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Document ofThe World Bank

Report No: 18934-IN

PROJECT APPRAISAL DOCUMENT

ONA

PROPOSED INTERIM TRUST FUND CREDIT

IN THE AMOUNT OF SDR 63 MILLION (US$85.7 million equivalent)

TO

INDIA

FORA

RAJASTHAN DISTRICT PRIMARY EDUCATION PROJECT

March 29, 1999

Education SectorSouth Asia Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective = October 1998)

Currency Unit = RupeeUS$1 = Rs. 42.50Rs. I = US$ 0.0235

FISCAL YEARApril 1 -March 31

ABBREVIATIONS AND ACRONYIMS

AS Alternative SchoolAWPB Annual Work Plan and BudgetBRC Block Resource CenterCAS Country Assistance StrategyCRC Cluster Resource CenterDEO District Education OfficeDFID Department for International DevelopmentDIET District Institute for Educational TrainingDOE Department of EducationDPEP District Primarv Education ProgramnDPO District Project OfficeECE Early Childhood EducationEMIS Educational Management Information SystemsFMS Financial Management SystemsGER Gross Enrollment RatioGOI Government of IndiaGOR Government of RajasthanICDS Integrated Child Development SchemeJRM Joint Review MissionLJ Lok JumbishMTR Mid-Term ReviewNARP National Appraisal Report and ProcessNER Net Enrollment RatioOBC Other Backward CommunitiesPIP Project Implementation PlanPMIS Project Management Information SystemPMR Project Management ReportPRI Panchayati Raj InstitutionPROBE Progress Report of Basic EducationRCPE Rajasthan Council of Primary EducationRSTB Rajasthan State Textbook BoardSAS Social Assessment StudySC Scheduled CasteSIDA Swedish International Development AgencySIERT State Institute for Educational Research and TrainingSIEMAT State Institute for Educational Management and TrainingSK Shiksha KarmiSMC School Management CommitteeSPO State Project OfficeSSv Shiksha Swayam Sevi VidyalayaST Scheduled TribeTLC Total Literacy CampaignUPBEP Uttar Pradesh Basic Education ProjectVEC Village Education CommitteeWEC Ward Education Committee

Vice President Mieko NishimizuCountry Director : Edwin R. LimSector Manager : Ralph W. HarbisonTeam Leader : Ward HeneveldTask Leader : N.K. Jangira

IndiaRajasthan District Primary Education Project

CONTENTS

A. Project Development Objectives 2

1. Project development objectives and key performance indicators

B. Strategic Context 2

1. Sector-related CAS goals supported by the project2. Main sector issues and Government strategy3. Sector issues to be addressed by the project and strategic choices

C. Project Description Summary 4

1. Project components2. Key policy and institutional reforms supported by the project3. Benefits and target population4. Institutional and implementation arrangements

D. Project Rationale 8

1. Project alternatives considered and reasons for rejection2. Major related projects financed by the Bank and/or other development agencies3. Lessons learned and reflected in project design4. Indications of borrower commitment and ownership5. Value added of Bank support in this project

E. Summary Project Analysis 11

1. Economic2. Financial3. Technical4. Institutional5. Social6. Environmental assessment7. Participatory approach

F. Sustainability and Risks 15

1. Sustainability2. Critical risks3. Possible controversial aspects

G. Main Loan Conditions

1. Effectiveness conditions2. Other

H. Readiness for Implementation

I. Compliance with Bank Policies

Annexes

Annex 1. Project Design Summary

Annex 2. Detailed Project Description

Annex 3. Estimated Project Costs

Annex 4. Cost-Benefit Analysis Summary

Annex 5. Financial Summary

Annex 6. Procurement and Disbursement Arrangements

Annex 7. Procurement

Table A Project Costs by Procurement Arrangements

Table Al Consultant Selection Arrangements

Table B Thresholds for Procurement Methods and Prior Review

Table C Allocation of Loan Proceeds

Annex 8. Project Processing Budget and Schedule

Annex 9. Documents in Project File

Annex 10. Statement of Loans and Credits

Annex 11. Country at a Glance

Map

South Asia Regional OfficeEducation Sector Unit

Project Appraisal Document

IndiaRajasthan District Primary Education Project

Date: March 29, 1999 Task Team Leader: N.K. JangiraCountry Manager/Director: Edwin R. Lim Sector Manager/Director: Ralph W. HarbisonProject ID: IN-PE-45050 Sector: Education Program Objective Category: Poverty ReductionLending Instrument: Specific Investment Loan Program of Targeted Intervention: Yes

Project Financing Data [ Loan [X] Interim [ ] Guarantee [ ] OtherTrust [Specify]FundCredit

For Loans/Credits/Others:

Amount (SDRm/US$m): SDR 63 million/US$85.7 millionProposed terms: [X] Multicurrency [ Single currency, specify

Grace period (years): 10 [X] Standard Variable [] Fixed [] LIBOR-basedYears to maturity: 35 years

including graceperiod

Commitment fee: 0.5%Service charge: 0.75%

Financing plan (US$m):Source Local Foreign Total

Government of Rajasthan 15.6 0.0 15.6CofmanciersITF 84.5 1.2 85.7Total 100.1 1.2 101.3

Borrower: Government of IndiaGuarantor:Responsible agency(ies): Ministry of Human Resource Development (GOI) and Government of Rajasthan

Estimated disbursements (Bank FY/US$M): 2000 2001 2002 2003 2004 2005Annual 3.0 17.3 26.5 23.1 10.6 5.2

Cumulative 3.0 20.3 46.8 69.9 80.5 85.7

Project implementation period: 5 years. Expected effectiveness date: July 31, 1999. Expected closing date: December 31, 2004.

Project Appraisal Document Page 2Country: India Project Title: Rajasthan DPEP

A: Project Developmerit ObjectiveProject development objective and key performance indicators (see Annex 1):

The project will assist the government of Rajasthan (GOR) to build and strengthen state, district and sub-district capacities to ensuregood quality prirmary education (5 years) for all primary age children, especially from disadvantaged groups such as female,Scheduled Caste (SC) and Scheduled Tribe (ST), children from Other Backward Communities (OBC), working children andchildren with disabilities.

The key performance indicators to monitor this objective would be: (a) yearly improvement in Gross/Net Enrollment Ratios(GER/NER); (b) reduction in disparity in the GERs for boys and girls, SC and ST and others to less than 5 percentage points by theend of the project period; (c) improvement in grade transition rates; (d) reduction in dropout rates to less than 10 percent; (e)transformed classroom practices and improvement in student achievement in literacy and numeracy by 25 percentage points; (f)improved state and district capacities to manage education; (g) teachers receiving continuous in-service training through localinstitutions; and (h) School Management Committees (SMCs) on behalf of Village Education Committees (VECs) formed toencourage community involvement in school construction and school improvement through participation in school management.

B: Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project (see Annex 1):

CAS document number: Report 17241 -IN Date of latest CAS discussion: January 15, 1998 (Progress Report,February 18, 1999)

The project is consistent with the Country Assistance Strategy (CAS) of 1998. Alleviating poverty, promoting economic reform andgrowth and strengthening the social sector are basic objectives of the CAS. Poverty is severe in Rajasthan with 47 percent of therural population (29 percent of the urban population) living below the poverty line. The economic and social returns to primaryeducation are reported in Bank publications (Primary Education in India), in Project Appraisal Documents for Bihar, UP andAndhra Pradesh and in various surveys (Health and Family Welfare Surveys). Differences in education development between stateshave also been shown in Bank poverty studies on India to be a major cause for variation in the incidence of poverty. Therefore, aspart of improving the quality, effectiveness/efficiency and service delivery of India's social and anti-poverty programs, the Creditwill assist the State of Rajasthan in its primary education sub-sector where the participation and literacy rates of female children andchildren from disadvantaged communities are low. The Credit to the State of Rajasthan is also in line with the CAS focus on humanresource development, and the enhancement of economic development at the state level. Furthermore, Rajasthan is one of the stateswith which the Bank is working to initiate fiscal reform that promotes development.

2. Main sector issues and Government strategy:The key sector issues in Rajasthan are:

Low literacy: The literacy rate in Rajasthan is 55 percent (1997) and female literacy is 35 percent. According to the Health andFamily Survey, 82 percent (44 percent males) of rural females and 75 percent (40 percent males) of all females over 6 years of agein Rajasthan are illiterate.

Low and disparate enrollment: Social stratification and poverty have resulted in severe disadvantage in primary school access andlearning for girls, SC and ST students. Only two in five children in the poorest 40 percent of households in Rajasthan attend schoolcompared to over three in five children from the next 40 percent and nine out of ten from the top 20 percent. Only 15 percent girlsand 25 percent boys complete 8 years of education before they reach 14 years of age. The recently published Public Report on BasicEducation (PROBE report) identifies the physical facilities in the sampled schools (about 15 percent schools do not have permanentbuildings, 74 percent do not have drinking water, blackboards are missing in one out of five classroom), the high indirect cost ofeducation for parents (Rs. 318 per child per year), and the poor levels of learning in government schools as dissuading poor parentsfrom sending their children to school.

Poor teaching, low achievement levels, and high drop out: Achievement levels in Rajasthan are low. The average score inmathematics and language of grade 2 students is about 50 percent. The situation is worse in grade 4 with the average score beingless than 40 percent. The PROBE report identifies reasons for low achievement levels which include low student attendance, lowteacher attendance (due to lack of commitment and demand from required non-teaching activities), shortened instructional time(about 150 functional working days per year with approximately 4 hours of instruction per day), difficult textbooks, and a lack offocus on student thinking and development of problem solving skills in the classroom (due to inadequate pre-service and in-servicetraining).


Inadequate public sector institutions and weak management: District-level institutions such as the DIETs, established for improvingprimary and upper primary education, are weak. State level institutional capacity (the State Institute for Educational Research andTraining (SIERT) and the Rajasthan State Textbook Board) to improve the quality of primary education also needs strengthening interms of additional staff, staff development and modernization of printing and distribution of instructional materials. Furthermore,in the project districts institutional capacity to provide professional support to teachers in school and to stimulate communitymobilization and involvement in school management is insufficient. Capacity for participation in the management andadministration of primary education at the district and sub-district levels is also weak.

Government strategy: GOR is deeply concerned about the educational backwardness of the state. Since 1992, it has moved toincrease access and provide quality education through a variety of innovative schemes. The Shiksha Karmi (SK) and the LokJumbish (LJ) projects constitute two such schemes established with the assistance of the Swedish International Development Agency(SIDA). Both projects represent publicly funded, semi-autonomous schemes that have been fairly successful and are well known fortheir teacher training models, school mapping and microplanning initiatives, respectively. Other innovative GOR projects includeSaraswati Yojana (adult women trained to educate girls in their homes or community centers), the centrally sponsored Total LiteracyCampaign and the Digantar program for tribal education.

Elementary education was under dual control until February 1999. Rural lower primary schools were under the administration oflocal elected government bodies (Panchayati Raj Institutions (PRIs), and rural upper primary schools and all urban primary schoolswere under the Education Department. Rajasthan has recently transferred the whole elementary education system to the RuralDevelopment and Panchayat Department of the state government. All elementary school projects and programs, irrespective of theirsource of funding, are being brought under one umbrella for better coordination and convergence. The professional support systemof the Block Resource Center (BRC) and the Cluster Resource Center (CRC) is also expected to be brought under the PRIs.However, the District Institutes for Educational Training (DIETs), SIERT, and the State Institute for Educational Management andTraining (SIEMAT) will remain with the Education Department. An efficient coordination mechanism between these institutionswhich is essential for effective project implementation is being put in place. At negotiations, GOR provided a description of thiscoordination mechanism that will ensure services from the various institutions, especially from the Education Department and PRIs,for the implementation of the relevant DPEP activities.

The Government of India (GOI) will assist the GOR, through the centrally sponsored District Primary Education Program (DPEP),to address issues facing the education sector. The DPEP is a national program and a multi-donor-financed operation responding tothe Revised National Policy in Education and its accompanying National Program of Action. The National Program of Action wasapproved by the GOI and the states in 1992 to improve the quality of education and to reduce disparities in the provision of primaryeducation among socially disadvantaged groups. DPEP is currently being implemented in about 180 educationally disadvantageddistricts in fourteen states (Assam, Haryana, Madhya Pradesh, Maharashtra, Karnataka, Kerala, Tamilnadu, Andhra Pradesh,Gujarat, Himachal Pradesh, Orissa, Uttar Pradesh West Bengal and Bihar). Financial assistance from IDA amounts to about US$1.3billion in six credits. In addition, contributions from other donors are: European Commission for Madhya Pradesh ECU 150 million(about US$200 million); Government of Netherlands for Gujarat US$25.8 million; Department for International Development(DFID UK) for Andhra Pradesh and West Bengal (US$100 million); and UNICEF for Bihar (US$10 million). GOR has requestedthe Bank to support DPEP in 19 districts of the state in two phases. Phase I, which the present Credit is funding, will cover 10districts (Alwar, Bhilwara, Sriganganagar, Jhalawar, Kota, Nagaur, Sikar, Sirohi, Tonk and Jhunjhunu), and Phase II will cover theremaining 9 districts (Hanumangarh, Churu, Jaipur, Dausa, Bharatpur, Karauli, Sawaimadhopur, Bundi, and Dholpur). Whereverpossible DPEP will be interfaced with the District Poverty Initiative Project (DPIP).

3. Sector issues to be addressed by the project and strategic choices:

Given the low levels of completion rates and literacy rates in the state, three issues are to be addressed by the project: (i) low levelsof enrollment especially among females, SC and ST children, OBC children, working children and children with disabilities; (ii) lowretention rates resulting in high costs per graduate; (iii) low levels of academic achievement (see Annex 2B for levels ofachievement in language and mathematics); and (iv) weak educational management structures and institutions at the state, district,sub-district and school levels, resulting in the less than optimal use of available resources.

The strategies to address these issues are:

(a) Expanding access to primary education especially for disadvantaged groups: The state intends to reduce differences inenrollment between gender and disadvantaged groups and others to less than 5 percentage points. The objective of expanded accesswill be achieved by various interventions: constructing additional classrooms; new schools and repairing unusable classrooms; andestablishing alternative schools; meeting the specific educational needs of children with disabilities; appointing para-teachers; andstrengthening early childhood education.


(b) Increased retention and improved learning achievement: The state intends to reduce dropout rates to less than 10 percent anddifferences in learning achievement between gender and social groups to less than 5 percentage points. In addition, by the end of theproject period, leaming achievement will increase over the baseline levels of achievement by 25 percentage points. The project willincrease retention and improve leaming through the following interventions: community awareness campaigns; the establishment ofSchool Management Committees on behalf of Village Education Committees to support and monitor the quality of education; theconstruction of toilets and the provision of drinking water in every school; the development of interesting and appropriateinstructional material for students; teacher training with a more child-friendly pedagogy; on-site professional support to teachers;provision of resources for making teaching aids; and the allocation of special funds to SMCs for school improvement.

(c) Improved state and district capacity to manage primary education: The State Project office (SPO) and the District ProjectOffices (DPOs) have been established to administer DPEP at the state and district levels. Block Resource Centers at the districtlevel and Cluster Resource Centers at the sub-district level will be established for the professional development of teachers. Thecapacities of auxiliary institutions such as the State Institutes for Education Research and Training and the District Institutes forEducational Training will be strengthened. The State Institute for Educational Management and Training is to be established in anexisting institution. SIEMAT will focus on issues of educational management in addition to training personnel in this area. Asystem of monitoring and evaluation will also be established.

C: Project Description Summary

1. Project components (see Annex 2for a detailed description and Annex 3for a detailed cost breakdown):

(a) Expanding access to primary education especially for disadvantaged groups by: (i) opening new primary schools and altemativeschools, constructing additional classrooms and repairing the existing classrooms; (ii) positioning para-teachers in new primaryschools, alternative schools and existing regular primary schools to meet the demand of increased enrollment; and (iii) strengtheningIntegrated Child Development Scheme (ICDS) centers and selectively establishing Early Childhood Education (ECE) centers invillages that are not eligible for opening centers under the ICDS.

(b) Increasing retention and improving learning achievement in primary schools by: (i) promoting community awareness andmobilizing community involvement in school mapping and microplanning, and school improvement; (ii) establishing SchoolManagement Committees for each school; (iii) constructing toilets (separate for girls) where water is available or alternativearrangements (dry toilets) where water is scarce and providing drinking water facilities in schools that do not have such facilities;(iv) developing instructional material with active involvement of teachers and insuring their timely distribution to students; (v)instituting continuous in-service training for and on-site professional support to teachers; and (vi) developing targeted interventionsfor special focus groups including providing fnancial assistance to community SMCs for school improvement and to teachers todevelop or purchase aids to enhance teaching and learning.

(c) Improving state and district capacity to manage primary education by: (i) establishing and strengthening the SPO and DPOs (theSPO staff will comprise the project director, area specialists, financial and accounts professionals and support staff; DPOs staff willcomprise the project coordinator, four program officers, financial and accounts professionals, and support staff); (ii) establishing andadequately staffing BRCs and CRCs to train and provide on-site professional support to teachers and to facilitate communitymobilization (decisions regarding the construction of BRCs will take into consideration the availability of existing buildings that canbe utilized as BRCs); (iii) strengthening SIERT which is responsible for developing curricular material, developing training modulesfor teachers and Early Childhood Education functionaries, the training of teacher trainers and conducting specific research andevaluation studies and strengthening the DIETs to enable them to conduct teacher training and provide support to BRCs and CRCs.The strengthening of SIERT and DIETs will involve enabling the hiring of technical expertise and staff experienced in primaryeducation. Establishing SIEMAT, working out of an existing institution, to train education management personnel and carrying outresearch in educational planning and management; and (iv) in order to monitor project implementation, third-party evaluationstudies will be carried out. Educational Management Information System (EMIS) and Project Management Information System(PMIS) data will be collected. Progress reports, sample surveys and classroom observation studies will also provide information onthe effectiveness of project interventions. The financial management system will monitor procurement and disbursements.


Project components with financial allocations are as follows:Component Category Cost Incl. % of IDA % of

Contingencies Total financing IDA(US$M) (US$M) financing

Expanding Access to Primary Education Physical 20.2 19.9 16.7 19.5

Increasing Retention and Improving Learning Training 42.6 42.1 38.7 45.2Achievement

Improving State and District Capacity to Institutional 38.5 38.0 30.3 35.3Manage Primary Education Capacity Bldg.

Total 101.3 100 85.7 100

2. Key policy and institutional reforms supported by the project:

Decentralized education planning and management: The project supports GOR's policy of establishing a decentralizedmanagement structure for education to ensure community ownership of primary education. This entailed the GOR transfer ofeducational planning and management to the Panchayati Raj Institutions (the locally elected self-governing bodies at the district andsub-district levels). School Management Committees with representation from females, Scheduled Castes, Scheduled Tribes, andparents with disabled children will work with the village Panchayat and the school to improve education provided. SchoolManagement Committees will also be involved in microplanning for school and resource mapping, mobilization of communitysupport for encouraging parents to enroll and retain children in school, management of the community construction program andschool management. For convergence of resources, the SMCs and VECs will work with the Panchayati Raj Institutions to secureavailable government funds (from various government schemes such as the Jawahar Rojgar Yojana Scheme, the EmploymentAssurance Scheme, and the Battees Zila Battees Kam Scheme) and local contributions for the construction of primary schools. Inaddition, available monetary and non-monetary inputs will be mobilized by the SMCs and VECs for enhancing the effectiveness ofproject interventions.

Redeployment of teachers and employment ofpara-teachers: The project supports the redeployment of existing teachers to ensure amore rational and efficient use of existing resources in addition to the employment of para-teachers in new and existing schools.Para-teachers are grade 8 and grade 10 school-leavers, recruited from the local community, provided with well-designed initial andannual training modules, and strong professional and personal support/supervision. They will initially be paid at a rate around one-third of the normal teachers' salary. Compared to regular teachers, locally recruited para-teachers have been shown to help lowerdropout and repetition rates and increase learning achievement. The technical and financial sustainability of and career incentivesfor these para-teachers at project completion will be addressed during the course of the project. Student achievement under para-teachers will also be monitored during the project.

Balancing supply and demand dimensions of educational provision: The educational provision in India has been predominantlynorm-based and supply-driven. In contrast, this project is based on district-based social assessment and baseline studies that will besupplemented by microplanning and school and community resource mapping to fnalize the allocation of inputs. The constructionof new schools will commence only after the process of school mapping and microplanning have been completed. Convergence ofinputs from different sources has been built into the district plans.

Schoolfocused initiative: The SMC, with the school head, will make decisions regarding the use of resources for schoolimprovement and will carry out planned school construction through the local community with technical support from the project.The project also supports school-based initiatives through the establishment of CRCs (for groups of six to eight schools) that-willprovide on-site professional support for improving teaching and student learning in each school.


Involvement of NGOs in planning and implementation: NGOs were involved in project formulation and more are being identified forimplementing specific project interventions like Early Childhood Education, alternative schools, instructional materialsdevelopment, development of teacher training programs and research and evaluation studies.

3. Benefits and target population

Investment in primary education has significant economic and social benefits. For India, these have been documented in the recentsector work, Primary Education in India. The economic impact of primary schooling in India as measured by rates of return isestimated to be about 13 percent. Bank studies on poverty in Indian states conclude that levels of literacy have long-term effects onpoverty reduction. The assumed social impact of this project is based on clear evidence of a strong and positive relationshipbetween mothers having completed primary schooling and the related reductions in total fertility rates of 25 percent, in infant andchild mortality rates of 40 percent, and in severe child malnutrition by 33 percent. In addition, education has a positive impact onwomen's utilization of schemes for raising family incomes. More intangible future social benefits of the project include theempowerment of future generations of women and the possibilities for more informed participation in the political process by alarger number of literate men and women.

Direct beneficiaries: An additional 600,000 children in the age group between six to ten year olds (out of which about two-thirds areexpected to be girls and one-third SC and ST children) who are to be provided access to primary education are the directbeneficiaries. The project has also made provision for the inclusion of OBC children, working children and children withdisabilities. Another 2.2 million already enrolled students in the proposed ten project districts are expected to benefit from theemerging quality of primary education.

Indirect beneficiaries: Families and teachers can be identified as indirect beneficiaries of the project. About half a million families,most of them poor families in Rajasthan, are expected to benefit from the basic education of their children. The project inputs forimproving schools, the professional development of existing teachers and newly appointed para-teachers, and improved school-community relations will raise teachers' self esteem, motivation and accountability.

System as a beneficiary: Government statistics indicate that for every 100 children who enrolled in grade I in 1993 in the ten projectdistricts, only 43 completed grade 5 five years later. This completion rate and the data on repetition rates indicates that to produce agraduate of lower primary school utilizes an amount of resources equal to providing 7.9 pupil-years of schooling. This implies thataround 60 percent more resources are being used than would be required if dropout and repetition rates were zero. On theassumption that the DPEP intervention will increase the quality of education and reduce dropout and repetition rates in primaryschools by half, about 6.7 years would be required by a child to complete the primary school cycle. This would reduce the cost pergraduate by about 20 percent

4. Institutional and implementation arrangements:

Implementation period: July 31, 1999 to June 30, 2004Executing agency: GOR through an autonomous registered society called "Rajasthan Council of Primary

Education" (RCPE) established on November 3, 1997.Project coordination: DPEP Bureau of the Department of Education (DOE) at the Ministry of Human Resource

Development, GOI.Project oversight: DPEP Bureau, GOI

The tried out and well-established DPEP design and its implementation practices in DPEP states provide guidelines for theinstitutional and implementation arrangements for DPEP in Rajasthan. Accordingly, the Rajasthan Council of Primary Educationoperates through the State Project Office and District Project Offices. The RCPE will act as an advisory body to the SPO in additionto approving all the Annual Work Plan and Budgets (AWPBs). According to the Project Implementation Plan, implementationwould be through incremental expansion of the state and district components and sub-components with the release of funding basedon previous performance and expenditure. The yearly release of funds to the SPO is to be based on: (i) good state and districtproject implementation; (ii) approval of the AWPBs by the DPEP Bureau on the basis of the National Appraisal Report and Process(NARP); (iii) evidence of payment of the GOR contribution of 15 percent to the RCPE for the ongoing DPEP program; and (iv)demonstrated additionality of DPEP investments compared to 1997/98 expenditure levels in the state. GOR will carry out, andcause the RCPE to carry out, the project in accordance with the DPEP Guidelines and the PIP agreed with the IDAadministrator of the Interim Trust Fund (ITF) Credit.

The first year implementation of Rajasthan DPEP will primarily focus on developmental activities: (a) building managementcapacity and physical infrastructure in the SPO, the 10 district project offices, the Block Resource Centers and the Cluster Resource


Centers; (b) formation of School Management Committees, mobilizing community support for education, school mapping, andmic- )planning; and (c) preparation of curricular material and training modules.

The Bank appraisal 'Aission reviewed the detailed proposals that will ensure effective implementation of the project: (i) appropriateand skilled personnel are already in place in the State Project Offices and key staff in addition to the existing two in the DistrictProject offices will be in place immediately after negotiations; (ii) adequate training of SPO and DPO staff; (iii) adequate fnancialallocations by GOI and GOR for commencing activities prior to the ITF Credit disbursement; (iv) time schedules for theconstruction, hiring and training of staff for DIETs, BRCs and CRCs; (v) a description of the coordination of the two departmentsresponsible for education in each of the 10 districts - the Rajasthan Rural and Panchayat Department and the state Department ofEducation; (vi) the preparation of a detailed teacher training model identifying the modalities of the training schedule and thespecific skills that are to be developed during training; (vii) establishing Educational Management Information Systems, ProjectManagement Information Systems, and Financial Management Systems for monitoring financial outlays and utilization of resources;and (viii) procurement and bidding documents for the first year.

More specific points for accomplishing the three project outcomes - access, retention and improved learning, and improvededucational management - are: (i) ensuring that 95 percent of teachers' posts in the project districts are filled and remain filledthroughout the project implementation period; (ii) the creation and distribution of appropriate instructional material includingtextbooks, teacher guides and workbooks by the commencement of the project; (iii) timely and efficient hiring and training of DIET,BRC and CRC staff; (iv) community mobilization and establishment of SMCs that ensure the effectiveness of the microplanningexercise which in turn ensures the rational and cost-effective location of new schools and extra classrooms, with school constructiontaking place only after school mapping and microplanning exercises have been completed; and (v) creating effective in-servicetraining modules for the training of teachers.

Monitoring and Evaluation arrangements: The project will be monitored and evaluated according to the input and output indicatorsspecified in Annex I and Annex 2 of the PAD. This will involve an annual review of implementation and AWPBs for the followingfiscal year; progress of implementation covering physical targets for civil works, procurement, training, software/systems,development and expenditures. The review will be conducted in the first quarter of each year. Progress reports and work plansfollow a format agreed with the DPEP Bureau and IDA.

Progress toward the achievement of development objectives will be measured in several ways:

Educational Management Information System: Using the EMIS system, the DPEP Bureau in the light of ongoing DPEP experiencewill provide data annually regarding enrollments, Gross Enrollment Ratios/Net Enrollment Ratios by gender, SC and STs, gradetransition rates and grade repetition rates, student teacher ratios in urban and rural area schools, average student and teacherattendance data, and number of teachers and other functionaries trained.

District-based learning achievement survey: A district-based survey of student achievement in language and mathematics will becarried out in 2001 and 2004 to measure improvement in learning over baseline levels collected during project preparation.Classroom observation studies will evaluate the extent to which teachers have appropriated in-service training skills and the extent towhich teachers are implementing a more child friendly pedagogy in the classroom.

Research and evaluation studies: Outcomes of the third party evaluation studies commissioned by the DPEP Bureau and the stateand periodical surveys undertaken by other organizations and agencies will complement information obtained from the managementinformation systems and from learning achievement studies. GOR will also undertake in-depth reviews of the quality andeffectiveness of para-teachers across programs in the state, in addition to reviews of school and community factors that contribute toquality education and achievement.

Supervision missions: The Bank will carry out bi-annual supervision missions in collaboration with other donors to spot-checkimplementation. As long as the JRM is the mechanism for supervision, an additional two (Bank) persons will join the JRM in orderto perform the review of Rajasthan in an acceptable manner. In addition, two in-depth reviews, one in the year 2001 and another inthe year 2004, will be conducted.

Accounts andfinancial management: Financial management arrangements for the project are detailed in Annex 6. Key actions thatneed to be completed are: (i) design, develop and implement an integrated computerized financial management system (FMS). Thiswill include procurement of necessary hardware, the development of software, and the training of staff in FMS. This is expected tobe completed by March 31, 2000 in accordance with World Bank regulations; (ii) recruitment by the Rajasthan SPO of a suitableaccounting professional as Financial Controller; and (iii) appointment of a firm of Chartered Accountants as auditors for the projectby July 31, 1999.


Disbursements: Disbursements from the ITF Credit would initially be made by the traditional system (reimbursements with fulldocumentation and against Statements of Expenditure) and would be converted to the new procedures (i.e., based on ProjectManagement Reports - PMRs) after the successful implementation of the computerized FMS. The target date for this conversion isJuly 15, 2000. Disbursements will start on the basis of PMRs submitted for the quarter ending June 30, 2001.

Procurement: Procurement will be according to IDA's Procurement Guidelines as detailed in Annexes 6 and 7.

Special Accounts: A Special Account would be maintained in the Reserve Bank of India; and would be operated by the Departmentof Economic Affairs (DEA) of the GOI. The authorized allocation of the Special Account would be US$6 million that representsabout 6 months of initial estimated disbursements from the ITF Credit. However, the authorized allocation in the Special Accountwill be limited to US$3 million until the aggregate amount of withdrawals from the ITF Credit Account equals or exceeds theequivalent of SDR 12 million. The Special Account would be operated in accordance with the Bank's operational policies.

Retroactive financing: Retroactive financing in the amount of US$6 million equivalent (SDR 4.4 million) would cover eligibleexpenditures for implementing appraised activities after June 1, 1998 based on a Statement of Expenditure. Retroactive financingwould support (a) start-up activities for establishing the SPO and DPOs; (b) setting up BRCs and CRCs; (c) start-up activities forconstituting VECs, including carrying out microplanning; and (d) the development of materials for pedagogical renewal.

D: Project Rationale

1. Project alternatives considered and reasons for rejection:

Project alternatives were considered and the decisions taken are given below:

GOR decided that the project would be a centrally sponsored scheme with similar financial arrangements as in other DPEP projects.With reference to the coverage of grades, after much discussion on whether Rajasthan DPEP should cater to grades 1 to 8, it wasfinally decided to confine DPEP to grades 1 to 5. Covering grades I to 5 will ensure DPEP's clear focus on universalizing five yearsof primary education. Support for the development of upper primary education in a more comprehensive state plan that involves thedevelopment of elementary education as a whole could form the basis for possible future Bank investment.

In accordance with the national DPEP guidelines, DPEP in Rajasthan will be implemented in the proposed project districts throughthe autonomous Rajasthan Council of Primary Education. The possibility of using the existing Lok Jumbish Society or ShikshaKarmi Society to implement DPEP instead of establishing the RCPE was discussed with GOR. It was decided to establish a separateRCPE for the implementation of DPEP for the following reasons:

(i) The LJ society has an established structure with a specific philosophy and ethos which is different from that of the DPEP at thisstage, and it was not considered prudent to disturb it. School mapping and microplanning developed in Lok Jumbish will, however,inform similar activities in DPEP districts.

(ii) The Shiksha Karmi project in Rajasthan has a defined focus on the placement and training of teachers for schools in rural andremote areas where the placement of teachers is problematic. Primary teachers who may not be qualified are identified from localcommunities and then intensively trained, in addition to receiving consistent and continuous professional support from theirsupervisors. Local communities are involved in managing the school. The results in terms of community involvement in schoolimprovement, teacher and student attendance, classroom practice and student achievement are encouraging. GOR's DPEP programreflects some elements of the Shiksha Karmi model, especially in its teacher selection and teacher training methodology. The SKmodel will also inform the setting up of alternative schools in DPEP, and experienced personnel from SK will also participate asresource persons in teacher training for Rajasthan DPEP.

The IDA Administrator has agreed to fund DPEP in 19 districts in Rajasthan, subject to the preparation and approval of districtplans. As Rajasthan is a new DPEP state, preparations for the implementation of DPEP in ten districts was initiated in the first phaseand preparations and appraisal for the remaining nine districts will follow.


2. Major related projects financed by the Bank and/or other development agencies (completed, ongoing and planned):Sector issue Project Latest Supervision (Form 590) Ratings

(Bank-financed projects only)Implementation Development

Progress (IP) Objective(DO)

Bank-financedAccess and quality of basic education Uttar Pradesh Basic Education S S

ProjectUttar Pradesh Basic Education S SProject II

Access and quality of primary education District primary Education S SProgram (DPEP)DPEP IIDPEP III (Bihar) S S

S SOther development agenciesEuropean Union DPEP (Madhya Pradesh)UNICEF (cofm) DPEP III (Bihar)Government of Netherlands DPEP II (Gujarat)Swedish International Development Agency Lok Jumbish

Shiksha KarmiIP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory)

3. Lessons learned and reflected in the project design:

The design of DPEP in 1993 took account of key lessons learned from educational projects in South Asia and the accumulatedinternational experience in primary education. Specific educational projects that have contributed to the preparation of RajasthanDPEP are: DPEP I, II, and III, Uttar Pradesh Basic Education Project I and II, the UNICEF-assisted project in Bihar, the totalliteracy campaign in Bihar, the UK DflD-assisted project in Andhra Pradesh and the Swedish International Development Agencyfinanced Lok Jumbish project in Rajasthan. The experience in DPEP states suggests that in terms of initial enrollment there is arapid increases in the GER, and the growth in enrollment of girls is faster than boys due to the large initial gap in enrollmentbetween the two. A trend analysis between 1995 to 1998 on access and retention by the National Institute for Educational Planningand Administration in DPEP I districts, carried out as part of the DPEP I mid-term review, reports an average increase in enrollmentin all DPEP districts, apart from Kerala, of 9.43 percent in 1995-96 and 6.48 percent increase in 1996-97. This study also indicatesthat girls' enrollment which was 45.5 percent in 1995-96 is now 46.3 in 1997-98. The index of Gender Equity (lOOxShare of girlsenrolled/Share of girls in corresponding population) in various grades has improved in all districts. In 37 out of the 42 districtsgender equity has been achieved.

The Bank experience with the primary education portfolio in India since 1993 confirns the benefits of the initial designassumptions. These include: the establishment of an independent society at the state level for implementation; a delivery modelmaintaining one-fourth of the project funding for civil works; a comprehensive package of interventions involving instructionalmaterials, special grants as incentives to improve instruction, continuous site-based teacher training, and institutional capacitybuilding at state, district and sub-district levels. The Bank's engagement with DPEP over the last five years reiterates theimportance of the following specific elements of the project:

(i) Flexible implementation arrangements are essential in order to cope with the wide variations in initial conditions, investmentpriorities and implementation capacity between districts and blocks. Flexibility also encourages the utilization of the skills andstrengths of already existing innovative projects in education in the state. It is important that since DPEP is a centrally sponsoredscheme, the national and state guidelines should enable rather than circumscribe local pedagogical, managerial and organizationalinnovation.

(ii) Building community support for education is a central element to the successful implementation of school developmentprograms. Community participation and activation of School Management Committees and Village Education Committees havedemonstrated a strong, pent-up demand for basic education that exists in many communities in India. Community mobilization andmicroplanning also ensure community ownership in school management and cost effectiveness in implementing a large-scale schoolconstruction program. Two important lessons with regards to SMCs are evident. First, the establishment of the SMC has to beprocess-oriented and participatory. If SMCs are bureaucratically appointed, the SMCs' involvement with school improvement andmanagement is negatively affected. Second, the involvement of the community and SMCs in the physical aspects of the school


is easier to initiate at the start of the project than their involvement with quality issues such as monitoring teacher performance andimproving learning and ownership. Both aspects of the SMCs involvement-in construction and in the qualitative part of schoolimprovement-will need continued attention during implementation.

(iii) Textbooks, workbooks and teacher guides are essential for changing classroom practice, and revised materials should bedeveloped in the early stages of the project. Blcck Resource Centers and Cluster Resource Centers serve as effective institutionalmechanisms to provide recurrent in-service teacher training and school based professional support to teachers. Therefore, earlyoperationalization of these institutions is critical to project effectiveness in enhancing student learning. Improvement in "enablingconditions" such as availability and rational deployment of teachers, enforcement of norms regarding school opening, and teacherattendance will need to be rigorously pursued. Strengthening of the State Institute for Education Research and Training and DistrictInstitutes for Educational Training continues to be an area of concern especially critical to project sustainability, and the discussionof alternative arrangements for the longer term should receive priority during implementation.

(iv) The mid-term baseline assessment study in DPEP I districts reports an increase in student learning achievement in bothmathematics and language, especially from grade 1 to grade 2. However, student performance in the higher grades can be furtherimproved. Though gender differences in achievement have been reduced to less than 5 percentage points, differences inachievement between SC/ST and other students and between rural and urban students still persist. Further, mastery learning of basiclanguage and mathematics skills needs more attention than is currently being provided. Student learning materials developed underDPEP will need to focus on the development of reasoning and problem solving skills. And the development of teachers' subjectmatter knowledge and the use of interactive pedagogy in the classroom during teacher training require attention. In addition, theprocess of continuous assessment of classroom processes and student learning and the use of this assessment in improving teachingand student performance has to be systematically implemented in the project.

(v) Establishing the capacity to provide all school age children with education opportunities of acceptable quality is a process that isexpected to take ten years or more and will require continued effort on the part of the government, beyond the period of the project,possibly in the form of follow up projects.

4. Indications of borrower commitment and ownership:* GOI commitment to accelerate the pace of providing basic education is visible in the 1992 revised education policy and in the

Government's resolve to raise basic education spending from 3.9 to 6 percent of GDP by the end of the Ninth Plan (2002).GOI's commitment is also evidenced in the 17 percentage point rise in literacy levels from 38.55 percent in 1991 to 55 percentin 1997;

* GOR is beginning to tackle state fiscal reforms and has approached the Bank and the GOI for assistance to accelerate the paceof the program to universalize primary education;

* GOR has conducted the district-based baseline achievement assessment study, the social assessment study and the state-basededucation finance study.

* Key staff in the SPO are in place. District planning teams are in position and remaining key staff will be appointed immediatelyafter negotiations.

* GOR has already approved the annual recurring cost of continuing project interventions after project completion.* The recent PROBE report covering the state of primary education in four states (MP, UP, Bihar and Rajasthan) indicates state

interest in improving the access to and quality of primary education is highest in Rajasthan when compared to the other threestates, reflected in the better infrastructure and maintenance, extensive incentive schemes, and more parent-teacher interaction.

5. Value added of Bank support in this project:The Bank has become the largest source of external funding for universalizing primary education in India. The experience of theBank in the implementation of large-scale programs of education reform and with the design of external assistance strategies forthese programs, has been valuable to GOI and the participating states in DPEP I, II and III, and in UPBEP I and II. The proposedproject, using the Bank's international experience in primary education in the context of Joint Review Missions will help GOR makeprogress towards its goal of Universal Primary Education in the project districts with special attention to the needs of girls and otherdisadvantaged groups. The DPEP experience in other states on funding strategies for primary education, including the areas ofteacher deployment in rural and remote areas and more appropriate or efficient allocation of funds to schools based on enrollments,are expected to affect education policies state-wide. In addition, through the discussions on fiscal policy, the Bank can advise GORon ways to increase allocations to primary education through intra- and inter-sectoral adjustments.


E: Summary Project Analysis (Detailed assessments are in the project file, see Annex 8)1 .Economic (Refer to Annex 4)

(a) Economic and social returns The positive economic and social returns to primary schooling in India, in general, have beendescribed in the Project Appraisal Documents for primary education projects in Bihar (3012-IN), Uttar Pradesh (3013-IN) and inAndhra Pradesh based on research studies reported in the Bank publication, Primary Education in India (1997). In summary,analyses of long run data on rural household agricultural productivity and a disaggregation of the sources of economic growth in the1970s and 1980s reinforced the positive findings of earlier studies of the economic rates of return to primary education and providedadditional evidence of externalities. In addition, the Health and Family Welfare Surveys conducted in each major state in India in1993 suggest that, across all states, primary schooling of mothers is associated with reductions in child mortality of 40 percent,fertility of 25 percent and severe child malnutrition of 33 percent. These are substantial effects with significant economicconsequences, in addition to improving the quality of life for women and children in particular.

While no studies of the economic returns to primary schooling have been undertaken specifically for Rajasthan, the effects ofmothers' schooling on aspects of social behavior have been measured. Actual and preferred fertility rates fall consistently bymothers' educational level with the largest falls (15-16 percent) associated with a primary schooling. The percentage reduction inthe under-five mortality rate is similar (14 percent) and there is a marked increase in the proportion of children who receive the fullcomplement of inoculations (by 129 percent). There is general undernourishment in Rajasthan with around 40 percent of childrenseverely undernourished and 19 percent chronically undernourished. While there is a slight reduction in rates of chronicmalnourishment for children whose mothers have a primary schooling, it appears that a complete elementary education of eightyears is required before there is a significant reduction in the rates (6.3 percentage points). (For additional detail see Annex 4).

(b) Poverty reduction. Poverty in Rajasthan is severe with 47 percent of the rural population living below the poverty line (WorldBank Report, 1997). Across India, states have performed differently in reducing poverty over time. In the case of Rajasthan,illiteracy appears to be responsible for two thirds of the difference in the rate of poverty reduction compared to Kerala. While nineout of ten children from the wealthiest households complete primary schooling in Rajasthan, less than three in ten from the poorest40 percent of households complete. To assess the potential role of government subsidization of primary schooling in reducingpoverty, two issues are involved - the impact of education on income and the extent to which government expenditures on schoolingare in fact captured by the poor. There is sufficient evidence from existing studies in India and elsewhere, to confidently predict thathigher levels of education on average lead to higher income. Recent analysis has also documented that while the poor in India,particularly in Rajasthan, currently have very low rates of access to education compared to middle and upper income groups, thelikely effect of further expansion on access is more than proportionately pro-poor. While the existing pattern of expenditure resultsin only 14 percent of the total going to children in the poorest 20 percent of households, their share of any additional expenditure hasbeen estimated to be 22 percent.

(c ) Internal efficiency and cost effectiveness. Government statistics indicate that for every 100 children who enrolled in grade I in1993 in the ten project districts, only 43 children completed grade 5, five years later. This completion rate plus data on repetitionimplies that to produce a graduate of this cycle utilizes an amount of resources equal to providing 7.9 pupil-years of schooling. Thisimplies that around 60 percent more resources are being used than would be required if dropout and repetition rates were zero.

Emphasis in the DPEP, including in this project, is given to quality improvement both to increase the levels of learning of those whograduate and to reduce the levels of repetition and dropout. While the mid term review of DPEP I did not produce accurateassessments of the effects of the project on dropout rates, repetition rates were shown to have decreased on average by seven percenta year. Further, the Shiksha Karmi program already exists in generally remote parts of Rajasthan to improve the quality of schoolingand the proposed project has based some of its interventions on this program. A recent evaluation has compared retention rates inschools coming under the program with others in adjacent areas outside of the program. These rates translate into a 30 percentdifference in favor of Shiksha Karmi in the teaching years provided per primary school graduate in the two types of schools. If theDPEP project is equally successful in reducing the dropout rate, the cost per graduate would fall by a similar amount.

In addition to the project components aimed at increasing internal efficiency through improvements in quality, teaching costs will bereduced by placing para-teachers in the proposed new schools and in existing schools where increased student attendance justifiesadditional teachers. Evaluations of the outcomes of similar teachers employed under the Shiksha Karmi scheme suggest that, theprogram can be very cost effective. Overall, including training and professional support, the cost per para-teacher is about half thatof a regular teacher. Compared to conventional schools with regular teachers, in Shiksha Karmi schools: (i) both dropout andrepetition rates are significantly lower even though the schools are located in more 'difficult' areas and the pupils are economicallyand socially disadvantaged; and (ii) leaming achievements of pupils are at least as high - the Baseline Assessment Survey testedlevels of learning achievement in language and mathematics for grade I and 4 children in both types of school. Children in thegroup of schools with para-teachers scored higher in grade 1 mathematics in six out of eight districts and in language test in four outof eight, with no significant differences in the other four districts. In the grade 4 tests, they scored significantly higher in both


subjects in five of the eight districts, while there were no significant differences in the remaining three districts.

2. Financial

Fiscal impactThis project will promote educational expansion and improvement in ten districts in Rajasthan, and it is anticipated that a furthernine districts will be covered in a subsequent project. The overall objective of these operations is to provide the facilities andincentives to universalize a good quality primary education. Since the state has the second lowest literacy rate in India, the financialeffort required to universalize will need to be particularly great. Already the Government's expenditure on education as a share oftotal non-Plan expenditure is 26 percent, one of the highest in the country. Of this, 57 percent is for elementary education. A recentWorld Bank study of the state's finances estimated that real expenditures on primary education would need to increase by over 11percent a year if universalization were to be achieved during the Ninth Plan period. This estimate included the cost of employing anadditional 38,000 regular teachers. The estimate needs to be viewed in a wider fiscal context of a need to reduce the growth ofoverall Government expenditures to restore fiscal balance. Currently, two thirds of the state's total revenues are consumed bysalaries, pensions and interest payments, and the fiscal deficit increased from around 3 percent in the early 1990s to 6.8 percent in1995/96. The recent study suggested the need for several reforms, particularly in the power and water sectors and in state ownedenterprises. In the absence of such reforms and the continuation of current levels of fiscal deficit, interest payments could increaseto almost 30 percent of total revenues by 2001/02 from current levels of around 18 percent. Without significant changes to theexisting patterns of revenues and expenditures and the re-direction of fmancial resources to the key development areas which requirepublic sector funding, the achievement of the objective of universal schooling will be very difficult. The implications are that theuniversalization objective will need to be seen over a longer time period than that covered by the Ninth Plan and that the unit costsof education need to fall (while increasing inputs which will enhance learning achievements). The increased employment of para-teachers within a supportive environment which at least maintains teacher quality is central to achieving these ends.

The direct fiscal impact of the project for GOR during the period of implementation will be relatively modest compared to theprojections described above. DPEP Guidelines require that the state government contributes 15 percent of the total cost. Thistranslates to around Rs. 12.5 crores (US$3 million) a year. In 1997/98, non-plan expenditure on elementary education was Rs. 1620crores and plan expenditure (outside of the centrally sponsored schemes) was Rs. 120 crores. Therefore, plan expenditure will needto increase by around 10 percent. The risk that the Government's contribution will not be forthcoming is low but as the program touniversalize develops further momentum, the need for overall fiscal reform will intensify if the quality of schooling is not to fallfurther and if the levels of school dropouts are to be reversed.

3. Technical:

Rajasthan DPEP is designed to expand access and transform teaching and learning in the classroom on a large-scale. Consideringthis project and earlier DPEP projects (I, II, III and UPBEP I and II) areas of concern include:* Employment ofpara-teachers: The employment of para-teachers in the project with either grade 10 or a grade 8 pass could

affect the achievement levels of students. The lowering of minimum qualifications and therefore, subject content knowledgemay affect instruction in higher grades (grade 4 and 5). There is a provision of intensive in-service training and on-siteprofessional support to para-teachers in schools based on the proven Shiksha Karni program methodology. Continuousmonitoring of para-teachers' recruitment, training, enhancement of content and pedagogic knowledge will have to be ensured.

* Slow observable change in classroom practices: The extent and rapidity with which classroom practices can be transformedduring the project period is an area of concern. To be able to measure change in classroom processes the project needs todevelop indicators that represent change and monitor classrooms in terms of these indicators. Experience in otherDPEP/IJPBEP projects indicates that this is a slow process and that clear indicators should be constructed in monitoring reformin pedagogy. The large number of multigrade schools and the extent to which in-service training and pedagogical support canaddress instruction of multiple grades in one class will also impinge on the extent to which classroom practices are transformed.Sample studies will be conducted in the first year, in the third year with the Mid-term Review and in the final year to measurechange in classroom practices.

* Human resource development: The adequate functioning of the institutions that support teacher development (DIETs, BRCs,and CRCs) will be crucial to the project's success. The effectiveness of human resource development -- both teachers andadministrative staff-- will depend on the extent to which the Rajasthan DPEP can establish an iterative process of monitoringthe outcome of training and support programs and the adaptation of programs to address issues arising out of the monitoringprocess. Specifically, with reference to teachers, an entry-level evaluation of teachers' subject content and pedagogicalknowledge will be used to adapt in-service training to teachers' specific needs. Continuous evaluation of the impact of teachertraining and on-site professional support to be used as feedback for improving training design and implementation will becarried out.


4. Institutional:

(a) Executing agencies: The Rajasthan Council for Primary Education, an autonomous body registered under the Registration ofSocieties Act 1958, established by GOR and headed by the Minister for Rural Development and Panchayat Department, is in-chargeof the overall implementation of DPEP. The State Project Office with an Executive Council headed by the DevelopmentCommissioner is directly responsible for project implementation. The Education Department will work closely with the RuralDevelopment and Panchayat Department which is responsible for the administration of primary schools in rural areas.

Three issues of particular concern were identified during-project preparation: two pertaining to the project's management; the otherinvolving the institutional arrangements for pedagogical renewal.

* Administration of Elementary Education: Until recently, elementary education had a dual system of governance with rurallower primary schools under the administrative control of the local government bodies while urban primary and rural upperprimary schools under the education department. The governance of the elementary education system, including BRCs andCRCs are now under the jurisdiction of the PRIs through locally elected bodies at the village, sub-district and district levels.Training and support institutions (DIETs, SIERT, SIEMAT) will continue to be under the Education Department. The IDAAdministrator will have to closely monitor the shared role and function of the two departments for effective implementation andmanagement of DPEP.

* Project management: Earlier sector investments in India required considerable start-up time to build effective state, district,sub-district school managerial and professional capacity for sustainable primary education development. It is important for thestate to ensure timely project implementation that will position and augment managerial and professional capacity. InRajasthan, the project commences with the SPO established and fully functional with its core planning team. Core teams in theDPOs will be in place soon after negotiations. Continuity in preparation and implementation is addressed through retroactivefinancing. In addition, staff stability is to be ensured by GOR.

* Institutional arrangements for pedagogical renewal: The State Institute for Educational Research and Training with supportfrom the state resource groups (to be constituted under the project), technical assistance from consultants, the DPEP Technicalsupport group and the National Council of Educational Research and Training will provide leadership for pedagogical renewal.Field-tested workbooks for students and teachers' guides to be used in the classroom will be developed by SIERT and printedand distributed by the Rajasthan State Textbook-Board. The District Institutes for Educational Training supported by the districtacademic resource group will support Block Resource Centers to conduct in-service training to teachers and Cluster ResourceCenters to provide on-site professional support to teachers. Ongoing evaluation of the training and change in classroom practicewill be carried out by the SIERT and the DIET. Periodic studies on the effectiveness of teacher training and its impact onclassroom practice and student learning by independent agencies will also be commissioned. Rajasthan has an impressive recordof developing innovative interventions in primary education on a small scale. However, Rajasthan has not fully succeeded intaking these interventions to scale and furthermore, their incremental and slow pace of growth is viewed with concern by thepublic as well as government authorities. Building institutional capacity to accelerate the pace of providing access to qualityprimary education using the strengths of existing innovative programs constitutes a major challenge for the Rajasthan DPEP.Technical assistance and involvement of NGOs and organizations from other DPEP states have been included in the investmentproposal to facilitate GOR's expansion of quality primary education.

5. Social assessment:

Reducing disparities in access, school completion, and learning achievement in primary schools across gender and social groups areprimary objectives of Rajasthan DPEP. In order to identify the situation of various social groups in the state, a Social AssessmentStudy (SAS) was carried out in ten villages in each district using secondary data, household surveys, interviews with specifiedgroups, and time budgeting of children, women and men (Annex 2A). The SAS highlights the general and specific issues affectingthe educational participation of disadvantaged groups in each district - causes for low enrollment, dropout and low achievement.

Lack of female participation cuts across caste and class - females belonging to higher castes such as the Rajputs and Muslimminorities are discouraged from going to school. Strategies identified by the Social Assessment Study for increasing femaleparticipation that are addressed by project interventions are: employing female teachers, adjustment of school timings, sibling carethrough early childhood development centers to be located near or in primary schools, separate toilet facilities for girls in schools,escorts for bringing girls to school, appropriate instructional material without gender bias, and targeting families for continuedfollow up by VEC members for sending girls to school. Certain cultural practices which are often difficult to change in a shortperiod of time such as the purdah system and beliefs resulting in parental perceptions of their girl child as eventually belonging totheir husband's family will continue to be barriers to female participation in schools.


Many of the DPEP interventions such as the proximity of schools, toilet and drinking water facilities on the school premises, thetransformed atmosphere in the classroom with consistent teacher attendance and active learning approaches, the timely availabilityof attractive and interesting instructional material, and the representation of disadvantaged communities in VECs for schoolmanagement will encourage enrollment and persistence in education among disadvantaged communities. Lack of support andresistance from higher castes, notions of purity and pollution, seasonal migration, extreme poverty, household chores andirresponsible parenting (alcoholism, parents encouraging absenteeism due to family functions and festivals) will continue to poserisks to the project's goal of providing basic education to children from disadvantage communities since cultural practices, beliefsand attitudes require considerable time for transformation.

6. Environmental assessment: Environmental Category []A []B [x] C

The proposed project would not raise any environmental concerns. Schools, additional classrooms and block resource centers willbe constructed on land donated by the community or government land. Each village has common land for developing civic utilitiesand village Panchayats pass resolutions on the allocation of this land for the school. Additional classrooms are to be constructed inthe existing schools, which are already constructed. No involuntary resettlement issues are expected to arise from implementing thecivil works component of the proposed project. GOR has provided confirmation to the Administrator in writing, detailing theirprocess of securing land for civil construction in districts. Documentation for registration/transfer of the land to the educationdepartment!panchayat department will be made available at the District Education Offices. All civil works undertaken will complywith the GOR's and GOI's existing building/ construction codes. Such provisions will also be reflected in future biddingdocuments. One of the major gains will be that the primary school graduates can be expected to become more responsible andenvironmentally conscious citizens, since environmental studies form a part of the core curriculum in grades I to 5. It is also likelythat knowledge gained in school on environmental issues will be shared at home, thus influencing parental attitudes. Also toilets anddrinking water will be integral components of the new schools' design to ensure sanitation and hygiene.

7. Participatory approach:

(a) Primary stakeholders:

Communities, parents and teachers constitute primary stakeholders in this project. Participation of stakeholders has been ensuredfrom project preparation through the Social Assessment Studies mentioned above. Social Assessment Studies providedopportunities to community members to express their views on education, barriers to education, and appropriate interventions. Asecond level of participation occurred in the preparation of district investment proposals through consultations with various groups.Consultations with teachers involved eliciting teachers' views on their relationships with the community, difficulties faced in thecourse of their job and reasons for low enrollment, dropout and low levels of academic performance. Consultations were also heldwith representative from the locally elected government bodies and NGOs. Detailed documentation of the consultation meetingsand SAS findings were made available to the appraisal team. The finally approved investment proposals will be shared with thestakeholders after negotiations.

During implementation, SMCs will mobilize communities for school mapping and microplanning. The project will also empowerlocal communities by enabling their involvement in school management and monitoring activities. Local communities willparticipate in continuous microplanning for school and resource mapping, community mobilization for school improvement,involvement in monitoring student and teacher attendance, carrying out and supervising community construction, and verifyingenrollment data and its use in planning school improvement. In addition, local decision making concerning the use of schoolimprovement grants and the appointment of local persons, preferably women, as.para-teachers have also been built into the projectdesign.

(b) Other key stakeholders: Other stakeholders include the Department of Women and Child Development, Department of RuralDevelopment and Panchayats, PRIs, Department of Health, Department of Social Welfare, Department of Women and ChildDevelopment and NGOs. They are involved in the pooling of resources and are represented in planning, implementation andevaluation groups.


F: Sustainability and Risks

1. Sustainability:

(a) Institutional Sustainability

The establishment of an integrated and coherent institutional framework will be an issue for sometimne due to the changes beingconsidered-by the new government in Rajasthan. As a part of implementing the 73rd and 74th Constitutional amendment todecentralize administration, the new government is committed to bring all projects and programs relating to elementary education,irrespective of the source of funding, under local government authorities. This transition will take a certain amount of time to beinstituted. Sharing of the responsibilities between the Rural Development and Panchayat Department and the EducationDepartment, sharing of institutions supporting both elementary and secondary education and the progressive integration of projectstructures into regular structures within the new framework starting about the fourth year of the project will continue to be monitoredduring project implementation. The transitional period of administrative change will be monitored closely.

GOR's cabinet-approved commitmnent to undertake financial responsibility for recurring expenditure after the project is a positivesignal for the integration and institutionalization of project interventions. During project implementation the state will have todetermine ways in which the pedagogical, managerial and organization innovations developed under this project will be transferredin a timely, effective and efficient fashion to the state's mainstream educational institutions. To ensure GOR's involvement inmainstreaming project interventions at project completion the project will outline after the mid-term review specific strategies andactivities that are going to take place at project completion. Pedagogical sustainability will deal with how the process of in-servicetraining and the system of on-site pedagogical support implemented during the project will be continued after project completion.Managerial and organizational sustainability will describe the strategies conceived to retain staff and maintain quality performancein DIETs, BRCs and CRCs after project completion.

(b) Fiscal Sustainability

The state of public finances in Rajasthan was described briefly in section E2. To provide the resources to universalize schoolingover the next five years with current teacher norms would require increased financial allocations of around 11 percent a year. Withthe current fiscal deficit of almost 7 percent and interest payments equal to almost 20 percent of revenues and increasing, theobjective cannot be reached. What is required is a longer time frame, changes in the level and composition of unit costs and, mostimportant, reform of state finances. The current project supports the strengthening of primary education in 10 of the 25 districts andis, therefore, one step towards universalization. The incremental recurring expenditures following completion of the project havebeen estimated at around Rs. 34 crores. This is three times the level of Government's required contribution during the project andalmost 30 percent of current plan expenditure on elementary education. These estimates, though large, suggest that the specificinterventions of the project can be sustained. One half of the incremental costs will cover the payments to the para-teachers inregular and alternative schools, and these payments are one third the level of regular teacher salaries. Thus total incremental costsare much less than they would be if the teachers appointed under the project were regular staff. In that case incremental costs wouldhave been equal to one half of current plan expenditures and thus less likely to be sustainable.

The project is a part of a set of expanded activities in primary education across the state that are anticipated to be implemented overthe coming years. If expenditure levels and patterns similar to those in the project districts are replicated across all districts, theincremental costs will require an increase equal to two thirds of existing plan expenditures, even if every additional teacheremployed across the state were to be a para-teacher. Given the deteriorating trends in public finances through the 1990s, the currentlevel of the fiscal deficit and the large proportion of revenues pre-empted by salaries, pensions and interest payments a reform ofpublic finances will be necessary if universalization of primary schooling is to be achieved in the near future. The Bank hascompleted a review of the fiscal situation facing the state and has begun discussions on a program of reform with the Government.

Project Appraisal Document Page 16Colntry: India Project Title: Rajasthan DPEP

2. Critical Risks (reflecting assumptions in thefourth column ofAnnex 1):

Risk Risk Risk Minimization MeasureRag

Annex 1, cell "from Outputs to Objective"

Future budget allocations by GOR to the project may H The use of RCPE for flow of funds and the role playednot be timely and adequate due to lower than by the DPEP Bureau in ensuring GOR's annualanticipated growth rates, competing demands on state contribution of 15 percent of the total project cost.resources and inadequate special central (GOI) GOR is committed to the annual recurring cost of Rs. 35assistance. crores (about US$8 million) for continuing to implement

project interventions after the project.Annex 1, cell "from Components to Outputs"

Difficulties in large-scale construction, particularly in M Use of local appropriate construction technology;areas where water is scarce. technical supervision; and training of SMC members in

monitoring construction quality.

Mobilization could be slow especially in remote areas L to M Establishing and facilitating SMCs to promote literacy inwith low levels of literacy and poor economic remote areas; the employment of local educated personsconditions. in these villages as teachers; and the use of folk media to

create awareness of the importance of education.

Community specific cultural patterns that interfere M Highlighting the maintenance of toilets duringwith the use of toilets. community mobilization.

Factors outside the project may limit rational M Policy and defined criteria for teacher deployment;deployment of teachers and make it difficult to keep appointment of local para-teachers by the community.teacher-student ratios at the state norm in manyschools.

Weakness in district and district professional M GOR assurance to positions trained staff in districts andinstitutions may slow down training and affect the sub-districts immediately after negotiations; involvementquality of training and on-site professional support. of NGOs, state and district resource groups; working

closely with GOR's Education and Rural Developmentand Panchayat departments

GOR's transfer of elementary education to the PRIs M to L Departments are in the process of clearly defining thewhich involves a change in institutional responsibilities of their respective institutions andresponsibilities. creating an effective coordination mechanism between

the two departments. Close monitoring by the DPEPBureau of the progress of institutional transition.

Overall Risk Rating MRisk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N (Negligible or Low Risk)

3. Possible Controversial Aspects:

None


G: Main Loan Conditions

1. Effectiveness Conditions:

None

2. Other [classify according to covenant types used in the Legal Agreements.]:

The Government of India and the Government of Rajasthan shall:(a) maintain policies and procedures a(equate to enable them to monitor and evaluate on an ongoing basis, in accordance withindicators satisfactory to the Association, the carrying out of the Project and achievement of the objectives thereof;(b) carry out with the Association a joint in-depth review of the Project on two occasions by December 31, 2001 and December31, 2004; such review to include a status report: (i) in both reviews, integrating the results of the monitoring and evaluation activitiesperformed, and (ii) in the first review set forth the measures recommended to ensure the efficient carrying out of the Project and theachievement of the objectives thereof; and(c) after the first review, take all measures required to ensure the efficient completion of the Project and the achievement of theobjectives based on the conclusions and recommendations offered by the Association during each such joint review in the course offurther implementation of the Project.

At negotiations Rajasthan provided assurances that it shall:(d) carry out the Project in accordance with: (i) the DPEP Guidelines; and (ii) the Project Implementation Plan agreed upon withthe administrator;(e) appoint individuals with adequate skills, qualifications and experience for the State Project Office and at all times maintainthe SPO, District Project Offices, State Institutes for Education Research and Training, State Institute for Educational Managementand Training and District Institutes for Educational Training with adequate staff, resources and facilities satisfactory to theAssociation;(f) appoint by July 31, 1999 and thereafter maintain a Financial Controller at the SPO with suitable experience and appoint byJuly 31, 1999 and thereafter maintain, a firm of chartered accountants with terms of reference and qualifications satisfactory to theadministrator for auditing the records, accounts and financial statements for the Project;(g) ensure that at least 95% of the teachers' posts in each Project District, starting July 1, 2000, remain filled throughout theProject implementation period;(h) establish by March 31, 200 1, a VEC/WEC for villages or urban areas having at least one school, a School ManagementCommittee in every new or alternative school with responsibility for assisting with Project implementation;(i) establish by December 31, 1999 technical resource groups at the state and Project District levels, to assist in the developmentand implementation of the Project;(j) by December 31, 2001 and December 31, 2004, furnish to the Administrator data, as of September 30, 2001 and September30, 2004, respectively, for all the Project Districts on (i) the enrollment of children in the age group of 6 to 10 years in primaryeducation, (ii) the primary education dropout rates and (iii) mathematics and language achievement scores of children in primaryeducation, all with separate categories for females, Scheduled Castes, Scheduled Tribes and other backward classes;(k) ensure that no involuntary resettlement arises from any use of land, or change of land use for the Project, except tothe extent that the Administrator agrees in writing prior to such resettlement that the arrangements for such involuntaryresettlement are satisfactory to the Administrator;(1) (i) implement the Project in accordance with strategies for improving primary education of female students; (ii) implementthe Project in any tribal area (as designated by Rajasthan in accordance with applicable state laws) in accordance with proceduresand strategies for the delivery of the Project benefits to tribal people as set forth in the Project Implementation Plan;.(m) select non-governmental and community organizations participating in the Project in accordance with criteria and proceduressatisfactory to the Association.

H. Readiness for Implementation[/] The engineering design documents for the first year's activities are complete and ready for the start of project implementation.[V] The procurement documents for the first year's activities are complete and ready for the start of project implementation.V] The Project Implementation Plan has been appraised and found to be realistic and of satisfactory quality.[] The following items are lacking and are discussed under loan conditions (Section G):

Proiect AppruisWl Document Page I8Counry: India Pjcct Title: Rjasthan DPEP

l. Compliance with Bank Poldi[LI 7his project complies with all applIcable Bank policies.[NA] [(The following exceptions to Ba6k policies ar rocommended for approval_. The project complies with all other applicable

Bank policies.]

Task Team Leader/Task Manager: N . K . J a n g i r a

Sector Manager/Dfrector. p h . arbison

Coutry.Manager/Directo Edwin R. Lim

Annex 1

INDIA: Rajasthan District Primary Education Project

Project Design Summary

Narrative Summary Key Performance Indicators Monitoring and Evaluation Critical AssumptionsSector-related CAS Goal:Improve quality, effectiveness Literacy rates especially of Census data. (CA) Sustained investment inand service delivery of India's women. Household survey data. quality basic education issocial and anti-poverty Economic and sector work. essential to enhanceprograms, including primary Years of education completed opportunity for economic andeducation. by the 15 years old and above social benefits to poor sections

population. of the population.

(R) The financial situation ofboth the State and Centralgovernments can slow theprogram of fiscal adjustmentand economic reform.

Project DevelopmentObjective:Assist GOR to strengthen state An increased percentage of 11- National education statistics. (CA) GOR will maintain itsand district capacities that 15 years old (especially female, Census data. commitment to basic educationensures good quality primary SC/ST, working and disabled Household surveys. beyond the project period andeducation (5 years) for all children, and children with Educational Management continue to provide adequatechildren, especially from limited educational Information Systems (EMIS). budget allocations, includingdisadvantaged groups such as opportunities) who have Project Management non-salary expenditures onfemale, scheduled caste (SC) completed primary education; Information Systems (PMIS). elementary education.and scheduled tribe (ST), and improvement in levels of Mid-term Review (MTR) andworking and disabled children. achievement. end-of-project reviews. (R) Future budget allocations

by GOR may not be timely andadequate due to lower thananticipated growth rates,competing demands on stateresources and inadequatespecial central (GOI)assistance.

Outputs:1. Expanded access to primary 1. About 300,000 additional EMIS. (CA) More accessibleeducation especially for children, out of which 150,000 The collection of information, education facilities; improveddisadvantaged groups. will be from disadvantaged monthly, by CRCs from quality of education; and

communities, in the age group School Management community mobilizationof 6-10 years will be enrolled Committees (SMCs), among disadvantaged groups.by 2002 and another 300,000 Alternative Schools (ASs) and(150,000 from disadvantaged Early Childhood Education (R) Competing demands oncommunities) additional Centers (ECEs) on enrollment state resources may affectchildren will be enrolled by the for the District Project Offices timely availability of funds,end of the project period. (DPOs). and more so the sustainabilityReduction in disparity in Sample surveys. of school quality inputs.enrollment rates between boysand girls, SC and ST and (R)The GOR's transfer ofothers to less than 5 percentage elementary education to thepoints by end of project period PRIs which involves a change

in institutional responsibilitiesand operating procedures.

2. Increased retention and 2.1 Improvement in grade EMIS.improved learning achievement transition rates. Reduction in The collection of information

drop out rates to less than 10 monthly by CRCs onpercent. attendance and quality of

programs for the DPO.

2.2 Transformation in Classroom observation studies.classroom practices from rote CRC feedback.to activity-based, child- Field visits.centered practices using VEC observations.materials developed underDPEP.

2.3 The improvement of PMIS.mathematics and language Achievement studies in 2001achievement scores when and 2004.compared to the achievementscores contained in the 1998baseline study of achievementby around 5 percentage pointsby 2001 and 25 percentagepoints by end of project period.

3. Improved state and district 3.1 The State Project Office EMIS.capacity to manage primary (SPO) and DPOs will be Field visits.education. staffed and functional before

commencing projectimplementation.

3.2 Block and Cluster Evaluation studies.Resource Centers (BRCs and PMIS.(CRCs) for professionaldevelopment of teachers willbe established and madefunctional in the first year ofproject implementation andcontinue after projectcompletion.

3.3 SMCs will be established Evaluation studies.and SMC members will be able Cluster Resource Centerto meaningfully manage school feedback.improvement by the end of theproject period.

3.4 Training of district and Field visits.block level management in PMIS.participatory planning andsupervision.

Project Components:

1.1 Constructing new schools 1.1 909 new schools, 1058 PMIS. 1.1 (R) Difficulties in large-and classrooms and repairing additional classrooms and 262 EMIS. scale construction, particularlyor rehabilitating existing schools (existing schools Evaluation studies in areas where water is scarce.classrooms. without buildings) constructed.

1.2 Placement of para-teachers. 1.2 7250 para-teachers in EMIS. 1.2 (CA) Maintain student-position and teaching with PMIS. teacher ratio to state norm andregular attendance and using rationalize teacher deployment.DPEF methods.

1.2 (R) Political influence maylimit the rational deploymentof teachers.

(R) Sustainability of para-teachers employed at lowerlevels of remunerationcompared to regular teachersbut doing equivalent work.

(R) Comparable studentperformance between studentsof para-teachers and regularteachers.

1.3 Supporting the preschoolcomponent of Integrated Child 1.3 700 ECE centers attached PMIS. 1.3 (CA) Early childhoodDevelopment Scheme centers to local primary schools Field visits. education and care improvesand selectively establishing opened; 2998 ECE centers school readiness of childrenEarly Childhood Development opened in areas where ICDS III which improves their length ofCenters. will be operational after the time and education in school.

first year.1.3 (CA) Empowered mothersfrom poor communities will bemore responsive.

2.1 Enhancing communityawareness and involvement in 2.1 Organizing awareness EMIS. 2.1 and 2.2 (CA) Localschool improvement by campaigns and monthly PMIS. communities are best suited forproviding monthly feedback to feedback sessions. Progress reports. addressing local and specificCRCs. Field visits. issues concerning student

participation in school.2.2 Establishing SMCs foreach school. 2.2 SMCs established for every Progress reports. (R) Mobilization could be slow

village. Field visits. especially in remote areas withlow levels of literacy and pooreconomic conditions.

2.3 Constructing toilets andproviding drinking water 2.3 6000 toilets constructed EMIS 2.3 (CA) Availability offacilities. and 798 hand pumps and 1113 PMIS separate toilets for girls is

PHED connections provided Progress reports. expected to improve theirfor drinking water with good Field visits. retention.maintenance by thecommunity. 2.3 (R) Community specific

cultural patterns may interferewith the use of the toilets.

2.4 Developing and providinginstructional materials. 2.4 Textbooks, workbooks and EMIS. 2.4 and 2.5(R) Weakness in

teacher guides developed/ PMIS. state and district professionalprocured and supplied to Progress reports. institutions (SIERT andstudents. Field visits. DIETs) may slow down

I__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ I______________training delivery and affect

quality of training packagesand the support ofimprovements in classroomteaching.

2.5 Providing continuous in-service training. 2.5 Master trainers, teachers EMIS

and para-teachers trained every PMISyear from year 1999 onwards. Progress visits

2.6 Developing targetedinterventions for focus groups. 2.6 Workbooks and extra AWPBs. 2.6 (CA) Empowering

teaching and learning material PMIS. communities and teachersdistributed. Escort services Implementation status reports. through meeting immediateprovided for students, needs stimulates schoolparticularly girls, to be brought improvement efforts.to school. Teachers and VECsreceive funds for school CA) Targeted interventionsimprovement increases participation and

improves student learning.3.1 Building and strengtheningstate and district project 3.1 Key staff trained and EMIS.offices. positioned in the SPO and PMIS.

DPOs. Progress reports.Field visits.

3.2 Establishing BRCs andCRCs at the block and cluster 3.2 84 number of BRCs andlevel respectively for 1041 CRCs constructed andmonitoring and training. trained staff, positioned.

3.3 Establishing andstrengthening state and district 3.3 Staff in SIERT, RSTB, PMIS. 3.3 (R) Delay in GOR staffinginstitutions (SIERT, RSTB, SIEMAT and DIETs Implementation status reports. policy may delay theSIEMAT and DIETs). positioned. Persons trained functioning of these

and materials developed. institutions.3.4 Project Monitoring andEvaluation Third party evaluation studies

will be carried out. EMIS andPMIS data will be collected. Supervision MissionsProgress reports, samplesurveys and classroomobservation studies will bedone. The financialmanagement system willmonitor procurement anddisbursements

Annex 2Page I of 4

Annex 2


Project Description

Rajasthan is an educationally under-developed state with a literacy level of 38.8% (1991), which happens to be the second lowest inthe country. The state has the lowest female literacy rate (20.8%) in the country. Low levels of literacy, especially female literacy,qualifies the districts in Rajasthan for support under the carefully-designed and well-established District Primary Education Programsince DPEP targets states with female literacy rates that fall below the national average. IDA has agreed to fund 19 districts. Theproposed credit covers 10 districts in phase I, and the preparation for funding the remaining 9 districts in phase II will commenceduring phase I. The Swedish Aid Agency (SIDA) has been funding 10 blocks in phase I districts and 8 blocks in the phase II districtsunder the Lok Jumbish project. During the project period the 10 Lok Jumbish blocks will be subsumed under DPEP project and it isexpected that Lok Jumbish, with DFID funding will cover the remaining 13 districts not covered by DPEP. The proposed project willassist the Government of Rajasthan (GOR) to build and strengthen state, district and sub-district capacity to accelerate progresstowards universal primary education in the ten low literacy districts in Phase I of the project. This will be accomplished by fosteringconditions that allow more children, especially from socially disadvantaged groups to complete a five-year primary education cycle ofreasonable quality. These groups include, females, SC, ST, Other Backward Communities children (identified in the SocialAssessment Study), children with mild to moderate disabilities, and working children. The project will support activities designed to:(i) increase access to primary education; (ii) increase retention and improve learning achievement; and (iii) strengthen the capacity ofinstitutions at the state and district levels to manage primary education.

Project Component 1: Expanding access - US$20.2 million (total cost of component)

(i) The construction of schools and classrooms: The project will fund the construction of new schools and additional classrooms.Two types of new schools are envisaged in the project --new primary schools (Shiksha Swayam Sevi Vidyalayas) and alternativeschools. New primary schools are to be constructed in villages with populations of above 250 and in villages with a concentration ofSC/ST children and in desert, hilly tracts and tribal areas with populations of 150. New schools will have two classrooms withsanitary and drinking water facilities. The credit will fund 909 new primary schools. Alternative schools will be constructed invillages with a population of less than 150. The 2455 Alternative schools will be of two types - 6-hour and 4-hour. The 1743 6-hourschools will be located in remote inaccessible areas while the 712 4-hour schools are intended for working children without primaryeducation and for children who have dropped out of the regular school system. Physical structures for both 6-hour and 4-houralternative schools will be provided by the community and GOR. Decisions on where new schools are to be constructed will be basedon microplanning focusing on the size of the population and the various social groups represented. These decisions will also be madein conjunction with local communities and will be located near to disadvantaged households. Effective technology and innovativedesign will characterize the construction of new schools. School Management Committees will construct new schools and additionalclassrooms with technical supervision by the Rajasthan DPEP's civil works personnel. In addition, 262 schools are to be constructedfor existing schools that are without buildings. 1058 additional classrooms adjoining already existing schools will also be constructedto accommodate additional enrollment.

(ii) Vacant teacher positions and para-teachers: Para-teachers will staff both new primary and alternative schools. Project fundswill be used to recruit 7250 para-teachers. 1818 teachers will be recruited for new primary schools. 1743 para-teachers will be hiredfor the 6 hour alternative schools and 712 teachers will be hired for the 4 hour alternative schools. In case of increased enrollment andin order to maintain the state teacher-pupil norm of one teacher for 49 (or less) students in a class, an additional 2977 para-teacherswill be hired. The qualification norm for para-teachers is to be grade 10 pass relaxed to grade 8 pass in remote areas. The policy ofrecruiting para-teachers from the community in which the school is located has evolved from the results of the Shiksha Karmi projectin Rajasthan. According to the Baseline Assessment Study, students taught by para-teachers in the Shiksha Karmi model performbetter than students taught by regular teachers, indicating the value of employing teachers with a sense of belonging and acommitment to the community rather than qualified teachers without this community involvement. Furthermore, the support ofcommunities is ensured in that the School Management Committee will play an important role in the selection and appointment ofpara-teachers for alternative schools in their own communities. The Rajasthan Government has assured the Association that 95% ofteacher posts in project districts will remain filled during the project period.

(iii) Early childhood education: The project will establish 2998 early childhood education centers where the Integrated ChildhoodDevelopment Scheme (ICDS) is expected to be operational in one year and 700 ECE centers attached to primary schools (in locationsnot eligible for ICDS centers). In addition, GOR intends to strengthen the early childhood education centers by providing training, pre-school kits and a remuneration of Rs.200 to each worker/teacher.

Annex 2Page 2 of 4

Project Component 2 Increase retention and improve achievement - US$42.6 million (total cost of component)

(i) Community mobilization: Community mobilization forms a significant component of the project and is expected to promoteenrollment, retention and achievement. By organizing community level activities and utilizing local NGOs the project willcommunicate to community stakeholders the importance of education and the need for actively supporting and monitoring theprovision of education in their local communities. Communities will also be involved annually with school mapping.

(ii) School Management Committees: A School Management Committee will also be formed for every school and educated withrespect to ways in which the Committee can manage the schools in their villages in areas such as monitoring school quality anddiscouraging teacher and student absenteeism. The Village Education Committee will oversee a cluster of SMCs. SMCs will alsoplay a critical role in school construction and in drawing students from disadvantaged backgrounds into the school system. Thechairperson of the SMCs will be the Head of the elected village governmental body (Gram Panchayat). The SMCs will be composedof representatives from SC/ST groups, parents of disabled children, ECE workers, parents, teachers and headmasters. 30% of theVECs will be women. In urban areas ward committees will be formed in place of SMCs. The main functions of the SMC are schoolmapping and micro planning, decision making and involvement in construction activities and school maintenance, identification andselection of para-teachers and school improvement (monitoring teacher and student attendance and performance). For convergence ofresources for school construction from other schemes, SMC with VECs will collaborate with the Panchayati Raj Institutions (PRIs).JRY, EAS and BZBZ schemes involve the joint contribution of government funds and local contributions for the construction ofprimary schools. In addition, available monetary and non-monetary inputs will be mobilized from the communities by the SMCs andVECs for enhancing the effectiveness of project interventions.

(iii) Drinking water and toilets: The absence of drinking water on the school premises causes students to miss classes in order toquench their thirst. Similarly, the lack of sanitary facilities negatively affects the consistent attendance of students especially girls.Drinking water will be made available on school premises by installing 798 ne>v hand pumps and 1113 PHED connections or drinkingwater taps. 6000 toilets, especially for girls will also be constructed. In areas where water is scarce, dry toilets may be constructed.

(iv) Instructional material: The project will develop an appropriate curriculum and textbooks based on already existing materialcreated by the State Institute of Educational Research and Training (SIERT) and Lok Jumbish. The free distribution of textbooks byGOR necessitates the creation of a standard textbook with a uniform curriculum. The ITF credit will be used to fund the developmentof the textbook "till a camera ready copy" is completed and the textbooks are field tested, and GOR will fund the printing anddistribution of textbooks. Project funds will also be utilized for the development, printing and distribution of appropriate teachingguides for the textbooks and student workbooks.

(v) In-service training: Successful implementation of educational reform depends upon effective training and continuous schoolbased evaluation of pedagogy. The structure and content of training vast numbers of teachers that have been developed in DPEP 1,DPEP II and DPEP III and in the Shiksha Karmi program will be adapted to the Rajasthan DPEP project. For each district there willbe four to five key subject specific resource persons chosen from District Institutes of Educational Training (DIETs), NGOs andEducation Departments. These resource persons will receive six days of training by the Shiksha Karmi resource unit. Block Resourcecenters (84) to be constructed at the block level and Cluster Resource Centers (1041) to be constructed for a cluster of villages will beresponsible for the training and continued school-based professional support to the teachers for improving teaching and learning.Block resource personnel will be trained for ten days by the key resources persons including teacher trainers from the Shiksha Karmiproject. Block resource personnel will in turn be responsible for teachers already in service and for newly recruited para-teachers.Teachers in service will be given nine days of training in the first year plus six days of training in the consecutive years. In the firstyear, para-teachers will be given 45 days of foundational training plus 10 days of remedial training. In each consecutive year para-teachers will be given 30 days of content-based training, and ten days of remedial training. Cluster resource personnel will provideschool-based monitoring and on-site professional support through scheduled and unscheduled visits to help the teachers implement theteaching and learning practices presented in training courses.

(vi) Targeted Interventions: This category comprises of a variety of activities to encourage student attendance, especially of childrenfrom disadvantaged communities. Activities intended to target the retention of the general student population include: setting up afund of Rs. 2000 for each school for school improvement through the VECs; recognizing good teacher performance; and enablingteachers (by providing Rs.500) to purchase materials to prepare their own instructional aids. In addition, students from disadvantagedcommunities will receive free teaching and learning materials, and female students will be provided free escort services to and fromtheir schools.

Annex 2Page 3 of 4

Project Component 3 Improve state and district institutional capacity to manage primary education - US$38.5 million (totalcost of component)

The state level body -Rajasthan Council of Primary Education (RCPE) has been established as an autonomous body and is registeredunder the Registration of Societies Act 1958. The RCPE is responsible for the complete planning, implementation and monitoring ofthe District Primary Education project. The RCPE consists of a governing council and a State Project Office (SPO). The governingcouncil, headed by the Education Minister of the State, deals with policy planning and review and it approves all Annual WorkProgram Budgets (AWPBs). The SPO with its executive council headed by the Education Secretary GOR is responsible for leadingimplementation. The RCPE's governing council will oversee the implementation of the state and district AWPBs by the State ProjectOffice and 10 DistriLI Project Offices.

(a) State Project Office (SPO): The SPO will supervise and direct the project at the district and sub-district level through the DPOs.Since, convergence is an important aspect Rajasthan DPEP, an important task of the SPO will be the identification of local resourcesavailable to DPEP. The SPO will also coordinate the activities of various institutions such as NGOs, the Rajasthan Department ofEducation and auxiliary institutions including the SIERT and SIEMAT. In addition, the SPO will be responsible for the monitoringand reviewing of DPEP interventions, inputs and outputs. Both the SPO and the DPOs will be staffed with key personnel and will beoperational at the commencement of the project using initial fumding from GOI and GOR. Personnel at the SPO already appointedinclude a State Project Director; program officers for primary education, alternative schools, community mobilization, and civilworks; and data entry operators. All key staff will be in place by June 30, 1999. A computerized fmancial management system willbe implemented by April 1, 2000 and an accounts professional will be appointed by June 30, 1999.

(b) District Project Offices (DPOs), Cluster Resource Centers (CRCs) and Block Resource Centers (BRCs): DPOs implementplans in addition to managing the flow of funds to project activities at the block and cluster levels through BRCs and CRCs/VECsrespectively. DPOs will also coordinate the activities of District Institute for Educational Training (DIETs) specifically with regardsto teacher training. In addition, an important function of the DPO in the effective management of the DPEP will be to coordinate thefunctions of the District Education Offices (DEOs) and the local elected government bodies that are in-charge of elementaryeducation. Other functions of the DPOs include the implementation of the civil works plans; microplanning with communities tofacilitate and accelerate the EMIS, awareness building at the community level and coordinating convergence with other agencies andNGOs. Key personnel including the project coordinator and accounts officer are already in place in the ten DPOs. The project fundswill support construction and facilitate the BRC's efforts at providing and overseeing teacher training and microplanning. Each BRCwill have a facilitator and four resource persons. Decisions regarding the construction of BRCs will take into consideration alreadyexisting buildings that can be utilized as BRCs. The cluster facilitator at CRCs will offer continued in-house and school- basedpedagogical support to schools. In addition, CRCs will be involved in mobilizing community support for schools in each village andin the data collection for the EMIS.

(c) SIERT, SIEMAT and DIETs,: The ITF credit will finance the strengthening of State Institutes for Educational Research andTraining's capacity through technical support from responsible national institutions for curriculum revisions and textbook preparation,the development of training modules and the training of staff from the District Institutes of Educational Research and Training andother resource persons to train teachers. DIET staff and other resource persons will in turn train master trainers who will beresponsible for introducing teachers to the new child-friendly and activity-centered pedagogy envisaged in DPEP. The State Institutefor Educational Management and Training will be responsible for training educational management personnel. SIEMAT's role will beperformed by specialists in management and planning operating from an already existing institution.

(d) Monitoring, Research and Evaluation: The Educational Management Information System (EMIS), Project ManagementInformation System (PMIS) and Financial Management System (FMS) will be used for monitoring progress. Third party evaluationstudies will also be carried out. This will involve an annual review of implementation covering physical targets for civil works,procurement, training, software/systems, development and expenditures and of the action plans, investment proposals and financingrequirements for the next fiscal year. The review will be conducted by DPEP in the first quarter of each year. Progress reports andwork plans would follow a common framework for all the districts. Progress toward the achievement of development objectives willbe measured in several ways: (i) District-based assessment surveys conducted in the third and last year of the project will monitorprogress on key education indicators. Most importantly student learning achievement will be measured against the baselineassessment study carried out during project preparation and will be presented by GOR during the third annual review and at projectcompletion; (ii) Classroom observation studies will evaluate the extent to which teachers have appropriated in-service training and theextent to which teachers are implementing the more child-friendly pedagogy in the classroom; (iii) PMIS, in compliance with theIDA's Loan Administration Change Initiative (LACI) requirements, will provide quarterly information on the project's physicaltargets for civil works, procurement, and training, software/system development and expenditures. The EMIS will provide age-specific enrollment data at village level; year-wise retention rates by grade, gender and socially disadvantaged students for consecutiveschool years; and average student and teacher attendance data. This information will be based on school records in addition to VECattendance reporting mechanisms and sample surveys. The FMS will monitor disbursement and financial management; (iv) Annual

Annex 2Page 4 of 4

supervision reports will be prepared by the DPEP Bureau and the DPEP Joint Supervision missions carried out twice a year by GOIand program donors, including IDA, administrator of the ITF credit. In addition, the DPEP Bureau and DPEP project states willconduct an annual implementation review workshop where states will report on their project implementation progress and shareexperiences in the implementation of one program element selected in consultation with the program donors; and (vi) Two in-depthreviews will be conducted by GOI and GOR

Annex 2APage I of 3

Annex 2A

Social Assessment Survey

Social assessment surveys focusing on local-micro-level contextual dimensions of cultural practices and social institutions relevant toeducational performance and participation was conducted in the ten DPEP project districts. Surveys made use of secondary data,household surveys, focus group interviews, and time budgeting of children and women. The sample consisted of ten villages fromeach district. The SAS identified the socially disadvantaged communities in the ten districts and the stakeholder perceptions of thebarriers to school enrollment and retention.

Literacy rates and % SC/ST in the population

District %SC in % ST inM F SC/M SC/F Population ST/M ST/F Population

Alwar 61 23 51 11 18 53 7 8Bhilwara 46 17 34 5 17 23 2 9Ganganagar 55 26 31 7 30 53 19 .3Jhalawar 48 16 35 6 17 35 5 12Jhunjhunu 68 26 56 13 15 64 16 2Kota 64 30 50 13 20 44 9 14Nagaur 49 13 29 3 20 46 7 .2Sikar 64 20 51 8 14 57 11 3Sirohi 46 17 39 8 29 _16 2 23Tonk 50 15 43 6 20 40 3 12

The above table in the Social Assessment report conveys the relative literacy position of females, SC/ST communities. In addition toidentifying levels of disparity among traditionally disadvantaged groups listed above, the social assessment survey provides moredetailed empirical information on specific disadvantaged communities within the SC/ST communities and among other backwardcommunities (OBCs). The table below summarizes the disadvantaged communities in each district.

Disadvantaged groups in the ten districts

District Dropout Minorities OBC SC ST(6-11)

Alwar 58.17 Meos Yadavs Chamar MeenaSD=4 Mali HarijansPS=14 Nais BalaisGP=478 Dhobi KhatikV=1946Bhilwara 63.36 Muslims Bagaris, Gujaras Khalbelias (N), Nayaks BhilsSD=5 Gadris Raigars Balais KanjarsPS=II Banjaras KeersGP=378V=1670Ganganagar 42.30 Nais, Kumbhar, Lavan Sikh, MahjabiSD=5 Suthar Sikh, Kammo Sikh,PS=7 Bavari Sikh, Meghwal,GP=291 Chamar, Bavari, Nayak,V=2738 Balmiki, OadJhalawar 65.30 Julahs, Banjaras, Chamars, Harijans,SD= Mirasis, Lodhas, Suthars, Balais,P=S6 Mewati Kumhars, Naths,GS=251 Bairagas,V=1448 Luhars, Telis

Annex 2APage 2 of 3

Jhunjhunu 41.30 Chodar, Gujaras, Yadavs, Balai (N) Raigar (N) MeenaSD= Fakir, Kaji Jangid, Mali, Chamar (N) Harijan,PS=8 Bisaity, Charan, Dakot, Dhanka Khatik DhobiGP=288 Teli, Kasi, Nayak, Luhar, SansiV=824 Leelgar Badgurjar, Nai

Kalal DarogaTeli

Kota 94.66 Muslims Gandiya (N), Raigar, Chamar, Kahar, Bhil, BhilSD=2 Banjare (N), Basera, Balai ThakarPS=5 Gujaras, Bhoi, MeenaGP= 162 Bangare.V=8l1Nagaur 41.24 Muslims Bagaris, Gujaras Chippa, Rebari, Meghwal, Sansi MeenaSD=4 Banjaras Harijan, Gawaria,PS=11 NayakGP=461 TeliV=1467Sikar 55.69 Muslims Saini Balai, Raigar, Meghwal MeenaSD=3 Gujaras SansiPS=8 Kumavat BhopasGP=33 3V~931Sirohi 61.26 Muslims Rebari, Kale, Meghwals, Kolis, Meen,SD=2 Mali, Nth, Jog Sargara, Gameti Garasiya,PS=6 BhilV=446Tonk 61.06 Nagori Gujaras Khanjar SansiSD=2 muslimsPS=6V=1019__ _ _ _ _ _ _ _ _

SD=Subdivisions; PS=Panchayat Samitis; GS=Gram Panchayats; V=Villages

Lack of female participation cuts across caste and class, females belonging to the higher castes such as the Rajputs and the Jats arediscouraged from going to school. Causes for the lack of female participation beyond the scope of DPEP are: a woman's acceptedposition in society as lower than their male counterparts; domestic chores; early marriage; segregation because of the purdah systemand gender; parental perceptions of their girl child as parayadhan (outsider) symbolizing their future belonging in their husband'sfamily; and perceptions of education as more corrupting than benefiting the girl child. Strategies identified by the Social AssessmentStudy for increasing female participation that are addressed by project interventions are: employing female teachers; more appropriatetimings; sibling care; conveying the importance of female literacy to parents and communities; and mobilizing community support.

Causes identified for the lack of enrollment and persistence in education among the disadvantaged communities that cannot beaddressed by DPEP include lack of support and resistance from higher castes, notions of purity and pollution, migration, agriculturaland grazing activities and irresponsible parenting (alcoholism, parents encouraging absenteeism due to family functions and festivals).Many of the DPEP interventions such as the proximity of schools, toilet and drinking water facilities on the school premises,transformed atmosphere in the classroom with consistent teacher attendance, the timely availability of attractive and interestinginstructional material, and the involvement of the community are described by parents and teachers in the social assessment survey asmeaningful and useful interventions that can increase enrollment and retention.

Third party evaluation, the mid-term review and EMIS will provide progress on enrollmnent and retention of students fromdisadvantaged communities listed in this survey.

Annex 2APage 3 of 3

Annex 2B

Baseline Achievement Survey

In preparation for this project baseline assessments of achievement was conducted in mathematics and language. The sampleconsisted of 13625 students including students from Shiksha Karmi schools.

Table 1: Achievement Grade 1 mathematics and language (actual scores)

Mathematics (maximum score=20) Language (maximum score=20)District SC ST SC ST

Rural Urban M F M F Rural Urban M F M FAlwar 13 14 14 13 12 14 11 15 13 13 14 13Bhilwara 10 11 9 11 10 11 10 10 9 11 10 9Ganganagar 13 15 13 11 19 13 11 15 11 11 16 14Jhalawar 12 14 12 12 11 10 11 14 11 13 10 9Jhunjhunu 14 16 14 14 14 13 13 16 14 12 10 12Kota 10 11 11 9 9 9 8 8 8 7 8 8Nagaur 11 11 14 11 14 12 11 11 13 12 16 12Sikar 14 13 15 14 12 11 13 13 13 12 14 14Sirohi 10 12 11 10 10 10 11 12 1 1 11 11 11Tonk 11 15 10 10 12 10 10 17 10 9 10 11

Table 2: Achievement Grade 4 mathematics and language (actual score)

Mathematics (maximum score=40) Language (maximum score=70)District SC ST SC ST

Rural Urban M F M F Rural Urban M F M FAlwar 15 19 17 16 14 15 34 37 38 34 33 34Bhilwara 14 17 14 19 13 12 33 33 32 36 32 31Ganganagar 14 15 14 14 14 12 33 38 34 32 40 30Jhalawar 12 11 12 10 11 14 32 29 31 27 30 35Jhunjhunu 17 19 14 16 16 14 38 41 32 37 38 32Kota 11 10 10 10 11 13 29 31 28 27 29 32Nagaur 15 17 15 14 15 15 34 31 35 35 25 38Sikar 15 14 15 15 15 17 35 34 33 36 31 36Sirohi 12 15 12 12 11 9 31 37 32 30 27 23Tonk 14 19 13 15 15 14 34 47 31 36 34 39

Annex 2APage 4 of 3

Table 3: Comparison of the scores of general government rural students and the scores of shiksha Karmi students (in percent)

Mathematics LanguageGrade 1 Grade 4 Grade 1 Grade 4

District Rural SK Rural SK Rural SK Rural SKBhilwara 50 62 35 33 49 56 47 47Ganganagar 61 78 35 42 54 74 47 52Jhalawar 58 65 30 31 55 59 45 46Kota 45 73 26 43 37 64 40 54Nagaur 55 63 38 48 55 54 48 48Sikar 68 71 36 53 61 71 49 62Sirohi 52 36 29 33 53 53 44 44Tonk 51 59 33 50 48 47 46 65

NB.: Maximum score is in brackets.

Major findings are:

* Grade I achievement varies from 7.96(39.80%) to 13.76 (68.80%) in language and 9.71 (48.55%) to 14.34 (71.70%) inmathematics.

* Grade 4 achievement varies from 29.0(41.4%) to 38.83 (55.5%) in language and 10.66 (26.65%) to 17.34 (43.42%) inmathematics.

i The performance of urban students is higher than rural studentsi No significant differences are evident in performance between girls and boys; and SC/ST and the rest of the students.i Significant differences are evident between the performance of students from the general government rural schools and students

from Shiksha Karmi schools. Shiksha Karmi students' scores are higher that the general government school students in bothmathematics and language especially in Grade I.

Annex 3

Annex 3


Estimated Project Costs

Project Component Local Foreign Total-----------------------US $ million--------------------

Expanding Access to Primary Education 18.3 0.1 18.4Increasing Retention and Improving Learning Achievement 38.0 0.6 38.6in Primary SchoolImproving State and District Capacity to Manage Primary 35.0 0.4 35.4Education

Total Baseline Cost 91.3 1.1 92.4Physical Contingencies 7.0 0.1 7.1Price Contingencies 1.7 0.1 1.8

Total Project Cost 100.0 1.3 101.3

Annex 4Page I of 5

Annex 4


Cost Benefit Analysis Summary

E. Summary Project Analyses

1. Economic:

a. Economic and social returns. The economic and social returns to primary schooling in India, in general, have been described in theProject Appraisal Documents for primary education projects in Bihar (3012-IN), Uttar Pradesh (3013-IN) and in Andhra Pradeshbased on research studies reported in the Bank publication, Primary Education in India (1997). Summarizing, analyses of long rundata on rural household agricultural productivity and a disaggregation of the sources of economic growth in the 1970s and 1980sreinforced the positive findings of earlier studies of the rates of return to primary education and provided additional evidence ofexternalities. Differences in educational development between states have also been shown in recent Bank poverty studies for India tobe a major cause of variations in the incidence of poverty. In addition, the Health and Family Welfare Surveys conducted in eachmajor state in India in 1993 suggest that, across all states, primary schooling of mothers is associated with reductions in childmortality of 40%, fertility of 25% and severe child malnutrition of 33%. These are substantial effects with significant economicconsequences, in addition to improving the quality of life for women and children in particular.

No studies of the economic returns to schooling have been undertaken specifically for Rajasthan though the positive conclusions ofthe across-states analyses (National Family Health Survey 1992/93: Rajasthan.) are likely to be equally applicable there. The effectsof mothers' schooling on aspects of social behavior have been measured and some of the results are described in table 1. Actual andpreferred fertility rates fall consistently by mothers' educational level with the largest falls (15-16%) associated with a primaryschooling. The reduction in the under-five mortality rate is relatively small (14%) at lower schooling levels though there is a markedimprovement in the proportion of children who receive the full complement of inoculations (129%). There is generalundernourishment in Rajasthan with around 40% of children severely undernourished and 19% chronically undernourished. Whilethere is a slight reduction in rates of chronic malnourishment for children whose mothers have a primary schooling, it appears that acomplete elementary education of eight years is required before there is a significant reduction in the rates (6.3 percentage points).

Table 1. Fertility, Child Mortality and Nutritional Status by Mothers Education. Rajasthan, 1993.

Children Ideal Number Under-Five All Child ChildrenEver Borne of Children Mortality Inoculations Undernourished

(per 1000) (%) (%)

Illiterate 3.3 3.1 112 15.4 19.8Primary 2.8 2.6 96 35.2 18.8Middle 2.4 2.5 --- 58.1 13.5Secondary + 2.1 2.2 49 --- 14.4

(b) Poverty reduction. There are two sets of justification for governments to subsidize education. One utilizes arguments ofefficiency and externalities and the need for aggregate coverage at levels beyond those which would be purchased by individuals. Theother focuses on social equality and poverty alleviation. To assess the potential role of government subsidization of primary educationin reducing poverty, two issues need to be addressed - the impact of education on income and the extent to which governmentexpenditures are captured by the poor. As noted above, there is sufficient evidence from existing studies in India, and elsewhere, toconfidently predict that higher levels of education lead to higher income. Recent analysis ("Why have some states in India performedbetter than others in reducing absolute poverty," Datt and Ravallion, 1996; "Reducing Poverty in India: Options for More EffectivePublic Services, World Bank, 1998) has also documented the extent to which the poor in India, including in Rajasthan, havedifferential access to education compared to middle and upper income groups.

Together with Bihar, Rajasthan has the lowest education indicators across Indian states. According to the Health and Family WelfareSurvey, 82 % of rural females and 75 % of all females over 6 years of age in Rajasthan were illiterate in 1993. For males the rateswere 44 and 40 % respectively. Overall, fifty six % of the total population was illiterate and only 28.9 % had completed a five-yearprimary schooling. Not all social and income groups are equally poorly educated. Children in the wealthiest 20 % of households inthe state have virtually the same chance of being in school as in any other state. It is children in the poorest households who do nothave access. For instance, only two in five children in the poorest 40 % of households in Rajasthan attend school compared to over

Annex 4Page 2 of 5

three in five children from the middle 40% and over nine out of ten children in the richest 20% of households. In this respect, thesituation in Rajasthan is worse than in any other state apart from Bihar. In Tamil Nadu and Kerala, for example, 72 and 89% ofchildren in the poorest income group are in school. Poor girls in particular are denied schooling in Rajasthan. Only 17% of girlsliving in the poorest category of households are in school and only 2% of 15-19 year old girls in this income group have completedeight years of schooling compared to 71% of girls in the most wealthy 20% of households. In Kerala, 58 % of the poorest girls havecompleted eight years. Not only do few children from poor and middle income households attend school at any point in time,completion rates, particularly for the poor, are low in Rajasthan and below those in most other states (Table 2).

Table 2. School Attainment by Household Income. Selected States.

Bottom 40% Top 20%Cohort Finished Finished Cohort Finished

Grade I Grade 5 Grade 8 Grade I Grade 5 Grade 8

Rajasthan 100 35 29 14 100 91 90 77Maharashtra 100 59 47 28 100 98 96 83Tamil Nadu 100 68 52 27 100 98 96 84

If Rajasthan is to meet the objective of universalizing primary education, the major challenge is to reach poor and middle income girlsand poor boys. Children from relatively wealthy households are already in school and most complete a full elementary education.

As background to the Bank's recent report on poverty in India, (Reducing Poverty in India: Options for More Effective PublicServices) Lanjouw and Ravallion estimated the degree to which a number of the Government's explicit anti-poverty programs impacton the poor and compared these to the effects of expenditures on primary education. Across all-states, among the three main anti-poverty programs, the poor were relatively more likely than higher income groups to be included in the public works programs, thenthe subsidized credit program and finally the subsidized food program. Regarding the distribution of expenditures on primaryeducation, current enrollment rates by income groups, both nationally and in Rajasthan, increase by quintile income group - inRajasthan from 27% to 58% suggesting that current expenditures confer increasingly greater benefits to higher income groups.However, the authors also calculated marginal participation rates - the increment in participation for each given income groupassociated with a change in total participation. The picture is sharply reversed and an expansion of primary schooling is shown to bedecidedly pro-poor at the margin, comparing well with the explicit anti-poverty programs. The exercise suggests across all-states, thatwhile the existing expenditure program results in 14% of the total going to children in the poorest 20% of households, their share inany additional expenditure would increase to-22%.

Poverty in Rajasthan is severe with 47% of the rural population living below the poverty line (World Bank Report, 1997). AcrossIndia, states have performed differently in reducing poverty. Datt and Ravallion have attempted to isolate and measure the reasons forthis for the period 1958 to 1991. Taking Kerala's annual rate of reduction in poverty (measured through the rural headcount approach)as the base, the question is asked as to how much of the difference between each state's rate of poverty reduction and that of Kerala isdue to differences in the spread of irrigation, female literacy, and the health of the population measured through the infant mortalityrate. In the case of Rajasthan, the incidence of rural poverty declined at an annual rate of 1.47 percentage points below the rate inKerala. According to the study, the main cause of this (equal to 1.09 percentage points) was the low level of female literacy. Of allstates, apart from Jammu and Kashmir, the impact of low literacy levels in slowing down the rate of poverty reduction, was greatest inRajasthan. Overall, recent empirical analyses show that (a) increasing literacy through expanding and improving primary educationcan reduce levels of poverty and (b) increases in expenditure on primary education are more than proportionately captured by thepoorest children.

(c ) Internal efficiency and cost effectiveness

Low completion rates and high dropout characterizes the primary education system in Rajasthan. Government figures indicate that forevery 100 children who enrolled in class I in 1993 in the ten project districts, only 43 children completed class V, five years later.Two of the district plans presented annual grade-wise enrollments from 1993/4 to 1997/8. These are shown below:

District Grade 1 2 3 4 5Sirohi 28,812 12,368 11,188 10,276 9,368Nagaur 135,777 65,067 40,501 33,353 32,457

Overall retention rates were 32 and 24% - significantly below the official rates. The main problem appears to be in grade I. Of thosewho did enroll in grade II, 76 and 50% completed the primary cycle four years later. Using a standard flow model, the officialcompletion rate implies that to produce 430 graduates from a 1000 entry utilizes an amount of resources equal to 7.9 pupil-years per

Annex 4Page 3 of 5

graduate of a five-year cycle. This implies that around 60% more resources are being used than would be required if dropout rateswere zero. Expenditure on elementary education in Rajasthan in 1996/97 was Rs. 1055 crores. For the same number of graduates anefficient system would have required almost Rs. 400 crores fewer.

The DPEP, including this project, gives a major emphasis to quality improvement both to increase levels of learning of those whograduate and to reduce the levels of repetition and dropout. Reports prepared for the Mid Term Review of DPEP I were not able toproduce accurate assessments of the effects of the project on dropout rates. Repetition rates had decreased in all DPEP districts inTamil Nadu, Assam, Karnataka, Maharashtra and Haryana, on average by 7% a year. The most dramatic falls were in Assam wherevery high rates (around 35%) had been halved. A program - Shiksha Karmi - already exists in parts of Rajasthan to improve thequality of schooling through training courses and the dissemination of newly developed materials and through increased levels ofcommunity support and involvement. Around 6000 villages in 75 blocks have been involved in the program, initiated in 1992 andtaken to scale in 1995. In several ways the proposed project within DPEP is based on the experiences of this program. A recentevaluation ("A Review of Gender Issues in the Shiksha Karmi Project," Sherry Chand et al., 1997) has compared retention rates inschools coming under the program with others in adjacent areas outside of the program. Taking 1993/94 intakes, 39% were in class Vin 1997/8 in the Shiksha Karmi schools compared to 25% in the comparator schools outside of the scheme. These rates translate into8.0 and 11.4 teaching years per primary school graduate respectively in the two types of schools. If the project is similarly successfulin this area, the cost per graduate would fall by around 30%.

(d) Component alternatives, innovations and cost effectiveness

The DPEP, initiated in 1994, is now being implemented in over 150 districts in fourteen states. IDA loans currently support threeprojects within the Program. Projects are developed within overall GOI Guidelines which outline the activities which are allowed andplace financial ceilings for civil works and project management. A feature of the Program is the continuous learning which occursresulting from common training programs, interactions between project teams across states and from the joint supervision missions.An outcome of this has been an in-built testing of alternatives in project conception, composition and mode of implementation. Inaddition, as part of the ESW leading to Primary Education in India, data from the baseline studies of learning achievement, andschool, teacher and student characteristics undertaken in the initial set of seven DPEP states were analyzed to assess which of thepolicy variables open to change had important potential effects on levels of learning achievement.

The Baseline Assessment Survey for Rajasthan allows some very crude initial observations regarding the relationship betweenlearning achievement and educational inputs including teachers, learning materials and physical infrastructure. Achievements inmathematics and language were measured for pupils completing classes I and IV across the ten project districts. The availability ofteaching-learning materials (12 items) and aspects of school facilities (14 items) plus the level of teacher vacancies were alsomeasured. Across the districts, the school-related variables significantly correlated with achievement scores were: teacher vacancies,reference and story books and magazines, toilets and tables for teachers. Further analyses of the data have been agreed to by the state.

In the proposed project, the main innovation being piloted is the use of so-called para-teachers. Teachers salaries currently consume97.6% of combined plan and non-plan expenditure on elementary education in Rajasthan leaving little for learning materials and otherinputs which may have a positive effect on the quality of schooling. The total number of teachers in primary schools in 1996/97 was95,044 plus almost 36,000 teachers in primary sections of upper primary schools. To enroll all primary age children (plus anadditional 10% under and over age children) with a teacher:pupil ratio of 1:40 would require roughly 174,000 teachers. In light of thesevere fiscal conditions in the state, and the positive assessment of the Shiksha Karmi program (described below) the project willdevelop a program to place para-teachers in the proposed new schools and in existing schools where increased student attendancejustifies additional teachers. The total number of newly appointed para-teachers over the five-year period will be around 3800, equalto ten percent of the existing teaching force in the projected districts and three percent of all teachers in the state. The savings as aproportion of total expenditure on primary education is small but as a proportion of project expenditure it is significant. Equallyimportant, evaluation of the introduction of para-teachers into both new and existing Government schools will be of importance for allfuture plans to expand educational coverage. Current knowledge of the outcomes of similar teachers employed under the ShikshaKarmi system suggest that, the program can be very cost effective. Compared to conventional schools with regular teachers:(a) both dropout and repetition rates are significantly lower (even though the schools are located in more 'difficult' areas and thepupils are economically and socially disadvantaged). The most recent evaluation, of the 1993/94 cohort, shows a 38% dropout ratewith 33% having completed the primary cycle and 29% still in school. In school year 1997/98, 77% of schools had a daily averageattendance rate of 80% and over.(b) learning achievements of pupils are at least as high - the Baseline Assessment Survey, undertaken during project preparation,tested levels of leaning achievement in language and mathematics for class I and V children in regular and Shiksha Karmi schools.Children in the latter group of schools scored higher in class I mathematics in six out of eight districts and in language test in four outof eight, with no significant differences in the other four districts. In the class IV tests, they scored significantly higher in bothsubjects in five of the eight districts, while there we no significant differences in the remaining three districts.(c) community support is strong.

Annex 4Page 4 of 5

The initial remuneration of the Shiksha Karmi, or para-teacher, is around one third that of the regular teacher. After eight years ofsuccessful teaching and further training, the remuneration can increase to a level equal to the starting salary of a normal teacher. Thelevels of in-service training and professional support, which are essential for the success of the program, are above those for regularteachers. They are estimated to add another 50% to the salary cost. Overall, the cost per para-teacher is about half that for the regularteacher. It is anticipated that the para-teachers employed through the project will be subject to the same recruitment criteria, trainingand support and remuneration as the teachers in the Shiksha Karmi program. This will be monitored and the effect on learningevaluated. Existing survey data indicate that the existing para-teachers are cost effective.

(e) Fiscal impactThis project will promote educational expansion and improvement in ten districts in Rajasthan and it is anticipated that a further ninedistricts will be covered in a subsequent project. The overall objective of these operations is to provide the facilities and incentives touniversalize a good quality primary education. Since the state has the second lowest literacy rate in India, the financial effort requiredto universalize will need to be particularly great. Already the Government's expenditure on education as a share of total non-Planexpenditure is 26%, one of the highest in the country. Of this, 57% is for elementary education. A recent internal World Bank studyof the state's finances estimated that real expenditures on primary education would need to increase by over 11% a year ifuniversalization were to be achieved during the Ninth Plan period. This estimate included the cost of employing an additional 38,000regular teachers. The estimate needs to be viewed in a wider fiscal context of a need to reduce the growth of overall Governmentexpenditures to restore fiscal balance. Currently, two thirds of the state's total revenues are consumed by salaries, pensions andinterest payments and the fiscal deficit increased from around 3% in the early 1990s to 6.8% in 1995/96. The study suggested theneed for several reforms, particularly in the power and water sectors and in state owned enterprises. In the absence of such reformsand the continuation of current levels of fiscal deficit, interest payments could increase to almost 30% of total revenues by 2001/02from current levels of around 18%. Without significant changes to the existing patterns of revenues and expenditures, and the re-direction of financial resources to the key development areas which require public sector funding, the achievement of the objective ofuniversal schooling will be adversely affected.

Even if the Government does implement a major program of fiscal reform, an 11% annual real increase in primary educationexpenditures is unlikely. The implications are that the universalization objective will need to be seen over a longer time period thanthat covered by the Ninth Plan and that the unit costs of education need to fall (while increasing inputs which will enhance learningachievements). The increased employment of para-teachers within a supportive environment which at least maintains teacher qualityis central to achieving these ends.

The direct fiscal impact of the project for GOR during the period of implementation will be relatively modest compared to theprojections described above. DPEP Guidelines require that the state government contributes 15% of the total cost. This translates toaround Rs. 12.5 crores (US$3 million) a year. In 1997/98, non-plan expenditure on elementary education was Rs. 1620 crores andplan expenditure (outside of the centrally sponsored schemes) was Rs. 120 crores. Therefore, plan expenditure will need to increaseby around 10%. The risk that the Government's contribution will not be forthcoming is low but as the program to universalizedevelops further momentum, the need for overall fiscal reform will intensify if the quality of schooling is not to fall further and if thelevels of school dropouts are to be reversed.

Annex 5

Annex 5


Financial Summary(US$ Million, including contingencies)

Operational Period2000 2001 2002 2003 2004

Project CostsInvestment Costs 11.6 19.0 13.1 5.5 5.0Recurrent Costs 12.3 13.9 16.0 4.7 0.2Annual Total 23.9 32.9 29.2 10.2 5.1Cumulative Total 23.9 56.8 86.0 96.2 101.3

Financing Sources (% of totalproject costs)

ITF 88 89 77 79 96Co-financiersGovemment of Rajasthan 12 11 23 21 4

Total 100 100 100 100 100

Annex 6Page I of 6

Annex 6


Procurement and Disbursement Arrangements

Procurement

Procurement Arrangements

The procurement arrangements to be undertaken by the project will be the responsibility of the implementing agency, RajasthanCouncil of Primary Education (RCPE). The RCPE will be responsible for all procurement activities either directly or through thehiring of procurement agents or consultants to assist it.

The RCPE will provide a team of qualified engineers in each district to extend technical support to the School Management andVillage Education Committees (VEC) and to supervise the progress of civil works. The State Project Office (SPO) will have oneBuilding Advisor, two Assistant Engineers and one Architect (on contract). One Assistant Engineer will be placed in the district andone Junior Engineer in each block. Staff will be oriented to provide technical assistance to SMC to be able to carry out the civil worksprogram according to the specified time schedule and also ensure quality.

For all procurement such as MIS, equipment and other supplies, consultants and services, the RCPE will directly manage procurementactivities with the assistance of staff working on procurement matters.

Civil Works

The civil works program encompasses the construction of 1171 primary school buildings, 2455 sheds for alternative schools (AS) inareas which are not eligible for a formal primary school, 1058 additional classrooms, 6000 toilets, 798 drinking water units (hand-pumps), 84 Block Resource Centers and 1041 Cluster Resource Centers in 10 educationally disadvantaged districts of Rajasthan. Theconstruction program also covers repairs and renovations to be made in 2336 existing school buildings and civil works as perrequirement in 9 District Institutes for Educational Training. The average base cost of civil works is US$17.7 million. The cost ofconstruction of a primary school would be US$5,760, an alternate school would be US$1,570, an additional classroom would beUS$2,800, a CRC would be US$3,940 and a BRC would be USS 0.016 million. The cost of repairs and renovation of existing schoolbuildings ranges from US$560 to US$1,200. Toilets and drinking water facilities will be provided at a unit cost of US$1,030 andUS$1,010 respectively.

Construction of school buildings and additional classrooms forms a large proportion of the civil works program. In the spirit ofdecentralizing project activities as far as possible to the village community, the school and classroom construction below US$20,000per contract will be undertaken by the SMC and VEC. Therefore, ICB and NCB will not be suitable. Community construction anddirect contracting will be the appropriate procedures and will account for almost the entire civil works program. Further, the remotelocations of some institutions and the low cost of work calls for allowing such works to be procured under the force account andcomparison of price quotations obtained from at least three qualified contractors eligible under the guidelines. However, forceaccount will be limited to five percent and direct contracting to four percent of civil works costs. NCB will be appropriate for the fewconstruction activities that are valued at more than US$20,000.

Equipment

Procurement of equipment would be phased on an annual basis in accordance with the requirement of the project activities. Phasingof the procurement of equipment and furniture will be closely sequenced with the civil works program. Most of the procurement willbe carried out by blocks/districts. Items to be procured include computers, furniture for schools, BRCs and CRCs and officeequipment etc. The average base cost of equipment and furniture for the project is US$1.9 million. Since the value of most of theitems to be procured under equipment and furniture is expected to be below US$50,000, other methods of procurement, such as localshopping, will be used. NCB will be used for the procurement of items such as computer hardware, software and allied equipment,books for libraries published by NCERT and NBT, office equipment and fixtures and furniture valued at more than US$50,000.

Vehicles

Annex 6Page 2 of 6

Procurement of vehicles required for the SPO will be in packages below US$100,000 for which the method of procurement will benational shopping (DGS&D rate contracts are acceptable under national shopping). Vehicles for the District Project Offices andDIETs will be hired as per requirement.

Procurement methods (Table A)

ITF-financed works, goods and services will be procured using Bank guidelines of January 1995, revised January, August, 1996,September 1997 and January 1999 for goods/works and January 1997, revised September 1997 and January 1999, for services. Theprocurement methods applicable to the various expenditure categories are summarized in the Table A below. For procurement underthe project, the Bank's standard bid documents shall be used.

* Contracts for civil works estimated to cost over US$20,000 equivalent will be carried out following National CompetitiveBidding (NCB) procedures. Contracts for civil works estimated to cost equivalent of US$20,000 or less will be procuredfollowing procedures acceptable to the Administrator:

(a) direct contracting;(b) under quotations solicited from at least three qualified contractors;(c) unit/piece rate system through qualified contractors or registered NGOs or other beneficiary associations,

or(d) through Force Account, as last resort.

* Contracts for the purchase of goods valued at more than US$300,000 equivalent each would be procured through InternationalCompetitive Bidding (ICB).

Contracts valued more than US$50,000 but less than US$300,000 may be awarded on the basis of NCB procedures acceptable toAdministrator. Items or groups of items valued US$50,000 equivalent or less per contract may be procured on the basis ofnational shopping procedures. Other items or small groups of items such as supply of furniture, equipment and books valued atless than US$5,000 equivalent per contract may be procured through direct contracting or national shopping procedures.

Contracts estimated to cost US$20,000 equivalent or less for operation and maintenance of equipment, hiring of vehicles andprocurement of educational & teaching materials may be awarded through:

(a) direct contracting; or(b) national shopping procedures.

Prior review thresholds (Table B)

* All contracts for goods with an estimated value of more than US$300,000 equivalent.* All contracts for works with an estimated value of more than US$300,000 equivalent.* The first NCB contract each for goods and works regardless of the value.* Consultants' contracts with an estimated value of US$100,000 or more for firms and US$50,000 or more for

individuals.* Terms of Reference for all consultant contracts costing more than US$ 1,000.

Disbursement

The proposed allocation of loan proceeds is given in Table C.

A Special Account would be maintained in the Reserve Bank of India; and would be operated by the Department of Economic Affairs(DEA) of Government of India. The authorized allocation of the Special Account would be US$2.5 million which represents about 6months of initial estimated disbursements from the ITF Credit. The Special Account would be operated in accordance with the Bank'soperational policies.

Financial Management System

The State Project Office, Rajasthan will develop and implement a comprehensive computerized financial management system. ProjectMonitoring Reports of the project would be generated from the fmancial management system.

Annex 6Page 3 of 6

The project financial management system would be documented in the form of a 'Financial Management Manual'. This would, inter-alia, include the: (i) funds flow process; (ii) detailed accounting system (including the Chart of Accounts; formats of books, vouchers,statements, etc.; formats of financial reports; linkages between the Chart of Accounts and financial reports; inputs of budget and otherdata; data capture, information flow and processing; (iii) internal control mechanisms; (iv) financial and accounting policies andprocedures; (v) budgeting and forecasting system; (vi) auditing arrangements; (vii) organization and staffing including jobresponsibilities of key staff, and (viii) service standards (benchmarks) for various accounting and fmancial activities. The FinancialManagement Manual would serve as a reference document for all project staff.

Assessment of the current Financial Management System: The project is a follow-on project in the on-going District PrimaryEducation Program (DPEP). The co-ordinating agency for all DPEP Projects in India is DPEP Bureau in the Ministry of HumanResources. The implementing agency in the state of Rajasthan is the Rajasthan Council of Primary Education. The DPEP Bureauwhich has considerable experience of running the DPEP Program in India has the following strengths: (i) a good accounting systemhas been established and is operational; (ii) staff are trained to carry out basic accounting functions; (iii) a reasonable system ofinternal controls is in place; and (iv) a very good computerized system with a facility for generating several fmancial reports has beendeveloped and is operational. Financial information from the accounting system is used to prepare various management reports.

However, it must be emphasized that these are the strengths of DPEP Bureau and not of the Project Implementing Agencyand it is being assumed that because of the significant experience DPEP Bureau has in managing the DPEP program, thesestrengths will be used to empower the State Project Office, Rajasthan. SPO Rajasthan is at an initial stage of inception.

There is however scope for improvement in the following aspects: (i) use of financial reporting/financial statements as a projectmanagement tool. There is need to analyze financial information and actively use the information in decision-making; (ii) need forenhanced clarity and consistency of activities and expenditures which are being charged as project expenditure; (iii) documentation ofoperation of the computerized system and controls over data integrity (iv) linking of physical progress with financial progress, and (v)increasing of focus on audit of SMC's, CRC's and BRC's where a significant portion of the expenditure is incurred.

Flow of Funds

Government of India would pass on IDA funds to State Project Office through banking channels. Government of Rajasthan will passon its share through a budgetary allocation under a single identifiable line item. The State Project Office, which is a registeredsociety, would receive funds against this allocation.

SPO will retain part of the funds for payments on activities managed directly by the SPO, and pass on funds to the 10 District ProjectOffices through banking channels. The amounts passed on to each DPO would be on the basis of their cash flow forecasts (which inturn would be based on their work plans and budgets.) It is expected that the transfer of funds from SPO to DPO would be on aquarterly basis. DPO would utilize the funds for payments on activities managed directly by the DPO and for expenditures/advancesfor Block Resource Centres, Cluster Resource Centres and School Management Committees as explained below.

DPOs will provide advances to the respective BRC's, CRC's and VEC's through banking channels based on the approved activities atthose levels. Subsequent payments will be based on the reported expenditure for the quarter and projected expenditure for the nextquarter. It is expected that release of funds for civil works would be in installments of 50%, 35% and 15% of the approved amount ofthe works. This design of the funds release mechanism takes into account the objectives of ensuring that there is sufficient amount offunds available at the works while at the same time ensuring that internal controls are maintained and that amounts are being promptlyand regularly accounted for. The first installment would be paid after approval of the works. The subsequent installments would bepaid on achievement of the objectives specified for the previous installment.

The IDA accounts of BRC's would be operated by the BRC Facilitator or jointly by BRC Facilitator and Chairman Block EducationCommittee - depending on the nature and quantum of expense, CRC's by the CRC Facilitator and VEC's jointly by the Chairman andMember Secretary of the VEC. These payments can be to suppliers, consultants, staff etc. based on approved activities. Thesepayments would be supported by standard documentation.

Accounting and Internal Controls

Books of accounts for the project would be maintained using double-entry bookkeeping principles. Standard books of accounts (cashand bankbooks, journals, ledgers, etc.) would be maintained at the SPO and DPO levels using an integrated computerized accountingsystem.

A Chart of Accounts would be developed to enable data to be captured and classified by expenditure center, budget heads, projectcomponents, expenditure categories, and disbursement categories. This would match closely with the classification of expendituresand sources of funds indicated in the project documents (Project Implementation Plan and Project Cost Tables).

Annex 6Page 4 of 6

Accounting for BRC's, CRC's and SMC's in each district would be done at the respective DPO. The accounting records (sub-ledgers)at the DPO level would provide details of accounts of the various BRC's, CRC's and SMC's. (important tool for monitoring theamounts advanced to and expenditures incurred on the various BRC's, CRC's and SMC's.) No books of accounts will be maintainedat the BRC's, CRC's and SMC's other then basic reporting of expenditures.

Transaction Infornation Flow and Accounting:

(i) The SPO and DPO will generate and maintain the transaction vouchers for their various receipts and expenditures made atthe SPO and DPO levels respectively (including at the DPO level, for amounts advanced by DPO to the BRC's, CRC's andSMC's);

(ii) Each BRC, CRC and SMC would generate the transaction vouchers for receipts and payments made by it on variousactivities. At the BRC level, the BRC Facilitator will record the transactions mainly bank receipts and payments. At CRClevel it will be done by CRC facilitator. At SMC level this will be done by the member secretary of the SMC. There will bea systematic filing of the supporting documentation for the transactions. At the time of submission of monthly accountstatement to the district, at the DPO' s, these monthly accounts statements would be approved/authorized after being correctlyclassified for account heads (based on the Chart of Accounts), and entered into the computerized accounting system. Thiswould enable generation of the sub-ledger giving the details of the accounts of each unit.

(iii) Consolidation of the project accounts at the SPO would be done by consolidation of accounts of the SPO and the 10 DPOs,which would be done by the computerized system. Data transfer would be handled through either diskette transfer fromDPO' s to SPO or through an integrated computer network - the NICNET.

Internal Controls: Internal control mechanisms include the following:

(i) the establishment of appropriate budgeting systems, and regular monitoring of actual financial performance with budgets andtargets;

(ii) identification of expenditure which can be charged to the project, and the categories under which the expenditure would becharged;

(iii) accounting of expenditure on activities would be based on actual expenditures, and not on the basis of estimated costs.

Financial Reporting

Project Financial Statements and Project Financial Management Reports would be generated from the project accounting system. Themain objective of the financial management reports is to provide project management with timely information on various financialaspects, and thereby serve as an active project management tool.

The SPO and DPOs would generate quarterly financial management reports from the integrated computerized fmancial managementsystem for the whole project and for their respective districts respectively. These reports would be management-oriented (i.e.,summaries rather than transactional details). The reports would include: (i) a comparison of budgeted and actual expenditure andanalysis of major variances, including on sources and application of funds (by components and summarized expenditure categories)and on key physical parameters; and (ii) forecasts for the next 2 quarters. These reports and the Withdrawal Application (which wouldbe based on the financial forecasts and actual expenditures classified by disbursement category) would also be used by IDA forquarterly disbursements in accordance with the disbursement procedures under LACI.

Auditing Arrangements

The purpose of the audit would be to provide an independent confirmation to project management and to IDA on the accuracy offinancial statements and working of internal controls; and to supplement the internal control mechanism. The Accounts of the Projectwill be audited by the Comptroller and Auditor General of India (CAG) and a firm of Chartered Accountants. The annual projectfinancial statements audited by the firm of Chartered Accountants would be submitted within 6 months of the close of GOI's fiscalyear (as required under the Bank's operational policies).

The Terms of Reference of the firm of Chartered Accountants would include a concurrent audit. This would strengthen internalcontrols, and would also facilitate early completion of the annual audit. Since a significant portion of the expense will be made at thelevel of SMC's, CRC's and BRC's, the Terms of Reference drawn up for the auditors would be oriented towards a strong emphasis on

Annex 6Page 5 of 6

the audit of these units involving site visits. The auditors would carry out such tests and controls as deemed necessary by them. Inaccordance with the Bank's operational policies, the Terms of Reference and qualifications of the firm of Chartered Accountantswould be reviewed by the Bank. The firm of Chartered Accountants would be appointed before the start of the project.

Staffing

Key Professional Staff: The most important requirement for effective fmancial management of the project is appointment of qualifiedand appropriate staff at key levels. The financial and accounting team for the project would be headed by a Financial Controllerlocated in the SPO. The finance and accounting team would have overall responsibility for the financial management aspects of theproject. The Financial Controller would report to the Project Director for the project. The Financial Controller would be a qualifiedaccounting and finance professional with about 4/5 years experience.

At each of the DPOs, the finance function would be headed by an Assistant Accounts Officer with about 4/5 years experience,including suitable experience in modem accounting and financial practices. The Assistant Accounts Officer will be fully responsiblefor all fin ncial and accounting aspects at the DPO level and below. The Assistant Accounts Officers would report functionally to theFinancial Controller, and administratively to the District Project Manager.

Supporting Staff: Both the SPO and DPO would have appropriate number of accountants/account clerks to carry out the variousroutine activities under the direction of the key professional staff indicated above. The number of these staff would be determinedbased on the quantum of activity. To promote efficiency and maintain a lean organization, all routine activities relating to generationof books of accounts, compilation, preparation of financial reports, etc., would be handled through the computerized financialmanagement system to the maximum extent possible.

Readiness for Implementation and Next Steps

An agreement has been reached with the DPEP Bureau and SPO, Rajasthan on the form and content of the ProjectMonitoring Reports.

The final key target dates agreed with the Bureau and SPO, Rajasthan are summarized as under:

Recruitment of Key Staff: July 31, 1999

Appointment of Auditors: July 31, 1999

Implementation of a computerized Financial Management System: July 15, 2000

Annex 7Page I of 7

Annex 7INDIA: Rajasthan District Primary Education ProjectTable A: Project Costs by Procurement Arrangements1

(in US$ million equivalent)

Expenditure Category Procurement Method Total Cost(including

contingencies)ICB NCB Other /a N.B.F

1. WorksCivil Works 0.21 21.26 - 21.48

(0.19) (19.23) (19.43)2. GoodsFurniture 0.91 0.10 - 1.01

(0.82) (0.09) (0.92)

Equipment 0.34 0.80 - 1.15(0.31) (0.73) (1.04)

Vehicles - 0.04 0.04(0.04) (0.04)

Books and Libraries 3.37 1.44 - 4.81(3.05) (1.31) (4.35)

3. ServicesTraining and Consultants-Project Preparation & Implementation - 12.94 - 12.94(Incl Training, Workshop & (12.94) (12.94)Fellowships)-Institutional Development (includesLocal and Foreign Consultants, - 14.67 - 14.67Studies, Professional Services and (14.67) (14.67)NGOs)

4. Miscellaneous-Salaries of Additional Staff - 30.36 - 30.36

(21.66) (21.66)-Incremental Operating Expenses (i.e. - 4.26 - 4.26consumables, office expenses) (3.08) (3.08)

-Educational and Teaching Materials - 7.92 - 7.92(5.65) (5.65)

-Hiring of Vehicles 2.55 - 2.55(1.82) (1.82)

-Equipment Operation & Maintenance - 0.08 - 0.08(0.06) (0.06)

TOTAL 4.84 96.44 - 101.3(4.4) (81.3) (85.7)

For details on presentation of Procurement Methods refer to OD 11.02, "Procurement Arrangements for Investment Operations."Details on Consultant Services can be shown more easily in the Table Al format (additional to Table A, where applicable).

Annex 7Page 2 of 7

Note: N.B.F. = Not Bank-financed (includes elements procured under parallel cofinancing procedures,consultancies under trust funds, any reserved procurement, and any other miscellaneous items). The procurementarrangement for the items listed under "Other" and details of the items listed as "N.B.F." need to be explained infootnotes to the table or in the text.

/a "Other Methods" include direct contracting, comparison of price quotations, construction through communitiesand force account.

Figures in parenthesis are the amounts to be financed by the Bank loan/ITF credit

Annex 7Page 3 of 7

Annex 7INDIA: Rajasthan District Primary Education Project

Table Al: Consultant Selection Arrangements (optional)

(in US$ million equivalent)

Selection Method Total CostConsultant Services (including

Expenditure Category contingencies)QCBS QBS SFB LCS CQ Other N.B.F.

A. Institutions* Project Preparation and 5.6 2.4 8.0

Implementation (Incl.Training, Workshops andFellowships)

* Institutional Development 7.35 3.15 10.5(Incl Local and ForeignConsultants, Studies,Professional Services andNGOs)__ _ __ _ __ _ __ _ _ _ _

B. Individuals* Project Preparation and 5.0 5.0

Implementation (Incl.Training, Workshops andFellowships)

* Institutional Development 4.2 4.2(Incl Local and ForeignConsultants, Studies,Professional Services andN G O s)__ _ _ _ _ __ _ _ _ _ __ _ _ _ _ _ _

Total 12.95 14.75 . 27.7

Note: QCBS = Quality- and Cost-Based SelectionQBS = Quality-based SelectionSFB = Selection under a Fixed BudgetLCS = Least-Cost SelectionCQ = Selection Based on Consultants' Qualifications (incl. single source contracts)Other = Selection of individual consultants (per Section V of Consultants Guidelines),Commercial Practices, etc.

N.B.F. = Not Bank-financed.Figures in parenthesis are the amounts to be financed by the Bank loan.

Annex 7Page 4 of 7

Annex 7

INDIA: Rajasthan District Primary Education ProjectTable B: Thresholds for Procurement Methods and Prior Reviewii

Expenditure Contract Value Procurement Contracts Subject to

Category (Threshold) Method Prior Review /

Estimated Total ValueSubject to Prior

Review

1. Civil Works Civil works estimated tocost the equivalent ofUS$20,000 or less percontract, up to an aggregatenot exceeding S$21,260,000may be executed by:

(i) Direct Contracting up to Direct Contracting Post review onlyan aggregate not exceedingUS$850,000;

(ii) on the basis of Solicitation of 3 bids Post review onlycomparison of pricequotations obtained from atleast three qualifiedcontractors eligible underthe guidelines; or

(iii) Unit/piece rate systems Rate Contract Post review onlythrough qualifiedcontractors or RegisteredNGOs or other beneficiaryassociations; or

(iv) by Force Account as a Force Account Post review onlylast resort up to an aggregatenot exceedingUS$1,100,000, in a mannersatisfactory to theAdministrator.Civil works estimated to National Competitive First works contract undercost more than the Bidding (NCB) NCB regardless of value andequivalent of US$20,000 per all contracts abovecontract. US$300,000 by prior review

in accordance withparagraphs 2 and 3 ofAppendix I to theGuidelines. All others bypost review.

2. Goods(a) Furniture, equipment, US$5,000 or less per Direct Contracting Post review onlybooks for libraries and contract up to an aggregatematerials not exceeding US$150,000

equivalent

US$50,000 or less per National Shopping Post review onlycontract, up to an aggregate Procedures (includesnot exceeding US$ DGS&D Rate Contracts)2,190,000 equivalent

2 Thresholds generally differ by country and project. Consult OD 11.04 "Review of Procurement Documentation" and contact theRegional Procurement Adviser for guidance.

Annex 7Page 5 of7

More than US$50,000 per National Competitive First goods contract undercontract, up to an aggregate Bidding (NCB) NCB regardless of value andnot exceeding all contracts aboveUS$4,620,000 equivalent US$300,000 by prior review

in accordance withparagraphs 2 and 3 orAppendix I to theguidelines. All others bypost review.

(b) Vehicles US$ 100,000 or less per National Shopping Post review onlycontract, up to an aggregate Procedures (includesnot exceeding US$ 40,000. DGS&D Rate Contracts)

3. Services(a) Procurement Agent (i) More than US$200,000 Quality and Cost Based Prior review of allcontracts, research contracts, per contract up to an Selection (QCBS) consultant contracts shall beIEC contracts, professional aggregate not exceeding governed by the provision ofservices, NGO contracts, US$2,770,000; paragraphs (i), (ii), (iii) andstudies, training, workshops (iv) below;and fellowships.

(ii) US$200,000 or less per Quality and Cost Based (i) with respect to eachcontract up to an aggregate Selection (QCBS) with contract for the employmentnot exceeding Short List (could comprise of consulting firmsUS$8,320,000 of domestic firms only if estimated to cost the

foreign consultants are not equivalent of US$200,000interested) or more, the procedures set

forth in paragraphs 1, 2 and[other than the thirdsubparagraph of paragraph2(a)] and 5 of Appendix I tothe Consultant Guidelinesshall apply.

(ii) With respect to eachcontract for the employmentof consulting firmsestimated to cost theequivalent of US$100,000or more, but less than theequivalent of US$200,000,the procedures set forth inparagraphs 1, 2 [other thanthe second subparagraph ofparagraph 2(a)] and 5 ofAppendix I to theConsultant Guidelines shallapply.

(iii) With respect to eachcontract for the employmentof individual consultantsestimated to cost theequivalent of $50,000 ormore, the qualifications,experience, terms ofreference and terms ofemployment of theconsultants shall befurnished to theAdministrator for its priorreview and approval. Thecontract shall be awardedonly after the said approval

Annex 7Page 6 of 7

shall have been given.

(iv) Terms of Reference forall contracts.All other cases: Post Review

(iii) US$100,000 or less per (i) QCBS with Short Listcontract, up to an aggregate (could comprise of domesticnot exceeding firms only if foreignUS$16,600,000 equivalent consultants are not

interested)(ii) Single Source Selection- (acceptable for tasksrepresenting a naturalcontinuation of assignment,when rapid selectionessential, when only onefirm is qualified, or forsmall assignments)

4. Miscellaneous(a) Incremental operating Incremental operating costscosts and maintenance and maintenance estimated

to cost the equivalent ofUS$ 20,000 or less percontract, up to an aggregatenot exceeding US$10,600,000 may be executedby:(i) Direct contracting up to Direct Contracting Post review onlyan aggregate not exceedingUS$8,250,000; or(ii) On the basis of price Solicitation of three bids Post review onlyquotations obtained from atleast three qualifiedcontractors eligible underthe guidelines up to anaggregate amount notexceeding US$2,350,000.

Total value of contracts subject to prior review:

Annex 7Page 7 of 7

Annex 7

INDIA: Rajasthan District Primary Education ProjectTable C: Allocation of Loan Proceeds

Expenditure Category Amount in US$ Financing Percentagemillion

Civil Works 17.7 90%

Equipment, Furniture, Vehicles and Books 5.7 100% of foreignexpenditures, 100%of local expenditures(ex-factory cost) and80% of localexpenditures forother items procured.

Training, Workshops, Fellowships and 25.9 100%Consultant Services

Incremental Operating and Maintenance Costs 29.5 80% until March 31,2001; 60% fromApril 1, 2001 untilMarch 31, 2002;55% from April 1,2002 until March 31,2003; and 25%thereafter.

Unallocated 6.9 -

Total 85.7 85

Annex 8Page 1 of I

Annex 8

INDIA: Rajasthan District Primary Education ProjectProject Processing Budget and Schedule

A. Project Budget (US$000) Planned Actual(At final PCD stage)

50.0 54.2PHRD Grant (Japan) 85.0 85.0Total 135.0 139.2

B. Project Schedule Planned Actual(At final PCD stage)

Time taken to prepare the project (months) 19 months 23 monthsFirst Bank mission (identification) 08/11/1997 08/11/1997

Appraisal mission departure 08/21/1998 11/16/1998

Negotiations 10/22/1998 03/23/1999Planned Date of Effectiveness 03/15/1999 07/31/1999

Prepared by: Government of India / Rajasthan

Preparation assistance: PHRD Grant (Japan)

Bank staff who worked on the project included: N.K. Jangira (Senior Education Specialist,SASED, Task Leader), Prema Clarke (Education Specialist, SASED, Co-Task Leader), EdwardHeneveld (India Education Team Leader), Keith Hinchliffe (Senior Economist, SASED),Kalpana Seethepalli (Operations Analyst, SASED), Susan Hirshberg (Education Specialist,SASED), Vijay Rewal (Consultant Architect), Adriaan Verspoor (Lead Education Specialist(AFTH3) formerly Education Adviser (SASED), Rajat Narula (Financial Analyst, SACIF), MamChand (Procurement Specialist, SACIF). Hiroko Imamura (LEGSA); Anthony Byrne (SARFM);Agustin Litvak (SARPS) assisted the team prior to the negotiations. John Middleton (LeadEducation Specialist, EACTF), Marlaine Lockheed (Sector Leader, MNSHD), John Shotton(Deputy Director, Center for Overseas and Developing Education) acted as peer reviewers.Sudesh Ponnappa (Program Assistant, SASED) assisted in the mission preparation anddocumentation, Gertrude Stubblefield (Team Assistant, SASED) assisted during negotiations.

Annex 9

Annex 9

INDIA: Rajasthan District Primary Education ProjectDocuments in the Project File*

A. Project Implementation Plan

1. Rajasthan District Primary Education Project I -Project Implementation Plan2. Rajasthan District Primary Education Project I - Working Plans for Jhalawar, Nagaur, Bhilwara, Sirohi,

Kota, Sriganganagar, Jhunjunu, Tonk and Alwar Districts3 Rajasthan District Primary Education Project I - GOI Preappraisal Mission (June 1-12, 1998) Report by

Education Consultants India Limited4. Rajasthan District Primary Education Project I - Project Costs for Districts and State Component5. Rajasthan District Primary Education Project I - Rajasthan State Component Plan - Rajasthan Council of

Primary Education.6. Annual Work Plan and Budget (December 1998 - March 2000) - State Level Intervention (DPEP) -

RCPE

B. Assessment Studies

1 . Rajasthan District Primary Education Project I - Baseline Assessment Survey of Rajasthan (June 1998) byState Institute of Educational Research and Training, Udaipur

2. Rajasthan District Primary Education Project I - Rajasthan State Finance Study by Center for AppliedResearch and Studies, Jaipur

3. Rajasthan District Primary Education Project I - Social Assessment Studies in the districts of Jhalawar,Nagaur, Bhilwara, Sirohi, Kota, Sriganganagar, Jhunjunu, Tonk and Alwar

C. Other

1. Rajasthan District Primary Education Project I - Bid Document for Procurement of Computer Hardwareand Software - RCPE

2. Rajasthan District Primary Education Project I - Procurement Plan - RCPE3. Rajasthan District Primary Education Project I - Construction Manual

*Including electronic files.

Annex 10Page I of 4


Statement of Loans and CreditsStatus of Bank Group Operations in India

Operations Portfolio(As of March 31, 1999)

Difference Between Expectedand Actual

Original Amount in US$ Disbursements a/ Last PSRMillions Supervision Rating

b/

Project ID Fiscal Purpose Using UsingYear IBRD IDA Cancel. Undisb Original Formal. Develop. Inpia_.

Esti- Revised Objec- Progressmates Est. Tives

Number of Closed Projects: 331Active ProjectsIN-PE-9869 1989 NATHPA JHAERI HYDRO 485.00 0.00 0.00 111.65 111.63 0.00 S SIN-PE-9982 1990 NOR REG TRANSMISSION 485.00 0.C0 0.00 178.66 178.65 0.00 S SIN-PE-9988 1991 TECH EDUCATION II 0.00 307.10 51.37 75.02 133.42 55.61 S SIN-PE-9877 1991 DAM SAFETY 23.00 130.00 60.03 25.81 84.17 -4.50 S SIN-PE-10390 1992 MAHARASHTRA FORESTRY 0.00 124.00 16.18 34.18 49.91 33.23 S SIN-PE-9963 1992 POPULATION VIII 0.00 79.00 0.00 55.86 51.17 0.00 S SIN-PE-9946 1992 NATIONAL HIGHWAYS II 153.00 153.00 0.00 154.13 91.19 0.00 S SIN-PE-9921 1992 SHRIMP & FISH CULTURE 0.00 85.00 48.51 16.05 63.78 15.17 U SIN-PE-10424 1993 NATL LEPROSY ELIMIN. 0.00 85.00 9.07 24.71 32.15 4.44 S HSIN-PE-10418 1993 KARNATAKA WS & ENV/SAN 0.00 92.00 0.00 31.64 29.26 0.00 S SIN-PE-10416 1993 PGC POWER SYSTEM 350.00 0.00 0.00 117.11 107.51 0.00 S SIN-PE-10410 1993 RENEWABLE RESOURCES 75.00 115.00 0.00 70.78 97.72 0.00 S SIN-PE-10408 1993 BIHAR PLATEAU 0.00 117.00 0.00 51.37 57.45 0.00 S SIN-PE-10407 1993 ADP - RAJASTHAN 0.00 106.00 0.00 22.98 23.17 0.00 S SIN-PE-9977 1993 ICDS II (BIHAR & MP) 0.00 194.00 0.00 118.38 83.30 93.67 U UIN-PE-9961 1993 UP SODIC LANDS RECLAM 0.00 54.70 0.00 12.94 7.24 0.00 S SIN-PE-9959 1993 RUBBER 0.00 92.00 36.58 23.19 55.39 11.79 S SIN-PE-9955 1993 UTTAR PRADESH BASIC ED 0.00 165.00 0.00 21.79 -9.14 -142.42 S SIN-PE-10457 1994 POPULATION IX 0.00 88.60 0.00 50.16 17.61 0.00 S SIN-PE-10455 1994 BLINDNESS CONTROL 0.00 117.80 0.00 81.38 35.60 0.00 S SIN-PE-10449 1994 ANDHRA PRADESH FOREST. 0.00 7 7.40 0.00 25.54 12.19 0.00 S SIN-PE-10448 1994 FORESTRY RESEARCH ED 0.00 47.00 0.00 22.43 38.17 4.22 S SIN-PE-9964 1994 WATER RES CONS.HARYANA 0.00 258.00 0.00 147.93 78.87 0.00 U UIN-PE-9870 1994 CONTAINER TRANSPORT 94.00 0.00 0.00 73.23 67.24 0.00 S SIN-PE-10563 1995 FINANCIAL SECTOR DEV 700.00 0.00 200.0 266.97 -233.03 0.00 S S

0IN-PE-10522 1995 ASSAM RURAL INFRASTR. 0.00 126.00 0.00 97.64 39.14 0.00 U UIN-PE-10506 1995 MP FORESTRY 0.00 58.00 0,00 19.06 7.61 0.00 S SIN-PE-10503 1995 AGRIC HUMAN RES DEVT 0.00 59.50 0.00 33.64 26.20 0.00 S SIN-PE-10489 1995 AP 1ST REF. HEALTH SYS 0.00 133.00 0.00 66.14 9.05 0.00 S SIN-PE-10476 1995 TAMIL NADU WRCP 0.00 282.90 0.00 211.95 105.73 0.00 S SIN-PE-10464 1995 DISTRICT PRIMARY ED 0.00 260.30 0.00 127.92 33.10 0.00 S SIN-PE-10463 1995 INDUS POLLUTION PREVEN 143.00 25.00 0.00 144.82 80.56 0.00 S SIN-PE-10461 1995 MADRAS WATER SUP II 275.80 0.00 189.3 56.59 156.33 5.51 S S

0IN-PE-43310 1996 COAL ENV&SOCIAL MIT. 0.00 63.00 0.00 45.55 14.17 0.00 U UIN-PE-39935 1996 ILFS-INFRAS FINANCE 200.00 5.00 0.00 179.22 98.09 0.00 S SIN-PE-35825 1996 STATE HEALTH SYS II 0.00 350.00 0.00 263.11 89.05 0.00 S SIN-PE-35821 1996 DISTRICT PRIM EDUC 2 0.00 425.20 0.00 307.88 5.54 0.00 S SIN-PE-35170 1996 ORISSA POWER SECTOR 350.00 0.00 0.00 326.13 83.63 0.00 S SIN-PE-10529 1996 ORISSA WRCP 0.00 290.90 0.00 161.11 -2.82 0.00 S SIN-PE-10485 1996 HYDROLOGY PROJECT 0.00 142.00 0.00 94.62 45.74 0.00 S SIN-PE-10484 1996 UP RURAL WATER 59.60 0.00 0.00 50.24 7.83 0.00 HS HSIN-PE-10480 1996 B SEWAGE DISPOSAL 167.00 25.00 0.00 119.89 86.34 0.00 S SIN-PE-49301 1997 A.P. EMERG. CYCLONE 50.00 100.00 0.00 119.95 36.97 0.00 U UIN-PE-45600 1997 TA ST'S RD INFRA DEV 51.50 0.00 0.00 33.82 15.32 0.00 S SIN-PE-44449 1997 RURAL WOMEN'S DEV 0.00 19.50 0.00 18.32 7.34 0.00 U UIN-PE-43728 1997 ENV CAPACITY BLDG TA 0.00 50.00 0.00 43.30 9.45 0.00 S SIN-PE-36062 1997 ECODEVELOPMENT 0.C0 28.00 0.00 22.54 2.86 0.00 U UIN-PE-35158 1997 AP IRRIGATION III 175.00 150.00 0.00 254.04 22.78 0.00 S SIN-PE-10531 1997 REPRODUCTIVE HEALTHI 0.00 248.30 0.00 233.16 48.36 0.00 S SIN-PE-10511 1997 MALARIA CONTROL 0.00 164.80 0.00 152.45 20.61 0.00 S UIN-PE-10473 1997 TUBERCULOSIS CONTROL 0.00 142.40 0.00 128.63 46.59 0.00 S UIN-PE-9995 1997 STATE HIGHWAYS I(AP) 350.00 0.00 0.00 327.32 27.32 0.00 S SIN-PE-50638 1998 UP BASIC ED II 0.00 59.40 0.00 31.35 -6.98 0.00 S SIN-PE-49477 1998 XERALA FORESTRY 0.00 39.00 0.00 35.25 -2.09 0.00 S SIN-PE-49385 0998 AP ECON RESTRUCTURING 301.30 241.90 0.00 483.35 -61.49 0.00IN-PE-38021 1998 DPEP III (BIHAR) 0.00 152.00 0.00 139.31 16.56 0.00 S SIN-PE-35827 1998 WOMEN & CHILD DEVEP. 0.00 300.00 0.00 301.87 0.00 0.00IN-PE-35824 1998 'JP DIV AGRC SUPPORT 79.90 50.00 0.00 125.09 10.92 0.00IN-PE-35169 1998 U.P. FORESTRY 0.00 52.94 0.00 45.48 1.90 0.00 S SIN-PE-35160 1998 NARYANA POWER APL-I 60.00 0.00 0.00 41.33 9.32 0.00 S HS

Annex 10Page 2 of 4

Difference Between Expectedand Actual

Original Amount in US$ Disbursements a/ Last PSRMillions Supervision Rating

b/Project ID Fiscai Purpose Using Using

Year IBRD IDA Cancel. Undisb Original Formal. Develop. Implem.Esti- Revised Objec- Progressmates Est. Tives

IN-PE-10561 1998 NATL AGR TECHNOLOGY 96.80 100.00 0.00 191.07 9.16 0.00IN-PE-10496 1998 ORISSA HEALTH SYS 0.00 76.40 0.00 73.56 -.03 0.00 S SIN-PE-9979 1998 COAL SECTOR REHAB 530.00 2.00 15.00 472.13 48.88 0.00 S SIN-PE-50651 1999 MAHARASH HEALTH SYS 0.00 134.00 0.00 129.77 -3.09 0.00IN-PE-50646 1999 rUP SODIC LANDS II 0.00 194.10 0.00 192.25 4.94 0.00IN-PE-49537 1999 AP POWER APL I 210.00 0.00 0.00 199.83 -10.17 0.00

Total 5,464.9 7,038.1 626.0 7,914.6 2,405.3 76.7

Active Projects Closed Projects TotalTotal Disbursed (IBRD and IDA): 3,734.88 33,285.32 37,020.20

Of which has been repaid: 178.66 10,509.62 10,688.28Total now held by IBRD and IDA: 11,698.29 22,105.50 33,803.79Amount sold : 0.00 133.77 133.77

Of which repaid : 0.00 133.77 133.77Total Undisbursed : 7,914.57 59.71 7,974.28

a. Estimated disbursements to date as projected at appraisal, or if disbursement estimate hasbeen formally revised, then revised disbursement estimate, minus actual disbursements todate.

b. Following the FY94 Annual Review of Portfolio performance (ARPP), a letter based system wasintroduced (HS = highly Satisfactory, S - satisfactory, U = unsatisfactory, HU = highlyunsatisfactory): see proposed Improvements in Project and Portfolio Performance RatingMethodology (SecM94-901), August 23, 1994.

Annex 10Page 3 of 4

IndiaSTATEMENT OF IFC's

Committed and Disbursed Portfolio(In US$ millions, as of February 28, 1999)

Committed DisbursedIFC IFC

FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic1964/75/79/90 MUSCO 0.00" 1.08 0.00 0.00 0.00 1.08 0.00 0.001978/87/91/93 HDFC 40.00 2.29 0.00 0.00 40.00 2.29 0.00 0.001981 Nagarjuna Steel 0.00 .07 0.00 0.00 0.00 .07 0.00 0.001981/86/81/91/93/96 ITW Signode 0.00 1.55 0.00 0.00 0.00 1.55 0.00 0.001981/86/89/94/92 TISCO 3.28 15.37 0.00 0.00 3.28 15.37 0.00 0.001981/90/93 M&M .33 6.49 0.00 1.33 .33 6.49 0.00 1.331984/90/94 India Lease .66 .86 0.00 0.00 .66 .86 0.00 0.001984/91 Bihar Sponge 12.68 .68 0.00 0.00 12.68 .68 0.00 0.001986 EXB-City Mills .48 0.00 0.00 0.00 .48 0.00 0.00 0.001986 EXB-CECL .01 0.00 0.00 0.00 .01 0.00 0.00 0.001986 EXB-NB Footwear .19 0.00 0.00 0.00 .19 0.00 0.00 0.001986 EXB-STG .37 0.00 0.00 0.00 .37 0.00 0.00 0.001986 EXB-TAN .03 0.00 0.00 0.00 .03 0.00 0.00 0.001986/92/93/94 GESCO 0.00 11.80 0.00 0.00 0.00 11.80 0.00 0.001986/93/94/95 India Equipment .38 .77 0.00 .93 .38 .77 0.00 .931987 Hindustan 4.03 0.00 0.00 0.00 4.03 0.00 0.00 0.001987/88/90/93 Titan Watches .68 1.03 0.00 0.00 .68 1.03 0.00 0.001988/90/92 Tata Telecom 0.00 .10 0.00 0.00 0.00 .10 0.00 0.001988/94 GKN Invel 0.00 1.40 0.00 0.00 0.00 1.40 0.00 0.001989 AEC 10.53 0.00 0.00 0.00 10.53 0.00 0.00 0.001989 UCAL 0.00 .63 0.00 0.00 0.00 .63 0.00 0.001989/90/94 Tata Electric 27.22 0.00 0.00 0.00 27.22 0.00 0.00 0.001989/91 Gujarat State 4.46 0.00 0.00 0.00 4.46 0.00 0.00 0.001989/95 JSB India 0.00 1.21 0.00 0.00 0.00 1.21 0.00 0.001990 HOEL 0.00 .28 0.00 0.00 0.00 .28 0.00 0.001990 TDICI-VECAUS II 0.00 1.41 0.00 0.00 0.00 1.41 0.00 0.001990/92 CESC 41.59 0.00 0.00 56.95 41.59 0.00 0.00 56.951990/93/94/98 IL & FS 18.75 6.23 1.81 6.00 18.75 6.23 1.81 6.001990/94 ICICI-IFGL 0.00 .30 0.00 0.00 0.00 .30 0.00 0.001990/95 ICICI-SPIC Fine 0.00 1.88 0.00 0.00 0.00 1.88 0.00 0.001991 BSES 17.50 0.00 0.00 0.00 17.50 0.00 0.00 0.001991/93 Triveni 0.00 1.11 0.00 0.00 0.00 1.11 0.00 0.001991/96 VARUN 0.00 1.35 0.00 0.00 0.00 1.35 0.00 0.001992 Indus VC Mgt Co 0.00 .01 0.00 0.00 0.00 .01 0.00 0.001992 Indus VCF 0.00 1.00 0.00 0.00 0.00 1.00 0.00 0.001992 Info Tech Fund 0.00 .64 0.00 0.00 0.00 .64 0.00 0.001992 SKF Bearings 2.86 0.00 0.00 0.00 2.86 0.00 0.00 0.001992/93 Arvind Mills 0.00 17.10 0.00 0.00 0.00 17.10 0.00 0.001992/94/97 Ispat Industries 78.31 5.77 0.00 85.00 38.45 5.77 0.00 0.001992/95 IL&FS Venture 0.00 1.05 0.00 0.00 0.00 1.05 0.00 0.001992/96/97 NICCO-UCO 6.31 .50 0.00 0.00 2.31 .50 0.00 0.001993/94/96 Indo Rama 19.68 11.98 0.00 7.87 19.68 11.98 0.00 7.871993/97 20TH Century 13.31 .80 0.00 .89 13.31 .80 0.00 .891994 Centurion Growth 0.00 2.39 0.00 0.00 0.00 2.39 0.00 0.001994 Chowgule 13.42 4.58 0.00 21.09 13.42 4.58 0.00 21.091994 Crdcap Asset Mgt 0.00 .32 0.00 0.00 0.00 .32 0.00 0.001994 DLF Cement 8.80 4.94 0.00 12.75 8.80 4.94 0.00 L2.751994 GujaratAmbuja 0.00 8.23 0.00 0.00 0.00 8.23 0.00 0.001994 Taurus Starshare 0.00 7.17 0.00 0.00 0.00 7.17 0.00 0.001994/97 GVK 28.33 7.45 0.00 33.98 28.33 7.45 0.00 33.981994/98 Global Trust 5.00 3.19 5.00 0.00 5.00 3.19 5.00 0.00

Annex 10Page 4 of 4

Committed DisbursedIFC IFC

FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic1995 Centurion Bank 0.00 3.87 0.00 0.00 0.00 3.87 0.00 0.001995 EXIMBANK 18.18 0.00 0.00 0.00 18.18 0.00 0.00 0.001995 GE Capital 10.00 5.00 0.00 0.00 10.00 4.39 0.00 0.001995 Prism Cement 15.00 5.02 0.00 12.00 15.00 5.02 0.00 12.001995 Rain Calcining 19.25 5.47 0.00 0.00 19.25 5.46 0.00 0.001995 Sara Fund 0.00 6.12 0.00 0.00 0.00 2.60 0.00 0.001995/98 RPG 0.00 11.25 0.00 0.00 0.00 11.25 0.00 0.00

Communicatns1996 India Direct Fnd 0.00 7.50 0.00 0.00 0.00 4.51 0.00 0.001996 Indus II 0.00 5.00 0.00 0.00 0.00 3.00 0.00 0.001996 Indus Mauritius 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001996 United Riceland 10.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001996/99 Moser Baer 4.00 2.14 0.00 0.00 4.00 2.14 0.00 0.001997 Asian Electronic 0.00 5.50 0.00 0.00 0.00 5.50 0.00 0.001997 CEAT 20.00 0.00 0.00 0.00 15.00 0.00 0.00 0.001997 Duncan Hospital 7.00 .84 0.00 0.00 0.00 0.00 0.00 0.001997 EEPL 0.00 .03 0.00 0.00 0.00 .03 0.00 0.001997 Owens Coming 25.00 0.00 0.00 0.00 25.00 0.00 0.00 0.001997 SAPL 0.00 .07 0.00 0.00 0.00 .07 0.00 0.001997 SREI 15.00 3.00 0.00 0.00 8.00 3.00 0.00 0.001997 Walden-Mgt India 0.00 .01 0.00 0.00 0.00 .01 0.00 0.001997 WIV 0.00 5.00 0.00 0.00 0.00 .88 0.00 0.001998 IDFC 0.00 15.46 0.00 0.00 0.00 15.46 0.00 0.001998 TCW/ICICI 0.00 10.00 0.00 0.00 0.00 3.20 0.00 0.00

Total Portfolio: 502.62 226.29 6.81 238.79 429.76 205.40 6.81 153.79

Approvals Pending Commitment

Loan Equity Quasi Partic1998 IVCAAF 0.00 5.74 0.00 0.001999 SARSHATALI 30.00 5.00 0.00 0.00

COAL

Total Pending Commitment: 30.00 10.74 0.00 0.00

Annex II


India at a glance 4/27/99

POVERTY and SOCIAL South Low- Inrsa Asia Income Development diamond'

19S 6POPuMsO. mi4aar (mIons) 976.9 1,289 2,048 Life expectancyGNP pw cpit (Atas mrnwo USS) 390 390 350GNP (Als meod, US$ bhm 381.0 502 722

Averae annual grwth, 139248

1.7 1.9 21Labor force (%) 2.0 2.2 2.3 GNP Gsros

per plimaryMost tent e _smat n(Wt yer avelbIa, 199248) capita enrollment

Poverty (% afpepuhaiorn below nabonul pOver tyne) 35Uobanpopuoftotaoptoulatlon) 27 27 28Ufeexpectaucylat bi(atal) 63 62 59Inant mortft or 1,OO0 6ve bkt As) 63 71 78CGIDdmalnuttn (f Octh tunder A) 6.e.. Access to safe waterAccessto safewaler(% of poRWagb) 81l 77 71lleracy t% opoWviation AP 43 51 47Gross plmay enroimnet otschooPgeg popxtiOn) 101 99 91 -India Low-incomegfup

mate ~~~~~~~110 10 -I1a Lo-nom0ruFemale 90 89 81

KEY ECONOMIC RATIOS and LONG-TERM TRENtS

1377 19S7 1997 1 9#"Economic ratior

GOP tUSS3 bons) 102.7 247.8 397.1 420QGross domestic investmenVGDP 204 22.8 23.1 23,4 TradeExports of goods and services/GOP 6.6 5.5 10.5 10.5Gross domestic savings/GOP 21.1 20.1 19.3 19.8Gross nalonai savings/GOP .. 20.5 218 21.7

Currentaccount bancelGOP 16 -2A -13 -1.4 DomesticInterest payments/GDP 0.3 0.7 1.0 0.9 InvestmentTotal debtVGOP 14.1 19,4 23.5 22,4 Savings I tmTotal debt serviofexports 15.3 32.0 23.1 19APresent value of debtGOP _ .. 17.8Pre#nt value of debtexports .. -. 135.4

Indebtedness17-7-87 tSi 1997 1M 199-03

(average annualgrowth)GDP 4.4 5.7 73 5.0 5.5 - ng Lo4cmguGNP per capIa 2.1 3.8 5.6 3w3 4. _ ndia -Low-income groupExport of gods Wd serAces 3.4 12.0 8.4 11.4 7.2

STRUCTURE of the ECONOMY1977 1987 1997 1998 Growth rates of output and lnvestment (S

(X ot GDP)Agdiulture 38.2 31.4 29.3 27.5 20

rIndustry 23.0 26.2 26.1 28.1 20-o

Manufacturing 15.5 16.1 16.8 16.8 10Services 38.9 42.3 44.7 48.4 93 97 0

Private consumption 69.3 68.2 70.1 69.1 .201General govemmentconsumption 9.6 11.7 10.2 11.1Imports of goods and services 5.9 8.1 14.0 14.1 " GDI -GDP

197747 1988-98 1997 1998 Growth rates of exports and Imports (%)(eea" anual growbb)Agrlutura 2.6 3.7 9.4 -1.0 40Industry 5.2 6.6 6.0 5.9 30

Manufacturing 5.5 7.1 7.7 6.8 20

Services 5.5 7.2 8.0 8.2 10

PdIvate consumpton 4.8 5.0 10.2 -0.1 0Generra govemment consumption 6.9 6.8 11.3 19.4 -10 3 94 sGross domestic Investment 4.2 6.4 -1.3 7.7 -20Imports of goods and services 8.7 8.5 9.7 3.5 -Exports C-importsGross national product 4.3 5.7 7.5 5.0

Note: 1998 data am preliminary estimates.

* The diamonds show four key Indicetors In the country (in bold) compared with its income-group average. If data are missing, the diamond wiilbe Incomplete.