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MADHYA PRADESH

HEALTH SECTOR REFORM PROGRAMME

Programme Memorandum

Government of Madhya Pradesh

Government of India

DFID, UK

May 2007

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Table of Contents

Abbreviations and Acronyms

1. Summary

2. Project Details

2.1 Programme Description

2.2 Programme Appraisal

2.3 Lessons and Evaluation

3. Implementation

3.1 Management arrangements

3.2 Timing

3.3 Funding

3.4 Contracting and Procurement

3.5 Accounting and Audit

3.6 Monitoring and Reporting

4. Risks

5. Conditionality

Annex 1: Madhya Pradesh Health Sector Reform Strategy

Annex 2: Policy Milestones Matrix

Annex 3: Consultation record

Annex 4: Fiduciary risk assessment

Annex 5: Procurement Reform Plan

Annex 6: Project Header Sheet

Annex 7: Innovative practices in health introduced by the GoMP

Annexes on Economic, Social, Institutional and Political Appraisals are available on

request, as is the Medium Term Expenditure Framework.

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Abbreviations and Acronyms

ANM Auxiliary Nurse Midwife

AWW Anganwadi Worker

ASHA Accredited Social Health Activists

BCC Behaviour Change Communication

BJP Bharatiya Janata Party

CAP Country Assistance Plan

CBP Capacity Building Plan

CHC Community Health Centre

CSSs Centrally Sponsored Schemes

CM Chief Minister

DEA Department of Economic Affairs

DFID Department for International Development (UK)

DWCD Department of Women and Child Development

EAG Empowered Action Group (referring to the states with the poorest social

indicators)

EC European Community

GoMP Government of Madhya Pradesh

GoI Government of India

GSDP Gross State Domestic Product

HMIS Health Management Information System

HRM/D Human Resource Management/Development

HSRS Health Sector Reform Strategy

HSS Health Sector Strategy

IMEP Infection Management and Environment Plan

JBIC Japanese Bank for International Cooperation

MPHSRP Madhya Pradesh Health Sector Reform Strategy

MTEF Medium Term Expenditure Framework

MDG Millennium Development Goals

M&E Monitoring and evaluation

MoF Ministry of Finance

MMR Maternal Mortality Rate (or Ratio)

MP Madhya Pradesh

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NACP 3 National AIDS Control Programme Phase 3

NFHS National Family and Health Survey

NRHM National Rural Health Mission

PHC Primary Health Care (or Centre)

PHED Public Health Engineering Department

PPP Public Private Partnerships

PH&FWD Public Health and Family Welfare Department

PRD Panchayati Raj Department

PRI Panchayati Raj Institutions

RCH Reproductive and Child Health

RKS Rogi Kalyan Samiti (Patients Welfare Society)

SRS Sample Registration System

SWAp Sector-wide approach

TA Technical Assistance

TFR Total Fertility Rate

VAT Value Added Tax

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1. Summary

1.1. Madhya Pradesh (MP) is one of the poorest states in India with over 37% of its

total population of 60 million living below the poverty line. Scheduled Castes (SCs)

and Scheduled Tribes (STs), two of the most marginalised groups, constitute 35% of

the population and account for 60% of the poor. Gender-based discrimination is

reflected in the unequal sex ratio (916/1,000) against an already worrying national

average of 933/1,000 in 20011) and lower human development indicators for women.

Despite progress in recent years, MP still has among the highest rates of maternal and

infant mortality of all states in India. Total fertility rate and incidence of vector-borne

and communicable diseases are also much higher than average. Recently published

national statistics (National Family Health Survey (NFHS 3) indicated that MP had

the highest rates of under nourishment in children under 3 years (60%) in the country.

1.2. DFID has been working in MP since early 2000 and has a diverse portfolio of

programmes. DFID started working in the health sector in MP in 2004 through the

District Health Management and Sector Reform Programme (2004 – 2006). A recent

evaluation of this programme indicated that it has led to a number of gains including

encouraging innovative practices such as the Janani Express (emergency transport

scheme for expecting mothers) and the Completely Observed Meal Programme

(COMP) for pregnant women; promoting decentralised planning of resources and

closer working with other government departments and schemes.

1.3. This earlier project also led to the development of a comprehensive Health Sector

Strategy (Annex 1) for the Health Department, covering a period of 5 years, starting

from 2007. The main objectives of this strategy are reduction in: infant mortality,

maternal mortality, total fertility rate, making health outcomes and utilisation of

services more equitable, addressing malnutrition among children and reducing

morbidity and mortality from common communicable diseases such as malaria,

leprosy and tuberculosis.

1.4. The Madhya Pradesh Health Sector Reform Programme (MPHSRP) will support

six key elements of this reform strategy: improving equitable access to quality public

1 Indian census 2001

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healthcare services, accountability of staff, organisational development and human

resource management, adequacy of financial allocation and effectiveness of

expenditure, participation and regulation of the private sector and integrated service

delivery to reduce malnutrition. Progress milestones for each area, agreed with the

GoMP are at Annex 2.

1.5. The performance of the public health delivery system in MP faces several

constraints: vacancies of staff and infrastructure gaps, particularly in the poorest 10

districts and tribal areas; lack of drugs and other essential supplies at local levels;

weak implementation and monitoring systems; poor accountability of staff and low

staff motivation and management capacity. The poor quality and low funding of the

public health system has resulted in the growth of an unregulated and poor quality

private sector. For poor households, use of the private sector has led to high out-of-

pocket expenditures (often pushing people further into poverty).

1.6. The GoMP has taken a number of steps in the recent past to improve the

functioning of the health system and facilities, which have been recognised by the

Government of India’s (GoI’s) central line ministry, the Ministry of Health and

Family Welfare (MoHFW). MP has set the example for other Indian states in

promoting decentralised planning under MoHFW’s flagship programme, the National

Rural Health Mission (NRHM). MP has already signed a memorandum of

understanding (MoU) with the GoI, committing itself to: increasing public

expenditure on health, increased decentralization and community participation,

providing funding for community level health workers and granting functional

autonomy to local health facilities. MPHSRP will enable GoMP to meet some of

these critical commitments by reducing the resource gap.

1.7. It is proposed that a total of up to £60 million be provided to GoMP as sector

poverty reduction budget support (PRBS), including £56 million in financial aid and

£4 million as technical cooperation (TC) funds. The support (which amounts to 7%

of the state health budget) will be made available over five years starting in 2007/8.

This will help GoMP to undertake a series of critical measures such as upgrading the

health infrastructure, particularly in the 10 poor districts and tribal areas, increasing

the supply of essential drugs, augmenting staff resources, building staff capacity and

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financing innovative schemes such as vouchers for emergency transport and other

schemes for the poorest groups, encouraging public private partnerships, introducing

health insurance for the poor, establishing Auxiliary Nurse Midwife (ANM) schools

in tribal areas and developing Anganwadi’s (village nutrition centres) into Village

Health Centres.

1.8. The first annual tranche will be of £ 6 million to be disbursed in 2007-08;

subsequent annual disbursements will be in the range of £ 10 m - £ 12.5 m and based

on the projected financial need against the agreed milestones for the coming year. In

order to absorb any likely future adjustments in resources available to the programme,

we propose that 80% of each annual tranche be designated as core and 20% as

indicative. The core and indicative components of DFIDI’s disbursements for the

coming years will be communicated to GoMP by November in the preceding year, in

time for the state budget session. The tranches will be disbursed as follows:

2007 – 08 £ 6.0 million

2008 – 09 £ 12.5 million

2009 – 10 £ 12.5 million

2010 – 11 £ 12.5 million

2011 – 12 £ 12.5 million

1.9. GoMP has committed to a minimum of 10% year on year increase in public

expenditure on health until 2012. This would be supplemented further by support

from GoI programmes and other donor support. The Medium Term Expenditure

Framework (MTEF), recently finalised by the state, forecast a resource requirement of

£9262 million over the next five years to implement the health sector strategy. DFID’s

contribution to this will be approximately 5.5%.

1.10. The goal of MPHSRP is to improve the health status of people in Madhya

Pradesh – especially the poorest. The purpose is “increased use of quality health

services, especially by the poorest people and in underserved areas”. The purpose of

the project is consistent with DFID India’s Country Assistance Plan (CAP), the Asia

2 £926 million includes the State’s funds plus those received from Government of India for centrally sponsored schemes in health

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Director’s Delivery Plan and with Public Service Agreement (PSA) objective 2. It

forms an important part of DFID’s strategy to meet the health and gender related

MDGs in India. The programme will also complement DFID’s existing work in MP

on public sector reform, rural and urban livelihoods.

1.11. We judge that the MPHSRP is a well-conceived and realistic plan for health

sector reform in MP. DFID support in the form of untied budget support provides

much needed flexibility to deploy resources across the health sector thereby

increasing the effectiveness of overall public health spending, including particularly

central schemes such as Reproductive and Child Health Phase 2 (RCH2), and

ensuring greater allocation of resources for poorer districts and populations. Expected

outcomes include: reduction in maternal mortality from 379 to 220 per 100, 000 live

births and of infant mortality from 70 to 60 per 1000 live births; increased

institutional deliveries from 30 to 75%; increased childhood immunisation coverage

from 40 to 75%; reduction in total fertility rates from 3.1 to 2.1; reduction in under

nutrition rates in children under 3 years from 60% to 35%; and reduction in the

burden of communicable diseases, particularly malaria, TB and HIV.

1.12. The programme is rated as medium risk, with potential high impact. Key risks

include: weak planning and implementation capacity, non availability of critical

medical staff particularly for remote areas, staff resistance to change, lack of political

commitment, and medium fiduciary risk. We judge that these risks are manageable

due to: presence of strong political and bureaucratic commitment to health reforms,

realistic GoMP plans for strengthened financial systems and capacity building, and

agreed actions from a Fiduciary Risk Assessment (FRA). The potential returns of this

intervention are also high, in terms of enhanced outcomes for some of India’s most

vulnerable people.

2. Programme Details

2.1. Programme Description and Approach

2.1.1. The goal of the MPHSRP is to improve the health status of people in MP,

especially the poor and the underserved, and thereby accelerate the state’s progress

towards the MDGs. The purpose is to increase use of quality health services

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especially by the poorest people and in underserved areas. The MPHSRP has been

jointly designed by GoMP and DFID.

Problems to be addressed

2.1.2. Health and poverty indicators in MP are amongst the worst in India. 37% of the

population of 60 million people are below the poverty line. MP has the second

highest infant mortality rate of all states in India of 70 deaths per 1000 live births.

Maternal mortality is 379/100,000 live births compared to the national average of

300/100,000; 60% of children under 3 years are undernourished compared to the

national figure of 46%. The health outcomes of SC/ST populations and girls/women

are worse than those for other groups. MP is currently off track on the maternal and

child mortality MDGs.

Table 1: Health Outcomes: Madhya Pradesh in Comparative Perspective

Maternal

Mortality (per

100,000)

Infant Mortality

(per 1,000)

% of

Institutional

Deliveries

Undernourished

children under 3

All India 300 57 41 46

Madhya Pradesh 379 70 30 60

Maharashtra3 149 38 66 40

Kerala 110 14 100 29

Source: SRS/NFHS III data

2.1.3. Regional and social disparities within the state are striking. The rural infant

mortality rate (IMR) is 80 per 1000 live births, compared to 54 per 1000 in urban

areas and figures for SCs and STs are much worse (NFHS-2). The tribal areas

concentrated in the south east and south west, have worse indicators due to

remoteness and lack of access to medical facilities. Table 2 sets out health indicators

for specific population groups.

Table 2: Health Indicators for specific population groups (number of cases per

1000 live births

Background characteristic Neonatal

mortality

Infant

mortality

Child

mortality

Under five

mortality

3 Maharashtra is a medium performing state and Kerala is the best performing state in India, on health indicators.

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Scheduled Tribe 69.4 101.0 87.4 179.6

Scheduled Caste 68.2 101.5 60.7 156.0

Other backward class 58.0 92.3 52.3 139.8

Muslim 42.4 77.9 22.4 98.6

Source: National Family Health Survey (NFHS-2)4

2.1.4. The reasons for poor health indicators are poverty, social deprivation, illiteracy,

lack of information and inadequate access to health services. There are substantial

gender disparities and women and girls are distinctly worse off in terms of access to

food, education, income, and work and social status when compared to their male

counterparts. Existing social norms such as early marriage and early motherhood also

affect fertility behaviour and other health outcomes adversely. A significant

proportion of morbidity and mortality is due to the high incidence of communicable

diseases.

2.1.5. Health outcomes are also affected by weak and inefficient systems of health

delivery. The public sector institutions (including primary health centres (PHCs),

secondary and tertiary hospitals) are centralised, unaccountable, and supply-driven

with inadequate coverage of rural areas. The private sector, though less visible, is

largely urban-centric, unregulated and of highly variable quality. High quality care

from the private sector is usually unaffordable for poor people.

Government of Madhya Pradesh’s response:

2.1.6. GoMP’s economic growth rate and per capita income are below the national

average. Following the fiscal crisis in the 1990s (as with other Indian states), GoMP

has initiated reforms on several fronts including better governance, fiscal discipline

and consolidation. MP’s fiscal situation has improved over the last three years. It has

wiped out the revenue deficit and is on track to meet the GoI target of 3% fiscal

deficit in 2008/9. GoMP has been increasing financial allocations to health over the

last few years but resources allocated are still short of actual requirements.

2.1.7. GoMP is committed to improving health service delivery through improved and

equitable access to quality health care especially targeted at the poor. This is reflected

in the MP Health Sector Strategy (MP HSS) which sets out four key approaches to

achieve strategy outcomes:

4 NFHS III data for 2005-06 disaggregated by social groups are not yet available.

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• Programmatic – choice of basic package with focus on needs of the poor

and vulnerable, provision of physical infrastructure and drugs, especially

in poorer regions, effective referral system, approaches to resource

allocation, communication strategies, and contracting for service

provision.

• Governance – Changing institutional arrangements (decentralization,

community participation, hospital autonomy, public private mix) to

improve responsiveness and accountability, improved capabilities for

policy making, planning, financial management and procurement, health

information systems, convergence with other determinants of health, and

stewardship of the private sector.

• Organisational – Reorganising of health services at the state and field

level, skill-mix and skill upgrading, human resource development,

adequacy of manpower.

• Health Financing - raising public expenditure on health, reducing

financial barriers to accessing basic health services, risk pooling

mechanisms for the poor and better targeting of resources.

2.1.8. MP was one of the first states to give limited financial autonomy to hospitals by

permitting them to retain user fees. The money thus collected is used by the Rogi

Kalyan Samiti (RKS – ‘patient welfare society’), which includes the senior medical

officials and local representatives, for better maintenance of facilities.

DFID Approach and Use of Resources:

2.1.9. To support GoMP in this programme of reforms, DFID will focus financial and

technical support on six priority outputs of GoMP’s health strategy:

i) Equitable access to quality public healthcare services improved

2.1.10. GoMP will ensure that the infrastructure and staffing requirements are met to

agreed standards, especially in 10 of the poorest districts and tribal blocks. GoMP has

initiated innovative approaches to recruit local talent to resource health centres and is

considering incentive mechanisms to retain talent. ANM training schools will be

established in tribal areas to encourage recruitment of tribal women into the ANM

cadre, with innovative financing mechanisms to attract participation of tribal

communities in this process. Support to participatory planning for health and related

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services, will lead to more appropriate and responsive service delivery. A

comprehensive monitoring and evaluation system will be established with

disaggregated data to track progress of the reforms, particularly in remote areas and

groups such as the SCs and STs.

2.1.11. Financial barriers to accessing health services have been identified as a major

constraint in MP. GoMP plans to test out ways to provide financial protection to the

poor to cover their large out-of-pocket expenses. DFID will work with GoMP to find

ways of supporting this.

ii) Accountability of health services improved

2.1.12. Systems will be developed for health service planning and monitoring,

together with mechanisms to make services more accountable to the population

groups they serve. Health committees will be set up at village, block and district

levels to ensure increased local ownership and accountability. Special efforts will be

made to ensure representation of the poorest groups and women in these committees.

GoMP will provide capacity building support to these health committees.

iii) Organisational development & human resource management systems

strengthened

2.1.13. A Strategic Planning Cell will be established within GoMP’s Department of

Public Health & Family Welfare. Human resource management systems (HRM) will

be strengthened through activities such as establishing a comprehensive database of

existing staff, institutionalising a transparent staff transfer and posting policy and

undertaking a cadre review. GoMP will also implement detailed reforms on

procurement and other issues as outlined in the Fiduciary Risk Assessment (FRA) risk

mitigation plan.

iv) Adequacy of financial allocation and effectiveness of expenditure

improved

2.1.14. Improved financial management systems will be developed to ensure

alignment of actual spend with budgeted expenditure, to keep the focus of spend as

planned on primary and secondary care, and to develop and implement criteria and

mechanisms to target resources to remote and under-served areas. The districts will

be mapped based on a composite health index (CHI) and the worst performing 10

districts will be selected for special focus for the next five years.

v) Participation and regulation of private providers in achieving public

health goals

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2.1.15. Dependence on the private sector for both minor and major ailments is high in

MP, particularly in rural areas. GoMP will focus on strengthening the regulation and

quality of services provided by the private sector, and will enhance the role of elected

local bodies in monitoring and holding providers to account for delivering better

quality services to the poor. The existing pilots for public-private partnerships (PPP)

in emergency transport and other services will be expanded to other areas. A PPP Cell

will be established within the Public Health and Family Welfare Department

(PH&FWD) to act as a focal point for managing PPPs.

vi) Integrated service delivery to reduce malnutrition and improve child

health.

2.1.16. GoMP will strengthen working between the Department of Women and Child

Development (DWCD), PH&FWD and the Panchayati Raj Department (PRD) at all

levels. DFID will provide technical assistance to DWCD to upgrade skills of, and

establish career progression for, Anganwadi Workers (AWW – village nutrition

workers) to develop into Auxiliary Nurse Midwives (ANMs). A Monitoring and

Evaluation System will also be set up. During the first year, GoMP will develop a

three year Action Plan based on its recently published state nutrition policy including

a Medium Term Expenditure Framework. Based on the outcome of these plans, DFID

will consider broadening the scope of our investment programme to cover DWCD

from the second year onwards.

Beneficiaries:

2.1.17. The programme will directly benefit the entire population of 60 million people

in MP, but in particular the 23 million poor and disadvantaged who suffer the greatest

burden of ill health. There will be a special focus on improving the health outcomes

for population groups located in the 10 poorest districts, and for scheduled castes and

tribes whose health outcomes are the worst.

2.2. Programme/Technical Appraisal

Background

2.2.1. Over the last few years, GoMP has taken a number of steps to improve the

functioning of the health system and facilities, which have been recognised by

Government of India’s (GoI’s) central line ministry, the Ministry of Health and

Family Welfare (MoHFW). MP has set the example for other Indian states in

promoting decentralised planning under MoHFW’s flagship programme covered

under the National Rural Health Mission (NRHM). MP has already signed a

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memorandum of understanding (MoU) with the GoI, committing itself to: increasing

public expenditure on health, increased decentralization and community participation,

training and funding community level health workers (ASHAs). This programme will

support GoMP to deliver these targets.

Fit with Government of India (GoI) policy

2.2.2. The reform strategy of MPHSRP is closely aligned with the key directions of

the Government of India’s National Rural Health Mission (NRHM) and the National

Health Policy. This includes increased public funding for the health sector,

decentralised village and district level planning involving Panchayati Raj Institutions,

convergence of vertical health programmes, and a stronger focus on equity in resource

allocation for health.

2.2.3. HIV prevalence in MP is currently low, but there is risk of greater transmission

of the virus. MPHSRP will help MP to implement the framework set by GoI’s

National AIDS Control Programme Phase 3 (NACP3) which is supported by DFID at

the national level and implemented through the MP State AIDS Control Society. In

particular, the MPHSRP will support MP to strengthen linkages between NACP3 and

broader health services, for example through provision of HIV testing for people with

TB, provision of treatment for sexually transmitted infections, and promotion of HIV

behaviour change counselling and HIV testing through health services.

Fit with DFID policy

2.2.4. This programme is consistent with DFID India’s CAP and contributes towards

meeting health and gender-related MDGs in India and DFID PSA objectives. The

approach responds to White Paper 3 in enabling the State service providers to address

key challenges and accelerate progress towards the MDGs. DFID India’s Health

Information Note (approved by the PUSS in November 2006) sets out the rationale

for our policy of working through both national and state governments.

Working with other development partners

2.2.5. GoMP and DFID have worked closely to build consensus amongst various

stakeholders within the state to develop the health sector reform programme. The

functional group of Development Partners (‘Donor Partner Technical Assistance

Group’), consisting of members from UNFPA, UNICEF, JICA and EC were

consulted during the design process.

Approach

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2.2.6. Experience from various sector reform programmes by DFID and other

development partners in other countries suggest a need to move away from inputs and

focus more on outputs and outcomes. MPHSRP, designed on the basis of an agreed

health strategy, a milestones matrix and an MTEF, has a clear focus on outputs.

Sector Budget Support is a relatively new aid instrument for GoMP. However, key

officials in the government recognise the merits of this instrument and welcome the

flexibility of use that goes with it.

2.2.7. The Health Sector Strategy (HSS) provides the overarching context within

which DFID will provide this five year support. On going policy dialogue with

GoMP will help ensure a programme focus towards the poor, especially in remote and

interior areas. Other areas of focus will include governance issues, health sector

management systems and convergence with nutrition, water and sanitation.

2.2.8. DFID’s technical support will be used to strengthen capacity, accountability

and responsiveness at state and district levels to implement and sustain reforms.

DFID support will also be used to strengthen M&E systems and improve human

resource and financial management systems. MPHSRP will play a key role in

supporting GoMP to evaluate and scale up various innovative schemes piloted in the

state. The Strategic Planning Cell that will be set up within the department and the

State Health Systems Resource Centre will also be supported through this programme.

2.2.9. The HSS recommends prioritisation of resources not only in terms of activities

but also poorer regions and districts. PH&FWD will develop a resource allocation

framework to allocate resources to districts based on the Composite Health Index and

absorptive capacity.

Key stakeholders involved in design

2.2.10. MPHSRP has been developed through wide ranging consultations with

GoMP’s PH &FWD, the state’s finance department and the DWCD. DFID also

consulted civil society organisations such as the Urban Resource Centre and

development partners through the Donor Partner Technical Assistance Group.

Economic Appraisal

2.2.11. MP has grown at 4% over 1993-2006, less than the national average of 6%.

GoMP enacted the Fiscal Responsibility and Budget Management Act in August

2005. It has reduced its revenue deficit and is on track to bring down its fiscal deficit

to 3% of GSDP by 2008-09, in line with GoI guidelines. However, the resource base

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in MP is low and competing demands from other sectors reduce GoMP’s ability to

raise health expenditure, which is currently (2005/6) 3.5% of public expenditure and

0.93% of GSDP. Per-capita public health expenditure is around INR 132 or less than

4 US$: one of the lowest in the country. Not surprisingly, National Health Accounts

for 2001/2, show private health out of pocket expenses at 85% of the total expenditure

incurred on health. There is scope for significant increases in volumes as well as

effectiveness and efficiency of public expenditure. The fragmented institutional health

framework constrains GoMP’s ability to comprehensively plan, budget and judge

overall effectiveness.

2.2.12. MPHSRP will support reforms not funded through other sources. GoMP’s

MTEF, which will be revised annually, estimates a sustainable resource envelope and

matches this to the costed health strategy. It shows health expenditure increasing to

4.3% of public expenditure by 2011-12. GoMP will increase budgetary allocation to

health from its own resources by 10% year on year, with an additional increase for

each percentage above 5% in inflation. GoI allocations will increase, mostly off-

budget, through national programmes such as the NRHM and NACP III.

2.2.13. The percentage of public health expenditure going to primary services is

appropriate at 57% and will be maintained. However, there are issues that undermine

effectiveness and efficiency of expenditure, such as significant absenteeism of staff in

public health facilities, especially in remote and tribal areas, and inadequate planning

and budgeting capacity. The MP HSS proposes to deal with the burden of out-of-

pocket expenses on the poor by financing of emergency referrals (by meeting

transportation costs) and assisting poor people through insurance cover for health

services. More generally, an improved public health service across the board should

result in much reduced out of pocket expenses for private healthcare.

Social Appraisal

2.2.14. In MP and in India a disproportionate number of deaths occur amongst girls,

ST and SC communities. MPHSRP will address inequities in health outcomes and

health provision by focusing on the 10 poorest districts and tribal blocks and by

targeting the marginalised groups within all districts. National NFHS3 data shows that

girls, tribals and dalits have worse infant and child mortality indicators than other

groups. Three out of every four tribals in India are estimated to be in the poorest two

economic quintiles. Tribal human development indicators have been compared with

those of the poorest countries in Sub Saharan Africa. Analysing trends in NSS data,

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the Human Development Institute predicts that in 2015 the incidence of poverty

amongst tribals will be 37.9% which is the same as the all India figure was in 1993-

94.

2.2.15. The programme will have a significant impact on the tribal districts, most of

which count amongst the poorest in MP. The programme will address the problem of

non-availability of staff and medical facilities in these areas by strengthening the

infrastructure and developing ANM Training Schools in these Districts. This strategy

will increase the accessibility, encourage local recruitment and enhance retention of

staff and reduction of absenteeism. It will also provide much needed jobs, incomes

and status for women from tribal communities. The long distances from functioning

health facilities mean that tribal women currently face higher costs in accessing

emergency obstetric care than their counterparts. There is a strong case for exploring

ways to increase the Janani Suraksha Yojana (JSY) allowance to women in remote

under served locations to compensate for increased transportation costs.

2.2.16 Dalits (SCs) and girl children in MP have poorer health indicators than the rest

of the population but are more evenly distributed geographically. The adverse sex

ratio indicates discrimination at household level. Girls are less likely to be well

nourished or bought for life saving treatment than their brothers. NFHS3 shows that

only 35% of Dalit women had institutional deliveries nationally. Dalit children are

also less likely to be immunised than their non SC/ST counterparts and are less likely

to have received life saving treatments. The reasons for their exclusion from health

services are more complex than remote location and require attention to provider

attitudes and behaviours. Issues of “untouchability” still influence provider

behaviour. The reform programme will strengthen the monitoring and evaluation

system to ensure that progress on various process and outcome indicators is tracked

and disaggregated by sex and socio-economic groups.

2.2.17. Two key challenges for this programme will be: first to reallocate scarce

resources to districts and blocks that are at present deprived and under served and

secondly to increase access for the poorest women, girls, dalits and tribals to health

services. This will require representation of underserved communities on decision

making committees at the District, Block and Gram Panchayat level. PRIs and SC/ST

and women members of PRIs, in particular, will need training if they are to be

empowered to monitor and hold staff to account. Development of risk pooling

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mechanisms and social insurance schemes are important components of the

programme.

Institutional Appraisal

2.2.18. The MPHSRP is sound and is implementable in the current institutional and

policy context. The policy context for reforms in the health sector is set by:

• Political acceptance that health and education sectors should get priority in

resource allocation.

• Increased emphasis on devolution of powers to decentralized governance

structures, and

• A realization within government that the major problem with the working of

the public health system is related to the overall governance of the sector.

2.2.19. MPHSRP is fully aligned with NRHM and RCH2, with an emphasis on

improving the overall governance of the public health system to make it more

responsive and accountable. The programme rightly focuses on organisational

restructuring, reform of human resource management systems, improved monitoring

and evaluation, strengthening public health infrastructure in focus districts and closer

working with DWCD and water and sanitation departments. Successful

implementation of these measures will require buy-in of all stakeholders and careful

sequencing. The organisational reforms and changes in deep rooted HR practices will

be slow and may invite opposition of staff and political classes. As such, the

programme will need to be led by the top political leadership.

2.2.20. The poor institutional capacity to plan and manage complex reforms will be a

constraint. The programme, however, makes provisions for strengthening capacity at

all levels. It will support reorganisation at the state level to bring in requisite skills for

strategic policy making and for overall management. State level training institutions

will be strengthened (and new schools set up) to ensure staff at all levels receive

training. District offices will be reorganised and strengthened for better planning and

management of health facilities and technical assistance will be provided for

preparation of evidence based and responsive district health plans. The programme

will support capacity building of Panchyati Raj Institutions (PRIs) at all levels.

2.2.21. We assess that critical governance issues have been adequately addressed and,

if implemented successfully, will result in delivering a responsive, efficient and

accountable health system in the state.

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Political Appraisal

Political Support for Reforms

2.2.22. The state is currently ruled by the Bharatiya Janta Party (BJP), one of the two

major national parties. The Chief Minister is young and dynamic and has strong

support from the central party leadership and from the state legislature. This increases

the prospect of political stability. Elections to the state assembly are due in 2008. The

current government is committed to enhancing expenditure on development. Public

expenditure on social services (including health, education and social welfare) has

increased from 5.27% of GDP in 2003/4 to 5.82% in 2005/6, reflecting the

development orientation of the government.

2.2.23. Overall, the political dynamic of the state is favourable to reform of the health

sector. However, changing the political mind-set to base resource allocation decisions

on rigorous performance data will take continuous engagement. It could be difficult to

ensure that resource allocation priorities are altered in favour of poorer districts as this

may weaken the ability of the political levels to offer patronage. Many proposed

changes in HR policies (transparent transfer policy, Cadre reviews, performance

linked career progression) could face political resistance. Continued support from the

highest political levels will be required to ensure implementation of these difficult

reform measures.

Voices of the Poor and the Policy Processes

2.2.24. The programme will support involving the community in planning for and in

management of service delivery at the local level. The PRIs or locally elected

governments, will be involved in preparations of district health plans which should

help in making these more responsive to local needs. Community monitoring of

services and client satisfaction surveys will improve the accountability of the system

and service providers and should also generate demand for services. However, the

policy making processes at the state level are still exclusive with very little

consultation with civil society.

2.2.25. Overall, the policy context at the national level, fiscal stability, the demand for

performance improvements in public expenditure, and the grain of state level politics

are all key forces that support the reform programme.

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Environmental Appraisal

2.2.26. Environmental impacts will be widely variable in a programme of this scale and

design. Health and environmental risks arise out of poor infection control and

insufficient environmental management practices. Health risks include the need for

potable water, better air quality, improved sanitation, reduction of mosquitoes, other

disease vectors; all of which impact on the morbidity and mortality profile. The Health

sector reform plan has initiated fundamental analysis of the causes of morbidity and

mortality in the population and has explored multi-disciplinary and multi-institutional

mechanisms by which these issues will be addressed.

2.2.27. Environmental risks include the impact of project-supported interventions, such

as treatment and disposal of bio-medical waste, design and construction of basic health

infrastructure, environmental contamination from medicines/treatment processes, and

sensitisation of human resources to environmental concerns. Appropriate sensitisation

and education can prevent or mitigate these problems. The environmental health

scoping study has been integrated within the GoI’s Infection Management and

Environment Plan (IMEP). IMEP envisages baseline data on medical products, medical

facilities and surveillance systems for mitigating all relevant solid and liquid waste

streams from health facilities through the effective application of GoI’s Biomedical

Waste Management Rules. It also looks at opportunities for green housekeeping and

reduction of environmental impact in health sector facilities.

2.2.28. GoMP proposes to adopt IMEP in the state to cover all health care facilities for

effective management of health and environmental risks in these facilities. The MP

State Health Mission will appoint an IMEP nodal officer and ensure that budgetary

support for IMEP is integrated in the Programme Implementation Plan. Training needs

assessments and awareness building workshops will be conducted in districts.

2.3. Lessons & Evaluation

2.3.1. DFID supported GoMP’s District Health Management and Sector Reform

Programme from 2004 to 2006. The project had three distinct and complementary

components (a) development of coherent and pro-poor sector strategy approved by

GoMP; (b) implementation of district planning process through out the state; and (c)

improved access to basic services affecting health. A recent evaluation of this

programme indicated that it has led to a number of gains including encouraging

innovative practices such as the Janani Express (emergency transport scheme for

21

expecting mothers) and the Completely Observed Meal Programme (COMP) for

pregnant women promoting decentralised planning of resources and stronger working

with other government departments and schemes. GoMP has successfully

implemented a number of innovations under this programme (details are at Annex 7).

The support also helped GoMP to prepare a comprehensive Medium Term Health

Sector Strategy and Medium Term Expenditure Framework, both prerequisites for

MPHSRP.

2.3.2. In designing MPHSRP, DFIDI has taken into account its experience in

implementing the Health Sector Budget Support programme in West Bengal. The first

two years of this programme have demonstrated strong ownership and oversight of

the health sector by the Government of West Bengal, and better donor coordination in

support of the reform process.

3. IMPLEMENTATION

3.1. Management arrangements

3.1.1. The strategic leadership for the programme will be provided by GoMP’s

Finance Department. The Principal Secretary (PH&FWD) in GoMP will lead on

operationalising the Programme. S/he will be assisted by the Commissioner,

Directorate of Health Services, PH&FWD and a core group. A Strategic Planning

Cell (Core Group) headed by a Commissioner will be set up to support the Principal

Secretary to manage implementation, and bring together Development Partners.

DFID will support PH&FWD to contract in additional management and technical

support to implement the strategy. Progress against the milestones will be tracked

through joint annual reviews, with participation from the GoI, DFID, Unicef, UNFPA,

JBIC and others.

3.1.2. A Task Force, chaired by the Chief Secretary, GoMP, and with Principal

Secretaries of the Finance Department, PH &FWD, DWCD, Public Health

Engineering Department (PHED), PRD and Tribal Welfare Department as members,

will provide oversight of convergence activities and monitor outcomes of the

MPHSRP.

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3.2 Timing

3.2.1. The programme will be effective from the date of Exchange of Letters (EOL).

The programme aims to provide support in five annual tranches beginning Financial

Year (FY) 2007/08, ending FY 2011/2012.

3.3 Funding

3.3.1. A total of up to £60m is being sought as DFID support for MPHSRP. This

will consist of up to £56 million of financial aid and £4 million of Technical Co-

operation funds.

3.3.2. Of the FA component, £2 million will be used by PH&FWD to procure local

consultants. DFID financial aid will pass from the GoI Department of Economic

Affairs to GoMP’s Finance Department and then to the budget of the PH&FWD.

Annual tranches will be separately assessed and disbursed by DFID based on approval

by the Director, South Asia. GoI will appoint Crown Agents Financial Services

Limited to manage the financial arrangements in respect of this FA component.

3.3.3. The Technical Co-operation funds will be available to support implementation

of the strategy, specifically to fund areas where PH&FWD, are unable to identify

resources locally. During the first year, DFID, and PH&FWD will agree upon an

action plan on the utilisation of this TA prior to incurring expenditure.

3.3.4. Based on our assessment of needs and available aid framework, we propose the

following schedule of tranches, which will be revised annually based on progress, and

estimate of need.

Table 7 : Annual DFID tranches (to be revised annually)

Tranches Year I Year II Year III Year IV Year V Total

FA: Core 6m 10 10 10 10 £46m

FA: Indicative 2.5 2.5 2.5 2.5 £10m

TA £4 million over five years £4m

Total £60m

3.3.5. There will be no DFID-funded assets under the programme.

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3.4. Contracting and Procurement

3.4.1. For the financial aid components, contracting and procurement will be

undertaken by PH&FWD in line with GoMP norms. The Fiduciary Risk Assessment

Study (Annex 4) reviewed GoMP’s contracting and procurement procedures and

DFID India’s Contracts and Procurement Advisory Section (CaPAS) have advised on

the procurement reform plan to strengthen these systems. GoMP has agreed to the

action plan (Annex 5) and the Madhya Pradesh Laghu Udyog Nigam (MP Small

Scale Industries Corporation responsible for health procurement) will be further

strengthened and will function as the nodal agency responsible for the procurement of

drugs and equipment.

3.4.2. DFID will manage the TC fund component through a contracted arrangement,

and procure any technical assistance required using standard DFID procedures.

3.5 Accounting and Auditing

3.5.1. GoMP will account for the financial aid through standard GoMP procedures,

including annual audits conducted by the Comptroller and Auditor General, whose

reports are presented to the legislative assembly. A fiduciary risk assessment has been

carried out as part of the current support to the MPHSRP. This has indicated that

auditing systems within the state and PH&FWD will need to be strengthened. GoMP

will undertake the following activities, laid out in the milestone matrix:

• An internal assessment of under spending and implementation measures to

address these;

• Implementation of the IT Enabled Financial System Plan developed for

improved financial management of on and off-budget items at the state and

district levels;

• Training on improved financial management for state and district level staff.

3.5.2. GoI/GoMP will exempt UK Government and the Programme from the costs of

any taxes, fees, VAT, import or customs duties imposed directly or indirectly by

GoMP on all goods and services provided.

Any providers of Technical Assistance will account for funds they manage in

accordance with DFID accounting rules for consultants.

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3.6. Monitoring and Reporting

3.6.1. Overall progress will be tracked against the targets set out in the Health Sector

Strategy. The table below sets out the targets for key health indicators:

Table 8: Madhya Pradesh progress on key health indicators and targets for 2012,

compared to all-India targets.

HEALTH

INDICATOR

SRS/ NFHS

II

1998-99

Baseline

SRS/NFHS

III

2005-06

Strategy

outcome

2011-12

India 10th

Plan/NPP/M

DG Targets

and years

1. Maternal mortality

Ratio (per 100,000 live

births)

498

379 (SRS

2003)

220

109 (2015)

2. % Institutional

Deliveries

22 30 75 (2009) 80 (2010)

3. % Deliveries with

Skilled Birth Attendant

28.9 37.1 90

4. Infant Mortality Rate

(per 1000 live births)

88 70 60 30 (2010)

5. Malnutrition among

children (under 3) in %

54 60 35

6. % Children

immunized against 6

diseases

23 40 75 100 (2010)

7. Total Fertility Rate

(TFR)

3.4 3.1 2.1 2.1 (2010)

3.6.2. In addition to overall progress in the State on the key indicators in Table 8,

disaggregated data will be produced regularly to monitor progress amongst the most

disadvantaged groups including ST and SC. This will be used to inform planning and

investment in subsequent years to ensure a narrowing of the inequities in health

between these and other population groups.

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3.6.2. The policy Milestones Matrix will form the basis on which overall progress will

be assessed at annual joint reviews. Development Partners will also be invited to join

review missions. The purpose of these reviews will be to monitor progress made

against common milestones, and to agree milestones for subsequent tranches. At the

block and district level, the monitoring role of the District and the Panchayat Health

Committee will be strengthened. This will result in PHCs and CHCs being regularly

supervised, and should enhance public participation.

4. Risks

4.1. The programme is judged to be of medium risk with the potential of high return.

Key risks include: fiduciary, weak planning and implementation capacity, non

availability of critical medical staff particularly for remote areas, staff resistance to

change and potential change to GoI policies.

4.2. We judge that these risks are manageable due to: presence of strong political and

bureaucratic commitment to health refoms, realistic GoMP plans for strengthened

financial systems and capacity building, and agreed actions from a Fiduciary Risk

Assessment (FRA).

A. Fiduciary risk

4.2.1. Medium probability, high impact: The programme of support is viewed to be

of medium risk. Key risks revolve around quality and targeting of expenditure,

monitoring, accounting and auditing of funds, procurement, and internal government

controls. The detailed assessment is at Annex 4.

4.2.2. Mitigation measures have been agreed with the government to address these

risks. Many of these mitigation measures are already a part of the larger reforms that

are being undertaken by GoMP to improve the working of the Public Financial

Management and Accountability (PFMA) system in the state as a whole. These

measures include preparation of performance budgets, preparation of a budget manual

and IT based Financial Monitoring and Information System (FMIS), strengthening

staffing of accounts and finance functions in the health department at all levels. The

GoMP will also focus on standardization of financial procedures in health societies,

enactment of a procurement law and establishment of an oversight body. Institutional

mechanisms for follow up on audit reports will be strengthened. Fiduciary risks will

be reviewed regularly through out implementation.

B. Inadequate implementation capacity to address critical reforms

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4.2.3. Medium probability, high impact: There is a risk that GoMP will not be able

to build/deploy adequate capacity to implement reforms. However, DFID will be

supporting GoMP in strengthening planning and implementation capacity by

providing support for the district planning process, promoting Public Private

Partnerships and encouraging better human resource management systems particularly

in 10 focus districts. Capacity building of staff will be taken up as a priority. There is

a high degree of political commitment to health sector reforms.

C. GoMP commitment to Health Sector Strategy priorities is not sustained

4.2.4. Low probability, high impact: The likelihood of PH&FWD meeting its

Strategic Objectives will depend on prioritised system improvements, strengthened

service delivery and sector reforms identified in the HSS and MTEF. If the

HSS/MTEF priorities are not kept central to future planning, budgeting and donor

partner activity, chances of reverting back to ad hoc and piecemeal planning will

increase significantly. Given the high degree of political and bureaucratic

commitment to reforms, this risk is low probability. We will review this risk through

the annual review process.

D. Staff obstruction to reforms

4.2.5. Medium probability, medium impact: PH&FWD has a large complement of

organised staff, including doctors and nurses. PH&FWD commitments to policy and

strategic reform may be resisted, especially in human resource restructuring. Again,

this risk will be monitored through the annual reviews. The current high degree of

political and bureaucratic commitment to reforms reduces the probability and impact

of this risk.

E. Continued exclusion of disadvantaged areas/groups

4.2.6. Medium probability, high impact: There is a risk that services continue to fail

to reach the poor in 10 focus districts and therefore that inequity in health outcomes

persists. However, much of MPSRP is aimed at reducing this risk. For example,

addressing gaps in infrastructure and redeployment/recruitment of staff to fill vacant

posts in 10 focus districts, provision of untied funds at district level and a

disaggregated participatory monitoring framework all seek to ensure progress towards

equity outcomes. Residual risk is medium probability, high impact.

F. Change in GoI policies and commitment

27

4.2.7. Low probability, medium impact: There is a risk of GoI changing its policies

and commitment to the health sector. This could adversely affect the financing plan

since GoI contributes 18% of the resources. However, this risk is low probability, and

medium impact for the reform programme. GoI continues to show strong commitment

to investment in the health sector and NRHM promises to bring more money into the

sector. There is also a consensus across the political spectrum to increase public

investment in health.

Table 8: Risk Matrix

Probability

Impact

Low Medium High

Low F C

Medium D A, B, E

High

5. Conditionality

5.1. GoMP will monitor MPHSRP implementation using the Policy Milestones

Matrix in consultation with DFID and other development partners. The present

Milestones Matrix includes prior actions for 2006-07, definite actions for 2007-08,

draft matrix for 2008-9 and expected outcomes by 2012. The actions for 2008-9 will

be revised at the time of the first annual review. Milestones for later years will be

developed annually during review missions between the Government and

development partners.

5.2. In order to absorb any likely future adjustments in resources available to the

programme, we propose that 80% of each annual tranche be designated as core and

20% as indicative. The core and indicative components of DFIDI’s disbursements for

the coming years will be communicated to GoMP by November in the preceding year,

in time for the state budget session..