republic of india womens ˇ empowerment … of india women ˇs empowerment and livelihoods programme...

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REPUBLIC OF INDIA

WOMENS’ EMPOWERMENT AND LIVELIHOODS PROGRAMMEIN THE MID-GANGETIC PLAINS

DESIGN COMPLETION REPORT

MAIN REPORT, APPENDICES AND ANNEXES

Asia and the Pacific DivisionProgramme Management Department

CONFIDENTIALReport No. 2233-IN

May 2010

This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without the authorization of theInternational Fund for Agricultural Development

REPUBLIC OF INDIAWOMEN’S EMPOWERMENT AND LIVELIHOODS PROGRAMME IN THE MID–GANGETIC PLAINS

DESIGN COMPLETION - MAIN REPORT

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REPUBLIC OF INDIA

WOMENS’ EMPOWERMENT AND LIVELIHOOD PROGRAMME INTHE MID GANGETIC PLAINS

DESIGN COMPLETIONMAIN REPORT

Table of Contents

Page

Currency Equivalents, Units and Conversions iiiFiscal Year iiiAbbreviations and Acronyms vMap of IFAD Operations in the Country viiMap of the Programme Area viiiProgramme Summary ixKey Files xiii

I. INTRODUCTION 1

II. COUNTRY AND POVERTY CONTEXT 2

A. Country Economic Background 2B. The Rural Poverty: The Sectoral Context 3

III. INSTITUTiONS AND ORGANISATIONS 3

A. Key Institutional and Policy Context of IFAD Interventions 3B. Key Organizations Relevant to the Programme 5

IV. Ongoing Government and Donor Activities and Lessons Learned 7

A. Ongoing Government, Donor and IFAD Activities 7B. IFAD’s Experience and Lessons Learned 8

V. TARGET GROUPS AND PROGRAMME AREA 9

A. IFAD Strategy and Focus 10B. Programme Area 11

VI. PROGRAMME DESCRIPTION 13

A. Programme Rationale and Objectives 13B. Programme Approach 14C. Programme Components 15D. Programme Strategy 22



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VII. ORGANIZATION AND MANAGEMENT 26

A. Programme Management (Usd 7.55 Million) 26B. Programme Coordination 28C. Communication and Knowledge Sharing 29D. Monitoring and Evaluation 30

VIII. PROGRAMME COSTS AND FINANCING 31

A. Summary of Programme Costs 31B. Financing Arrangement 35C. Disbursement, Procurement, Accounts, Audit, and Reporting Disbursement and Special

Account 36D. Procurement 36E. Annual Work Plan and Budget, and Funds Flow 38

IX. BENEFITS AND BENEFICIARIES 38

A. Economic and Financial Analysis 40B. Environment Impact 42C. Programme Risks and Assumptions 43

X. POLICY ISSUES AND INNOVATIONS 44

XI. OUTSTANDING ISSUES AND NEXT STEPS 46

Appendices

A. Mission Programme and List of Persons MetB. Country Portfolio of Loans and GrantsC. Programme Organizational Structure (Chart)D. Flow of Funds ArrangementsE. Responses to Government and IFAD Reviews

Annexes

1. Amplification of Institutional and Implementation Arrangements, including NGO Involvement2. Local Initiatives and Participation3. Environmental Screening and Scoping Note

Working Papers

1. Gender Issues2. Participatory Community Development3. Programme Management4. Farming Systems5. Rural Finance Services6. Value Chain and Enterprise Development Component7. Marketing and Marketing Components8. Programme Costs9. Financial and Economic Analyses10. Innovation Fund



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CURRENCY EQUIVALENTS

Currency Unit = Indian Rupee (INR)USD 1.00 = INR 44.66INR 1.00 = USD .02239

WEIGHTS AND MEASURES

1 kilogram = 2.204 lb1 000 kg = 1 metric ton (mt)1 kilometre (km) = 0.62 mile1 metre = 1.09 yards1 square metre = 10.76 square feet1 acre = 0.405 hectare1 hectare = 2.47 acres

FISCAL YEAR

1st April – 31st March



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ABBREVIATIONS AND ACRONYMS

AWPB - Annual Work Plan and BudgetBF - Business FacilitatorBSN - Bhoomi Sudhar Nigam (U.P.)CB - Commercial BanksCBO - Community Based OrganizationCD Ratio - Credit Deposit RatioCIMAP- Central Institute for Medicinal and Aromatic PlantsCIMMYT - International Centre for Maize and Wheat ResearchCMRC - Community Managed Resource CentreCOMPFED - Co-operative Milk Producers’ Federation of BiharCPSU - Central Programme Support UnitCSIR - Council of Scientific and Industrial ResearchDASP - Diversified Agriculture Support ProjectDEA - Department of Economic AffairsDWCD - Department of Women and Child DevelopmentFFDC - Flowers and Fragrance Development CentreGOI - Government of IndiaGS - Gram Sabha (Village council)ICAR - Indian Council of Agricultural ResearchIDRC - International Development Research Centre of CanadaIFAD - International Fund for Agricultural DevelopmentIGA - Income Generation ActivitiesIIM - Institute of Irrigation ManagementIPGRI - International Plant Genetic Resources InstituteIPM - Integrated Pest ManagementIPNM - Integrated Plant Nutrient ManagementIRDA - Insurance Regulation and Development AuthorityIRRI - International Rice Research InstituteKVK - Krishi Vigyan Kendra (Farmers’ Science Centre)LIC - Life Insurance Corporation of IndiaLISA - Low Input Sustainable AgricultureM & E - Monitoring and EvaluationMFI - Micro finance InstitutionMIS - Management Information SystemMPCE - Monthly Per Capita ExpenditureMTR - Mid-term ReviewMWCD- Ministry of Women and Child DevelopmentNABARD - National Bank for Agricultural and Rural DevelopmentNPCU - Programme Coordination UnitNGO - Non-Governmental OrganizationNPA - Non-performing AssetNPV - Nuclear Polyhydrosis VirusNSS - National Sample SurveyPACS - Poorest Area Civil Society ProgrammePD - Programme DirectorPIU - Programme Implementation UnitRBI - Reserve Bank of IndiaRFAS - Rural Financial Access SurveyRFI - Rural Financial InstitutionRIMS - Results and Impacts Management System



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RRB - Regional Rural BankSAU - State Agricultural UniversitySC - Scheduled CasteSGSY - Swarna Jayanti Swarojgar YojanaSHG - Self Help GroupSHPI - Self Help Promoting InstitutionSPMU - State Programme Management UnitSRI - Systemic Rice IntensificationST - Scheduled TribeTOR - Terms of ReferenceTSG - Technical Support GroupU.P. - Uttar PradeshUPCAR - U.P. Council of Agricultural ResearchWFP - World Food Programme



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MAP OF THE PROJECT AREA



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MAP OF THE PROJECT AREA



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EXECUTIVE SUMMARY

1. This report is the outcome of a design process that started with a series of background studiescarried out in April-May 2006, a Formulation Mission conducted during June/July 2006, anImplementation Planning/Appraisal Mission carried out in September 2006 and a ReformulationMission fielded during July 2008. During this process, several interactions through briefing meetings,stakeholder workshops and wrap-up meetings took place between the main partners of theProgramme, i.e. the Central Government of India, both State Governments, NABARD and IFAD.

2. Rationale. During the past few years, India as a whole has witnessed substantial increases ineconomic growth which are projected to continue and to increase even further in the foreseeablefuture. This growth and accompanying prosperity however has not reached the Mid-Gangetic Plains,especially in Eastern Uttar Pradesh and northern Bihar, where a significant out-migration isindicative of the ever increasing poverty present in the region and is linked to the weakening of thesustainability of past production systems despite the availability of fertile lands and water bodies.

3. Programme Goal and Objectives:. The Programme will aim at the holistic empowerment of ruralpoor women and adolescent girls, supported by sustainable and improved livelihood opportunitiesand strengthening of local institutions that relate to livelihood development, in line with theGovernment of India’s 11th Plan and Millennium Development Goals. Hence, the purpose of theProgramme will be to strengthen community level institutions for social and economic empowermentand enable the target groups to access productive resources, social services and to build asustainable livelihood base integrated with the wider economy.

4. The Programme will pursue the following objectives:

Creating a strategy for linking poverty reduction to India’s economic growth; Building and/or strengthening community-level institutions for social and economic

empowerment to increase the participation of women in local institutions and decision-makingprocesses within the community and access productive resources, social services and to build asustainable livelihood base;

Enhancing the capabilities of local people to make informed choices in selecting appropriateeconomic opportunities, access required financial resources, manage new technologies andinstitutions at the village level that will increase incomes and reduce drudgery through moreremunerative on-farm and off-farm enterprises;

Establishing and facilitating appropriate delivery systems for inputs and for the maintenance ofassets and resources, with emphasis on microfinance, savings and thrift, micro-insuranceproducts and enterprise finance;

Testing innovations, ensuring convergence with existing programmes, leveraging additionalresources from the private sector and financial institutions, and share lessons learned on policyissues.

5. Programme Strategy and Approach: The Programme will initially focus on capacity building ofcommunity based organizations and supporting organization. Livelihood opportunities will be analyzedthrough the Value Chain and then promoted and supported as micro-enterprises through the sub-sector/business development services strategy. These opportunities will be presented to the target groupthrough demonstrations, exposure visits and communication materials to enable them to make informedchoices of economic activities most suited to their interests, resources, skills, and needs. The process ofenterprise selection will be demand driven, with the participants making decisions about individual orgroup activities. Institutional sustainability will be ensured through Community Service Centers.



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6. Programme Area and Target Group. The Programme will work in six of backward districts inthe States of Uttar Pradesh (four districts) and Bihar (two districts) – The women that are targeted forparticipation come from 108,000 households that fall below the poverty line as well as hover justabove it. The two main reasons for this more inclusive targeting are: households marginally abovethe poverty line should have their economic status stabilized to prevent them from falling back intopoverty; strict targeting of only those below the poverty line may be counterproductive in a livelihooddevelopment strategy since it often generates resentment among the larger community whose co-operation will be needed if livelihoods are to take hold.

7. Programme Components: The Programme will comprise of the following components:

I. Empowerment and Capacity-Building of Communities and Support Organizations. Thiscomponent will include activities related to formation and strengthening of Self-HelpGroups and Producer Groups, the establishment of Federations of SHGs and CommunityService Centres, and gender mainstreaming activities and life skills training;

II. Livelihood Enhancement and Enterprise Development. This component will focus onexpanding and developing micro, small, and medium-scale enterprise; rural financial andnon-financial business services; an Equity Fund ;

III. Programme Management. This will include the establishment of a a Central ProgrammeSupport Unit at the MWCD level, a Programme Coordination Unit at the NABARDHead Office level, Programme Management Units at the state level, ProgrammeImplementation Units at the district level and Block Offices at the block level.

8. Programme Cost and Financing. The total programme cost over eight years isUSD 32.73 million, of which IFAD loan is USD 30.00 million and the Government of Indiacontribution is USD 2.32 million cash contribution and USD 0.44 million in taxes and duties.1 TheProgramme intends to leverage institutional finance of up to USD 18.09 million to meet the creditrequirements of SHGs, and micro, small and medium enterprise development. The programme costfor Bihar over eight years is USD 11.47 million, of which IFAD loan is USD 10.42 million and GOIcontribution is USD 1.05 million. Similarly, the total programme cost for Uttar Pradesh over eightyears is USD 20.24 million, of which IFAD loan is USD 18.89 million and GOI contribution isUSD1.35 million. For the Central Programme Support Unit at the MWCD the total cost over 8 yearsis USD 0.29 million of which IFAD Loan is USD 0.21 million and GOI contribution isUSD 0.08 million. The total cost over 8 years for the Programme Monitoring Unit at the NABARDHead Office level is USD 0.73 million of which IFAD loan is USD 0.48 and GOI contribution isUSD 0.28

9. Organisation and Management. The MWCD will be the nodal agency for the Programme at theCentral Level. A Central Programme Support Unit will be established at the Ministry. NABARD willbe the Lead Programme Agency for both the programme states and will be responsible forprogramme implementation and coordination. At the district, block, and village levels the programmewill have staff working closely with the community and NGOs.

10. Benefits and Impact. Approximately 108,000 households in 6 districts will benefit from theProgramme. Community Based Organisations, including SHGs, will have developed a greatercapacity to take charge of their own affairs and a greater confidence in dealing with externaldevelopment entities. Women and adolescent girls will be empowered economically, socially andorganizationally. Over 50,000 enterprises will benefit from Programme Activities at the micro(34,000), small (12,860) and medium-scale(104) levels;

1 Totals do not match due to rounding.



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11. Policy Issues. The Programme will promote discussion on a number of issues in the areas ofenterprise development and marketing, leasing of land and ponds by SHGs, enabling legislationaffecting cooperatives, marketing institutions, and a dialogue on the present state of the SHGmovement and its future directions.

12. Innovations. The Programme will test a number of innovative instruments, approaches andinstitutions across Programme components. Among these, the establishment of: i) Community ServiceCentres; ii) the combined Value Chain Analysis/Sub-Sector/Business Service approach; iii) theInnovation Fund; iv) the Equity Fund; v) Mentoring Programme; vi) a different approach to recruitcapable NGOs for implementation responsibilities; v) introduction of business facilitators at banks;and vi) a new approach to programme monitoring making greater use of national institutions.Finally, the Programme management will ensure effective convergence with ongoing and plannedinterventions by Government and other donors.



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KEY FILE TABLE 1: LOGICAL FRAMEWORK

Goal Indicators Monitoring mechanismand info sources

Assumptions

Holistic empowerment of rural poor womenand adolescent girls2 supported bysustainable and improved livelihoods, inselected districts of the states of UttarPradesh and Bihar, in line with the goals ofthe GOI’s 11th Plan and MDGs

- Number of households with improvement inhousehold assets ownership index; and

- Percentage reduction in the prevalence of childmalnutrition3.

- Increased women participation in PRIs.

- RIMS survey – benchmark, mid term andcompletion.

- Special Studies – baseline,mid term and completion.

- Supervision reports. Programme progress

reports.

- Continuous support by Centraland State - level Governments.

- Continuous economic growth ofIndia’s economy.

- Banks support financing SHGand enterprises.

- Programme implementingagencies engage competentNGOs and Service Providers toimplement programme activities.

Programme purpose Indicators Monitoring mechanismand info sources

Assumptions

Building and/or strengthening SHGs andPeople’s Organizations of women for socialand economic empowerment and enablingthe target group (from an estimated 108,000households organised in 7,200 SHGs) toaccess productive resources, social servicesand to build a sustainable livelihood baseintegrated with the wider economy.

- Development of sustainable SHGs and People’sOrganizations.

- Reduction in borrowing from high cost sources.- Linkages with banks and MFIs.- Expansion of livelihood activities/ enterprises.- Convergence with other government programmes.

- Special Studies – baseline,mid term and completion

- MIS reports- Programme progress

reports- Supervision reports- NGO reports- Field observations

- Central and State-level ownershipof Programme proposals

- Effective relationship between.Government, banks/MFIs, privatesector and NGOs

Output 1: Capacity Building andEmpowerment

Indicators Monitoring mechanismand info sources

Assumptions

- Engagement of large NGOs with corestrengths in developing sustainablepeople’s organisations to build localcapacity.

- Mobilising SHGs with systematic savingsand credit operations.

- Development of sustainable people’sorganisations for provision of services toSHGs.

- Number of large NGOs engaged by theprogramme in a partner ship mode.

- No. of SHGs formed, strengthened.- No. of SHGs with good track record as measured

by savings rate, internal repayment rate,attendance and meeting regularity.

- No. of people’s organisations established.- Percentage of operational costs of people’s

organisations contributed by self help groups.

- Programme MIS reports- Supervision reports.- Programme progress

reports.- MIS of People’s

organisations.- NGO reports- Case studies

- Successful partnership betweenNABARD and capable NGOs forSHG mobilisation.

- SHGs are willing to pay for theservices of people’sorganisations.

- Other Poverty Alleviationprogrammes are willing toconverge with the programme

2 from vulnerable households living in the programme districts of Uttar Pradesh and Bihar3 RIMS Anchor Indicators



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- Convergence with other relevant povertyalleviation programmes.

- Gender sensitization of all programmestakeholders.

- Development of enterprises with genderconcerns.

- Building capacity of women.

- No. of SHGs and members benefiting from otherpoverty alleviation programmes.

- No. and effectiveness of training programmes ongender sensitization.

- No. of enterprises that have developed technologyfor drudgery reduction.

- No. of sub-sectors that have incorporatedreduction in work load of women with increasedincome.

- No. and effectiveness of training programmes tobuild capacity of women in life skills, HIV/AIDsetc.,

groups.- Appropriate technological

solutions available for drudgeryreduction.

Output 2: Livelihood Enhancement andEnterprise Development

Indicators Monitoring mechanismand info source

Assumptions

- Value chain analysis/ sub sector survey inprogramme districts.

- Innovation Fund operationalised tofinance proposals of NGOs/ServiceProviders.

- Establish Demonstrations in respect ofsub-sectors that offer potential forcommercial upscaling.

- Identifying key interventions in the valuechain that will impact primary producers

- Prioritizing business developmentservices through subsector analysis

- Establishment of enterprise for providingbackward and forward linkages.

- Households take up Sub-sectorEnterprises.

- -Large experienced NGOs engaged in valuechain analysis, subsector/bds strategy enterprisedevelopment

- - No. of sub-sectors identified.- Amount disbursed from Innovation Fund.- No. of demonstrations of economic activities

launched.- No. of forward and backward linkages enterprise

established with cluster level producerorganisations

- No. of PPGs formed.- No. of households taking up sub-sector

enterprise.

- - Programme MIS Report.- -MIS of People’s

Organizations.- -Programme progress

reports.- -Progress reports by

implementing partners.- -NGO reports- -Supervision reports- Special Studies – baseline,

mid term and completion

- Banks and other financialinstitutions will providenecessary credit support toenterprises.

- NABARD will engagecompetent NGOs and ServiceProviders to implement sub-sector / value chain analysisapproach to enterprisedevelopment.

- Seed Capital provision to well functioninggroups after rating.

- SHGs linked to banks and MFIs.- Support provided to MFIs to expand

branch network in programme blocks.- Equity Fund Operationalised.- Community Asset Fund Operationalised.- Mentoring Programme Established

- No. of SHGs accessing Seed capital.- No. of SHGs linked to banks and MFIs.- Repayment performance of loan granted to SHGs

from Banks and MFIs.- No. of MFIs branches established – amount

disbursed, repayment performance and branchviability.

- No. of equity /quasi-equity support provided.- No. of People’s Organizations accessing

- Programme MIS Report.- MIS of People’s

Organizations.- Programme progress

reports.- Progress reports by

implementing partners.- Bank and MFI reports.- NGO reports.

- NABARD able to solicit supportof banks and MFIs to work withthe programme.

- NABARD would find acompetent partner tooperationalise Equity Fund.

- People’s Organizationsundertake only one-time loanprovision to SHGs.



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community Asset Fund.- Repayment performance of loans provided by the

People’s Organization to SHGs.- Extent / No. of land and ponds leased by the

People’s Organization.- Assets created by the People’s Organization

using community Asset Fund.- No. of mentoring relationships established

- Supervision reports.- Special Studies –

baseline, mid term andcompletion

- -Businesswomen are willing tocome forward and play amentoring role

Output 3: Programme Management Indicators Monitoring mechanismand info source

Assumptions

- Effective programme management systemestablished and made operational.

- Engagement of large NGOs on a partnershipmode to implement the programme activities.

- Smooth flow of funds.- Provide efficient supervision.- A system of periodic reviews and mid-course

corrections established.- RIMS operationalised.

- Programme MIS Report.- Programme progress

reports.- Supervision reports.- Special Studies –

baseline, mid term andcompletion.

- RIMS Survey – baseline,midterm and completion.

- NABARD develops a proactiveNGO engagement practices toattract large competent NGOs.

- GOI would allocate adequateresources for programmeimplementation and release thesame as required.

- NABARD is able to recruitcompetent programme staff.



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KEY FILE TABLE 2: ORGANIZATION CAPABILITIES MATRIX

Bihar and Uttar PradeshOrganisation Strengths Weaknesses Opportunities Threats

EnablersGovernment technical departments(Rural Development, Agriculture, etc.)

Clear Line of Command Continuity Technical expertise Trained manpower Government funding

support. Government infrastructure

especially training etc.

Lack of motivationLack of flexibility in managementsystemsHigh staff turnover and shortageof human resourcesDilution of focus on targetingmarginalized.Complex procedures andbureaucratic delays.Top down and delivery orientedapproach.Top heavy management structure.Limited experience working withNGOs.

Ability to leverage with otherlenders and donors.Easier coordination withinthe government linedepartments.

Political uncertaintiesPolitical interferenceInsecure feeling leading to impediment of work byother agencies

Bihar State Women’s DevelopmentCorporation

Continuity Ability to work with diverse

NGOs Experience in supporting

SHGs Experience of working on

empowerment issues.

Limited resources.Bureaucratic, top-down approach Partnership mode of working with

NGOs yet to emerge.

The mission of thecorporation is to work withwomen. This will help inmobilizing resources.

Ability to leverage withother donor funded projects.

Easier coordination withinthe government linedepartments.

Political interference

Department of Women and ChildDevelopment in Bihar

Quick Start up Clear Line of Command Continuity Broader remit than WDC Experience of implementing

programmes relating womendevelopment

Standardised delivery systems,some of which emphasissubsidies – so slowing thedevelopment of self-reliance.

Limited experience of workingwith NGOs

Lack of flexibility even forresults

Ability to leverage withother donor funded projects–especially the SGSY

Easier coordination withinthe government linedepartments.




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Organisation Strengths Weaknesses Opportunities ThreatsUttar Pradesh State Women’s DevelopmentCorporation

Continuity Limited ability to work with

diverse NGOs Limited experience in

supporting SHGs Limited experience of working

on empowerment issues.

Inadequate staff No top management staff. Negligible resources. Bureaucratic, top-down approach Partnership mode of working with

NGOs yet to emerge. Tend to promote collective rather

than individual enterprises for SHGmembers

The mission of the corporationis to work with women. Thiswill help in mobilizingresources.

Ability to leverage with otherGovernment projects.

Easier coordination within thegovernment line departments.

Political interference Corporation’s image with other stakeholders is that of a

weak organization.

Department of Women and ChildDevelopment in UP

Clear Line of Command Continuity Broader remit than WDC Experience of implementing

programmes relating womendevelopment

Standardised delivery systems, someof which emphasis subsidies – soslowing the development of self-reliance.

Limited experience of working withNGOs

Lack of flexibility. Top heavy management structure.

Ability to leverage with otherdonor funded projects –especially the SGSY



National Bank for Agriculture and RuralDevelopment

Clear line of command Quick start-up Continuity Ability to work with diverse

NGOs Experience in supporting

SHGs Experience of working on

empowerment issues. Experience in handling

enterprise developmentrelated issues.

High cost management structure. Bureaucratic, top down approach of

implementation. Limited ability to coordinate with

government line departments.

Ability to effectively coordinateprogramme implementation inboth states.

Ability to harness synergieswith the programmes of otherdonors.

Limited ability to facilitate convergence with stategovernment agencies

District Development Administration Ability to coordinate work ofthe line departments at thedistrict level.

Power and accountability at thelevel of DistrictCollectors/Chief DevelopmentOfficer leading to personalsupervision.

Can ensure better performanceof NGOs

High turnover of DistrictCollectors/Chief DevelopmentOfficers limits ability to focus onlong term developmentinterventions.

Depends on the quality andcapability of person heading thedistrict.

Ability to leverage with otherlenders and donors.


Political interference Uncertain continuity.



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Organisation Strengths Weaknesses Opportunities ThreatsCommunity InstitutionsSHGs Enhances capacity of the

members to deal with thepeople, institutions andmarkets.

Savings driven and not creditdelivery driven.

Internalised transaction costsand enhances ability ofmembers to access loans.

Easy accessibility to the poorfor financial and social services.

Strong handholding support requiredduring initial stages.

Driven by group cohesion achievedby rigorous grassroots level workwhich is time consuming.

Possible domination by groupleaders.

Ability to leverage on thesavings mobilised and accessloans at market rates of interest.

Ability to provide cost effectivedelivery of services related toupscaling livelihood options.

Ability to mobilise thecommunity for social sectorissues.

SHGs increasingly being used by the governmentmachinery towards delivery of schemes that underminecredit culture of the SHGs.

High chances of politicisation of the members as a resultof government driven programmes.

Panchayati Raj institutions Constitutionally mandatedbodies.

Powers and resources have beendevolved to the village levelbodies.

33% women membership haspotential to push women’sempowerment agenda.

In Bihar,women participate isvery high in PRI meetings.

In Bihar, 50 percent reservationfor women in PRIs is a veryenabling provision.

Many instance of elite capture andmalfunctioning of PRIs especially inUP.

“Pradhan pati” syndrome in UP –husbands take decisions

Role of women members ignoredespecially in UP.

Politicisation of these bodies Many inactive Gram Sabhas Lack of participation of members

Long term plans for capacitybuilding support from nationaland state governments visible

Can provide a supportiveenvironment to SHGs and othergrassroots member basedbodies.

Women members can be betterchange agents.

Inadequate political support to strengthen these bodies. Politicisation of the PRIs. Interference and capture by elite.

Service ProvidersNGOs Flexible management systems

with scope for innovation andability to respond to dynamicand evolving situations.

Closer to people with ability torespond to the needs of thecommunity in a participatorymode.

Experience of working withwomen and SHGs.

Experience of working withGovernment schemes.

In some of the Programmedistricts, there are professionalNGOs having sufficient

Inadequate technical competency. Limited accountability. Limited organizational and

management capability Many have limited staff especially

women staff High turnover of staff Limited exposure to good practices

of promoting sustainable communitybased organisations.

Gender orientation understood as“women only” initiatives

Financial self sustenance is low. High dependency on government

schemes

Fast expansion. Willingness to explore new

areas of intervention Utilisation of staff resources to

quick start of the programme

Financial/Funding Uncertainty Limited second line management capability in small

NGOs Possible Hostility between village / block/district level

government officials and NGO staff Political leanings. Withdrawal from the Programme



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Organisation Strengths Weaknesses Opportunities Threatsexperience in managing womenempowerment projects.

Presence of local NGOs inProgramme districts.

Lack of networking and coordinationamong NGOs at district level.

Financial Institutions Good rural network ofbranches.

Can provide integrated financialservices to the poor (includingsavings services which is barredto MFIs)

Leading agencies for advancingcrop and agricultural loans tofarmers

Government controlled and managed– risk averse and complacent.

Cooperatives financially weak. Low priority for needs of small and

marginal farmers, women andbackward groups.

Reluctance to lend to rural micro andsmall-scale sector.

Poor performance of governmentsponsored schemes.

Low morale of staff in Bihar.

Cooperatives on the radar ofnational and state governmentsfor wide ranging reformsincluding recapitalization.

Pressure of Central Governmentand Reserve Bank to increaseoutreach in rural areas.

Policy directions and initiativesto increase rural andagricultural credit.

Banks’ commitment to increasetheir rural portfolio

Political interference Inconsistency between policies and actions. Law and order situation not conducive to deliver

financial services especially in Bihar.



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KEY FILE TABLE 3: COMPLEMENTARY DONOR INITIATIVE/PARTNERSHIP POTENTIAL

Donor/Agency Nature of Project/Programme Project/Programme Coverage Status Complementarity/SynergyPotential

World Bank U.P. diversified Agriculture SupportProject

Selected villages of the Project districtsof Bahraich & Shravasti and otherdistrict,Activities are likely to be those whichcould be built upon the gains of theearlier phase

Earlier phase has beencompleted and the next phaseis in the pipeline.

Would be complementary in a limitedway in promoting agriculture basedlivelihoods if such villages happen tobe the Programme villages.

World Bank UP rural water supply &environmental sanitation –Swajaldhara Project

Covers activities of sanitation anddrinking water supply in the selectedvillages

Being implemented Would be complementary in a limitedway in improving the health of thetarget group if the Programmevillages are included in the Project.

World Bank & IFAD Rural Women Empowerment andDevelopment Programme(Swashakti)

Selected villages in selected districts inU.P. and Bihar

Recently closed Has provided considerable learningfor managing similar Projects in abetter manner

GOI Swarna Jayanti Gram SwarojgarYojana (SGSY)

Provides assistance for promotion ofgroups of poor women and men, theirnurturing and providing back endsubsidy for taking up IGA

Being implemented The target group would be able to getsubsidy when they borrow sizeableloan for IGA and repay 50%.However its approach can undermineProgramme’s strategy and SHGs.

GOI National Rural Health Mission Activities include provision ofcommunity health worker ‘Asha’ inselected villages and incentives to herfor motivating women forimmunization, etc.

Just being grounded Would be complementary, providedthe target group is empowered toactively participate in the scheme.

GOI Integrated Child DevelopmentScheme

Services of Anganwadi worker forimproving the nutrition status ofchildren and pregnant mothers andtheir immunization

Under implementation Would be complementary providedthe community is empowered enoughto actively participate in the scheme.and make it functional where it is notreaching them.



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KEY FILE 4: TARGET GROUP PRIORITY NEEDS AND POSSIBLE PROGRAMME RESPONSES IN MGP

Typology Causes of Poverty Coping Strategies Priority Needs Possible Project ResponsesMedium poor -Family size of 3-4 children

-Small farm producers highly fragmented;unable to leverage attractive pricing forproduce-Negligible access to agricultural extensionand animal health services-Poor access to market-Children studying up to secondary level –mostly boys-Only very few access government healthposts for health care – generally go toquacks-Awareness of women on their healthissues and nutrition is limited-Permanent roof but rudimentary/mudwalls – vulnerable to natural disasters-In some context, social customs inhibitwomen from working outside-Lack of savings/safety net-Limited sanitation facilities-Governance structures not responsive tothe needs of the poor, especially women-Gender based violence

-Search for temporaryemployment-Lease out land orwater bodies-Limited cropdiversification;-Rearing of animals –dairy, poultry donemostly by women-Petty trading-Sale of assetsincluding animalsduring distress

-Regular Employment-Diversification of livelihood pattern toreduce dependence on land and increaseincome from off-farm sources.-Improved village-level infrastructure(roads, irrigation, power and watersupply)-Improved and accessible health care

-Capacity building of SHGs infinancial and non-financial issues.-Encourage low input sustainableagriculture by efficient use of thelocally available natural resources.-Facilitate processing of productsto add value and receive additionalincomes.-Exposure to demonstrationprojects during pilot phase.-Provide technical inputs andmarketing linkages for home basedenterprise like painting orembroidery for women who havelimited mobility-Provide improved access toenergy, sanitation, water and healthcare.-PRI training of women members-Provide legal assistance to dealwith violence and other forms ofdiscrimination.-Capacity building of women onlegal rights and right toinformation.

Poor -Landless households with more than oneearning member.-Daily wage employment-Children studying up to primary school-Girl children drop out of schools -involved in household chores-Access quacks for health care-Thatched roof – poor housing-Poor health and nutritional status ofwomen and children-Poor access to drinking water supply,electricity and sanitation facilities-Natural disasters such as floods leading toloss of assets-Early marriage of girl children

-Male out migration –often semi skilled-Use of family labourfor subsistenceproduction-Income generatingactivities like goatrearing or fisheries-Reduce food intakespecially by womenspecially during leanseason-Credit from moneylenders-Some cases, women

-Linkage to national rural employmentguarantee scheme-Better housing – Indira awas yojana-Food security-Appropriate enterprise-Support including secure access to landand water resources to intensifyproduction efforts-Access to credit at affordable rates andother financial services-Increased role of the poor in the villagelevel decision making

-Enable formation andstrengthening of grassrootsinstitutions of poor women forcreating a platform to address theirneeds.-Build their capacity in selectingviable enterprises.-Access to financial services,technology and marketing.-Improved access to energy,drinking water, sanitation, healthcare and nutrition.-Leadership development of SHGs-PRI training for women members.-Provide legal assistance to deal



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Typology Causes of Poverty Coping Strategies Priority Needs Possible Project Responses-Governance structures not responsive tothe needs of the poor, especially women-Lack of provision of skill enhancementservices aimed at upgrading the capacity ofthe poor to increase incomes-Gender based violence

have organized intoSHGs and accessinggovernment schemes –SGSY

with violence and other forms ofdiscrimination.- Capacity building of women onlegal rights and right to information

Very poor -Landless and assetless-Women headed households with no otherearning member.-Dependent on wage labour as and whenavailable – most end up in an exploitativework situations-Prevalence of child labour-Lack of safety nets-Poor health and nutritional status-Access to drinking water limited-No toilets and electricity-Access quacks to health care-Barely manage two meals a day-Rudimentary housing - shacks.-Lack of information about governmentpoverty alleviation programmes-Social exclusion by upper castesespecially in case of dalits limiting theiraccess to opportunity. They are mostlydependent on caste occupation – like shoemaking-Governance structures not responsive tothe needs of the poor/dalit, especiallywomen-Lack of provision of skill enhancementservices aimed at upgrading the capacity ofthe poor to increase incomes-Gender based violence

-Out migration-Wage labour whenavailable oftenextremely lowly paid-Borrow money at anexorbitant rate ofinterests-Dependent on quacksfor health care

-Secured livelihood-Access to credit at an affordable rate-Access to other financial servicesincluding insurance to reducevulnerability-Improved access to basic infrastructure– water, sanitation, health care-Access to government programmes/schemes

-Provide access to governmentschemes – Annapoorna Yojana andNREG-Provide access to welfare servicestargeted for the poor women –specially health care, widowpension, mid day meals forchildren-Facilitate formation of their ownSHGs-Provide training on small incomegenerating activities – poultry,livestock-Facilitate financial servicesproduct development such assavings and insurance to reducetheir vulnerability-Awareness raising on rights andentitlements-Facilitate more opportunities forpoor women and particularly dalitsand upper castes to interact onneutral basis by enabling poor toparticipate in the local governance.-Legal aid support



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KEY FILE TABLE 5: STAKEHOLDER MATRIX/PROGRAMME ACTORS AND ROLES

Component Sub-component Coverage Perennial Institution(s)Involved

Potential Contractors/Periodic Inputs

Other Possible Partners in Execution

CommunityInstitutionsDevelopment

Capacity building of thecommunity basedorganizations such as SHGs,cluster associations, people’sorganisations,Capacity building of FieldNGOs, Resource NGOs.Gender related activities.

Overall target groupField NGOsResource NGOs

MWCD and NABARDCommunity Institutions.NGOs and other civil societyinstitutions,Resource NGOs

Large national NGOs such asMYRADA,DHAN Foundation,Training institutions,Sahbhagi Shikshan SansthanMahila Samkhya, SEWA Lucknow,Nirantar, JagoriResource OrganisationsConsultants

Other government schemes.

Livelihoodenhancementactivities

Subsector / Value ChainAnalysis.Innovation FundRural Finance

Overall target group MWCD and NABARD.Community Institutions.NGOsCBOs

National Institutions like BAIF, ATIndia, BASIX, NDDB, Lucknow,KTL etc.

Private Enterprise, Research Institutes.

Programmemanagement

Central ProgrammeManagementState ProgrammeManagementProgramme Management UnitICTM&E

Overall target groupGovernments – centraland state.IFAD and CI

MWCD and NABARD.Community Institutions.NGOsCBOs

Consultants.Training Institutions.Research Agencies.IFAD/CI

Other donors



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REPUBLIC OF INDIA

WOMENS’ EMPOWERMENT AND LIVELIHOOD PROGRAMME INTHE MID GANGETIC PLAINS

DESIGN COMPLETION

MAIN REPORT

I. INTRODUCTION

1. Following a request sent by GOI on 10 March 2006, IFAD fielded a Formulation Mission forthe Women’s Empowerment and Livelihood Programme in the Mid-Gangetic Plains from 15 June to4 August 2006. The Formulation Mission Report was submitted to IFAD on 5 August 2006 andreviewed on 8 September 2006 by the Technical Review Committee.

2. Continuing with the Programme design process, IFAD fielded an ImplementationPlanning/Appraisal Mission4 for the Women’s Empowerment and Livelihood Programme in the Mid-Gangetic Plains from 28 August to 30 September 2006 to work in cooperation with the Ministry ofWomen and Child Development, Government of India, the Women Development Corporation ofBihar and the Women Development Corporation of Uttar Pradesh to detail the implementationplanning and processes of the Programme.

3. The Mission started its field work in Bihar with a Stakeholder Meeting on 1 September attendedby the Secretary, Social Welfare, Government of Bihar, the Women Development Corporation, NGOsand bank representatives. A meeting with representatives of the Ministry of Women and ChildDevelopment (MWCD) and Department of Economic Affairs (DEA), Government of India, theWomen Development Corporation of Bihar and the Women Development Corporation of UttarPradesh was held in Delhi on 7 September 2006, which discussed the response of the variousGovernment departments to the draft Formulation Report. A wrap up meeting was held with Biharofficials on 9 September. A Stakeholder Meeting was held in Lucknow on 11 September attended byofficials of the Uttar Pradesh Government, Women’s Development Corporation, financial institutions,and NGOs. The Mission proceeded to visit the Districts of Rae Bareli and Sultanpur from9 -15 September. A wrap up meeting was held with the Government of Uttar Pradesh on18 September 2006.

4. A wrap-up meeting with representatives from GOI, Government of Bihar and Government ofUP was held at MWCD in Delhi on 22 September 2006. The Draft ImplementationPlanning/Appraisal Report was submitted to IFAD on 27 September 2006.The Programme LoanNegotiations were held in Rome from 22-24 November 2006. The IFAD Executive Board approvedthe loan assistance for implementing the Programme in December 2006. IFAD had been following upwith the DEA and MWCD at various levels for early signing of the loan documents and start up ofimplementation activities.

4 Comprising: Dr. Jack Croucher, Team Leader and Enterprise Specialist; Ms. Girija Srinivasan, Deputy Team Leader andRural Finance Specialist; Mr. S.K. Shetty, Project Management Specialist; Ms. Bhaswati Chakravorty, Gender Specialist;Mr. M.A. Alam, Financial Analyst. Mr. Mattia Prayer Galletti, Country Programme Manager, IFAD, joined the missionduring the first and last week and attended the final wrap-up meeting in Delhi. Mr. A. Tewari, Director, DEA joined theMission during the final week and at the final wrap-up meeting in Delhi and Mr. Subramanium Sriram, Assistant ProgrammeOfficer, IFAD Field Presence Office, New Delhi joined the Mission during the final week and at the final wrap-up meetingin Delhi.



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5. The Government of India, on 10th April 2008 requested that in order to have a smoothimplementation of the programme to change the programme implementation agency from the StateWomen’s Development Corporation in both states to NABARD. As a result of this, a ReformulationMission5 was fielded during 21-31 July 2008.

II. COUNTRY AND POVERTY CONTEXT

A. Country Economic Background

6. India is the second most populated country in the world with a total population of 1.07 billion(in 2003), it accounts for 17% of the world’s population, but India occupies only 2.4% of the world’sland mass. The rural proportion of the population is declining, reflecting rural-to-urban migration,and was estimated to be 72% in 2003. The overall annual population growth rate has also fallen: from2.2% in 1981 to 2.09% in 2003.

7. The Indian economy is now recognised as one of the world’s powerhouses with average GDPgrowth increased from 3.5% during the 1950s-70s to 5.4% in the 1980’s to be 7.0% in 2005. Theacceleration in growth has resulted in per capita GDP rising from INR 2 044 (USD 260) in 1980 to anexpected INR. 29 911 (USD 620) in 2005. The National Income per person in 2002-03 wasINR 18 912. The contribution of agriculture has declined from 57% of GDP in 1950 to 22% in 2002.In the same period, the contribution of services rose from 28% to 51% of GDP, while the contributionof industry increased more modestly, to 27%. For the first time ever, employment growth in the non-farm sector exceeded that in the farm sector for the first quarter of 2006. This robust growth howeveris not reflected throughout the countryside and the Mid-Gangetic Plains in particular has yet toparticipate in the momentum and share the benefits experienced in other sections of the country.

Human and Social Development

8. The Human Development Index (HDI) has improved significantly in India between 1980 and2001 (Planning Commission 2002). Overall, during the 1980s, the index has improved by nearly 26%and by another 24% during the 1990s. At the state level, there are wide disparities in the level ofhuman development. In the early 1980s, states like Bihar, Uttar Pradesh, Madhya Pradesh, Rajasthanand Orissa had HDI close to just half that of Kerala’s.

9. Gender equality has improved only marginally. At the national level, the gender empowermentindex (GEI) improved from 62% in the early 1980s to 67.6% in the early 1990s. However, the female-male ratio has been steadily declining, from 972 in 1991 to 933 in 2001. This is largely attributed tothe preference for sons, discrimination against the girl-child, female foeticide and infanticide, andhigher mortality levels for females. Many of India's women are malnourished, and anaemia is presentin 60% of the female population. Maternal mortality remains high, particularly in rural areas, withestimates of 540 deaths per 100 000 live births and while some gender indicators have improved, suchas the declining gender gap in school enrolment, the overall inequality remains.

10. Despite remarkable progress in education, literacy rates have only reached 64%. Almost half ofall children under the age of five are malnourished and 34% of newborns are significantlyunderweight. The spread of HIV/AIDS, if unchecked, could become a major threat as an estimated4 to 5 million persons are reportedly infected.

5 Comprising Mr. Shreekantha Shetty, Project Management Specialist assisted by NABARD team consisting ofMr. S. S. Iyer, Deputy General Manager and Mr. Anoop Mohan, Assistant General Manager.



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B. The Rural Poverty: The Sectoral Context

11. In India, 75% of all poor live in rural areas and 15% of them are chronically poor (IndiaCOSOP 2006). The social determinants of poverty have been significant, as demonstrated by the factthat the incidence of poverty is highest among socially disadvantaged groups. For example, povertyincidence among the Scheduled Castes (SCs) or Dalits and Scheduled Tribes (STs) in rural areas in2000 was about 38% and 48%, respectively compared to 27% among all rural households. Womenconstitute one of the most disadvantaged groups in terms of human development.

12. The percentages of children (aged three or under) who were underweight for their age wasbetween 54-56 percent among SC and ST groups compared to 44 percent for the rest of the population(Kabeer 2006). Likewise, infant mortality rates were 83, 84 and 68 per 1,000 live births for SCs, STsand other groups, respectively whereas under-five mortality was 119, 126 and 92 per live births.Maternal mortality was the highest among STs, where 65 percent of women were anaemic comparedto 48 percent for the general population.

13. Poverty in India is far from homogenous: the incidence of rural poverty differs widely, bothbetween and within states, between different social and occupational groups, between male andfemale, etc. Generally speaking, levels of poverty are higher in the northern and eastern states.Throughout the country, ethnicity and gender also come into play. The highest incidence of poverty isrecorded amongst the scheduled tribes (54%) followed by the scheduled castes (50%). The latteraccount for 27% and the former for 13% of the total rural poor though they represent only 18% and8% of the total population respectively.

14. Women throughout India remain one of the most disadvantaged groups, especially in ruralareas. It is reflected in the sex ratio of 934:1,000 in 2001 and numerous other indicators. Over 90% ofrural women workers are unskilled and about 90% of women work in the informal/unorganised sector.Women’s wage rates in agriculture are 30-50% less than for men and female casual labourers showthe highest incidence of poverty of all occupational categories, male or female. A disproportionateburden of poverty weighs on female-headed households who are not reached by the deliverystructures of credit and technical advice because institutions are slow to recognise women ashousehold heads.

III. INSTITUTIONS AND ORGANISATIONS

A. Key Institutional and Policy Context of IFAD Interventions

Government’s Poverty Reduction Strategy

15. The overriding objective of India’s poverty reduction strategy has been growth with socialjustice and equity6. Poverty reduction has been one of the guiding principles of the planning processin India (Planning Commission: 10th Five-Year Development Plan 2002-2007). The government hasclearly recognized the role of economic growth in providing more employment avenues to thepopulation. The growth-oriented approach has been reinforced by focusing on specific sectors whichprovide greater opportunities to the people to participate in the growth process. Recognizing thevarious dimensions of poverty relating to health, education, sanitation and other basic services, bothcentral and state governments have considerably enhanced allocation to these sectors, which promote

6 Consistent with the strategy of the central government, Uttar Pradesh’s strategy calls for faster growth with more equitabledistribution of income, while recognizing an essential role for programmes that promote self-employment as well as short-term wage employment. The strategy notes the importance of improving productivity in the agriculture sector, with a morerapid shift out of low-value to higher value, labour intensive crops and non-farm activities.



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capacity-building and well-being of the poor. The government’s poverty reduction strategy focuses onthe following:

Investments in agriculture, area development programmes and afforestation to provideavenues for employment and income.

Special programmes for the welfare of SCs and STs, the disabled and other vulnerablegroups.

Anti-poverty programmes that seek to transfer assets and skills to people for self-employment, coupled with public works programmes that enable people to cope withtransient poverty.

Targeted public distribution system to protect the poor from adverse effects of a rise inprices and to ensure food and nutrition security at affordable prices.

16. The Eleventh Plan has identified key areas and concerns to be addressed during the upcoming5-year Plan period 2007-2012. These include a) improving the access and quality of essential publicservices such as health and education to the rural poor through implementation and improvement ofspecific programmes and involvement of voluntary sector, b) broad basing the income growth bydoubling the growth rate in agriculture from 2 percent during tenth plan to 4 percent in eleventh plan,c) harmonizing the self employment schemes of various Ministries and implement an integrated selfemployment programme, d) special attention to scheduled castes, tribes and minorities especiallyeconomic empowerment of women from these sections of poor. The 11th Plan articulates providingan opportunity to restructure policies to achieve a new vision of growth that will be more broadlybased and inclusive, bringing about a faster reduction in poverty.

17. The major policy focus of the Government of India has been on improving the productivity ofthe farms and thus increasing the income of the farmer households. The Central Government hasrecently approved a major initiative, the National Agriculture Innovation Programme, to boostresearch and education in agricultural science with financing from the World Bank. The research willfocus on production and consumption systems, sustainable livelihood security and will result in15 value chain development reports for replication in disadvantaged areas.

18. Seventy-third Amendment making the Panchayats statutory and elections mandatory isbeginning to make some changes in rural areas. In 2006 panchayat elections of Bihar, women havebeen elected in over 50% villages as Pradhan and in a few blocks as Block heads. Further, whereverthere has been grassroots mobilization of women through SHGs or otherwise, women participation ingovernance through contribution in village open-meetings and as pressure groups for fair distributionof entitlements, is increasing. After the amendment, Bihar has witnessed two elections in PanchayatRaj Institutions (PRI), while in Uttar Pradesh the third election took place in August 2005. A numberof women from SHGs contested in this election and won more than 38% of total seats. The policy ofreservation for women in governance (33% in Uttar Pradesh and 50% in Bihar) has givenopportunities for women to participate in political spheres, thereby creating an enabling environmentfor political empowerment for women.

19. There are several policy directions set by the Central Government, Reserve Bank of India andNABARD to enhance the credit flow to the rural households, which are relevant for the Programmedistricts as well. Reserve Bank of India in order to deepen the outreach of banks has permitted thebanks to use the services of non-governmental organizations(NGOs), micro-finance institutions(MFIs) and post offices as intermediaries in providing financial and banking services by appointingthem as Business Facilitators. There is a greater acceptance of the role of Micro finance institutionswith the budget announcement of the Finance Minister that the Government is planning to promoteMFIs in a big way. With Reserve Bank and NABARD providing necessary policy support, bankersare now keen to lend to Self Help Groups and MFIs.



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20. The Programme has the opportunity to achieve its Convergence objective to link target clientsand activities to other ongoing programmes and institutions that compliment the Programme’s Goalsand Objectives of holistic empowerment.

Achievement of Millennium Development Goals

21. India has made significant progress in reducing poverty in the last decade and is on track tomeet the MDG of halving poverty by 2015. However, the attainment of other MDGs - halving hunger,achieving universal primary education and gender equality, reducing infant and child mortality bytwo-thirds and maternal mortality by three-quarters, reversing the spread of HIV/AIDS and othercommunicable diseases, and halving the proportion of people without access to safe water by 2015remains challenging, especially in poor states. A recent study has shown that it should be possible forthe poor states to meet the MDGs relating to infant mortality, child malnutrition, and hunger-povertywith a combination of interventions (such as nutrition supplementation and immunization), economicgrowth, improved coverage of infrastructure, and wide-ranging reforms in the institutions of servicedelivery (Deolalikar 2005). However, attaining the education goals will require considerably moreeffort.

B. Key Organizations Relevant to the Programme

Ministry of Women and Child Development (MWCD)

22. The recently established Ministry, MWCD has a number of ongoing programmes. IntegratedChild Development Services and the Swayamsiddha are the two major GOI programmes implementedby this ministry. In addition, this ministry has also implemented Swashakthi project. The MWCD willserve as the nodal agency for the Programme.

National Bank for Agriculture and Rural Development (NABARD)

23. NABARD is the pioneer and continues to be in the forefront of Micro-credit initiatives acrossthe country. NABARD operates through its Head Office at Mumbai, 28 Regional Offices located inthe States, a Sub-Office at Port Blair, Training Establishments at Lucknow, Bolpur, Mangalore andHyderabad and 392 District Development Officers at the district level. NABARD has on its roll 2982professionals who are supported by other staff.

24. NABARD has undertaken considerable development work in the field of SHG mobilization,bank linkage, and enterprise development. The SHG Bank Linkage Programme was introduced byNABARD, as a pilot project in 1992-93. Bank Linkage Programme covers 2.79 million SHGscovering 39 million households with a cumulative bank loan of INR 161 billion as at 31 March 2007with a repayment track record of over 95%. NABARD provides financial support in the form ofrefinance of loans granted to SHGs and also grants support for mobilsing SHGs and linking SHGs toBanks. In addition, NABARD conducts training programmes for SHG members, bank officials andfield staff of NGOs using partner organizations. It has established a “Micro-Finance Developmentand Equity Fund” for providing revolving fund and capital support to MFIs. NABARD has alsoestablished a Micro-credit Innovations Department headed by a Chief General Manager. Thisdepartment is responsible for all the micro-credit initiatives and innovations of NABARD. NABARDhas also started initiatives related to micro-enterprise promotion among SHGs.

25. NABARD has considerable knowledge base and professionals with expertise to manage micro-finance and micro-enterprise development interventions and has required competency to implementthe proposed programme.



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Panchayat Raj Institutions (PRI)

26. The PRIs are functioning in all the villages and are involved in implementing different schemes.They are devolved with a number of responsibilities and power. They can influence the linedepartments in convergence as most of the schemes are implemented through PRIs only. Women areparticipating in large number in PRIs. The 50% reservation in Bihar and 33% reservation in UttarPradesh for women allowed them access to this institution. In recent Panchayat election women areexpected to have a majority in these bodies. In Bihar, awareness on Gram Sabha are higher andcommunity especially women are participating in these meetings with their agenda. A lot of SHGsmembers are elected to the PRIs and are willing take up women’s issues in this forum.

27. However PRIs continue to be heavily influenced by upper castes and elites and controlled bypolitical leaders; hence they do not function as responsive bodies to people’s need. There is a strongneed to strengthen them, increasing their accountability and allowing effective participation andcontrol by local communities.

Self Help Groups (SHG)

28. The SHG movement is probably today the most important development institutional innovationintroduced in India and replicated elsewhere. There are more than 2 million SHGs recorded in India,promoted under different programmes. SHGs provide social space, especially for women, to buildtheir capacity and deal with various external institutions. They provide a platform to share issues andto build self confidence. SHGs are established based on affinity. SHG members have a high stake inthe group and they are involved in all group activities. SHGs create savings habit, develop capacity tomanage their own financial resources and reduce their dependence from private money lenders.

29. Intensive capacity building, exposures and handholding support are required for the groups tofunction and sustain in the long run. Building the capacity, forming an affinity group is time-consuming process. In Uttar Pradesh, not many women SHGs are functioning properly because ofmale dominance. Social stigma is still prevalent in the society that resists women’s activeparticipation in SHG activities.

Enterprise Organizations

30. Drawn from mature Self-Help Groups a variety of enterprise organizational opportunities areavailable for the aspiring entrepreneurs to use. The first step will be to form Producer Groups ofwomen interested in the same economic activity in order to create economies of scale for provision ofbusiness services and marketing. At a higher level these producer groups may form ProducerCompanies, Mutually Aided Cooperative Societies, or Private Limited Companies to pursue largereconomic objectives higher up the value chain.

Banks / Cooperatives

31. Past experience in the Programme area highlights a number of constraints faced by the ruralhouseholds in accessing credit. Banks’ willingness to lend to the rural households is severely reducedby: low recovery rates; difficulties these institutions face in dealing effectively and economically witha large number of small borrowers; inadequate staffing in relation to the widespread geographic areato be covered; low staff morale and motivation, and negative mindset of the bankers towards ruralpoor, based on their negative perception relating to risks and credit-worthiness of these borrowers.The cooperatives are highly controlled and are vulnerable to politicisation. Poor households arerelatively more dependent on the informal credit system at high cost to meet their needs.



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32. During the field visits as well as consultation with a variety of stakeholders, the reluctance ofbankers in Bihar to link self help groups has been articulated as a major constraint. In Uttar Pradeshthe bankers seem keen to lend to poor women through innovative approaches. The banks provideconfidence to the poor about the safety of their savings and they also offer various financial products.The programme will include bankers in the planning of Programme activities from the outset andaddress some of their capacity building needs so that they will develop a sense of “ownership” ofProgramme activities resulting in easier access to credit.

Marketing Institutions

33. In both the states of UP and Bihar presence of marketing institutions is virtually negligible. TheState Agriculture Marketing Board (SAMB) partially takes care of the agriculture marketing but it isthe traders both at the village as well as the town level which control the agri produce marketing.Generally, every district has a mandi which operates under the SAMB and purchases agricultureproduces from the farmers as well as the traders. Pradeshik Cooperative Dairy Federation in UP andCOMPFED (Cooperative Marketing Producer’s Federation) in Bihar are the major institutions whichpurchase milk from the various milk cooperative societies. Sericulture Board also purchases cocoonsfrom the people practicing sericulture. State Khadi Village Gramodhyog Board/Khadi VillageIndustries Commission also engages in buy-back arrangement with the artisans for the varioushandicraft products. Despite the fact that these institutions are present in the state, district, block levelthey have not been able to achieve their mandate of helping primary producer in marketing theirproducts in a remunerative manner. It is predominantly the traders who have been able to make use ofall the facilities provided by these institutions. In those situations where traders add no value to aproduct, the programme will aim to replace them with well organized groups of producers. Wheretraders do provide services, efforts will be made to more equitably distribute the terms of trade.

NGOs

34. The NGOs have a stronger presence in the rural areas of Bihar than UP. Generally, NGOs areflexible in nature and open to innovations. Their comparative advantage lies in social mobilizationand building of grassroots institutions. They have committed and experienced staff settled in the area,thereby acquainted with local social, cultural and political settings, making them accessible to peopleat all time. These NGOs yet do not have long term vision for the SHGs related to providingsustainable support structures. As a result, the rate of bank linkage is poor and the most SHGs becomedormant after the project closure. Also NGO experience in successful enterprise development isminimal. There are few state level professional NGOs in UP and Bihar having experience in womenempowerment and micro enterprise development.

IV. ONGOING GOVERNMENT AND DONOR ACTIVITIES AND LESSONS LEARNED

A. Ongoing Government, Donor and IFAD Activities

35. Over the past few decades India has allocated fairly large resources to targeted anti-povertyprogrammes, mainly through food subsidies, rural employment schemes and subsidised credit forasset creation. The results have not been commensurate with the expenditure, due largely to poortargeting. In recent years, GOI has revamped its anti-poverty programmes and now places a greaterfocus both on channelling assistance through grassroots self-help groups (SHGs) that help thedisadvantaged categories gain access to subsidized credit for asset creation, on better targeting of theemployment creation schemes towards these categories and on addressing land issues in a manner thatprotects their constitutionally recognized rights.



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36. Among the several Government-funded activities are: the Public Distribution System (PDS)under which subsidized ration is provided to below poverty line (BPL) households; universalimmunization and mid-day meals for children; safe motherhood scheme; pensions for old aged,widow and handicapped; scholarships for girls and children from SC/ST households; are some of theother social security schemes. Important anti-poverty programmes under the aegis of RuralDevelopment Department are Swarnajayanti Gram Swarojgar Yojana (SGSY) for subsidized credit togroups for income generation activities; Indira Awas Yojana (IAY) for subsidized housing to BPLfamilies; and rural employment scheme through the panchayats.

37. The Ministry of Women and Child Welfare is implementing various programmes throughWomen Development Corporations at state level. Swashakti, Swayamsiddha and Swabalamban aremajor programmes focusing on women’s empowerment. Many SHGs have been formed under theseschemes. These schemes could achieve good outreach due to the target approach but could notachieve in some cases their full potential due to lack of implementation capacity and operationalissues.

38. The National Rural Employment Guarantee Programme, recently launched by GOI, seeks toprovide 100 days/year of employment at the minimum daily wage of Rs. 60 to every poor ruralhousehold. The programme will initially target the 200 poorest districts with plans to extend to 600districts. Schedule Castes, Schedule Tribes, and women are seen as the primary beneficiaries. Whilethis Programme has been initiated in Bihar, it is yet to be started in Uttar Pradesh.

39. The World Bank assisted UP Diversified Agriculture Programme was implemented in theselected districts, which envisaged empowerment of the rural women by mobilizing them in SHGsand nurturing them with the help of NGOs as well as facilitating diversification of agriculture throughdemonstrations and support of experts.

40. Another Programme assisted by DFID, the Poorest Areas Civil Society (PACS) programme isalso being implemented in both the states through NGOs. It focuses on livelihood development,strengthening of local self Government, and women empowerment.

41. The World Bank is planning a USD 70.00 million Bihar Rural Livelihood Programme (BRLP).The programme will focus on livelihoods at grassroot level with a “saturation approach” in theselected districts. The Bank’s programme will start in initially four districts and may expand toanother two. It is a long-term programme with three phases that will eventually cover most of theState.

42. UNDP has a disaster management programme in some of the flood prone districts of Bihar andUttar Pradesh (UP). Considering the high level of trafficking and thereby making people vulnerable toHIV/AIDS, UNDP has also launched “Trafficking and HIV /AIDS” (TAHA) in both the state to buildawareness among community.

B. IFAD’s Experience and Lessons Learned

43. IFAD’s largest country portfolio is in India. So far IFAD approved 20 loans to India for a totalof USD 534 million. IFAD has a substantial history of involvement in the microfinance sector withfour projects, namely the Tamil Nadu Women’s Development Project (IFAD Loan 240-IN); theMaharashtra Rural Credit Project (IFAD Loan 325-IN); the Rural Women’s Development andEmpowerment Project – Swashakti - (IFAD Loan 439-IN); and the National Microfinance SupportProgramme (IFAD Loan 538-IN). One more project, the Tejaswini Rural Women’s EmpowermentProgramme (IFAD Loan 662-IN) was approved in December 2005.



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44. IFAD’s experience has demonstrated that the approach based on women’s SHGs formationlinked with the rural banking system has been an effective instrument in fostering women’sempowerment, providing greater access to and control of services as well as increased incomes ofpoor women while, at the same time, ensuring commercial sustainability. The Programme will buildin particular on the previous women empowerment Swashakti project, funded by World Bank andIFAD. While the Programme did well in formation and capacity building of the SHGs, large numberof SHGs could not be linked with bank credit and that affected the livelihood promotion activitiesunder that Programme. Among the several lessons learned, the following have particular relevance forthe proposed Programme:

Women SHGs were able to build self-reliance, self-confidence whenever they were formedon the basis of affinity and adequately trained.

SHG formation and strengthening is best achieved by a credible and experienced NGO andthe SHGs require support structure to evolve into sustainable People’s Organizations.

Capacity and performance of the Field NGOs (FNGOs) is critical to the success of SHGs.There is a need to invest in building capacity of committed NGOs.

Institutional evolution to provide ongoing support after the programme closure has to bepromoted from the very beginning and the concept of paying for the services need to beseeded.

Life skills need to have a more direct approach in terms of training field level workers andproviding institutional support.

There is a need to address the lack of linkages between skills training on one hand andsupport and guidance in how to plan and implement income generating activities on the other.

Programme management suffers because of delays in recruitment, high turnover, longbureaucratic procedures and insufficient decentralization.

It is desirable to plan for promotion of livelihood and micro enterprises from the beginning asconsiderable time is required for identifying resources and their use,

Livelihood activities to date have been promoted in relative isolation of the wider economy inan ad hoc manner lacking an analytical framework.

Constant review of progress at higher level is important for achieving a balanced progress inprogramme implementation.

At times NGOs are reluctant to give up their hold on SHGs. More time and efforts are required for active participation of the banks in providing credit to

the programme beneficiaries.

V. TARGET GROUPS AND PROGRAMME AREA

45. Selection of the target districts of Bahraich, Shravasti, Rae Bareli and Sultanpur in U.P. andMadhubani and Sitamahri in Bihar was undertaken during the Formulation Mission. TheImplementation Planning Mission focused on a deeper understanding and differentiation of poorwomen and in developing criteria for selection of blocks (2 per district), villages, and poor womenparticipants. (refer to Annex 1, Attachment 1 for details)

46. A participatory wealth ranking was undertaken by the mission on 13.9.2006 in Dilli Sherivillage, Harchandpur block of Rae Barelli district of UP. This data coupled with the various secondaryinformation categories the rural households into four categories. The features of these four categoriesare provided in Table 1 below:



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Table 1: Features of rural households in the programme area

Category Features of the householdsBetter Off Households with more than Five Bigha of land. The other features include:

(i) children studying up to degree level; (ii) access private health care; and(iii) permanent roof with brick walls.

Medium Poor Households with less than Five Bigha of land. The other features include:(i) children studying up to Pre-University; (ii) access government health postsfor health care; (iii) permanent roof but rudimentary / mud walls; and(iv) social customs forbid women from working outside.

Poor Landless households with more than one earning member. The other featuresinclude: (i) daily wage employment; (ii) children studying up to primaryschool; (iii) access quacks for health care; (iv) thatched roof housing; and(v) seasonal migration of male members.

Very Poor Landless women headed households with no other earning member. The otherfeatures include: (i) daily wage employment; (ii) child employment; (iii) accessquacks for health care; and (iv) rudimentary housing - shacks.

47. The vulnerable households belonging Very Poor, Poor and Medium Poor category will be theprogrammes’ target group. The target group will be identified through a participatory wealth rankingat the time of SHG mobilization. Most scheduled caste households are generally the poorest. Butpoverty is equally distributed amongst other castes. In other castes there exist no specific relationshipbetween caste and economic status of the family. Poverty in the programme area is characterized bythe lack of organized productive economic opportunities that are less labour intensive and at the sametime enhance the income levels compared to the daily wages.

48. Poverty is compounded by a very low rate of literacy among both men and women butespecially women. Access to health care is minimal and nutritional well being is a serious problem.Men from poorer and landless households migrate in search of wage labour and the women managethe households. Their remittances are used in consumption smoothening. However, under separatearrangements, DFID will carry out a study on remittances and migration in consultation with WorldBank and IFAD. It is expected that the findings of this study will be highly relevant for implementingthis programme.

49. The primary target group comprises of women and adolescent girls in 40,500 vulnerablehouseholds in four blocks of Madhubani and Sitamarhi districts in Bihar. It is expected that theprogramme will mobilize 2700 SHGs in Bihar. In UP, the primary target group will comprise 67,500households in eight blocks of Bahraich, Shravasti, Sultanpur and Rae Bareli districts. It is expectedthat the programme will mobilize 4500 SHGs in UP. Up to 50,000 micro, small and medium sizeenterprises will be formed or expanded during the programme’s eight years.

A. IFAD Strategy and Focus

50. IFAD’s current Country Strategy for India, presented in the Country Strategic OpportunitiesPaper (COSOP), was approved by its Executive Board in December 2005 after almost two years ofwork and intensive interactions with GOI. Recognizing the limited size of its operations, IFAD’sstrategy focuses on identifying niche areas where the development of innovative approaches couldmake a meaningful contribution to the broader development effort.

51. Among the several opportunities identified for project interventions, the COSOP included aproposal aimed at improving livelihood opportunities in the middle Gangetic plains. The proposedProgramme also relates to the key elements of IFAD’s Country Strategy, including:



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Innovation: The Programme proposes several innovative endeavours including: anInnovation Fund, Equity Capital Fund to facilitate bank financing, an examination of therole of remittances in household incomes of the target groups;

Institutional sustainability: The Programme places significant emphasis on institutionbuilding at the grass-roots level, the NGO level and the government department level.Self-sustained Community Service Centers will ensure cost efficiency and institutionalsupport to CBOs at the end of the Programme.

Target areas: In line with IFAD’s mandate, the Programme will target underdevelopedareas and the most vulnerable women.

Government demand: IFAD is deeply committed to ensure that its support is directed toinitiatives that have strong elements of ownership by the concerned stakeholders. Firstand foremost, this implies a regular and open dialogue with the Government.

B. Programme Area

52. The Mid Gangetic Plains (MGP) possibly forms the largest ‘poverty patch’ on the Indian map,both in terms of area and even more so in terms of the size of the inhabiting population. The acuterural poverty in MGP is striking in the face of high fertility of its agricultural land and the immensebio-diversity of its vegetation pattern. Comparable estimates, relating to the year 1993-94, show thatwhile the rural poverty ratio was 36.7 percent for India as a whole, it was much higher at 51.8 percentin MGP.

53. The functioning of its rural economy is also very traditional, thanks to the tenurial system ofPermanent Settlement, introduced during the colonial period. Although statutory base of thisunproductive tenurial system was removed after independence (in both Uttar Pradesh and Bihar), itwas not able to alter the extremely inegalitarian land distribution pattern. Nearly 70 percent of therural households in MGP are either landless or own less than one acre of land. A large part of the landhere is cultivated not by its owners, but by sharecroppers. Further, a very large number of agriculturalholdings are so small that their owners are unable to cultivate it using modern agricultural inputs. Thevery high population pressure on land coupled with the extreme inegalitarian ownership of landshould be regarded as one of the important determinants of acute rural poverty in the region.

54. Other social problems that characterize the target area include: poor governance at the districtand local levels, continuation of the rigid social structure including casteism, wide spread law andorder problems and overall low levels of development activities.

District, Block, Village and Household Selection

55. The background study on programme area selection considered 65 indicators for all the37 districts in Bihar and the 70 Districts in UP and develop a composite index. These indicators relateto gender, socially disadvantaged groups, economy, infrastructural facilities and the demographicsituation of the districts. In addition to these data the Mission reviewed the list of the mostdisadvantaged districts prepared by the Planning Commission and the list of district proposed byMWCD. In addition to the incidence of poverty prevalent in the selected districts, based on field visitsand discussions with various stakeholders, the Mission considered additional criteria including: theeconomic potential existing in each district; the existence of well grounded, experienced NGOs at thedistrict levels that will play a crucial role in implementation, and the geographical contiguity of thedistricts that will facilitate Programme management and monitoring, especially in Bihar where travelby road is difficult and time consuming. (refer to Annex 1, Attachment 1 for details on selectioncriteria for Districts).



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56. The proposed programme area will include the following districts: Madhubani and Sitamarhi inBihar; Bahraich, Shravasti, Sultanpur and Rae Bareli in Uttar Pradesh. The four districts in UP can begrouped in two clusters of two contiguous districts.

57. Block Selection and Village selection in Uttar Pradesh will be undertaken during ProgrammeImplementation during the pre-start up phase by the Programme Staff. A budget has been includedunder operational costs in the retroactive financing component. The following criteria will be used inguiding block selection:

Availability of road to the block headquarters. Presence of 4 to 6 commercial and Regional Rural bank branches in a block. Scope for economic activities. Not less than 40% of the households in the below the poverty line category. Low number of development programmes. High percentage of SC/ST population. Contiguity of blocks. Not prone to large scale flooding. Backwardness based on the composite index of backwardness developed by IFAD

background study where available for ranking of blocks within the state; (refer toAnnex 1 Attachment 1 for details on composite index and rankings for blocks).

58. A “Saturation strategy” in which women from every poor household in the block will berecruited to join SHGs will be adopted in both the states. As a result, the programme will work invirtually every village in the selected blocks in which below poverty line and marginally abovepoverty line households are found.

59. However, in the event it is not possible to adopt “saturation strategy”, selection of villages willbe taken up by the Programme staff during per-start up phase with funds available under theretroactive financing component. The following selection criteria for villages will be used:

% of below poverty line population (which should exceed 40%). Proximity of bank network for linkages. key village characteristics:

- social cohesiveness with strong community identity and a tradition of collectivedecision making.

- respected and progressive leadership sensitive to equity concerns.- consensus in favour of women’s participation in community institutions and decision

making.- commitment to the principle of working towards self-reliance.- commitment to equitable sharing of benefits arising from Programme inputs.- willingness to make voluntary contributions for Programme activities.- commitment to making community level decisions by consensus and establishing

transparent systems for funds management.

Selection criteria for individual participants

60. The programme strategy has sought to address the issues of social exclusion and vulnerability inits programme components. Some of the key parameters of vulnerability include: Single female-headed households/Widows, Households with differently-abled people (physical and mental),Households with irregular employment, Households that depend on distress migration, Householdswithout access to any services, water, sanitation, welfare, extension services, Ethnic or religious



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minorities. Even within this category, there are sub-categories: very poor, poor and medium poor,which are detailed in Key File Table 4. All these categories fall below the poverty line.

61. There is yet another category of households, which do not fall into the “poverty groups” butthey are vulnerable or “tomorrow’s poor” These are households which may be above poverty lines,but whose livelihoods are so precarious that any downward mobility in the event of a crisis will leadthem to be reclassified as poor. (Detailed criteria specific to each subcategory can be found in the KeyFile Table 4.

VI. PROGRAMME DESCRIPTION

A. Programme Rationale and Objectives

62. The degree and nature of poverty described above and prevalent in the targeted districts ofEastern Uttar Pradesh and Bihar contrasted with the wealth of resources both natural and human haveguided the implementation planning of this programme. On the one hand there is virtually little if anyeconomic development activity sponsored by the government being undertaken in many of thesedistricts, especially Bahraich and Shravasti and to a somewhat lesser extent in Sultanpur and RaeBareli in UP, and Sitamarhi and Madhubani in Bihar. Capacity building that is being undertakenthrough government programmes has resulted in the organizing of numerous SHGs that are barelyfunctioning or are in serious arrears. Landholdings are highly in-egalitarian and landlessness,sharecropping, out-migration and the resulting feminization of poverty contribute to the negativecharacteristics of the targeted districts.

63. On the other hand, the natural resource base is remarkable. The land is alluvial and fertile; thereis plenty of ground and surface water. Field based assessments have found ample potential fordeveloping economic opportunities particularly for women that suit their interests, needs and socialconstraints. Likewise the human resource base is rich in potential. The women having been ignoredfor so long are enthusiastic, are full of ideas and ready to take up the challenges the programme mayoffer.

64. The SHG mobilisation strategies in UP and Bihar have not evolved. The government led SHGmobilisation under various schemes have been target oriented related to group formation and subsidyrelease. Under Swashakti, there has been considerable improvement with regard to capacity building.But, the capacity building did not translate itself into better bank linkage and development ofsustainable support structures. This apart, the cost of development of a SHG became prohibitivelyexpensive to upscale. Most SHGs mobilised under these programmes become dormant once projectsupport ceases.

65. However, SHGs remain single most important vehicles to facilitate the march of poorhouseholds along the social and economic growth trajectories. The transaction costs of reaching thehouseholds reduce considerably in this methodology. However, issues related to cost effectiveness inSHG mobilisation, building support structures for SHGs and achieving sustainability of SHG supportstructures remain major challenges for SHG led development.

66. SHGs will be the basic platform from which enterprise activities will develop. Producer Groupsof aspiring entrepreneurs with similar sub-sector interests will be recruited from mature SHGs.

67. The Programme will aim at the holistic empowerment of 108,000 rural poor women andadolescent girls supported by sustainable and improved livelihoods, in selected districts of the statesof Uttar Pradesh and Bihar, in line with the goals of the Government of India’s 11th Plan andMillennium Development Goals.



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68. Specific objectives associated to each component of the Programme will be the following:

Building and/or strengthening community-level institutions for social and economicempowerment and enabling the target group (from an estimated 108,000 householdsorganised in 7200 SHGs) to access productive resources, social services and to build asustainable livelihood base integrated with the wider economy.

Establishment of SHGs and CSCs and their convergence with other ongoing social welfareprogrammes, i.e. nutrition, health, literacy, HIV/AIDS, and education. Increased capacity ofsmall NGOs to support the CBOs and the objectives of the programme.

Enterprise development and expansion including: promotion of on and off farm economicactivities that are relevant to women and significantly increase their economic security;facilitating business development services, both financial and non-financial, with particularattention paid to market studies and marketing plans; innovative mentoring programme bybusinesswomen for budding village entrepreneurs. The programme intends to involve 50,000women in organized economic activities that will lead to their greater economic security. Anadditional 30,000 women will be involved in informal livelihood activities that will improvetheir incomes as well.

Rural Financial Services made accessible to Programme participants; Micro-finance andfinancing of IGAs and linkages with rural banks; Seed capital to SHGs to stimulate bankcredit; Equity Fund to leverage bank financing; and a Community Asset Fund to facilitate theCSCs to provide one-time loans to SHGs and on repayment to lease land and ponds and tobuild common assets.

Policy: Increase awareness amongst policy makers on the legal issues that pertain to women,land issues including leasing of land, orchards, and ponds by SHGs, issues related to MutuallyAided Cooperative Societies and SGSY.

Launch of Innovation Fund to implement various programme components; Value ChainAnalysis; Enterprise Development; expansion of rural /micro-finance and convergence ofgovernment programmes at the local level.

B. Programme Approach

69. This eight-year Programme will be implemented in three phases. During the six-nine months ofits pre-implementation or start up phase, Programme staff will be recruited, oriented and trained. Duringthe following phase of three years, the Programme will concentrate on capacity building activities forthe self-help groups, other community based organisations and support organisations. At the same timepilot demonstrations of various economic opportunities will be developed and demonstrated toProgramme participants. The purpose is to prepare Programme participants to make informed choicesabout which livelihoods best suit their circumstances by both strengthening their capacity to understandand make choices and by demonstrating a variety of potential choice opportunities suitable to theirneeds, skill levels, and particular interests and social constraints. The entire enterprise developmentprocess will be demand driven.

70. The third phase of implementation (years 4-8) will concentrate on enterprise promotion anddevelopment. The Programme proposes a strategy in which livelihoods are treated as micro-enterpriseslinked to the wider economy through Value Chain Analysis and developed through the Sub-sector/Business Development Services (SBS) approach. This approach provides for a systematicselection of economic opportunities set against certain criteria.



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C. Programme Components

71. The Programme will comprise three components: i) Empowerment and Community InstitutionDevelopment; ii) Livelihood Enhancement and Enterprise Development; and iii) ProgrammeManagement.

I Empowerment and Community Institution Development (USD 6.18 million)

Community Institution Development

72. The Programme will invest substantially in strengthening the capacities of both the community-based organisations (CBOs) and support organisations that will partner in Programmeimplementation. The Programme in total would support 18 CSCs to mobilise 2700 SHGs in fourblocks of two districts in Bihar and 30 CSCs to mobilise 4500 SHGs in eight blocks of four districts inUP. The support would also build capacity of FNGOs by engaging RNGOs.

73. Self Help Affinity Groups (SHG): The classical SHG mobilization methodology, promotesgroups of 10-20 members based on “affinity”, who are like minded people. The members areidentified during the wealth ranking exercise by the NGO and they are facilitated to form their owngroups based on mutual trust. Their capability to undertake savings and credit and then work towardssustainability is built through a series of institutional capacity building modules and by establishinglinkages to financial institutions. This methodology is used by the NGOs in India for the past onedecade. The capacity of these SHGs is simultaneously developed to: (i) network through formingCommunity Owned Institutions (SHG federations, CMRCs, Cooperatives etc.); (ii) lobby with PRIsand Government departments; and (iii) take up common community related issues as credit plusactivities. This methodology is a part of the credit plus approach to develop strong and sustainablegroups. The classical approach develops the capacity of the community to inculcate savings as a habitand management of group fund with required book keeping. It is not so much the provision of creditbut the management of finance (savings and credit) that is stressed. Training and exposure provided inthis methodology become vital inputs to empower the community. This Programme would facilitatethe SHGs to traverse both social development and economic development growth trajectories.

74. Sustainability of SHGs: Two levels of support are required to SHGs to emerge as sustainablegrassroots institutions. First level of support required is for proper mobilization of SHGs, instillinggood practices, maintaining books of accounts, managing internal savings and credit systems andassisting the members in pursuing social and economic development growth trajectories. Secondlevel of support is in the form of developing apex organizations that provide services related tosupervision of SHGs, quality checks, bank linkage, training of members and other services required.The apex organization will have to be managed by trained staff and located close to the SHGs. Inorder to make these structures sustainable, it is necessary to inculcate a system of paying for theservices. The Programme would seed this concept from the very beginning.

75. Producers/Users Groups: Such groups may emerge when there is sufficient market potentialfor certain products and the production capacity is significant. Membership in these organisations willbe mainly drawn from SHGs but will also be open to other individuals – especially where suchindividuals bring added strengths to the group. These groups may remain informal or may choose toregister themselves as formal entities (companies, cooperatives) if the need arises. Based onavailability of good markets, new enterprises may be promoted with members drawn from otherCBOs and individuals for production, value addition and business services.

76. Programme Support: The primary responsibility related to SHG mobilisation rests with theFNGOs engaged by the Programme. The capacity of FNGOs and their staff would be strengthened bythe RNGOs. FNGO would establish Community Service Centres (CSCs) to mobilise and support



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about 200 SHGs and would be responsible for all field level activities. Each CSC would be staffedwith a CSC Coordinator, a Community Accountant, Enterprise Development Guides, and 8-10Community Organisers. Each community organiser would support 20-25 SHGs. EnterpriseDevelopment Guides would facilitate formation of Producer Groups. The CSCs are expected toevolve into SHG owned and managed institutions. The important feature of this arrangement is thatthe programme will establish a system of SHG contribution to cover operational costs of the CSCsfrom the second year itself in order to ensure full operational sustainability within six years.

77. RNGO and Training of Trainer Approach: The Programme would engage RNGOs to buildcapacity of the CSCs, FNGOs and Programme staff involved in SHG mobilization. The proposedtraining approach addresses four weaknesses related to earlier SHG capacity building methodology.They are: (i) focus on training only the leaders resulting in training of a few people; (ii) payment toNGOs linked to training delivery as a result focus was mostly on training related targets rather thanreal capacity building; (iii) high costs due to class room training over several days outside the village;and (iv) day-long class room training as compared to the requirement of illiterate women for short,repetitive and on the job training. The CSC staff would be the main trainers for SHGs. Training wouldbe delivered in the village reducing the cost of training substantially. This would enable all themembers of SHGs to be trained. SPMU would appoint one or two RNGO/s after assessing theircapabilities.

78. Most large national NGOs do not respond to the conventional advertising mode of procurementprocess. The senior programme management staff would visit large national NGOs to study theprocesses employed by them to mobilize SHGs. During this exposure visit, the large national NGOswould be requested to identify a suitable local partner RNGO and submit a technical and financialproposal for undertaking all community institution development related training activities. In addition,the Programme would also advertise the requirement in national newspapers and seek technical andfinancial proposals. The selection criteria for RNGO engagement is provided in Working Paper 2 –Community Institution Development.

79. FNGO: FNGOs would be the main implementing agency for SHG development. The strategyfor SHG development hinges on developing an institutional structure at the CSC level to supportSHGs. Therefore, each selected FNGO would be allocated at least one CSC with a potential tomobilise about 150-200 SHGs. During the exposure visit, the programme management staff mayrequest the large national NGOs to develop CSCs in a block to develop them as models for otherFNGOs to follow. The Programme would also advertise the requirement in national and regionalnewspapers and seek technical and financial proposals for engagement of FNGOs. The activities tobe undertaken by the FNGO, the process of selection of FNGO and also the details regarding outputlinked payment modalities are provided in Working Paper 2–Community Institution Development.

80. Exit Strategy: The Programme strategy is to transform CSCs into SHG owned and managedinstitutions. The programme would build the capacity of the CSC staff and provide adequateinfrastructural facilities. In addition, a system of contribution by the SHGs towards operational costsof the SHGs would be initiated from the second year. It is expected that the CSCs would beoperationally self sufficient within six years. Once this is achieved, the role of FNGOs and theprogramme ceases in respect of community institution development.

Gender Mainstreaming7

81. The programme strategy is one that where SHG women develop ownership of the programme,build their stakes and facilitate their engagement as “change actors” and not as “beneficiaries” ortargets of development interventions. The programme aims to facilitate processes where women learn

7 See Working paper 1 on Gender Mainstreaming



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from each other, explore alternatives collectively and become active agents of change. Women’sempowerment is about change, choice and power, but its scope and relevance will be determined bythe socio-cultural context that affects women’s options. Therefore the programme prioritizes theempowerment of women as the primary goal to improve their overall status and contribute to broad-based economic growth, poverty reduction and social security. Gender issues have been incorporatedthroughout the Programme Components.

82. The programme proposes to have a number of activities focusing mainly on capacity buildingon gender for the SHGs and for the implementing agencies. Sensitization on Gender for theimplementation team is very critical as people who are working on gender need to be sensitized andshed gender biasness that they may have. The programme will support Life skills training on health(including HIV/AIDS), nutrition, sanitation and legal awareness. The most important aspect of theprogramme is to provide legal aid support and services through RNGOs to build awareness of womenwith regard to their rights and entitlements. Essentially capacity building on gender entailsbehavioural and attitudinal changes. Special emphasis will be given to the sector specialists in theprogramme who will also undergo training on social and gender analysis.

83. The programme seeks to address gender mainstreaming into all aspects of livelihood trainingand capacity development programmes. This will mean programme components dealing withleadership development, audit and accounting, SHG rules and norms, microfinance productdevelopment and enterprise development will all specifically have gender concerns and perspectivesbuilt into the content of their programme design at the outset. For mainstreaming gender, all theactivities should address critical issues like access to and control over resources and benefits.

84. The programme intervention will include situational analysis to carry out a gender analysis indetail. The study would help to generate information on the activity and access and control profile todevelop a gender strategy for the programme.. The programme also seeks to sensitize the PRImembers and Government officials from block and district level on gender and facilitate convergenceeffectively with the ongoing programmes. All capacity building initiatives will be organized byprofessional and credible RNGOs. The programme clearly recognizes the limits to time women haveavailable for training, etc and has designed the training activities keeping these constraints in view.

II. Livelihood Enhancement and Enterprise Development (USD 16.37 million)

Enterprise Development 8

85. The enterprise development strategy proposed here will link India’s resurgent economic growthwith enterprise based poverty alleviation interventions for 50,000 poor women. The strategy first ofall recognizes the need for organizing women as micro-enterprises that need to be integrated into thelarger economy in order to become sustainable. As such, the Programme’s strategy recognizes thatwhile concentrating on the enhancement of income generating activities at the grassroots level,attention must also be given to backward, forward and horizontal linkages and the development ofthese linkages as well. But enterprise development will not be a stand alone component. It needs toand will be linked closely to the empowerment and capacity building activities noted above and it willabove all be demand driven. To reach 50,000 women in organized economic activities the Programmerecognizes the need for a more systematic approach to identifying and assessing the potential ofeconomic activities for further development into microenterprises.

8 see Working Paper and Attachments on Enterprise Development



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Programme Strategy

86. The Programme will follow a sub sectoral approach integrating a rigorous value chain analysisof the potential economic options in a systematic way.

Strategic Inputs

87. The Programme would:

Integrate efforts of the technical, marketing, technological service providers (bothgovernment and private) for promotion of market led activities.

Develop capacities of both Producer Groups recruited from SHG members and CSC(facilitators) on understanding local economy, identifying potential livelihoods andmarketing.

Identify and demonstrate a basket of potential livelihood options which could be taken upby the rural poor women.

Encourage promotion of innovative activities. Provide robust business development models for replication. Leverage support from various projects strengthening the livelihood initiative, programmes

run by government, financial and developmental institutions. Converge with various line departments in promoting potential activities (Fishery,

Sericulture, Livestock, and Dairy etc.).

88. The enterprise component will be implemented through the Innovation Fund (refer to WorkingPaper 10 on the Innovation Fund for details). The Innovation Fund will offer competitive grants toexperienced organizations and teams of organizations to undertake Value Chain Analysis,demonstration of promising economic activities, and expansion of those activities in to broad basedenterprises at the micro, small and medium scale levels. A women to women mentoring programmewill also be experimented with on a pilot basis.

89. The enterprise development component will proceed in two major Phases. They are: (i) ValueChain Analysis/ Subsector-Business Development Services Analysis and Rapid uptake of selectedeconomic activities; and (ii) Up-scaling of economic activities to commercial enterprises

Phase I: Stream A: Value Chain Analysis/ Subsector-Business Development Services Analysisand Stream B: Rapid Take up of selected economic activities.

90. Phase I has two implementation streams. In Stream A Demonstration Phase. The Programmewill invite selected reputed NGOs with established reputations in enterprise development based onvalue chain analysis and the use of subsector/business development services strategy for exposurevisits to learn about enterprise development opportunities in the Programme Area. A number ofeconomic opportunities specific to the target districts have already been identified during theformulation and appraisal mission filed work (see below). The programme through the TechnicalResources Group will then issue request for proposals that will lead to the development ofdemonstration units of a variety of economic activities with good potential for women’s involvementthat have been identified by the above Value Chain Subsector/BDS analyses. These proposals shouldinclude an implementation team including the short-listed organizations with proven experience invalue chain analysis and development of the subsector/BDS strategy and experience and knowledgeof particular subsectors; locally based organization with clear experience in the target blocks, havingthe trust and knowledge of the local people; technically experienced organization such as BAIF,Appropriate Technology India, PRADHAN, SEWA-Lucknow, CARE-India, KTL, BASIXS, NDDB,KVIC, etc.; and producer groups recruited from mature SHGs that are ready to undertake thedemonstration activities under the guidance of the team, technical institutions and where appropriateline departments The Innovation Fund should become effective during PY2.



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91. The purpose of these demonstration units is to replicate as closely as possible all the conditionsthat micro/small entrepreneurs will encounter if they were to establish such economic activities.These demonstrations need to be operated for a sufficient period of time so they take hold andgenerate adequate information and experience that can be presented to prospective entrepreneurs toallow them to make an informed decision as to which economic activity is most suited to theirinterests, capabilities, experiences, and needs.

92. Since the programme intends to reach about 50,000 entrepreneurs over an 8 year period, it willbe necessary to selected subsectors with potential for adsorbing large numbers of entrepreneurs. Forexample, dairy may have wide spread adoptability involving 100’s or 1000’s of women asmicrodairies, while service subsectors (such as bicycle repair, tailoring, etc. may not hold sufficientpotential for that many people).

93. Stream B: Fast Track Opportunities. There are certain economic activities along with matureSHGs in some target districts that have the potential for a rapid uptake. This will include linking updairy activities with the NDDB sponsored chilling plants in Sultanpur and Rae Bareli. In Bihar theseinclude Madhubani Paintings and Makhana. These economic activities initially require organizingproducer groups from mature SHGs; gathering market information and intelligence; preparation of amarketing strategy that returns more to the producers In Stream B, the work can be carried out byprogramme staff supported by a resource NGO, preferably from the short listed NGOs identified inStream A along with an experienced marketing firm to undertake the market study and subsequentmarketing plan. Additional related business development services can be identified and facilitatedduring Phase II Up scaling after the groups are more efficiently linked to the markets.

Phase II: Up scaling of economic activities to commercial enterprises

94. Producer Groups of likeminded micro-entrepreneurs will evolve to undertake specific economicactivities that have been convincingly demonstrated and communicated to them allowing them tomake informed decisions. Scaling up will allow for reaching the large numbers of women targeted foreconomic security activities and will also generate the economies of scale needed for BDS delivery,marketing and linking them to the wider economy.

95. This Phase will: (i) enable the programme participants to select the livelihood activities mostsuited to their resources, skills, and interests based on the Subsector/Business Development Services(SBS) approach which will analyze, demonstrate and provide a systematic selection of livelihoodopportunities. Producer Groups of like minded entrepreneurs will evolve to create economies of scalefor BDS delivery; and (ii) facilitate effective and appropriate delivery systems for inputs and formaintenance of assets and resources through business development services including technical,marketing, microfinance, savings and thrift, and micro-insurance products and equity capital. It willcommence in the 3rd / 4th year of the programme and will be implemented through the InnovationFund.9

96. Programme activities: to be undertaken by Innovation Fund grantees assisted by theprogramme’s enterprise staff:

(a). Preparation of appropriate modules for enterprise development and marketing at the villagelevel.

(b). Preparing a concrete strategy for promoting natural resource (particularly land) basedenterprises.

9 see Working Paper on the Innovation Fund



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(c). Support NGOs for carrying out survey to understand local economy to identify market ledlivelihood activities which can be started by women. This exercise would analyze localskills, resources, support services and markets, through external experts.

(d). Sub-sector and Value chain analysis and project formulation. The project in the initial phasemay want to focus on Fishery, Makhana and Madhubani painting in Bihar and onPeppermint, Dairy and Sericulture in UP.

(e). Introduce and strengthen ‘Consolidation and Aggregation’ approach of raw produces atprimary producer level, introduce local value addition (drying, sorting, grading, storing etc.)at the village level, preparing strategy and Producer Group modules for the same.

(f). Promote Producer Group/SHG managed storage facilities by offering the services of storingthe produces, a grocery shop and a centre for collective marketing (both input and output) inPanchayat area.

(g). Encourage private players’ participation for supply of raw materials, marketing of finishedproduces, training and technological inputs and other business services.

(h). Each sub sector should develop a concrete marketing plan. For example, the fisherymarketing plan should include, identifying marketable varieties, promote fishery units inclusters to support producers, fish growers groups/associations, promote transporters,establish fish market shed in local haats etc.

(i). Support in promotion of activities by facilitating creation of Business DevelopmentServices (BDS). A strategy for each key sub sector should be developed in order to promoteBDS.

(j). Supporting Cluster Level Federation and Resource Centres to take up marketing activities.(k). Documenting the efforts made, capturing the process followed and developing case studies

for wider circulation.

Opportunities Bihar

The strong community mobilization and formation of robust SHGs, in many parts of the statewill be helpful in building up livelihoods and micro enterprises among resource poor womeneffectively. Many women possess trading and vending skills and SHG members areenthusiastic to take up enterprise activities.

Makhana, Dairy, and Madhubani Painting, and can be promoted through the fast trackStream; followed by a sub-sectoral approach for scaling up. . A private sector investment (Rs.70 crore) on Makhana processing is underway and provides scope for remunerative marketlinkage.

Fishery is practiced in more than 5000 ponds in the district of Madhubani. There are manyprivate hatcheries apart from a World Bank supported hatchery unit at Ramapatti in an area of87 acres. The local consumption of fish is very high and the local production is unable tomeet the demand. The potential of fisheries for the target group should first of all bedemonstrated along with a thorough Value Chain analysis to further understand the marketand supporting markets outside the district and the state and to get a clearer idea of the costsand benefits to potential producers. If it is found attractive to them and the government’sefforts to facilitate leasing of ponds to producer groups is effective, fisheries has the potentialfor providing extensive income opportunities as well as improving the nutritional well-beingof the target group.

Production of potato, vegetables, maize, and mung dal has large scope for expansion if thetarget group is successful in accessing land through leases. These crops have god potential inthe area due to their stable returns and low cost technological inputs. These activities havegood scope for fast tracking.

Peppermint Cultivation and oil distillation enjoy a favorable market environment. However,an intensive effort should be introduced in area of distillation and oil extraction, technologyimprovement and marketing. Demonstration and a value chain analysis is recommendedbefore widespread promotion can be undertaken.



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Goat rearing and poultry can be promoted among women producers. While goat rearingwould primarily require access to veterinary services, an integrated and intensive approachneeds to be followed for promoting commercial poultry. Both should be fully demonstratedfirst while a value chain analysis is concurrently carried out to determine the feasibility ofcreating supporting markets for business services. There is a strong base haat base in the statewhich can be strengthened to offer a first level market for local producers, women inparticular. It is an encouraging fact that the involvement of women as sellers in haat is quitehigh.

There is a good scope for private players to become development stakeholders in enterprisedevelopment at the village level in the districts. Private entrepreneurs have been involved inMakhana trading and managing hatchery (fish).

Opportunities in UP

97. While economic opportunities are extensive in UP, the target population is not as well preparedas in Bihar. Therefore there are less options for fast track activities and more attention needs to bepaid to extensive demonstrations and thorough value chain analysis.

Dairy is one activity particularly in Sultanpur and Rae Bareli that can be fast tracked due tothe extensive chilling plant network being established through NDDB. However, care shouldbe taken to follow up with value chain analysis that will lead toward dairy farmers increasingtheir participation in the value chain through shareholding in chilling plants and other valueaddition activities. Solely supplying raw milk is not likely to generate enough income forparticipants to raise them out of poverty.

Fisheries, essential oils cultivation and processing and sericulture can be promoted throughextensive demonstrations followed by a sub sectoral approach if the demand is there.

Rope making, Bee keeping, Basket making, Vermicompost, and Medicinal plants etc. are allsmall-scale activities that can be promoted at the village level as supplementary activities butare unlikely to have significant income impacts.

Trend of growing cash crop (ginger, potatoes, pointed gourd, and peppermint etc.) areincreasingly visible in the area because of the stable returns these crops have given in the pastand farmers access to low cost technological inputs. Existing cold storage network(particularly in Baharaich town) offers a strong base to promote the existing potatocultivation. Again, extensive demonstrations need to be followed by a sectoral approach ifdemand warrants.

There is a very strong potential of promoting goat rearing in the area because of theavailability of both domestic and export (Nepal) markets. Value chain analysis shouldparticular exam the potential for supporting business service markets.

There is a strong base haat base in the state (particularly in Baharaich district) which can bestrengthened to offer a first level market for local producers, women in particular.

There is a good scope for private players to become development stakeholders in enterprisedevelopment (have already started happening in Sultanpur and Fatehpur etc.) at the villagelevel in the districts of Bahraich and Sravasti.

The Innovation Fund 10

98. The Innovation Fund will be a competitive grant mechanism that provides support to localinitiatives for grassroots development and poverty alleviation strategies that fit with the goals andobjectives of the Programme. The Innovation Fund will focus on two thematic components of theProgramme – capacity building/empowerment and enterprise development including rural finance, aswell as initiatives that support these two components, such as action research on gender

10 see Working Paper 10



22

mainstreaming in enterprise development, demand driven vocational training for young women, andresearch on land and pond access issues.

99. The Fund will be managed by the Programme Management Unit at each of the State and itswork will be undertaken by a Technical Review Team of experts from around the country withexpertise in the areas of sub-sector analysis and market research, business development services, ruralfinance and technologies. A consultant will be engaged by NABARD to design detailed modalities forestablishing and managing the Innovation Fund.

D. Programme Strategy

The Technical Resource Group

100. TRG will be formed at each state and will consist of a permanent panel experts with nationalreputations for excellence from the following fields: enterprise development and value chain,subsector, business development services experience; an expert from the marketing field withexperience in conducting market analysis throughout the value chain and experience in assessingmarket plans; an expert from financial institutions with experience in assessing business plans of ruralenterprises at the micro, small and medium level; and the State Programme Manager in each state. Inaddition experts with particular expertise in relevant technical fields (such as fisheries, sericulture,essential oils, dairy, etc) can be recruited to work with the TRG permanent panel as needed.

101. The TRG will not only review proposals and select grantees, but should also be available toassist potentially successful grantees in strengthening their proposals. It is envisioned that most of thework can be done electronically with minimum time placed on travelling and meetings.

Timeline and Key Steps to Implementing Innovation Fund Grant Streams

Value Chain Subsector Analysis and Demonstration Phase:

Step One: Call for Concept Papers on initial Value Chain Analysis of various subsectors withina block or district, or more than one district with guidelines drawn up by TRGassisted by Programme enterprise development staff;

Step Two: Preparation of a short (5 page maximum) Concept Paper;Step Three: Review of Concept Paper by the Technical Review Team and response within 4

weeks;Step Four: Selected Concepts to prepare full proposal (suggested 20 pages) and assistance for

developing proposal can be provided by the Technical Review Team;Step Five: Review of proposals by Technical Review Team assisted by Programme enterprise

staff;Step Six: Selection of grants decided by the Technical Review Team in consultation with the

SPMU and award of grants made by SPMU; andStep Seven: Contract essentials undertaken by the SPMU.

Expansion Phase of subsectors selected by women after Demonstration Phase

Step One: Call for Concept Papers on initial subsector enterprise development and expansion ofvarious within a block or district, or more than one district with guidelines drawn upby TRG assisted by Programme enterprise development staff;

Step Two: Preparation of a short (5 page maximum) Concept Paper;Step Three: Review of Concept Paper by the Technical Review Team and response within 4

weeks;



23

Step Four: Selected Concepts to prepare full proposal (suggested 20 pages) and assistance fordeveloping proposal can be provided by the Technical Review Team;

Step Five: Review of proposals by Technical Review Team assisted by Programme enterprisestaff;

Step Six: Selection of grants decided by the Technical Review Team in consultation with theSPMU and award of grants made by SPMU; and

Step Seven: Contract essentials undertaken by the SPMU.

Research and Policy Studies

Step One: Call for Concept Papers on selected research topics that have relevance to theProgramme. Selected topics include but are not limited to: gender considerations inenterprise development; the role of remittances in local household expenditure andpotential for productive uses;

Step Two: Preparation of a short (3 page maximum) Concept PaperStep Three: Review of Concept Paper by the Technical Review Team; response within 2 weeksStep Four: Selection of grants decided by the Technical Review Team in consultation with the

SPMU; award of grants made by SPMUStep Five: Contract essentials undertaken by the SPMU

Marketing Services 11

102. Haats (mobile rural markets) are subject to a piecemeal approach by various governmentagencies. There is adequate scope for selling some products locally (i.e. fish) particularly in the initialyears of enterprise development. There is a strong haat base in both states (except for Shravastidistrict), which can be strengthened to offer a first level market outlets for local producers, women inparticular. In a cluster of villages where haats do not exist, the Programme would facilitate creation ofnew haats. The Programme will work directly and through convergence at the local level to develophaats that are more responsive to needs of local producers, especially women. The Programme willalso work at the policy level to encourage a comprehensive policy review of rural marketingarrangements with a view to adopting a more consistent approach.

103. Local enterprise initiatives often do not have a clear idea on market driven activities and end upstarting activities, which are of interest to them but are rarely sustainable. The Value Chain analysisand Subsector strategy will facilitate understanding of local economy resulting in identification andselection of market driven activities by the aspiring entrepreneurs. The Programme will also invest inpromoting collective purchase of inputs and collective marketing of outputs at the SHG, federation,and producer group levels. Economies of scale would be achieved and would assist the groups andfederations in marketing their produce in a more remunerative manner. Convergence with variousGovernment schemes on marketing outlets will be enabled by the Programme. The marketingcomponent of the Programme falls within the enterprise development component and will beimplemented through Innovation Fund grants as part of the broader Value Chain/Subsector Strategy.

Rural Financial Services 12

104. The financial service delivery approach to be adopted under the programme would convergewith the sub-sector business services approach of the programme. The programme would mobiliseand build SHGs as the first step towards developing both social development and economic growth ofthe participating households. However, since SHGs are unable to address enterprise credit needs,

11 see Working Paper on Marketing12 see Working Paper on Rural Finance



24

developing an effective delivery system requires investments at the retail level and its sustainabilitywould depend on the ability to build credit ethics and discipline. The rural financial servicescomponent would contribute to fast tracking the households into the economic growth trajectory.

105. This approach has five essential steps: (i) developing a rural financial service independentlymanaged by the SHGs which place savings mobilisation at core of their efforts with easy access tosmall credit for consumption smoothening; (ii) promoting SHG-Bank/MFI linkage to enhance capitalavailability to SHGs; (iii) enabling credit to micro enterprises to individuals and Primary ProducerGroups through direct linkages with banks for larger loans, iv) formation of activity groups throughdemonstrations and provision of credit for enterprises especially for providing backward and forwardlinkages; (v) enabling the development of financial products and services to build safety nets andresilience for the poor households. These are explained in detail below.

106. The rural financial service intervention has the following activities: (i) capacity building ofSHGs for financial services provision and enhancement of the capital base of SHGs through seedcapital to leverage access to external loan funds; (ii) capacity building of NGOs and communityservice centers to monitor SHGs and provide them need based services; (iii) funding a multi purposecommunity asset fund for providing one time loan to groups for creating their credit history and forenabling lease of land and water bodies; (iv) capacity building of bankers and supporting banks toengage business facilitators to ensure smooth flow of credit to enterprises; (v) enabling MFIs to set upoperations in Programme districts; (vi) creation of equity fund for promotion of investment flow toenterprises that provides backward and forward linkages; and (vii) development of savings, remittanceand insurance products.

107. Thus the programme will undertake a variety of capacity building measures to enable smoothdelivery of financial services – groups will receive training on financial management, credit planning,on new financial products such as insurance; Programme, NGO and CSC staff will be trained tomonitor and strengthen self help groups and producer groups and to ensure smooth flow of financialservices: The capacity of bank staff will be built through training and exposure visits. MFI will beprovided initial operational expenses and technical assistance apart from training from reputedinstitutions.

108. The programme will adopt a training of trainers approach for training and capacity building ofNGO and CSC Staff. This will be the responsibility of Resource NGOs making use of outsideexpertise when needed. The CSC staff will in turn train staff and capacitate groups. Exposure visitsfor NGOs, CSCs and groups will be organized by the SPMU. The Community Organizers placed withCSCs will provide necessary support for group nurturing and, book keeping, training monitoring andbank linkages.

109. The programme community development staff of the PIU will carry out the rating of the groupsat the end of the six month of their operation. Well functioning groups will be provided with seedcapital by the programme in order to augment the resource base of the groups.

110. For building the credit history of the groups with the banking system, a one time loan will beprovided through the CSCs. On repayment of the loans by the groups, a Community Asset Fund willbe created at CSCs for leasing of water bodies and land and for creating community assets. Each CSCwill be provided with a community asset fund of INR 1.00 million to be released by the SPMU/PIU intwo instalments based on the work plan of the CSC. The CSC with the support of the PIU and anexternal consultant will work out the modalities of using the fund for community asset leasing. TheCSC will maintain a separate bank account for the operation of this fund.



25

111. The SPMU with the input of the PIU and an external consultant will identify MFIs operating inthe district as well as the state/country and provide them with need based support to operate in theprogramme area. The SPMU based on reports from the PIU/CSCs will provide incentives to the MFIsfor linking programme groups.

112. While facilitating access to rural microfinance services for the SHGs is an important componentin the programme, it is a well known fact that women’s access to credit or their financial contributiondoes not necessarily challenge the gender inequalities within the household. Therefore theintervention on rural financial services would be tailored to the specific needs of rural poor women.The programme seeks to explore how the interests of women would be served by providing financialservices13. What are the needs that have been expressed by the women, how these needs relate togender divisions of responsibility in household financial management and economic activity14?

113. Business Facilitators. Business Facilitators (BFs) will be engaged by the NGOs in consultationwith the PIU and placed at the CSC in order to enable smooth flow of finance to the entrepreneurs andSHGs. The Business Facilitator will work in cooperation with the local bank manager. The SPMUwill fund the salary of the BF for the first four years on a decreasing basis with the CSC picking upthe difference over time.

114. Equity Fund: The programme will set up an Equity Fund of INR 25.00 million in Bihar andINR 40.00 million in UP. The programme, through Equity Fund will provide quasi equity/long termloan funds to the producer companies/individuals interested in establishing enterprises related tobackward and forward linkages. Enterprises with a capital investment of a minimum ofINR 0.5 million and a maximum of INR 2.00 million will be supported. The quasi equity will remainwith the enterprises for five to six years and there after this can be repaid to the fund based on cashflows of the enterprise. The equity participation from the fund will not exceed 50% of the cost ofinvestment of an enterprise selected for support. The SPMU will establish the Equity Fund with a duelegal structure. The Fund will be managed a competent Venture Capital Company with experience inequity capital for rural enterprise such as Avishkar. During the first year a consultant will be hired bythe SPMU to work out the modalities for establishing the Fund and this consultant would also detailthe prerequisites for NABARD to manage the Equity Fund. However, management of Equity Fund byNABARD is subject to approval of IFAD and shall be based on its comparative advantage forundertaking this activity.

115. The Programme will work closely with the Lead Banks to ensure the credit needs of theProgramme are included in the banking plans. A Programme Area Credit Monitoring Committeeconsisting of Rashtriya Mahila Kosh, local bankers, private sector banks and concerned GovernmentDepartments will be constituted under the Programme to ensure smooth flow of credit. The close knitworking will help in addressing the policy and operational level support required for smooth linkages.

116. The men of the poor households seasonally migrate and remit money or bring home savings toenable the households to cope with household consumption and make small investment in productiveassets. However, the transaction cost of remitting money through formal channels is high and othermeans are risky. The PIU will invite proposals for study and development of remittance productsthrough the innovation fund mechanism. Channels for greater availability and access to remittances ininterior villages, scope for layering savings and insurance products with remittances, solutions thatminimise transaction cost will be tested and scaled up by the programme. The Innovation Fund willsponsor research on mechanisms for developing new financial products for remittances, savings, andinsurance.

13 For details see Working paper on Rural Financial Services14 See Working paper 1 on Gender for further details



26

VII. ORGANIZATION AND MANAGEMENT

A. Programme Management15 (Usd 7.55 Million)

Executing Agencies

117. The MWCD at the central level would be nodal agency for the Programme. This centrallyfunded multi-state programme would be implemented at the state level by the National Bank forAgriculture and Rural Development. (NABARD). The programme management structure wouldcomprise of (i) a Central Programme Support Unit (CPSU) within the MWCD, (ii) a ProgrammeCoordination Unit at NABARD, Head Office (NPCU), (iii) a State level Programme ManagementUnit (SPMU) within NABARD Regional Offices in Bihar and UP; (iv) a PIU at the field level in theprogramme districts; (iv) and a Community Service Centre (CSC) to support about 150-200 groupsinitially managed by FNGOs that would eventually be owned and managed by SHGs. Each CSCwould generally be assigned to a FNGO charged with the responsibility to provide support to theSHGs. The proposed programme management structure is provided in Appendix C.

Programme Management16 (USD 7.55 million)

118. CPSU: A central level CPSU would be set up within the MWCD. This would be headed by aProgramme Director who would be a Director level officer and would have additional charge of thisprogramme. No allocation for the salary of the Programme Director is made in the programme costs.The programme would provide a Programme Officer, and a Finance Manager.

119. The main responsibilities of the CPSU would include: (i) monitoring progress and performanceNABARD in implementing the programme; (ii) incorporating the Annual Work Plan and Budget(AWPB) of the programme into the budget of the GOI; (iii) ensuring flow of funds to NABARD andfollowing up with NPCU for SOEs and reimbursement claims; (iv) coordinating submission ofreimbursement claims for eligible expenditure incurred for the programme activities for submission toDEA, Ministry of Finance; (vi) ensuring submission of periodical progress reports, AWPBs and Auditreports to IFAD.

120. NPCU: An apex level NPCU would be set up within Micro-credit Innovation Department ofNABARD. This would be headed by a Programme Coordinator (Deputy General Manager) and wouldbe supported by an Asst Programme Coordinator (Asst General Manager). In addition, the programmewould engage two Programme Officers on a contract basis.

121. The main responsibilities of the NPCU would include: (i) monitoring progress and performanceof the Programme in the States; (ii) consolidating and fine tuning the AWPB of both the states andforwarding it to CPSU; (iii) ensuring flow of funds to the SPMUs and following up with them forSOEs and utilization claims; (iv) coordinating submission of SOEs, utilization claims andreimbursement applications for eligible expenditure incurred for the Programme activities to CPSU;(v) arranging for cross learning among Programme staff of both the States; (vi) consolidating andensuring submission of periodical progress reports, AWPBs and Audit reports to CPSU;(vii) arranging for periodical review of the progress and problems in the implementation of theProgramme; (viii) arranging for knowledge management related activities; (ix) addressingimplementation constraints; and (x) undertaking such other tasks as the CPSU may assign forsuccessful implementation of the Programme.

15 See Working Paper on Programme Management16 See Working Paper on Programme Management



27

122. SPMU: This unit would be located within the Regional Office of NABARD in the respectivestate. The SPMU would be integrated within the organizational structure of NABARD. The SPMUwould be headed by a State Programme Manager (Deputy General Manager) and assisted by anAssistant Programme Manager (Asst. General Manager). In addition, the Programme would engagean Enterprise Development Manager, a Programme Officer (Planning and M&E), a ProgrammeOfficer (Finance), and an ICT Officer on a contract basis, SPMU in UP will be provided with anadditional Programme Officer (Planning and M&E)

123. The main responsibilities of the SPMU would include: (i) providing implementation andcoordination support to the PIU/s; (ii) undertaking procurement activities including engagement ofNGOs, Consultants, Service Providers and Enterprise Development Organizations; (iii) marketing theProgramme to capable NGOs with experience in implementing various components of theProgramme; (iv) facilitating the work of the organizations engaged for implementing enterprisedevelopment activities under the Innovation Fund; (v) monitoring progress and performance of theprogramme in the districts and to ensure that it does not face constraints that slow down the pace ofprogramme implementation; (vi) reviewing and fine-tuning the AWPB of the state and forwarding thesame to NPCU; (vii) ensuring flow of funds to the PIU/s and following up with them for SOEs andutilization certificates; (viii) preparing reimbursement applications for the eligible expenditureincurred by it for the Programme activities for submission to NPCU; (ix) undertake all activitiesrelated to monitoring, thematic reviews, evaluation and impact assessment; (x) ensuring submission ofperiodical progress reports, AWPBs and Audit reports to NPCU; and (xi) undertaking such other tasksas the NPCU may assign for successful implementation of the programme.

124. PIU: The Programme would establish a PIU in each programme district in UP and a PIU fortwo districts in Bihar, and a small block office in each programme block. The PIU would beestablished in a convenient location preferably within a programme block or a sub-division dependingupon the availability of infrastructure. The PIU would be headed by a District Programme Manager(Asst. General Manager/Manager) from NABARD. The programme would also provide:; (i) aCommunity Development Officer; (ii) an Enterprise Development Officer; (iii) a FinanceOfficer;(iv) a MIS and Planning Officer; (v) a Convergence Officer; and (vi) a Programme Assistant.In respect of PIU in Bihar, as it covers two districts, additional staff contingent comprising aCommunity Development Officer; an Enterprise Development Officer and two Programme Assistantswill be provided. In addition, each block would have a small Block Office with a Block CommunityDevelopment Facilitatos, an Block Enterprise Development Facilitator and a Block CommunityAccountant.

125. The main responsibilities of the PIU would include: (i) coordinating and supervisingimplementation of programme activities in coordination with the NGOs and Service Providersengaged for the purpose; (ii) undertaking preparation of AWPB of the programme; (iii) facilitatingflow of funds to the programme partners and other implementing agencies and ensuring properutilization of the programme funds placed with them; (iv) preparing SOEs and utilizatiuoncertificates; (v) maintaining a Management Information System (MIS) and monitoringimplementation of the programme activities vis-a-vis the programme log frame and the AWPB; (vi)preparing and submitting Progress Reports, AWPB and Audit Reports to the SPMU; (vi) supportingthe Block Offices and CSCs to implement programme activities; and (vii) undertaking such othertasks as the SPMU may assign for successful implementation of the programme.

126. CSC: The Programme supported FNGOs would establish CSCs and each CSC would beresponsible for mobilizing and managing about 150-200 SHGs. The CSCs would be funded entirelyby the programme funds during the first year during which the concept of cost recovery would beseeded. The SHGs would be required to contribute to the operational costs of the CSCs from thesecond year onwards. Programme funding would progressively decrease and SHG contributionswould progressively increase. The CSC is expected to evolve into an organization owned and



28

managed by the SHG members. During this evolution, the CSC may take the legal framework ofSociety, Cooperative, Trust, CMRC, etc. All staff initially engaged by the FNGOs would become staffof the CSC. It is expected that the CSC would become self sufficient in about six years.

127. The main responsibilities of the CSCs would include: (i) recruiting and training a team ofcommunity organizers to undertake SHG mobilization activities; (ii) mobilizing SHGs and developingthe capacity of members to undertake savings and credit activity; (iii) developing a book-keepingsystem preferably computerized for the SHGs and monitoring their performance; (iv) establishinglinkages to obtain credit from the MFIs and Banks; (v) facilitating the members to form PrimaryProduce Groups and to access services for enterprise development; (vi) facilitating convergence ofmembers with other government supported programmes related to social and economic development;(vii) facilitating establishment of the cost recovery systems and evolution of the CSC as memberowned and managed organizations; (viii) undertaking such other tasks as the PIU/s may assign forsuccessful implementation of the programme; (ix) providing support services for obtaining loans fromthe banks for enterprise development reducing the transaction costs of the members and banks and asa result get waiver of processing charges charged by the banks; (x) facilitating the members to get lowcost insurance policies; (xi) linking up the SHGs for obtaining low cost housing and other loans forapex lending institutions such as HDFC, SIDBI, ICICI etc.; and (x) organizing bulk buying of SHGmember requirements (tea powder, books of children, etc.) to reduce household expenditure.

B. Programme Coordination

128. The programme would facilitate convergence with the ongoing schemes of the government.This apart, the programme needs to establish coordination mechanisms with the NGOs and thefinancial institutions. In order to ensure this interface between various stakeholders, the programmewould establish three committees.

129. A Programme Monitoring Committee chaired by the Joint Secretary, MWCD would beestablished at the state level. The Secretaries of the Rural Development, Women and ChildDevelopment and other relevant line departments, the Chief General Manager of MCID, theProgramme Director, the Programme Coordinator, the State Programme Manager, and the DistrictProgramme Managers would be the members. The Chief General Manager of the respectiveNABARD Regional Office would be the Member Secretary. This committee would meet once in sixmonths and would have an oversight role on programme implementation. This would be necessary tofacilitate synergies and convergence with other programmes of the government.

130. A State Programme Advisory Committee (SPAC) would be established chaired by theManaging Director/Executive Director of NABARD. The Chief General Manager of MCID, the ChiefGeneral of the respective NABARD Regional Office, the District Magistrates of the ProgrammeDistricts, the Programme Coordinator, the District Programme Manager/s, the representatives of theNGO networks involved in programme implementation, a representative of RNGOs, SIDBI andRMK, and controlling officers of the major participating commercial banks would be the members.The State Programme Manager would be the member secretary. SPAC would meet at least once inthree months and would become a forum for: (i) selection and performance analysis of partner NGOsand other partner organizations; (ii) resolution of implementation issues; and (iii) provision ofconceptual and strategic inputs for operationalising the programme strategies for SHG mobilizationand for facilitating SHGs in their social and economic development growth trajectory.

131. A Programme Area Credit Monitoring Committee (PACMC) would be established at thePIU level in order to facilitate bank linkage and convergence with other government programmes. ThePACMC would be chaired by the District Magistrate of the respective district. The DistrictDevelopment Manager of NABARD, the CEO of DRDA, the Lead District Manager, Chairperson ofRegional Rural Banks, Chief Executive Officers of Cooperative Banks operating in the Programme



29

area, representatives of the relevant line departments and the Bank Managers of the banks operatingthe Programme area would be the members. The District Programme Manager would be the membersecretary. This committee would meet once in a quarter to assess the performance of SHGs and theirlinkage to the financial institutions and convergence with other government programmes at thedistrict/block level.

C. Communication and Knowledge Sharing

132. Communication of the programme’s goals and strategy is an integral part of the SPMU’s role.The programme will have to document successful SHG- Bank/MFI linkage programme, financialservice product development including insurance, lessons in promotion of SHGs, convergence withgovernment programme, employment generation, etc. Communication tools including brochures,working papers, video films, etc, would be effective in wider replication of the success stories. Thesetools would also be used to train the participating households. In addition to documentation ofprogramme activities, the Programme needs to develop a comprehensive communication andknowledge sharing strategy addressed to several types of stakeholders.

133. Some of the main communications strategies involve internal communications among theprogramme staff, external communications between the programme staff and other implementingorganizations such as the various NGOs, external communications between the implementingorganizations (both programme staff and implementing NGOs and the programme participants.Finally there is the issue of communications and knowledge sharing with the wider developmentcommunity. These strategies are aimed at different audiences and use different tools and activities toconvey the message. For example internal newsletters may be used to communicate to the staff onissues of performance, achievements, targets, etc. while a workshop may be the best mechanism forcommunicating with the wider development community and a press release for communicating withthe public at large

134. The Programme will retain the services of a professional communications consultancy firm todesign its communications and knowledge sharing component in order to ensure the most efficient useof scarce resources, prioritise between conflicting demands, give a clear direction for everydayactivity, enable a review of existing organizational activity and provides milestones against which tomeasure future success.

135. The Programme’s communications and knowledge sharing strategy should establish thefollowing:

Objectives: Should be organizationally driven not communications driven. Audiences: strategies need to be tailored to specific audiences: staff, NGOs, participants, the

development community, the public. Messages: It is often best to create a comprehensive case covering all messages and

emphasize the different elements of the case for different audiences. Tools and activities: It is necessary to identify the tools and activities that are most

appropriate to communicating the key messages to the various audiences. These will besuggested by your audiences, messages, or a combination of the two. For example, an annualreport is a useful tool in donor or government communications whereas an email newsletterlends itself well to internal communications. It is important to ensure that the tools andactivities are attuned to the level of time and human and financial resources available.

Resources and timescales. The key rules to observe are always to deliver what you promiseand never over promise. Use resources and timescales to set legitimate levels of expectationsand outline the case for more dedicated resources.

Evaluation and amendment. Develop a communications audit to assess the effectiveness ofthe strategy with both internal and external audiences. Use open questions with appropriate



30

prompts and benchmarks and if possible, get someone independent to do the work. Considerand discuss the results carefully and use them to amend the strategy. Consider and discuss theresults carefully and use them to amend your strategy.

136. While drawing up the strategy, involve the implementation team, and on a smaller scale, theentire organization. Feed the communications strategy into the organizational strategy to ensuremaximum alignment and efficiency. Derive a detailed month-by-month communications plan fromthe strategy and monitor and report activity against the original objectives contained within thestrategy.

D. Monitoring and Evaluation

137. The proposed system consists of four elements. They are: (i) Activity and output monitoring;(ii) Process Monitoring; (iii) Outcome monitoring; and (iv) Impact monitoring.

138. Activity and Output monitoring: The main objective of this reporting is to assess the physicaland financial progress of the activities undertaken by each of the implementing partners. The PIU,CSCs and other programme implementing agencies will report each month on the activitiesundertaken. Where appropriate (such as for training courses) this will be disaggregated by gender.The outputs indicators to be monitored include: (i) attendance of members in SHG meeting;(ii) savings pattern; (iii) internal loan disbursement; (iv) internal loan repayment rate; (v) loansobtained from banks and MFIs; (vi) repayment of loans obtained from banks/MFIs; (vii) no. ofsuccessful demonstrations; and (viii) number of SHG members obtaining loan for enterprisedevelopment. Format for reporting activity and output monitoring data is provided in Attachment 1.

139. Process monitoring: The MIS and Planning Officer based in the PIU will make regular visitsto a sample of SHGs to obtain feedback from participating communities on project outputs such asleadership rotation, targeting performance, cost recovery, and poverty profile of members. Theeffectiveness of training would be monitored via KAP (Knowledge, Attitude and Practice) datacollected by the MIS and Planning Officer from small samples of participating group members. Theprogramme would engage consultant/s to establish such survey questionnaires and train the MIS andPlanning Officers in conducting survey for process monitoring, data analysis and preparation ofreports. Some of these surveys may be undertaken by the SPMU.

140. Outcome monitoring will gather information on Key File Logframe indicators (not covered byImpact Monitoring) via baseline beneficiary profiles and sample surveys. This will aim to relateoutcomes in terms of improved livelihoods to delivery of programme services and outputs. Some ofthe outcomes include reduction in amount borrowed from money lenders, number of personsincreasing income levels after expanding their livelihood activities or after starting new enterprise,sustainability levels of CSC, etc. This data could be collected by the MIS and Planning Officers andBlock Community Development Facilitators and analyzed at the SPMU. Undertaking the surveysinternally enhances internal capacity and also increases the ownership of results.

141. Impact Monitoring will gather information on the anchor indicators of programme impact forIFAD’s reporting on RIMS. This involves a sample survey of household assets, food security andmalnutrition and stunting among children less than five years old. The gathering of anthropometricdata needs special skills and equipment and such surveys would be contracted out to an experiencednutrition survey organization. All IFAD projects now have to report on two key RIMS “anchorindicators”: reduced stunting among children less than five years old and a composite asset index.Assessing the extent of stunting would involve the measurement of the physical indicators for asample of children (height, weight, age). Three survey to be undertaken as a part of the RIMS. Theseinclude a baseline, mid-term and end of the programme, survey. A format for collecting data for thispurpose is provided in Annex 3 –Monitoring and Evaluation.



31

142. Thematic Reviews: The programme would undertake thematic reviews. The intention is toprovide focus to specific themes such as insurance, savings and credit, the value chain approach toenterprise development, sustainability of Location Offices, etc by bringing in external perspective tothe implementation modalities, constraints and possible solutions. These reviews would be conductedby consultants engaged by the programme.

143. Progress Reports: Each SPMU would submit quarterly, half yearly and annual progressreports in English to NPCU for review and consolidation. These consolidated reports would be sent toIFAD through CPSU to provide essential information on the physical and financial progress ofprogramme activities and regular assessment of the programme impact. Quarterly progress reports onimplementation performance would be submitted along with four tables: (i) programme logframe withtargets in the first column and cumulative progress towards these targets reported in the secondcolumn; (ii) financial expenditure report showing expenditure by sub-components; (iii) physicalprogress showing progress of major programme activities; and (iv) summary of RIMS indicators(taken from the logframe). In addition, the programme should produce a half yearly and an annualreport giving a breakdown of activities and results for individual CSCs, NGOs etc. Half yearly andannual reports would include the same information, but with text explaining reasons for anydeviations from targets, major achievements, problems and bottlenecks. Annual reports may alsoinclude more detailed tables on programme activities, outputs and results, including analysis of databy district / Location.

144. Mid-term Review: IFAD, MWCD and NABARD would undertake a mid-term review (MTR)in PY4 to review: (i) the programme’s achievements and constraints; and (ii) the conclusions of thevarious assessments of programme impact and performance. Based on the findings of the MTR, amutually acceptable action plan for the remainder of the programme will be prepared. Prior to theMTR, impact and other surveys would be carried out to obtain information on the progress towardsprogramme objectives. In addition, a number of participatory stakeholder workshops would be heldfor the partners involved in programme implementation (NABARD, line departments and NGOs) andrepresentatives of grassroots stakeholders. These would provide feedback on programmeachievements and performance.

145. Programme Completion Review: IFAD requires that a Programme Completion Review (PCR)be carried out following the completion of each project / programme that it funds. This involvespreparation of a PCR by NABARD followed by an IFAD PCR mission. The programme’s PCRshould take place after completion of the programme, but before loan closing. It should follow thesame outline as the IFAD PCR (as described in IFAD PCR guidelines) and aim to provideinformation that would enable IFAD to complete its PCR. Most data would come from programmerecords and the impact survey, but, as for the MTR, a number of participatory stakeholder workshopsshould be held for the partners involved in programme implementation.

VIII. PROGRAMME COSTS AND FINANCING17

A. Summary of Programme Costs

146. Detailed Programme costs over a period of eight years, including price and physicalcontingencies are estimated at USD 32.73 million. It is expected that the IFAD loan would be about30.0 million or about 92% of the total Programme costs, GOI contribution in taxes and duties and apart of staff salaries at USD 2.75 million equivalent.18 It is also envisaged that 53% of the loan willgo for financing investment in enterprises development that includes rural finance, 19% for trainingand capacity building and development of community institutions and about 24 % for support to State

17 see Working Paper # 8 Programme Costs.18 Totals do not match due to rounding.



32

Programme Management Units and Programme Implementation Units. Of this amount aboutUSD 0.86 million (3%) represent foreign exchange content. Taxes and duties, calculated at theprevailing rates, amount to USD 0.44 million, or about 1.3% of total Programme costs and thephysical and price contingencies at USD 1.77 million. Investment costs account for 84% whilerecurrent costs account for 16% of the total costs. The detailed summary cost tables are presented inTable 2 and 3 below.

147. In addition, the institutional credit estimated at INR 826.22 million equivalent to USD 18.09and beneficiary contribution of USD 2.46 million (INR 98.37 million) would flow to the programmeactivities in particular for financing enterprises development.



33

Table 2Republic of India

WOMEN'S EMPOWERMENT & LIVELIHOOD PROGRAMME IN MGPComponents Project Cost Summary

(INR Million) (USD Million) Foreign BaseLocal Foreign Total Local Foreign Total Exchange Costs

A. BIHAR1. Empowerment & Community Institutions Development

a. Community Institutions Development 84.2 7.6 91.8 1.89 0.17 2.06 8 7b. Gender Mainstreaming 11.4 - 11.4 0.26 - 0.26 - 1

Subtotal Empowerment & Community Institutions Development 95.6 7.6 103.2 2.15 0.17 2.32 7 72. Livelihood Enhancement & Enterprises Development

a. Enterprises Development 189.4 0.0 189.5 4.26 0.00 4.26 - 14b. Rural Finance 81.7 0.1 81.8 1.84 0.00 1.84 - 6

Subtotal Livelihood Enhancement & Enterprises Development 271.1 0.2 271.2 6.09 0.00 6.10 - 203. Project Management

a. State Programme Support Unit 43.3 1.0 44.3 0.97 0.02 1.00 2 3b. Programme Implementation Units 62.1 3.4 65.5 1.40 0.08 1.47 5 5

Subtotal Project Management 105.4 4.4 109.8 2.37 0.10 2.47 4 8Subtotal BIHAR 472.2 12.2 484.3 10.61 0.27 10.88 3 35B. UTTAR PRADESH

1. Empowerment & Community Institutions Developmenta. Community Institutions Development 136.9 12.8 149.7 3.08 0.29 3.36 9 11b. Gender Mainstreaming 22.2 - 22.2 0.50 - 0.50 - 2

Subtotal Empowerment & Community Institutions Development 159.1 12.8 171.9 3.57 0.29 3.86 7 122. Livelihood Enhancement & Enterprises Development

a. Enterprises Development 338.8 0.1 338.9 7.61 0.00 7.62 - 25b. Rural Finance 117.8 0.2 118.0 2.65 0.00 2.65 - 9

Subtotal Livelihood Enhancement & Enterprises Development 456.6 0.2 456.9 10.26 0.01 10.27 - 333. Project Management

a. State Programme Support Unit 53.7 1.1 54.8 1.21 0.02 1.23 2 4b. Programme Implementation Units 163.2 8.0 171.2 3.67 0.18 3.85 5 12

Subtotal Project Management 216.9 9.1 226.0 4.87 0.20 5.08 4 16Subtotal UTTAR PRADESH 832.7 22.1 854.8 18.71 0.50 19.21 3 62C. MWCD

1. Central Programme Support Unit 10.1 1.0 11.1 0.23 0.02 0.25 9 1Subtotal MWCD 10.1 1.0 11.1 0.23 0.02 0.25 9 1



34

D. Nat Bank Agriculture and Rural Development1. Programme Coordination Unit 26.3 1.2 27.5 0.59 0.03 0.62 4 2

Subtotal Nat Bank Agriculture and Rural Development 26.3 1.2 27.5 0.59 0.03 0.62 4 2Total BASELINE COSTS 1,341.2 36.5 1,377.6 30.14 0.82 30.96 3 100

Physical Contingencies 37.2 - 37.2 0.84 - 0.84 - 3Price Contingencies 96.3 4.4 100.7 0.89 0.04 0.93 4 3

Total PROJECT COSTS 1,474.7 40.9 1,515.5 31.87 0.86 32.73 3 106

Table 3Republic of India

WOMEN'S EMPOWERMENT & LIVELIHOOD PROGRAMME IN MGPDisbursement Accounts by Financiers

(USD Million)Local

GOI IFAD Beneficiaries Banks Total For. (Excl. Duties &Amount % Amount % Amount % Amount % Amount % Exch. Taxes) Taxes

A. Community Services 0.15 4.1 3.43 95.9 - - - - 3.58 10.9 - 3.58 -B. Enterprises Development 1.48 9.1 14.74 90.9 - - - - 16.22 49.6 - 16.22 -C. Equipment & Materials 0.05 5.0 0.91 95.0 - - - - 0.96 2.9 0.82 0.10 0.05D. Vehicles 0.08 18.0 0.34 82.0 - - - - 0.42 1.3 0.04 0.30 0.08E. Training - - 3.86 100.0 - - - - 3.86 11.8 - 3.86 -F. Demonstrations - - 0.09 100.0 - - - - 0.09 0.3 - 0.09 -G. National Technical Assistance 0.05 2.5 2.06 97.5 - - - - 2.11 6.5 - 2.06 0.05H. Surveys & Studies 0.00 2.5 0.12 97.5 - - - - 0.13 0.4 - 0.13 -I. Salaries & Allowances 0.79 36.2 1.40 63.8 - - - - 2.19 6.7 - 2.09 0.11J. Operation & Maintenance (O&M)

5. Office Expenditure 0.16 5.0 3.01 95.0 - - - - 3.16 9.7 - 3.01 0.167. Office Operation Cost - - 0.00 100.0 - - - - 0.00 - - 0.00 -

Subtotal Operation & Maintenance(O&M) 0.16 5.0 3.01 95.0 - - - - 3.17 9.7 - 3.01 0.16

2.75 8.4 29.97 91.6 - - - - 32.73 100.0 0.86 31.43 0.44



35

B. Financing Arrangement

148. The Programme will be financed by IFAD, rural and commercial banks, the primarystakeholders (SHGs and members), and the Government of India. The largest share of finance willcome from IFAD and the participating financing institutions. IFAD will finance USD 30.00 millionbeing 91.7% of the total programme cost without taking into account beneficiary contribution andinstitutional credit (Table 4) and 56% of the total programme cost taking into account accountbeneficiary contribution and institutional credit. Banks are expected to provide incremental credit tothe tune of USD 18.09 million being 34% of the total programme costs (Table 5). Banks will financethe term loans and working capital needs of the enterprises. Programme beneficiaries will mobilizesavings to be managed under the SHG’s common fund. In addition to the USD 2.32 million cashcontribution from GOI, additional government contributions will primarily come in the form offinancing of taxes and duties.

Table 4: Program Cost Estimates by Components without InstitutionalCredit & Beneficiary Contribution

(USD Million)

Details Bihar UP MW&CD NABARD Total

IFAD Loan (USD million) 10.42 18.89 0.21 0.45 29.97GOI contribution (including taxes) 1.05 1.35 0.08 0.28 2.76Total Cost (USD million)Of which,

11.47 20.24 0.29 0.73 32.73

(i) Empowerment & CommunityInstitutions Development

2.51 4.30 - 6.81

(ii) Livelihoods Enhancement &Enterprises Development

6.31 10.64 - 16.95

(iii) Programme Management 2.65 5.31 0.29 0.73 8.98

Table 5: Program Cost Estimates by Components including InstitutionalCredit & Beneficiary Contribution

(USD Million)

Details Bihar UP MW&CD NABARD Total

IFAD Loan (USD million) 10.42 18.89 0.21 0.45 29.97GOI contribution (including taxes) 1.05 1.35 0.08 0.28 2.76Beneficiary Contribution 0.93 1.53 - 2.46Institutional Credit 6.69 11.40 - 18.09Total Cost (USD million)Of which,

19.09 33.17 0.29 0.73 53.28

(i) Empowerment & CommunityInstitutions Development

2.51 4.30 - 6.81

(ii) Livelihoods Enhancement &Enterprises Development

13.93 23.56 - 37.49

149. During the course of the Programme design, IFAD has been in touch with WB and DFID inorder to seek partnership opportunities in supporting livelihood development interventions. Asmentioned, the WB already started the design of a programme in Bihar, while DFID will take adecision most probably in October 2006 regarding its future engagement in UP and Bihar. It wasagreed to continue the exchange of information with the concrete participation in the design processwith the aim to secure post programme approval cooperation. Any such arrangement would not formpart of the co-financing plan and would be co-coordinated and managed by the state governments in



36

consultation and agreement with the GOI. This Programme has been flexibly designed to allow forany additional inputs from other agencies.

C. Disbursement, Procurement, Accounts, Audit, and Reporting Disbursement and SpecialAccount

150. Proceeds of the IFAD loan would be disbursed over a period of eight years. In order to ensureready availability of the funds required to finance IFAD’s share of eligible expenditures, critical fortimely Programme implementation, a Special Account in United States Dollars will be opened withthe Reserve Bank of India. The Special Account will be maintained in accordance with the publicaccounting practices prevalent in government and provisions of the financing agreement with IFAD.Upon effectiveness of the Loan Agreement, an initial deposit of USD 2.00 million in the aggregate,equivalent to IFAD’s share of estimated Programme expenditure for six months, would be withdrawnfrom the Loan Account and paid in advance into the Special Account. The Special Account will bereplenished on a regular basis in line with the disbursement procedures of the IFAD and theprovisions of the Loan Agreement.

151. The Special Account will be used to feed the Programme Account held in local currencyoperated by the CPSUs in accordance with GOI accounting policies and procedures. Governmentcontributions for the programme would be received into the same Programme Account in accordancewith provisions of the Loan Agreement. NABARD would have a separate Programme Account inINR at the head office level and maintain them in accordance with the Loan Agreement and existingprocedures of the GOI and NABARD. The SPMUs would also have separate State ProgrammAccounts in each state. Implementing agencies in the districts will access funds from the stateProgramme Account in accordance with liquidity needs for activities identified in approved AWPBs.At NABARD head office and at the state levels, Programme Accounts would be maintained byNABARD in line with existing public accounting policies and procedures.

152. Applications for withdrawal of funds from the IFAD Loan Account would be prepared andsubmitted by NPCU in accordance with the IFAD procedures. Disbursements would normally bemade against full supporting documentation. However, certified statements of expenditure (SOEs)would be used for withdrawal applications in respect of: (i) payments made under contract costingless than USD 20 000 equivalent; (ii) expenditures for training; and (iii) operating costs. The MWCDand the NABARD would retain supporting documentation in respect of their respective SOEs forexamination in the course of the annual audit of Programme accounts and during supervisionmissions.

D. Procurement

153. The programme would adopt a two pronged approach to engage NGOs for programmeimplementation. First, it would actively seek proposals from the reputed NGOs, assess their capacityto implement programme activities. Second, the SPMUs would advertise in local and nationalnewspapers calling for expressions of interest Based on these two exercises, the SPMUs wouldprepare a shortlist of interested and reputed NGOs with substantial experience in promotingsustainable SHGs and their apex organizations. These short-listed NGOs would be invited to visit theprogramme area. Each of them would prepare and submit a technical proposal containing a brief writeup on the implementation methodology and a financial proposal. These proposals will be evaluatedusing quality based selection process (refer to IFAD procurement Guidelines) and the price could benegotiated after taking into account the financial proposal of other short-listed NGOs and also theamount allocated for specific activities under the programme. The SPMUs are required to send adetailed evaluation report to the CI and obtain its approval before for signing partnership agreements.Selection of institutional service providers under livelihoods, community institution building,enterprise development and micro-finance would, follow the procedure outlined above.



37

154. The programme would adopt a quality and cost based selection for appointing service providersfor conducting activities related MIS, Computerizing SHG accounts, Results and Impact ManagementSystem. It would follow the process of advertising in national and regional newspapers calling forexpression of interest (EOIs) with their annual reports, activities and financial status. Based on theanalysis of these EOIs, a shortlist would be prepared. The short-listed service providers would beinvited to visit the programme area and submit technical and financial proposals. Based on theevaluation of these proposals, partnership agreements would be signed after obtaining approval fromIFAD/CI.

155. In respect of individual consultants, SPMUs would initially prepare a roaster of consultants withhonorarium approved by the implementing agencies and IFAD/CI after advertising in regional andnational newspapers. This would enable the SPMU/s to field consultants as and when required insteadof advertising each time the need arises to avoid delay in recruitment.

156. Procurement of all goods and services financed by IFAD loan will be subject to the provisionsof IFAD’s guidelines on procurement. Equipment and materials would be procured by SPMU usingNational Competitive Bidding or Local Shopping procedures as applicable to the state governmentfunds. Direct procurement would be allowed for goods and services less than USD 10,000 on termsand conditions approved by IFAD. Local shopping procedure would be applied for procurementscosting between USD 10,000 to USD 25,000. Local Competitive Bidding procedures would apply forprocurement of goods and services costing USD 25,000 or more. The respective state governmentswould issue a written government order allowing the implementing agencies to follow IFADprocurement guidelines instead of government procurement guidelines.

157. Accounts. Separate records and accounts related to programme expenditures would bemaintained by all programme implementing agencies. The state implementing agency would submitannual financial reports to IFAD/CI no later than six months after the end of the reporting period in aformat acceptable to IFAD/CI.

158. Audit. The programme accounts at the CPSU, NPCU, SPMU and PIU would be auditedannually by a reputed firm of independent auditors. Audit would cover: (i) financial statement audit;(ii) compliance audit; and (iii) operational audit. The Audit report should be accompanied by amanagement letter which is a report on the organizations internal control and operating proceduresand their effectiveness based on an auditor’s review during the normal course of audit. The auditreport should contain a clear expression of opinion on the financial statements. This should besubmitted to IFAD within six months from the end of the financial year. In these statements, theexpenditures made under the programme would be separated from the overall accounts. The GOIfunds are subject to Comptroller and Auditor General’s audit as per prevailing provisions of GOI evenafter the independent auditors have undertaken auditing. In addition to the external audit, theprogramme would establish internal audit mechanisms to ensure regular checks on the utilization offunds and adherence to established procedures. In the event, the implementing agencies do not submitthe audit reports within the stipulated period, IFAD may suspend in whole or part the right of theborrower to request withdrawals from the Loan Account. All the programme partners would submitaudit report from independent auditors in respect of the utilization of programme funds.

159. Reports. All programme partners i.e. NGOs and Service Providers would prepare and submit toPIU/SPMU quarterly financial and physical progress reports. SPMU would prepare and submitconsolidated quarterly financial and physical progress reports to NPCU, These half-yearly reportswould be based both upon programme partners’ reports and progress as recorded against the AWPBfor the year. NPCU would consolidate the progress reports with inputs fro CPSU and forward thesame to IFAD within two months of the end of the financial year.



38

E. Annual Work Plan and Budget, and Funds Flow

160. Annual Work Plan and Budget – Flexible and Performance Based: The programme wouldbuild flexible systems of management and performance based resource allocation. During thepreparation of the annual work plan and budget, the programme management would have theflexibility to allocate higher amount of funding to a component that has the capacity to absorbadditional resources and has better implementation performance. SPMU may also include newactivities based on the emerging needs of the programme communities after obtaining approval fromthe supervision missions fielded by IFAD. Such changes in the allocation will have to be part of theannual work plan preparation and approval process. The SPMU would send the AWPB to the NPCUfor consolidation and this would be sent to CPSU for getting approval of IFAD for incorporating thesame into the central budget. The programme would reallocate resources between states and look atthe possibility of increasing of blocks during MTR.

161. Funds Flow: The IFAD loan will be on highly concessional terms with a term of 40 years,including a ten-year grace period, and a service charge of 0.75% p.a. The programme funds, formingpart of IFAD’s assistance, having passed through GOI would be received by NABARD. TheGovernment of India would establish a Special Account in New Delhi to receive funds from IFAD.This would be a condition for loan effectiveness.

162. Funds for programme implementation would flow to NABARD based on Annual Work Planand Budget. MWCD being the nodal agency would incorporate the budgetary requirements based onthe AWPB of both the state SPMUs, NPCU and the CPSU into its budget which would include bothIFAD and GOI contribution. A MOU would be signed between NABARD and the MWCD outliningthe procedure for release of funds, accounting, audit and reporting obligations. The MOU wouldclearly indicate that the MWCD –GOI would make budgetary allocation as projected in theImplementation Planning/Appraisal report in the GOI budget to cover government contribution forprogramme implementation. This would be a condition for loan effectiveness.

163. NABARD and the MWCD will have to prepare a budget for pre-start-up and start-up activitiesand this will have to be incorporated into the supplementary budget of MWCD for 2008-2009.Alternatively, MWCD may release ad-hoc payment amounting to 50% of the programme budget forthe first year. Eligible expenditure for pre-start-up and start-up activities would be financed by IFADon a retroactive basis after the programme becomes effective. MWCD would initially release fundsfor first six months of operation and thereafter reimburse based on the statement of expenditure on amonthly basis directly to the “Programme Account-NABARD” maintained by NABARD head officein a commercial bank acceptable to IFAD. Fund would flow from the “Programme Account-NABARD” to the State Programme Accounts maintained by the NABARD Regional Offices in theprogramme states (Programme Account-UP and Programme Account-Bihar). Opening of theseprogramme accounts would be a condition for loan effectiveness.

164. NPCU would consolidate all the SOEs and forward the reimbursement claims to the Controllerof Aid Accounts and Audit of the Department of Economic Affairs (DEA), Ministry of Finance, andGOI through MWCD. The verified claims would be forwarded to IFAD. Each reimbursement claimshall not be less than USD 50,000.

IX. BENEFITS AND BENEFICIARIES

165. Beneficiaries. The majority of rural women who would benefit from the programme would befood insecure and resource poor households. Within this general group, special attention will be givento those who live in absolute poverty and are the most vulnerable households, particularly sociallydisadvantaged women, landless households, and youth. In general poor rural women and theirhouseholds are characterized by low incomes, a narrow and declining natural resource base, and high



39

levels of vulnerability are the beneficiaries of the Women’s Empowerment and LivelihoodProgramme. The opportunity to engage in micro-enterprises and small and medium enterprisesthrough a number of value-addition activities is, thus, a bridge out of poverty for these ruralhouseholds.

166. The number of beneficiaries who would be directly benefited under various programmeinterventions are 40,500 households in Bihar and some 67,500 households in Uttar Pradesh. Some34,000 rural households would benefit directly by pursuing the micro-enterprises activities whichrequire an investment in the range of INR 15000 and 20,000. (30,000 households would also benefitfrom improvements to informal economic activities.) All formal enterprises would be managed andoperated by individual household using primarily own labour from the family, which is estimated atabout 60 to 80 incremental workdays in a year and thus generating an average incremental income ofINR 150 per labour day or INR8400 per household. Below Poverty Line household incomes in thetarget districts are approximately InR 19,200 annually, thus the programme aims at increasing annualhousehold incomes of the poorest families by approximately 40%.

167. Small enterprises are pursued by about 12,860 households with an average investment of INR50,000 and annual incremental benefit of INR 15,000 annually. Medium-scale enterprises would beundertaken by Producer Groups organized into some legal form of enterprise organization as theirinvestments would be higher and require proper technical and managerial services. In all, some 117small and medium enterprises are undertaken with investment ranging above INR 1.0 million andeach such enterprise provide employment to about 20 to 25 persons in wage and labour employmentfor about 100 days/year or an income of INR 6000/worker.

Details 1 2 3 4 5 6 7 8 TotalBihar:Micro-enterprises HHs 225 1050 1575 2350 2400 2200 2200 12000Small Enterprises HHs 480 800 1100 1100 650 650 50 4810Medium Enterprises 12 14 14 7 47

Uttar Pradesh:Micro-enterprises HHs - 550 1600 4800 5100 4000 3000 3200 22150Small Enterprises HHs 505 1260 1710 1710 1155 450 0 8050Medium Enterprises 4 12 20 23 11 0 0 70

168. Thus the programme would cover some 108,000 households in all covering a total population ofnearly some 560,000 people. In addition, the programme would organise and mobilise some 7200SHGs (2700 in Bihar and 4500 in Uttar Pradesh) which would benefit from various programmeinterventions such as training on entrepreneurial skills, capacity building and eventually linked torespective banks for long term sustainability.

Unit Bihar UP

SHGs Nos 2700 4500Enterprises Nos 16850 30270Micro Nos 12000 22150Small Nos 4810 8050Medium Nos 47 70Incomes/labourday:Existing INR 60-90 60-90With Programme INR 150 170



40

169. The immediate benefit from the Programme is increased productivity-through the introductionof a number of enterprises development activities that are linked to markets and access to creditsupport. This response is expressed as increased household incomes and improved economic security.The greatest benefit will come from increased economic development options with more secure andbetter-managed linkages.

170. Other Benefits. Additional benefits will come from the programme’s training and capacitybuilding interventions. First, at the end of the programme, all participating 7200 SHGs would havegained experience in managing their group activities in a sustainable manner with their own savingsand support from the MFIs and banks. Secondly, women from the poor and very poor groups will beparticipating in and managing their social and economic development and would have better access tomarkets and inputs and marketing their products. Thirdly, the PR institutions will have gainedexperience and proficiency in implementation system for rural development involving the rural poorwomen. Finally, SHGs will have the capacity and experience in managing their activities and at thesame time help evolve viable models for economic development of rural women in other regions. Theprogramme will also offer opportunities of developing viable and household-acceptable models ofsmall and medium enterprises development, operations and maintenance and sustainable mechanismfor SHGs.

A. Economic and Financial Analysis19

171. Economic Analysis. Enterprises development induced economic benefits have been quantifiedbased on number of units supported, inputs and output products recent farm-gate and mill-gate prices.In making the analysis, the following assumptions are made: it takes about 5 year period for fulldevelopment and optimum production is achieved in year 5 or 6; in the initial three year period,entrepreneurs gain experience and knowledge including training and risks management of theirrespective units.

172. All investment costs and related recurrent costs have been included and all cost and benefitshave been estimated over a 20 year period. Enterprises models were used to estimate benefits frommain production. The programme economic costs were calculated from the financial programmecosts excluding price contingencies, taxes and duties and applying the conversion factors. Recurrentcosts including the cost to be born by the beneficiaries have been included. Economic prices for inputsand output models were estimated by applying the standard conversion factors on the financial pricesfor example, 0.9 for the domestic resources and 0.8 for the skilled labour. The flow of economic costsand benefits is presented in Table 15, in WP9 and the programme investments generates an ERR of34%. Overall, the Programme would generate an average annual net incremental benefit of INR 92million in 5 years and INR 282 million at full development stage.

173. A number of scenarios were tested to establish the economic viability of the total programme inthe event of adverse factors. The results show that the ERR is sensitive to increases in costs andbenefits delays.

(i) Base EIRR % 34%(ii) Benefits Decrease by 10% 27%(iii) Costs Increase by 10% 14%

(refer to Working Paper 9 on Financial and Economic Analysis for details).

19 see Working Paper # 9 Financial and Economic Analysis



41

174. Sensitivity analysis indicates that the Programme is equally sensitive to both decreases inbenefits and increases in costs. Decrease in revenues may be brought about by a decline in outputprices, or a failure of sub-projects in achieving projected yields or outputs. The combination of a 10percent increase in cost and a 10 percent decrease in revenue also result in the reduction of the EIRR.This sensitivity analysis indicates the Programme is robust and remains economically viable underforeseeable adverse conditions. As the proposed investments are targeted to the poor rural women,the resulting ERR is considered appropriate.

175. Table below summaries the analyses of 14 enterprises models that are discussed above andshows the estimated ‘with’ and ‘without programme’ incomes from the proposed activities of thehouseholds with different resources and assets. The results demonstrate that households though poorat present, have some resources, perhaps land and/or a bit more skill labour, and thus the potential torealize significantly greater incremental increases in farm income. The financial impact on the varioustypes of beneficiary group households can be summarized below.

MODELS

Financial ParametersReturn/

Labourday(INR)

a/

BCratio

IRR MIRRb/

BEPc/

ProfitMargin

d/

Return onEquity

e/

1.Mint Cultivation 186 1.532.Mint Distillation unit 1.14 20 14 52 14 243.Mulberry cultivation 175 1.564.Cocoon rearing 226 1.17 47 185.Silk reeling unit 1.19 26 17 12 24 96.Dairy processing 1.05 198 44 66 5 3.67.Small dairy unit 1144 1.60 121 318.Mini dairy unit 289 1.10 26 139.Micro-dairy unit 264 1.30 59 2210.Pond fishery 299 1.10 15 711.Fish hatchery 1.50 19 9 33 31 2612.Makhana cultivation 632 1.90 331 4613.Makhana drying unit 1.20 10 5 50 18 1014. Madhubani painting 1.30 150 34 18 29 98

a/ Return per labourday, income per day of family labour contributedb/ MIRR, modified IRR, means “re-investment rate assumed at equal to rate at which cash flow is invested”c/ BEP, break even point, expressed in percentage capacity utilisationd/ Profit margin, a ratio between net income stream and sale stream, expressed in percentagee/ REO, return on equity, a ratio between netincome stream and equity, expressed in percentage

176. Economic analysis has been undertaken to evaluate the expected contribution of the proposedprogramme interventions to the economic development of Bihar and Uttar Pradesh as a whole. Thepurpose of such analysis is to determine whether the economic benefits sufficiently justify the use ofthe scarce resources that the programme attempting to invest.

177. The analysis includes all incremental costs and benefits associated with the programme’sinvestments in capacity building of community organizations, NGOs and other service providers,livelihoods activities such as investments in micro-enterprises, small and medium enterprises. In allsuch interventions pilot studies have been earmarked during the first three years of the projectimplementation. Incremental benefit streams are based on the indicative and protype financial andeconomic models. Dairy and land-based interventions are built on the household as the unit ofintervention. The enterprise models are based as a group activity of the self help groups.

178. The following assumptions underlie the economic analysis. (i) A ten-year analysis period hasbeen assumed although the Programme investment period is eight years. (ii) Goods move freely



42

within the Programme area in response to market signals. (iii) All output prices are either farmgate ormillgate and the input prices are either farmgate or nearby markets and the financial prices in the localcurrency reflect closely the economic value of goods and services. (iv) Economic costs are net of allduties, taxes and price contingencies and insurance, depreciation and interest payments but inclusiveof physical contingencies. All costs directly associated with the incremental production are includedin full, including costs are net of credit, and (v) standard conversion factor (SCF) of 0.90 is applied toall non-traded items. A SCF adjusts financial prices for the taxes, duties or subsidies which distorttheir economic value. Although detailed economic analysis would necessitate the estimation of the taxand duty element of transport costs but has not been attempted as it will vary with the distancetravelled and transport costs are only a small proportion of Programme costs.

179. Results of analyses detailed in Working Paper 9 are summarised below:

MODELS Return/Labourday

(INR)

BC ratio IRR MIRR

1.Mint Cultivation 207 1.672.Mint Distillation unit 1.31 31 183.Mulberry cultivation 192 1.564.Cocoon rearing 226 1.17 47 185.Silk reeling unit 1.40 49 246.Dairy processing 1.06 273 487.Small dairy unit 1452 1.70 163 358.Mini dairy unit 338 1.10 58 209.Micro-dairy unit 283 1.40 83 2510.Pond fishery 486 1.40 37 1511.Fish hatchery 2.20 31 1312.Makhana cultivation 670 2.00 360 4713.Makhana drying unit 1.20 12 614. Madhubani painting 1.30 194 37

180. Results of both economic and financial analysis of type enterprise models show that theseinterventions are technically feasible, financially viable and economically favourable and capable ofimproving the economic well-being of the target groups. On an average, household income increasesare between INR 100 and 125/day.

B. Environment Impact20

181. The Programme will bring about beneficial environmental impact in the target area. Byencouraging low input sustainable agriculture (LISA) and organic farming wherever feasible, use ofchemical inputs and thereby leakage of toxic residues into the environment will be reduced. Soilhealth will be built up by the use of organic manures such as farmyard manure and vermin-compost.Through capacity building and training, the target group will be sensitized to assess the environmentalimpact of the activities they are taking up. When new constructions are taken up, efforts will be madeto minimize any environmental damage by taking suitable remedial measures. The new enterprisespromoted in the area will use the locally available resources prudently, reducing the import ofpurchased inputs. Overexploitation of any resource will be avoided by continuous monitoring of theresource base and its impact on the environment.

182. Overall the programme should not have any irreversible impact on the environment. Allinvestment and development proposals should be sustainable and not involve the use of largequantities of fertilisers or agro-chemicals, abstraction of large quantities of water, construction ofreservoirs or clearing forests or undesirable effluents. There are no construction activities of anynature under the programme that would impact the environment on any way. The programme will

20 see Annex 6 Environmental Screening and Scoping Note for details



43

promote the use of the existing supplies of water, mostly rainfall, and increase the production of mintoil, silk, milk and value-addition in a number of financial and economic activities. All farm-basedoperations would use compost and organic manure and as such no damage to environment isenvisaged. Fisheries and makhana cultivation would use existing water bodies and no new waterbodies or ponds are created. The proposed Programme can be classified as Category “B” and does notrequire any EIA before implementation.

183. Although the majority of the programme activities will have a negligible environmental impact,the programme includes support to a number of dairy-based activities that may seem to put pressureon pasture and fodder in the programme area districts. Since these activities are going to beconcentrated in and around existing cattle population and in areas where supply of feed and fodder isnot a constraint, the proposed dairy-based activities should not create any adverse impact. Moreover,the Programme focuses on value-addition to generate incomes to the rural women. The programmeshould be designated as IFAD Category B – with no significant environmental impact. The mostcurrent procedure and the existing policy guidelines of the Government of India have been consultedin preparing this screening and scoping note as presented in Annex 6.

C. Programme Risks and Assumptions

Risks

184. SGSY in its current form continue to pose problems to SHG mobilization. SHG mobilization inthe minds of people is getting associated with subsidy and government driven loans. This risk ismitigated by clear communication with the groups on the negative impacts of such loans and also byproviding sustainable support structures to provide services to the groups.

185. The programme intends to implement cost recovery towards operational costs. It is expectedthat the CSCs/ Peoples’ Organizations will become operationally sustainable in six years. In the event,the CSCs are unable to seed the cost recovery concept clearly and if they are not able to deliverservices required by the members, there could be issues related to payment of service charges by theSHG members. This risk is mitigated by training the programme management team by a ResourceNGO that has successfully handled this issue. In addition, the programme has allocated a budget lineto partly cover the deficit in cost recovery.

186. Programme success hinges on credit from banks. The programme impact will be considerablyreduced in the event bank credit does not flow adequately. The risk mitigation measures adoptedinclude: (i) support to MFIs to establish branches in the programme area; (ii) establishment ofCommunity Asset Fund to enable the SHGs to get one round of loans from the Community servicecenters to create credit history with the banks; (iii) engagement of Business Facilitators to reduce thetransaction costs of both banks and groups; and (iv) involve bankers in programme planning from thebeginning.

187. Engagement of NGOs with adequate experience and capacity is vital for the success of theprogramme. Most large, experienced NGOs generally do not respond to the expression of interestadvertised by the Programmes. As a result only a few opportunistic NGOs participate in such abidding process. This risk is mitigated by allocating adequate funds for exposure visits for NABARDtop management to big NGOs that have systematically organized the SHGs. In addition, NABARDtop management will reach out to these NGOs seeking their proposals for participation in programmeimplementation and invite large experience NGOs the programme sites and seek proposals from themto participate in programme activities.



44

188. The programme has created a Community Asset Fund to provide one-time loan to the SHGsthrough the CSCs. It is expected such one-time loan will help developing required credit history ofSHG to facilitate easy linkage with banks. There is a risk that the CSCs continue with financialintermediation beyond the stipulated one-time loan. This needs to be contained by incorporating acovenant in the loan agreement that the programme will provide only one loan to each SHG throughthe CSCs.

Assumptions

189. Poverty reduction being positively affected by an economy that has strong fundamentals, themajor assumption of this Programme strategy is that the Indian economy continues its robust andsteady economic growth during the life of the Programme and that the Programme interventionsfacilitate the participation of the target group in the benefits of a robust economy. A comprehensivelist of assumptions is indicated in the Programme Logframe. 21

X. POLICY ISSUES AND INNOVATIONSPolicy Issues

190. Land and Pond Leasing: There exist substantial potential in the programme districts for leasingof lands, orchards and ponds by the SHGs from the absentee landlords, village commons and to someextent government owned lands. There is a need for developing appropriate policy guidelines by thegovernment to enable SHGs to access land and ponds on long-term lease. The Programme willsponsor relevant research, workshops, and policy dialogue on this issue.

191. Land Inheritance. As part of the women’s empowerment process the Programme wouldadvocate granting of equal rights to daughters at par with sons in matters of inheritance of agriculturalland.

192. SGSY: There is a need to engage the policy makers in policy level discussion related to SGSYand its funding mechanisms to SHGs. The SGSY scheme pushes large credit and subsidy to groupsthat are at their infancy and with limited credit absorption capacity. As a result, recovery performanceis low destroying the credit history of the members of such SHGs. SGSY scheme is available only to afew groups SGSY scheme should have a graduated process of facilitating the SHGs to move towardshigher credit absorption. At the same time, SGSY assistance should be available to CSCs and not toindividual SHGs.

193. Amendment of APMC Act: There is strong need for amending the act and making provision forthe private players to procure directly from the farmers and also from the market yards without givingthe mandi fee (presently 2.5% of the total value). A fair and free marketing would lead to entry ofprivate players and a demand and supply dynamics would determine prices accruing to the farmers.

194. Haat Policy: There is an imperative to develop a common policy for improvement of haats,which would consolidate the present piecemeal approach adopted by various developmental agencies.This is critical to the development of local markets especially in Bihar where there is adequate scopefor selling products locally in the initial years until road transport improves and the ability to movegoods outside local areas is facilitated. Though there are several schemes for Haat development, thedesign and interventions lack women focus. Comprehensive local market development throughconvergence, with due provisions for enabling women run enterprises will require policy support.

21 See Key File Table 1



45

195. Mutually Aided Cooperative Societies. The legal form of Mutually Aided Cooperative has beenfound enabling for community owned and managed enterprises. The Programme will commission astudy to critically look at the working of the MACs, issues involved and make a proposal to theGovernment. MACS have worked well in other States, like Andhra Pradesh, in promoting economicopportunities at a scale that allows participants to capture more value addition and improve theireconomic security.

Innovations

196. Convergence facilitation – the programme will give special attention to facilitating access of theSHGs to the myriad programmes and Programmes of the government and other organizations that arealready in existence but are either not known to our target group and are too complicated to access.Convergence Officers have been placed at the PIU level to oversee thorough implementation of thiscomponent.

197. Processes to enlist support of Large National NGOs.: The Government led implementationagencies treat the NGOs like contractors. Due to this most large, experienced national NGOs do notrespond to the government’s advertisement calling for expression of interest. In order to attractcapable national NGOs, the programme has built in exposure visits to the programme managementteam to the large national NGOs to understand their processes and systems and to invite them toparticipate in the implementation of the programme activities focusing mainly on quality basedselection. The NGOs will be requested to visit the programme area and prepare proposals forconsideration by NABARD.

198. SHG owned and managed CSCs with Professional Management: The programme starts off witha clear vision and goal of evolving CSCs that service about 150-200 SHGs into organizations ownedand managed by the SHGs.

199. Moving SHG methodology towards sustainability: The programme intends to introduce theconcept of payment from the SHGs towards the operational costs of the CSCs. The target is to achieveoperational sustainability in six years.

200. Introduction of Business Facilitators: These facilitators will be placed within the CSCs toprovide linkages between the groups/entrepreneurs and banks.

201. Innovation Fund: An Innovation Fund will be established primarily to support new genderaware approaches to large-scale enterprise development based on value chain analysis and thesubsector/BDS strategy for prioritizing interventions. The Fund can also support innovativecomponents such as the Mentoring Programme, action research on gender-based enterprisedevelopment, the role of remittances in the local economy, etc.

202. Mentoring Programme: The Programme proposes experimenting with an innovative mentoringprogramme that will particularly target young women who are participating in programme activitieslinking them with businesswomen in a mentoring relationship.

203. Supervision Arrangements: In line with the resolution of IFAD’s Governing Council inFebruary 2006 enabling the possibility to entrust local and regional organizations to carry outsupervision activities, the mission proposed GoI to consider this opportunity. The advantages of alocal institutions would be to: i) provide a more continuous cost-effective implementation support; ii)enhance ownership of the review process by local stakeholders; iii) ensure an effective use of theField Presence Unit in Delhi. The disadvantages would be related to the need to establish thisarrangement for the first time and the teething issues associated to that.



46

XI. OUTSTANDING ISSUES AND NEXT STEPS

Assurances

The MWCD would engage core staff for CPSU and NABARD would allocate permanentNABARD staff for core positions of NPCU, SPMUs and PIUs. This would be a condition forloan effectiveness.

The staff appointments other than regular MWCD and NABARD staff would be based on an openselection process to attract talent from the market.

MWCD would sign a MOU with NABARD outlining the procedure for release of funds,accounting, audit and reporting obligations. This would be a condition for loan effectiveness.

The DEA would establish a Special Account with the Reserve Bank of India in New Delhi toreceive funds from IFAD. This would be a condition for loan effectiveness.

MWCD would open a Programme Account (Programme Account –MWCD) and NABARDwould open three Programme Accounts (Programme Account-Main, Programme Account-UP andProgramme Account-Bihar) with commercial bank/s acceptable to IFAD. This would be acondition for loan effectiveness.

The NABARD would establish PIU/s in the programme area; and engage of Resource and FieldNGOs with gender perspective. This would be a condition for loan disbursement.

The MWCD would release an ad-hoc fund release (in total approximately INR 25 million being25% of the first programme year budget) to the NABARD and CPSU to finance pre-start upactivities. The eligible expenditure made during this period would be reimbursed by IFAD afterthe loan becomes effective based on the agreed reimbursement percentages.

The Borrower shall ensure that there shall be no more than three turnovers of the ProgrammeDirector, Programme Coordinator and State Programme Managers during the programmeImplementation period, and that each successor shall have qualifications and experiencesatisfactory to IFAD.

NABARD would not transfer any funds from out the Programme Account for other expenditure. The NPCU shall submit quarterly and annual reports recording the programme’s implementation

progress to the CPSU. The CPSU shall submit the same to IFAD. No Loan proceeds shall be used to pay the taxes levied on procurement and supply of any goods

or services financed by the Loan. Counterpart funds: Within 30 days after the Effective Date, GOI shall make the initial release of

counterpart funds to NABARD. Moreover, GOI shall timely make each subsequent release ofcounterpart funds as called for in the Loan Agreement.

By 31 March each year, starting in 2009, the CPSU/NPCU shall provide to the Fund for reviewand comments, a copy of the Annual Work Plan and Budget for the coming year.

Beginning September 2009, the NPCU shall submit six-monthly and annual reports synthesisingoverall programme progress, to the Fund.

Every six months, MWCD shall transfer anticipated programme expenditures in advance for thecoming six months to the CPSU and NPCU in accordance with the amounts established in theAWP/B.

Not later than six months after the Closing Date, the CPSU/NPCU Borrower shall submit or causethe CPSU /NPCU to submit a Programme Completion Report, in a format acceptable to the IFADwhich shall review the performance of the programme in achieving its wider objectives ofempowerment and livelihoods enhancement.

The NPCU/SPMU would make all required efforts to engage large national NGOs to develop afew CSCs to act as training ground for local NGOs.

The SPMU would engage competent NGOs to implement programme activities. Most SHG programmes have no emphasis on development of sustainable support structures. It is

therefore necessary that the government evaluate its SHG programmes and develop stringarguments for incorporating the need to build sustainable support structures in all its programmes.



47

Next Steps

204. The following processing schedule was discussed and agreed with GOI:

Implementation Planning/ Appraisal Report and all attachments sent simultaneously to IFAD,GOI and NABARD by 5 August.

Amendments to the Programme Loan Agreement approved by IFAD Board by September2008.

Retroactive Financing can commence from 1 October 2008 through loan effectiveness


DESIGN COMPLETION- MAIN REPORT – APPENDICES

49

APPENDIX A

MISSION PROGRAMME AND LIST OF PERSONS MET

1 September Meeting with Stakeholders - Patna

7 September Meeting with Ministry of Women & Child Development Officials, Dept. ofEconomic Affairs Representatives, Planning Commission Representative,Rashtriya Mahila Kosh Managing Director, Women’s Development CorporationRepresentatives of Bihar and Uttar Pradesh

1-9 September Appraisal Team in Bihar

5 September Wrap Up Meeting in Patna

9-18 September Appraisal Team in Uttar Pradesh

11 September Stakeholders’ Meeting in Lucknow

11-15 September Field Visits: Rae Bareli and Sultanpur

18 September Wrap Up Meeting in Lucknow

19-30 September Report Writing in Lucknow

18 September Draft Aide Memoires submitted to Government of UP and Government of Bihar

20 September Draft Joint Aide Memoire submitted to Government of India

22 September Final Wrap Up Meeting in New Delhi with GOI, GoB, and GoUP.

30 September Conclusion of report writing;

1 October Draft Implementation Planning/Appraisal Report sent to Rome

List of Persons Visited

New Delhi

Mr. Biswajit Sen, Livelihood Specialist, World BankMs Sneh Lata Kumar, Executive Director, Rashtriya Mahila Kosh, GOI

Mumbai

Mr. S.G. Anil Kumar, Chief Manager, Rural Micro banking and Agri business Group, ICICI Bank

Uttar Pradesh

Shri Balvinder Kumar, Secretary, Government of Uttar Pradesh, WDCMs. Alka Srivastava, M.D. WDC UPMs. Madhu Mathur, Dy. Secretary, Government of UP WDCMr. M. Shamim, WDCMr. R. Sinha, WDCMr. Vinod Jain, Trust Microfinance NetworkMr. R.L. Yadav, Chief Manager Baroda Eastern UP Gramin Bank, Rae BareliMr. A.K. Singh, CEO NEED, LucknowMr. S.K. Bajpai, Section Officer



50

Mr. K.B. BarkuriMr. Y.K. Gautam, D.D. Rashtriya Mahila Kosh, New DelhiMr. R.K.Bansal, Chairman,Baroda East UP Grameen Bank.Mr. K.R.Kanoujia, Lead Bank Officer, SultanpurDR. V. Srivastava, Coordinator, DEHAT, Joshiapur, Bahraich, UPMr. V.K. Rao, Gram Udyog Sansthan, Shravasti District, UPMr, Y.L. Sapra, Chief General Manager, NABARD, LucknowMr. Debesh Roy, Asst. General Manager, NABARD, Rae BareliMr. P.S. Tomar, Project Director, Land Development Corporation, Rae BareliMr. M.P. Singh, Dy. Project Director, NDDB Chilling Plant, Harchanpur, Rae BareliMilk Collectors, NDDB Chilling Plant, HarchanpurMr. Gopal Krishna, Branch Manager, Grameen Bank, Harchanpur, Rae BareliMr. Pankaj Das, Asst. General Manager, NABARD, Sultanpur

Bihar

Mr. Vijoy Kumar, Secretary Welfare, Government of BiharMs. S. Sidhoo, CMD, WDC BiharDR. P. Garg, NIRDESH, MuzaffarpurMr. Babul Prasad, IDF, PatnaMr. Arbind Singh, NIDAN, PatnaMr. Rupesh K. Singh, WDC BiharMr. P.K. Sharma, Centre Director, PatnaMr. Pradeep K. Ghosal, WDC BiharMr. Md. Ejaz Ahmad, WDC BiharMs. P. Kumari, Adithi, SitawaliMr. Sarda Nath, NABARD, PatnaMr. Ritesh Kumar, WDC BiharMr. M.K. Sinha, Zonal Officer, Central Bank of India, MuzaffarpurMs. Nazish Bano, WDC BiharMs. Suman Singh, MadhubaniMs. Abha Jha, Trainer and Training Materials Developer, PatnaMr.Vibhuti Jha, Assit. General Manager, State Development Finance Corporation, PatnaMr. R.A. Pandey, Asst. Genreal Manager, NABARD, Patna



51

APPENDIX B

COUNTRY PORTFOLIO OF LOANS AND GRANTS


DESIGN COMPLETION - MAIN REPORT – APPENDICES

53

APPENDIX C

PROGRAMME MANAGEMENT STRUCTURE

MWCD –GOI(Central Program Support

Unit)

NABARD – Head Office - MCID(National Program Coordination Unit)

NABARD – Regional Office(State Program Management Unit)

Resource NGOs /Service Providers

District ProgrammeImplementation Unit

SHGs

Line Department

Banks/MFIs

Field NGOsCommunity Service Centers

PPGs

ProducerCompany



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APPENDIX D

FLOW OF FUNDS

CPSU

MWCD-

GOI

GOI

IFAD Loan

NABARAD-

Service provider/Enterprise

DevelopmentOrganizations

FNGO/RNGO CommunityService CentersSHGs and theirInstitution

FFIs/ MFIs

Individualenterprises andSHG- IGA

GOI - Contribution



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Appendix E

RESPONSES TO COMMENTS FROM IFAD, GOI, GoUP, and GoB

XII. APPRAISAL MISSION RESPONSE TO TRC OBSERVATIONS

TRC India – Women’s Empowerment and Livelihoods Programme in the Mid-Gangetic PlainsTRC No. 34/06/PI

The TRC reviewed the formulation of the above-mentioned project on 8 September 2006. Present atthe meeting were: Rodney Cooke (Chair), Director, PT, Kevin Cleaver, AP, PD (Observer), ThomasElhaut, Director, PI, Mattia Prayer Galletti, CPM, PI, Sean Kennedy, Lead Adviser, PT, HenryDommel, Technical Adviser, PT, and Vineet Raswant, Consultant, PT

GENERAL OVERVIEW

On the whole, design at Formulation presents a persuasive case for IFAD support. The Mid-GangeticPlains (MGP) areas of Bihar and Uttar Pradesh are among the most densely populated and poorest inIndia. Despite high potential for agricultural productivity, the rate of economic growth and reductionin rural poverty has lagged behind the rest of the country, in part due to lack of access to land andother resources on the part of IFAD target groups. The documentation provided for technical review iscoherent, and builds on the experience of at least four similar IFAD projects in India: The Tamil NaduWomen’s Development Project, The Maharashtra Rural Credit Project and the Rural Women’sDevelopment and Empowerment Project – Swashakti, and the National Microfinance SupportProgramme.

The stated purpose of the programme is to strengthen community-level institutions for social andeconomic empowerment and enable the target group to access productive resources, social servicesand to build a sustainable livelihood base. A large majority of the planned resources are for livelihoodenhancement and enterprise development, primarily for forward and backward investment in valuechains. Six value chains are proposed: essential oils (mint), dairy and sericulture in Uttar Pradesh; andmakhana (an aquatic nut), madhubani painting (tradition artwork) and fisheries in Bihar. Costs byprogramme component are outlined below:

It was agreed that Key Issues to be elaborated during appraisal, and to be addressed satisfactorilyprior to EB submission, are the following (including reference to the relevant Learning Notes):

Issue 1: Designing for ImplementationIssue 2: Targeting & Gender;Issue 3: Issue 5: Value Chains;Issue 5: Value Chains; andIssue 8: Rural Finance.

Specific TRC Issues and decisions were as follows:

--- CROSS-CUTTING ISSUES ---

Issue 1: Designing for Implementation.

Recommendations: (Ref: LN CCI.2 Designing for Implementation, Core Issues 1, 4& 7, and KeyTasks for Design 1&3)



58

As complicated implementation environments call for straightforward implementation arrangements,programme management should be re-visited with a view to:

Assign clear responsibilities for implementation. In this context, it is suggested that PSU beresponsible for liaison and evaluation, the State DWCDs for implementation planning, monitoringand contracting the NGOs (with appropriate control measures to ensure that contractingprocedures are transparent) and the District PIUs, working under the district staff of the WDCs,responsible for supervising the implementation by FNGOs.

Ensure that provision of support services is entrusted to FNGO, and that the roles of various typesof NGOs are clearly spelled out without any overlap of responsibilities.

Align the field organization to the Districts, establishing 6 PIUs which would work closely withthe District based staff of the WDCs.

Consider cutting the Innovation Fund, or postpone establishment of the Fund until after the Mid-Term Review once there is greater confidence in the implementing institutions.

TRC Decisions: Agreed. Regarding the organizational and management structure, the appraisal teamwill finalize the design taking into account – and seeking the agreement of – State and CentralGovernments’ views.

Appraisal Mission observations:

Assign Clear responsibility to CPSU, SPMU and PIU: Clear responsibilities have been assignedto all the levels in the program management structure. The details are in Working Paper 3 –Program Management.

Roles of various types of NGOs: Clear roles have been assigned to Resource NGOs and FieldNGOs. Details are in Working Paper 2 – Community Institution Development

Align field organizations to district level set up of WDC: The WDCs in both UPand Bihar dohave district level set up. PIUs have been established at the district level. Therewillbe one PIUcovering two contiguous districts and four contiguous blocks in Bihar and a PIU in of the programdistricts in UP. However, the PIU/s would be established near the program block to facilitateclose supervision. Details in Working Paper 3 – Program Management.

Innovation Fund is planned for implementing Enterprise Development activities in a more holisticway. This will enable the NGOs and Service Providers that have capability to participate in theEnterprise Development activities to prepare and submit proposals to the program managementand obtain funding for developing full range of activities related to the sub-sector enterprisedevelopment. See Working Paper # 9 on Innovation Fund

Issue 2: Monitoring & Evaluation.

Recommendations: (Ref. LN CCI.4 Monitoring & Evaluation)

The M&E narrative and log frame are generally aligned with RIMS, but should be revised to:

State all indicators in non-compounded, measurable terms. Specify that the standard RIMS survey covers all the anchor indicators of impact, and remove any

reference to (or budget for) separate anthropometric surveys. Include the requirement to monitor targeting performance.

TRC Decisions: Agreed.


Aligning M&E and log frame with RIMS: M&E narrative and log frame aligned with alignedwith RIMS. Details in Annex 5- Monitoring and Evaluation.



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Non-Compounded Indicators: Measurable indicators included in the log frame. No separate anthropometric survey- Reference to separate anthropometric survey deleted. RIMS

survey would include all anchor indicators of impact. Include the requirement of monitoring targeting performance – Included in the M&E design.

Details in Annex 5- Monitoring and Evaluation.

--- ISSUES RELATED TO IFAD’S STRATEGIC OBJECTIVES ---

STRATEGIC OBJECTIVE ONE: HUMAN AND SOCIAL ASSETS (HSA)

Issue 3: Targeting & Gender.

Recommendations: (Ref. LN HSA. 1 Gender & HSA.4 Project Targeting)

While the goal of the programme is clearly to benefit the poorest segments of the rural population, thetarget groups and the targeting strategy need to be better defined.

Based on wealth ranking exercises undertaken in typical target villages, provide a more precisecategorisation of the target groups by wealth and asset base.

Review proposed value chains identifying how the poorer will benefit, and give priority to thoselikely to benefit the target groups – primarily the landless and quasi-landless.

Explicitly mention promotion of social inclusiveness of SHGs, and ensure that communicationactivities are planned with special efforts to reach those who are normally excluded.

Incorporate attention to targeting in ToR of project staff and NGOs. Complete design of the targeting strategy in line with IFAD’s Targeting Policy (see Table 1) and

gender activities according to IFAD’s Gender Plan of Action (see Table 2). Envisage operational links between the programme and other initiatives providing social support

to the poorest, who may not otherwise be able to take advantage of planned value chain activities.

TRC Decisions: Agreed. Regarding the first point, the appraisal mission may use available secondarydata.

Wealth Ranking was accomplished through secondary sources and focus group discussions at thevillage level in Rae Bareli.; it will also be in the TOR for program staff during identification oftarget households See Key File table 4 for details on targeting.

The value chains detailed in the report are only prototypes indicative of the type of analysis thatwill need to be done during implementation of the enterprise component; however, the valuechains analyzed do indeed reflect opportunities for the very poor, especially makhana and dairy;access to land and ponds is an important part of the program that will enable very poor to activelyengage in fisheries and essential oils cultivation and processing. See working Paper # 6 onEnterprise Development Strategy

The gender action plan is incorporated in the working paper See the section on Program strategy

Issue 4: Food Security, Health and Nutrition.

Recommendations: (Ref. LN HSA.2 Food Security, Health & Nutrition)

The analyses of food security, health and nutrition are sound, however, some proposed interventionsfit better with programme design than others .Regarding the three interventions:

Drop the block “paramedics” (WP4 ¶73-75) as the planned training and institutional support arenot adequate

Reconsider the “health camps” (WP1 ¶52) in favour of focusing on life skills training Further support life skills training (MR ¶90-93) on health, sanitation and nutrition.



60



Paramedics and health camps have been dropped. Support for life skills training expanded to include training in HIV/AIDS awareness and legal

protection. For details see the section on Program strategy in Gender working paper.

STRATEGIC OBJECTIVE TWO: PRODUCTIVE ASSETS AND TECHNOLOGY (PAT)

Issue 5: Value Chains.

Sub-Issue 5.1: Marketing for Selected Value Chains.

Recommendations: To further simplify design and maximize target group participation, theprogramme should initially:

Focus initially on selected chains, preferably dairy and makhana nuts (cross-reference Issue 5.2). Develop short value chains, undertaking limited marketing activities (promoting marketing

groups and linking them to purchasing companies) and/or training selected individuals identifiedby the members to market produce on their behalf.

Promote access to working capital for marketing organizations to interact with purchasers onmore equal basis.

The mission is also advised to hold discussions with ITC, which has successfully promoted the e-Choupal model.22

TRC Decisions: Agreed. It was clarified that the value chain analyses at formulation were onlyprototypes that are indicative. The feasibility of short/long value chains and the focus on few/multiplevalue chains will be considered.


It appears that the reviewers did not understand that the value chains detailed in the FormulationReport are only indicative of the type of analysis that will be required for implementing theenterprise component – as such they are prototypes and are not meant to be prescriptive. SeeBackground Paper on Value Chain and Poverty Reduction and Working Paper # 6.

Dairy and makhana seem to have good potential for rapid take-up. See working Paper # 6attachment 1

Short value chains are not necessarily productive ones if they increase easy entry and competitionthat floods a limited market with goods prices and returns will come down resulting in a decreaseof income. See background paper on Value Chain and Poverty Reduction

All capital requirements are planned for under the rural finance sub-component. ITC e-Choupal model is not relevant to our target group. It deals with commodity food items

produced by wealthier farmers. Formulation Team met with e-Choupal representatives andconcluded lack of synergy

22 http://www.echoupal.com/



61

Sub-Issue 5.2: Livestock Value Chain Development.

Recommendation: (Ref. LN PAT.4 Core Issues 1, 3 and 5)

In order to enable rural households’ access to economically viable value chains:

Review the appropriateness of sericulture and fisheries as sustainable productive resources forlandless and land poor households, and the risks of flooding and drought for fisheries.

Focus on micro and small dairy farming systems, excluding medium and large dairy farms (whichare not appropriate models for poor households

Consider including small livestock (such as goats, pigs or poultry) in the value chains)



A major program intervention will be facilitating the leasing of ponds, orchards and land by SHGsthus giving them access to assets that can be productive employed in higher value activities likefisheries and sericulture; also eri sericulture make use of castor which can be cultivated onwastelands. see Main Report section??

If properly organized micro and small scale dairies can be scaled up to own even large-scale dairyprocessing; a good example of this is found in Kerala.

Small stock may be considered during project implementation if that provides economies of scalefor upscaling.

Issue 6: Tenure for Land and Other Natural Resources.

Recommendations:

Design emphasis on tenure arrangements is well placed, and could be further strengthened.

Develop criteria to compare instruments to enhance access to land by IFAD target groups(adapted to the local situation and in light of the general criteria as described in the draft LN),compare a wider variety of instruments, and agree on one (or more) instruments in thecomparison, even if this would imply dropping the original choice for land banks.

Outline implementation mechanisms that are robust enough to take up the task of challengingvested interests.

Detail elements, outcomes and time frame for policy dialogue (BS3 ¶53 - 68). Complement the land study with a participatory analysis which takes into account all types of

rights (transfer, use, control) in both states that is focused on the project interventions (regarding:ponds and land) during early implementation.

TRC Decisions: Agreed. The land bank concept will be dropped. A review of alternative instrumentswill be carried out during the pre-implementation phase, among a number of activities to be fundedusing IFAD retroactive financing.


The land bank sub-component dropped from the program.

http://www.echoupal.com/



62

Issue 7: Environmental Issues.

Recommendations: (Ref. LN PAT.4 Environment & Natural Resource Management)

In light of the environmental impacts resulting from a diverse array of small interventions associatedwith enterprise development, Appraisal should:

Assess the merits of adapting EUGAP or other relevant procedures for the six value chains; and Ensure that all costs associated with implementing the identified mitigation measures are included

in the programme budget.

TRC Decisions: It was agreed that the appraisal report will include the EUGAP procedures to beconsidered by Programme managers.

(need clarification on EUGAP, no one is familiar with it).We did a search for EUGAP but couldnot locate any useful documents. However, the Environmental Screening Note has beensubstantially strengthened)

STRATEGIC OBJECTIVE THREE: FINANCIAL ASSETS AND MARKETS (FAM)

Issue 8: Rural Finance.

Recommendations: (Ref. LN FAM.1 Rural Finance, Core Issues 5 & 6)

The design provides a good description and analysis of the rural finance context, and proposes avariety of interventions which are globally relevant to the project objectives. However, some willneed to be re-assessed at Appraisal.

Reconsider the proposal to capitalize SHGs (MR ¶99-100), and the concept of a Risk Fund (MR¶101, WP5 ¶100-101) as experience has shown that injection of donor funds in community-basedsavings and credit groups is often disruptive, and Risks Funds have not been needed in previousIFAD-supported rural finance activities in India.

Re-evaluate setting up an Equity Fund (an intervention where commercial actors may be betterplaced to undertake this initiative).

Establish strong linkages between the programme and the National Microfinance SupportProgramme and the incipient MicroSave initiative, both of which have targeted Bihar and UttarPradesh as priority areas for future interventions.

Note that all MFIs supported by the programme will be strongly encouraged to report on the MIXmarket.

TRC Decisions: Agreed. It was considered that the proposed capitalization of SHGs was of a smallscale, would be provided only as an incentive based on performance, and was based on experiencewith MYRADA. It was also agreed that ICICI should be contacted by the appraisal team to discusstheir willingness to move into the target districts and their partnership in the Equity Fund.


Risk fund has been reconsidered and dropped due to 1) practical difficulties expressed by banks inmaintaining project borrower accounts. 2) State Governments are not prepared to contribute sincethe GOI had mentioned that the project did not envisage their contribution. 3) PlanningCommission had expressed some reservations. The seed capital to groups is found necessary toleverage bank loans and to incentivise performance in the initial stage and hence retained.

ICICI bank can provide micro finance if some mFIs/other channels emerge in the project districts.They can provide larger enterprise loans through credit franchisees they propose to set up in UP



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and Bihar. ICICI bank does not provide equity finance and their venture capital company does notprovide small size quasi equity of Rs.5 to 10 lakhs. More over there is a risk in tying up with onlyone bank.

Strong linkages between NMFSP and Micro Save will be established. (see paragraph 74 to 78 ofworking paper on rural financial services).

Mix market – agreed. (see paragraph 73 and 74 of working paper on rural financial services).

Issue 9: Financial Analysis and Cost Tables.

Recommendations:

The financial analysis section and cost tables are largely incomplete (MR ¶164, WP8 ¶17). Appraisalshould finalize the financial analysis, including enterprise models, and articulate all underlyingassumptions. An economic analysis should be conducted at Appraisal on the basis of assumptionsregarding uptake of enterprises. Cost tables should be finalised as per the following key tasks:

For the foreign exchange elements, include price contingencies following the standard approachof CPP in the cost tables (according to the EIU, inflation and structural deficiencies in the Indianeconomy are likely to put pressure on the rupee).

Calculate taxes and duties and include them in the Government’s contribution. Provide a detailed breakdown of Expenditure accounts by Financiers reflecting the above (a Key

File requirement). Provide disbursement and procurement accounts with revised financing rules. Restructure expenditure accounts to reflect categories of costs as accurately as possible,

minimising or eliminating the use of “Funds” as stand alone accounts.


Approved:


The recommendations have been taken into account while restructuring the cost tables. See newcost tables

Changes and Responses made by the Appraisal Mission based on comments of MWCD-GOI,WDC-Bihar and WDC-UP to the Formulation Report

Target Group- The targeted beneficiaries will be identified as “vulnerable groups”. Beneficiary contribution and Incremental Bank Credit – This has not been included in the

program cost as required by the GOI though this is a normal practice while costing IFADprogram costs. Beneficiary contribution and Incremental Bank Credit have beenseparately indicated as the amount that will be leveraged by the program.

Government contribution- GOI agreed for a contribution of USD 1.00 million over eightyears excluding the taxes and duties and the same has been incorporated into the programfinancing. The mission had argued for at least 2.00 million despite the fact that the GOIcommunication to the states had indicated no contribution from the states.

Community Asset Creation – A Community Access Fund was created at the People’sOrganization level to support: (i) building credit history of SHGs by providing them onetime loan; (ii) leasing land and ponds; and (iii) building small community assets.

Capacity building inputs - Adequate provision is made under the program with capacitybuilding inputs. The cost tables have been revised.

Implementing agency – Both GOI and the state governments strongly advocated usingWDCs as the implementing agency. The IFAD mission expressed its reservations on



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WDC-UP and suggested the Land Development Corporation to implement the program.But, due to government’s insistence WDC of the respective state will be implementingagency. Strengthening WDC-UP with full time top management staff has been agreedupon. The government clearly stated its opposition to the society model of programmanagement in response to the Formulation Report.

Gender – Life skills, gender sensitization and HIV/AIDS sensitization have been includedin the program activities.

Tie-up with KVIC – KVIC could be one of the institutions for marketing tie-up. Innovation Fund – Shifted to the state. Suitable changes made to the staffing structure of

CPSU due to this shift. RMK involvement – There will be no exclusive involvement of RMK in the program.

However, the program will foster access of financial services from different institutionsincluding RMK.

Credit Monitoring Committee – This will be set up at the PIU level and the DistrictMagistrate will be Chairperson.

Staff Recruitment – Staff can be recruited either through deputation or from the openmarket.

Comptroller and Auditor General of India (CAG) – The term Auditor General of India inthe report has been replaced with CAG.

SHGs - No of SHGs are only indicative. Peoples’ Organizations- The program will support Cluster level Associations depending

the maturity of the groups involved and will promote People’s Organization (CMSC)covering 150-200 groups.

Lead NGO - All functions of Lead NGO will be built into Resource NGOs. Seed Capital - The program will provide seed capital to enable the groups to develop

required credit history expeditiously and leverage higher amount of bank finance whichlinked to the savings of the groups.

Risk Find – This activity has been deleted. Land Leasing – Allocations made for this activity under Community Asset Fund. Use of NGOs – The program will support building capacity of local NGOs. However,

there is a need to bring in best practices by engaging large national NGOs. Criteria for selection of blocks – These have been worked out and included in the

Appraisal Report. Staffing- Staffing requirements for central, state and PIU level have been worked out by

the mission. Policy Issues – The state government representatives are unable to take a position on the

policy issues without consulting the government.


DESIGN COMPLETION- MAIN REPORT – ANNEXES

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ANNEX 1

IMPLEMENTATION ARRANGEMENTS

I. IMPLEMENTATING ORGANIZATIONS

1. The MWCD at the central level would be nodal agency for the Programme. This centrallyfunded multi-state programme would be implemented at the state level by the National Bank forAgriculture and Rural Development. (NABARD). The programme management structure wouldcomprise of (i) a Central Programme Support Unit (CPSU) within the MWCD, (ii) a ProgrammeCoordination Unit at NABARD, Head Office (NPCU), (iii) a State level Programme ManagementUnit (SPMU) within NABARD Regional Offices in Bihar and UP; (iv) a PIU at the field level in theprogramme districts; (iv) and a Community Service Centre (CSC) to support about 150-200 groupsinitially managed by FNGOs that would eventually be owned and managed by SHGs. Each CSCwould generally be assigned to a FNGO charged with the responsibility to provide support to theSHGs. The proposed programme management structure is provided in Appendix C.

2. CPSU: A central level CPSU would be set up within the MWCD. This would be headed by aProgramme Director who would be a Director level officer and would have additional charge of thisprogramme. No allocation for the salary of the Programme Director is made in the programme costs.The programme would provide a Programme Officer, and a Finance Manager.

3. The main responsibilities of the CPSU would include: (i) monitoring progress andperformance NABARD in implementing the programme; (ii) incorporating the Annual Work Plan andBudget (AWPB) of the programme into the budget of the GOI; (iii) ensuring flow of funds toNABARD and following up with NPCU for SOEs and reimbursement claims; (iv) coordinatingsubmission of reimbursement claims for eligible expenditure incurred for the programme activities forsubmission to DEA, Ministry of Finance; (vi) ensuring submission of periodical progress reports,AWPBs and Audit reports to IFAD.

4. NPCU: An apex level NPCU would be set up within Micro-credit Innovation Department ofNABARD. This would be headed by a Programme Coordinator (Deputy General Manager) and wouldbe supported by an Asst Programme Coordinator (Asst General Manager). In addition, the programmewould engage two Programme Officers on a contract basis.

5. The main responsibilities of the NPCU would include: (i) monitoring progress andperformance of the Programme in the States; (ii) consolidating and fine tuning the AWPB of both thestates and forwarding it to CPSU; (iii) ensuring flow of funds to the SPMUs and following up withthem for SOEs and utilization claims; (iv) coordinating submission of SOEs, utilization claims andreimbursement applications for eligible expenditure incurred for the Programme activities to CPSU;(v) arranging for cross learning among Programme staff of both the States; (vi) consolidating andensuring submission of periodical progress reports, AWPBs and Audit reports to CPSU;(vii) arranging for periodical review of the progress and problems in the implementation of theProgramme; (viii) arranging for knowledge management related activities; (ix) addressingimplementation constraints; and (x) undertaking such other tasks as the CPSU may assign forsuccessful implementation of the Programme.

6. SPMU: This unit would be located within the Regional Office of NABARD in the respectivestate. The SPMU would be integrated within the organizational structure of NABARD. The SPMUwould be headed by a State Programme Manager (Deputy General Manager) and assisted by anAssistant Programme Manager (Asst. General Manager). In addition, the Programme would engage



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an Enterprise Development Manager, a Programme Officer (Planning and M&E), a ProgrammeOfficer (Finance), and an ICT Officer on a contract basis, SPMU in UP will be provided with anadditional Programme Officer (Planning and M&E)

7. The main responsibilities of the SPMU would include: (i) providing implementation andcoordination support to the PIU/s; (ii) undertaking procurement activities including engagement ofNGOs, Consultants, Service Providers and Enterprise Development Organizations; (iii) marketing theProgramme to capable NGOs with experience in implementing various components of theProgramme; (iv) facilitating the work of the organizations engaged for implementing enterprisedevelopment activities under the Innovation Fund; (v) monitoring progress and performance of theprogramme in the districts and to ensure that it does not face constraints that slow down the pace ofprogramme implementation; (vi) reviewing and fine-tuning the AWPB of the state and forwarding thesame to NPCU; (vii) ensuring flow of funds to the PIU/s and following up with them for SOEs andutilization certificates; (viii) preparing reimbursement applications for the eligible expenditureincurred by it for the Programme activities for submission to NPCU; (ix) undertake all activitiesrelated to monitoring, thematic reviews, evaluation and impact assessment; (x) ensuring submission ofperiodical progress reports, AWPBs and Audit reports to NPCU; and (xi) undertaking such other tasksas the NPCU may assign for successful implementation of the programme.

8. PIU: The Programme would establish a PIU in each programme district in UP and a PIU fortwo districts in Bihar, and a small block office in each programme block. The PIU would beestablished in a convenient location preferably within a programme block or a sub-division dependingupon the availability of infrastructure. The PIU would be headed by a District Programme Manager(Asst. General Manager/Manager) from NABARD. The programme would also provide:; (i) aCommunity Development Officer; (ii) an Enterprise Development Officer; (iii) a FinanceOfficer;(iv) a MIS and Planning Officer; (v) a Convergence Officer; and (vi) a Programme Assistant.In respect of PIU in Bihar, as it covers two districts, additional staff contingent comprising aCommunity Development Officer; an Enterprise Development Officer and two Programme Assistantswill be provided. In addition, each block would have a small Block Office with a Block CommunityDevelopment Facilitatos, a Block Enterprise Development Facilitator and a Block CommunityAccountant.

9. The main responsibilities of the PIU would include: (i) coordinating and supervisingimplementation of programme activities in coordination with the NGOs and Service Providersengaged for the purpose; (ii) undertaking preparation of AWPB of the programme; (iii) facilitatingflow of funds to the programme partners and other implementing agencies and ensuring properutilization of the programme funds placed with them; (iv) preparing SOEs and utilization certificates;(v) maintaining a Management Information System (MIS) and monitoring implementation of theprogramme activities vis-a-vis the programme log frame and the AWPB; (vi) preparing andsubmitting Progress Reports, AWPB and Audit Reports to the SPMU; (vi) supporting the BlockOffices and CSCs to implement programme activities; and (vii) undertaking such other tasks as theSPMU may assign for successful implementation of the programme.

10. CSC: The Programme supported FNGOs would establish CSCs and each CSC would beresponsible for mobilizing and managing about 150-200 SHGs. The CSCs would be funded entirelyby the programme funds during the first year during which the concept of cost recovery would beseeded. The SHGs would be required to contribute to the operational costs of the CSCs from thesecond year onwards. Programme funding would progressively decrease and SHG contributionswould progressively increase. The CSC is expected to evolve into an organization owned andmanaged by the SHG members. During this evolution, the CSC may take the legal framework ofSociety, Cooperative, Trust, CMRC, etc. All staff initially engaged by the FNGOs would become staffof the CSC. It is expected that the CSC would become self sufficient in about six years.



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11. The main responsibilities of the CSCs would include: (i) recruiting and training a team ofcommunity organizers to undertake SHG mobilization activities; (ii) mobilizing SHGs and developingthe capacity of members to undertake savings and credit activity; (iii) developing a book-keepingsystem preferably computerized for the SHGs and monitoring their performance; (iv) establishinglinkages to obtain credit from the MFIs and Banks; (v) facilitating the members to form PrimaryProduce Groups and to access services for enterprise development; (vi) facilitating convergence ofmembers with other government supported programmes related to social and economic development;(vii) facilitating establishment of the cost recovery systems and evolution of the CSC as memberowned and managed organizations; (viii) undertaking such other tasks as the PIU/s may assign forsuccessful implementation of the programme; (ix) providing support services for obtaining loans fromthe banks for enterprise development reducing the transaction costs of the members and banks and asa result get waiver of processing charges charged by the banks; (x) facilitating the members to get lowcost insurance policies; (xi) linking up the SHGs for obtaining low cost housing and other loans forapex lending institutions such as HDFC, SIDBI, ICICI etc.; and (x) organizing bulk buying of SHGmember requirements (tea powder, books of children, etc.) to reduce household expenditure.

II. PRE-START UP ACTIVITIES

12. Broad Guidelines for the initial stages of programme implementation, which are to becompleted before disbursement of IFAD loan, are outlined below. Most of these activities would becarried out before the programme becomes effective.

13. Block and Village Selection: NABARD would select block and villages based on the criteriaprovided for the purpose in the Programme Area section of the Implementation Planning / Appraisalreport.

14. Recruitment of core staff: This activity would be undertaken during the pre-implementationphase as it would take considerable time to prepare a supplementary budget and initiate otheractivities. The MWCD-GOI would nominate a Director level Officer to function as the ProgrammeCoordinator at the GOI level. This officer would not be a full time Programme Director -CPSU butwould hold additional charge of the programme.

15. NABARD would provide the managerial staff. The NPCU will be staffed with a DeputyGeneral Manager who will be the National Programme Coordinator and an Asst. General Managerwho will be the Asst. National Programme Coordinator. Similarly NABARD staff will be the StateProgramme Managers, Asst. State Programme Managers and District Programme Managers. NABARwill engage technical staff on contract basis. All new appointments would be on a contractual basis.Usual recruitment procedure would be adopted. It would include: (i) formation of a selection panel;(ii) advertisement in newspapers, circulation in all government departments and circulation to reputedNGOs; (iii) short-listing and interview; (iv) selection of the candidates. Other things being equal,women would be given preference in appointment. All these staff members would be engaged duringthe pre-implementation phase.

16. Supplementary Budget Preparation: NPCU would prepare a Work Plan and Budget for thepre-implementation phase and submit it to the CPSU-GOI. The CPSU would consolidate these workplans and include its own annual work plan and budget. This consolidated budget for per-implementation phase would be forwarded to the Finance Section of MWCD-GOI for makingnecessary arrangements for release of funds. Alternatively, MWCD-GOI may release ad-hoc paymentto an extent of 10% of the first year’s budget to fund pre-implementation activities.

17. Exposure visits: NABARD staff members are not yet exposed emerging trends in developingsustainable support structures for SHGs and upscaling methodologies. The programme would supportexposure visits by the NABARD staff to BAIF, MYRADA and Dhan Foundation. This exposure visit



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would enable the NABARD team to study: (i) the improvements made in SHG mobilization processeswith regard to cost recovery and exit strategy; (ii) training infrastructure and resources available withthem; (iii) financial intermediation through MFI; (iv) pros and cons of financial intermediation at thelevel of federations; and (v) enterprise development modalities employed by them. This visit wouldalso provide an opportunity to the NABARD team to rope in these NGOs to establish some CSCs inthe programme area to act as training models to build capacity of other NGOs.

18. Identification of Resource NGOs: As a part of the pre-start-up activities and exposure visit,NABARD would identify competent RNGOs that have developed large number SHGs and seek theirassistance in training new staff, preparing training materials and in working out a strategy forprogramme implementation. In addition, these large national NGOs may be entrusted with the task ofSHG mobilization and establishing CSCs in the programme districts. These CSCs are expected toemerge as training and best practices hub. NABARD would seek proposals from the RNGOs for thefollowing activities:

Training (approx 30 days) in SHG mobilization concepts, formation of support organizations,sustainability of support organizations, cost recovery concepts and their implementation, banklinkage, financial intermediation through support organizations, setting programme standardsand convergence with government programmes for Programme Managers, CommunityDevelopment Officers, Block Community Development Officers, Field NGO coordinatorsand Convergence Officers.

Training in enterprise development modalities and value chain analysis (approx 30 days) forEnterprise Development Manager, Enterprise Development Officers and Block EnterpriseDevelopment Facilitators.

Training of PIU Accountant, Block Community Accountants and CSC CommunityAccountants (approx 30 days) in SHG book keeping, book keeping at the SHG level,computerized accounting of SHGs, reading MIS reports of SHG accounts and auditing ofSHG accounts.

Training of CSC Coordinators (approx 30 days) in SHG mobilization, savings and creditschemes for intra-group lending, bank linkage, managing CSCs, evolution of CSCs intoorganizations owned and managed by SHGs, tracking performance of SHG by analyzing thedeviations as against programme standards and facilitating SHG to take up social andeconomic development growth paths.

Training for Community Organizers (approx 45 days) in participatory wealth ranking andidentifying poor, SHG mobilization methodologies, conducting meeting and savings andcredit schemes.

19. Most national NGOs with requisite experience do not generally respond to theadvertisements. It would be appropriate for NABARD to establish a team to visit large national NGOs(BAIF, MYRADA and Dhan Foundation). During this visit, the team would make an assessment ofthe ability and interest to provide required training support to the programme. In the event theseNGOs visited are interested in providing required training support, they may be asked to submit atechnical and financial proposal after providing the details of the training programme to be conducted,number of participants and duration. The Technical Proposal will have to contain the followinginformation:

Brief Information about the organization – establishment, legal framework, vision, majoractivities.

Financial Information about the Organization – total receipts and total expenditure during thelast five years, funding agencies and their contribution.

Qualification and Experience of core training staff. Infrastructure available for conducting training. Details of SHG related training programme conducted during the last three years.



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Proposed Training methodology proposed for each of the training programme includingcourse duration and course contents.

Proposed partnership with local NGOs / training institutions if any and the details related tosuch partnership especially for training of Area Coordinators and Community Organizers atthe programme area level.

20. The NPCU would undertake an assessment of the technical proposal and shortlist theResource NGOs. Thereafter, the financial proposal would be opened. The procurement of ResourceNGOs would adopt quality-based selection method. The SPMU would thereafter invite the short-listed RNGOs and negotiate a terms of engagement.

21. Identification of Field NGOs: The programme would adopt a two pronged approach toidentify Field NGOs. First, large national NGOs generally do not respond to the expression of interestadvertised by the programmes. During the exposure visits the NABARD staff would also assess thecapacity and interest of large national NGOs (BAIF, PRADAN, SEWA Lucknow, MYRADA andDhan Foundation) to undertake field level activities by establishing CSCs. It would be ideal if somelarge national NGOs could establish a few CSCs that would serve as training locations for otherNGOs. These NGOs would be invited to visit and programme area and prepare proposals forestablishing CSCs. Second, the programme would also call for expression of interest from the NGOsto work as Field NGOs. The Field NGOs are required to support a minimum of 150-200 SHGs thougha CSC established for the purpose. A Field NGO depending upon its capacity would be allowed toestablish more than one CSC. The procedure to be adopted for engaging the Field NGOs is providedin the Community Institution Development Working Paper.

22. Recruitment of non-core staff for SPMU, PIU and Block Office: The programme wouldadvertise, interview and select the staff required for different positions to implement the programme.This activity would be undertaken during the pre-implementation phase as considerable time isrequired to complete this process. All new appointments would be on a contractual basis. Usualrecruitment procedure would be adopted. Other things being equal, women would be given preferencein appointment. The SPMU would complete the staff selection procedures during the pre-implementation phase. The actual engagement would be after the programme becomes effective.

III. START-UP ACTIVITIES

23. Engagement of non-core staff of SPMU, PIU and Block Office: The other programme staffselected during the pre-implementation phase would be contracted immediately after the programmebecomes effective.

24. Establish SPMU, PIU and Block Offices: The programme upon recruitment of staff wouldestablish SPMU in the state capital, a PIU covering two programme districts in Bihar and a PIU foreach programme district in Bihar. In addition, Block offices would be established in each programmeblock

25. Engagement of Resource NGOs: The programme would engage the selected ResourceNGOs to conduct training of the programme staff employed and also the Field NGO Coordinators.

26. Engagement of Field NGOs: The programme would engage the Field NGOs to recruitpeople for establishing CSCs and to mobilize SHGs.

27. Preparation of Implementation Manual: NABARD is implementing a programme of thissize and nature for the first time. Therefore, it is necessary to prepare a manual detailing the strategiesand steps in programme implementation. This manual will have to be prepared and deliberated withthe stakeholders immediately upon recruiting core staff. This would provide an opportunity to



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internalize the best practices of SHG development and deliberate on the issues that might arise duringprogramme implementation.

28. Start-up Workshop - In cooperation with the GOI and IFAD, NABARD will organize aprogramme start-up workshop in Patna and Lucknow respectively after the IFAD Loan becomeseffective. The purpose of the workshop will be to explain the procedures related to programmeimplementation, including budgeting, accounting, reporting, loan disbursement and procurement.

29. Human Resource Development: Start-up activities would include a huge human resourcedevelopment effort. It includes training of the PIU, Block Office and CSC staff. The Resource NGOwould undertake this activity.

IV. COMMUNITY INSTITUTION DEVELOPMENT

30. Establishment of Community Service Centre (CSC): The programme would establish aCSC to mobilize 150-200 SHGs.The selected FNGOs would recruit staff required for managing theCSCs and a CSC would be established in a location that provides easy access to the 150-200 SHGs.The programme would provide all required equipments for the CSC.

31. SHG mobilization and Development: The staff of CSC would be responsible for mobilizingthe SHGs. The staff would conduct a survey of their service area, undertake wealth ranking, identifythe poor strata of the community and mobilize affinity groups. The SHGs would start savings andcredit and their operations would be monitored closely. The book keeping would be computerized atthe CSC level.

32. SHG Sustainability: The CSC would from the very beginning seed the concept of paying forthe services. The CSC would provide support services that would enable the SHGs to pay for theservices. The other SHG development activities are outlined in the Rural Financial Services workingpaper. The programmeme would pay for the operational costs of CSC on a declining basis and it isexpected that the CSC would become operationally sustainable in six to seven years.

V. GENDER MAINSTREAMING

33. The programme approach is one that where SHG women develop ownership of theprogramme, build their stakes and facilitate their engagement as “change actors” and certainly not as“beneficiaries” or targets of development interventions. The main approach is one that empowerswomen to take informed decisions about their own lives. The programme aims to facilitate the processwhere women learn from each other, explore alternatives collectively and become active agents ofchange guided by the FNGOs.

34. The Department of Women and Child Development (DWCD) of Government of India (GOI)would be the nodal agencies for implementation of the Programme. The state/district level capacitybuilding activities like Training on Gender for the project staff of the Field NGO will be done byResource NGOs like Mahila Samakhya. The legal aid training and counseling could be provided bySEWA Lucknow and Hamsafar. Life skill for community resource persons would be provided byVatsalya (based in Lucknow) and National level NGOs like Jagori and Nirantar would be engaged toorganize workshops at the district level with multiple stakeholders for advocacy related issues.

35. The situational analysis to formulate a gender strategy for target districts will be done byNABARD in both the states. Capacity building of local institutions like SHGs, PRIs on gender issueswill be done by Field NGOs. Introducing drudgery reduction technologies will be the responsibility ofPIU. Convergence with various agencies like BAIF and IIT, for demonstrating the technologies in theproject area will be done by PIU under enterprise development.



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VI. ENTERPRISE DEVELOPMENT

36. The enterprise component activities will begin with recruitment of Programme EnterpriseStaff at Central, State and field levels. This staff will assist the Programme Coordinators in identifyingcandidates for the Technical Resources Group and reputed NGOs with experience in enterprisedevelopment using value chain analysis and subsector/bds strategies.

37. At the same time Programme Enterprise Staff will receive training in value chain analysis andsubsector/bds strategy to allow them to interact more fully with the NGOs and to assist in theimplementation of enterprise activities undertaken through Innovation Fund grants.

38. The Innovation Fund will commence work from the second year onward making requests forconcept papers and proposals as well as funding relevant research on a variety of topics (refer toInnovation Fund working paper #10).

39. The first phase of enterprise activities will include value chain analyses of the target districtsand blocks to identify potential economic activities for further development. These selected activitieswill then be widely demonstrated through producer groups recruited from mature NGOs under thedirection of Innovation Fund grantees to allow for aspiring women entrepreneurs to make informedchoices of economic activities that best suit their interests, needs, skills, etc.

40. At the same time there may exist certain economic activities that are ready to be “fasttracked” in that the producers are already identified and the early interventions are quite clear;generally involving horizontal networking, market assessment and a marketing plan, with additionalbusiness services to follow. These “fast-track” enterprises can get underway within the first year.

41. By the third to fourth year the demonstrations should be mature enough for women to makechoices of their one enterprise interests and widespread enterprise development can take-off. Later inthe programme further horizontal networking will occur leading to the formation of small-scale andmedium-scale enterprises that move the primary producers farther up the value chain withcorresponding increases in incomes and economic security.

VII. RURAL FINANCE

42. The programme will adopt trainers’ training approach for training and capacity building ofNGO and Community service center staff. Resource NGO will comprehensively train the field NGOsand community service center staff. The CSC staff will train and capacitate the groups. Experts andoutside resource persons will be invited for specialized subjects such as insurance, enterprisefinancing. Exposure visits for the NGOs, CSCs and groups will be organised by the SPMU at the statelevel.

43. The Community service center (CSC) will monitor the group performance, enable linkagesfor financial services and procure other services for the groups. The NGOs and Community servicecenter staff will be trained in financial monitoring and delinquency management to enable them tomonitor the financial performance of the groups and micro enterprises. This training will be providedby Resource NGO/National NGOs like DHAN Foundation, BIRD etc.

44. Seed capital - The programme community development staff at PIU will carry out the ratingof the groups at the end of six months of their operation. Good working groups will be provided seedcapital by SPMU.

45. Community Asset Fund - Each community service center will be provided community assetfund of Rs.1.0 million to be released in two installments based on the work plan of the community



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service center. The community service center will provide one time short term loan to the groups inthe second and third year of the programme. On repayment by the groups, the community servicecenter with the support of PIU and external consultant will work out modalities of using the fund forcommunity asset leasing. The community service center will maintain a separate bank account for theoperation of this fund.

46. Supporting MFI - The SPMU with the input of Project Implementation Unit (PIU) andexternal consultant will identify MFIs operational in the district as well as in other parts of thestate/country and provide them the need based support to operate in the programme area. Theprogramme will fund the technical assistance needed for the MFIs either from the resource MFI orfrom a technical service provider. Micro Save, Trust Micro Finance and Intellicap are some of therenowned technical service providers in the region. The MFIs will also be provided training in thetoolkits of Micro Save. The SPMU will partially fund the opening of the branches and provide for theoperational expenses of the branch for the first two years. The SPMU based on reports from the CSCs,will provide incentives to the MFI for linking programme groups.

47. Business Facilitators (BF), will be engaged by the CSCs. The business facilitators willnetwork with livelihood field guides and community organizers and enable smooth flow of finance tothe entrepreneurs and SHGs. The programme will discuss and work out modalities of thisarrangement with management of the banks and enter into memorandum of understanding for thescope of work of the business facilitators. The bankers will be closely involved in selection and on thejob training of the BF. The BF will work under the guidance of the branch manager. The SPMU willfund the salary cost of the BF for four years on a tapering basis – full support for the first three years,which will be reduced to fifty percent in the fourth year.

VIII. MONITORING AND EVALUATION

48. The monitoring and evaluation related activities would be the core responsibility of theManager-M&E at SPMU and the MIS officer in the PIUs. Initially, the SPMU would engage aconsultant to design MIS formats. These formats would be used for data collection and would beconsolidated to monitor progress. The SPMU would also engage a consultant to operationalise RIMS.This would include finalizing RIMS Survey Questionnaire, deciding on a sample size, conductingbenchmark survey and data analysis. RIMS survey would be undertaken subsequently at mid-termand completion to measure the improvements made over time.



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ANNEX 2

LOCAL INITIATIVES AND PARTICIPATIONS

Government Departments:

1. The State Government departments such Women and Child Development Department,Scheduled cast and Scheduled Tribe Department, Department of Rural Development areimplementing programmes like Asha Bahu, Shisksha Mitra, Panchayat Mitra, National RuralEmployment Guarantee Act (NREGA) etc., some programmes implements mainly throughAnganavadi worker like Anganavadi Kendra (baby care centre), nutrition for women before and afterdelivery. These anganavadi’s are attached to the primary school due to lack of infrastructure facilities.In majority of cases the aganavadi workers are outsiders hence reaching the centre in time is aproblem. The SC and ST welfare departments have programmes like pension to widows, scholarshipsand subsidies, however to deliver these scheme there is shortage of required staff. These developmentprogrammes exclusively target the people as “beneficiaries” there is lack of coordination andcommunication between Government departments, PRIs and the Community and little participation ofpeople in the programme

2. Village groups are used as delivery mechanisms – when people are involved, it is not with aconviction that they are capable, but because working through people is mandated in the program.

NGOs efforts:

3. Both the states have a large presence of NGOs and more in Bihar with better experience.There is sudden emergence of hundreds of NGOs and civil society organizations in the past years dueto various schemes sponsored by the state government with a mandate that the scheme must have acomponent of community mobilization to be implemented through NGOs. But in target district thereis a lack of experienced and professional NGOs particularly in two northern districts of Uttar Pradesh.However few out side NGOs are contracted by the NABARD and WDC for formation of SHGs.

4. There are few NGOs who have worked with DRDA in formation of SGSY groups and laterdiscontinued due to contractual conflicts. SHGs are also formed under the Poorest Areas Civil Society(PACS) programme in some of the target districts in UP. In all the above mentioned programmes, theNGOs are functioning as “contractors” efforts or opportunities to incorporate the culture, values ofNGOs is lacking. The experience and understanding of most of these NGOs with regard toparticipatory development and community participation is limited to the particular programme.

5. The capacity of these NGOs in leveraging various schemes and identifying other social issuesof the area is poor. The NGOs involved in implementing schemes are heavily dependent ongovernment funds and do not seem to have any strategies for other complementary activities on theirown.

6. There are no effective platforms for development agencies to learn from each other or toresolve operational issues. Each NGO implements programmes by developing its own CBOs and as aresult several CBOs of different types have been formed in the same area by different NGOs. Thisresults also in members of one household become members in multiple CBOs. A few smallorganizations exist in each district which have the potentials to train the CBOs. However, theircapacities have to be strengthened to undertake SHG promotion in the project. Identifying andstrengthening these NGOs will be a major function of the project.



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Traditional Institutions and PRIs:

7. Traditional institutions have almost vanished in the area; however the traditional leadership iscontinuing; decisions related to village issues are discussed with the traditional leaders and whennecessary village meetings are called by the leader. Most of the traditional leaders are also membersof different political parties. The traditional leaders do not generally have equal concerns for all castesand class.

8. The PRIs are the primary local level institutions which are planning an increasing role.However due to party politics they do not bothered take initiatives to resolve the village disputes andeven when they do so it is usually in favour of the upper cast. The development concerns are not apriority among the PRIs; only little investment has gone to help to improve governance to be morevibrant and development oriented and to become proactive to keep up with fast moving changes intheir societies. Due to domination of political leaders there is little transparency in PRI functioning.The PRI are merely used by the line departments as to deliver their schemes.

9. The reservation for Backwards Castes (BC-27%) and Scheduled Castes (SC-23%) in thepanchayats has resulted in large number people from these communities being elected. In both thestates, seats are also reserved for women. UP has 33% and Bihar has 50% reservation for women inpanchayats. A large number of women are elected from SHGs to the panchayats in both the states.Many women are holding key positions like Block Pradhan and Village Pradhan and by all reports areperforming well. The degree of involvement of women in the Gram Sabha (open meeting in village) ishigher in Bihar than in Uttar Pradesh.

Existing community based organizations:

10. Thousands of groups, mainly men are formed under SGSY in both the States. Theunderstanding of an SHG is more of a saving and thrift group rather than an “affinity group” whichprovides space and opportunities for growth in confidence and skills leading to moral empowerment.Most of the groups having heterogeneous membership and they break up once they availed first creditlinkage from bank. The bank loan is generally divided among all the members or it is shared betweenthe two office bearers. In many groups one single activity is taken up for the whole group, so it maynot cater to the need of all the members. Group activity in general is only limited to savings and loans,political and social empowerment is not addressed. No efforts are made to address the issues ofgender disparity and gender relations. There are few women groups promoted under this project butthe men deal with the entire group activities in the name of the group. The financial management suchas lending money and bank transactions are managed by the husbands of the members of the group.

11. In Bihar, a number of Community-Based Organisations (CBO) such as Mata Samitee, Villageeducation committee, Jagjagi Groups for adolescent, Kishan Clubs, Yuva Dal, Village level disasterpreparedness committee etc., are promoted under various government sponsored schemes. But theexistence and functions of these CBOs at village level is not prominently visible.

12. Most of the “groups” are formed with the only objective of claiming the “subsidy” from thegovernment some of the groups have undergone trainings on skill up gradation and income generationactivities, with no emphasis on “how to” ground and manage these activities.

13. Most SHGs have not been oriented or enabled by their promoters to actively establish linkagewith various types of agencies and service providers. The agencies contracted to facilitate groups arewithdrawn once the groups are formed and the grading is completed. The agencies promoting groupshave not played an effective role in strengthening groups.



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14. Target approach in group formation has led to poor quality of groups; the strategy of forminggroups on the basis of affinity was not adopted. Efforts to develop capacity of the groups and theirmembers are limited. Most of the groups are not well versed with the fundamentals of group dynamicsand the advantages of working in groups. Most of the thrift activities are considered condition toobtain larger funding. However, a few good groups (that can qualify to be called Self-Help Groups)exist and the clarity on concept, commitment and group promoting skills of the SHG promotingagency is an obvious factor that contributed to the strength of these groups. These SHG promotingagencies acquired group development skills through NABARD and SWASHAKTI trainingprogramme. In contrast to most of the groups – these groups fared well on a range of organizationalparameters that included clarity of objectives, management of savings and credit, good bookkeeping,credit plus initiatives, rotation of representatives and overall gender empowerment. However, manypromoting agencies did not know that they could apply the same training inputs to groups formedunder SGSY.

15. There is no system to build the capacity of NGO field staff as well as the block level staffwho are facilitating the process of forming SHGs. The Banks have not made much effort either tocontact these groups or to recover the loan given partly because the back ended subsidy is held up bywith banks.

16. To summarize a much more focused and professional approach is required to help the ruralpoor identify various resources and opportunities and to build their confidence to make use of theseresources and opportunities to attain better living conditions and to change their social and economicstatus. There is much scope to improve the livelihood of the rural households in the rural areas and tobring them in to the mainstream of the development. The absence of appropriate local institutions toaddress the problems of poor especially the women is a major gap. The lack of pressure on localgoverning bodies, like PRIs, to deliver their tasks is a missing link.

Major Constraints:

Since the community has little or no involvement in planning and implementation ofGovernment sponsored developmental programmes, the sense of ownership in theseprogrammes is lacking. The space for community participation has to be incorporated;emphasis on promotion and strengthening of community based organization and theirnetworking is required.

The process of social auditing of constitutional bodies like PRIs is lacking in the community;there is no enabling environment or platform. The accountability of PRI functionaries islacking, they do not have enough knowledge of their roles and responsibilities and the rightsof the people, efforts to build the capacity of members especially of women are inadequate.

There is wide gap between the developmental departments and the community partly due tothe lack of accessibility of information at the community level. The project should addressand fill this information gap through setting up of appropriate institutions

The poor capacity of PRIs in managing the developmental programmes needs to beaddressed. Emphasis to be given to build the capacity of the PRI members with special focusto be incorporated in the project to address the PRI women members. The women Panchayatmembers of the area need to be motivated to join the SHGs; this would to build theircapacities on a regular basis. The SHG federation would act as suitable platform to supportthe women member in her efforts to lobby in the PRIs for transparency, equity and genderjustice.



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17. Conclusion: Though there are few approaches initiated by public and private agencies withthe primary focus of involving community as “partner” by mandate, in reality the target people aretreated as “beneficiaries”. However emphasis has been given for community participation throughforming as Community Based Organisations over the last few years.



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ANNEX 3

ENVIRONMENTAL SCREENING AND SCOPING NOTE

A. PROGRAMME OBJECTIVE, COMPONENTS AND AREA

1. The goal of the Women Empowerment and Livelihoods Programme in Mid-Gangetic Plains is theholistic empowerment of rural poor women and adolescent girls supported by supported by sustainableand improved livelihoods, in selected districts of the states of Bihar and Uttar Pradesh in line with thegoals of Government of India’s Eleventh Plan and MDGs. The primary objective of the WomenEmpowerment and Livelihoods Programme in Mid-Gangetic Plains is building and strengtheningcommunity level institutions for social and economic empowerment and enabling the target group to haveaccess to productive resources, social services and to build a sustainable livelihood base integrated withwider economy. The proposed programme will consist of three key components, namely,(a) Empowerment and community institutions development, (b) Livelihoods enhancement and enterprisesdevelopment, and (c) Project management. The components and sub-components of the programme aresummarised as follows:

Component A: Empowerment & Community Institutions Development

Sub-component A.1: Community Institutions Development sub-component provides supportservices in strengthening existing community organisations and also promoting new organisationswith training and capacity building using the services of national NGOs and also setting up ofcommunity service centres for cater to the needs of SHGs and creating their linkages with banks forlong term sustainability.

Sub-component A.2: Gender Mainstreaming sub-component ensures adequate training and lifeskills development to women and adolescent girls, sensitisation and awareness creation of theirrights, developing innovations in drudgery reduction to reduce physical labour in livelihoodsactivities etc.

Component B: Livelihoods Enhancement & Enterprises Development

Sub-component B.1: Enterprises development sub-component provides technical and financialsupport services to the women entrepreneurs in setting up of value-chain enterprises activitieswhich are both land-based and off-farm in response to market demands.

Sub-component B.2: Rural Finance sub-component provides capacity building and training toSHGs, NGOs and staff of the local bank branches and provides seed capital to SHGs, extendsequity fund support to enterprises development and promotes micro-finance institutions to cater tocredit requirements of the target group households.

Component C: Project Management

Sub-component C.1: State Programme Support Unit is responsible for planning, implementationand management of the programme activities at state level through a special management unit.

Sub-component C.2: Programme Implementation Units are responsible for the implementation,supervision, monitoring and day-to-day activities at district level through a number of communityservice centres that are being promoted by involving SHGs.

Sub-component C.3: Central Programme Support Unit is responsible for national levelcoordination, policy guidance, fund disbursements to state units and monitoring and evaluation



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B. PROGRAMME AREA

2. The Mid Gangetic Plains (MGP) possibly forms the largest ‘poverty patch’ on the Indian map,both in terms of area and even more so in terms of the size of the inhabiting population. The acute ruralpoverty in MGP is striking in the face of high fertility of its agricultural land and the immense bio-diversity of its vegetation pattern. Comparable estimates, relating to the year 1993-94, show that whilethe rural poverty ratio was 36.7 percent for India as a whole, it was much higher at 51.8 percent in MGP.

3. The functioning of its rural economy is also very traditional, thanks to the tenurial system ofPermanent Settlement, introduced during the colonial period. Although statutory base of thisunproductive tenurial system was removed after independence (in both Uttar Pradesh and Bihar), it wasnot able to alter the extremely inegalitarian land distribution pattern. Nearly 70 percent of the ruralhouseholds in MGP are either landless or own less than one acre of land. A large part of the land here iscultivated not by its owners, but by sharecroppers. Further, a very large number of agricultural holdingsare so small that their owners are unable to cultivate it using modern agricultural inputs. Land is theprincipal source of livelihoods in rural areas and it is, therefore, not surprising that the rural poverty ratiosare one of the highest in MGP. The very high population pressure on land coupled with the extremeinegalitarian ownership of land should be regarded as one of the important determinants of acute ruralpoverty in the region.

C. KEY ENVIRONMENTAL CHALLENGES IN INDIA

4. Key environmental challenges that India faces relate to the nexus of environmental degradationwith poverty in its many dimensions, and economic growth. The proximate drivers of environmentaldegradation are population growth, technology and consumption choices, and poverty.23 It is also a majorcasual factor in increasing and perpetuating poverty, particularly among the rural poor, when suchdegradation impacts soil fertility, quantity and quality of water, air quality, forests and fisheries. This inturn, affects their capacity to seek and retain employment, attend schools, and enhances genderinequalities24, all of which perpetuate poverty. Economic growth, in turn, bears a dichotomousrelationship to environmental degradation. Environmental factors are estimated as being responsible, insome cases for nearly 20% of the burden of diseases in India25. Institutional failures, referring to unclearor insufficiently enforced rights of access to and use of environmental resources, result in environmentaldegradation. Traditionally villages protect water sources, grazing grounds, local forests, fisheries etc., butthese are being degraded through the very process of development, including urbanisation, and populationgrowth. If such access to the community resources under weakened norms continue, the livelihoods of thecommunity suffer. Policy failures can emerge from various sources, including the use of fiscalinstruments etc. Inappropriate policy can also lead to changes in commonly managed systems, withadverse environmental impacts.

5. Environmental Standards Setting Environmental standards must reflect the economic andsocial development context in which they apply. These could be ensured only after a proper legislativeframework is in force. At present there are no standards or legislative norms to protect the environments.The existing legislative framework is broadly contained in the Environment Protection Act 1986, theWater (Prevention and Control of Pollution) Act, 1974, Water Cess Act 1977 and the Air Pollution Act1981. The other instruments are Indian Forest Act 1927, the Forest Conservation Act 1980, the Wild Life

23 Source: National Environmental Policy 2004, Draft, Ministry of Environment and Forests, GOI, New Delhi24 For example, as money for medical treatment is preferentially allocated to wage-earning men within a household.25 Source: Hughes et al 2001: Environmental Health in India: Priorities in Andhra Pradesh, The World Bank



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(Protection) Act 1072 and the Biodiversity Act 2003. There are several other enactments, whichcomplement the provisions of these basic enactments.6. The Ministry of Environment and Forests, GOI is responsible for protection, conservation anddevelopment of environment. It works in close collaboration with other ministries, state governments,pollution control boards and a number of scientific and technical institutions, universities, NGOs. Theweakness of the existing system lies in the enforcement capabilities of the various environmentalinstitutions, as there is no coordination among various Ministries and institutions. Lack of trainedpersonnel and comprehensive database delay many a development projects. Although overall quality ofEIA and their effective implementation has been improving over the years, the institutional frameworkstill remains poor and inadequate.

D. ISSUES IN WOMEN EMPOWERMENT

7. The differential impact of globalisation and the opening up of world trade on the livelihoods andwell-being of poor women is a particularly challenging area of concern. Many women are pushed intolow profit micro-enterprises with little prospect of growth or freedom from debt. It cannot be taken forgranted that the economic growth in India currently being experienced at the macro level automaticallytranslates into reduction of poverty at micro level, especially of women. The programme attempts atinvolving women SHGs in enterprises activities supported by extensive training and orientation.

8. Increases in women's incomes are small, and in some cases negative. Women often continue to beconfined to a narrow range of low profit and low growth activities where enterprise interventions increasemarket saturation, increase input prices and decrease prices for products. Women continue to beconsigned to a narrow range of low paid employment and enterprise development and regulation mayinadvertently weaken their ability to organize themselves into higher level more remunerative economicactivities. This is often the outcome of traditional “livelihood” programme that look at women’s work inisolation from the wider economy. The proposed programme, by and large, focuses on value-additionactivities in response to market requirement and demand so as to ensure sustainability of the activities.Accordingly the women’s groups and women entrepreneurs would be sensitized with regard to their needsand rights.

9. Women’s contribution to household incomes does not ensure that there is any challenge to genderinequalities within the household. In response to women’s increased (but still low) incomes men maywithdraw more of their own contribution for their own expenditure. Small increases in access to incomemay be at the cost of heavy workloads, increased stress and women's health. Women’s expenditurepatterns may replicate rather than counter gender inequalities and continue to disadvantage girls.Daughters may be withdrawn from school to assist their mothers. Women’s increased independence mayintensify tensions and violence at home. The proposed programme through gender mainstreamingactivities would ensure that girl children are allowed to continue with their education and the proposedenterprises interventions would result in income increases to women and provide for their economicsecurity.

10. Many young men see no future in remaining in villages and have either migrated or plan tomigrate to urban areas. Seasonal and permanent migration, largely by men and adolescent boys, is a majorfactor in the Programme districts. Women are left behind as household head with child rearingresponsibilities along with the need to earn wages. The programme provides for a number of options foremployment generation through the establishment of large and medium enterprises where youth couldfind themselves occupied and thus minimizing migration.



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11. Women from the SC/ST communities while extremely poor, have fewer barriers to workingoutside the home. Their poverty is characterized by the lack of organization of productive economicopportunities that are less labour intensive and more income generating than the agricultural labour theycurrently provide. Poverty is compounded by a very low rate of literacy. The programme is especiallytargeted to vulnerable, poor, rural women and the SC/STs could find opportunities of their developmentby organising themselves into SHGs and participating all training and capacity building interventions.

12. Access to health care to women is minimal and their nutritional well being is a serious problem.The Body Mass Index (BMI) is one of the indicators to assess the nutritional status of women. It is theratio of weight of person to the square of her height in metre. A BMI below 18kg/m2 indicate ChronicEnergy Deficiency (CED), caused by highly deficient diet. In UP 35% women suffer from CED, which isat par with national figure of 35.8%, while for Bihar the percentage of women below that BMI is38.7%.(source: Background papers on status of women in Uttar Pradesh and Bihar for MGP). Nutritionalproblems are particularly serious for women in rural areas, illiterate women, Muslim women, womenemployed and women from Scheduled Caste and Scheduled Tribes. These issues would be addressedduring the gender mainstreaming training and life skills development interventions.

13. Legal protection under the law is customarily lacking for most women. While under law womenhave the right to inherit, own and lease, customarily they do not come forward to claim these rights.Domestic violence among women is a common feature. In Uttar Pradesh, 22.4 percent of the womenreport to have been physically mistreated or beaten and again customarily they do not seek legal redress.This issue is being addressed through legal counselling at each Block and also by conducting advocacyworkshop.

14. High levels of women's participation in interventions such as micro-finance programme, dairyenterprises or handicraft training may not indicate a high level of need on the part of women or theeffectiveness of the intervention. Rather these are due to lack of interest on the part of men, lack ofalternatives for women and mounting pressures on women to increase their contribution to householdincomes. In credit programmes, women may merely be used as a vehicle by which men can get access toresources without having to put in the time and effort required for group meetings and/or a means bywhich programmes can conveniently access a docile and amenable clientele. The Enterprise developmentstaff are sensitised with regard to women’s role in development and in focussing activities that are largelyadvantageous to women.

15. Agro-chemical pollution is not regarded as a major environmental problem. While pesticide useis small, that in vegetables, fruit and other cash crop is generally high. An increase in pesticide use islikely, in particular for vegetables. In order to mitigate for potential negative impacts from pesticideapplication, the programme will support: in service training for extension staff, farmers and SHGs inIPM.

E. NORMS FOR ENVIRONMENTAL ASSESSMENT

16. As there are no standards or norms for Environmental Impact Assessment, the EIP of theproposed programme was carried out using the IFAD Guidelines for EIA.

F. ENVIRONMENTAL IMPACT ASSESSMENT

17. The environmental impact assessment carried out for the Women Empowerment and LivelihoodsProgramme in Mid-Gangetic Plains are summarized below.



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Component/Activities Negative impact Positive impact Mitigation MeasuresRequired

Component: Empowerment & Community Institutions Development

Community InstitutionsDevelopment

No direct impact The activity providestraining to womenSHGs and enhancestheir bargain power

No measures required;target groups areexposed toenvironmental impactsas part of training

Gender Mainstreaming No direct impact Awareness training,counselling andadvocacy workshops

No measures required;

Component: Livelihoods Enhancement & Enterprises Development

Enterprises Development Both land-based and off-farm enterprisesdevelopment activitiesare provided, no pressureon grazing lands, soilfertility not affected, noharmful industrialeffluents or discharges,no forest lands cleared;

Improves the economicwell-being of thewomen households andwomen SHGs; value-addition is emphasisedand existing resourcesuse is optimised;sericulture, makhanacultivation, fisheries aretraditional activities

No measures required;farmers use extensivelyorganic and compostsas manures;participating targetgroups are exposed toenvironmental issues aspart of training

Rural Finance No direct impact Women SHGsorganised and providedtraining and capacitybuilding to manage theirsavings andprogrammes

Good modelsdeveloped forreplicating them inother parts



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G. ENVIRONMETAL ANALYSIS OF THE PROGRAMME

Actions Affecting Environmental

Resources Values

Environmental

Impact

Mitigation Measures proposed or

Design Features

Responsible

Agencies for

Action

Relocation or migration of People Nil No dislocation or migration of

people involved

NABARD/PIU

Effect on downstream water use Nil No such effect

Disruption of existing water courses Nil

Soil erosions at construction sites Nil Existing land is used

Public health concerns Small Awareness created; training

provided

PIU, NGOs

Obstruction to grazing sites Nil No obstruction to grazing areas

Water-borne diseases Small Awareness created Districts, PIU

Felling of trees/forest clearing Nil No trees or forest cleared;

Local disputes Small Local and PRI institutions are

involved; group approach used

Damage to historic sites Nil All such sites are avoided

Lack of tenancy rights Major Encouraging policy makers to make

appropriate laws

NABARD

Pollution by agro-chemicals, pesticides Small Hazardous chemicals avoided;

farmers provided training;

demonstrations on compost making.

PIU, NGOs

Disruption of existing social systems Small Use and adoption of indigenous

systems in the design and effective

community participation; adequate

awareness creation and community

sensitisation

PIU, NGOs

Inadequate resources to meet demands Major Community awareness and

transparent scheme selection process

PIU, NGOs

Economic and social evaluations Small Community and SHG acceptable

activities adopted and selection

criteria employed

NABARD, PIU,

NGOs, SHGs



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H. REVIEW AND JUSTIFICATION OF ENVIRONMENTAL CATEGORY

18. IFAD Criteria for Environmental Impact Assessment: As all activities under the programmewill have no adverse environmental impact, programme should be designated as IFAD Category B –with no significant environmental impact. There are no existing standards for EIA in India.

Further Information Required to Complete Screening & Scoping

19. No further information is required.

Recommended Features of Programme Design to Mitigate Environmental Problems

20. The programme will promote the use of best practices, appropriate technology and indigenousknowledge for design and implementation of the programme’s activities in compliance with IFADGuidelines on EIA norms.

Components Requiring EIA and Scope of Assessment Needed

21. None of components of the programme requires EIA.

Requirements and Recommendations for Further NRM Activities during Preparation

22. Concurrent monitoring of environmental impacts during programme implementation wouldbe undertaken using easily verifiable indicators and a participatory approach.

Estimated Budgetary Requirements for EIA

23. As no EIA is required no budget has been provided for in the programme costs.

Summary

24. Overall the programme should not have any irreversible impact on the environment. Allinvestment and development proposals should be sustainable and not involve the use of largequantities of fertilisers or agro-chemicals, abstraction of large quantities of water, construction ofreservoirs or clearing forests or undesirable effluents. There are no construction activities of anynature under the programme that would impact the environment on any way. The programme willpromote the use of the existing supplies of water, mostly rainfall, and increase the production of mintoil, silk, milk and value-addition in a number of financial and economic activities. All farm-basedoperations would use compost and organic manure and as such no damage to environment isenvisaged. Fisheries and makhana cultivation would use existing water bodies and no new waterbodies or ponds are created. The proposed programme can be classified as Category “B” and does notrequire any EIA before implementation.

25. Although the majority of the Enterprises activities will have no environmental impact, theprogramme includes support to a number of dairy-based activities that may seem to put pressure onpasture and fodder in the programme area districts. Since these activities are going to be concentratedin and around existing cattle population areas and in areas where supply of feed and fodder is not aconstraint, the proposed dairy-based activities should not create any adverse impact. Moreover, theprogramme focuses on value-addition to generate incomes to the rural women. The programmeshould be designated as IFAD Category B – with no significant environmental impact. The existingpolicy guidelines of the Government of India have been consulted in preparing this screening andscoping note.

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