiene awareness programmes

9.1 Based on the experience of the Swajal Project, integrated implementation of water supply, sanitation, source protection, health and hygiene awareness programmes is beneficial. Therefore, dovetailing of TSC, IEC, HRD with Swajaldhara Project would be ensured and proposal for funding under these projects shall be submitted to RGNDWM for approval. Once these projects are sanctioned, the PMU will develop guidelines and plan of action for integrated implementation of all these projects at the village level.

9.2 Apart from this, water conservation and water harvesting works implemented by Rural Development and Forest will also be dovetailed with the related village level programmes. A detailed plan of action will have to be formulated. It is well known that the women are the main stakeholders and their participation will be ensured at every level.

10. Arrangements of revenue deficit between cost of water supply and tariff collected from Users.

10.1 In the majority of the rural schemes, the cost per liter of water supply is more than tariff charged from the user. Therefore, the government has to make regular budget provision to meet the revenue deficit. Jal Sansthan has been asked to prepare detailed proposal for further action.

11. Establishment Cost in Jal Nigam

11.1 Presently the Jal Nigam gets 12.5% as centage for meeting administrative expenditures where as the actual expenditure is around 30%. As a result, certain portion of the fund received for water supply scheme gets spent in for administrative purpose. The surplus staff of the Jal Nigam needs to be identified through a detailed study so that they can be placed in surplus pool.

The meeting ended with a vote of thanks to the chair.

Signed

(P.K.Mohanty) Secretary, Drinking Water

Government of Uttaranchal

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