The World Bank FOR OFFICIAL USE ONLY · ICQS Independent Construction Quality Surveillance IDA International Development Association IE Impact Evaluation . iii IEC Information Education

Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: 76346-IN

INTERNATIONAL DEVELOPMENT ASSOCIATION

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED CREDIT

IN THE AMOUNT OF SDR 325.1 MILLION (US$500 MILLION EQUIVALENT)

TO THE

REPUBLIC OF INDIA

FOR A

RURAL WATER SUPPLY AND SANITATION PROJECT

FOR LOW INCOME STATES (P132173)

December 3, 2013

Sustainable Development Unit India Country Management Unit South Asia Regional Office

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

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CURRENCY EQUIVALENTS (Exchange Rate Effective October 31, 2013)

Currency Unit = Indian Rupees (INR) US$1 = INR 61.47 US$1 = SDR 0.65018

FISCAL YEAR

April 01 – March 31

ABBREVIATIONS AND ACRONYMS

BCC Behavior Change Communication BCM Billion Cubic Meter CBP Community Based Procurement CDD Community Driven Development CE CPS

Chief Engineer Country Partnership Strategy

CPSMS Central Plan Scheme Monitoring System DALY Disability Adjusted Life Year DBOT Design, Build, Operate and Transfer DC District Collector / Deputy Commissioner DDC Deputy Development Commissioner DPMC District Project Management Consultants DPMU District Project Management Unit DWSC District Water and Sanitation Committee DWSD Drinking Water and Sanitation Department DWSM District Water and Sanitation Mission DSC EA

District Sanitation Committee Environmental Assessment

E-in-C Engineer-in-Chief ECOPS Environmental Codes of Practice EE Executive Engineer EMF Environmental Management Framework ERR Economic Rate of Return FBS Fixed Budget Selection FM Financial Management GAAP Governance and Accountability Action Plan GDP Gross Domestic Product GIS Geographic Information System GoI Government of India GP Gram Panchayat GP-WSC Gram Panchayat Water and Sanitation Committee ICB International Competitive Bidding ICQS Independent Construction Quality Surveillance IDA International Development Association IE Impact Evaluation

iii

IEC Information Education Communication IHHL Individual Household Latrines IMIS Integrated Management Information System INR Indian Rupee JE Japanese Encephalitis JN Jal Nigam LCB Local Competitive Bidding LCS Least Cost Selection LIS-MIS Low Income States Management Information System lpcd liters per capita per day M&E Monitoring and Evaluation MGNREGS Mahatma Gandhi National Rural Employment Guarantee Scheme MoDWS Ministry of Drinking Water and Sanitation MoEF Ministry of Environment and Forest MTR Mid-Term Review MVS Multi Village Scheme MVS-WSC Multi-Village Scheme Water and Sanitation Committee NBA Nirmal Bharat Abhiyan NCB National Competitive Bidding NGO Non-Governmental Organization NGP Nirmal Gram Puraskar NIC National Informatics Center NPMU National Project Management Unit NRC National Resource Center NRDWP National Rural Drinking Water Program O&M Operation and Maintenance ODF Open Defecation Free OHS Over Head Storage OP Operational Policy OP / BP Operational Policy / Bank Procedures ORAF Operational Risk Assessment Framework PDO Project Development Objective PHED Public Health Engineering Department PIP Project Implementation Plan PMF Performance Measurement Framework PPP PRD

Public Private Partnerships Panchayati Raj Department

PRI Panchayati Raj Institution PWD Public Works Department QBS Quality Based Selection QCBS Quality and Cost Based Selection RDD Rural Development Department RWSS Rural Water Supply and Sanitation RWSSP-LIS Rural Water Supply and Sanitation Project for Low Income States SC/ ST Scheduled Castes/Scheduled Tribes SE Superintending Engineer

iv

SGS Multi-Habitation Schemes Within GP SHS Single Habitation Schemes SLSSC State Level Scheme Sanctioning Committee SLWM Solid and Liquid Waste Management S-MIS State Management Information System SO Support Organization SPMU State Project Management Unit SSS Single Source Selection SSM State Sanitation Mission SVS Single Village Scheme SWSM State Water and Sanitation Missions TA Technical Assistance TAG Technical Advisory Group TDP Tribal Development Plan TSC Total Sanitation Campaign UP Uttar Pradesh UPJN Uttar Pradesh Jal Nigam US$ United States Dollar WHO World Health Organization WSH Water, Sanitation and Hygiene WSSO Water and Sanitation Support Organization ZP Zila Parishad / Panchayat

Regional Vice President: Philippe Le Houérou Country Director: Onno Ruhl

Sector Director: John Henry Stein Sector Manager: Ming Zhang

Task Team Leader: Smita Misra

v

INDIA RURAL WATER SUPPLY AND SANITATION PROJECT FOR LOW INCOME

STATES

TABLE OF CONTENTS

Page

I. STRATEGIC CONTEXT .................................................................................................1 A. Country Context ............................................................................................................ 1 B. Sector and Institutional Context .................................................................................... 1 C. Higher Level Objectives to which the Project Contributes .......................................... 3

II. PROJECT DEVELOPMENT OBJECTIVES ................................................................3 A. Project Development Objective (PDO) ........................................................................ 3

1. Project Beneficiaries ............................................................................................... 4 2. PDO Level Results Indicators ................................................................................. 4

III. PROJECT DESCRIPTION ..............................................................................................4 A. Project Components ...................................................................................................... 4 B. Project Financing .......................................................................................................... 5

1. Lending Instrument ................................................................................................. 5 2. Project Costs and Financing Plan ........................................................................... 5

C. Lessons Learned and Reflected in the Project Design .................................................. 6

IV. IMPLEMENTATION .......................................................................................................7 A. Institutional and Implementation Arrangements .......................................................... 7 B. Results Monitoring and Evaluation .............................................................................. 8 C. Sustainability................................................................................................................. 9

V. KEY RISKS AND MITIGATION MEASURES ............................................................9

VI. APPRAISAL SUMMARY ..............................................................................................11 A. Economic Analyses ..................................................................................................... 11 B. Technical ..................................................................................................................... 11 C. Financial Management ................................................................................................ 12 D. Procurement ................................................................................................................ 13 E. Social (including Safeguards) ..................................................................................... 13 F. Environment (including Safeguards) .......................................................................... 15

Annex 1: Results Framework .....................................................................................................16

Annex 2: Detailed Project Description .......................................................................................19

Annex 3: Implementation Arrangements ..................................................................................30

Annex 4: Operational Risk Assessment Framework (ORAF) .................................................52

Annex 5: Implementation Support Plan ....................................................................................57

Annex 6: Economic Analysis .......................................................................................................61

Annex 7: Governance and Accountability Action Plan (GAAP) .............................................66

vi

INDIA

Rural Water Supply and Sanitation Project for Low Income States (P132173)

PROJECT APPRAISAL DOCUMENT

SOUTH ASIA

Basic Information

Project ID Lending Instrument EA Category Team Leader

P132173 Investment Project Financing

B - Partial Assessment Smita Misra

Project Implementation Start Date Project Implementation End Date

December 30, 2013 March 31, 2020

Expected Effectiveness Date Expected Closing Date

March 15, 2014 March 31, 2020

Joint IFC: No

Sector Manager Sector Director Country Director Regional Vice President

Ming Zhang John Henry Stein Onno Ruhl Philippe Le Houérou

Borrower: Government of India

Project Financing Data(US$M)

[ ] Loan [ ] Grant [ ] Other

[ X ] Credit [ ] Guarantee

For Loans/Credits/Others

Total Project Cost (US$M): 1,000.00

Total Bank Financing (US$M): 500.00

Financing Source Amount(US$M)

BORROWER/RECIPIENT 500.00

International Development Association (IDA) 500.00

Total 1,000.00.

Expected Disbursements (in US$ Million)

Fiscal Year 2014 2015 2016 2017 2018 2019 2020

Annual 10.00 60.00 80.00 100.00 120.00 70.00 60.00

Cumulative 10.00 70.00 150.00 250.00 370.00 440.00 500.00

Project Development Objective

The project development objective is to improve piped water supply and sanitation services for selected rural communities in the target states through decentralized delivery systems and to increase the capacity of the participating States to respond promptly and effectively to an Eligible Crisis or Emergency.

vii

Components

Component Name Cost (US$ Millions)

Component A: Capacity Building and Sector Development Component B: Infrastructure Development Component C: Project Management Support Component D: Contingency Emergency Response

9386047

0.

Compliance

Policy

Does the project depart from the CAS in content or in other significant respects? Yes [ ] No [X ] .

Does the project require any waivers of Bank policies? Yes [ ] No [ X ]

Have these been approved by Bank management? Yes [ ] No [ ]

Is approval for any policy waiver sought from the Board? Yes [ ] No [ ]

Does the project meet the Regional criteria for readiness for implementation? Yes [X ] No [ ] .

Safeguard Policies Triggered by the Project Yes No

Environmental Assessment OP/BP 4.01 X

Natural Habitats OP/BP 4.04 X

Forests OP/BP 4.36 X

Pest Management OP 4.09 X

Physical Cultural Resources OP/BP 4.11 X

Indigenous Peoples OP/BP 4.10 X

Involuntary Resettlement OP/BP 4.12 X

Safety of Dams OP/BP 4.37 X

Projects on International Waterways OP/BP 7.50 X

Projects in Disputed Areas OP/BP 7.60 X

Legal Covenants I. Financing Agreement

Name Recurrent Due Date Frequency

Implementation Units Yes Ongoing N/A

Description of Covenant Recipient to: (a) maintain a Steering Committee to provide overall policy guidance and Project implementation coordination and monitoring; (b) constitute and maintain a National Project Management Unit responsible for Project implementation at the national level; (c) constitute and maintain a Technical Advisory Group responsible for independently reviewing and guiding Project design and implementation; (d) cause each Participating State to maintain State Project Management Units within their State Project Implementing Agencies responsible for Project implementation at the State level; and (e) cause each Participating State to constitute and maintain District Project Management Units responsible for Project implementation within their Project Districts.


Project Reviews and Reports No Various Various

Description of Covenant

viii

Recipient to carry out, and cause the Participating States to carry out: (a) a comprehensive mid-term Project review, and to prepare and furnish to IDA a mid-term Project progress report, by March 31, 2017; and (b) a comprehensive Project completion review, and to prepare and furnish to IDA a Project completion report, within 90 days after the Closing Date.


Procurement Yes Ongoing N/A

Description of Covenant All goods, works and non-consulting services required for the Project (other than Part D) to be procured in accordance with the Procurement Guidelines, the Procurement Plan and the Financing Agreement. All consultants’ services required for the Project (other than Part D) to be procured in accordance with the Consultant Guidelines, the Procurement Plan and the Financing Agreement. All goods, works, non-consulting services and consultants’ services required for Part D to be procured in accordance with the Part D, Project Implementation Plan (PIP).


Withdrawal Conditions for Part D Yes Ongoing N/A

Description of Covenant No withdrawals for payments for Eligible Expenditures under Category (2) (regarding Part D of the Project, in the case of an Eligible Crisis or Emergency) unless special conditions have been met.

II. Project Agreements


Implementation Units Yes Ongoing N/A

Description of Covenant Participating States to: (a) maintain State Project Management Units responsible for Project implementation at the State level; (b) constitute and maintain District Project Management Units responsible for Project implementation in the Project Districts; and (c) constitute and maintain water and sanitation committees in Gram Panchayats responsible for Project implementation at the village level.


Contingency Emergency Response Mechanism

Yes Ongoing N/A

Description of Covenant Participating States to prepare and furnish to the Association a Part D in PIP setting out implementation arrangements for Part D of the Project (in the case of an Eligible Crisis or Emergency), and to ensure that Part D is carried out in accordance with the Part D, PIP. Participating States to maintain a Coordinating Authority with adequate staff and resources to carry out activities under Part D.


Special Conditions of Part D Activities Yes Ongoing N/A

Description of Covenant Participating States not to undertake any activities under Part D (in the case of an Eligible Crisis or Emergency) unless and until special conditions have been met.


Capacity of Implementation Units Yes Ongoing N/A

Description of Covenant Participating States to ensure that State Project Implementing Agencies, District Project Management Units and Water and Sanitation Committees of Gram Panchayats in their respective Participating State each have an adequate organizational structure with functions, powers, professional support and resources necessary to carry out the Project, including convergence with NRDWP and NBA programs.


ix

Project Reviews and Reports Yes Various Various

Description of Covenant Participating States to carry out: (a) a comprehensive mid-term Project review, and to prepare and furnish to IDA a mid-term Project progress report, by March 31, 2017; and (b) a comprehensive Project completion review, and to prepare and furnish to IDA a Project completion report, within 90 days after the Closing Date.

Conditions

Name Type

Description of Condition

Locations

Country First Administrative Division

Location Planned Actual Comments

India Ministry of Drinking Water and Sanitation

New Delhi Actual Four States: Assam, Bihar, Jharkhand and Uttar Pradesh

Team Composition: Bank Staff and Consultants

Name Title Specialization Unit

Smita Misra Lead Water and Sanitation Specialist Team Lead, Economist, Water Supply and Sanitation

SASDU

Martin P. Gambrill Lead Water and Sanitation Specialist Water Supply and Sanitation LCSWS

Pratibha Mistry Water and Sanitation Specialist Water Supply and Sanitation, Water Resources

SASDI

Pyush Dogra Senior Environmental Specialist Sanitation and Environmental Management

SASDI

Papia Bhatachaarji Senior Financial Management Specialist Financial Management SARFM

A.K. Kalesh Kumar Senior Procurement Specialist Procurement SARPS

Thomas K. S. Anang Procurement Specialist Procurement SARPS

Luis A. Andres Lead Economist Economist SASSD

Rafik Fatehali Hirji Senior Water Resources Specialist Water Resources, Groundwater Management

AFTN2

Surbhi Dhingra ET Social Development Social Development, Institutions SASDS

Suryanarayan Satish Senior Social Development Specialist Social Development, Institutions SASDS

Manu Prakash Water and Sanitation Analyst Water Supply and Sanitation SASDU

Rajesh Balasubramanian Senior Infrastructure Specialist Water Supply and Sanitation SASDU

Neeraj Gupta Senior Investment Officer, IFC Public Private Partnership CSAPP

Anshum Saxena Investment Analyst, IFC Public Private Partnership CSAPP

Pankaj Sinha Investment Officer, IFC Public Private Partnership CSAPP

Junxue Chu Senior Finance Officer Financial Management CTRLN

Vikram Raghavan Senior Counsel Legal LEGOP

Sunita Singh Program Assistant SASDO

Michelle Lisa Chen Program Assistant SASDO

x

Suseel Samuel Water and Sanitation Specialist Water and Sanitation TWISA

D. Maruthi Mohan Consultant Engineer, Water and Sanitation SASDU

Vijendra Vikramaditya Consultant Engineer, Water and Sanitation SASDU

Swati Gamaliel Consultant Procurement SASDU

BKD Raja Consultant Environmental Management SASDU

Kumar Amarendra Narayan Singh

Consultant Water Supply and Sanitation SASDU

Gary Moys Consultant International Technical Expert SASDU

Christopher A. Sandeman

Consultant International Technical Expert SASDU

Parameswaran Iyer Lead Water and Sanitation Specialist Peer Reviewer EASVS

Maria Angelica Sotomayor

Sector Leader Peer Reviewer LCSSD

Miguel Vargas-Ramirez Senior Water and Sanitation Specialist Peer Reviewer AFTU2

Institutional Data

Sector Board

Water

Sectors / Climate Change

Sector (Maximum 5 and total % must equal 100)

Major Sector Sector % Adaptation Co-benefits %

Mitigation Co-benefits %

Water, sanitation and flood protection Water supply 50

Water, sanitation and flood protection Sanitation 30

Public Administration, Law, and Justice Public administration- Water, sanitation and flood protection

20

Total 100

I certify that there is no Adaptation and Mitigation Climate Change Co-benefits information applicable to this project

Themes

Theme (Maximum 5 and total % must equal 100)

Major theme Theme %

Rural development Rural services and infrastructure 100

Total 100

1

I. STRATEGIC CONTEXT

A. Country Context

1. India has been one of the fastest growing economies in the last decade, but its economy now shows signs of slowing down. Between 2004 and 2011, the period that includes the global financial crisis, India’s growth averaged 8.3 percent per year. Expanding social programs lowered the poverty rate by 1.5 percentage points per year during 2004–09, double the rate of the preceding decade. India’s growth rate has however slipped to 6.5 percent in 2011-12 due to a combination of domestic and external factors, including high inflation, high fiscal deficit and weak external demand for the country’s exports. This slow down carries high social costs for millions of Indians, and threatens the gains made in poverty reduction over the past decade. Within this context, the Government of India approached the Twelfth Five Year Plan around the theme of ‘Faster, Sustainable, and More Inclusive Growth’. The Plan focuses on investment in infrastructure, and recognizes the benefits of improved water and sanitation services to health and economic welfare, particularly in rural areas. It recommends piped water coverage for at least 50 percent of the rural population, along with a conjoint approach for addressing sanitation and hygiene challenges. According to the 2011 Census of India, close to 70 percent of India’s 1.2 billion people live in rural areas, and contribute to about 40 percent of the country’s GDP. It is estimated that the total economic impacts of inadequate sanitation in India is about INR 2.44 trillion (US$53.8 billion) a year, equivalent to 6.4 percent of GDP in 20061, implying an annual loss of INR 2180 (US$48) per person. Therefore, improving access to water and sanitation services is a development priority for India.

B. Sector and Institutional Context

2. The Government of India (GoI) and the State Governments have together invested about US$30 billion for Rural Water Supply and Sanitation (RWSS) in the last five decades, with US$8 billion spent in the last 3 years. 74 percent of rural habitations have achieved a Fully Covered (FC) status with 40 liters per capita daily (lpcd), but this coverage is primarily through hand-pumps and does not necessarily translate into reliable, sustainable, and affordable service. Only 31 percent of the 167 million rural households have access to tap water and domestic toilets (Census 2011). About 67 percent of the rural population continues to defecate in the open. India accounts for about 50 percent of the world’s open defecation. Figure 1 presents important increases in access to RWSS piped water and domestic toilet nationally between Census 2001 to Census 2011, but the overall coverage levels are still relatively low.

1 Water and Sanitation Program (2007). The Economic Impacts of Inadequate Sanitation in India.

0%

10%

20%

30%

40%

Access toTap Water

Access toDomesticToliets

Percent of Rural

Households

Census 2001

Census 2011

Figure 1: Access to Rural Water Supply andSanitation, 2001 and 2011

2

3. Sustainability of service delivery is an area of concern with large numbers of rural habitations slipping to a ‘partially covered’ status mainly due to sources going dry, or systems working below capacity due to poor operations and maintenance (O&M). Depleting groundwater table and deteriorating groundwater quality are further threats to sustainability. Together these pose large coping costs to consumers. Weak cost recovery from users implies that most schemes require large operating subsidies provided by GoI and the States. On the sanitation front, while expenditure on toilet construction has been increasing, there are significant ‘slippages’ in coverage, coupled with low usage, mainly due to lack of understanding at the community level of the linkages between sanitation, hygiene practices and related diseases. Although the 73rd Constitutional Amendment promotes service provision to be decentralized to local governments (Panchayati Raj Institutions – PRIs2), most of the work of designing, implementing and operating RWSS schemes continues to be with the state engineering agencies through top-down, engineering-based, ‘supply-driven’ approaches, which also adversely impact governance and accountability. Monitoring and Evaluation systems focus mostly on ‘infrastructure creation’ (number of schemes and expenditures) but less information is provided on the quantity, quality and availability of services. 4. GoI has launched significant sector reforms in the last two decades, including the Sector Reform Project (SRP) in 1999 and the Swajaldhara Program in the early 2000s for decentralizing service delivery responsibilities. Recently, the Ministry of Drinking Water and Sanitation (MoDWS) has launched the National Rural Drinking Water Program (NRDWP), emphasizing the involvement of PRIs and communities in planning, implementing and managing drinking water supply schemes, along with providing support to capacity building programs and M&E systems. MoDWS’ long term strategy aims to cover 90 percent of rural population with piped water supply by 2022 and 80 percent rural population with household connections of 70 lpcd water supply. The strategy emphasizes achieving water security through decentralized governance, with oversight and regulation, participatory planning, and implementation of improved sources and schemes. The State sector institutions and/or Zila Panchayats (District PRIs) will implement and manage large multi-village schemes, delivering bulk water to villages, and Gram Panchayats (GPs) will implement and manage the intra-village schemes. 5. GoI’s Total Sanitation Campaign (TSC), launched in 1999, moved away from a supply driven approach followed under the Central Rural Sanitation Program (CRSP) since 1986, and attempted to adopt a demand driven program with greater thrust on Information Education Communication (IEC), Human Resource Development and Capacity Development activities. The Nirmal Gram Puraskar (NGP) award scheme was launched in 2003 to incentivize Open Defecation Free (ODF) villages. However, only 28,196 Panchayats (11.47 percent of the 245,000 Panchayats in the country) have received NGP in the last eight years. MoDWS has recently restructured the TSC as the Nirmal Bharat Abhiyan (NBA, the Clean India Campaign Program) with a GP-based ‘saturation’ approach to sanitation, with enhanced cash support to households for toilet construction, emphasis on Solid and Liquid Waste Management (SLWM) programs for achieving clean villages, integrated approach for planning and implementing sanitation and water schemes, and convergence with other local programs, such as the Mahatma

2Panchayati Raj is a system of governance encompassing lower tiers of government, in which Gram Panchayats (village governments, GPs) are one of the basic units of administration.

3

Gandhi National Rural Employment Guarantee Scheme (MGNREGS). The long term goal is to attain universal ‘Nirmal Status’ (clean status) by 2022. 6. RWSS service achievements vary across states, with some states like Kerala, Uttarakhand, Tamil Nadu and Karnataka having higher coverage through piped water supply. On the other hand, states like Bihar, Jharkhand, Assam and UP continue to struggle with minimum provision of services. The eight states that have the lowest coverage of tap water include Bihar (2.6%), Jharkhand (3.7%), Assam (6.8%), Odisha (7.5%), Chhattisgarh (8.8%), Madhya Pradesh (9.9%), West Bengal (11.4%) and Uttar Pradesh (20.2%) – collectively referred to as the “Low Income States” in this document. Of these, Bihar, Jharkhand and Uttar Pradesh (UP) also lag significantly in sanitation, with more than 75 percent of the rural households not having access to latrines within premises. C. Higher Level Objectives to which the Project Contributes

7. The Project is directly aligned with the Bank Group’s India Country Partnership Strategy (CPS) 2013-2017 (Report Number: 76176-IN), contributing to the Bank’s strategic engagement area of ‘transformation’, which specifically includes the proposed Project. In addition to supporting the decentralization of programs and policies under on-going RWSS projects, the key strategic shifts under this CPS, supported by the Project, include: (i) piloting an array of management models for large or multi-village schemes; (ii) supporting sustainable RWSS programs by linking Gram Panchayats (GPs) with higher levels of government and strengthening the capacity of PRI institutions; (iii) integrating water supply and sanitation interventions into catchment area protection schemes, household and village environmental sanitation programs, solid and liquid waste management, and health and hygiene awareness promotion; (iv) piloting the use of PPP models for efficient and accountable service provision, and (v) institutionalizing and scaling up proven policies and strategies demonstrated through various Bank-supported projects.

II. PROJECT DEVELOPMENT OBJECTIVES

A. Project Development Objective (PDO)

8. The project development objective is to improve piped water supply and sanitation services for selected rural communities in the target states through decentralized delivery systems and to increase the capacity of the Participating States to respond promptly and effectively to an Eligible Crisis or Emergency. 9. Table 1 presents the preparation readiness milestones that have been achieved.

Table 1: RWSSP-LIS – Key Readiness Milestones Achieved

Readiness Milestones Achievement Establishment of PMUs PMUs at national and State level established and functional Preparation of Project Implementation Plan (PIP) PIP finalized and presents the detailed RWSS program Preparation of ToRs for major consultancies ToRs finalized and under implementation Preparation of Investment Program 30% Investment Program and Bid Documents prepared;

Tenders invited Preparation of Procurement Plan Procurement Plan finalized for first 18 months

4

1. Project Beneficiaries

10. The Project will support RWSS programs in 33 districts in Assam, Bihar, Jharkhand, and Uttar Pradesh, and is expected to directly benefit about 7.8 million rural people, including about 3.8 million female beneficiaries. In convergence with NRDWP and NBA, the project will improve the ‘access and usage’ of the water supply and sanitation facilities created in the project area. Women and children will benefit significantly from the project interventions as they currently bear the burden of securing daily water supplies and dealing with illnesses resulting from poor water and sanitation facilities. The rural population is expected to benefit from IEC and BCC programs which will promote the adoption of improved sanitation and hygiene practices, including latrine usage. Rural women will be empowered to have voice and choice through membership in the Gram Panchayat Water and Sanitation Committees (GP-WSCs). The project beneficiaries also include tribal population.

2. PDO Level Results Indicators

11. The key PDO level results indicators are3 the following: i) Number of people with increased access to piped water. ii) Number of people with access to improved sanitation facilities. iii) Number of people using improved latrines. iv) Improvements in O&M cost recovery.

III. PROJECT DESCRIPTION

A. Project Components

12. The Project will be implemented over a six year period and will support the design and implementation of a ‘ring-fenced4’ RWSS program in MoDWS for improving piped water and sanitation coverage in the “Low Income States”. The MoDWS has prioritized four states, Assam, Bihar, Jharkhand, and UP, for Phase I of the program, based on: (i) rural piped water coverage; (ii) water quality problems; and (iii) number of Acute Encephalitis Syndrome (AES) and Japanese Encephalitis (JE) afflicted districts. The Project comprises the following three components (details in Annex 2): Component A: Capacity Building and Sector Development (Cost US$ 93 million; IDA contribution US$ 46 million). This component will support the building of institutional capacity for implementing, managing and sustaining project activities, along with sector development studies to inform policy decisions: (a) Capacity Building activities for MoDWS; (b) Capacity Building activities for State, district, and village level institutions, PRIs, and sector stakeholders; (c) Information, Education and Communications (IEC) Program; (d) Sector Development Studies and Pilot Innovations and Technologies; and (e) Monitoring and Evaluation Program at the State and Sector level, along with an on-line system for financial management and reporting.

3 The related Core Sector Indicators are presented in Table 5 in Annex 1. 4 This will be a dedicated RWSS Program for the Low Income States, under the on-going NRDWP of the Ministry.

5

Governance and Accountability Action Plan will be implemented by the MoDWS and the participating States. Awards will be given for good performance. Component B: Infrastructure Development (Cost US$ 860 million; IDA contribution US$ 430 million). This component will support investments for improving water supply and sanitation coverage, including construction of new infrastructure and rehabilitation and augmentation of existing schemes. Water supply investments will include water source strengthening and catchment area protection activities. Most habitations are expected to be served by Single Village Schemes (SVSs) using local groundwater sources. Multi Village Schemes (MVSs), mainly relying on surface water sources, will be taken up for habitations where the local source is either not sustainable or not of acceptable quality. The sanitation component will support NBA5 activities including soak-pits, drain and lane improvements, community awareness programs for improving sanitation and hygiene practices, along with incentives for achieving ‘open defecation free’ status. In addition, the project will promote pilot programs for 24/7 water supply and the introduction of new technologies in the RWSS sector, including the use of solar energy. Component C: Project Management Support (Cost US$ 47 million; IDA contribution US$ 24 million). This component includes project management support to the various entities at the national, state, district, and village levels for implementing the Project, including staffing, consultancy and equipment costs, and internal and external financial audits.

Component D: Contingency Emergency Response (Cost US$ 0 million). Following an adverse natural event that causes a major natural disaster, the Government may request the Bank to re-allocate Project funds to support emergency response and reconstruction. This component would draw resources from the unallocated expenditure category and/or allow the Government to request the Bank to re-categorize and reallocate financing from other Project components to partially cover emergency response and recovery costs. B. Project Financing

1. Lending Instrument

13. The lending instrument is Investment Project Financing.

2. Project Costs and Financing Plan

14. The overall allocation of funds, based on inter-state priorities determined by MoDWS, is presented in Table 2. The sharing of counterpart funds between GoI and the States (Table 3) is based on GoI-NRDWP guidelines, while IDA funds are an additional source of funds to these States. In the event that any individual state under or over performs compared to the plan, a mechanism is in place to reallocate IDA funds between the States based on performance at the time of the mid-term review (details in Annex 3).

5 GoI -NBA funds will be leveraged for construction of new toilets in all the Project GPs.

6

Table 2: RWSSP-LIS Financial Outlay (US$ million)

Table 3: RWSSP-LIS Financing of Components (US$ million) Components Total RWSS

Sector Program

Government Financing World Bank(IDA) Financing

Community Contribution

WB (IDA) Financing as % of Total Project

Cost

GoI

Financing6 State

Contribution7

Capacity Building and Sector Development

93 41 6 46 0 50%

Infrastructure Development 860 276 146 430 8 50% Project Management Support 47 13 10 24 0 50%

Contingency Emergency Response

0 0 0 0 0 0

Total 1,000 330 162 500 8 50%

C. Lessons Learned and Reflected in the Project Design 15. Since 1991, the World Bank has supported GoI in piloting and scaling up the RWSS Reform Program, contributing more than US$1.4 billion and benefitting about 24 million rural inhabitants in over 15,000 villages. The key lessons learned from this partnership and reflected in the project design are: The need to use PRI-based decentralized institutional models for the design, implementation

and management of RWSS services. Sustainability is enhanced through inclusive, community-based, participatory, demand-

responsive approaches to RWSS service delivery. Building the capacity of state RWSS departments, sector institutions, local governments,

support organizations, local private sector and communities is critical to successful outcomes. Project designs should integrate governance and accountability aspects. The criticality of focusing on sustainability, including financial sustainability of programs,

water source sustainability and service delivery sustainability. The importance of designing and implementing consistent sector-wide approaches at the state

and district level to scale-up reforms. Enabling the achievement of ‘open defecation free’ villages through effective sanitation

programs, advancing the household sanitation agenda and starting to tackle the next generation of sanitation challenges related to community-centric solid and liquid waste management.

6 GoI NRDWP funds. 7 Matching State counterpart funds, as per NRDWP guidelines.

State/MoDWS Project Outlay (US$ million)

%

Assam 240 24% Bihar 261 26% Jharkhand 146 15% Uttar Pradesh 331 33% MoDWS 22 2% TOTAL 1000 100%

7

IV. IMPLEMENTATION

A. Institutional and Implementation Arrangements

16. The Project will support progressive decentralization, with increased responsibility to the PRIs at the district and village level for designing and implementing the schemes, and to the State and District Water and Sanitation Missions for policy and oversight aspects. The following highlights the main institutional and implementation arrangements (details in Annex 3). (a) National Level: MoDWS Steering Committee, National Project Management Unit (NPMU), Technical Advisory Group (TAG). The Steering Committee chaired by the Secretary, MoDWS will include the Principal Secretaries of the four States and the Joint Secretary, MoDWS (Sanitation) as members and the Joint Secretary MoDWS (Water), as Member-Secretary. The NPMU will be established to assist MoDWS in implementing the Project. The NPMU will be supported by a specially constituted TAG with responsibility to review and guide project implementation. The existing National Resource Center (NRC) will be strengthened with the expertise available with NPMU. The NPMU will provide technical and policy advice and assist MoDWS in managing RWSS programs in the four States. The NPMU will also be supported by a professional agency to assist the States in implementing the Project. (b) State Level: State Water and Sanitation Mission (SWSM), Water and Sanitation Support Organization (WSSO), Public Health Engineering Department (PHED), Drinking Water and Sanitation Department (DWSD), Jal Nigam, Rural Development Department (RDD), Panchayati Raj Department (PRD), State Project Management Unit (SPMU). The existing SWSMs in the four states are responsible for planning and policy formulation, capacity building, fund flow, approval of the annual plans and budget allocations, and monitoring and evaluation of the Sector and District Programs. The Project will support the existing SWSMs and the WSSOs in implementing their roles and responsibilities. The State Departments such as PHED/DWSD, or Jal Nigam and RDD/PRD (in UP), will work primarily as ‘facilitators’ for all aspects of the district programs, including technical support, capacity building, and training programs. Their role in large schemes (MVS and SLWM) would be to plan and implement the schemes, with the involvement of GP-WSCs for intra-village works and operations. The Project will also support institutions, including Vishwa in Jharkhand and Pranjal in Bihar, for training and research activities in the RWSS sector. The SPMUs have been established as part of the SWSMs, with sector specialists, for preparing and implementing the Project. (c) District level: District Water and Sanitation Mission (DWSM), District Water and Sanitation Committee (DWSC), Public Health Engineering Department, Drinking Water and Sanitation Department, Jal Nigam (District Technical Divisions), Multi Village Scheme-Water and Sanitation Committee (MVS-WSC), District Project Management Unit (DPMU). The DWSMs, headed by the ZP Chairperson, and the DWSCs, headed8 by the District Collector (DC)/Deputy Commissioner/Chief Development Officer (CDO) /Deputy Development Commissioner (DDC), will be strengthened for receiving policy guidance from the SWSM and translating into district-level programs. The DWSC will be responsible for overall management

8 States have different arrangements for the DWSC.

8

of the district program, including selecting GPs based on criteria laid down by SWSM, engaging Support Organizations (SOs), and allocating funds for various schemes. The Technical Divisions of PHED/Jal Nigam/DWSD/RDD/PRD at the district levels will be responsible for designing and implementing the MVSs (possibly through PPPs) and large SLWM schemes in partnership with participating GP/GP-WSCs, and facilitating GP-WSCs in designing and implementing the SVSs. They will also be the technical back-stopping agencies for all schemes during the design, construction and O&M cycles. The MVS-WSC at the district level will be a representative committee of the group of GPs for MVS and will endorse and sign off scheme design and implementation phase payments. All Project districts will have fully staffed DPMUs to support the implementation of the Project. (d) Village Level: Gram Panchayat (GP), Gram Panchayat Water and Sanitation Committee (GP-WSC), Support Organization (SO). The GP will be responsible for taking all important decisions, including tariffs, through resolutions at the Gram Sabha meetings, under the overall guidelines given by SWSM and DWSM. The GP-WSC, as the sub-committee of the GP, will be responsible for design and implementation of SVS, the intra-village component of MVS, and SLWM activities, along with IEC/BCC programs for sanitation and hygiene promotion activities. The GP-WSC will work closely with the counterpart health and education committees at the village level. SOs will be appointed by the DPMU to assist the GP/GP-WSC. SOs will be responsible for community mobilization, capacity building and IEC/BCC activities.

B. Results Monitoring and Evaluation

17. Monitoring and Evaluation Program. The Project will adopt a results-based approach to monitoring and evaluation at the State, Sector and National level. State Level: State Management Information System (S-MIS). Project data will be collected

‘bottom-up’ from habitations/villages upwards to the districts and the State level. S-MIS will be responsible for data collection, monitoring and evaluation, adapted for each State as part of the IMIS system, based good practices, including the comprehensive web-based MIS developed under the World Bank assisted Uttarakhand RWSS Project.

Sector Level: Low Income States Management Information System (LIS-MIS). The State MIS will be integrated across the participating States into an MIS for the Project (LIS-MIS), as part of the National IMIS. The LIS-MIS will provide information for reporting progress towards achievement of the PDO through the Project Results Framework. A Performance Scorecard will be developed to facilitate implementation performance review on the basis of specific indicators (Annex 3).

National Level (MoDWS level). The Project will strengthen the National IMIS with a greater focus on service delivery: (a) Sector Performance Measurement Framework (PMF) to measure progress of the RWSS sector, including a GIS based MIS system to integrate data across the Ministry; (b) Capacity Building Monitoring and Evaluation to study the effectiveness, efficiency, impact and sustainability of capacity building interventions; and (c) an independent impact evaluation to assess the project's sustainability and potential for scalability.

18. Reviews on Project Implementation Progress. Indicators in the Project Results Framework will be monitored against the agreed targets annually, based on progress reports submitted by NPMU. In addition, the following assessments will be conducted: (i) a comprehensive mid-term review by March 31, 2017, including: (a) independent assessment of

9

decentralized institutional arrangements for mid-course recommendations, and (b) beneficiary assessment of RWSS service delivery improvements for completed schemes; and (ii) by December 31, 2019: (a) independent assessment of the achievements of the Project, and (b) beneficiary assessment of RWSS service delivery improvements for completed schemes. The Project completion report will be prepared within 90 days after the Closing Date of the Project. C. Sustainability 19. Sustainability of Schemes. The key ingredient for sustainability of RWSS schemes is operationalizing each state’s already articulated commitment and policies supporting the decentralized service delivery arrangements. PRIs and communities will be involved in water supply and sanitation schemes from the planning stage to ensure that schemes are designed and implemented as per community needs and affordability. The modest community contribution towards capital costs promotes ownership of the design of piped water schemes. Support organizations and NGOs, along with technical experts, will be involved in mobilizing communities, building capacities, and understanding local demands for preparation of scheme-level feasibility reports. The technical experts will work closely with the communities in designing schemes that communities desire and are willing to maintain, thus maximizing the likelihood of provision of safe and sustainable services. Source sustainability issues will be addressed through source recharge programs integrated within the design of the schemes. Governance and accountability measures, which will support improved sustainability, include independent monitoring through technical, financial and social audits, and the introduction of grievance redressal measures to address complaints by villagers. 20. The Project will explicitly address the issues of: (i) financial sustainability, especially for multi-village schemes, including beneficiaries’ ability and willingness to pay for improved services and importance of minimizing the need for subsidies for covering O&M and replacement costs; (ii) institutional sustainability of system operation and maintenance, including the need to explore back-up arrangements for professionalized support to local community operators; (iii) environmental sustainability of RWSS schemes to minimize the chance that they run out of raw water of adequate quantity and quality; and (iv) sustaining ODF villages and not letting them slip back to non-ODF status. V. KEY RISKS AND MITIGATION MEASURES

21. The detailed Operational Risk Assessment Framework (ORAF) is presented in Annex 4. The implementation risk of the project is High.

Table 4: Summary Risk Rating Risk Rating

Stakeholder Risk Moderate Implementing Agency Risk (including Fiduciary) - Capacity High - Governance Moderate

Project Risk - Design High - Social and Environmental Moderate - Program and Donor Low - Delivery Monitoring and Sustainability High

Overall Implementation Risk High

10

22. The major implementation risks are as follows: Weak capacity and institutional arrangements for implementing the decentralization

program; Convergence with NBA for financing the sanitation program and achieving ODF status; Effective implementation of project activities, including Social and Environmental programs;

and Timely delivery of the project activities, given the low and varying capacity across the four

participating States. 23. The key measures to address the identified risks are summarized below. i. The Project design has a strong focus on building the capacity of all stakeholders, particularly PRIs and Sector Agencies. Strong PMUs will be set up at the national, state and district levels, actively supporting and coordinating with PRIs and concerned stakeholders to streamline project implementation. NPMU will monitor the effective functioning of the governance structure and systems built into the project design (including findings of independent reviews and internal and external audit reports). The NPMU will be strengthened with a Technical Advisory Group (TAG) for reviewing and guiding the implementation of the RWSS Program.

ii. GP-WSC headed by the GP President will lead implementation, hence any risk associated with NBA funding (including MNREGS) as convergent resources for toilet and SLWM schemes will be resolved at the GP level through annual / batch-wise identified work program. MoDWS will prioritize funds for the project villages to achieve ‘saturation’ of water supply and sanitation facilities. Information Education Communication (IEC) and Behaviour Change Communication (BCC) programs will be specially designed, targeting diverse rural communities, for achieving village-wide ODF status.

iii. The Project will have ‘twinning’ arrangements with successful on-going Bank supported RWSS Projects in India. Project agencies, in particular NPMU, SWSM/WSSO, and DWSM/DWSC, as well the various project consultants, will monitor the effective implementation of the project as designed, including social and environmental programs.

iv. The risk that the four States do not perform as programmed, is addressed by permitting reallocation of IDA funds between the States, based on the use of the Performance Scorecard tool to assess performance of the participating States. The Bank will provide intensive implementation support, especially during the initial years of the project. 24. An additional risk is that certain areas may not be accessible due to local disturbances which may result in project implementation delays. This risk will be addressed through careful selection of project villages through ‘demand responsive’ and participatory approaches, involving PRIs, local NGOs and Support Organizations for effective and timely implementation.

11

VI. APPRAISAL SUMMARY

A. Economic Analyses

25. Cost-benefit analysis has been carried out for a sample of schemes, using representative technology options and a representative household sample survey covering 5,522 households. The following benefits have been quantified: (i) value of time saved in water collection; (ii) value of incremental water supply; and (iii) value of health benefits due to reduction in the incidence of diseases (diarrhea, malaria, encephalitis and dengue) which are widely prevalent in the Project habitations. The economic rate of return (ERR) of the project is estimated to be 30 percent and the benefit cost ratio is estimated to be 6.2. Annex 6 presents the details, including estimations for the four states. Sensitivity tests based on assessed risks indicate that the project will be able to absorb negative impacts and still generate an acceptable ERR. O&M cost recovery is expected to increase from the current low level of 5 percent to at least 70 percent by the end of the project period. 26. The ERR is a conservative estimate, since benefits that are harder to quantify were not included in the computation, e.g., several health outcomes (such as the reduction of miscarriages since women will no longer be fetching water) are not included. Project interventions also have a strong social component at the village level through the GP-WSCs. This social cohesion will generate spill-over benefits in the communities. Finally, the analysis does not include the value of savings in capital and recurring costs compared to the 'without project’ scenario. B. Technical

27. The Project will support improvements in water supply and sanitation coverage in the project habitations through construction of new infrastructure or rehabilitation and augmentation of existing schemes, with safe disposal of wastewater, as described below9: (i) Single Village Water Supply Schemes (SVS). Piped water schemes, mostly using local

ground water through deep bore wells, will involve pumping from the bore well, construction of elevated service reservoirs, and piped distribution networks to provide house connections to all households. The small schemes will adopt safe and appropriate disinfection programs. The cost of house connections will be provided by the Project.

(ii) Multi Village Water Supply Schemes (MVS). The scheme will use surface water sources (river), where locally available ground water has quality and quantity problems covering more than one GP, and will involve construction of infiltration wells/galleries or conventional water treatment plants, elevated service reservoirs for each village/GP, and piped distribution networks to provide house connections to all households. All MVSs will use disinfection mechanisms for treating raw water. Bulk flow meters will be provided at the inlet of each village Over Head Storage (OHS) and these will be linked to a simple Supervisory Control and Data Acquisition (SCADA) system. The cost of house connections will be provided by the Project. For large MVSs serving the peri-urban and large villages with 24/7 water supply, all households will be provided with metered connections and the cost of the meters is included in the Project.

9 Details are presented in the PIP.

12

(iii) Sanitation and Solid and Liquid Waste Management (SLWM). Project will support the following in convergence with NBA: sanitation (household toilets), institutional sanitation (toilets for schools and anganwadi, community/public toilets) and SLWM activities.

(iv) Quality of Detailed Engineering. Each state will adopt the following engineering practices: (a) Total Station Survey; (b) GIS base map; and (c) preparation of Water Security Plans. The Project has provision for procuring design software for the distribution system amenable to hydraulic modeling; optimal design of reservoirs conforming to the latest codes for RCC, seismic and wind loads; and GIS software.

(v) Design Criteria. The project will adopt agreed criteria for design population, service levels, and technology options, including service storage capacity, pipe materials for pumping mains, gravity mains and distribution systems, type of water treatment plants, disinfection facilities, etc. A dedicated power supply will be provided for MVSs. Solar power will be considered wherever power is not available or is unreliable. Provision of diesel generating sets will be carefully considered, in view of the high cost of diesel.

(vi) Independent Construction Quality Surveillance (ICQS). Departmental Engineers will assist GPs in day-to-day monitoring of works and materials procured by GPs. SPMU will retain an ICQS Consultant to monitor the quality of supervision of works, including the quality of materials procured and the quality of construction.

(vii) O&M Arrangements. For SVS, the construction contract will have a provision for O&M for one year, during which the capacity of the GP will be developed to manage O&M. If necessary, the GP will select an agency for O&M. For MVS, the construction contract will have a provision for O&M for five years / ten years for both common facilities and in-village facilities. The States will develop and adopt a sector-wide O&M Policy.

(viii) Water Quality Monitoring. GPs will ensure disinfection and check regularly for residual chlorine in all SVS. For MVS, water quality sampling and analysis will be carried out by the implementing departments in their water laboratories and state referral laboratories. These laboratories will regularly analyze samples of drinking water supplied in all rural water supply schemes.

(ix) Technical Manual. Considering the diverse nature of activities and the requirement of a much higher level of technological input to the proposed activities, a Technical Manual is being developed with guidelines for planning, design, construction, and operations and maintenance of water supply and sanitation facilities under the Project.

C. Financial Management

28. FM Assessments have been conducted for MoDWS, SWSMs and DWSCs of the participating States and project districts. FM arrangements of a few GPs have also been reviewed in the participating States. The review of FM arrangements of NRDWP and NBA Programs indicates the following strengths: (i) financial management arrangements are well documented in the Program Operational Manual; (ii) staff is trained to carry out basic accounting functions at all levels, including SWSM and DWSCs; (iii) a system of periodic financial reporting from the Districts and States to MoDWS is operational; and (iv) an online computerized Management Information System exists. However implementation experience shows a number of weaknesses, namely: (a) parking of funds at SWSM and DWSC is a common feature; (b) delays in bank reconciliations, inadequate control over fund authorization and non-settlement of advances have been noted in external audit reports of DWSCs; (c) SWSMs are merely routing funds received from the Centre to the Districts under the existing Programs; (d) devolution to GP-WSCs is

13

limited; (e) accounting is done manually; (f) internal audit is non-existent; (g) current staffing structure at MoDWS and SWSM allows only limited oversight of financial management functions; and (h) FM staffing at DWSCs requires strengthening. 29. FM arrangements for the Project have been designed based on the above strengths and weaknesses and the risk profile of the existing programs. These arrangements will be adequate to meet the Bank’s fiduciary requirements, subject to compliance with the financial management framework summarized in Annex 3. FM arrangements of the Project are detailed in the FM Manual prepared for the Project.

D. Procurement

30. Goods, works and consultancy services required for the Project, and financed out of the proceeds of the IDA credit, will be procured in accordance with the World Bank’s ‘Guidelines: Procurement of Goods, Works and Non-Consulting Services under IBRD Loans and IDA Credits & Grants by World Bank Borrowers,’ dated January 2011 (Procurement Guidelines); and ‘Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits & Grants by World Bank Borrowers,’ dated January 2011 (Consultant Guidelines). A project Procurement Manual has been developed by MoDWS in consultation with the Bank, which details procurement arrangements and methods. In addition, model bidding documents will be developed and agreed with the States. 31. The procurement risk assessment found that e-procurement system is already in use in Assam, Bihar, Jharkhand and Uttar Pradesh. The PWD Codes are being followed for procurement of works and adequate knowledge and expertise is available in all project States. The assessment found that there are no uniform or predictable practices for procurement of goods and services. Lack of capacity, transparency and grievances management in procurement has been observed in all participating States. A common procurement framework has been designed for the project comprising: (i) community based procurement (CBP) for small single village schemes where user groups will implement either through community Force Account or through Shopping and Local Competitive Bidding; (ii) conventional single responsibility contracts issued by the implementing agency through NCB and ICB procedures; and (iii) PPP options, including Design Build Operate Transfer (DBOT) schemes. The Project will use the e-Government Procurement System developed by NIC, with appropriate customization in all participating states. The current two envelope system will be termed as ‘bids in two parts’: technical qualification assessment will determine the eligibility and qualification of the bidders; and the technical-financial part of the bid will be opened in a timely fashion for the qualified bidders. Procurement under emergency situation (OP 10.00) will be guided by paragraph 20 of OP 11.00 procurement under emergency situation using simplified procurement procedures.

E. Social (including Safeguards)

32. Social Aspects. Project interventions are expected to provide positive health, environmental, and social benefits through the provision of 'safe' drinking water and the creation of sanitary conditions in villages. Success of the project will depend on mobilizing local communities to participate in the development of water supply and sanitation facilities and in enabling them to share the O&M responsibility. The communities are quite diverse – social (scheduled castes, others), economic (landless, small, marginal, and large farmers), ethnic

14

(scheduled tribe, others), gender (female headed households) and geographical setting (hills, plains, forests, flood prone areas). The GPs are still in their infancy. There are areas characterized as ‘extremist affected’, making them difficult to access. In addition, the RWSS sector rests mainly with Government Departments, which have traditionally followed top-down decision making, with hardly any accountability to the communities. 33. The Project has identified the following as significant social issues: (i) ensuring participation; (ii) ensuring inclusion and enhancing equity; (iii) decentralizing service delivery, underpinned by the principle of subsidiarity; and (iv) human and institutional development. Other important aspects are: (a) enabling participation, especially of women; (b) GP Strengthening; (c) change management initiatives for changing the role of Government from ‘provider’ to ‘facilitator’; (d) improving accountability and transparency; and (e) information, education and communication (IEC) campaign, along with capacity building programs. The project will provide capacity support to participating communities and local self-governments. It will strengthen existing and/or new institutions at the grassroots level to enable local communities to participate in planning and construction of RWSS facilities and subsequently operate and maintain the systems. 34. Gender. Although there are efforts to address gender issues, the social norms and conventional ways within villages often influence the way women view RWSS facilities and use them. Inadequate access or shortage of water implies that women will have to walk longer to fetch water to meet their needs. The quality of water being consumed is also an issue, impacting the health and income earning capacity of women. The absence of household latrines has a gender impact. The absence of girl friendly toilets with water facilities and safe menstrual hygiene management is a strong deterrent for girl attendance in schools. The Project will support sensitizing the functionaries and stakeholders at all levels and will promote full participation of women in sub-project activities at the village level, and in project activities at the district and state level. Capacity building initiatives will underpin gender sensitization as one of the major themes, with focus on social mobilization and participation, up-grading skills, and operational activities. The Project will support gender mainstreaming as part of project activities. 35. Land. Land requirement arises for four purposes: (i) water source; (ii) water treatment plants (WTPs); (iii) construction of ground level or overhead tanks (G/OHT) or cisterns; and (iv) water transmission and distribution pipelines, and sullage/ storm water drains. Water sources could be either ground water or based on surface sources, mainly rivers and canals. Ground water sources require ‘land’, as do WTPs and G/OHTs. Transmission and distribution lines are laid mostly on public land, or along public streets. In a few cases, pipelines may have to pass through private agriculture fields. Since the pipeline is laid at least 90 centimeters below ground level, no land acquisition is required, but permission from the land owner may be required. If such permission is not forthcoming, then an alternative pipe routing could be used. 36. Ownership of land acquired for Project activities could be either public or private. While it is easier to access public land, arrangements will have to be made for securing privately owned land. The prevailing practice is that such plots are obtained either through voluntary donation or through outright purchase. Private land will be secured through market based purchase and will be voluntary; as such Operational Policy (OP) 4.12 -Involuntary Resettlement is not triggered.

15

Mechanisms have been developed to ensure the voluntary aspect and that these do not involve any significant adverse impact upon the income or physical displacement of affected persons. 37. Tribal Development (Indigenous Peoples Policy – OP/BP 4.10). All the four states have some Schedule Tribe population. However, barring districts in Jharkhand, there are no ‘tribals’ (Indigenous Peoples, as defined by the Bank) in any of the other project areas. In Jharkhand, state policies ensure that tribal interests are protected in accordance with the Indian Constitutional provision (Article 244). Four of the six districts chosen for project coverage in Jharkhand are recognized as distinct tribal territories, where special Constitutional protections apply. The proposed project interventions are not likely to have any adverse impact on the tribal groups. Accordingly, in line with the Bank’s OP 4.10, a Tribal Development Plan (TDP) has been prepared, with the objective of the ‘promotion of inclusive, equitable and sustainable water supply and sanitation delivery through fostering and empowering grassroots tribal institutions in the tribal areas’. The TDP will have geographical jurisdiction comprising all distinct tribal territories of the six project districts in Jharkhand. Simultaneously, GoI’s policies for promoting RWSS activities for STs will also be implemented in the four States. F. Environment (including Safeguards)

38. The participating states have conducted state-specific Environmental Assessment (EA) studies, comprising an assessment of the current status of rural water supply and sanitation in each state, which includes the quantity and quality of available water resources, baseline environmental issues, along with institutional programs and policies. The EA has assessed the expected environmental impact of the proposed interventions and proposed mitigation measures. An Environmental Management Framework (EMF) has been developed with institutional arrangements for the implementation of the EMF. The EA study indicates that while the proposed interventions are expected to result in overall environmental and public health improvements, potential adverse impacts could occur if the schemes are not properly designed, sited, implemented, and maintained. The EMF will be applied to all individual single or multi village schemes, with respect to upfront screening of the schemes and identifying potential impacts and mitigation measures. The EMF will be a dynamic document, and will be updated from time to time, depending on any new issues or experience gained during project implementation. Annex 3 summarizes steps to ensure the Project’s environmental safeguard compliance. Currently, the safeguards assessments and management plans have not been planned for Component “D” of the project. These will be updated and applied, as and when the Component “D” is made effective in the project.

39. Environmental Assessment (OP/BP 4.01). Project activities are not expected to have any significant adverse environmental impacts. However, due diligence of each water supply scheme will ensure that in the unlikely event of any adverse impact, appropriate mitigation measures will be put in place in accordance with the EMF.

40. Projects on International Waterways (OP/BP 7.50). Individual schemes in Uttar Pradesh, Bihar, Assam and Jharkhand may involve the use of surface water from the Ganges and the Brahmaputra River basins. The Project will not result in any adverse changes to the quality or quantity of water in the river. In accordance with OP/BP 7.50, the Legal Department and the Regional Vice President have provided an exception to riparian notification under Paragraph 7 (a) of OP 7.50.

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Annex 1: Results Framework

INDIA: Rural Water Supply and Sanitation Project for Low Income States

1. SECTOR LEVEL - MANAGEMENT INFORMATION SYSTEM (LIS-MIS)

Table 5: Project Results Framework

The project development objective is to improve piped water supply and sanitation services for selected rural communities in the target states through decentralized delivery systems and to increase the capacity of the Participating States to respond promptly and effectively to an Eligible Crisis or Emergency.

PDO Level Results Indicators* Cor

e

Unit of Measure

Baseline

Cumulative Target Values**

Frequency Data Source/ Methodology

Responsibility for Data

Collection

Description

YR 1 YR 2 YR3 YR 4

YR5 YR6

Indicator 1: New piped household water connections that are resulting from the project intervention (number)

Number 0

1.15 million Annual

Project MIS, Beneficiary Assessment, Social Audits

DPMU, SPMU

Indicator 2: People provided with access to ‘improved sanitation facilities’ under the project – rural (number), of which female (percentage), BPL (percentage)

Number 0

As per baseline

survey and annual work

plan

AnnualProject MIS, Beneficiary Assessment, Social Audits

DPMU, SPMU

Convergence with NBA

Indicator 3: Number of people using improved latrines in the project area (number)

Number 0

Target to be set through

baseline survey

Annual Project MIS, Beneficiary Assessment, Social Audits

DPMU, SPMU Convergence

with NBA

Indicator 4: O&M Cost Recovery: (i) Percentage habitations with 50% or more O&M Cost Recovery; (ii) Percentage Habitations with 100% O&M Cost Recovery.

Percentage

(baseline to be

established after

selection of GPs)

As per Project MIS


DPMU, SPMU

INTERMEDIATE RESULTS

Intermediate Result (Component One): Capacity Building

Indicator 5: People trained to improve hygiene behavior or sanitation practices under the project (number), of which female (number)

Number 0

Total= 7.8

million; Female: 48%.


DPMU, SPMU

17



e

Unit of Measure

Baseline

Cumulative Target Values** Frequency Data Source/ Methodology


Collection

Description

Indicator 6: Water Utilities the Project is supporting Number 4

4 Annual Project MIS, DPMU, SPMU

Indicator 7: Other water service providers the project is supporting (number)

Number 0

2000 Annual Project MIS, DPMU, SPMU Number of schemes

Indicator 8: National, State, and District level institutions are set up, staffed and fully functional: NPMU, SPMU, and DPMU.

Yes/No/Partial n/a

1 NPMU/ 4

SPMUs; 33DPMUs.

Annually Institutional

Checklist NPMU

Indicator 9: Capacity building activities undertaken as per agreed strategy and plan in response to the requirements of the scheme cycle

Yes/No/Partial n/a

As per Project MIS

AnnualCapacity building checklist

SPMU

Indicator 10: Number of GP-WSCs with at least 50% woman members

Number 0

As per Project MIS

AnnualProject MIS DPMU, SPMU

Intermediate Result (Component Two): RWSS Investments

Indicator 11: Direct project beneficiaries (number), of which female (percentage), BPL (percentage)

Number 0

7.8 million

Female: 48%; BPL10: 42%

Annual Project MIS, Beneficiary Assessment, Social Audits

DPMU, SPMU

Convergence with NBA

Indicator 12: People provided with access to “improved water sources” under the project- rural (number), of which female (percentage), BPL (percentage)

Number 0

7.8 million

Female: 48%; BPL: 42%


DPMU, SPMU

Indicator 13:Improved community water points constructed or rehabilitated under the project (number)

Number 0

15000

Annual

Project MIS, DPMU, SPMU

Number of shared connections serving 20% households;

Indicator 14: Piped household water connections that are benefiting from rehabilitation works undertaken under the

Number 0

64000

Annual


Piped connections under Rehabilitation

10 NSSO 2009-10

18



e

Unit of Measure

Baseline

Cumulative Target Values** Frequency Data Source/ Methodology


Collection

Description

project (number) Schemes

Indicator 15: Number of schemes operationalized using the decentralized service delivery system, disaggregated by: Single habitation schemes (SHS)

Multi habitations within single GP schemes (SGS)

Small multi village schemes (Small MVS)

Large multi village schemes (Large MVS)

Number 0

As per Project MIS

Annual


Indicator 16: Percentage of project GPs that are declared open-defecation free.

Percentage 0

As per Project

MIS11 Every 6 months

Project MIS, Beneficiary Assessment, Social Audits

DPMU, SPMU Including NBA funding

Intermediate Result (Component Three): Project Management

Indicator 17: Number of schemes which have carried out: (a) independent supervision quality checks; (b) community monitoring /social audits; (c) beneficiary assessments at least once a year

Number 0

As per Project MIS

Annual Project MIS DPMU, SPMU

Indicator 18: Number of External Audits of environmental performance completed. Number 0

As per Project MIS

Annual

Project MIS: Independent

External Environmental

Audit

DPMU

*Core Sector Indicators are marked (http://coreindicators)

11 Project expects at least 30% of target GPs are declared open-defecation free.

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Annex 2: Detailed Project Description


1. The project development objective is to improve piped water supply and sanitation services for selected rural communities in the target states through decentralized delivery systems and to increase the capacity of the Participating States to respond promptly and effectively to an Eligible Crisis or Emergency. I. KEY FEATURES OF THE PROJECT

RWSS Program and Policies

2. Following are the key features of the RWSS-LIS Program and Policies supported by the Project12 in convergence with NRDWP and NBA:

(i) Decentralized Service Delivery Systems. The Project will promote decentralized service

delivery arrangements in the participating states with increased participation by the PRIs and communities and enhanced accountability at all levels. The project will support the following major shifts from the ‘business-as-usual’ model currently practiced in these States.

i. Strengthening policy and planning activities at the State and the district levels, with clear accountability to the GPs and the beneficiary communities. The existing State Water and Sanitation Missions (SWSMs) and the participating District Water and Sanitation Missions (DWSMs), Zila Panchayats (ZPs – District PRI), and GPs will be strengthened to allow them to undertake their respective policy, planning and review functions.

ii. Decentralization of RWSS service delivery responsibility to the DWSM and the ZP for Multi Village Schemes (MVSs) and to the GP Water and Sanitation Committee (GP-WSC) for Single Village Schemes (SVSs) and the intra-village component of the MVSs. GP-WSC will be formed as a statutory body of the GP, headed by the GP Chairperson.

iii. Facilitating decentralized responsibilities through Support Organizations (SOs) contracted by the District PMUs to help the GPs in planning and implementing SVSs. Multi Village and other complex schemes will be designed and implemented by the State Engineering Agency, in agreement with the participating GPs.

(ii) Strengthening Institutions for Building Capacity. Project will support strengthening

existing institutions for carrying out capacity building activities, including the State RWSS Institutes and the State Rural Water and Sanitation Management Organizations.

(iii) District-wide Approach. Uniform policies and institutional arrangements will be adopted for

the identified districts under the Project across the project districts, irrespective of the source of financing. The following criteria have been used by the States for the selection of districts:

12Details are presented in the Project Implementation Plan. A series of stakeholder consultations were held in each State to get feed-back for firming up the proposed program and policies.

20

Districts with low coverage of piped water supply and sanitation within the State. Quality affected districts, especially with chemical contamination (Fluoride and Arsenic)

in ground water. Districts with water scarcity due to non-sustainable or dried up water sources. Districts with large socially disadvantaged and poor population.

(iv) Integrated Approach to Water Supply and Sanitation. An integrated scheme cycle approach

will be adopted for planning, implementing and managing the water supply and sanitation schemes.

Water Supply: SVSs and MVSs will provide piped water supplies, taking into consideration the availability and quality of local water sources, and using catchment area management programs as required for improving source sustainability. MVSs will be taken up only if a local sustainable source is not available.

Sanitation interventions: Project will support: (a) household toilets13; (b) institutional sanitation (schools, anganwadi, community/public toilets)14; (c) environmental sanitation (SLWM, including soak-pits, drains and lane improvements for disposal of sullage and wastewater, and solid waste management for village-wide cleanliness; and (d) IEC / behavior change communication (BCC) activities. The sanitation component is designed to be complementary to GoI’s NBA program, by bringing about convergence in institutional arrangements and integrating water and sanitation processes into a single scheme cycle. A ‘saturation approach’ will be followed for achieving ODF coverage, with funding from both NBA and the Project: A comprehensive sanitation plan for each GP will be the basis for any household sanitation works and SLWM activities to be undertaken by the GP. The list of districts / GPs selected under the RWSSP-LIS will be submitted by the States to MoDWS for priority NBA funding from the Project. M&E System and Independent Checks: The Project MIS will monitor the sustained use of latrines. The Project will make use of new innovations in monitoring, e.g., Qualitative Information Systems (QIS), combined with GIS-databases (Geographic Information Systems). Performance benchmarking and cross-checks will be carried out through social audit teams within the village and externally through cross-visits by other GPs. All data will be transparently shared through the Project MIS. The ‘usage’ of toilets will be tracked on a self-reporting basis by the habitation / village / GP, with periodic independent checks.

(v) Community Contributions towards Capital and O&M Costs

Capital Cost (CAPEX) Contributions. To demonstrate support for the schemes, an amount of Rs 450 per household will be collected as an upfront, one-time, contribution from the beneficiary household (Rs 225 for SC/ST household). This contribution will enable households living within 10 meters of the network to connect at no additional charge. O&M Cost Recovery. The Project will adopt a phased approach for achieving full O&M cost recovery through user fees. Experience from on-going Bank assisted RWSS Projects and willingness-to-pay surveys for similar socio-economic households indicate the

13 through convergence with GoI-NBA program 14 through convergence with GoI-NBA program

21

willingness to be in the range of Rs 50-70 per household per month. In some States it could be more, depending on local demand and affordability. Based on these findings high levels of cost recovery can be expected through “affordable tariffs” in low cost schemes. In cases where affordable charges are inadequate for covering O&M costs, the State Government will provide transparent subsidies through O&M grants available under various programs, including NRDWP, Finance Commission, and State budgetary allocations. 24x7 water supply services will include household metering and suitably structured volumetric tariffs. For MVSs, ‘Bulk Water Tariffs’ will be introduced for bulk water supply at the village entry point. Annual increases in tariff will be indexed to inflation (consumer price index). States will develop and adopt a sector-wide O&M Policy. GPs will be responsible for meeting any shortfalls in beneficiary contributions and/or user charges.

(vi) Public Private Partnerships (PPPs). The project will support PPPs for efficient and

accountable services. About six to eight schemes have been identified in the four States for possible PPP models. PPP options for provision of power through solar operated pumps will be explored.

(vii) Selection of GPs. Under the demand responsive approach, any GP within the selected

districts that demonstrates commitment and willingness to implement the reforms could be considered under the Project, taking into consideration the following criteria: (a) existing level of water supply access and service; (b) water quality issues; (c) percentage of SC/ ST/ BPL; and (d) GP location in flood prone zones and water scarce zones.

(viii) Governance and Accountability Aspects. The Project will improve transparency and

enhance governance and accountability through the following measures: (a) RWSS district-wide program, including policies, institutions and infrastructure development program for transition to decentralized service delivery; (b) Clarification of roles and responsibilities for RWSS functionaries at each level: State, district, and GP, with well-defined responsibilities for policy and planning, design, implementation, managing and maintaining the schemes; (c) independent construction quality surveillance through technical experts to check on implementation quality of SVSs and MVSs; (d) social audits and civil society oversight, through NGOs and community organizations, during scheme planning and implementation phases; (e) grievance redressal measures at the GP, district and State level, with the M&E system capturing grievances and actions taken; (f) Service Delivery Assessment through household surveys, carried out once in two years, for assessing water supply and sanitation services, health and hygiene improvements, household expenditure on water and sanitation, etc.; (g) technical and financial audits to confirm and validate the technical aspects and expenses incurred for schemes and programs under the Project; (h) transparent and robust procurement processes, including competitive bidding processes, with on-line contract management and monitoring system; (i) M&E Systems for capturing project baseline and implementation progress, with clearly defined indicators; And (j) public disclosure of all project documents and reports at the web-site of the SWSM.

(ix) ‘Twinning’ with Bank assisted RWSS Projects. The participating States will have ‘twinning’

arrangements with on-going Bank assisted RWSS Projects, including Uttarakhand, Kerala,

22

Karnataka, Maharashtra and Punjab, to learn from the decentralization experience of these Projects.

Linkages with Education and Health Sectors 3. The Project will build partnerships, as appropriate, with the Education and Health-Nutrition Sectors for improving RWSS services. The NBA, NRDWP, National Rural Health Mission (NRHM), Sarva Siksha Abhiyan (SSA), and the Integrated Child Development Services (ICDS) programs articulate commitment for inter-sectoral convergence and have identified institutional mechanisms to do so. However, in practice these linkages largely remain weak and the sectoral intents unrealized. The RWSS-LIS project offers the opportunity to strengthen the linkages in the following ways:

Improving community awareness of the importance of improved water, sanitation and hygiene in disease prevention and achieving better health and nutrition, particularly for children, by strengthening IEC/BCC strategy, package and training.

Enhancing institutional convergence with NRHM and ICDS: (i) Building partnerships with the GP-WSC and the Village Health Sanitation Nutrition Committee (VHSNC) formed under the NRHM and ICDS for joint IEC/BCC, where VHSNCs exist. Where VHSNCs do not exist, the project will collaborate with the Aanganwadi Worker (AWW) and Accredited Social Health Activist (ASHA), key functionaries of ICDS and the NRHM. (ii) Improving the collaboration between GP-WSC and NRHM to support and promote each fulfilling its defined role for water, sanitation and health.

4. The Impact Evaluation of the project will design and test the impact of improved water and sanitation on health and nutrition indicators, as well as design studies to assess the impact of improved water and sanitation on morbidity reduction and specific disease incidence reduction.

Groundwater 5. On the basis of a review of the ongoing groundwater initiatives in Bihar (supported by the Central Groundwater Board - CGWB) and UP (supported by the Department of Groundwater and other agencies), and lessons from other States (Maharashtra and Gujarat), the Project will support the inclusion of a TA program for strengthening the management of groundwater. The TA will be developed in close collaboration with the respective Groundwater Departments of the Project States. II. PROJECT COMPONENTS 6. The Project will have three components: A. Capacity Building and Sector Development; B. Infrastructure Development; and C. Project Management Support. The total Project Cost is US $ 1 billion, with World Bank financing of US$500m.

Component A: Capacity Building and Sector Development (Cost US$ 93 million, IDA contribution US$ 46 million)

This component aims to build the capacity of the MoDWS and participating States to implement the Project.

23

A1: Capacity Building of MoDWS. The Project will support the strengthening of MoDWS to manage RWSS Programs, provide policy and technical advice, and to carry out training and research programs to support RWSS in all States at the national level.

The NPMU will be supported by a Professional Agency for implementing project activities of MoDWS.

A2: Capacity Building of RWSS Sector Institutions and PRIs. The following capacity building and training programs will be implemented under the Project:

o State level. Capacity building and training activities will focus on strengthening sector policy and planning functions at the state level. These include strengthening the capacity of sector institutions through training programs in sector policy and planning, program management, policy implementation, skills development, financial management, M&E, etc.

o District level. District functionaries have a key role in developing district-level programs, as well as facilitating PRIs for planning and implementing RWSS schemes. Specific capacity strengthening activities at the district level include training in policy and planning, engineering design and implementation of schemes, project management, financial and accounting management, procurement, community development, and health and hygiene aspects.

o PRIs. Training PRIs on scheme design, implementation and maintenance, procurement and financial management, health and hygiene aspects, etc., will be supported. These activities will be coordinated with the on-going training programs under NRDWP and NBA.

o Twinning arrangements. Twinning arrangements with successful, on-going Bank-supported RWSS projects from other states in India, as well as outside the country, will be supported.

A3. Program Information, Education, and Communications (IEC). This sub-component will facilitate Project activities by disseminating relevant information among stakeholders:

o IEC for empowering PRIs to adopt their new role in planning and implementation of RWSS schemes.

o IEC to promote behavioural change among stakeholders for improving sanitation and hygiene practices. A communication strategy will also be developed and implemented.

o Development of manuals, hand books, field books etc., on Project activities and implementation guidelines.

A4: Sector Development Studies and Pilot Innovations and Technologies. The Project will support technical, institutional, economic, and social studies and workshops intended to inform the state level policy decisions, including the following broad topics.

o RWSS Sector Program and Policies o Cost Effectiveness and Sustainability Analysis o Appropriate Technologies for RWSS Schemes o Institutional Models for Service Provision o Groundwater Management by Rural Communities o Independent Assessments and Project Reviews

24

The Project will also support pilot testing of new approaches and technologies, including the innovative use of solar energy, cost-efficient pumps, Reverse Osmosis plants, R&D for toilet technologies, recycling technologies for SLWM, etc.

A5: Monitoring and Evaluation. This sub-component comprises the following activities:

(a) M&E. Establishment and operationalization of an Information, Communication, Technology (ICT) enabled M&E System for monitoring project achievements, including the type and cost of schemes, service levels, water quality, O&M cost recovery and collection efficiency, etc. A benchmarking system will allow comparisons amongst districts, GPs and across schemes. Impact evaluations will be carried out to assess the effectiveness of project interventions. The Financial Management System will facilitate on-line accounting and monitoring of fund flows and expenditures.

(b) Governance and Accountability Activities. This will include independent verifications, technical audits, social audits and beneficiary assessments.

A6: Excellence Awards for Integrated Water Supply and Sanitation. The Project provide awards to the best performing States, districts and GPs, based on implementing integrated water supply and sanitation schemes, as per scheme cycle, and demonstrating full beneficiary satisfaction.

Component B: Infrastructure Development (Cost US$ 860 million, IDA contribution US$ 430 million)

7. This component includes investments required to improve RWSS services. Water Supply investments would be made in an integrated manner with source strengthening and catchment area management activities; Individual Household Latrines (IHHLs), Institutional toilets, Solid Liquid Waste Management (SLWM) activities15; health and hygiene awareness programs; and community incentives for attaining ‘open defecation free status’. In addition, pilot programs will include 24/7 water supply provision in select areas, and the introduction of new technologies, including the use of solar energy. The project will support the universal provision of household connections, meters for bulk water supply in all schemes, and the promotion of household meters, where appropriate. The main sub-components are:

B1: New Investments. Project will finance new water supply schemes, supported by catchment area management programs (B3 below, if required), and test new technologies. Public-Private Partnerships will be supported as part of the new investment programs.

a) New investments in SVS, including SHS and SGS b) New investments in MVS, including small and large MVS

B2: Rehabilitation and Augmentation of Existing Schemes. The following activities will be undertaken to improve service delivery in existing schemes:

a) Rehabilitation and augmentation of SVS b) Rehabilitation and augmentation of MVS

B3: Catchment Area Program. Source strengthening and catchment area management programs will be integrated as part of SVS and MVS (B1 and B2), if required.

15 Sanitation activities will be carried out in convergence with NBA.

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B4: Water Quality Management. GPs will carry out disinfection of water supply and will regularly check for residual chlorine levels for the intra-village schemes. For all schemes, water quality sampling and analysis will be carried out by the implementing Departments in their laboratories and state referral laboratories as per NRDWP guidelines. These laboratories will regularly analyze samples and report findings. A detailed Water Quality Management Program will be prepared by each State.

B5: Household, Institutional and Environmental Sanitation. This sub-component will complement the existing GoI led Nirmal Bharat Abhiyan (NBA) and will be carried out in an integrated manner with water supply activities. The Project will focus on creating awareness and demand for health, hygiene, and sanitation services, and motivating communities to attain open defecation free status through IEC activities and building capacity of village level institutions. In addition to the regular NBA funding for SLWM in all GPs, the Project will support an additional amount of Rs 825 per capita for an estimated 65% of the population, with prioritization for large villages.

B6: Infrastructure Support. This sub-component will support the design and implementation of the infrastructure program, including the following activities:

(a) Engineering Support. Engineering support would be provided for designing and implementing the RWSS facilities. This includes field surveys, geophysical surveys for source selection, geotechnical investigations for determining safe bearing capacity, water quality analysis, preparation of designs, drawings, estimates, bid documents, engineering supervision during project implementation, O&M support, etc.

(b) District Support. Professional Agencies will be hired by the State RWSS Departments for implementing the district and village infrastructure programs in Jharkhand and Bihar, including technical support activities.

(c) Community Support. The services of SOs, NGOs and community based organizations will be used for pre-planning, planning and implementation phase activities of the scheme-cycle, including the formation of GP-WSCs and MVS-WSCs.

Component C: Project Management Support (Cost US$ 47 million, IDA contribution US$ 24 million)

8. This component will support the PMUs at the National, State and district levels:

C1: Staffing and Consultancy Costs. The Project will support staff and consultancy costs for the PMU at the National, State, and district levels, for the following tasks:

a) Implementing and managing the Project. b) Facilitating the RWSS Program. c) Coordinating with various stakeholders, especially SWSM and DWSMs. d) Procuring services/consultants to support the implementation of the Project. e) Internal and external financial audits. f) Reviewing and reporting progress of Project activities.

C2: Equipment and Miscellaneous costs. These will include operational costs of the PMUs and the DPMUs, covering office expenses (rent) and other costs (computers, stationary, fuel, etc.)

26

Component D: Contingency Emergency Response (Cost US$0 million) 9. Following an adverse natural event that causes a major natural disaster, the State government may request the Bank to re-allocate project funds to support response and reconstruction. This component would draw resources from the unallocated expenditure category and/or allow the government to request the Bank to re-categorize and reallocate financing from other Project components to partially cover emergency response and recovery costs. An Operations Manual specific to Component D will be prepared. 10. Disbursements would be made against a positive list of critical goods or the procurement of works, and consultant services required to support the immediate response and recovery needs. All expenditures under this component, should it be triggered, will be in accordance with paragraph 11 of OP 10.00 and will be appraised, reviewed and found to be acceptable to the Bank before any disbursement is made. In accordance with paragraph 11 and 12 of OP 10.00, this component would provide immediate, quick-disbursing support to finance goods (positive list agreed with the Governments), works, and services needed for response, mitigation, and recovery and reconstruction activities. Operating costs eligible for financing would include the incremental expenses incurred for early recovery efforts arising as a result of the impact of major natural disasters.

11. Goods, Works and Services under this component would be financed based on review of satisfactory supporting documentation presented by the government including adherence to appropriate procurement practices in emergency context. All supporting documents for reimbursement of such expenditures will be verified by the Internal Auditors of the Government and by the Project Director, certifying that the expenditures were incurred for the intended purpose and to enable a fast recovery following the damage caused by adverse natural events, before the Application is submitted to the Bank. This verification should be sent to the Bank together with the Application.

12. Specific eligible expenditures under the category of Goods include: (i) construction materials; water, land and air transport equipment, including supplies and spare parts; (ii) school supplies and equipment; (iii) medical supplies and equipment; (iv) petroleum and fuel products; (v) construction equipment and industrial machinery; and (vi) communications equipment.

13. Specific eligible expenditures under the category of Works may include urgent works (repairs, rehabilitation, construction, etc.) to mitigate the risks associated with the disaster for affected populations. Specific eligible expenditures under the category of Services may include urgent studies (either technical, social, environmental, etc.) necessary as a result of the effects of the disaster (identification of priority works, feasibility assessments, delivery of related analyses, etc.).

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III. PROJECT COSTS AND FINANCING 14. Tables below present the detailed Project Costs, including component-wise costs and financing.

Table 6: RWSSP-LIS Cost Estimates

Base Costs US$ Million

A Capacity Building and Sector Development

A1 Capacity Building of MoDWS 9.5

A2 Capacity Building of Institutions in Four States 32.3

A3 Program IEC for Water & Sanitation 22.3 A4 Sector Development Studies 17.9 A5 Monitoring and Evaluation 8.5 A6 Awards for Good Practices 2.2

A. Total Capacity Building and Sector Development 93

B Infrastructure Development B1 New Investments- Water a. SHS 27.5 b. SGS 252.5 c. Small MVS 122.5 d. Large MVS 257.0 Total New Investments 660 B2 Rehabilitation and Augmentation a. SHS 0.1 b. SGS 33.4 c. Small MVS 2.8 d. Large MVS 1.5 Total Rehabilitation and Augmentation 38 B3 Catchment Area Program 3.4 B4 Water Quality Management 1.9 B5 Solid & Liquid Waste Management* 86.7 B6 Infrastructure Support a. Engineering Support 20.0 b. District and Community Support 50.6

B. Total Infrastructure Development 860 C Project Management Support C1 Staffing & Consultancy 32.9 C2 Equipment and Administration Costs 14.4

C. Total Project Management Support 47 Total Base Costs (A+B+C) 1,000 Total Project Costs 1,000 Total Financing Required (from WB) 500

Price escalation@7% per annum factored in the costs. * Regular NBA funds will be available for toilet coverage and SLWM in all GPs. The Project will support an additional amount of Rs 825 per capita for SLWM coverage for estimated 65% population, with a prioritization for large villages. Totals may not add due to rounding.

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Table 7: RWSSP-LIS Sources of Funds by Component (US$ million)

Component Total

Project

% to total

Project

Sources of funds

World Bank

% World Bank

GoI %

GoI States

% States

Communi

ty

% Commu

nity

A Capacity Building and Sector Development

A1 Capacity Building of MoDWS

9.5 0.95% 4.73 50% 4.73 50% - - - -

A2 Capacity Building of Institutions in Four States

32.3 3.23% 16.06 50% 10.3 32% 5.91 18% - -

A3 Program IEC 22.3 2.23% 11.17 50% 11.17 50% - - - - A4 Sector Development Studies

17.9 1.79% 8.97 50% 8.97 50% - - - -

A5 Monitoring and Evaluation

8.5 0.85% 4.25 50% 4.25 50% - - - -

A6 Awards for Good Practices

2.2 0.22% 1.11 50% 1.11 50% - - - -

Total Capacity Building and Sector Development*

93 9.3% 46 50% 41 44% 6 6% - -

B. Infrastructure Development

B1 New Investments- Water

659.5 65.95% 329.76 50% 199.20 30% 123.25 19% 7.25 1%

B2 Rehabilitation and Augmentation

37.8 3.78% 18.90 50% 13.93 37% 4.56 12% 0.42 1%

B3 Catchment Area Program

3.4 0.34% 1.70 50% 1.70 50% - - - -

B4 Water Quality Management

1.9 0.19% 0.93 50% 0.93 50% - - - -

B5 Sanitation- Solid and Liquid Waste Management

86.7 8.67% 43.4 50% 30.10 35% 13.20 15% - -

B6 Infrastructure Support

70.6 7.06% 35.31 50% 30.50 43% 4.81 7% - -

Total Infrastructure Development*

860 86.0% 430 50% 276 32% 146 17% 8 1%

C Project Management Support

C1 Staffing & Consultancy

32.9 3.29% 16.46 50% 9.35 28% 7.13 22% - -

C2 Equipment Costs 14.4 1.44% 7.24 50% 4.05 28% 3.15 22% - - Total Project Management*

47 4.7% 24 50% 13 28% 10 22% - -

Total Project Costs* 1,000.0 100% 500 50% 330 33% 162 16% 8 1% Note: * Totals may not add due to rounding.

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Table 8: RWSSP-LIS Average Unit Costs adopted in the Project Cost Estimates

(US$ per capita)

Assam Bihar Jharkhand UP SHS - 41 42 68 SGS - 47 76 64 Small MVS - 88 98 90 Large MVS 123 108 107 191

15. Table below presents the expected batch-wise coverage of habitations.

Table 9: RWSSP-LIS Batch-wise Coverage Habitations/Schemes

Batch Years SVS Schemes Small MVS Schemes Large MVS Schemes Total

State From To No of Schemes

Habitations

Coverage

No of Schem

es

Habitations

Coverage

No of Schem

es

Habitations

Coverage

No of Schem

es

Habitations

Coverage

Batch-1 Feb-14 March -

17

Assam

0 0 0 0 3 1956 3 1956

Bihar 152 555 3 56 1 90 156 701

Jharkhand 326 766 6 94 3 122 335 982

UP 219 1300 13 176 0 0 232 1476

Batch-2 Feb-16 March -19

Assam

0 0 0 0 4 3081 4 3081

Bihar 108 515 6 470 3 400 117 1385

Jharkhand 270 742 21 494 3 65 294 1301

UP 300 1800 19 450 2 180 321 2430

Batch-3 Feb-17 March -

20

Assam

0 0 0 0 0 0 0 0

Bihar 56 450 1 60 0 0 57 510

Jharkhand 83 314 36 626 3 81 122 1021

UP 361 2313 10 250 0 0 371 2563

Total 1875 8755 115 2676 22 5975 2012 17406 * Tentative dates and estimates for new and rehabilitation schemes. Batches could overlap, following the scheme cycle.

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Annex 3: Implementation Arrangements


I. Project Implementation Arrangements 1. Following are the key implementation arrangements at the national, state, district and village levels.

A. National Level Ministry of Drinking Water and Sanitation (MoDWS). The Project will be implemented through a special window of assistance under the on-going NRDWP. A Steering Committee will be established at MoDWS under the Chairmanship of the Secretary, MoDWS. The Steering Committee will provide guidance on sector policies and will be responsible for overall monitoring of the project. The Steering Committee will comprise the Principal Secretaries of the four States and the Joint Secretary MoDWS (Sanitation) as Members, and the Joint Secretary MoDWS (Water) as Member-Secretary. It is proposed that the Steering Committee meets at least once every quarter to review progress of project implementation. National Project Management Unit (NPMU) and Technical Advisory Group (TAG). NPMU

will be established in MoDWS for implementing the project. NPMU will be staffed with experts in technical, social, environmental, financial, procurement, etc., for policy guidance to the states. NPMU will be supported by a Professional Support Agency. In addition, a Technical Advisory Group (TAG) will be constituted, with primary responsibility for independently reviewing the design and implementation of the project, guiding participating states on project activities, and developing capacity building and institutional strengthening programs. B. State Level State Water and Sanitation Mission (SWSM). SWSM, under the RWSS Minister, is currently responsible for overall policy guidance to the RWSS Sector. The Executive Committee of SWSM, headed by the RWSS Secretary, assists SWSM in all its responsibilities, including planning and policy formulation, capacity building, fund flow, approval of the annual plan and budget allocation, and monitoring and evaluation of Sector and District Programs. SWSMs have been established in the four states, but need capacity enhancements. The existing WSSO will be strengthened as a facilitating agency to bridge the gap between State agencies and PRIs at the district, block and GP levels, mainly for ‘software’ activities, including HRD and IEC activities, monitoring and evaluation, and impact evaluation and impact assessment studies. The State Departments such as PHED/ DWSD or Jal Nigam and RDD/PRD (in UP) will work primarily as the ‘facilitator’ for all aspects of the District Program, including technical support for small SVSs and small SLWM activities, along with capacity building and technical backstopping. Technical Departments will continue to plan and implement large MVSs and large SLWM schemes, with involvement of participating GPs for intra-village works and operations. The project will support various institutions, including Vishwa in Jharkhand and Pranjal in Bihar, for training and research activities in the RWSS sector.

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State Project Management Units (SPMU). The Project will substantially strengthen SWSM and WSSO through the establishment of a State PMU, with sector specialists for policy and institutional aspects, social and community development, communication, capacity building, financial management, procurement, environmental sanitation, technical, and M&E. SPMU will be responsible for assisting SWSM and WSSO in monitoring and approval functions, as well as guiding implementing agencies in all aspects of project implementation.

C. District Level District Water and Sanitation Mission (DWSM). States have established DWSMs, headed by the ZP Chairperson, as per the guidelines of the GoI NRDWP. However, many of these are not fully functional and do not have adequate capacity. The proposed Project will strengthen DWSM, so that these can be responsible for the district RWSS program, including approval of schemes, fund flow, capacity building, IEC activities and M&E. The DWSM will receive policy guidance from SWSM and will be assisted by the District Water and Sanitation Committee (DWSC).

District Water and Sanitation Committee (DWSC). DWSC, headed16 by the District Collector (DC) / Chief Development Officer (CDO) / Deputy Development Commissioner (DDC), will be the executive arm of DWSM for implementing RWSS policies and program at the district level.

District Technical Divisions of the State Engineering Departments. The District Technical Divisions of PHED / DWS / UPJN will be responsible for designing and implementing MVS in partnership with the participating MVS-WSC. All design, supervision or operational activities will be undertaken through an agreement between the Technical Division, DWSC and the MVS-WSC. The MVS-WSC will sign off on all activities related to intra-village activities in MVSs.

Multi Village Water Supply & Sanitation Committee (MVS-WSC). MVS-WSC at the district level will be a representative committee of the group of GPs for an MVS. This will be a sub-committee of the ZP and will work closely with the Technical Divisions of RWSSD Division in planning, designing and implementing the MVS. MVS-WSC will endorse and sign off on scheme design and on implementation stage payments.

District Project Management Units (DPMU). DPMUs will support district level DWSMs and DWSCs. Each DPMU will have professional and technical staff, comprising technical staff (for water and sanitation) and sector professionals for community mobilization, IEC, M&E, capacity building, procurement, and financial management activities. These professionals will support the design and implementation of the district program and policies, including communications and capacity building, monitoring and evaluation projects, technical and social audits. These units will coordinate with various departments at the district level.

16 States have different arrangements for the DWSC.

32

D. Village Level Gram Panchayat (GP). The GP is the key institution at the village level for all RWSS activities, with the following responsibilities:

Providing guidance to GP-WSCs on village-wide RWSS activities. Passing resolutions at the Gram Sabha, as per scheme cycle. Tariff fixation at the GP level, within the overall guidelines given by SWSM.

Gram Panchayat Water and Sanitation Committee (GP-WSC). GP-WSC, as GP sub-committees, will be responsible for the design and implementation of the smaller water supply schemes (single habitation and single GP with multiple habitations), GP level SLWM activities, and the intra-village component of MVS. In particular, the GP-WSC will be responsible for scheme planning, design, procurement, construction, O&M, tariff collection / community contributions (capital and O&M), and accounts management. It will be responsible for all IEC/BCC activities for water and sanitation programs. It will also be responsible for the preparation of the comprehensive water security plan and the sanitation plan, with the help of the SO and the State Technical Agency.

Support Organization. The GP / GP-WSC will work with SO / NGO for community mobilization and IEC/BCC activities at the village level. The SO will provide technical expertise in design, implementation and O&M of SHS/ SGS/ intra village MVS and SLWM activities, as required. Block Resource Centers (BRC) will provide back-stopping support to the villages after the phasing out of SOs. The Project will promote the convergence of water supply and sanitation schemes in all States. A strong and dedicated DPMU, along with SOs at the village level, will ensure that the intended demand-responsive, community-driven approaches are followed as per the scheme cycle. Bihar and Jharkhand will appoint district level Project Management Consultants (PMCs) to support and strengthen the district team.

2. The agreed National and State level institutional and implementation arrangements are shown in Figure 2.

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Figure 2: National, State, District, and Village Level Institutional and Implementation Arrangements

State SWSM

Headed by Dev. Commissioner/ Chief Secy/ Additional Chief Secy (Member Secy: Secy / PS, RD/

PHED)

DWSD/ PHED/UPJN Planning, Design, Implementation of

MVS; Technical sanctions

SWSM Framing Sector policy guidelines,

Issuing GOs and directions

Overall Sector Monitoring

Sanctioning annual plans

SPMU*‐ WSSO*

Assistance in implementation and application of reform principles

Overseeing technical, financial and social audits

M&E, Capacity Building, Training, other Support Activities

DWSM/DWSC Implementation of district program,

Selection of SOs/DPMC

Admin. approval of all small schemes (Water/ Sanitation)

Capacity building and IEC with support from WSSO

Focus on District‐wide approach

GP: Gram Sabha resolutions and approval of schemes, Tariff policies; GP‐WSC: Design & Implementation of SHS/ SGS; O&M of SHS/ SGS and intra‐village MVS; Tariff design and collection

IEC on sanitation/ hygiene

SO: Community Mobilization; IEC; BCC;

Support design and implementation of

SHS/SGS/intra village MVS; SLWM: Tech Support at GP Level

PHED/DWSD/ UPJN Engineers

Support, Design, Implementation & Monitoring of MVS Schemes

Tech support to SHS/SGS/Env. sanitation

DPMU**Specialists

SO#

DWSD/PHED/Jal Nigam

DWSM Headed by ZP Chairperson

EE

G P AE/JE

State Level

District Level

Village Level

DWSC Headed by DC/CDO/ ZP President

GP‐WSC

Additional CE/ SE

Chief Engineer

EE is a member/ Member Secy of DWSC

SPMU*‐ WSSO* Project Director

Specialists

** DPMU will be assisted by DPMC in Jharkhand and Bihar # SO will be engaged by DWSC (part of DPMC, wherever DPMCs are deployed)

AEE

MoDWS

Steering Committee Headed by Secy, MoDWS

NPMU# Project Director,

Specialists TAG Specialists

National Level

MoDWS Policy guidance, Overall Sector

Monitoring, Project roll‐out, Capacity Building

NPMU* NPMU‐ Oversight and monitoring

TAG ‐ Review of designs and implementation

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Scheme Cycle for Integrated Water Supply and Sanitation Program

3. Implementation of the water supply and sanitation activities will be through an integrated scheme cycle, covering activities at the GP / village levels. There will be two types of scheme cycles, based on implementation responsibilities: (i) small water supply scheme (Single Habitation (SHS)/Single GP-Multi Habitation (SGS)) integrated with sanitation and environmental sanitation; and (ii) larger water supply schemes (MVS) integrated with sanitation and environmental sanitation. A summary of the scheme cycle is presented below.

Table 10: Scheme Cycle for Integrated Water Supply and Sanitation Program

Summary

Key Activity17

SHS/ SGS and HH Sanitation/Env

Sanitation (Months)

MVS and HH Sanitation / Env

Sanitation (Months)

Pre-planning Phase 2-3 2-3

Mobilization of GP and Communities and Formation of GP Water and Sanitation Committee (GP-WSC)

1 1

Formation of Multi Village Water and Sanitation Committee (MVS-WSC) NA 2

Gram Sabha Resolution “Agree To Do”, to take up RWSS schemes as per guidelines and principles

2-3 2-3

Tripartite agreement for SVS and MVS signed between DWSC, Technical Dept./ Technical Agency and participating GPs

NA 2

Names of Project GPs (Batch-wise) to be informed to MoDWS (Sanitation) for priority allocation of NBA funds

- -

Planning Phase 3-4 4-6

Baseline for water supply and sanitation – status and requirements 2 3

IEC/ BCC for water, hygiene, sanitation and environmental sanitation by SO and GP-WSC - continues throughout planning and implementation phases periods

3-4 3-4

Preparation of Water Security Plan for the GP 2 3

Preparation of SHS/SGS preliminary designs by GP-WSC, with support from SO 3 NA

Preparation of MVS preliminary designs by Technical Agency NA 4

Preparation of a comprehensive sanitation plan (including environmental sanitation) for the GP/ habitation.

3 3

Gram Sabha Resolution for scheme technology and estimates (for SHS/SGS) 1 1

Gram Sabha Resolution for Sanitation activities 1 1

Submission of SHS/SGS/SLWM proposals by GP to DWSC for administrative approval

1 NA

Submission of MVS proposals by Technical Dept.to DWSC for approval and for administrative approval as per Delegation of Powers

NA 1

Preparation of detailed Technical and Cost proposals of SHS/SGS by GP-WSC with assistance from SO and Technical Dept., and submission for Technical Sanction

2 NA

17 The detailed Scheme Cycle is presented in the Project Implementation Plan.

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Key Activity17

SHS/ SGS and HH Sanitation/Env

Sanitation (Months)

MVS and HH Sanitation / Env

Sanitation (Months)

Preparation of Detailed Project Report (DPR) by Technical Dept. for MVS NA 4

Preparation of Community Water and Sanitation Action Plans for water and sanitation by GP-WSC, with assistance from SO

1 1

Gram Sabha resolution on accepting Community Water and Sanitation Action Plan

1 1

Collection of initial community contribution by GP-WSC 2-3 2-3

Implementation Phase 6-10 18-24

Selection of construction contractor(s) by GP/GP-WSC for SHS/SGS and SLWM Schemes, assisted by SO and Technical Department,

2 2

(Env San only)

Selection of MVS Contractor by Technical Dept. as per procurement process NA 2

Construction of HH toilets (IHHL) using NBA funds with checks on quality of construction by Household and GP-WSC/ SO

3 3

IEC/BCC activities continue, coordinated by SO on construction quality/monitoring, use/maintenance of toilets, hygiene promotion, solid waste management and sanitation training

6-10 18-24

Quality of construction independent checks for MVS and SLWM 1 1

Preparation of Implementation Phase Completion Reports for SHS/SGS/SLWM by GP-WSC with assistance from SO (and Technical Dept. if required)

1 NA

Preparation of Implementation Phase Completion Reports for MVS by Technical Dept.

N1A 2

Technical and Social Audits to check water and sanitation schemes; toilets are used and maintained; villages are clean with no visible solid waste

2 4

ODF confirmed by SO/GP-WSC, with spot checks by external groups 1 1

O&M Phase Continuous IEC/BCC activities with monitoring at household and community level

6 18-14

Sanitation cross-checks by GP-WSC: households use and maintain toilets; villages are clean: no visible solid waste thrown around. Checks confirmed by external group

1 1

GP-WSC takes over O&M of schemes for SHS/SGS/intra-GP/SLWM 2 2 (SLWM only)

Technical Dept. takes over O&M from Contractor for inter-village works of MVS 2 4

Collection of user charges by GP-WSC 2 4

Exit of SOs from the GP 1 1

Continuous back-stopping by State Technical Department / Professional Agency - -

II. Financial Management 4. The FM risk is rated as Substantial based on assessment of the FM performance of the ongoing NRDWP and the agreed mitigation measures. The key weaknesses observed are stated in Section VI C of the main text of the PAD. The agreed financial management arrangements summarized below are adequate to meet the Bank’s fiduciary requirements.

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5. Budget and Release of Funds. GoI contribution (including the share to be financed by the World Bank) will be budgeted in the Demands for Grants of the Ministry of Drinking Water and Sanitation (MoDWS), as a separate budget line under the NRDWP. The budget for the State contribution will be provided in the Demands for Grants of the Public Health Engineering Department of the respective States (Drinking Water Supply Department in the case of Jharkhand) as part of the States’ overall budget for NRDWP. The Project budget for each financial year will be derived from the Annual Work Plan (AWP) of NMPU, SPMUs, DPMUs18, and GP-WSCs / MVS-WSCs in the four participating States. The annual planning process will follow a ‘bottom-up’ approach, starting from GP-WSCs/MVS-WSCs, consolidated at each DWSC, further consolidated at each SPMU, and finally consolidated at the NPMU. Allocation of funds for Batch II and III schemes will be based on the performance scorecard. 6. The fund flow design is shown in the following diagram. The details are given in the FM Manual.

Figure 3: Fund Flow Diagram

18 DPMU budget in case of Uttar Pradesh will also include the budget of UP Jal Nigam.

World Bank

MoDWS

GOI

Flow of Funds

DWSCs-DPMUs

SPMU, Assam

SPMU, UP

SMPU, Bihar

SPMU, Jharkhand

DWSCs-DPMUs

DWSCs-DPMUs

DWSCs- DPMUs

GoUP GOA GOJ GOB

Allocation of funds by SPMU to UP Jal Nigam / GP-WSCs/MVWSCs

GP-WSCs/ MVS-WSCs

GP-WSCs/ MVS-WSCs

GP-WSCs/ MVS-WSCs

GP-WSCs/ MVS-WSCs

UPJN

SWSM, UP

SWSM, Assam

SWSM, Bihar

SWSM, Jharkhand

UPJN SSM

DSCs

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7. The fund flow arrangements in the Project will do away with the unnecessary parking of funds with GP-WSCs/MVS-WSCs, and allow efficient cash management by the SPMU and DPMU. It will address the issue of having a large float of idle funds across project bank accounts, with no effective system to monitor these funds. This fund flow mechanism will simplify the book-keeping requirements at the level of the GP-WSCs/ MVS-WSCs. Internal controls will be strengthened since the DPMU will have online access to the bank statements of all participating GP-WSCs/ MVS-WSCs in the State. 8. Financial Reporting. Each SPMU will submit consolidated quarterly Interim Unaudited Financial Reports (IUFRs) comprising financial reports of all DPMUs and GP-WSCs/MVS-WSCs along with its own to NPMU19. NPMU will consolidate IUFRs received from the four States along with its own, and submit a quarterly consolidated IUFR to the World Bank within 45 days from the end of each quarter. 9. Internal Control Framework. The internal control framework will consist of: (i) Financing Agreements; (ii) Project Implementation Plan; (iii) Procurement and Financial Management Manuals; (iv) delegation of administrative and financial powers mandated for the Project, both at the Centre and the State;, and (v) relevant MoDWS/State departmental circulars/GO/ Rules. The Annual Action Plan of the Project, approved by the competent authority, will form the basis of implementation. Under the Infrastructure Component, technical clearance will be given by SLSSC. The delegation of power for administrative and technical sanction of all schemes is well laid out in each State. Additional key controls built into the project design are:

Project M&E System, which includes Beneficiary Assessments at least once a year, and independent construction quality supervision.

Approval of Batch II and III schemes on the basis of a performance scorecard for each State, validated by TAG, and sample cross-checked by independent reviewers.

Annual Financial Audit by Chartered Accountant Firms empanelled with C&AG for Major Audits.

Biannual Internal Audit. Social Audit.

10. External and Internal Audits. NPMU will be responsible for submitting individual audited project financial statements and audit reports of NPMU and SPMUs to the Bank for each financial year. Audited statements and reports will be submitted within 9 months from the end of the financial year. State level audit coverage will be extended to all spending units up to the level of GP-WSCs/MVS-WSCs. The Annual External audit will be conducted by private firm/s of chartered accountants, empanelled with the Comptroller and Auditor General (C&AG) for Major Audits for Implementing Agencies in States. Audits for Central Ministries will be done by the C&AG. Terms of Reference and selection criteria will be agreed with the Bank. The Project will be subject to a biannual internal audit by chartered accountant firms under Terms of Reference agreed with the Bank. The Internal auditors will assess the effectiveness of internal controls and

19 In case of UP it will also comprise financial reports of SSM and DSCs.

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provide independent assurance on the effective implementation of these controls. Internal Audit will also cover procurement reviews. Findings of social audits, particularly asset verification by communities, will be linked to financial audits. 11. Financial Management Manual. Detailed financial management processes, including budgeting, funds flow, internal control framework, accounting, financial reporting and audit arrangements are described in the Financial Management Manual. 12. Training and Capacity Building. The Project will provide training to finance staff at the state, district and GP levels as required. On-going training will be conducted to maintain appropriate books and records, and undertake other FM functions as envisaged in the Project Implementation Plan. Appropriate staffing, commensurate with the size and nature of the Project, has been agreed for NPMU, SPMU and DPMUs. Support Organizations (SOs) will help in building the capacity of GP-WSCs/MVS-WSCs to maintain books and records. 13. Under the Capacity Building component, the Central Plan Scheme Monitoring System20 (CPSMS) will be rolled-out in all the four Project States. 14. Retroactive Financing. Expenditures incurred with the Bank’s concurrence on or after March 31, 2013 and according to the Bank’s procurement guidelines will be eligible for retroactive financing up to an overall ceiling of SDR 8,000,000. III. Disbursements 15. The Bank will disburse funds to the designated account of the Borrower on the basis of eligible project expenditures pre-financed by government budgets and reported by consolidated quarterly IUFRs submitted by NPMU. The applicable disbursement method will be Reimbursement. Funds will be disbursed by the Bank as per Table below.

Table 11: Project Disbursement Categories

Sl. No

Category

Amount of the Credit Allocated

(expressed in million SDR)

Amount of the Credit Allocated

(expressed in Million US$)

Percentage of Gross Reported Expenditures

to be Financed (Inclusive of Taxes)

1. Goods, works, consultants’ services, training and Operating Costs under Parts A, B, and C of the Project

325.1 500 50%

2. Goods, works, consultants’ services, training and Operating Costs under Part D of the Project

0 0 100%

Total Amount 325.1 500

20 The Planning Commission and the CGA (CPSMS Cell) have piloted the implementation of the Central Plan Scheme Monitoring System (CPSMS) over the last two years. The CPSMS aims at establishing an on-line financial management information system and a suitable decision support system for approximately 1000 Plan Schemes of GoI. The CPSMS has been fully implemented in all civil ministries of GoI and transaction level details of all fund releases from GoI is available entity-wise with geographical tagging. The CPSMS has also been rolled out, on a pilot basis, in the states of Bihar, Punjab, Madhya Pradesh and Mizoram under MGNREGS, NRHM, SSA and PMGSY. Other states have also joined in the roll out.

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IV. Procurement 16. The broad procurement categories expected in the Project are: Component A: Capacity Building and Sector Development. Procurement of consultancy services for capacity building of RWSS Sector institutions and PRIs of participating states. Component B: Infrastructure Development. Procurement of goods and works for improving water supply and environmental sanitation (SLWM) coverage in the project habitations, including construction of new infrastructure or rehabilitation and augmentation of existing schemes with safe disposal of wastewater. Component C: Project Management Support. Procurement of goods and services to support implementing agencies established under the project at the national and state levels. Component D: Contingency Emergency Response. This component will be guided by the OP 10.00, Paragraph 11: Projects in Situations of Urgent Need of Assistance or Capacity Constraint. Therefore, Paragraph 20 of OP 11.00 on use of simplified procurement procedures will be applicable. 17. All goods, works and consultancy services required for the Project will be procured in accordance with the World Bank’s ‘Guidelines: Procurement of Goods, Works, and Non-Consultancy Services under IBRD Loans and IDA credits & Grants by World Bank Borrowers,’ dated January 2011 (Procurement Guidelines), and ‘Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA credits & Grants by World Bank Borrowers,’ dated January 2011 (Consultant Guidelines). A Procurement Manual for the Project has been developed by the Government of India, in consultation with the World Bank. Model Bidding Documents will be developed under the Project and agreed with the Government. A dedicated procurement management team will be established at the National level, comprised of qualified technical staff with overall responsibility for developing, implementing and managing project procurement functions. Similar teams, comprising of qualified procurement professionals, will be set up in the State and District level Project Management Units. Procurement staff of all implementing agencies will receive training on the World Bank Guidelines under Component A of the Project. State and District level Project Management Units will provide continuous handholding support to community institutions to carry out procurement related activities. 18. A common procurement framework has been designed for the Project consisting of: (i) community based procurement (CBP) for small single village schemes, where user groups will implement through either community Force Account/ or Shopping and Local Competitive Bidding; (ii) conventional single responsibility contracts issued by implementing agencies through NCB and ICB procedures; and (iii) PPP methods, e.g., DBOT. 19. Procurement for the construction of piped water supply schemes will likely consist of contracts on a turnkey basis. Small schemes (e.g., SHS and SGS) will be implemented by community based institutions.

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20. Procurement at the State and District levels will follow NCB & ICB procedures for procurement of goods and works. The project will use the e-Government Procurement system developed by NIC, with appropriate customization in the participating states. The use of the e-Government Procurement system is compulsory for all implementing agencies for procurement under NCB procedure. However, the use of the e-Government Procurement system is optional for other procurement methods. Through the e-Government Procurement system, the current two envelope system will be referred to as bid in two parts: the first part will determine the eligibility and qualification of bidders; and in the second part technical and financial bids from qualified bidders will be opened. 21. Public Private Partnerships (PPPs). The project will implement PPP options including DBOT models in the participating states on a pilot basis. Bidding documents for PPPs will be prepared and agreed with the Bank. 22. Procurement of Goods & Works. Table below indicates the methods of procurement for goods & works with value thresholds applicable and prior/ post review arrangements.

Table 12: Procurement Thresholds: Goods, Works, and Non-Consulting Services Expenditure

Category Value Threshold per

Contract Procurement Method Review Arrangement

Goods and Non-

Consulting Services

Contracts

Each greater than US$ 3,000,000 or equivalent

International Competitive Bidding (ICB)

All contracts are subject to prior review by the Bank.

Each less than US$ 3,000,000 equivalent and greater than US$ 100,000 or equivalent

National Competitive Bidding (NCB)

First contract irrespective of the value from each state shall be prior reviewed by the Bank. All contracts valued above US$ 1,000,000 are subject to prior review by the Bank. All other contracts are subject to post review by the Bank.

Each less than US$ 100,000 equivalent

Shopping / Limited Tendering

All contracts are subject to post review by the Bank.

All values Direct Contracting All contracts are subjected to prior review by the Bank.

All values Framework Agreements All contracts are subject to prior review by the Bank

Works Contracts

Each greater than US$ 40,000,000 or equivalent

International Competitive Bidding (ICB)

All contracts are subjected to prior reviewed by the Bank.

Each less than US$ 40,000,000 equivalent and greater than US$ 100,000 or equivalent

National Competitive Bidding (NCB)

First contract irrespective of the value from each state shall be prior reviewed by the Bank. All contracts valued above US$ 10,000,000 are subject to prior review by the Bank. All other contracts are subject to post review by the Bank.

Each less than US$ 100,000 equivalent

Shopping/ Limited Tendering

All contracts are subject to post review by the Bank

All values Direct Contracting All contracts are subject to prior review by the Bank

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23. Community Based Procurement. Table below provides the procurement thresholds for Single Village Schemes (SVS)/Single Habitation Schemes (SHS) implemented by community institutions based on procurement under the March 2012 Bank Guidelines for Procurement Management for CDD projects. Details of the process and procedures to be followed are detailed in the Procurement Manual.

Table 13: Procurement Thresholds: Goods and Works for CDD Projects Expenditure

Category Value Threshold per

Contract Procurement Method Review Arrangement

Goods and Non-Consulting Services Contracts

Each less than US$ 100,000 equivalent and greater than US$ 20,000 or equivalent

Local Competitive Bidding First contract irrespective of the value in the each state shall be prior reviewed by the Bank. All other contracts are subject to post review by the Bank.

Each below US$ 20,000 or equivalent

Shopping/ Force Account All contracts are subject to post review by the Bank.

Works Contracts

Each less than US$ 150,000 or equivalent and greater than US$ 50,000 or equivalent

Local Competitive Bidding First contract irrespective of the value in the each state shall be prior reviewed by the Bank. All other contracts are subject to post review by the Bank.


Shopping/ Force Account All contracts are subject to post review by the Bank.

24. Selection of Consultants. Consultants will be selected on the basis of the following methods: Quality and Cost Based Selection (QCBS); Quality Based Selection (QBS); Selection based on Consultants’ Qualification (CQ); Fixed Budget Selection (FBS); Least Cost Selection (LCS); Single Source Selection (SSS); and Selection of Individual Consultants. For service contracts, Bank’s Standard Bidding Documents will be used. Table below provides the thresholds for procurement of consultancy services.

Table 14: Procurement Thresholds: Consultancy Services Expenditure Category

Value Threshold per Contract

Procurement Method Review Arrangement

Consultancy Contracts

Each greater than US$ 300,000 or equivalent

Quality and Cost Based Selection (QCBS) REOI to be published in UNDB online

First contract in the each state shall be prior reviewed by the Bank. All other contracts valued above US$ 500,000 are subject to prior review by the Bank. All other contracts are subject to post review by the Bank.

Each less than US$ 300,000 or equivalent and greater than US$ 100,000 or equivalent

Quality and Cost Based Selection (QCBS)/ Quality Based Selection(QBS)/ Least Cost Selection (LCS)/ Fixed Budget Selection (FBS)

First contract in the each state shall be prior reviewed by the Bank. All other contracts are subject to post review by the Bank.


Selection Based on Consultant’s Qualification (CQ)/ Least Cost Selection (LCS)/ Fixed Budget Selection (FBS)

All contracts are subject to post review by the Bank.


Individual Consultants through comparison of qualifications of at least three individuals

All ToRs will be subject to prior review by the Bank. All other contracts valued above US$ 50,000 are subject to prior review by the Bank.

All values Single Source Selection (SSS) All contracts for SSS are subject to prior review by the Bank.

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25. Procurement Plan. The procurement plan for the first 18 months of the project has been prepared by the Borrower and agreed with the Bank. For each contract to be financed by the Bank, the procurement methods or the consultancy selection methods, estimated costs, prior review requirements and the time frame have been indicated in the Procurement Plan. The Procurement Plan will be updated annually or as required to reflect the project implementation needs and improvements in institutional capacity.

26. Selection of NGOs and SOs. Bank Procurement Guidelines for Selection of Consultants will be followed for the selection of Non-Governmental Organizations and Support Organization. Procurement Risks and Mitigation Measures 27. A procurement capacity risk assessment was carried out for implementing entities in the four participating states and at the national level. The assessment shows that the e-procurement system is already in use in Assam, Bihar, Jharkhand and Uttar Pradesh. PWD Codes are been followed for works contracting across the states and there is adequate knowledge and expertise in the lead engineering departments. 28. The assessment concluded that there is no uniform or predictable practice for procurement of goods and services. Consultancy services were seldom used, except for a single contract processed in Bihar under QCBS.

29. Poor bidder participation, often resulting in three to four bids, indicates a limited catchment of bidders in the market and is recognized as a major weakness. Inadequate capacity, transparency and grievance management in procurement were observed in all four states. Weaknesses in the control environment were evident, especially in the post award contract management stages, including processing of payments.

30. The assessment rates the procurement risk as Substantial. Table below summarizes procurement risks and mitigation measures.

Table 15: Procurement Risks and Mitigation Measures

Procurement Risk Mitigation Measures Fiduciary Risk relating to main principles of Bank Procurement Guidelines

Procurement will be in accordance with the Procurement Manual drafted in line with Bank Procurement Guidelines.

A Model Bidding Document will be prepared for works contracts. Experienced procurement professionals/staff will be hired at the national, state

and district level PMUs to comply with the agreed procurement guidelines & procedures.

Procurement/ technical staff dealing with procurement will undergo training programs conducted by the Bank/ Implementing agencies.

The proposed procurement review arrangements will ensure that the fiduciary requirements of the Project are met.

Procurement Accountability Risk Each state will retain relevant records of procurement documentation of each contract as required in the Procurement Manual.

Procurement Transparency The Procurement Manual provides guidelines for Disclosure Management of procurement information and Compliance Mechanism System.

e-Government Procurement system will have public access to procurement information.

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V. Environment and Social Management Framework 31. Social and environmental assessments were conducted by the States with the objective of identifying social and environmental issues and to design appropriate management measures for enhancing positive impacts and mitigating potential negative impacts. These assessments included collection and collation of secondary data, primary surveys and field studies in a sample of villages representing all six agro-climatic zones, analysis of the policy and legal framework, and wide stakeholder consultations. The program is not expected to have significant adverse environmental and social impacts and has been classified as a Category B project. However, the program does have the potential to offer significant opportunities to further environmental and social development objectives. Safeguards Management Plans have been prepared following Social and Environmental Assessments by independent consultants. Currently, the safeguards assessments and management plans have not been planned for component “D” of the project. These will be updated and applied, as and when the component “D” is made effective in the project. 32. Key Stakeholders, Consultations and Disclosures. Key program stakeholders were identified and extensive consultations were held at various levels during project preparation. Grassroots level stakeholders included: (i) potential beneficiary households (including women, poor, Scheduled Castes, Scheduled Tribes and the Tribal Settlements); (ii) GPs (men and women elected representatives); (iii) Junior Engineers of District Engineering Agencies; and (iv) other community based organizations. Block/district level consultations had participation from the respective Panchayat Raj Institutions; other concerned line departments such as health, rural department, power, irrigation; district/block administration; government water and sanitation departments/agencies; and non-governmental organizations, contractors/suppliers and consultants. Stakeholders at higher levels comprised: Government Functionaries from the Departments of Finance, Drinking Water and Sanitation, Rural Development and Panchayat Raj, Science and Technology, Irrigation, Health, political leaders, NGOs, consultants and other international agencies. While comprehensive and structured consultations were held through Social and Environment Assessment Consultancies, thematic deliberations were held throughout project preparation by State and Central Governments, as well as by the Bank missions. Suggestions from such consultations were incorporated into preparing as well as up-dating Environmental Management Framework (EMF) and the Social Management Framework (SMF). 33. The information on EMF and SMF are available at the web-site of each State. The executive summary of EMF was translated into local languages, including Assamese in Assam, and Hindi in UP, Bihar and Jharkhand. The EMFs and SMFs from respective states were received by Bank on February 28 / March 1, 2013. These were duly disclosed in the respective states at their websites. States will keep copies of these in the office of each implementing agency at both state as well as district levels for reference during implementation. Additionally, all the relevant documents will be shared at least 3 months in advance with the participating communities and GPs and ensure fuller awareness before the commencement of the planning phase. The EMF and SMF have been submitted to the Info Shop and were disclosed at the Info Shop on April 3, 2013.

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34. Social and Environmental Assessments. The Social Assessment comprised: (i) Beneficiary Assessment; (ii) Stakeholder Analysis; (iii) Institutional Analysis; (iv) Impacts Assessments; and (v) Risk Analysis. The Beneficiary Assessment enabled building socio-economic profiles at the national, district, sub-district and village levels, project beneficiaries’ assessment on the current status of research/extension/marketing, and their linkages with governance/management mechanisms. The Stakeholder Analysis resulted in identifying stakeholders at different levels and mapping key expectations, issues and concerns of each stakeholder group and the sub-group. Institutional analysis led to documenting and analyzing existing institutional arrangements, and formulating inputs into the design of the decentralized extension delivery system in consultation/collaboration with the stakeholders. This was followed by impact assessments and risk analysis. The results helped in designing the delivery system and addressing safeguards, thus ensuring positive and sustainable impacts; these are captured in the SMF. 35. The Environmental Assessment (EA) study, which comprised an assessment of the current status of rural water supply and sanitation in the state, status of water resources availability for sourcing of drinking water in terms of quantity and quality, identification of baseline environmental issues pertaining to rural water supply and sanitation, institutional and policy assessment, expected environmental impacts of the proposed project interventions and proposed mitigation measures, development of the Environmental Management Framework (EMF), and institutional arrangements for implementation of the EMF. Findings of the EA study indicate that while the proposed project interventions are expected to result in overall environmental and public health improvements in the states, potential adverse impacts could occur if the schemes are not properly designed, sited, implemented, and maintained.

36. Social Development Issues. Project interventions promise a significant potential for positive health and environmental as well as social benefits through the supply of 'safe' drinking water and the creation of sanitary conditions in villages. However, given the diverse conditions – physical as well as socio-economic and cultural – it will be a challenge to translate the potential into reality. Success of the project depends upon the project’s efforts in mobilizing local communities to participate in the development of water supply and sanitation facilities and enabling them to shoulder responsibility for operation and maintenance, in order to derive benefits on a sustained basis. 37. Given this setting, the project identified the following significant social issues: (i) participation; (ii) ensuring inclusion and enhancing equity; (ii) decentralizing service delivery, underpinned by the principle of subsidiarity; (iii) customer base and demand generation – marketing the program and driving home the health and hygiene benefits; and (iv) human and institutional development. Other important issues are enabling participation of women; GP strengthening; change management initiatives for changing the role of Government from ‘provider’ to a ‘facilitator’; improving accountability and transparency; and information, education and communication (IEC) campaign along with capacity building programs. The project will build capacity of the participating communities and local self-governments and strengthen existing institutions at the grassroots level, in order to enable local communities to participate in planning and construction of RWSS facilities and subsequently to operate and maintain the systems.

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38. Environmental Issues. The EA studies identify the following as significant environmental issues: (i) Water Availability, (ii) Water Quality, (iii) Environmental Sanitation, (iv) Solid and Liquid Waste Management and (v) Schemes in Forest Areas and Natural Habitat. The screening of schemes will identify scheme specific issues and based on OP 4.01 on Environmental Assessment, relevant Bank policies will be triggered to develop a mitigation plan for a particular scheme. Appropriate institutional and implementation arrangements associated with capacity building and capacity support also require focused attention.

Social Safeguards 39. Land. No land will be acquired involuntarily and hence Operational Policy (OP) 4.12 Involuntary Resettlement is not triggered. The program however does require land and the mechanisms for securing land are detailed. In respect of OP 4.10 Indigenous Peoples, there are ‘tribals’ in Jharkhand state, hence a Tribal Development Plan (TDP) has been prepared.

40. When plots of lands are to be acquired for project installations, their ownership could be either public or private. The normal prevailing practice in the state is to obtain such land plots either through voluntary donation or by outright purchase. Most villages do have sufficient public/Panchayat lands available for project installations. However, in case land acquisition becomes inevitable, the local community will secure lands either through voluntary donations or outright purchase. 41. Rules for land acquisition. The project will not resort to any involuntary land acquisition. All donations and purchases will be voluntary. Voluntary land transactions will meet the following criteria: (i) the land in question will be free of squatters, encroachers or other claims of encumbrances; (ii) land will be chosen (by the community) after ensuring that water is available there; (iii) verification of the voluntary nature of land donation in each case; (iv) land transfers will be completed and land title will be vested in the community (GP/GP-WSC) through registered sale deed or MOU; and (v) provision will be made for redressal of grievances (ROG). DPMU will arrange for an examination of all land transactions by an independent agency before according approval. Land will not be accepted from land owners whose holding is less than the minimum economical viable stipulated size (2.5 acres). Tribal Development (Indigenous Peoples Policy OP/BP 4.10) 42. All four states have sizeable Schedule Tribe population. However, barring Jharkhand, there are no ‘tribals’ (meeting the Bank definition of Indigenous Peoples) in any of the other project districts. In Jharkhand, state policies ensure safeguarding tribals’ interests in accordance with the provisions of the Indian Constitution (i.e., Article 244), by recognizing a significant geographical area as a distinct tribal territory (called ‘Scheduled Area’) where the constitutional provision of the Fifth Schedule applies. Jharkhand’s scheduled area is spread across 14 districts (out of a total of 24 districts). Of the six districts chosen for project coverage, four have Scheduled Areas. Proposed project interventions are not likely to have any adverse impact on tribal groups. However, a majority of the tribals are socially and economically weak, prone to vulnerability, and are often excluded from development initiatives. Hence, to ensure that they have access to project benefits on par with others and ensure ‘inclusion’ and ‘equity’, specific

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targeting is essential. Accordingly in line with Bank OP 4.10, a Tribal Development Plan has been prepared to ensure that the project reaches the Tribals. Simultaneously, GoI’s policies for promoting RWSS activities for STs shall also be implemented in the four States. Environmental Safeguards Management 43. Water Availability. Increasing levels of water contamination due to anthropogenic activities is slowly becoming an area of concern. Open defecation, lack of means to dispose animal waste, and garbage are major contaminating factors in all four states. Assam has annual replenishable groundwater resources of 27.23 BCM, of which 22% is being utilized annually. Assam does not have any zones classified as over exploited, critical or semi-critical. The Brahmaputra River has an average water discharge of 19,830 cum/sec at its mouth, a maximum discharge of 72794 cum/sec. at Guwahati, and a minimum discharge of 1757 cum/sec. Though surface water is available, risk to intakes and other water supply infrastructure from floods is an issue. Floods may create water quality issues, e.g., flood waters entering toilets, resulting in contamination of surface and groundwater aquifers. Decreasing groundwater levels are observed in some districts. 44. Annual replenishable groundwater resources in Bihar are estimated to be 29.19 BCM, of which about 39% is being utilized. The state does not have any zones classified as over e xploited, critical or semi-critical. Surface water resources in Bihar include 69,000 ha of ponds and tanks, 9,000 ha of oxbow lakes, 7,200 ha of reservoirs, 3,200 km of rivers, and 1 lakh ha of riverine and other flood plains. Due to the general lowering of the groundwater table, hand pumps run dry during summer months.

45. Annual replenishable ground water resources in Jharkhand are estimated to be 5.58 BCM, of which about 20% is being utilized. Jharkhand does not have any zones classified as over e xploited, critical or semi-critical. Extraction of groundwater is an issue due to the rocky terrain. Frequent drying of sources is reported.

46. Groundwater levels in Uttar Pradesh show a wide variation from less than 2 mbgl to more than 30 mbgl. Annual replenishable groundwater resources in UP are 76.35 BCM, of which about 70% is being utilized. In the 28 proposed project districts of eastern Uttar Pradesh, utilization of replenishable groundwater resources is about 66%; 7 blocks are declared as over-exploited, 13 blocks as critical and 44 blocks as semi-critical with respect to groundwater utilization. The state is estimated to have 161.70 BCM (131.0 m.a.f.) of surface water. Contamination of sources due to agricultural activities was observed during the EA study.

47. The EMF provides adequate management measures (under the Environmental Codes of Practice) for compliance during the construction and laying of pipe-distribution networks. Selection of the source for the water supply will be made after detailed examination of both surface and groundwater sources in the region. These sources will be tested for water quality prior to selection for water supply schemes. In order to ensure sustainability, groundwater will be sourced from deep aquifers after scientific hydrogeological investigations. High Flood Levels (HFL) of the source and nearby rivers will be taken into consideration during design. Water requirements of the program are very small, compared to the present draft of replenishable

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groundwater and available surface water. When water from deep aquifers is not potable due to chemical contamination, surface water will be used with appropriate treatment. 48. Management Measures. Environmental management strategy, along with the technical specifications required for effective implementation, is captured under eight Environmental Codes of Practice (ECoPs): (i) ECoPs for Identification of Sources of Water Supply. (ii) ECoPs for Protecting Surface Water Supply Source and Ensuring Sustainability. (iii) ECoPs for Protecting Ground Water Supply Sources and in Ensuring Sustainability. (iv) ECoPs for Water Quality Monitoring. (v) ECoPs for selection of Safe Sanitation Technology Options (Including Drainage) at Individual Household and Community Level. (vi) ECoPs for Selection of Location for Community Toilets. (vii) ECoPs for Safe Sullage Disposal and Organic Waste Management. (viii) ECoPs for Safe Solid Waste Management at Individual Household and Community Level. 49. Water Quality. A robust Water Quality Monitoring mechanism has introduced through institutional and capacity building of the existing systems and strengthening water testing infrastructure. Water quality will be monitored at the time of site selection for tapping water sources. A protocol for regular water quality testing and control has been developed by all four states, which will be implemented during the operations phase of the water supply schemes. 50. Solid and Liquid Waste Management. Disposal of solid and liquid waste has been addressed through Environmental Codes of Practice on Safe Disposal of Sullage and Organic Waste Management and Safe Solid and Liquid Waste Management at Individual, Household and Community Level. Efficient design of surface sullage drains and adoption of good construction practices, along with a system of regular maintenance will ensure that stagnant pools of sullage are eliminated. Placement of water supply pipeline at a safe distance from sullage lines on different sides of the road would reduce the risk of cross contamination. Oxidation ponds/root-zone treatment system would be constructed for treating sullage from the village and the treated sullage can be used for agriculture, horticulture, aquaculture and agro-forestry purposes. Vector control measures will be adopted for ponds and drains carrying sullage by avoiding stagnation and spraying with non-hazardous insecticides, in accordance with Bank OP 4.09. Forest Areas and Related Issues 51. EA studies have identified forest areas and ecologically sensitive areas in the participating states. The EMF indicates that the project schemes should not be in close proximity to (which may require a pre-forest or environmental clearance from State Forest Department / Ministry of Environment and Forest (MoEF), Govt. of India) or inside National wild life Parks/sanctuaries. If forest land is required, the clearance procedures as per existing laws of the state and of MoEF will be followed before undertaking construction. The EMF also prescribes actions to avoid any temporary minor impact related to construction. It includes guidelines on working in forest areas and avoiding impacts on natural habitats.

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52. Since the EMF is based on the Environmental Assessment (EA) conducted for sample schemes of the four participating states, there is a possibility that some environmental and social aspects that have not been identified and addressed in the EMF may arise during implementation. The EMF is therefore envisaged as a living document and will be updated from time to time, based on experience gained during project implementation.

53. Based on screening criteria described in the EMF, each proposed single and multi-village water supply scheme will be categorized based on the sensitivity of the level of intervention required. Category I schemes will have no or negligible environmental and social issues, and designs can be finalized and tendered immediately, including screening, categorization and mitigation plan. Category II schemes will require a brief scheme specific EMP to be prepared by the concerned state implementation unit before works commence. Environmental management and mitigation activities will be included in the specifications and conditions of the civil works contract and will be appropriately costed by the contractor. Projects on International Waterways (OP/BP 7.50) 54. OP 7.50 is applicable for the proposed project since rural water supply, drainage and sanitation activities will be carried out in the watersheds of the Ganga and the Brahmaputra Rivers, or their tributaries. These rivers and tributaries are considered international waterways for the purposes of the policy. Project components, in the context of OP 7.50, will not adversely change the quality or quantity of water, both upstream and downstream, and will not be adversely affected by the water use of other riparian countries. In addition, proposed project activities do not conflict with any of the agreements between the riparian countries. The Legal Department and the Regional Vice President have approved the request for exception from the riparian notification requirement under Paragraph 7(a) of OP 7.50. Implementation Arrangements 55. Safeguards management will form an integral part of the overall scheme cycle, including sub-project appraisals and monitoring and implementation. SMPU and DPMUs, under the supervision of SWSM and DWSM, will be responsible for providing technical support on safeguards management to GPs and communities.

56. SPMU and DPMU staff will include Environmental and Social Development Specialists with overall responsibility for ensuring implementation of environmental and social development aspects. They will, in particular, assist the PMUs in: (i) developing and disseminating alternative mechanisms to reach and work with the communities on safeguards; (ii) drawing strategies and implementation action plans for transparency, inclusion and accountability in relation to safeguards; (iii) designing and adopting change management approaches and capacity building programs for safeguards; and (iv) designing, rolling out and maintaining a web site reflecting status and progress in the RWSS sector in the state. At the village level, support organizations will be deployed for building capacity of the GPs and GP-WSCs, including the awareness and capacity for environmental and social management. The Specialists will review screening forms, EMPs, SMF, Lands, Tribal Development and other related documents, and monitor compliance

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with the agreed procedures. Plans have been made to build the capacity of staff involved in safeguards management. 57. In addition to internal environmental monitoring and evaluation, environmental and social audits will be conducted at regular intervals by experts (typically by staff of the State and National PMU, with assistance from specialists of the management and engineering consulting firm). VI. Monitoring and Evaluation State Level (State–MIS) 58. An S-MIS for each State will be adapted from national and international good practices, including the Uttarakhand Rural Water Supply and Sanitation Project, integrating MIS, M&E, and Audit Systems. It will include PRI based monitoring, which facilitates bottom-up data flow from the village/habitation level to GP, District, and State levels; the use of web and mobile technologies for data collection; output and outcome monitoring, covering both access and usage, supported by social audits, sustainability assessments, and the Healthy Home Survey for personal hygiene, domestic hygiene, and environmental sanitation. The State level MIS will be designed to ensure the addition of future GIS functionality. Financial data and implementation data will be integrated in one database. Sector Level (LIS-MIS) 59. S-MIS will be integrated across the participating states into a Sector level MIS for the participating Low Income States (LIS-MIS). The LIS-MIS will be used for reporting on the detailed Project Results Framework and the Performance Scorecard of the participating States: (i) Project Results Framework for reporting progress towards achievement of the Project Development Objective, including implementation activities, outputs and outcomes (presented below); and (ii) Performance Scorecard to facilitate an implementation performance review on the basis of the scheme cycle, and to progress from one Batch to another. 60. A performance-based allocation mechanism will encourage implementation of the decentralization reform agenda and efficient project execution. A Performance Scorecard will be used to assess the performance of the participating States, against the following major elements of the Project: (i) RWSS Decentralization Program; (ii) RWSS Infrastructure Program; and (iii) RWSS O&M Cost Recovery and Sustainable ODF. Indicators and marks for the Scorecard can be revised at the MTR stage, if required.

Figure 4 Monitoring and Evaluation Framework

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61. Funds for Batch I have already been allocated by MoDWS; however, States can move from Batch I to Batch II only when they have achieved a minimum score21. In addition, a Mid-Term Review will be conducted by MoDWS at the end of Year 3, and available funds and eligible States for Batch III will be reviewed based on the Performance Scorecard. Batch III will be adjusted to accommodate additional funds for the more progressive States and a reduction in funds for lagging States, taking into consideration realistic prospects for achievement in the remaining three years of the project.

Table 16: Performance Scorecard Performance Scorecard

Indicator Unit Review at end of first year of

the Project Review at end of Y2 of each Batch Scores*

RWSS Decentralization Program 10 1. Government Orders issued:

(a) RWSS Decentralization Program and District-wide approach in all Project Districts; (b) Policy on O&M Cost Recovery

Yes/No Yes/No

Yes if (a) and (b) are achieved, otherwise No

Follow-up activities: MIS established for decentralized program

(habitation upwards data collection), with data entry completed for previous Batch

10% or more schemes have carried out: (a) independent supervision quality checks; and (b) community social audits.

2

2

2. GP-WSC and MVS-WSC formed and functional

Number of WSCs

30% or more WSCs for the Batch

70% or more WSCs for the Batch 2

3. Water Security Plans completed for Project GPs

Number of GPs

Plans completed for all GPs in Batch 2

4. Sanitation Plans completed for Project GPs

Number of GPs

Plans completed for all GPs in Batch 2

RWSS Infrastructure Program 10 5. Number of schemes

commissioned as per scheme cycle

Number of Schemes

At least 30% of Batch SVS

At least 50% of Batch MVS and at least 60% of Batch SVS

4

6. Number of GPs saturated with water and sanitation facilities (including SLWM)as per agreed targets

Number of GPs

At least 30% of Batch target

At least 60% of Batch target 4

7. Agreed Capex contribution collected from communities in all Project GPs which have completed planning phase

Number of GP-WSCs

At least 40% GP-WSCs of the Batch have completed the planning phase and collected capex contribution.

At least 90% GP-WSCs of the Batch have completed the planning phase and collected capex contribution.

2

RWSS O&M Cost Recovery and Sustainable ODF 10 8. O&M cost recovery from user

charges Number of schemes

60% or more schemes in the Batch are collecting 50% or more O&M costs (O&M for SVS and intra-village MVS) through agreed user-charges.

5

9. Open defecation free GPs Number of GPs

30% or more of GPs of the Batch have achieved ODF Status

5

* Scores will also take into consideration the performance against Y 1 of the Project.

21 The minimum score can be announced during the Project launch ceremony.

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National Level 62. The NPMU will be responsible for reporting on indicators in the Project Results Framework every six months. In addition, NPMU will monitor the Performance Scorecard for efficient flow of funds from MoDWS to the States. The NPMU will also have data quality assurance processes in place, including data verification procedures and audits. There will be a qualitative review of the Project Results Framework and the Performance Scorecard at the MTR stage for assessing the efficacy of these tools and the need for any changes. The Project will support the strengthening of the National Level MIS to include a greater focus on ‘service delivery’, comprising:

(i) Sector Performance Measurement Framework (PMF): Performance monitoring allows service providers to self-evaluate, for government to have a strengthened basis for control and supervision, and for the public to have greater awareness of water and sanitation services. The following steps will be followed for developing the sector PMF: (a) identifying a representative group of key sector stakeholders; (b) conducting a workshop to explore international practices for sector-wide performance measurement; (c) producing an initial sector analysis report to define the current state of the sector, analyzing sector performance trends, and identifying performance gaps; (d) conducting a PMF workshop to identify key objectives for sector performance, and to translate these objectives into streamlined system for measuring performance; and (e) institutionalizing the process by ensuring that the NPMU and the National Resource Center, manage the PMF on an on-going basis. The Annual Sector Report will be the most important product of the PMF and will provide a sector-wide perspective beyond individual projects or programs. (ii) Capacity Building Monitoring and Evaluation. Institutions at all levels of the service delivery chain (from GoI, to States, Districts, PRIs, and villages and habitations) will be strengthened to promote the decentralization agenda through the capacity building component. The NPMU will support MoDWS in developing monitoring and evaluation capacity, and sector-wide guidelines and policies to improve the effectiveness of capacity building interventions.

(iii) Impact Evaluation (IE). A rigorous, independent IE will be designed and implemented in the early stages of the project. The IE will utilize mixed methods and a diverse set of data sources, including primary data collection through the baseline study and follow-up household surveys, and selected secondary data sources (census and other types of secondary information). The IE will aim to determine the causal relationship between project interventions and socio-economic outcomes.

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Annex 4: Operational Risk Assessment Framework (ORAF)


1. Stakeholder Risks Rating Moderate Description The project supports GoI policies and programs for RWSS and is strongly supported by government at national, state, and district levels, as well as PRIs. It builds on on-going RWSS projects of the Bank and other donors. There have been consultations with various stakeholders, including NGOs and local communities during project preparation and project design takes into account their views. However, difficulties may arise during implementation.

Risk Management Consultations will be continued by project implementation agencies with all stakeholders throughout project implementation to ensure continued support for the project. The GoI and Bank will monitor continued stakeholder support during implementation support missions through meetings with key stakeholders, especially at the State level and below. The project mid-term review will provide a formal opportunity to make any changes to the project, based on stakeholder views.

Resp: GoI and Bank Stage: Implementation

Due Date : Continuous

Status: Not yet due

2. Implementing Agency Risks (including Fiduciary) 2.1 Capacity Rating High Description RWSS agencies at the national and state levels have good technical capacity as they have been managing RWSS program activities, including funds, for the last five decades. However, their capacity to reach PRIs and local communities to ensure effective service delivery needs to be enhanced. Capacity at the LIS, especially at the level of the districts and PRIs, needs strengthening in technical areas and for implementing Bank procurement and financial management, as well as safeguards requirements.

Risk Management The Project will focus on building the capacity of the stakeholders, particularly the PRIs and the RWSS Sector Agencies. For the PRIs, the focus would be on project management. For the RWSS Sector Agencies, the ‘change management’ approach would be adopted to enable them to transform from ‘providers’ to ‘facilitators’. Suitable institutional and implementation arrangements have been designed to support the capacity building program. Institutional assessment of procurement practices of the agencies have helped in identifying and addressing issues and practices that need to be aligned. Procurement will be implemented in line with the Procurement Manual and the Procurement Plan. FM capacities have been assessed and the project includes steps to strengthen the agencies by training or outsourcing, as appropriate. The PMUs will also assist in building capacity of the Support Organizations involved with the Project. Capacity Building Programs are a regular feature of all Bank assisted RWSS Projects. ‘Twinning’ arrangements, including exposure visits, with on-going RWSS Projects will be useful for building capacity across various stakeholders. Bank implementation support missions will monitor the adequacy of the capacity building measures and agree with GOI and the States on additional measures that may be required.

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Resp: GoI, participating States, and the Bank

Stage: Implementation

Due Date : ongoing

Status: Not yet due

2.2 Governance Rating Moderate

Description The governance structure of the Project builds on the GoI arrangements for implementing the RWSS Program and takes into account Bank experience in the sector in India. The NPMU, supported by a Technical Advisory Group, has been established at MoDWS to assist in implementing this Project. Governance arrangements have been established at the State and district levels: State Water and Sanitation Mission and the associated Water and Sanitation Support Organization (WSSO) and district level project management units and Support Organizations, who will support and coordinate with the PRIs and concerned stakeholders. However, decentralized arrangements need to be effective for timely implementation of project activities.

Risk Management The NPMU will monitor the effective functioning of the governance structure and systems built into the project design (including in particular the findings of independent reviews and internal and external audit reports) through quarterly and ad hoc reviews. Bank implementation support missions will also focus on implementation of the agreed arrangements and will review findings and issues with the NPMU and the States to agree on remedial measures.

Resp: GoI, participating States, and Bank


Due Date : ongoing Status: Not yet due

3. Project Risks

3.1. Design Rating High Description: The overall project design is complex, involving the implementation of a national program addressing essential basic infrastructure issues in four low income states in a decentralized manner. The Project is designed to be implemented in three Batches, with the first Batch to test the Project model and learn early lessons; specific milestones and indicators have to be met before the State moves from one Batch to another. Project design also includes flexibility to reallocate funds between the four States based on performance, and also add new low income States, if necessary. A Performance Scorecard will incentivize sector institutions to adopt the scheme cycle approach for sustainable services.

Risk Management Project will have ‘twinning’ arrangements with successful on-going Bank supported RWSS Projects in India. Project agencies, in particular the NPMU, SWSM/WSSO, and DWSM/DWSC as well the various project consultants, will monitor the effective implementation of the project as designed. The Bank will assess the efficacy of the design through review of various progress and other reports, implementation support missions, as well as periodic reviews with the NPMU and the State level agencies. GoI and the Bank would use the movement from one batch to the next and the mid-term review to revise the project design as appropriate, including through reallocation between States and bringing in additional low income states.

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Changing the role of traditional sector institutions from that of a ‘Provider’ to ‘Facilitator’ and fostering partnerships will be a challenge. Proposed project interventions have been successfully tried and tested under a number of World Bank assisted projects during the last two decades. The project also builds on lessons learned from the earlier Bank assisted projects. The project will focus on behaviour change programs, especially in ensuring the usage of toilets in order to achieve ‘open defection free’ status in villages. This may be a challenge given the existing coverage status.

Resp: GoI, participating States, and Bank



3.2. Social and Environmental Rating Moderate Description: Given the highly diverse socio-economic and cultural setting, ensuring inclusion, achieving equity and maintaining cohesion and peace is always a challenge. Although four safeguard policies are triggered, the potential negative environmental and social impacts of the project are manageable, and it is a Category B project. Involuntary land acquisition is not envisaged. An EIA acceptable to the Bank is in place, and includes the EMF/ECOPs to be used during implementation. Measures to address social issues identified by the Social Assessment are integrated in the project design. A Social Management Framework (SMF) and a Tribal Development Plan (TDP) have been prepared to address Social Safeguards issues. The key issue is to implement the agreed safeguard instruments satisfactorily and to properly record any voluntary land donation or market based land acquisition.

Risk Management Social Implementation of measures to ensure inclusion (especially for women and vulnerable people) will be monitored at district, State and national levels. Implementation of the SMF, including procedures for voluntary land donation and market based land purchases, will be monitored at district, State and national levels. Implementation of the Jharkhand TDP will be monitored at the Jharkhand State and national levels. The Bank will monitor satisfactory implementation of social aspects of the project, including safeguards, through review of reports, site visits, and discussions with implementing agencies at State and national levels, as well as with selected districts. Environment Implementation of the EMF/ECOPs will be monitored at the district, State, and national level. The Bank will review reports, visit sites, and discuss environmental safeguards compliance at the national and State levels.

Resp: GoI and participating States

Stage: Preparation and Implementation


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3.3. Program and Donor Rating Low Description: RWSS is high priority program for GoI. The Bank India CPS supports RWSS, especially in low income States. The Bank and GoI have a long standing successful partnership in implementing the RWSS sector reform program over the past 20 years, including ten RWSS projects in seven States.

Resp: GoI and Bank

The Bank will continue the dialogue with GoI on RWSS, especially in low income states.

3.4. Delivery Monitoring and Sustainability Rating High Description: Project design includes capacity building and consultant support for scheme design, procurement, and implementation. Given the low capacity of the sector institutions in the State and the PRIs, delivery of the schemes in a timely manner, with good quality and within budget will be a challenge. The project includes a results based approach to M&E at the State, Sector, and national levels. Compilation of M&E data from the community level, and aggregating them at the district, State, and project levels on a timely and regular basis, as well as interpreting M&E reports and taking appropriate follow-up action will require considerable effort. Project design addresses sustainability at multiple levels: financial; institutional; environmental; and ODF villages. Critical factors for success – implementation of institutional framework, capacity building, changing mindset from provider to facilitator, and proper monitoring - have been identified. Implementation of these measures will require a massive and coordinated effort on the part of GoI agencies at national, State, district, and PRI levels.

Risk Management NPMU, State and district level agencies will monitor the timely and quality delivery of project outputs, M&E reports, and implementation of measures to ensure project sustainability. The Bank will also monitor these through review of reports, discussions with project officials at various levels, and through selected site visits. GoI agencies and the Bank will take corrective action, as necessary, to address slippages and other issues.

Resp: GoI, participating States, and the Bank



4. Overall Implementation Risk: High

Comments: Project implementation faces the following major issues: (i) weak capacity in the four states, including the PRIs at the district and the village levels; (ii) the project’s convergence with NBA (including MNREGS) for the household sanitation cash-incentive scheme and SLWM; (iii) effective implementation of RWSS program and activities; and (iv) timely delivery and monitoring of RWSS schemes.

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An additional risk is that certain areas may not be accessible due to local disturbances which may possibly result in project implementation delays. The risk will be addressed through careful selection of project villages through ‘demand responsive’ participatory approach, involving the PRIs, local NGOs and Support Organizations for effective implementation. Project design has a strong focus on building the capacity of all stakeholders, particularly PRIs and Sector Agencies. Strong Project Management Units will be set up at the national, state and district levels, actively supporting and coordinating with PRIs and concerned stakeholders to streamline project implementation. The National PMU will be strengthened with a Technical Advisory Group (TAG) for reviewing and guiding the implementation of the RWSS Program. GP-WSC headed by the GP President will lead implementation, hence any risk associated with NBA (including MGNREGS) funding to be used as convergent resources for toilet and SLWM schemes will be resolved at the GP level. Any residual issue will be taken up by the DPMU at the district level. The risk that the States do not all perform as programmed is addressed by permitting reallocation of IDA funds between the States, based on the use of Performance Scorecard tool to assess performance of the participating States. The Bank will provide intensive implementation support, especially during the initial years of the project.

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Annex 5: Implementation Support Plan


1. Experience from Bank assisted Multi-state and RWSS Projects. The Implementation Support Plan (ISP) for the Project builds on the experience of various Bank assisted multi-State projects22 and the successfully implemented RWSS Projects, including the Kerala, Uttarakhand, Karnataka, Maharashtra, and Punjab RWSS Projects. The ISP reflects the decentralized nature of the project. ‘Twinning’ arrangements will be established with the on-going Bank assisted RWSS Projects for sharing experiences, including programs and processes at the State, district and village levels. 2. Project Management. Based on lessons learnt from various multi-State projects, strong support agencies will be established at the National, State, and District levels. A highly specialized Technical Committee will be established at the National Level for review and oversight of the entire Project. Joint Review Missions will be undertaken with the National Ministry. The ISP will address requirements at four levels: (i) National; (ii) State; (iii) district; and (iv) Village.

(i) National Level. A Steering Committee will be established at MoDWS under the

Chairmanship of the Secretary, MoDWS. The Steering Committee will provide guidance on sector policies and will be responsible for overall project monitoring. MoDWS will set up a NPMU, adequately staffed with expertise in technical, institutional, social, financial, procurement, and M&E programs for providing guidance to the participating States as well as establishing a strong monitoring arrangement. NPMU will have a specially constituted Technical Advisory Group (TAG) with the primary responsibility of independently reviewing the design and implementation of the program in each of the four states.

(ii) State Level. The participating States will have fully staffed State level SPMUs, with sector specialists for policy and institutional aspects, social and community development, communication, capacity building, financial management, procurement, environmental sanitation, technical, and M&E. SPMU will be responsible for assisting SWSM in monitoring and approval functions, as well as facilitating and guiding the implementing agencies in all aspects of project design and implementation.

(iii) District Level. The participating districts will have fully staffed district level DPMUs for building capacity, facilitating project activities, and providing continuous guidance to the participating villages for implementing the decentralized RWSS program for water supply and sanitation, as per the scheme cycle. District PMUs will be responsible for recruiting Support Organizations for assisting the villages in scheme design and implementation.

22 Rural Roads Project (PMGSY), National Rural Livelihoods Mission (NRLM), Sarva Siksha Abhiyan (SSA), Multi-State Health Projects, and the National Ganga River Basin Project

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(iv) Village Level. At the village level, professionally staffed Support Organizations (SOs) will support the GPs and GP-WSCs in planning and implementing the SVSs. In all these small schemes, technical guidance will be available from the State Engineering Agencies as the back-stopping entities on technical issues. The larger MVSs and other complex SLWM schemes will be designed and implemented by the State Engineering Agencies, involving the village level GPs and GP-WSCs.

3. Twinning Arrangements with Bank Assisted RWSS Projects. The participating States will have ‘formal’ twinning arrangements with on-going Bank assisted RWSS Projects, including Uttarakhand and Kerala. Twinning arrangements will include: (i) workshops on implementing decentralized arrangements; and (ii) exposure visits. In addition, twinning arrangements will be explored with Brazil and other countries for developing the M&E system at MoDWS.

4. Implementation Support Missions. Bank implementation support missions will be undertaken at least twice a year. The mission will start with discussions at the MoDWS level, followed by visits to the States and districts where sub-project interventions are underway. The twice yearly missions will include the TTL, co-TTL, procurement and financial management staff, environmental and social safeguards staff, and technical and institutional specialists and consultants, as appropriate. A team of Specialist Consultants will be recruited to support the Bank in reviewing implementation progress in each State. In addition, interim implementation review missions will be undertaken by Bank specialists, as required. The following are the major areas to be covered in the Implementation Support Missions:

(i) Institutional Arrangements. The mission will review the implementation of the

decentralized arrangements, including roles and responsibilities of the different actors under the project implementation arrangements (SWSM, SPMU, DWSM, DWSC, GP, GP-WSC, external support agencies and other concerned State institutions), including Capacity Building activities.

(ii) Implementation Progress of Water Supply and Sanitation Schemes. The mission will

review progress in implementation of the RWSS schemes as per Batches / scheme cycle, and will address related issues (if any).

(iii) Safeguards. Supervision of the safeguard aspects of the Project will entail verification

that the Environmental Management Plan is being appropriately implemented, and adjusted as deemed necessary, and that the Tribal Development Plan, and the Project’s other features designed to enhance its social development outcomes, are similarly being adequately implemented and adjusted as appropriate.

(iv) Procurement. Implementation support will include: (i) ex-ante and ex-post reviews of

Project procurement; (ii) review of the Procurement Plan and procurement performance; and (iii) providing information on training resources, preparation of training material and modules and need-based training to the implementing agencies on the Bank’s procurement guidelines to the implementing agencies. In addition, guidance will be provided by the Bank’s procurement specialist on any necessary revisions to the

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Procurement Manual, the Procurement Plan and bidding documents, as deemed necessary. The Bank will assist NPMU in identifying capacity building needs, and the Bank’s procurement specialist will provide timely support on procurement issues. Procurement missions to the participating States will be carried out at least semi-annually and will include visits to districts and GPs to verify implementation arrangements in situ and make recommendations for their refinement as judged necessary.

(v) Financial Management. The Project would require an in-depth and intensive

supervision in the initial years, especially to ensure successful implementation of the agreed FM arrangements. This will include field visits to districts and GPs every six months to review the FM arrangements. Implementation support will also include review of periodic IFRs as the basis for disbursements and reporting expenditures, and review of the audit reports, including verifying the adequacy of the resolution of major audit observations.

(vi) Monitoring and Evaluation. The M&E System will monitor processes, inputs, outputs

and outcomes, and will include: (a) Sector M&E system that consolidates sector data at the MoDWS level with regard to sector-policy implementation and project outputs; (b) Results Framework which captures processes, inputs and outputs at the State level; (c) periodic review of inputs and processes through targeted evaluation, to learn from field experience and suggest strategic inputs for further strengthening (including audits by independent financial and technical auditors); (d) sustainability monitoring and evaluation to track long-term technical, financial, institutional, social, and environmental sustainability prospects of the schemes and assets created; and (e) community monitoring to help community members track the progress of their schemes in all phases of the project, for continuous use after scheme completion. The M&E System will include independent reviews, social audits and third-party quality checks in each phase of the scheme cycle. M&E data and information will be transparently disclosed. The system will contain a set of suggested participatory monitoring tools.

5. Mid-Term Review. A comprehensive mid-term review would be conducted to review implementation performance of all aspects of the Project and to discuss, agree and take any mid-term course corrections deemed necessary.

6. Timelines and Skills. The main focus of support for implementation during the Project’s major timeframes is presented below. The Bank team will be supported by Specialist Consultants for assisting in reviewing project implementation progress.

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Table 17: Project Implementation Requirements

Time Focus Skills Needed

Resource Estimate Staff

Weeks (SWs) per year

Consultant Support

Weeks per year

First Year

Project mission and launch workshop focused on project program and implementation arrangements, subproject scheme cycles, staffing up at the different levels (MoDWS, State, district, GP).

Review of Institutional and Implementation arrangements.

Review of technical/engineering aspects of water supply and sanitation

Reviews of EMF Reviews of TDP and other Social safeguards Review of Procurement Plan, Bidding

Documents, Training Requirements Review of FM arrangements, Training

Requirements Establishing M&E Systems

TTL Co-TTL Institutional Specialist

Engineering Specialist Environmental Specialist Social Development Specialist Procurement Specialist FM Specialist M&E Specialist

20 SWs 16 SWs 12 SWs

12 SWs 10 SWs 10 SWs 10 SWs 10 SWs 10 SWs

16 Weeks 8 Weeks

12 Weeks 10 Weeks 10 Weeks 10 Weeks 10 Weeks 10 Weeks

Second – Fifth Year

Review of Project Implementation Progress Review of Project Implementation Progress

Review of Institutional and Implementation Arrangements

Review of Technical/Engineering aspects of subproject implementation –water supply and sanitation

Review of Sanitation Program Review of EMF Review of TDP and other social safeguards Review of Procurement Plan, Bidding

Documents, training requirements Review of FM arrangements, Training

Requirements Review of M&E Systems

TTL Co-TTL Institutional Specialist

Engineering Specialist

Sanitation Specialist Environmental Specialist Social Development Specialist Procurement Specialist FM Specialist M&E Specialist

20 SWs 16 SWs

12 SWs

12 SWs 10 SWs 10 SWs 10 SWs 10 SWs 10 SWs 10 SWs

16 Weeks

8 Weeks

12 Weeks 10 Weeks 10 Weeks 8 Weeks 10 Weeks 10 Weeks 10 Weeks

Last Year

Review of Project Implementation Progress Finalizing Impact Evaluation Studies Preparation of Implementation Completion

Report preparation Review of Project Implementation Progress Review of Institutional and Implementation

Arrangements Review of Technical/Engineering aspects of

subproject implementation –water supply and sanitation

Review of Sanitation Program Review of EMF Review of TDP and other social safeguards Review of Procurement Plan, Bidding

Documents, training requirements Review of FM arrangements, Training

Requirements Review of M&E Systems

TTL Co-TTL

Institutional Specialist

Engineering Specialist Sanitation Specialist Environmental Specialist Social Development Specialist Procurement Specialist FM Specialist M&E Specialist

20 SWs 16 SWs

12 SWs

10 SWs 10 SWs 10 SWs 10 SWs 10 SWs 10 SWs 10 SWs

20 Weeks 12 Weeks

8 Weeks

12 Weeks 10 Weeks 10 Weeks 8 Weeks 10 Weeks 10 Weeks 10 Weeks

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Annex 6: Economic Analysis


1. Cost-benefit analysis has been carried out for the States of Assam, Bihar, Jharkhand, and Uttar Pradesh, based on a representative household survey covering 5,522 households, as shown in Table 18. A questionnaire, which was designed specifically for this survey, was administered by the respective State RWSS Departments. The survey was undertaken from November 2012 to March 2013.

Table 18: Profile of the Survey Sample

Assam Bihar Jharkhand Uttar Pradesh Total Districts (nos.) 6 10 6 10 32 Talukas (nos.) 17 51 23 48 139 Gram Panchayats (nos.) 53 66 44 59 222 Households (nos) 1,493 1,977 1,063 989 5,522 Population (nos.) 8,246 12,521 9,140 6,938 36,845

PROJECT BENEFITS 2. The Project estimates a total of 7.8 million direct rural beneficiaries. The likely quantifiable benefits of the Project, based on both primary survey data and secondary sources, are: (i) value of time saved in water collection; (ii) value of incremental water supply; and (iii) value of health benefits due to the reduction in the incidence of diseases, particularly diarrhoea, malaria, encephalitis, and dengue, which are widely prevalent in the Project areas.

3. Other benefits include improved sanitation resulting from an improved community environment and better health and hygiene practices. Efficiency gains are likely to result from the decentralised service delivery approach. Savings are also expected in capital and recurring costs incurred to maintain the existing supply of water in the ‘without’ project scenario. The strong social cohesion of the project will generate spill overs in project communities. These benefits are harder to quantify, and are not included in this analysis.

4. Time Saved in Water Collection. Time saved per household is based on the analysis of field data on time currently spent for collecting water. Hand pumps, wells and ponds are the predominant sources of water supply in the project habitations. Time saved in water collection is assumed to be the weighted average of time spent by households using hand-pumps, well, and ponds. The phasing of benefitted households has been established on the basis of the proposed Batches in the Project: 0% until year3, 25% in year 3, 35% in years 4 and 5, 70% in year 6, 85% in year 7, and 100% from year 8 onwards. It is assumed that 80 percent of the Project households will be supplied through household connections and 20 percent will continue to be supplied from stand-posts.

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5. The expected time saving is 1.59 hours/household/day.23 The value of time saved is calculated on the basis of the wage rate or income foregone. The daily wage rate for unskilled workforce has been obtained from the latest available State Gazette Notifications.24 6. Benefits from Incremental Demand for Water. The project will improve water availability and reduce time spent in collecting water. The average daily per capita consumption of water in each of these States, as per the survey findings, are: 26.0 liters in Uttar Pradesh, 23.9 liters in Jharkhand, 38.3 liters in Bihar, and 35.6 liters in Assam. Incremental water consumption after the schemes are operational is estimated to be the difference between the designed supply of 70 lpcd and present water consumption. The incremental water available on account of the Project is valued as the ‘future cost of water’, i.e., the cost of water per liter with the Project. The future cost of water is based on the design capacity of 70 lpcd. The future cost of water is estimated as US$ 0.19 per kilo-liter of water produced.25 These costs have been used to arrive at the value of incremental water in each of the participating states. 7. Health Benefits from Improved Water Supply. The Project aims to improve water supply and sanitation services, including environmental sanitation. The World Health Organization (WHO) carried out an assessment of the global disease burden from unsafe water, sanitation and hygiene (WSH).26 The study notes that: (i) drinking water can transmit pathogens and toxic chemicals; (ii) the lack of access to safe drinking water, adequate sanitation and solid waste management services increases the risk of disease; and (iii) water associated behaviors, including water used for personal and domestic hygiene, can increase or decrease disease risks. The WHO report further notes that several studies that have examined WSH and diarrhea, have looked at changes in water supply, excreta disposal or hygiene practices, and have assessed the effects on diarrhea morbidity. In a large volume of studies examining the impact of sanitation on disease transmission, twenty one studies found a 22 percent reduction in diarrhea morbidity, with even rigorous studies showing much greater median reduction in diarrhea of 36 percent. Patients with diarrhea were less likely to have an improved latrine. In addition, the report further notes that it is not only water contaminated at source or during distribution that is an issue, but water stored within the home where it may become contaminated, although arguably this is a matter of water quality management and domestic hygiene. Numerous epidemiological studies and outbreak investigations have also found an association between poor water quality and infectious diarrhea (Hunter et al 2003)27. 8. With respect to hygiene a number of studies have attempted to examine the role of personal and domestic hygiene, although in many cases some of the hygiene measures or interventions could also impact on sanitation and hygiene interventions; these ranged from 14 to

23 The expected time saving for the different states is: 1.55 hours in Uttar Pradesh, 1.02 in Jharkhand, 1.80 hours in Bihar, and 1.74 hours in Assam. 24 The wage rates per day used for different States are: US$ 1.63 in Uttar Pradesh (2012), US$ 2.38 in Jharkhand (2011), US$ 2.24 in Bihar (2011), and US$ 2.11 in Assam (2011). 25 The future cost of water for each State is estimated as follows: US$ 0.17 in Uttar Pradesh, US$ 0.20 in Jharkhand, US$ 0.16 in Bihar, and US$ 0.26 in Assam. 26 World Health Organization (2007), “Quantifying the health impact at national and local levels in countries with incomplete water supply and sanitation coverage”, Public Health and the Environment, Environmental Burden of Disease Series, No. 15. 27 Drinking Water and Infectious Disease: Establishing the Links, General of Royal Society of Medicine, June 1996 (6); 311-312.

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48 percent, with a median reduction of 33 percent. Curtis and Cairncross (2003)28 conducted a systematic review and analysis of the impact of hand washing with soap on diarrhea morbidity. The results of the analysis suggested that hand washing with soap could reduce diarrhea morbidity by 47 percent. 9. This economic analysis combines both literature review and estimates of possible cost savings due to improved health resulting from improved sanitation. Of the methodologies to quantitatively assess health impacts due to unsafe WSH proposed by WHO, this analysis adopted systematic literature reviews of the nature and magnitude of the association between water resources development and vector-borne diseases. The Project is therefore expected to have significant health benefits. For purposes of segregating health benefits on account of water and sanitation, it is assumed that 40 percent would be on account of sanitation initiatives and 60 percent on account of water supply:

Expenditure Incurred on Treatment. Reduction in expenditure on diagnosis and treatment (including medication, hospitalization charges etc.) for diarrhea, dengue, malaria, and encephalitis is assumed to be the benefit. The incidence, proportion of households affected, and expenditure per household on each of these diseases has been derived from the survey.29 Benefits accrued due to reduction in expenses incurred on treatment are based on the difference between expenses incurred ‘without’ the project and ‘with’ the project. Expected benefits from reduction in medication expenses are 67 percent over the analysis period.30

Disability Adjusted Life Year (DALY) is taken as the summation of Years Lost Due to Disability (YLD) and Years Lost Due to Premature Mortality (YLL). As per WHO, the DALY for Malaria, Dengue, Encephalitis and Diarrhea are 0.2, 0.06, 0.12, and 5.72 percent, respectively. It is assumed that with the implementation of the Project, DALY on account of bthe four diseases in the project population (derived in proportion to the India figures) will be reduced to 25 percent of the present levels for these four diseases. This is on account of the specific focus on improving the quality of water in the project and emphasis on improved sanitation, which are envisaged to have a significant benefit in terms of reduced incidence of these diseases. The reduction in DALY is valued at the labor opportunity cost for the days lost due to illness31.

Indirect Person days Lost. Reduction in frequency of diseases has a direct impact on the well-being of the household, leading to a reduction in person days lost. The person days lost on account of a disease has an impact on the income foregone for the period. The number of person days lost for various diseases is based on discussions with health professionals: three days for diarrhea, three days for malaria, ten days for dengue, and ten

28 Effect of Washing Hands with Soap on Diahorrea Risk in Community, A Systematic Review, May 2003, LANCET. 29 It is assumed that in the first two years there would not be any benefit from reduction in incidences of diseases, followed by 15 percent in 3rd Year, 30 percent for the 4th, 40 percent in 5th Year, 65 percent between 6th and 9th year, and 75 percent thereafter. 30 UP 66 percent; Jharkhand 67 percent; Bihar 67 percent; and Assam 66 percent. 31 The analysis has been carried out using the India DALY figures. The DALY figures for the 4 Project States are expected to be significantly higher than the India average DALY figures. Therefore the benefits on account of reduction in DALY are a conservative estimate. In addition, only four diseases have been considered.

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days for encephalitis. Reduction in indirect person days lost has been valued at the opportunity cost of labor. The opportunity cost of labor is calculated as per the wage rate declared in the respective State Gazettes, outlined in earlier paragraphs.

10. Total Benefits. The following Table presents the benefits related to the Project.

Table 19: Benefits (US$ million)

Year 2014-2024 2025-2035 2036-2043 Total Percentage

Opportunity cost of Time saved 1642 3520 2996 8158 88.1%

Total value of incremental water 153 303 256 712 7.7%

Total reduction in medication expenditure 48 93 78 219 2.4%

Opportunity cost of reduction in person days lost 11 22 19 52 0.6%

Total opportunity cost of reduction in DALY 0 105 14 120 1.3%

Total benefit 1855 4043 3363 9261 100.0%

PROJECT COSTS 11. The Project costs in the four States, excluding the community contribution, is presented in Table 20. The O&M for SVSs (Single Habitation and Single GP) is estimated to be US$ 0.08 per KL and that for MVSs (Small and Large) is estimated to be US$ 0.11 per KL. The O&M cost for sanitation is estimated to be 5 percent of the capital expenditure on SLWM activities. O&M has been extrapolated to the period 2043 for purposes of the economic analysis and is in addition to the Project Cost32 outlined below.

Table 20: Summary of Total Project Cost in the 4 States (US$ million)

Assam Bihar Jharkhand UP MoDWS Total Capacity Building and Sector Development 14 19 16 28 15 93 Infrastructure Development 218 230 122 291 0 860 -Hardware 211 208 107 263 0 789 -Other Support 6 22 15 27 0 71 Project Management Support 8 12 8 12 6 47 Total Project Cost 240 261 146 331 21 1000 * considers inflation of 7 percent per annum. ECONOMIC RATE OF RETURN AND SENSITIVITY ANALYSIS 12. The Economic Rate of Return for the Project and its various components is based on the above costs and benefits. The Benefit Cost ratio has been calculated as part of the analysis. 13. The ERRs and Benefit Cost Ratio for the Project (all four states) and for each State are presented in the following Table:

32 For the purposes of Economic Analysis, the Project Costs have been considered without inflation (as also the Benefits).

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Table 21: ERR and Benefit Cost Ratio

State UP Jharkhand Bihar Assam Overall Project ERR 26% 27% 39% 25% 30% Benefit Cost ratio

4.8

5.5

8.3

5.6 6.1

14. ERR Sensitivity - Total Project Cost. A sensitivity analysis has been carried out for various risk factors. These are summarized in the following Table.

Table 22: Sensitivity Analysis- Total Project Cost

Criteria ERR Base Value 30% Increase in costs 10% Increase in total cost 27% 20% increase in total cost 25% 50% increase in total cost 20% Decrease in benefits 10% decrease in benefits 27% 20% decrease in benefits 24% 40% decrease in benefits 18% Combined increase in total cost and decrease in benefits

Increase in costs and decrease in benefits by 5% 27% Increase in cost and decrease in benefits by 10% 25% Increase in cost and decrease in benefits by 30% 16% Combined decrease in total cost and increase in benefits

Decrease in cost and increase in benefits by 5% 32% Decrease in cost and increase in benefits by 10% 35% Decrease in cost and increase in benefits by 30% 51% Decrease in wage Decrease of 10% 27% Decrease of 20% 25% Decrease of 30% 22% Schemes failing after 15 years 10% of the schemes fail 29% 30% of the schemes fail 28% 50% of the schemes fail 26%

15. ERR and Benefit Cost Ratio- Infrastructure (Hardware) Cost. ERRs and Benefit Cost Ratio for each state and for the Overall Project (all four states) by type of schemes are presented in the following Table.

Table 23: ERR – Scheme-wise for the

Four Project States (Infrastructure/Hardware)

State Scheme Type ERR BC ratio

Overall

SHS 45% 8.3 SGS 44% 8.2 SMVS 35% 6.8 LMVS 28% 6.8

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Annex 7: Governance and Accountability Action Plan (GAAP)


1. The Governance and Accountability Action Plan (GAAP) is meant to mitigate governance and fiduciary risks (as identified in the ORAF) and enhance the development effectiveness of the Project by strengthening the institutional framework, accountability and fiduciary systems. Institutional Effectiveness

2. The most critical implementation agencies are local governments, which need to be strengthened for providing efficient RWSS services within their jurisdiction. The project will operationalize the MoDWS’s commitment to “provide enabling environment for Panchayati Raj Institutions, Gram Panchayats/Village Water & Sanitation Committees, other local communities, Self Help Groups and other groups to manage their own drinking water sources and systems, and sanitation in their villages” as per its draft Result Framework Document for FY13-14. Although decentralization is a State prerogative, MoDWS can support: (i) “enabling recognition and award to Panchayats for excellent work in rural drinking water and sanitation”, and (ii) building capacity of local governments and communities for the implementation of the Project in the four target states. 3. Under the project, Support Organizations (SOs) will be appointed by DPMUs to assist GPs and the GP-WSCs to design and implement the schemes. The SOs will be responsible for community mobilization and IEC/BCC. The National MIS will allow the assessment of the institutional effectiveness of decentralized service delivery by capturing the perception/satisfaction/unmet needs of members of targeted communities and local representatives through social accountability mechanisms (grievance redressal, social audits, etc.,). The NPMU will benchmark institutional effectiveness for project implementation across the 33 targeted districts and identify and promote good practices. 4. At the local level, project implementation includes a number of institutional reforms, laid out in an integrated scheme cycle that will ensure institutional readiness prior to and during implementation. The project addresses the critical challenge of inter-agency coordination at the local level by mainstreaming tripartite agreements between the local governments, the local administration (DWSCs) and the state technical department for RWSS. Such formal agreements are a potent and indispensable tool to allocate responsibilities and leverage synergies.

Accountability

5. Given the multiplicity of agencies in the RWSS sector, the GAAP aims to strengthen the accountability by clarifying roles and responsibilities across institutions along the delivery chain and consolidating mechanisms to ensure project performance down to end users. 6. The Project will improve transparency and enhance governance and accountability through the following processes: (a) RWSS district-wide program, agreed with each State and concerned district, for transition to decentralized service delivery, irrespective of sources of

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financing across the district. (b) Clarification of roles and responsibilities for the RWSS functionaries at each level. (c) Independent construction quality surveillance through technical experts. (d) Social audits and civil society oversight, through PRIs, NGOs and community organizations. (e) Grievance redressal measures at the Gram Panchayat, district and State level. (f) Service Delivery Assessment through household surveys. (g) Technical and financial audits to confirm and validate technical aspects and expenses incurred for the schemes and programs under the Project. (h) Transparent and robust procurement processes, including competitive bidding processes, with on-line contract management and monitoring system. (i) M&E Systems for capturing project baseline and implementation progress, with clearly defined indicators. (j) Public disclosure of all project documents and reports at the web-site of the SWSM. The use of a rigorous M&E system, including third party checks, will provide the ongoing performance monitoring of physical works. Social audits conducted by community will be an integral part of the overall design. 7. The above processes have been successfully implemented in other Bank assisted RWSS Projects, including Uttarakhand RWSS Project which has twice received the RTI Award for good governance and transparency. ‘Twinning’ arrangements with Uttarakhand will help in designing and implementing the above governance and accountability practices to address fraud and corruption issues. 8. MoDWS will establish an integrated grievance redress mechanism for the project, capturing all grievances submitted to community organizations, local governments, local or state level administrations, and ensuring adequate follow-up. This system will be established within the first six months of project implementation and will subsequently be reviewed. The grievance redress system will ensure easy access for complainants, prompt follow up of grievances, systematic recording and traceability of complaints and responses, and adequate appeal mechanisms and monitoring. It will be compliant with GoI guidelines and modeled on good practices. 9. The Bank’s fiduciary safeguards will be applied rigorously, as has been the case with the earlier Bank supported RWSS Projects. An internal auditor will be appointed for the project and will undertake procurement audit. Fiduciary Systems

10. Given the specifics of project implementation, most allegations or complaints related to RWSSP-LIS in the targeted states will be followed up at the State level. However, fiduciary systems across beneficiary states are uneven and cannot be equally and effectively mobilized to mitigate the risks of fraud and corruption. 11. To mitigate the risks of fraud and corruption, the GAAP relies on the vigilance function of MoDWS, as per GoI guidelines. It will extend to (i) preventive vigilance; (ii) punitive vigilance; and (iii) surveillance and detection. Details of each of these three functions are provided in the Vigilance Manual.

12. A detailed plan for ensuring awareness among the project implementing agencies, down to the PRIs, will be rolled out within the first six months of project implementation.