India - Rajasthan Health systems Development Project

Documentof The World Bank FOR OFFICIAL USE ONLY ReportNo: 26823-IN PROJECTAPPRAISAL DOCUMENT ON A PROPOSED CREDIT INTHEAMOUNT OF SDR61.O MILLION(US$89.0MILLIONEQUIVALENT) TO THE REPUBLIC OF INDIA FOR THE RAJASTHANHEALTHSYSTEMS DEVELOPMENT PROJECT February9,2004 HumanDevelopmentUnit SASHD - SouthAsia RegionalOffice This document has arestricteddistributionandmay be usedby recipientsonly inthe performanceof their official duties. Its contentsmay not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS (Exchange Rate Effective December 31,2003) Currency Unit = Rupee (Rs.) Rs. 45.60 = US$l.OO US$0.02 = Rs. 1.00 FISCAL YEAR July 1 -- June 30 ABBREVIATIONS AND ACRONYMS ANC Ante Natal Care ANM Auxiliary Nurse Midwife BCC Behavior Change Communication BPHC Block Primary Health Center BPL Below-the-Poverty Line C & A G Comptroler and Auditor General CAS Country Assistance Strategy CBHI Community-based Health Insurance Schemes CBO Community BasedOrganization CEO Chief Executive Officer CHC Community HealthCenters CMHO Chief Medical and Health Officer DEA Department of Economics Affairs DGS&D Directorate General Supplies and Disposables DMHS Directorate of Medical and Health Services DOMHFW Department of Medical, Health and Family Welfare DPMC District Project Management Cells DPT Diphtheria, Polio and Tetanus ECG Electro Cardiogram EMP Environment Management Plan EPC Engineering and Procurement Cell EPMC EquipmentProcurement andMaintenance Cell FMR Financial Management Report GF & AR General Financing and Accounting Rules GO Government Order GO1 Government of India GOR Government of Rajasthan GSDP Gross State Domestic Product HMIS Health Management Information System IDA IntemationalDevelopment Association IEC Information, Education and Communications IIHMR IndianInstituteof Health Management andResearch IMR Infant Mortality Rate IPD InPatient Department M&E Monitoring and Evaluation MOHFW MinistryofHealthand Family Welfare MRS Medicare Relief Society  FOROFFICIALUSEONLY MSS Mahila Shasthya Sangha NFHS National Family Health Survey NGO Non-Governmental Organization NSSO National Sample Survey Organization OPD Out Patient Department PCMC Project Coordinator and Monitoring Committee P D Personal Deposit PHC Primary Health Center PIP Project Implementation Plan PMU Project Management Unit PNC Post Natal Care P R I Panchayati Raj Institution PSC Project Steering Committee QER Quality Enhancement Review QIIS Quality Improvement and Information System Cell RCH-RHS Reproductive and Child Health-Rapid Household Survey RMRS Rajasthan Medicare Relief Society S A Social Assessment sc Scheduled Caste SDH Sub Divisional Hospital SEC State Empowered Committee SHSD India State Health Systems Development SIHFW State Institute for Health and Family Welfare SOE Statement of Expenditures SPC Strategic Planning Cell ST Scheduled Tribe STI Sexually Transmitted Illness TBA Trained BirthAttendant TOR Terms o f Reference TOT Training o f Trainers UNFPA UnitedNations Population Fund UNICEF UnitedNations Children's Fund Vice President: Praful Pate1 Country ManagedDirector: Michael F. Carter Sector ManagedDirector: Anabela Abreu Task Team Leader/Task Manager: Sadia Afroze Chowdhury This document has a restricted distributionand may be used by recipients only in the performance of their official duties. I t s contents may not be otherwise disclosed without World Bank authorization.   INDIA RAJASTHANHEALTH SYSTEMS DEVELOPMENT PROJECT CONTENTS A. Project Development Objective Page 1. Project development objective 2 2. Key performance indicators 2 B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 2 2. Main sector issues and Government strategy 3 3. Sector issues to be addressed by the project and strategic choices 4 C. Project Description Summary 1. Project components 2. Key policy and institutional reforms supported by the project 3. Benefits and target population 4. Institutional and implementation arrangements D.Project Rationale 1. Project alternatives considered and reasons for rejection 9 2. Major related projects financed by the Bank and/or other development agencies 10 3. Lessons learned and reflected inthe project design 11 4. Indications o f borrower commitment and ownership 12 5. Value added of Bank support inthis project 12 E. Summary Project Analysis 1. Economic 12 2. Financial 13 3. Technical 13 4. Institutional 15 5. Environmental 18 6. Social 20 7. SafeguardPolicies 23 F. Sustainability and Risks 1, Sustainability 24  2. Critical risks 25 3. Possible controversial aspects 27 G. Main Loan Conditions 1. Effectiveness Condition 27 2. Other 28 H. Readiness for Implementation 30 I.CompliancewithBankPolicies 30 Annexes Annex 1: Project Design Summary 31 Annex 2: Detailed Project Description 38 Annex 3: EstimatedProject Costs 54 Annex 4: Cost Benefit Analysis Summary, or Cost-Effectiveness Analysis Summary 55 Annex 5: Financial Summary for Revenue-Earning Project Entities, or Financial Summary 69 Annex 6: (A) Procurement Arrangements 70 (B) Financial Management and Disbursement Arrangements 83 Annex 7: Project Processing Schedule 89 Annex 8: Documents inthe Project File 90 Annex 9: Statement of Loans and Credits 92 Annex 10: Country at a Glance 96 Annex 11: Inequities inRajasthan 98 Annex 12: Activity Matrix 103  INDIA RAJASTHAN HEALTH SYSTEMS DEVELOPMENT PROJECT ProjectAppraisalDocument South Asia Regional Office SASHD Date: February 9,2004 Team Leader: Sadia Afroze Chowdhury Sector Manager/Director: Anabela Abreu Sector(s): Health (100%) Country ManagedDirector: Michael F. Carter Theme(s): Health system performance (P), Population and Project ID: PO50655 reproductive health (P) Lending Instrument: Specific Investment Loan (SIL) Project Financing Data [ ]Loan [XI Credit [ ]Grant [ ]Guarantee [ ]Other: For LoanslCreditslOthers: Amount (US$m): 89.00 ProDosed Terms IIDAI: Standard Credit BORROWER 16.93 I 0.05 I 16.98 IDA 88.33 0.67 89.00 Total: 105.26 0.72 105.98 - PEstimated Disbursements ( Bank FY/US$m): FY 1 2004 2005 I 2006 I 2007 I 2008 I 2009 I 2010 Annuall 4.40 II 18.60 I 24.50 I 22.50 I 12.40 I 3.60 I 3.00 86.00 I 89.00 I1I Project implementation period: FY 04-FY 10 Expected effectiveness date: 0611512004 Expected closing date: 0913012009 'CS PA? rDlm Iu UU/n ilM ,  A. Project Development Objective 1. Project development objective: (see Annex 1) The project would assist Rajasthan inimproving the health status o f its population, inparticular the poor and underserved population. Specifically, the project would have the following two project development objectives (PDO): PDOl: Increase access o f poor [Le., below the poverty line (BPL)] and underservedpopulation to health care. PD02: Improve the effectiveness o f health care through institutional development and increase inthe quality o f health care. The project would assist the state inachieving the outcomes targeted inthe draft Health Vision for Rajasthan 2025. These include: reducing Infant Mortality Rate (IMR) to less than 30 per 1,000 live births by 2025; reducing Maternal Mortality Rate (MMR) to less than 100 per 100,000 live birthsby 2025; increasing assistance at delivery by qualified attendants to 85 percent by 2010; increasing full immunization coverage o f children under 1 to 90 percent by 2010; and increasing the percentage o f Tuberculosis (TB) cases treated to 85 percent by 2015. 2. Key performance indicators: (see Annex 1) The following Key Performance Indicators would be used to assess progress towards the achievement o f the two project development objectives: For PDO1: Increasedutilization of government health services by poor (BPL) and Scheduled Tribes (ST) households. Increasedproportion o f BPL/Scheduled Tribe patients among those attended at government health facilities at various levels. Increasednumber o f BPL/Scheduled Tribe patients exempted from user fees at government health facilities. Increasedawareness o f poor and tribal households o f health services offered by different levels o f government health facilities. For PD02: Constant or rising expenditure on primary and secondary levels o f care. Increasedproportion o f non-wage expenditure intotal health expenditure. Increasedproportion o f government health care facilities staffed according to agreed norms. Decreasedirrational use o f drugs in government health care facilities. Increasedpatient and community satisfaction with primary and secondary levels o f health care services. Increased number o f appropriate referrals at Community Health Centers (CHCs), District and sub-Divisional hospitals from Primary Health Centers (PHCs) and Sub-centers. Increasedhealth care utilization interms o f number o f outpatient visits, hospital admissions, and deliveries. B. Strategic Context 1.Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1) Document number: R2002-0203[IDA/R2002-0 1771[IFC/R2002-02 141 Date of latest CAS discussion: December 5, 2002 The proposed project is consistent with the Bank Group Country Assistance Strategy (CAS) progress - 2 -  report for India, discussed by the Executive Directors on December 5,2002. The project would support the CAS objective o f developing more efficient and effective health prevention and care systems at the state level, that would better serve the needs o f the poor. Additional CAS objectives o f enhancing the role o f the private sector inachieving important public health goals; improving governance; and enhancing community participation and empowerment would also be supportedby the project. 2. Main sector issues and Government strategy: HNP Sector Issuesin Rajasthan The major generic health sector issues in India are: wide disparities inhealth status among regions and between poor andnon-poor households; inadequate institutionalarrangements and weak program management; low quality o f services inboth the public and private sectors; ineffective targeting o f public funds to the poor; inadequate framework for engaging the private sector; low efficiency and limited financial resources. These problems exist within a general institutional environment o f poor oversight and inadequate measurement o f health system performance. TheHealth Sector in Rajasthan Rajasthan is the eighth most populous state in India with a population o f over 56 million. It i s characterized by immense regional disparities, adverse climatic conditions, and scarcity o f water. Forty percent o f the population lives inthe remote, western desert areas that are subject to seasonal migration and nomadic movements o fpeople. According to Survey of Cause of Death data, communicable diseases and peri-natal and maternal causes account for about 50 percent o f deaths inthe state. With an IMR o f 85, MMRof approximately 670 per 100,000 live births and a total fertility rate of4.4 children per woman, Rajasthan i s below the national average interms o f basic health outcomes. A consistent observation across almost all indicators i s that the poor have worse health status relative to the rich and are less likely to use health services. These results are not unexpected or peculiar to Rajasthan; however, the extent o f disparities inthe state i s glaring. All o f this poses special challenges to providing accessible health care o f good quality. Major issues inthe health sector include: WeakInstitutional Arrangements and Program Management: Rajasthan i s one o f the lowest performing states inIndia, with a weak health care management system and limitedinstitutional capacity. The complex and fragmented management structure has created a public health system characterized by insufficient integration o f health, family welfare and disease control programs, inadequate coordination and integration at different service delivery levels, and overlapping functions. Weak management o f human resources i s o f particular concern intribal and hard-to-reach areas. Declining Financial Resources: The share o f health intotal state government expenditure has been declining for the past two decades. From over 8 percent of the total revenue budget in 1980-81, the health share declined to less than 6 percent in2000-01. Futher details are given in Section E.1. Lack of Synergy Between the Public and Private Sectors: Private providers o f health services inthe state are heterogeneous. Informal practitioners, practitioners o f traditional medicine, and not-for-profit and for-profit allopathic providers coexist offering varying quality o f services. The most recent data on utilization o f services (1995-1996) showed that 59 percent o f ambulatory care inrural areas was provided by the private sector, compared to 82 percent for all India; the corresponding figures for urban areas are 58 - 3 -  percent and 83 percent. These figures indicate that, while the private sector inthe state plays a dominant role inthe provision o f individual curative care, the public sector i s muchmore important than is generally the case inIndia. The private health sector is poorly organized and has limitedcontact with the public sector. Opportunities for public-private partnerships remain largely neglected inthe government's policy formulation and program implementation. There is no formal system for regulation o f the private sector, and though the informal providers are often the first point o f contact for the patients, there is very little information on their activities. Quality of Health Care: The quality o f health services inboth the public andprivate sectors is low and few mechanisms exist to holdproviders accountable. There i s currently n o regulatory framework inplace to monitor the quality o f care andto protect consumers. Inthe public sector, health facilities at the primary and secondary levels are often poorly equipped andindisrepair. Other constraints include: inappropriate skill-mix,shortage o fdrugs and supplies, lack o fattention to supervision and maintenance, and staffing limitations, especially inthe remote and hard-to-reach areas. The main issues inthe private sector are poor quality o f care, lack o f accountability o f the provider, and limited linkages with the public sector including poor referral mechanisms. Access and Equity of Health Care: The distribution of government health expenditure by household income in Rajasthan i s the second most regressive (after Bihar), with a concentration index o f 0.34. There are also important intra-state disparities inthe allocation'of government resources for health care, and consequent regional disparities in access. Governance: The major issues in governance that have affected the performance o f the public sector include lack o f staff motivation, staff absenteeism, the lack o f transparency with regard to the appointment and transfer o f staff, and weak procurement arrangements. Strategy of the Government of Rajasthan The Government o f Rajasthan (GOR) is committed to the overall development o f the health sector. This is to be achieved through appropriate policies andprograms based on the principles o f equity, gender equality and partnership with the private sector. I t has recently re-formulated its population policy (Population Policy of Rajasthan, 2003) inline with the recommendations o f the National Population Policy, identified priorities for the health sector, and is preparing a private sector health policy. The Health Vision 2025 -Rajasthan, has also been prepared. Inaddition, duringthis project, the state would develop a more comprehensive health sector development policy which could eventually result inimportant system-wide changes. 3. Sector issuesto be addressed by the project and strategic choices: The project would address the six major issues identified inthe preceding section. Institutional Arrangements and Program Management: The project would support capacity buildingto improve management, implementation and monitoring o fprograms; procurement; financial management; equipment management; referral practices; health information systems; and health care waste management. The project would coordinate inputswith the proposed national disease surveillance project, expected to be supported by International Development Association (IDA), inorder to strengthen disease surveillance in the state. - 4 -  Financial Resources: Within the overall budgetary and fiscal constraints faced by the state, the project would assist instrengthening the capacity o f the Department o f Medical, Health and Family Welfare (DOMHFW)to use its resources more efficiently and equitably. Itis expected that GORwould maintain the share o f the health budget allocated to the primary and secondary levels, and ensure increasedresources to non-salary recurrent costs as a percentage o f the overall health budget. The project would support the efforts o f the Medical Relief Societies set up at the facility level to raise supplementary funds through user charges or other mechanisms, and retain such revenue for use at the facility. Mechanisms for ensuring fee exemptions for the poor would be strengthened. Under the project, a Health Care Fund or any similar mechanisms that would be used to suplement the income o f Medical Relief Societies inthe poorest areas would be established. The goal o f this find would be having the amount o f money available for spending per BPL patient (i.e. total revenues/BPL population intarget area) be roughly equal across the state. Synergy Between the Public and Private Sectors: The project would support consultations, analytical studies and pilots on public-private partnerships. The main focus would be on experimenting with the contracting out o f selected clinical and non-clinical services. Quality of Health Services: The project would include interventions to improve quality o f government health services. Supply side interventions would include upgradingprimary and secondary health care facilities, rationalizing service norms, addressing manpower gaps and skills mismatches, and strengthening partnerships with private providers. Demand side interventions would include providing households with information that would improve their decision-making inchoosing health services, as well as their health related practices within the household itself. Access and Equity of Health Care: The project would support interventions to strengthen the provision o f health services inthose regions and communities that have the poorest health outcomes. A public expenditure review and benefit incidence analysis conducted duringproject preparation have helped to identify priorities for resource allocation that would improve equity. Criteria for selecting facilities for upgrading have taken into account regional, gender and other disparities. A Tribal Development Plan (TDP) has been formulated to ensure that appropriate interventions are inplace to increase access to health care intribal areas. The focus o f the TDP i s on empowerment o f tribal populations to demand better health services; community driven interventions inconformity with local conditions; and targeting o f remote, hard-to-reach areas through innovative schemes such as contracting o f Non-Government Organizations (NGOs)for service delivery. Information gathering instruments would be put inplace to measure access to and utilization o f health services by the poor and general patient satisfaction. Information would be made public on these issues, as well as on the performance o f health facilities. Information, Education and Communication (IEC) activities would be directed at behavior change that result in: (i) who are those underserved demanding better services andbeing better able to manage their own health care; and (ii) more responsive behavior on the part o f service providers. Governance: Governance problems inthe public sector such as absenteeism andpoor personnel management are difficult to tackle (and not limitedto health staff). The project would support the establishment and operation o f a Strategic Planning Cell (SPC) to lead health policy development inthe state. Issues related to healthmanpower would be an important topic for the SPC and may result innew approaches to personnel management inthe government's health activities. It should also be noted that the Government o f Rajasthan's interest in developing contracting with private providers o f health services i s partly motivated by reluctance o f staff inthe public sector to work with difficult areas-the expectation beingthat contracted private sector staff would not consider their employment to be immune to poor performance and thus be better motivated. - 5 -  Recent analysis o f the health sector inIndia: Better Health Systemsfor India's Poor: Findings, Analysis and Options, classifies the Indian states into three broad categories based on commitment to improving the performance o f the health sector, institutional capacity, and stage o f epidemiological transition. Rajasthan represents a lower tier Indian state, inthe early stages o f the epidemiological transition, with weak health systems capacity. The strategy followed by the proposedproject conforms to the recommendations o f the report, and includes: increasing health system oversight by empowering people with information to demand better health services and fostering public-private partnerships on common interests; focusing on improving the implementation o f existingpublic health programs that tackle the conditions o f the "unfinished agenda"; encouraging private sector provision o f ambulatory care, while prioritizing public facilities in disadvantaged areas; and improving the quality o f existing first referralhospitals ina selective manner that would promote more equitable distribution o f public resources. C. Project Description Summary 1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown): The proposed project would have three main components. While the first two components would benefit the entire population o f the state, the thirdcomponent would mainly focus on the poor and tribal population. I. ProjectManagement,PolicyDevelopmentandCapacityBuilding(US%19.97million). This component would support the improvement o fthe state's institutional capacity for healthpolicy development and planning through the establishment o f the Strategic Planning Cell (SPC). The SPC would focus on the following areas: (a) designing and implementing strategies for public-private partnership in the health sector, including organizing a series o f consultative workshops with major stakeholders to guide the development o f such partnership, developing contracting mechanisms o f health services to be undertaken by the private sector, and carrying out a diagnostic assessment o f the role o f private providers inthe health sector; and(b) designing a regulatory framework relatingto the provision o f quality health care services by the private sector. Secondly, the component would support the improvement o f the health management information systemof Rajasthan. Thirdly, the component would support a variety o f training activities on health management, clinical aspects, waste management, equipment maintenance and behavior change communication. Training would be imparted to a wide range o f government staff, as well as community leaders, Panchayati Raj Institution (PRI) members, and NGO personnel. Fourthly, the component would support management o f the implementationo f the project itself, through the establishment and operation o f a State Empowered Committee, a Project Steering Committee and a Project Management Unit at the State level, and Project Coordination andMonitoring Committees and District Project Management Cells at the district level. This component would finance professional services and workshops, studies, training, vehicles, and operational expenses and salaries o f incremental staff on a declining basis. 11. Developmentof Primaryand Secondary HealthCare Services in the Public Sector (US% 52.70 million). This component would include: (a) the physical renovation andupgrading o f 28 district hospitals, 23 sub-divisional hospitals, 185 Community Health Centers, and two Block Community Health Centers; (b) the development and implementation o f an efficient and sustainable health care waste management system (including the preparation and implementation o f a Health Care Waste ManagementAction Plan for all renovated and upgraded facilities under the project; the establishment o f an institutional framework; training o f staff and workers o f health care facilities; and the establishment o f monitoring and reporting systems); (c) improving the quality o f clinical services at district and sub-division hospitals and community - 6 -  health centers through, inter alia, the development and implementation o f clinical norms and quality improvement guidelines, andnorms for improving drug prescribing anddruguse practices; and (d) strengthening the current referral system inRajasthan by linking different tiers o f the health care delivery system through an appropriate referralmechanism, the strengthening o f referral linkages with the ongoing reproductive and child health, malaria and tuberculosis programs, and the application o f continuous and intensive monitoring measures. The component would finance civil works, furniture, equipment, vehicles, drugs and medical supplies, Health Management Information System and IEC materials, training, services, professional services and salaries o f incremental staff on a declining basis. 111. Health Care Innovations for the Disadvantaged (US$33.31 million). This component would support interventions to improve access to health care among disadvantaged populations, inparticular the tribal population and those households below the poverty line (BPL households). Specifically, it would include: (a) the carrying out o f an Information, Education and Communication (IEC) strategy consisting inter alia of: health care facility based activities targeted at the providers and patients; inter-personal activities targeted at the tribal and poor population; and outreach activities targeted at the tribal and poor population; (b) the development and implementation o f a new strategy to improve health services among the tribal population o f Rajasthan, focusing inter alia on strengthening service delivery, the organization and operation of health camps, introducing a package o f non-financial incentives for medical professionals to serve intribal areas, contracting o f local private doctors, and integrating the tribal medical system inthe provision o f essential medical services; and (c) the development and implementation o f innovative mechanisms to diminish financial barriers to health care by disadvantaged population including improving the existing schemes, establishing a health care fund, and piloting the development o f sustainable community-based health insurance schemes. This component would finance professional services, training, IEC, workshops, piloting o f innovations, studies, surveys, operational expenses, and salaries o f incremental staff on a declining basis. 2. Development o f Primary and Secondary Health Care Services inthe Public Sector 3. Health Care Innovations for the Disadvantaged 33.31 31.4 28.16 31.6 Total Project Costs 105.98 100.0 89.00 100.0 Total Financing Required 105.98 100.0 89.00 100.0 2. Key policy and institutional reforms supported by the project: The main policy reforms supported by the project are: (i)redefinition o f the state government's policy a towards the private health sector, which would be made more of a partner, initially through the development o f contracting out schemes; (ii) assignment o f a higher priority within the state's the health-related programs to tribal and BPL populations; and (iii) the assignment o f a higher priority to demand-side interventions, initially through behavior change communications efforts with households as the target audience. Interms o f institutional reforms, the establishment o f a state-level Strategic Planning Cell i s potentially a key development for the evolution o f the health sector policy inthe state. - 7 -  3. Benefitsand target population: The project would result ina more efficient and equitable health system to better address the health needs o f the people o f Rajasthan. Improvements inhealthpolicy andplanningcapacity, management effectiveness, allocation o fpublic resources (e.g., the envisaged increase inthe non-salary recurrent budget), and enhanced role o f the private sector would increase the efficiency of the health sector. Equity would improve with the planned greater attention to tribal and B P L populations. Access to improved health services by the population at large, and the disadvantaged populations inparticular, would in turn lead to better productivity and earnings -in addition to the intrinsic value that society attaches to improvements inhealth status. Environmental benefits would also result from the implementation o f the health care waste management plan. Beneficiaries o f the project would include the state population at large, but as noted the project would place a special emphasis in improving the health status o f tribal and poor households. The project would support an expected expansion inthe provision of government health services (including contracted out services) to an estimated three million out-patients and 34 thousand in-patients annually. Those outpatients who are already using government health facilities (which currently account for about 10 million outpatient contacts per year and about 300 thousand inpatients) would benefit from the expected improvement inthe quality o f services which the project would made possible. 4. Institutionalandimplementationarrangements: The project would be implemented over a period o f five years. The proposed institutional and implementation arrangements have been based on the experience o f similar health system development projects in other states with administrative capacity similar to that o f Rajasthan. Implementationof the project would be managed by a Project Implementation Unit (PMU) locatedinthe state's Department o f Medical, Health andFamily Welfare (DOMHFW). The PMU, which would be headedby the Project Director (a senior officer from the IndianAdministrative Service), would be responsible for overall project coordination and day to day implementation. It would comprise o f a central body linkedto seven cells, each having specific responsibilities inproject implementation. Inaddition, the project management structure wouldincorporate: (i) StateEmpoweredCommittee,headedbytheChiefSecretary,GOR,andincludingseniormembers The o f government, which would provide overall direction, approve the annual budget, undertake periodic review o fproject progress and facilitate inter-departmental coordination; (ii)TheProjectSteeringCommittee(PSC),headedbythePrincipalSecretaryofDOMHFW,and composed o f senior managers o f the DOMHFW,including the Project Director. The PSC would supervise and guide the PMU, monitor fund flows, and facilitate smooth implementation o f the project; and (iii)TheProjectCoordinationandMonitoringCommittee(PCMC)atthedistrictlevel,headedbythe District Collector, which would monitor and coordinate implementation o f project activities at the district level, as well as ensure community participation with the inclusion o f representatives o f PRIs, NGOs and social workers inthe committee. Financialmanagement arrangementsare describedin section E 4.4 and annex 6 (b). - 8 -  D. Project Rationale 1. Project alternativesconsideredandreasonsfor rejection: The major alternatives considered include: (a) Reducethe role ofthe public sector inthe provision of health services. Rajasthan ranks lowest among all states interms o f private spending on health care and it ranks among the top interms o f utilization rates o f public health facilities. Giventhe limitedavailability o f private sector services o f adequate quality inremote and rural areas, there is a continued need for public provisiodfinancing o f such services: for example, health service utilization data show a very highdependence on public health care (up to 96 percent) indesert and tribal districts. Additionally, the National Sample Survey Organization (NSSO) data show that despite gradual reduction inits share for ambulatory care, the public sector i s still the dominant player in the provision o f ambulatory care inRajasthan, and this i s more so for inpatient care. Only three other states report higher utilization o fpublic hospitals for inpatient care. This points to a continued need for supporting these services, and expanding good quality health services, where possible, into remote and rural areas. (b) Implement project only in selected parts of the state.While there is a special needto focus on increasing access and effectiveness o f health services inunderserved areas o f the state, and for underserved populations, implementing the project exclusively in selected parts o f the state would miss an important opportunity to address key state- and sector-wide policy issues, such as the current weak capacity for policy development and planning, insufficient non-salary budget, ineffective referral mechanisms, and the insufficient capacity for the surveillance o f major diseases. Varying needs o f different parts o f the state would be addressed through decentralized planning and management at the district level. (c) Support to the provisionof either primary or secondary health services only. Given that Rajasthan falls in the category o f states inthe early stage o f the epidemiological transition, to bring about changes in health outcomes of the population, especially the poor, scheduled caste and scheduled tribes (SCISTs), it wouldbe important to institute changes across both the primary and secondary levels o f care. A sustainable health system would need to combine elements o f public health and basic clinical services. Investments at the primary level would require supporting investments at the first referral level inorder to confer credibility to the health system. (d) Placingthe focus on emerging and neglectedproblemssuch as mentalhealth, care ofthe elderly, and non-communicablediseases. Given the constraint on availability ofresources, GORneeds to make some strategic choices, and focus on those interventions that would have more wide-ranging health outcomes, which at this point intime are basically those related to maternal and child health and control o f communicable diseases. (e) ProgramLending.A Quality Enhancement Review conducted in July 2002 for India State Health Systems Development projects noted that all these projects to date have been traditional investment projects; and that for some states the Bank and state governments could consider program lending operations encompassing the entire state health sector. However, given the current low institutional and management capacity o f the GOR, program lending would not be appropriate. - 9 -  2. Major related projects financed by the Bank and/or other development agencies (completed, ongoing and planned). Latest Supervision Sector Issue Project (PSRI Ratings (Bank-finance projects only) Implementation Development Bank-financed Progress (IP) Objective (DO) Poverty-related healthproblems, with India Population Project VI11 S S maternal and child health indicators (Cr.23944" closed on June 30 below average for the country's stage o f 2002) development andincome level. IndiaPopulationProject IX S S (Cr.26304" closed on December 31,200 1) Strengthening institutional capacity; Reproductive andChild Health S S improving quality, coverage and (Cr.N-01 %IN,ongoing) effectiveness of existing FW services, increasing access in selected disadvantaged districts and cities Implementationcapacity o f the public Immunization Strengthening S S health andthe immunization program. (Cr.3340-IN, ongoing) System performance o f health care, Andhra Pradesh First Referral S HS improvements inquality, effectiveness Health System (Cr.26634" and coverage o f health services at the on March 31, 2002) first referral or secondary levelto betterIclosed S S serve the neediest section o f society. Second State Health Systems Development, (Cr.2833-IN, ongoing) Lack o f a coherent health system with Orissa Health Systems U S well-defmed public-private division of Development (Cr.N-041-IN, responsibility, andunder-funding o f ongoing) primary health care Maharashtra Health Systems S S Development (Cr.3 1494" ongoing) Uttar Pradesh Health Systems S S Development (Cr.3 338 4 " ongoing) Second National HIV/AIDS S S Control Project, Cr.32424" - 1 0 -  ongoing) General health, Prescription pattems, Malaria Control (Cr.2964-IN, S andpatient compliance for the ongoing) treatment o f communicable diseases Tuberculosis Control S (Cr.2936 4 " ongoing) 3ther development agencies UNFPA Integrated Population and Development Project (ongoing ) UNICEF Border District Cluster Project (ongoing ) UNICEF Women's Rightto Life and Health Project (ongoing ) European Union Health and Family Welfare Sector Investment Project (ongoing ) I (Highly Unsatisfactory) 3. Lessons learned and reflected in the project design: A Quality Enhancement Review ( QER) was carried out inJuly 2002 to review the Bank's experience with the India State Health Systems Development (SHSD) projects, which have been under implementation since 1995, and to consider possible hture directions for the next generation o f these projects. The panel supported the idea o f ordered change inadapting the project design,rather than a completely new approach. The QER concluded that much hadbeen achieved by these projects and that it was important to buildon this success and to move forward. The QER also notedthat the projects had steadily evolved away from a focus on secondary hospitals to a more integrated approach. The appropriate approach now would be to reinforce this trend, take it to the next level by incorporatingboth public and private sectors, and seek to develop genuinely integrated health systems. Some o f the key lessons leamed from the implementationexperience o f the SHSD projects are as follows: Sector Planning and Program Management. It was found that capacity for sector planning and management in SHSD states continued to be weak and required special attention. Management strengthening at all levels would need to be stressed, particularly with regardto providing more autonomy inmanagement and enhancing supervision. Moreover, convergence withcentrally sponsoreddisease control and reproductive health programs would need to be strengthened. The implementation o f these schemes was not well integrated at the state level, leading to tensions and inefficiencies. The proposed project would ensure that the Strategic Planning Cell be constituted early inthe project's implementation so as to function effectively as an advisory body to the DOMHFWas a whole. The project would develop a health management information system to provide regular and accurate information that would facilitate policy formulation andmanagement decision-making. Quality of Care. Independent rating o f health facilities, such as that undertaken by the Andhra Pradesh FirstReferralproject, introducedhealthy competition and independent monitoring, andprovided incentives for improved performance. This project would employ a similar rating system at the primary and secondary  health care facilities Targeting of the Poor. Findings from the recently completed sector work indicate that special efforts need to be made to reach the poorest households. The project would facilitate enhanced access to health services by the poor, tribal, nomadic and remote populations by: (i) inputs inthose regions and focusing communities that are the poorest and have the poorest health outcomes; and (ii) priority to diseases giving of the poor (i.e,, communicable diseases and health problems related to matemal and child health). Involvement of the Private Sector. SHSD projects so far have explored public-private sector partnerships mainly inancillary activities o f hospitals, such as cleaning, laundry, kitchen services and minor maintenance o f building and grounds. The proposed project would go further, by contracting NGOs to deliver services inremote communities and pilot innovative schemes involving private providers including the traditional health care providers. 4. Indications of borrower commitment and ownership: GORhas expressed a strong commitment to the proposed project at the highest levels. The GORhad approached the Bank several years ago seeking support for a project at the secondary level o f health care. Inlightofthe findings o fthe recent sector work onhealthinIndia, which highlights the needfor low capacity states such as Rajasthan to strengthen health systems, as well as address the unfinished health agenda, GOR has adapted its initial project proposal to include systems development at the primary as well as secondary level. Additionally, GOR has acknowledged the need to work with the private sector, especially inunderserved areas, and wishes to expand its activities inthis area, buildingon its experience o f work with NGOs and the Medical Relief Societies. It has participated in several State Health Systems Development Workshops, and has also financed and carried out a number o f preparatory studies for the proposed project. 5. Value added of Bank support inthis project: The policy and institutional strengthening aspects o f the project are where the value added o f Bank support lies. The Bank has maintained an active policy dialogue with the Government of India and those o f several states for the past several years on the subject o f how to develop more effective state health systems, and the ideas are continuously evolving. The proposedproject would buildon the experience o fpreceding Bank-supported Health Systems Development Projects and integrate lessons learned inthe process. Bank support for the proposed project would also help inensuring that sufficient attention and priority are given to those project interventions which specifically address the needs o f the poor and tribal populations. E. Summary Project Analysis (Detailed assessmentsare inthe project file, see Annex 8) 1. Economic(see Annex 4): 0 Costbenefit NPV-US$ million; ERR = % (see Annex 4) 0 Costeffectiveness 0 Other(specify) Economic growth in Rajasthan i s currently not as steady as it was duringthe 1980s. However, a substantial investment ininfrastructure which i s taking place inthe state is likely to boost economic growth inthe coming years. The fiscal situation o f the state has been grim since the early 1990s and the state's fiscal deficit has grown to about 7 percent. - 12-  Ithas already beennoted insection B.2. that the share ofhealth intotal state government expenditure has been declining for the past two decades. From over 8 percent o f the total revenue budget in 1980-81, the health share declined to less than 6 percent in2000-01. More recently, four consecutive years o f drought accompanied by famine, the resulting freeze on public expenditures, and the rapid deterioration inthe fiscal position o f the state have resulted in a hrther decrease inthe already insufficient funds available for health. The proportion o f salaries in the total health budget i s too highat about 80 percent, leaving little for drugs andother complementary inputs. The allocation to secondary health care services has witnessed a substantial decline both interms o f per-capita allocation as well as interms o f share o f the total health budget. This is an issue because the secondary care service is a crucial link between primary and tertiary services and the provision o f services would be more cost effective at this level than at the tertiary level, to which public resources flow disproportionately. Onthe positive side, the National Health Policy 2002 envisages a doubling o f Central grants to the states' health sector. However, inorder to make effective use o f the additional grants, Rajasthan would have to enhance its own budgetary allocation to health. The establishment o f Medicare Relief Societies (MRS) at major hospitals during 1995-96 inthe state has increasedthe resources available to these hospitals to improve the delivery o f health services. Informal discussions with the officials at MRS suggest that the revenues raised through user charges at major facilities could indue course be adequate to meet the recurrent non-salary costs o f the health facilities. However, caution should be exercised on the degree o f dependence on user charges to raise revenues, since such charges are a regressive modality o f raising resources for health. The 52nd round o f the NSSO reveals that, inproportion to their income, the loss o f income to the household due to hospitalization i s the highest (Rs.1,235) for the bottom quintile o f the household income distribution. 2. Financial (see Annex 4 and Annex 5): NPV=US$ million; FRR= Yo (see Annex 4) Fiscal Impact: The proposed project's budgetwould average only about 8-9 percent o f the state's annual combined Plan and Non-plan budgets for the health sector during the project period (FY2004/05 to FY2008/09). However, the project would constitute a large share o f the health sector's Plan budget during those years. The additional annual recurrent expenditure due to the project would be below 5 percent o f the state Non-plan budget when the project comes to an end. 3. Technical: The experience o f implementing several State Health Systems Development projects inIndia and the detailed economic and sector work highlight several technical issues that have been addressed during project preparation. A series o f workshops and consultations have been held to clarify these issues. The technical aspects o f the project have been developed as follows: ClinicalSewiceNorms: A detailed mapping exercise has beenundertaken to identify the types o f services to be provided at different levels o f facilities, and separate norms have been agreed for 300-bed and 150-bed district hospitals; likewise, different norms for 100-bed and 50-bed sub-district hospitals. Staff, equipment and hnctional space norms consistent with the redrafted clinical norms have also been developed. - 1 3 -  Rational use of Drugs: Availability and access to good quality drugs at project facilities, along with improvements inprescribing practices would be an important element inimproving the quality and effectiveness o f the health care delivered, particularly to poor and presently underserved populations. An essential drugs list would be adopted by the state for different levels o f facility, and would provide the generic drugs templates against which drugs can be procuredthrough the project. The issue o f rational drug prescribing by providers and drug use bypatients wouldbe addressed through a combination o f background research, workshops, training and IEC. Health Management Information System (HMIS)-: A detailed HMIS would be developed for the project that would report on activity and efficiency indicators along with selected indicators for key resources such as staff, financial status, essential equipment and drugs vital for service delivery and waste disposal. Comprehensive hospital activity information that was collected as part o f the facility surveys would be analyzed to supplement the currently available baseline data. DuringYear 1, as part o f the implementation o f the HMIS system, a study would be undertaken to provide a complete set o f appropriate baseline data. Training: The training component has been prepared based on a training needs assessment, including clinical and management training. Training would also be undertaken to enhance management and clinical skills, health care waste management, and in other areas o f health systems, such as referral, HMIS, etc. A plan for timely extemal evaluation o f the different trainings and modification o f the ongoing training programs based on recommendations of the evaluation would be included inthe overall training plan. Referral: The logistics to enable a referral system to h c t i o n have been outlined. Experience from other state health systems development projects indicates the critical element o f a referral system i s feedback and completion o f the referral loop. Initially, the project would focus on feedback for selected disease conditions, and from tribal camps. Referral linkages with the on-going reproductive and child health, malaria and tuberculosis programs would be strengthened by the end o f the project period. Continuous and intensive monitoring would be incorporated into the system to ensure that referralprotocols are followed andthe reports are complete. QualityImprovement: The quality improvement program would focus on two important aspects o f quality: (i) defining a core set o f quality indicators which would include quality o f clinical services being provided at facilities, and measurement o f client satisfaction; and (ii)improving quality o f processes and procedures at facility level. These would be incorporated into the regular HMIS, and monitored at regular intervals. Over a period o f time, the project would move towards grading o f facilities, and possibly motivating better performance. The existing disease surveillance system inthe districts would be strengthened, and extended to the secondary level, to effectively track and reduce morbidity and mortality due to communicable diseases. Inputsto this area, including the implementationandmonitoring, would be providedthrough the proposed National Disease Surveillance Project. - 14-  4. Institutional: A comprehensive institutional assessmentwas undertaken duringproject preparation andbased on its recommendations, plus the lessons learned from implementation o f previous projects inthe state, specific measures would be taken at the state, divisional and district levels to strengthen institutional capacity to implement the project. These measures include: (i) setting up a State Empowered Committee to support the Project Implementation Unit inpolicy matters; (ii) creating capacity within the P M U for strategic planning, analysis andpolicy formulation ;(iii) settingup a mechanism to ensure adequate and timely flow o f funds, and empowering the Project Director to incur project-related expenditures; (iv) setting up a computer-based financial management system capable o fproviding timely andreliable feedback on fmancial matters to facilitate monitoring o f the project's financial performance; (v) transferring responsibility to the P M U for the implementation o f the civil works program, equipment, and procurement; (vi) decentralizing project implementation activities selectively to the district level to facilitate responsiveness to local needs; (vii) promoting private sector involvement to increase service delivery and outreach to remote rural areas; and (viii) setting-up a project monitoring and evaluation system to provide timely feedback to project management and assessprocesses, outputs and impact o fproject performance. 4.1 Executing agencies: The project would be implementedand managedby the Department o f Health, Medical and Family Welfare, Government o f Rajasthan through the Project Management Unit (PMU) established for the project. 4.2 Project management: The project would be implementedthrough a four-tier management structure to ensure smooth project implementation and coordination among ongoing projects within the Department o f Medical, Health and Family Welfare. A State EmpoweredCommittee (SEC) and a Project Steering Committee (PSC) at the state level and ProjectCoordinationandMonitoringCommittees (PCMC) at the district level would be established for govemance of the project. The Project ManagementUnit (PMU) at the state level and DistrictProject ManagementCells (DPMC) would be responsible for implementationo fthe Project. The P M Uwould consist o f the following seven cells: 1. Strategic Planning Cell 2. Equipment Procurement and Maintenance Cell 3. Engineering (Civil Works) Cell 4. Financial Management Cell 5. Quality and Systems Improvement Cell 6. Human Resources Cell 7. Community Access and Equity Initiatives Cell To promote teamwork andjoint decision making, the PMUwould have a Project Implementation Board consisting o f the Project Director (also representing the Strategic Planning Cell) andheads o f the other six cells. Creating an enabling and supportive environment for health systems development i s critical for the success o f the Project. Therefore, the Project Implementation Unit and the District Project Management Cells would hold annual consultations with major stakeholders (senior government officials, leading professional, community leaders, private sector, NGOs, Women's Groups and others) to share the vision, and plans and progress o f the Project. - 1 5 -  The Strategic Planning Cell would support the state in strengthening planning and problem solving functions. Inaddition, it would focus on two areas: promoting an appropriate rolefor theprivate sector and resource allocation within thepublic sector. It would identify key strategic issues ineach o f these areas through consultations with major stakeholders, commission necessary diagnostic studies and analysis to identify ways to address these issues, and carry out necessary policy advocacy to accelerate progress in addressing them. The terms o f reference for diagnostic to determine potential for public-private partnership as well as for a study on regulation o f private sector have been developed, while the terms o f reference for studies and analysis o f the resource allocation inthe public sector would be developed during the second year o f the project after a consultative process with key stakeholders. These would be carried out inthe thirdyear ofthe project. The Equipment Procurement and Maintenance Cell would oversee the procurement o f equipment and other goods under the various project sub-components. It would also manage the maintenance o f the equipment. The Engineering (Civil Works) Cell would oversee the execution o f all civil works proposed under the Project. The responsibilities o f the Cell would be to manage the contracting out of design and construction of civil works to private sector architects I consultants and contractors to check, coordinate and supervise their work. The Financial Management Cell would be responsible for establishment o f the agreed financial management arrangements, providing timely financial reports to the stakeholders including the Bank, ensuring smooth and timely flow o f funds andproviding overall guidance inrespect o f the financial management o f the Project. Several actions are envisaged inthe project to improve quality including setting up clinical care standards and protocols for implementation o f standards, information system for monitoring quality, and hospital waste management. Four critical systems need to be inplace for effective functioning o f the institutions to be strengthened inthe project - logistics, health management information system, monitoring and evaluation, and referral linkages. The Quality and SystemsImprovement cell would ensure implementationo f the activities proposed under the project for upgrading the quality o f services provided through the public and private health systems and strengthening the above four systems. Considerable experience i s available inother states, which have implemented health systems development projects. To benefit from these experiences and to rapidly strengthen necessary skills inthe PMU, aprocess of intensive collaboration between relevantpersonnel in other states needs to be implemented. Several workshops have been held to initiate this process. These need to be followed up by study tours and exchange o f experiences as well as seeking hands-on assistance. Enhancingnecessary staff competencies i s critical for improving performance. Therefore, staff would be assisted inassessing their own competency development needs and accessing necessary training programs plannedunder the project. Inthe thirdyear a second round o f competency assessments would be carried out which would help monitor the progress made and instrengthening the capacity buildingactivities. The Human Resources Cell o f the PMUwould provide guidance and the District Project Management Cell would implement the process. The Community Access and Equity Initiatives Cell would ensure implementation o f community information education and communication activities to improve health seelung behavior as well as - 16-  advocacy with key stakeholders to create a favourable social and political environment to improve access by the disadvantaged. As many interventions to enhance access andequity are new andthere are considerable knowledge gaps, the Cell would commission necessary studies as well as collaborate with relevant institutions/organizations to ensure implementation o f pilots. Its work would leadto (a) strengthening government's schemes to reduce financial barriers for the poor; (b) supporting enhanced public-private partnership; and (c) pilot testing community-based health insurance schemes. The District Project Coordination and Monitoring Committee would ensure the coordination among jarious departments for timely completion o f the project activities, review project progress and remove bottlenecks, and approve the annual action plans for the district. A District Project Management Cell would be set up ineach district inthe office ofthe ChiefMedical and Health Officer (CMHO). The Cell would assist the CMHO and the Principal Medical Officer o f the district hospital in effective implementation o f the project activities at the district level. For this purpose, it would prepare annual plans and get them approved by the District Project Coordination and Monitoring Committee, prepare the progress reports for submission to the PMU, and coordinate implementation o f the activities among various agencies. It would assist the P M U (a) inlocal procurement; (b) by facilitating and monitoring the provision o f project inputs at the district level; (c) through supporting implementation o f systems for logistics, health management information, monitoring and evaluation, and referral linkages in the project supported institutions; (d) preparing competency assessment and training plans for the staff; and (e) by coordinating the implementation o f the activities o f the Component 3 at the district level. 4.3 Procurement issues: The "Guidelines for Procurement for IBRDLoans and IDA Credits (January 1995, revised inJanuary and August 1996 and in September 1997 and January 1999)" shall apply to all Goods and Works financed under the project. The "Guidelines for Selection and Employment o f Consultants by World Bank Borrowers (January 1997, revised in September 1997 and January 1999)" shall apply to all Consultants' services financed under the project. Procurement will be implemented by the Project Management Unit (PMU) through the Equipment Procurement & Maintenance Cell for gooddequipment and the Engineering (Civil Works) Cell for civil works at the state level and by District Project Management Cells (DPMC) at district level. Existing procurement capacity, systems andprocedures o f the executing agencies have been assessedand suitable changes which had been agreed with GOR have been completed. Project procurement schedules/plans for the entire project period o f five years have beenprepared and are attached to the Borrower's Project Implementation Plan (PIP). Implementationo f these procurement schedules/plans will be reviewed every six months whereas the schedules themselves will be reviewed every year to make necessary changes as may be required. Procurement processing for the first year o f the project i s at an advance stage, so that disbursements could start immediately upon project effectiveness. The lessons learned from other similar projects have been considered while developing the procurement arrangements for this project along with keyprocurement staff appointed duringproject preparation. 4.4 Financialmanagement issues: The project would have a financial management system which would be adequately able to account for project resources and expenditures. (See annex 6(b) for detailed information on budgeting, accounting policies andprocedures, information systems, disbursement and auditing arrangements). Funds Flow: the main challenge to satisfactory financial management arrangements o f the project relate to the GOR's fiscal ability to make timely release o f counterpart funds for the project. The following funds - 17-  flow mechanismhas been agreed which would mitigate the potential risk o f delays infunds flow to the project : GORwould establish a separate PersonalDeposit (PD) account for the project and make funds available (credit) inthe P D account o f the project quarterly in advance. For this, necessary budget provisions o n both receipts and expenditures would be made annually inthe State budget andthe P M U would provide the funds forecast on a quarterly basis to the Finance Department. The Project Director and the Financial Controller o f the project wouldjointly withdraw, on a periodic (monthly) basis, the funds from the P D account and deposit them ina separate bank account o f the project (to be established ina nationalized bank outside the treasury system o f the government). The funds would be withdrawn in a manner to ensure that there is sufficient funds at any point intime to meet the cash requirement o f the project both at the PMUand DPMU. a The Districts spending under the project would be given periodical advances (every month) by the State P M U to meet their forecasted cash requirements through the banking channels. Bank accounts would be established by all the District Project Management Cells (DPMC) ina nationalized bank (ifpossible in the same bank as that o f the state PMU). Subsequent funds flows to districts would be based on performance o f key indicators, projected funds requirement for the next period and evidence o f utilization o f funds. Staf$ng: The P M Uwould include finance personnel under the supervision o f a Finance Advisor & Chief Accounts Officer (FA & CAO). The FA & C A O would be assisted by a qualified chartered accountant as a Finance Manager, one Accounts Officer and other accounts support staff. One accounts person would be exclusively deployed at the DPMC who would be responsible for accounting, reporting and maintaining the books o f accounts. A finance manual layingdown the financial policies andprocedures, budgeting and flow o ffunds, quarterly and annual reporting formats including financial statements, flow o f information andmethodology o f compilation, chart o f accounts, information systems, disbursement arrangements, external and internal audit for the project and operation o f the Financial Management System (FMS) has been prepared for guiding the project personnel. The project would ensure that sufficient training is providedto the finance staff at the State P M U and districts on disbursement policies andprocedures (of IDA) and the financial reporting requirements. External audit: The audit arrangements under the project would include, (i)comprehensive audit report a (including consolidated project financial statements with sources and uses o f funds by categories and components) inrespect o f the entire project (PMU and the participating districts) by the office o f the Comptroler andAuditor General (C&AG), which is acceptable to IDA as an independent auditor. The audit would be conducted by the C&AG as per the terms o f reference approved by IDA and consented to by the C& AG. 5. Environmental: Environmental Category: B (Partial Assessment) 5.1 Summarize the steps undertaken for environmental assessment and E M P preparation (including consultation and disclosure) and the significant issues and their treatment emerging from this analysis. Biomedical waste, if improperly handled andmanaged, can have adverse impact on the environment and on public health through air, land and water pollution. However, only about 10 - 25 percent o f waste - 1 8 -  generated from average health care facilities i s regarded as hazardous, whose potential negative impacts can be mitigated through systematic management from source to disposal. Within the scope o f this project, it is proposed that an efficient and sustainable health care waste management system (including segregation, storage, treatment and final disposal) would be formulated and implemented at all the project facilities. The GORs project preparation team undertook a survey o f 50 health facilities o f various sizes in 11 districts to quantify waste generation patterns and assess existing waste management practices. The main findings o fthe survey were that there is little knowledgeor understanding of the environmental and public health implications resulting from inadequate waste management practices. Inmany facilities, unsegregated hospital waste, including anatomical waste i s disposed into the municipal dump or burnton the premises. Used (and untreated) plastic and glass bottles and syringes are sold to the local rag-pickers, who are unaware o f the high risk involved. Untreated waste water i s discarded into the municipal sewer system or directly onto the grounds around the facilities. The Government o f India's Bio-Medical Rules (2000) have been disseminated to all health facilities inthe state but the survey revealed that many o f the facilities remain unaware o f these new legislation and operational and monitoring systems are not yet in place to ensure that good practices are followed. To address these critical issues, the State Government has formulated an Action Plan for Health Care Waste Management, which would be developed into a Health Care Waste Management Program to be implementedunder this project. 5.2 What are the main features o f the E M P and are they adequate? As this is a Category B project, a separate Environment Management Plan (EMP) is not required. The GORhas prepared a Health Care Waste Management (HCWM) Action Plan. The key activity to be carried out under the Action Plan would be the finalization o f the H C W M program, including outlining the overall framework, the process for development o f facility specific H C W M plans, the roles and responsibilities o f various parties and estimates o f the costs (investment and operating). Other activities include establishment of institutional frameworks at the various levels, formulating a training program for staff and workers o fhealth care facilities and establishing monitoring and reporting systems. These systems are expectedto be put inplace inYear 1o fproject implementation. Other activities detailed inthe Action Plan include support to the implementation o f facility specific H C W M Plans, (inphases as appropriate) and provision o f basic infrastructure, in accordance with the wider system enhancement activities under the project. The Action Plandistinguishes between the needs o f facilities o f different sizes, and proposes technical guidance to be providedfor preparation o f "full" H C W M plans for major urban hospitals and "simplified" systems which would be appropriate for small rural facilities. The Action Plan also includes a basic outline of a "simplified" H C W M plan and a schedule o f initial HCWM activities for facilities (grouped according to size) to be implemented inYear 1where project works are to be undertaken. The Quality Improvement and Information System Cell (QIIS), inclose collaboration with the Project Director, would be responsible for the timely and effective implementationo f the Action Plan and the subsequent H C W M Program. 5.3 For Category A and B projects, timeline and status o f EA: Date o f receipt o f final draft: February 26, 2003. 5.4 How have stakeholders been consulted at the stage o f (a) environmental screening and (b) draft EA report on the environmental impacts and proposed environment management plan? Describe mechanisms o f consultation that were used and which groups were consulted? Key stakeholders were consulted duringthe initial assessment o fhealth care facilities andwaste - 1 9 -  management practices. These included department officials at various levels, health care providers, rag-pickers and NGOs. The critical feedback that was received was that there i s very little awareness with regard to the highriskrelated to handling o f health care waste andthe existing systems for implementing good practices are weak. 5.5 What mechanisms have been established to monitor and evaluate the impact o f the project on the environment? Do the indicators reflect the objectives and results o f the EMP? Monitoring and evaluation systems would be established for reviewing (i) the overall progress o f the H C W Mprogram and (ii) performance o f facilities inimplementation o f their individual H C W M Plans. Indicators to monitor and evaluate effectiveness o f the H C W Mprogram would be incorporated into the regular project HMIS. 6. Social: 6.1 Summarize key social issues relevant to the project objectives, and specify the project's social development outcomes. A Social Assessment (SA) study was carried out inRajasthan duringpreparation to gain operationally relevant understanding o f the social underpinnings and incentives determining behavior and needs o f various actors, especially the poor communities, vulnerable groups, ST, NGOs, government and the private sector. The SA is based on several background studies: (i) a detailed situation analvsis, describing the socio-economic, demographic, epidemiological and health sector situation inthe state; (ii)burden o f a disease study; (iii) an analysis o f hospital activity indicators, providing information on the levels o f utilization o f public facilities for different health conditions; (iv) a beneficiary assessment study which identifies the health care needs o f the poor, including ST and underserved communities, and women, and the constraints on addressing these needs; (v) an NGO assessment, which maps the geographic coverage and scope o f work o f NGOs working with vulnerable groups, particularly ST, and assesses the representation, sustainability and capacity o f such NGOs to partner with the govemment inimplementing the project; and (vi) an institutional assessment o f government health service delivery capacity at the primary and secondary level. The following details the status and constraints faced by vulnerable groups: Poor: Data indicate that below-poverty line (BPL) populations comprise 2.3 million households, which is about 25 percent of Rajasthan's population (3 1percent o f the rural and 11percent o f urban). ST and SC constitute a disproportionate share o f the rural poor. Data from the National Sample Survey Organization (NSSO) 52nd Round show that rates o fhospitalization are much higher among the wealthy than the poor, despitehigher burden o f illness among the poor. Rates o fhospitalizationare as much as 18 times higher among the wealthiest comparedto the poorest quintile inrural areas and six times higher inurban areas. Government has a pro-poor program under which BPL card i s provided to the poor for accessing subsidizedpublic service, however, consultations revealedthat because o f poor implementation o f BPL scheme as well as lack o f awareness about the benefits o f the scheme, about 23 percent o f the targeted population, Le., BPL patients, could not access free health care at public hospitals. A majority o f the BPL cardholders didnot have the knowledge regarding the benefits andusage o f this card. Women: Status o f women is low in Rajasthan as indicated by various socio-economic indicators. The state has a feudal culture andpatriarchy i s institutionalized, resources and power are mostly held by men, and problems such aspurdah (seclusion o f women), and child marriage exist. An alarming trend is the steady decline inthe ratio o f women to meninthe state. In 1981, the sex ratio was 919 females per 1000males, which declined to 913 in 1991 and 909 in2001. Women's literacy at 44.34 percent i s low compared to an all-India average o f 54.16 percent. and rural women's literacy i s much lower. National Family Health Survey (NFHS)-2 survey data indicate that majority o f women have reproductive health and pregnancy related problems, but only 48 percent o f all mothers received Ante Natal Care (ANC), 22 percent o f all - 20 -  deliveries took place ininstitutions, and only 10 percent received (Post Natal Care (PNC); and there are wide variations between urbadrural, ST/SC and mainstream population, as well as among economic groups. Women's healthrisks increase with early marriages, frequent pregnancies, unsafe abortions and sexually transmitted diseases. Health problems and discriminationthat begins inchildhood and adolescence affect the health status o f women during their reproductive years (thus determining the health o f the children) and continues thereafter. Consultations reveal that choices regarding marriage, childbearing and contraception are denied to poor and vulnerable women, and they lack access to functional reproductive health services and contraception, contributing to highmaternal mortality. Women's access and control over health care i s severely limited due to the existing gender gaps insociety. Though women experience more episodes o f illness than males they are less likely to receive treatment before the illness is well advanced. Greater priority i s given to men inthe allocation o f household resources for health care seeking. A Gender Action Planhas been finalised during the project preparation to address the above mentioned concerns. Children: According to the 2001 Census, 18.51 per cent o f the total population i s inthe age-group 0-6 years (19.53 percent inrural and 15.15 percent inurban). The children are vulnerable because o f various social, health, and economic reasons. InRajasthan, malnutrition, particularly severe malnutrition i s substantially higher inm a l areas than inurban areas. According to NFHS-2, the proportion o f children with severe malnutrition i s at least fifty per cent higher inruralthan inurban areas, 82 percent o fthe children have some level o f anaemia, and children belonging to SCiST have a higher level o f malnutrition than others. TheReproductive and Child Health-Rapid Household (RCH-RHS) survey indicates that 57 percent o f children received the Bacille Calmete Guerin (BCG) vaccine; 48 percent received the three doses o f Diphtheria, Polio andTetanus (DPT) vaccine; 50 percent received the polio vaccine; and 42 percent received the measles vaccine. The complete schedule o f immunization including BCG, three doses o f DPT andpolio each and measles was received by 37 percent o f the children whereas 34 percent o f the children didnot receive a single shot o f any o f the vaccines. About 22 percent o f the children received supplementation o f at least one dose o f vitamin A and only 2 percent children received Iron Folic Acid tabletdliquid for iron supplementation. The immunization coverage i s lower inrural areas and for SC/ST population. Scheduled Tribes (ST) and Scheduled Caste (SC): About 12.4 percent and 17.3 percent o f the population belong to ST and SC respectively. Data indicate that ST and SC have highdisease burden, which i s mostly infectious e.g. TB, leprosy, cholera, skin ailments and malaria. The major factors behind highdisease burden are illiteracy, poverty, malnutrition, poor sanitation and access to safe water. Also modem health care utilization by ST and SC i s low due to physical, economic and social constraints. About 48 percent scheduled tribe and 47 percent scheduled caste women have reproductive health problem, which i s higher than other women (40 percent). Consultations revealed that on an average a person who i s from a SC or ST waited more for services compared to a non-SCiST person. Data indicate that there i s delay o f 4.4 days between acute illness and health care contact. ST usually are superstitious and believe that diseases are caused by hostile spirits, ghosts or taboo and their health seeking behavior has not changed due to lack of health workers for awareness raising, motivation and promotion o f modem health care. The hilly terrain anddense forests also make the delivery o fhealth care services difficult. There are few government health facilities intribal areas, and these also are unable to ensure adequate andreliable availability o f medical personnel and drugs. The project includes a Tribal Development Plan (TDP) for targeting health services to the ST. Nomadic Population: There are four groups o f nomads who migrate through Rajasthan (a) pastoral, (b) - trader, (c) artisan, and (d) miscellaneous group. Animal husbandry is the main occupation o f the nomads. Most o f the pastoral families are engaged inagriculture duringthe four months o f monsoon. After monsoon -21 -  they get involved in animal husbandry related activities and generally migrate along with their herds and flocks to other areas till the on-set o f next monsoon. The health behaviour o f these groups and consequently their health care needs, are different from those o f the general population- they have low health status, especially o f the women and children. These special groups have their own beliefs and value systems. Dueto their migration pattern, they lack access to awareness, immunization andreproductive health services - and are highly vulnerable to Sexually Transmitted Illness (STI) and Human Immunodeficiency VirudAcquired Immune Deficiency Syndrome (HIV/AIDS). The proposed project includes specific interventions e.g. mobile health camps at festivals, fairs, migration routes, and a Behavior Change Communication (BCC) strategy for meeting the needs o f nomadic population. The social development outcomes o f the project are expected to be: 0 Increased access to information and quality health care for women, poor, ST, SC, and other vulnerable groups; 0 Increasedsocial mobilization and community participation inthe health system, overcoming socio-cultural, ethnic barriers and gender differentials; 0 Improved surveillance o f the health o f the poor, and vulnerable groups; 0 Improved social capital. 6.2 Participatory Approach: H o w are key stakeholders participating inthe project? The social assessment included focus group discussions, exit interviews, in-depth interviews andworkshops with the vulnerable group population (i.e., women, scheduled caste, scheduledtribe, poor and under-served population), government service providers (at zonal, district, and facility levels, and para-medical workers such as Lady Health Visitors, Auxiliary Nurse Midwife (ANM) and the male health workers), traditional medical practitioners, representatives from PRIs, NGOs, women's organizations and private sector, to identify health needs and barriers to obtaining quality care and expanding access, and to define outcomes and plans for monitoring and evaluation during the course o f the project. Furthermore, a LogFrame workshop was conducted with government officials for developing components as well as monitoring indicators. A decentralizedmechanism has beenplannedas a part o fthe project structure, which would allow for involvement o f stakeholders inthe planning, implementation and monitoring o f programs. At the state level, a steering committee with representatives from different government departments, PRI and reputed NGOs would be formed. This committee would suggest policy guidelines, review, monitor and evaluate the program at the state level. A district level coordination committee would be formed, under the chairmanship o f the District Collector. This committee would consist o f representatives o f different government departments, PRI and reputed NGOs, and would approve the micro-plans developed at the village level and review the implementation o f the plans. Block level coordination committees would be set up, with representation o fblock level staff ofrelateddepartments, PRI, NGOs/CBOs.At the Sub-centrehillage level, a village health teamicommittee would be formed consisting of ANM, village midwife (SahayikdSevika), and Anganwadi Worker (AWW), Trained BirthAttendant (TBA), NGO, Mahila Shasthya Sangha (MSS) and village Panchayat member. Need assessment, community organization and facilitation would be the responsibility o f the village health tedCommittee. 6.3 H o w does the project involve consultations or collaboration with NGOs or other civil society organizations? As detailed above, a decentralized mechanism wouldbe established, and committees at different levels would include NGOs and other civil society organizations, for facilitation o f further consultations and collaboration. NGOs would be contracted inremote, rural and tribal areas, and with appropriate training and capacity building, to implement BCC strategy, provide limited curative care and preventive care, as - 22 -  well as for training o f traditional healers for referral and linkage with essential services. Inaddition, it i s proposed that NGOs would facilitate recruitment, training and management o f village level volunteers(Sevika)/Community Health Volunteers for health promotion and awareness campaign andto fill the gap between the Auxiliary Nurse Mid-wife and Traditional BirthAttendant. The Social Assessment also found that some NGOs are already assisting the Scheduled Tribes and poor women to act as pressure groups for improved quality and accountability o f public services. This project would expand the participatory monitoring by end beneficiaries, which would be facilitated by NGOs. 6.4 What institutional arrangements have beenprovided to ensure the project achieves its social development outcomes? A decentralized mechanism, withparticipation ofkey stakeholder groups inthe planning, implementation and monitoring has been designed as a part o f the overall project structure, to achieve the social development objectives o f the project. The Project Steering Committee would coordinate and work closely with the existing State Steering Committee on Tribal Health inRajasthan inthe implementationo f the project's Tribal Development Plan. This State Steering Committee consists o f representatives from the department o f Tribal Welfare, Directorate o f Women and Child Development, Health andFamily Welfare, Education, Rural Development, Panchayati Raj and reputed NGOs. The P M U would have a designated officer who would be responsible for implementation and monitoring o f the Tribal Development Plan. The P M U would also have another officer responsible for gender issues and for monitoring the implementation o f the proposed Gender Action Plan. One designated officer under the District Chief Medical Officer would be responsible for monitoring the progress o f tribal, and gender plans. Similarly, there would also be designated persons inthe Block and village health committees for this purpose. Furthermore, participatory monitoring and evaluation would be undertaken by the PRI, facilitated by NGOs. The project would also develop and implement communication strategies, aiming at informing providers and enabling beneficiaries to demand improved health care andbetter manage their own health care needs. 6.5 H o w will the project monitor performance interms o f social development outcomes? The existing State Health Service Utilization and Patient survey would be used for periodic monitoring o f health services accessibility, quality o f services and patients satisfaction with the delivery o f services. Data would be collected for vulnerable groups inorder to track the social development outcomes, together with healthoutcomes. These indicators wouldbe incorporated into the regular HMIS being planned under the project, and tracked regularly. Furthermore, participatory monitoring would be included at different levels for improving transparency and accountability o f health system. 7. SafeguardPolicies: - 23 -  7.2 Describe provisions made by the project to ensure compliance with applicable safeguardpolicies. (i)ATribalDevelopmentPlan(TDP)focusingonmeetingthespecifichealthneedsofSThasbeen developed by GOR after detailed consultations with ST and NGOs. The TDP aims to ensure the following: a. Strengthening service delivery at district, sub-district and CHC hospitals located in tribal areas, and strengthening linkages between primary and secondary health care levels; b. Developing an incentive package andtraining for doctors and other medical staff, from public and private sectors, to encourage them to work inthese areas; c. Improving non-tribal medical systems through appropriate BCC and training; and; d. Reducing the cost o f services to ST through strengthening or adjusting the existing user fees exemption schemes o fthe government. The health and social development outcomes o f TDP would be monitored within HMIS. (ii)AHealthCareWasteMwagementActionPlanhasbeendevelopedwhichdetailstheprojectactionsto be taken for the finalization o f a H C W M program for Rajasthan. (iii)Theprojectwouldstrictlyfollowengineeringandcivilconstructioncodesthatexistforthestate duringplanning andimplementation o fnew healthcare facilities. Particular attention would be given to water, sewerage and construction-related debris. This project would carry out extension andor renovation o f district and sub-divisional hospitals, and Community Health Centers. No land acquisition would be required as health facilities would be built only where landi s already inactual possession o f the government and where encroachers' and squatters' issues do not exist. The resettlement policy, therefore, does not apply. All civil works contracts would need to include a statement that all new constructions and extensions are on government land, without any displacement o fpeople or their livelihood. Ifprivate land is donated, proper documentation would be required. F. Sustainability and Risks 1. Sustainability: Financial, institutional, technical, and social sustainability has been addressed inthe design and preparation o f the project. Financial sustainabilitv: The additional annual recurrent expenditure due to the project i s expected to be below five percent of the state Non-plan budget when the project comes to an end, so that continuation o f the activities initiatedunder the project operation and maintenance o f civil works andequipment provided under the project are not expected to be curtailed because of lack of funds. Financial sustainability would be also aided by the fact that cost recovery would be enhanced at health care institutions, while ensuring that a mechanism i s inplace to exempt the poor. Such funds are to be retained at the institution and used for non-salary recurrent costs. It is expected, from the successful experience o f other state health systems projects, that cost recovery could defray up to 15 percent o f non-salary recurrent expenditures. - 24 -  Institutional sustainabilitv: The management o f the project would be institutionalized at both state and district levels. As has been the case with other health systems development projects, these institutional arrangements would be expected to impact positively on the working o f the DOHFW as a whole, as has been the case with the systems set up for the procurement o f drugs and consumables. Inaddition, the computerized HMIS, and M&Emechanisms, as well as the health care waste management system and disease surveillance system would be intemalizedinto the overall state system over time. These tools would be vital to focusing program inputs and maintainingthe momentum o f the program. Technical Sustainability: Updating the technical paradigms, streamlining services andintegratingthe referral chain, working with the private sector, and focusing on clinical and management training would be steps taken to ensure a system that i s technically and managerially more sustainable than before the project. Social Sustainabilitv: Sustainability and efficiency would be both enhanced by actively involving beneficiaries inthe design, implementation and monitoring o f the project. Effective partnerships with the private/NGO sectors would be developed inthe course o fproject implementationthat would continue beyond the project period. The project would develop and implement Behavior Change Communication (BCC) strategies at different levels to raise provider awareness on providing services to the vulnerable groups and raise awareness and motivation o f women, BPL, ST, SC and other vulnerable groups to demandquality services at public health care institutions. 2. Critical Risks (reflecting the failure o f critical assumptions found inthe fourth column o f Annex 1): Risk Risk Rating 1 Risk Mitigation Measure :TomOutputs to Objective 'he overall financial status o f the state i s M The Project Agreement states that starting from ,risk.This may have implications for FY 2004-05 and untilFY 2008-09, Rejasthan llocations o f funds to the health sector will: (a) make non-plan budget allocations for the health and family welfare sector ineach annual budget ina manner so as to maintain such allocation at least at the level obtained in FY 1997-98; (b) increase the non-plan expenditures ineach fiscal year for the primary and secondary levels o f health care within the total resources allocated to the health and family welfare sector; and (c) within the budgetary framework as set out in(a) above, ensure that adequate allocations are established and maintained for drugs, essential supplies and maintenance o f equipment and buildingsat primary and secondary levelhealth care facilities inaccordance with norms set out inthe Project Implementation Plan; and (d) ensure full utilization o f the resources allocated in accordance with (a) and (c) above. The financial status o f the health sector will be assessed as part o f the mid-term review. institutional arrangements are not S Specific plans are inplace to bringabout - 25 -  effective in carrying out systemic systemic improvements, based on a common improvements, and inintegrating centrally understanding developed through a participatory sponsored health and family welfare and approach. state health concerns Seminars, workshops and other informal collaboration would occur between Rajasthan and other states implementing state health systems projects to share and learn from experience Productive institutional linkages with the H Specific norms andregulations would be defined private sector are not established (G,M) andagreedupon. Information sharing, pilot studies would be encouraged. Provider behavior cannot be changed. M A mechanism is inplace to involve stakeholders inimplementation andmonitoring. Patient Satisfaction Surveys would be regularly conducted to monitor provider behavior. Training and capacity buildingprograms aimed at changing provider attitudes and behavior would be carried out. Non-salary incentives would be offered to providers inremote and rural areas to prevent absenteeism and other provider problems BCC strategy focusing on bothproviders to provide user oriented services and users to be able to demand quality services. Monitoring o f the Tribal Development Plan and Gender Action Plan developed for the project, by the PMU, district andvillage level designatec officers will identify further input. Flow o f funds from GOR to Implementing S The government has set up an administrative Units mechanismto ensure adequate financial management, including flow o f funds Delays inimplementation due to slow S The first year procurement packages are in procurement and recruitment o f key staff. place. Start-up o f construction activities and procurement o f equipment i s being planned well inadvance andwouldbeundertakenby specialized agencies for the first year o f the project. - 26 -  knds are not made available for M The government has undertaken inthe Policy ion-wage recurrent expenditures, Letter to: make adequate budgetary allocations :specially drugs, medical supplies, and for recurrent expenditures, including drugs and nobility allowances. essential supplies; and continue the implementation o f a user charge policy to supplement budgetary resources. lelays inputtingproject management M The core project management staff are inplace. ;taff inplace Siven the tight fiscal condition o f the state S A suitable riskmitigating measure which would here is a risk o f delay inflow o f funds to provide for a quarterly credit inthe P D account he project ina timely manner. and the separate bank account for the project (at the PMUand districts) outside the treasury systemhas beenagreed. Itwas also confirmed by the Additional Chief Secretary (Finance) that government. contribution inEAP where the government's share i s not more than 20 25 - percent would not be a constraint and further that externally aided projects are not subject to any embargo on the release o f funds for the project The accountants at the districts may not M P M U would closely monitor the financial )e exposed to double entry accounting and aspects andwould be adequately staffed with .eporting. This could cause delays in experienced personnel for this purpose. Formats inancial reporting and audit. for monthly reporting o f expenditures and funds transfers to the districts would be a part o f the reporting system and included inthe financial manual. Training will be provided to all accounting staff at the inception o f the project. Also as most o f the expenditures would be incurred and accounted at the P M U (over 70 percent o f the project cost), the financial involvement at each district would be minimal. herall Risk Rating S :isk Rating H (High Risk), S (Substantial Ris - I,M (Modest Risk), PNegligible or Low Risk) 3. Possible Controversial Aspects: Development o f a regulatory framework for the private sector may be opposed by those whose business i s affected. G. Main Conditions 1. EffectivenessCondition There are no special conditions o f effectiveness other than the standard legal opinions. - 27 -  2. Other [classify according to covenant types used in the Legal Agreements.] Other covenants: At negotiations, GORprovidedthe following assurances: 1. For the purpose o fmanaging the implementation o fthe Project, Rajasthan shall (a) establish an institutional structure consisting o f (i)a Strategic Planning Cell at the State level, (ii)State a Empowered Committee at the State level, (iii) a Project Steering Committee at the State level, (iv) a Project Management Unit at the State level, (v) Project Coordination and monitoring committees at the District level, and (vi) District Project Management Cells at the District level, all with composition, powers, functions, andresources satisfactory to the Association; (b) no later than 30 days after the Effective Date, make these institutionsfully functional and operational including the completion o f recruitment o f all requiredpersonnel; (c) maintain these institutions with composition, powers, functions, and resources satisfactory to the Association. 2. Rajasthan shall implement the Health Care Waste Management Action Plan inaccordance with the objectives, policies, procedures, time schedules and other provisions set forth in such Plan. 3. Rajasthan shall implement the Tribal Development Plan in accordance with the objectives, policies, procedures, time schedules and other provisions set forth insuch Plan. 4. Rajasthan shall employ qualified consultants to complete not later than March 31,2008 an independent impact evaluation report with respect to the implementation o f the HealthCare Waste Management Action Plan and the Tribal Development Plan, and the outcomes thereof. 5. Rajasthan shall appoint in accordance with TORSsatisfactory to the Association (IDA) (i)financial a advisor and chief accounts officer, and (ii) a finance manager, both having qualification and experience satisfactory to the Association no later than 30 days after the Effective Date; and ensure that these positions remain filled throughout the implementation o f the Project. 6. Rajasthan shall starting from FY 2004-05 and untilFY 2008-09 shall (a) make non-plan budget allocations for the health and family welfare sector in each annual budget ina manner so as to maintain such allocation at least at the level FY 1997-98; (b) increase the non-plan expenditures ineach fiscal year for the primary and secondary levels o f health care within the total resources allocated to the health and family welfare sector inaccordance with the above; (c) within the budgetary framework as set out above, ensure that adequate allocations are established and maintained for drugs, essential supplies and maintenance of equipment and buildingsat primary and secondary level health care facilities inaccordance with norms set out inthe Project ImplementationPlan. 7. Rajasthan shall (a) carry out assessments o f the current functioning o f Medical Relief Societies and Below-the-Poverty-Line Medical Card Schemes, as well as for the design o f community-based health insurance schemes; (b) based on such assessments prepare action plans containing a package o f interventions to strengthen access and provide financial protection to the poor including a timetable for implementation no later than October 31, 2006; and (c) implement such action plans ina manner satisfactory to IDA. - 28 -  8. Rajasthan shall (a) Develop and implement thereafter (i) norms focusing on staffing, equipment clinical and drugmanagement for district and sub-divisional hospitals, (ii) guidelines to improve the quality o f services at government health facilities including monitoring indicators, and (iii) a referralmechanism defining the norms of service and improving the linkages among different tiers o f the health care delivery system no later than September 30,2004; (b) ensure the continuous provision o f quality services inthe hospitals up-graded or renovated under the Project, and take all action to bringinto operation, no later than six months after the upgrading or renovation o f a hospital, the clinical norms, the quality improvement guidelines, andthe referralmechanism referred above. 9. Rajasthan shall bring into operation a computerized financial management system at the PMU, which can adequately record the resources of, and expenditures incurred or made, under the Project, no later than December 31,2004. 10. Rajasthan shall ensure that no civil works shall be camed out under the Project that will require the acquisition o f land in any form and that may result inthe involuntary resettlement o f people. 11. Rajasthan shall (a) Complete underterms o freference cleared by IDA,an assessment o f the role o f the private sector in delivering health services and strategies for monitoring such services by March 31, 2005; (b) design different models o f public-private collaboration by September 30, 2005; and (c) implement such models in accordance with arrangements and timetable satisfactory to IDA. 12. Rajasthan shall design a regulatory framework, satisfactory to IDA, for improving the quality o f health services provided by the private sector by December 31, 2005. 13. Rajasthan shall review with IDA by April 30 o f each Fiscal Year, during the implementation o fthe Project, the progress made to date on implementing the Project and shall furnishto IDA an annual plan covering the range o f activities to be undertaken under the Project during that Fiscal Year. 14. Rajasthan shall: (a) Maintainpolicies and procedures adequate to enable it to monitor and evaluate on an ongoing basis, in accordance with indicators satisfactory to the Association, the carrying out o f the Project and the achievement o f the objectives thereof; (b) Under terms o freference satisfactory to the Association, andprovided to IDA no later than October 31,2006 a report integrating the results o f the monitoring and evaluation activities o n the progress achieved inimplementing the Project during the period preceding the date o f report, and setting out the recommendtions to ensure efficient project implementation and the achievement o fthe objectives duringthe period following this date; (c) Carry outjointly with IDA a MidTerm Review o f the progress made by the project, no later than January 2007. - 29 -  H. Readinessfor Implementation [xi 1.a) The engineering design documents for the first year's activities are complete andready for the start o fproject implementation. 0 1.b)Notapplicable. IXI2. The procurement documents for the first year's activities are complete andready for the start of project implementation. El3. TheProjectImplementationPlanhasbeenappraisedandfoundtoberealisticandofsatisfactory quality. [?4. The following items are lackingandarediscussedunderloanconditions (Section G): None. Note- The engineering design documents andprocurement documents for the first year's activities are expected to be completed and ready for project implementationprior to project effectiveness. 1. Compliancewith Bank Policies IXI 1. This project complies with all applicable Bankpolicies. 0 2. Thefollowingexceptions toBankpoliciesarerecommendedforapproval. Theprojectcomplieswith all other applicable Bankpolicies. Sadia Afioze Chodhury Team Leader Sector ManagerlDirector () - -' Country ManagerlDirector - 30 -  Annex 1: Project Design Summary INDIA: RAJASTHAN HEALTH SYSTEMS DEVELOPMENT PROJECT KeyIndicators Performance Data Collection Strategy Hierarchyof Objectives Critical Assumptions iector-related CAS Goal: iector Indicators: iectorl country reports: rom Goal to Bank Mission) -0 improve the health status nfant and child mortality -Baseline and end-of-project road-based improvements in ifthe populationof ates; maternal mortalityrate tudies ie health o f the population o f Lajasthan, especially the poor s proxiedby the proportion ajasthan would contribute to .ndtribal population, in line f safe deliveries [target for -NFHS and RCH household icreasedproductivity and vith the Millennium lese three indicators is to urveys ltimately to poverty levelopment Goals chieve an improvement o f at :duction :ast 25% over the baseline igures inthe five-year period 003-081. The indicators will e measured separately for the eneral population, lelow-the-poverty-line ouseholds, and tribal groups 'roject Development htcome I Impact 'roject reports: ?om Objective to Goal) lbjective: ndicators: 'DO1 : Increase access to Increasedutilization o f -Department o f Medical , Government health services iealth care o f poor (BPL) and government health services lealth and Family Welfare are o f highenough quality to inderserved population by the poor (BPL )regress reports ensure that utilization o f households) and Scheduled these services does lead to Tribes population. -HMIS reports from the improved health status Increasedproportion o f iospitals and other levels o f (reduced morbidity and BPLlScheduledTribe iealth care facilities premature mortality) patients at different levels o f The Government o f government health care -Patient satisfaction surveys Rajasthanwould ensure facilities. special assistance is given to Increasednumber o f -Periodic project evaluation the poor and tribal BPLlScheduledTribe eports (including mid-term population in case o f patients exempted from user eport) drought-induced famine. fees at government health care facilities -Periodic RCHDistrict Increasedawareness o fpoor Surveys (households and and tribal households o f k i l i t i e s ) health services offered at different levels o f government services 'D02: Improve the 0 Constant or rising -Annual State budget 0 The populati no f :ffectiveness o f health care (relative to the FY1997198 Rajasthan will continue hrough institutional levels) expenditure on -Treasury/Finance to utilize government levelopment and increase in primary and secondary Iepartment (for actual health services inthe he quality of healthcare. levels o f care. xpenditures) same or larger proportion. -31 -  0 Increasedproportion o f --Department o f Medical, 0 The incidence of non-wage health Health and Family Welfare consumption poverty in expenditure. [baseline is Finance Unit (for actual health Rajasthan remains the 20% inFY20021031. expenditures) same or declines. 0 Increasedproportion o f facilities staffed --Prescription Audits according to agreed norms. --Health Management 0 Decreased irrational use --Information System o f drugs inhealth care (facility-based) facilities 0 Increasedpatient and --Patient satisfaction surveys community satisfaction (exit interviews) with primary and secondary levels o f health --Department o f Medical, care services. Health, and Family Welfare 0 Increasednumber o f Annual and Six- monthly appropriate referrals at progress reports. CHCs, District and Sub Divisionalhospitals from --Periodic project evaluation PHCs and Sub-centers. reports (including mid-term 0 Increasedhealth care report) utilizationinterms o f number o f outpatient visits; hospital admissions; and deliveries. Output from each htput Indicators: Project reports: from Outputs to Objective) Component: Component 1: Policy Development and Project Management Improving the Institutional Frameworkfor Policy Development (i)Establishment and i)TheStrategicPlanning Quarterly project progress and operation o f a Strategic ;ell i s established and disbursement reports Planning Cell unctioning satisfactorily by vlarch 2004. Supervision mission reports (ii)Development o f a strategy for Public-Private ii)Strategydevelopedand Annual project reports Partnerships greed. Health Management (iii) Implementation o f iii)Indicatorstobedeveloped InformationSystems Public-Private Partnerships )rice strategy i s agreed strategy jeptember 2005 Audits for HMIS data - 32 -  validation. (iv) Carrying out o fprivate (Iv) Private sector sector diagnostidassessment diagnostidassessment completed by March 2005 (v) Designof a regulatory (v) Blueprint completed by framework blueprint for December 2005 private health services Strengthening Management and implementation capacity (i)Establishment and (i)The State Empowered operation o fthe state and Committee, the Project District level project Steering Committee, the management and oversight Project Implementation Unit, structures and the District Project Management Cells established and functioning satisfactorily by March 2004 Strengthening Human Resources: Training and Capacity Building (i)Establishment o f Hospital (i) Numbero fHospital Training Complexes in 32 Training Complexes District Hospitals establishedby March 2005 (ii)Provision o f trainer's (ii) Numbero ftrainers training for 576 staff trained. (iii)Provision o f management training for 2,788 staff (iii) Numberprovided management training (iv) Provision of annually from March 2005 clinical/technical training for[iv) Number provided 8,837 staff :linical/technical training annually from March 2005 (v) Provision o fhealth systems training for 8,698 :v) Number provided health staff systems training annually [training in HMIS, IEC, drug From March 2005 management, equipment management] Strengthening the Health Management and Information System (i)Establishment and :i)Cellestablishedand 0Managers utilize the data operation o f a Quality and imctioning satisfactorily by from the HMIS for Systems Improvement Cell in \/Iarch 2004 decision making. the Project Implementation Unit - 33 -  (ii) Developmentand implementationof an (ii) Number of govemment improvedHMIS healthfacilitieswith strengthenedHMISoperating. Number of facilities providing reportsinthe agreedformats (iii) Validationof HMISdata annually from September andtraining 2005 (iii) ofdiscrepancy Degree betweenHMISdata andthe correspondingdata from validation surveys by March 2007 Component 2: Development o f primaryandsecondary healthcare servicesinthe public sector Physical Renovation and Upgradingof Health Facilities (i) Renovatiodupgradingof (i) Numberof healthfacilities Quarterlyproject progressand0 Staffinthe 28 districthospitals, 23 renovatedupgradedby type of disbursementreports renovatedupgraded sub-divisionalhospitals, 185 facility annually by March facilitiesare motivatedto CHCs, and2 BPHCs 2005 Supervisionmissionreports utilize these facilities for improvedservices. (ii) Provisionto the upgraded (ii) Numberof facilities Annual project reports facilities of new equipment equippedwith appropriate and furniture equipment andfurniture HealthManagement annually from March2005 InformationSystems (iii) Implementationofthe (iii) Number of facilities(by Audits for HMIS data HealthCare Waste type) with a HealthCare validation. Management Plan Waste Management Plan annually from September Hospitalperformancerating 2005 surveys (iv) Numberof facilities implementingtheir Health Care Waste Management Plan. Improvements in the Quality Quarterlyprojectprogressand of Clinical Management and Proportionofdrugs available disbursementreports Support services at facilitiesthat are included Improveddrugs andhospital inthe EssentialDrugsList. Supervisionmissionreports supplies. Annual projectreports Monthlyaveragenumberof -34-  ;tockouts o f essential drugs by lealth Management Development and ype o f facility. nformation Systems implementationo f Quality [mprovement Guidelines iudits for HMISdata :i)Development o f guidelines Falidation. :ompleted by September Development o f guidelines ,004. lospital performance rating andcapacity inequipment use ... 11)Number of Equipment urveys mdmaintenance VIaintenance Units :stablished. itatus reports on mplementationo f tribal trategy. Establishment o f monitoring systems for: Use and maintenance of Squipment quality o f clinical care Patient satisfaction Hospitalperformance HCWM practices at upgraded facilities lmprovement of Referral Mechanisms (i) Development and :i)Guidelinesiprotocols implementation o f referral :ompleted by September 2004 guidelinesiprotocols including training (ii) Review o f the ji)Numberofwomenwith effectiveness o f referral ibstetric emergencies referred systems o FRUs, Sub-district and listrict Hospitals. Component 3: Health Care Innovations for the Disadvantaged lmproving Health-Seeking Behavior :i) strategyandmaterials IEC (i) Development o f IEC leveloped for (a) and (b). 0The implementation of strategy and materials for (a) the IEC activities impact! facility-based IEC activities household health-seeking (for the general population) behavior significantly. and (b) for BPLiSCT population. ii)NumberofNGOs (ii) Implementation o f IEC :ontracted for awareness strategy for BPLiSCT ;eneration concerningkey population. ispects o f women and child iealth annually from March !004 - 35 -  Enhancing access to care (i) Implementationo f tribal :i)Asetofindicatorsis strategy includedinthe Tribal DevelopmentPlan. (ii) Renovatiodupgradingo f :ii)NumberofCHCdBPHCs 138 CHCs/BPHCs intribal :enovated/upgraded. andpoor districts including the provisionofrequired equipment,furniture and drugs ,.jn) ..Studies completedby (iii) Studies of: (a) existing March2005 schemes for user fee exemptionof the poor inthe state and possible alternatives; and(b) community-based healthinsurance. (iv) Agreement on package o f :iv) Packageof interventions interventionsfor user fee :ompleted by March2005 exemptionand community-basedhealth insurance. (v) Pilotingof innovations for :v)Number ofMedical Relief improvingexisting user fee Societiespilotinginnovations exemptionschemes for the .o start September2005 poor (vi) Pilotingof :vi)Number of districts with community-basedhealth iilots incommunity-based insurance schemes iealthinsurance. (vii) Evaluationof innovative schemes andformulation of plans for scalingup Development of mblic-private partnerships i)Numberofmodels (i) Designand mplemented. implementationo f I public-privatepartnership models for the provisionof healthcare: a. ContractingNGOs for :ribal andpoor population, for ?revision of services and Jemandgenerationthrough interpersonalIEC. b. Contractingwith the for-profit private sector for ion-clinical/supportservices I - 36 -  at governmenthealth care facilities. c. On a pilot basis, contractingwith for-profit private sector for diagnostic andpharmacy services. (ii) Independentassessment0: public-privatepartnership models(as implementation proceeds) Project Components I nputs: (budget for each Project reports: from Components to Sub-components: :omponent) 2utputs) Component 1:Policy US$19.97million) Quarterlyprogress and 0 Adequate andtimely flow DevelopmentandProgram disbursementreports o f funds from the GOR to Management the State Governmentand from GOR to the PMU. 0 Timely appointment of staffandconsultants. 0 Continuityofkey staff at the State andDistrict levelimplementationCell Component 2: Development (US$52.70 million) Supervision missionreports Timely completionof all o f Primary and Secondary plannedprocurement HealthCare Mid-termreview and Adequate funds for evaluationmissionreports non-wagerecurrent expendituressuch as drugs, medicalsupplies, maintenance, and mobility allowances. Component 3: HealthCare (US$33.31 million) Project audits Innovations for Poor and 0 Privateproviders Tribal Households interestedinworking with the GOR. 0 GOR has goodcapacity to identify, designand monitorthe different public-privatemodels, - 37 -  Annex 2: Detailed Project Description INDIA: RAJASTHAN HEALTH SYSTEMS DEVELOPMENT PROJECT By Component: Project Component 1 US$19.97 million - ProjectManagement,Policy Developmentand Capacity Building 1.1 Project Management Project management will be thejoint responsibility o f a number o f entities at both the state and district level. For the governance o f the project, the GOR will establish a State Empowered Committee and a Project Steering Committeeat the state level, and Project Coordination andMonitoringCommitteesat the district level. For the actual implementation o f the project, a ProjectManagementUnit (PMU) will be created within the Directorate o f Health, at the state level, and DistrictProjectManagement Cells will be created at district level. Details about the roles o f these various entities are given below. State Empowered Committee (SEC) At the top o fthe management structure there willbe a State EmpoweredCommittee (SEC), headedbythe Chief Secretary, Government o f Rajasthan and comprising high-level representation from all the concerned departments o f the State Government. The SEC will consist o f the following members: Principal Secretary, Medical, Health and Family Welfare; Secretaries o f the Departments o f Finance, Planning, PWD, and Tribal Welfare; Special Secretary, Medical, Healthand Family Welfare; Project Director; and representatives from the Government o f India. This body will solve inter-departmental coordination problems, approve the project's annual action plans, review project implementation progress, and issue directions for more effective implementation. The committee would meet at least twice a year. Project Steering Committee (PSC) The second tier o fproject management will be a Project Steering Committee (PSC), headed by the Principal Secretary, Medical, Health and Family Welfare. The committee will have as its members the Chief Engineer, Public Works Department (PWD); Special Secretaries o f Health and Finance; the Project Director; and the Directors o f Public Health, Family Welfare, IEC, AIDS Control Program and the State Institute o f Health and Family Welfare. The committee will supervise and guide the Project ImplementationUnit, seek coordination with centrally-assisted disease control andreproductive health program, reduce overlap/duplication betweenprojects, monitor funds flow, and facilitate smooth implementation o fthe project. The PSC will meet every month. Project Management Unit (PMU) A Project Management Unit(PMU) will be set up within the Department o fMedical, Healthand Family Welfare, inorder to implement and coordinate project activities. The P M U will have the following functions: (i) plan, implement and supervise all activities and components o f the project directly or through various agencies, i.e., PWD, Directorate o f Medical and Health Services (DMHS), State Institute for Health and Family Welfare (SIHFW); (ii) supervise and monitor the project; (iii) progress and submit financial reports to the Project Steering Committee, Government o f India and the Bank; (iv) regulate and facilitate funds flow to implementing agencies; (v) ensure adherence to Bank procurement guidelines for all - 38 -  procurement supported through project funds; (vi) maintain appropriate accounts and their timely audit as per Bank requirements; (vii) ensure quality inimplementation o f project activities; and (viii) maintain close liaison with Government o f India and the Bank for smooth implementation o f the project. The P M Uwill be headed by a Project Director, who will be an IndianAdministrative Service (IAS) officer. The Project Director will report directly to the Principal Secretary, Medical, Health andFamilyWelfare, Government of Rajasthan and will have full financial authority as Head o f Department. The P M U will consist o f the following seven cells: 1. Strategic Planning Cell 2. Equipment Procurement and Maintenance Cell 3. Engineering (Civil Works) Cell 4. Financial Management Cell 5. Quality and Systems Improvement Cell 6. Human Resources Cell 7. Community Access andEquity Initiatives Cell To promote teamwork andjoint decision making, the P M U will have a Project ImplementationBoard ' consisting o f the Project Director (also representing the Strategic Planning Cell) and heads o f the other six cells. The role o f the Strategic Planning Cell is described indetail inthe section (1.2) below. The Equipment Procurement and Maintenance Cell will oversee the procurement o f equipment and other goods under the various project sub-components. It will also manage the maintenance o f the equipment. The Engineering (Civil Works) Cell will oversee the execution o f all civil works proposed under the Project. The responsibilities o f the Engineering Cell will be to manage the contracting out o f design and construction o f civil works to private sector architects I consultants and contractors, and to coordinate and supervise their work. The Financial Management Cell will be responsible for establishment o f the agreed financial management arrangements, providing timely financial reports to the stakeholders including the Bank, ensuring smooth and timely flow o f funds and providing overall guidance inrespect o f the financial management issues for the project. Several activities are envisaged inthe project to improve quality o f government health services, including the establishment o f clinical care standards andprotocols for implementation o f these standards, an improved information system for monitoring quality, and a hospital waste management program. The Quality and SystemsImprovement cell will ensure implementation o f these activities. Considerable experience is available inother states which are implementing projects to strengthen health systems. To benefit from these experiences and also to rapidly strengthennecessary skills inthe PMU, a process o f intensive collaboration with relevant personnel inother states needs to be implemented. Several workshops have been heldto initiate this process. The GOR will follow up this initiative with study tours and exchange o f experiences, as well as seeking hands-on assistance. Enhancing necessary staff competencies is critical for improvingperformance. Therefore, staff will be - 39 -  assisted in assessing their own competency development needs and accessing necessary training programs plannedunder the project. Inthe thirdyear a second round o f competency assessments will be carried out which will help monitor the progress made and make corrections as needed. The Human Resources Cell o f the P M Uwill provide guidance for staff training and the District Project Management Cells will implement the training activities. The Community Access and Equity Initiatives Cell will ensure implementation o f community IEC and communication activities to improve health-seeking behavior, as well as advocacy activities with key stakeholders inorder to create a social andpolitical environment favorable to the improvement o f access to health services by the disadvantaged. As several interventions to enhance access and equity will be new and there are considerable knowledge gaps, the Cell will commission necessary studies, as well as collaborate with relevant institutions/organizations to ensure implementation o f the innovative activities. Its work will lead to (a) strengthening o f the existing government scheme to enhance access for the poor by exempting them from paying user fees; (b) enhanced public-private partnership inhealth care; and (c) pilot testing o f community-based health insurance schemes. District Project Coordination and Monitoring Committees A District Project Coordinationand Monitoring Committee willbe set up ineach district inorder to ensure coordination among various departments within the district for timely completion o f the project activities, review project progress and remove bottlenecks, and approve the annual action plans for the district. In each district, the Committee will be mergedwith the existing District Health Society to make integration with other sectors and programs easier. District Project Management Cell A District Project Management Cell will be set up ineach district inthe office o fthe ChiefMedical and Health Officer (CMHO). The Cell will assist the C M H O and the Principal Medical Officer (PMO) o f the district hospital ineffective implementation o f the project activities at the district level. For this purpose, it will prepare annual plans and get them approved bythe District Project Coordination and Monitoring Committee, prepare the progress reports for submission to the PMU, and coordinate implementation o f the activities among various agencies. It will assist the P M U in: (a) local procurement; (b) facilitation and monitoring the provision o f project inputs at the district level; (c) implementation o f the systems for logistics, health management information, monitoring and evaluation, and referral linkages; and(d) competency assessment and training plans for the staff. It will also assist the Community Access and Equity Initiatives Cell to implementproject activities at district levelwithin Project Component 3. Staff selection for project management will be made through a special selection process. Efforts will be made to select the staff from the government, on deputation for the duration o f the project. Professionals will be engaged on a contractual basis as consultants where government staff are not be available. 1.2. Policy Development The capacity for healthpolicy development and planning inRajasthan will be strengthened through the establishment o f a Strategic Planning Cell (SPC) inthe PMU. The SPC will have a specialfocus on two areas: exploring thepossibility andpotential of expandedpublic-private collaboration in the context of the health sector; and resource allocation within thepublic sector including manpower issues. - 40 -  Design and Implementation of Strategiesfor Public-Private Partnership Private providers potentially represent an important component o f GOR's strategy to increase access o f the poor to basic health services o f adequate quality. NGOs already have a record inRajasthan o f developing innovative approaches to reaching the poor and underserved populations. Also, over the past two years the GOR has developed a policy framework that seeks to promote greater collaboration with private (for profit) providers o f health care services. To develop public-private collaborative models that can be brought to scale in line with the GOR's health priorities, the project will support the following initiatives: (i) develop the initial regulatory and policy framework to guide development and implementation o f different modalities o f public-private collaboration, (ii) differentmodelsofpublic-private collaboration,withaviewtoscalingupsuccessfulmodelsover test the medium term, (iii) fillinformationgapsregardingthe scopeandnature ofprivate healthservices, and (iv) buildthe requisite capacity o f GOR to design, negotiate, monitor and evaluate the different public-private models. Consultative Worhxhops The PMUwill initiate these efforts through a series o f consultative workshops with major stakeholders (senior government officials, leadingprofessionals, community leaders, and representatives o f major NGOs, women's groups, and other private sector entities). The workshops are expected to expand the dialogue with the private sector and create support for an expandedprivate-public partnership inthe state's health sector. They will allow state policy makers to have a better understandingo f the extent and quality o f services provided by private sector providers ,including the small scalehformal health care providers. Workshop participants will be encouraged to share their views and concerns regarding private sector participation inhealth service delivery. Expected outcomes o f the first consultative workshop will include: (i) enhanced understanding by GOR and local stakeholders o f the different options and design and implementation issues to be addressed in developing public-private partnerships; and (ii) increased communication and information exchange between the different public andprivate stakeholders. During the workshops, experiences from India, South Asia and outside the region would be shared with local stakeholders. Presenters o f these experiences would include parties actively involved inthe design, implementation, monitoring and evaluation o f such initiatives. The first workshop will take place within the first six months o f credit effectiveness. Private Sector Diagnosis Though the GOR is interested in developing pilot contracting approaches to test the efficiency and effectiveness o f private providers, it faces important information gaps related to (i) the type, of services, their quality, location, profile o f clients served, and costs o f private health care providers Rajasthan; (ii) policy, legal, regulatory, and other constraints that impair the ability or diminishthe interest o f private providers inserving low-income populations; and (iii) potential public-private models that private providers would be interested indeveloping with the Government. Without this baseline information, the Government i s significantly constrained inits ability to develop a systematic and effective approach to working and contracting with private providers. The GOR will undertake a Private Sector Diagnosis/Assessment to secure the necessary information to develop partnership initiatives with private providers. The Diagnosis will be expected to generate sufficient information to support and expedite the GOR's activities to develop pilot initiatives. The Diagnosis is also -41 -  expected to further the dialogue with the private sector. More specifically the key issues to be addressedthrough the Diagnosis will include information on the groups o f private providers which are relevant given the GOR's healthpriorities; their location and constraints; the general cost and quality o f their services; their general level o f interest inworking with the GOR; the factors that negatively affect the cost and quality of services offeredby them to the poor; the aspects o f their behavior which need to change in order to ensure that the GOR's healthpriorities are achieved; the prevalence o fundesirable practices undertaken by them such as fee splitting, over-prescription of drugs and diagnostic tests, inadequate fulfillment o f standards,inadequate information given to patients, inappropriate use o f medical technology and inadequate sterilization or waste disposal methods; the monetary or non-monetary incentives that would increase their efficiency and quality o f services to the poor; their interest inworking under contractual arrangements where payments are conditional upon the actual delivery o f services or achievement o f certain health outcomes; their degree o f awareness and their perception o fthe effectiveness o f government regulations (related to (i) manufacturing, sale andprescription o f pharmaceutical drugs; (ii) medical and clinical practices including licensing, basic code o f conduct, negligence and consumer complaints; and (iii) service facilities, technology and manpower. Inorder to focus the results o fthe Diagnosis, it will be targeted to a set o f specific services, type o fproviders (for-profit vs. non-profit) and geographic location. Inadditionto the workshops, a studytour of actual contracting experiences will be arranged for key local stakeholders. Design a Regulatory Framework The project will support the development o f a regulatory framework under which the GOR will be able to formulate the arrangements to support the development o f contracting mechanisms. It i s anticipated that the arrangements initially developed will evolve, perhaps significantly, based on the initialresults o f implementing contracting. The regulatory framework will initially be aimed at a selected set o f critical services and providers rather than attempt to address all services and all provider types. Key topics to be addressed indesigning the regulatory framework will include: what regulatory approaches will best meet GOR's policy objectives; what are the governance, institutional, operational andfunding arrangements for implementing the initialregulatory framework; what are the service cost, access and quality indicators that the regulatory framework will focus upon and how will these indicators be measured; the activities, budget and timetable to roll-out and sustain the regulatory framework through the first five years; and the necessary supporting information dissemination and stakeholder consultations andfeedback mechanisms. This work will start shortly after the conclusion o f the Private Sector Diagnosis and will take approximately one year to complete. ResourceAllocation Within the Public Sector Inadditionto its work onpublic-private partnerships, the SPC will have a focus on improving resource allocation within thepublic sector, with a view to increasing both the efficiency and equity o f govemment expenditure on health. A detailed agenda for this work will be developed during the second year o f the project after a consultative process with key stakeholders. - 42 -  1.3 Health ManagementInformation System The existing HMIS inthe state will be strengthened. The present HMIS i s limited to collecting information on services provided (number o f outpatient contacts, number o f inpatients, etc.). The strengthened HMIS will report on activity and efficiency indicators; selected indicators for key resources such as staff, financial status, essential equipment and drugs vital for service delivery; andwaste disposal. The source o f these data will be facility surveys. Detailed data on service utilization will be available from the NFHS and the RCHdistrict basedsurveys. The project will: (i) develop standard formats for hospital record-keeping, improve storage facilities for medicalrecords, andprovide training for medical records personnel; (ii) strengthen district level capacity for data analysis by providingtraining to H M I S staff indata analysis and computer use, andproviding appropriate equipment and supplies; and (iii) train state level personnel indata analysis. The Quality and Systems Improvement Cell inthe P M U will be responsible for this sub-component, under the guidance o f the Project Director. The existing disease surveillance systemwill also be strengthened and extendedto the secondary level. The scope and content o f this will be in accordance with, and be implementedwith support from, the proposedNational Disease Surveillance Project. The Quality and Systems Improvement Cell will also be responsible for setting up and operating the information system to track project inputs, activities, and outputs. 1.4 Training and Capacity Building A training needs assessmentwas completed duringproject preparation, and a detailed training plan for the entire project i s provided inthe PIP, As a part o f the first year activities inthis sub-component, a Hospital Training Complex will be created at all district hospitals; training materials developed, and Training o f Trainers (TOT) provided. The State Institute for Health and Family Welfare (SIHFW) will be responsible for coordinating all the training activities inthe project. However, given the mammoth task o f the extensive training requirements, and the limited capacity within the public sector, the GOR has identified both public andprivate training institutions, including some outside Rajasthan, especially to conduct the management training. The training program proposed under the project can be categorized as follows: (i) management training, aimed at improving the management competency o f state, district and local level healthmanagers in areas such as district healthplanning, hospital management and administration, monitoring and evaluation, leadership and planning, and program implementation; (ii) clinical/ technical traininq, aimed at providing specialized and quality health care at primary and secondary levels through upgrading the skills of doctors, nurses and paramedical personnel; and (iii) health systems training, aimed at developing capacity inhealth information, quality assurance, health care waste management, equipment maintenance, and behavior change communication. Training will be imparted to a wide range o f personnel including: administrators, district officials, specialists, general physicians, nurses, paramedical staff, technicians and non- technical staff/attendants (lower level staff such as ward boyiclass IV - for health care waste management), community and PRI members, andNGOs. Given the importance o f measuring the output and impact o f the training, monitoring and evaluation o f the training activities will be conducted, both intemally as well through periodic extemal reviews. An extensive extemal evaluation o f the training activities will be conducted at mid-term. - 43 -  Project Component 2 US$52.70 million - Developmentof Primary and SecondaryHealthCare Services in the Public Sector 2.1 Physical Renovation and Upgrading of Health Facilities This sub-component will be implementedstatewide. Itwill consist o fthe physicalrenovationand upgrading o f 28 district hospitals, 23 sub-divisional hospitals, 185 Community Health Centers (CHCs) and 2 Block Community Health Centers (BPHCs). The selection o f the facilities for physical renovatiodupgrading has been made on the basis o f a scoring system which took account o f the following: (i) strategic location; (ii)access by disadvantaged groups; (iii) utilization rates; (iv) remoteness from district headquarter hospital; and, (v) the Planning Commission's norms for beds at the first referral level. A prerequisite for any facility to be included inthe list was the guaranteed availability o fwater and power supplies. The poverty index o f districts has been usedto rank and prioritize the selection o f the facilities to receive project support inthe first year. No new hospitals will be built under the project, and the state government has confirmed that all premises slated for renovatiodextensionhave available land. Under this sub-component, the project will finance civil works, professional services, furniture, equipment, vehicles, building,vehicle and equipment maintenance andoperational expenses. As part o fthe project preparation activities, a detailed exercise was undertaken for District and Sub-divisional hospitals and CHCs to define the types o f clinical services to be provided at different levels o f facilities, treatment guidelines, and the staffingnorms appropriate for the identified services. Equipment and fimctional space norms consistent with the revised clinical norms have also been specified. Within six months o fphysical renovation o f each facility, staff and equipment inline with the agreednorms will be put inplace. Management of Health Care Waste The management o f health care waste i s an important element inproviding quality health care. Improper treatment and disposal o f biomedical, infectious and hazardous waste can have adverse impact on the environment and on public health through air, land and water pollution. However, since only about 10 25 - percent o f waste generated from health care facilities is regarded as hazardous, its potential negative impacts can be adequately mitigated through systematic management o f waste from source to disposal. The hazards posed by improper management o f hospital waste i s recognized by the government. Additionally the State Government i s responsible for complying with Government o f India's Biomedical Rules. Therefore, the GOR has decided to develop and implement an efficient and sustainable health care waste management system (including segregation, storage, treatment and final disposal) at its facilities. As a first step, the GOR has prepared a detailed Health Care Waste Management Action Plan (HCWMP) for all renovatedupgraded facilities under the project, including the requirements interms o f civil works, equipment, andtraining and preliminary cost estimates. The key activity upon project effectiveness will be the further refining o f the Plan, outlining the process for development o f facility-specific H C W Mplans, the roles and responsibilities of various parties, and detailed estimates o f the costs per facility including the operating costs. Other activities will include establishment o f institutional frameworks at the various levels, imparting training for staff and workers o f health care facilities, and establishing monitoring and reporting systems. It i s recognized that different sized facilities will have different requirements and it i s envisagedthat technical guidance will be provided for preparation o f "full" HCWMplans for district hospitals and "simplified" systems which would be more appropriate for small rural facilities. The Quality and Systems ImprovementCell will be responsible for the timely and effective implementationo f the Action - 44 -  Plan and the subsequent H C W M Program. 2.2 Improvements in the Quality of Clinical Servicesat District and Sub-divisional Hospitals and CHCs As explained above, the physicalupgrading ofhealth care facilities will be guidedby the agreed revised clinical norms, and within six months o f the physicalrenovation o f each facility, staff and equipment inline with the agreednorms will be put inplace. These inputs are expectedto enable an improved quality o f services. Inaddition, the project will support improvements indrug management and the development and implementation o f Quality Improvement Guidelines. Drug Management Better availability o f drugs at project facilities, along with improvements indrug prescribingpractices, will be an important element inimproving the quality o fthe healthcare delivered. An essential drugs list will be adopted by the state for different levels o f facility, and will provide the templates for the procurement o f drugs through the project. The prescribing patterns o f service providers and drug use by patients would be addressed through a combination o f background research, workshops, training and IEC, and assessed through follow up studies. Introduction of Quality Improvement Guidelines This sub-component would consist o fthe development and implementation o f guidelines to improve the quality o f services at government health facilities. This would entail first o f all the definition o f a core set o f health service quality indicators, including such elements as the provision to patients o f appropriate drugs, the goodmaintenance o f equipment, andthe degree o f client satisfaction. The quality assurance indicators will be monitored periodically by senior staff of the state's Department o f Medical, Health and Family Welfare andor independent inspectors hired for the purpose. Over a period o ftime, the quality improvement program would move towards grading o f individual facilities, generating a competition between facilities andmotivating them towards better performance (a system o f incentives to this effect will have to be introduced). The quality improvement work will be spearheaded and monitored by the Quality and Systems Improvement Cell o fthe PMU. The cell would establish a working group to: (i) develop guidelines o f quality improvement and assurance, and establish standard procedures, guidelines, registers, and task assignments at various levels; (ii)assess the data on the quality o f clinical care at CHC, district hospitals and sub-divisional hospitals; (iii) identify suitable indicators for assessment o f quality o f care; (iv) set acceptable standards; (v) test methods o f data collection on a pilot basis; and (vi) conduct and review pilots. Appropriate training programs for all levels o f staff inquality assurance will be developed prior to launching the program state-wide. 2.3 Improvement of Referral Mechanisms A referral system is an institutionalmechanism through which patients with healthproblems that cannot be managed at one level are identified in a timely manner, investigated and relatively promptly referred to an appropriate health care facility for appropriate treatment and follow-up. At present, the system in Rajasthan, as i s the case inmany other states, does not function adequately. It i s estimated that about one third o f all cases which are currently treated at the tertiary facilities inthe state couldbe treated at lower costs at first referral facilities ifthose facilities received adequate inputs. Also, many o f the cases treated at the district hospital could be treated at CHCs or PHCs. - 45 -  The project will support better linking o f different tiers o f the government's health care delivery system through a referralmechanism inwhich the norms o f service have been clearly defined. Experience from other state health systems development projects indicates that the critical element o f a referral system i s feedback and completion o f the referral loop. Initially, the project will focus on feedback for TB and emergency obstetric care (and also the mobile service camps inthe tribal areas). This will help to strengthen referral linkages with the on-going Reproductive and Child Health and TB programs. Continuous monitoring will be incorporated into the system to ensure that referralprotocols are followed andthe reports are complete. The project will support the provision o f greater access to Emergency Obstetric Care through the deployment o f more skilled attendants during delivery ingovernment facilities andthe provision o f transportation to referral facilities when necessary. These interventions will be o f particular relevance to the Millennium Development Goals o f improvingmaternal health and reducing child mortality. Project Component 3 US$ 33.31 million - Health Care Innovations for the Disadvantaged The objective o f this component is to improve access to health care among disadvantaged populations, in particular the tribal population and those households below the poverty line (BPL). Currently, the poor seek health care largely from unqualified informalproviders, who provide generally low quality o f care. A smaller proportion o f the poor avail themselves o f health care through formal public or private health care facilities. Here too, the quality o f care is uncertain; and, as data indicate, results in significant out-of-pocket expenditures for them. The approach supportedby the project will aim at: (i) improving health-seeking behavior o f households; (ii) improving access to health care by the poor andtribal population by makingtheir access to govemment health facilities easier; and (iii)further improving access to health care by the poor and tribal population through the development o f public-private partnerships. 3.1. Improving Health Seeking Behavior The project will only support inter-personal IEC activities. The state's Department o f Medical, Health and FamilyWelfare already has an ongoing mass-media program, which will continue duringthe duration o f the project. The inter-personal IEC activities to be introduced with project support will be o f two types: (i)Healthcarefacility-basedactivities,whichwillaimatthebehaviorsofbothprovidersandpatients. These activities will take place ingovernment health care facilities o f various levels across Rajasthan, and willbenefit the general population o fthe state. (ii)Inter-personalIECactivitiescarriedoutthroughNGOscontractedbytheGORtothateffect. These activities will be targeted at the tribal and poor population. Facility-Based IEC Activities This sub-component will aim at promoting an improved understanding o fthe health care needs o f the population among govemment service providers; provide the population with better information about the services available at various levels o f government health care facilities; and motivate households to - 46 -  effectively utilize these services. More specifically, this will include (a) providing appropriate information to the community, and to patients and their attendants, about the range o f services available, drugs, other facilities, and the referral system through brochures, pamphlets and billboards (e.g. patient's charters); (b) implement an inter-personal communication campaign targeting the medical, paramedical, and other staff at the facilities to improve the quality o ftheir communication with the patients and their attendants. Outreach IEC Activities This sub-component will be specifically targetedto the poor and tribal populations-- who are less able to access appropriate health care. Activities will be primarilyimplementedthrough NGOs that already have links to the targeted populations, using inter-personal communication techniques. The objective o f this sub-component will be to influence the health-seeking behavior o f households belonging to the targeted groups and orient them towards seeking safer health care. The focus will be on the community, empowering households to identify their health needs, seeking appropriate health care solutions, and improving basic hygiene and nutrition practices within the households themselves. The above inter-personal communication strategy will be further refined and,developedinthe second year o f the project. To achieve this, a consultant (IEC agency) will be appointed by the end o f Year 1in order to: (i) convert the strategy into a detailed action plan; (ii) produce the corresponding IEC materials; and (iii) pre-test the materials. At that point implementation o f the IEC activities on the ground will start. 3.2 ImprovingAccess of the Poor and Tribal Population to Government Health Care Facilities This part o f the project comprises the implementation o f a new tribal health care strategy; interventions to improve the existing schemes for user fee exemptions for those before the poverty line; and the piloting o f community-health insurance schemes. Implementation of the Tribal Strategy The project will support the implementationo f a new strategy to improve health services among the tribal populations o f the state. The tribal strategy will comprise several elements as described below. (t) Strengthening service delivery at district and sub-divisional hospitals and Community Health Centers located in tribal areas: Selective strengthening of district and sub-divisional hospitals, and Community Health Centers (CHCs) intribal areas will be carried out under the project. This will include improvements ininfrastructure and equipment, staffing, and improved provision o f drugs and supplies. The Department of Medical, Health and Family Welfare will set the following goals, to be met duringthe project period: (a) in each o f the hospitals, deploy specialistkrained doctors inthe following specialties: medicine, surgery, obstetrics, pediatrics and anesthesia; (b) reduce the number o f vacancies inthese facilities for all categories o f staff; and (c) establish procedures to ensure that patients requiring emergency care receive the initial stabilizing treatment and are then referred to the next level o f facility for appropriate care, and also ensure follow up. The project will support the upgrading o f 138 30-bedded CHCs and Block Primary Health Centers (BPHCs) in tribal areas, including improvement o f facilities, equipment, drugs and trained manpower in accordance with agreed norms. The inputs o f the project will be as described earlier under Component 11. (ii)StrengtheningServiceDeliveryatthelevelof FirstReferral Units,PrimaryHealthCenters, Sub-centers, and Villages: The Department o f Medical, Health and Family Welfare project inputs will set - 47 -  the following goals, to be met during the project period: (a) the services o f specialistltrained doctors inthe following specialties: medicine, surgery, obstetrics, pediatrics and anesthesia are available at Block PHCs andthe FirstReferralUnits;(b) reduce the numbero fvacancies inthese facilities for all categories o f staff (ifnecessary byprovidingfor parttime appointments). Where doctors arenot inplace inthe PHCs, paramedical staff (namely male nurses and ANMs) will be provided additional training around the provision o f an `essential' package o f interventions. These cadres (particularly the ANMs) will receive additional supervision and support. Training will also be provided to staff to identify patients with emergencies for referral to the next level facility. (iii) Strengthening health camps in tribal areas: The project inputswill support strengthening o f the Reproductive and Child Health Camps intribal areas through: (i) training o f outreach workers inthe provision o f an essential package o f R C H services; (ii)strengthening o f the referral network between the camps and public health facilities (PHCs and CHCs) and ensuring adequate follow-up; and, (iii) enhanced management and supervision o f the quality o f clinical services provided at such camps. (iv) Staff incentivepackage: GORis considering introducing an incentive package to encourage government doctors to serve intribal and other difficult areas. Ideas for incentives include preference for post-graduate education and giving a posting o f choice after a certain number o f years o f service intribal areas. All incentives would be non-cash incentives; the Strategic Planning Cell o f the P M U will assist the GOR to reach a decision inthis regard through an analysis o f options, andtheir cost andmanagement implications. (v) Contracting of local private doctors: Another strategy to be supported under the project for increasing access to health care services in tribal areas, is the contracting o f local doctors to provide services ingovernment facilities, particularly in areas where the government has difficulty in placing their own doctors. The GOR will identify those areas where the shortage o f medical personnel i s most acute to implement this program. Private doctors will be contracted for one or two days every week at a fKed honorarium. (vi) Integrating the tribal medical systems in theprovision of essential services: As has been piloted inother state health systems states, it i s proposed that traditional healers and "unqualified service providers" be involved inthe provision o f basic services at the community level. As an action research, the project will initiate the training o f such service providers inone tribal district inthe provision o f the "essential" package and referral as part o f their menu o f services. The initiative would be evaluated at the end o f a year, and after incorporating the feedback, would be implementedinthe remaining tribal blocks. Implementation of Innovationsfor Strengthening Existing Government Schemesfor Exemption to those Below Poverty Line Under the existing Below-the-Poverty-Line (BPL) Medical Card Scheme, those households identified as BPL (which are currently one-quarter o f the total population o f Rajasthan) are exempted from paying user fees at the government health care facilities allowed to charge them (i.e. CHC level and above). This scheme is administered at the facilities by an autonomous society, the Medical Relief Society (MRS). However, the initial review during project preparation showed that the poor are often prevented from benefiting from this scheme due to a variety o f demand-side constraints (e.g. lack o f knowledge about the scheme, cost o f travel to the nearest public provider, perceived low quality o f public health services) and supply-side constraints (e.g. failure o f the Medical Relief Societies to identify and provide exemption to all BPL Card holders). - 48 -  Data collected as a part o f the review suggestthat only a small percentage o f all episodes o f public health sector utilization by BPL households are provided for free under the BPL card scheme. B P L individuals often lack information about their rightsandthe facilities available under the scheme; there is n o effective mechanism at facilities (with MRSs) to ensure that BPL individuals avail themselves o fbenefits under the scheme; the Management Information System for the MRSs is poorly organized -the information available i s limited and o f questionable reliability, which restricts its utility as a basis for managing the scheme; there i s also no mechanism for ensuring that the MRSs spend the mandated 25 percent o f total revenues on BPL patients; some MRSs carry over large balances from one year to the next, thus limiting their impact (in terms o f quality improvement at the facility, or financial protection o f the B P L populations). This sub-component aims to improve access to health care among the BPL by addressing these demand- and supply-side constraints. Duringthe first year o fthe project, research will be carried out with two primary aims. First, assessingthe current functioning o f Medical Relief Societies andthe BPL Medical Card scheme. Second, developing a package o f interventions that can be implementedunder this project inorder to improve access to (and equity of) public health care facilities among the very poor, by enhancing utilization o f this scheme. It has been agreed that the package o f interventions will include IEC that targets BPL households, aimed at strengthening knowledge of, and demand for, the serviceshenefits available under the scheme; provide technical assistance to MRSs, to ensure that they have inplace systems for evaluating the BPL status o f all facility users, and exempting those who hold the BPL Medical Card; develop an H M I S so that the percentage o f all outpatient and inpatient cases charged and exempted by the MRSs can be monitored; training of health care providers so that they are aware o f the BPL Medical Card Scheme, and they are sensitive to the needs o f the poor; improved quality o f health care at secondary-level facilities (which will be addressed under Component 11); placing a patient advocate or social worker at all sub-divisional and district hospitals, to assist BPL individuals in accessing benefits under the scheme. Under the project, a Health Care Fund that would be usedto subsidize the MRSs inthe poorest areas will be established. The goal o f this fund i s to ensure that the amount o fmoney available for spending per BPL patient @.e. total revenueshotal BPLpopulation in target area) i s roughly equal across the state. Ultimately, the facilities made available by the MRS should be similar across the state; essential services should be available at all facilities. The criteria o f eligibility for the MRSs to receive these funds will be based on performance outcomes o f agreed upon health and coverage indicators. These will be developed duringthe planned consultations with stakeholders. The package o f interventions will first be implemented inthree districts, duringthe secondyear o fthe project. Itwill thenbe scaledup, on a district-wise basis, untilall 32 districts are covered inthe final year of the project. Implementation of Innovationsfor Community-based Health Insurance Schemes (CBHI) InIndia, as inother developing countries, out-of-pocket spending on healthcare is burdensome, particularly among the poor. The high costs o f care, particularly inpatient care, pose a barrier to health care seeking among the poor. Out-of-pocket payments on health care can pushhouseholds into poverty, and can be particularly catastrophic for households that are already below the poverty line. Community-based health insurance (CBHI) is a mechanism that allows for pooling o f resources o f the households ina given locality inorder to cover the costs offuture, unpredictable health-related events. Itmay offer individuals and households protection against the uncertain risk o f catastrophic medical expenses in exchange for the regular payment o fpremiums. The GOR expressed that any C B H I scheme designed for the State shouldbe broad inscope. Unlike most CBHI schemes inIndia, they should cover not only the cost o fhospitalization, but also the costs o f - 49 -  outpatient care, disability and possibly even death -perhaps an insurance package that includes some component o f health, life and disability insurance. Furthermore, with respect to the hospital insurance component, C B H I inRajasthan should avoid the "exclusions" common to most insurance schemes inIndia (e.g. exclusions o f inpatient delivery and chronic conditions, exclusion o f infants/ children andthe elderly), as such exclusions would certainly limit the potential benefit o f CBHI among the poor. While the intentions of the GOR are laudable, it should be notedthat the broader the coverage o f the insurance schemes the higher the premiumto be paidperiodically by participating households will be --unless the GOR decided to subsidize a large share o fthe costs from general revenues. Duringthe first year o f the project, research will be carried out, with the primary aim o f designing Community-Based Health Insurance schemes that will ensure access and financial protection among the poor, and that will address the concems voiced by GOR as feasible. First, at the beginning o f the year, a workshop will be held bringingtogether experts inCBHI, including key people from existing CBHI schemes from all over India. Second, during the course o f the first year, research will be conducted in Rajasthan to assess the willingness to participate in, and pay for, community based health insurance. Simultaneously, several key personnel from the Project Implementation Unit will participate in a study tour to witness first-handthe functioning o f several Indian C B H I schemes. Towards the end of the year, a meeting will be held inRajasthan. This meeting will bringtogether key stakeholders from within the state, to summarize the findings o f the prior activities (workshop, research and study-tour) and to decide on the site, design and management o f C B H I schemes to be implementedunder the project. Duringthe secondyear o fthe project, three district-based, pilot CBHIschemes will be implemented. Three diverse districts will be selected by GOR, and the insurance package/premium offered will be similar inthe three districts. The agency responsible for marketing the insurance, and thus the exact nature o f the target population, may vary from one district to another - for example, possible implementing agencies include: NGOs, dairy cooperatives, NABARD and PRIs. At the end of the second year o f the Project, these pilots will be carefully evaluated, anda decision taken as to whether they should be scaled-up, andifso, to how many districts. The Ministry o f Health and Family Welfare (MOHFW) o f the GO1will, separate from this project, also be providing support to the GOR for the implementation of two pilot, district-based C B H I schemes. It i s expectedthat the exploratory studies described above will also assist inthe development o f these pilots to be supported by the GOI. 3.3 Public- Private Partnership The previous section described the project-supported initiatives which aim at improving access of the poor (BPL households) andtribal population to health services provided out o f government facilities (though the pilot community health insurance schemes are likely to include private health care providers on the supply side). The present section i s concerned with another type o f project-supported initiative aimed at improving access o f the poor and tribal population to essential health services. Inthis initiative, the GOR will contract withprivate health careproviders (both for-profit and NGOs) for the provision o f health services to the poor and tribal population. Inother words, these will be services which are financed by the GOR but not provided out o f GORs health facilities. A broaddescription o fthe preparatory work that will needto be carried out inorder to launchcontracting pilots has already been given in Section 1.2. (Policy Development). The present section elaborates on some aspects o f the contracting initiative. - 50 -  Design and Implementation of Public -Private Partnership Modelsfor Contracting Provision of Services Inorder for the contracting initiative to be implementedonthe ground, it willbe first benecessary to design the pilot contracting scheme(s). Design is planned to start within six months o f project effectiveness, so that by the end o f the first year, the GOR will be in a position to contract private providers o f primary and essential referral services who are well suited to the provision o f services to the poor and tribal population. Therefore the PMU, working inclose cooperation with the Strategic Planning Cell, will devote the first year to: (i)develop the model service contracts to be entered into with private providers, (ii) identify those sites and activities for which they would enter into such service agreements; (iii) negotiate the basic terms and conditions o f the service contracts with the private providers; and (iv) define the flow o f funds arrangements to make sure that providers get paid in a timely manner. A consultant! agency will be contracted to provide technical assistance for these tasks. As currently envisioned the initial set o f Targeted Health Services will focus on Reproductive and Child Health services, and communicable disease prevention and treatment. These services will be provided through NGOs, except for certain diagnostic services which may be provided directly by private for-profit providers. Pilot contracting will first be implemented in the tribal areas. Based o n the results from an independent assessment planned for the end o f the second year, the schemes will be replicated in other appropriate areas. The GOR i s interested in assessing whether a performance-based contracting approach could be developed, where payments by the GOR to the NGOs would be linked to the achievement o f certain health output or outcome indicators (e.g. TB cure rates, improvements inbirth spacing, etc.). The specific activities necessary to develop the pilot contracting initiative include the following: (i) oftechnicalstaffwithexperienceinneedsassessmentandcostinganalysis,contract Hiring administration, and operations and maintenance o f M I S and related reporting systems. Inaddition, the P M Uwill employ consultants on an as-needed basis to assist with specialized tasks (Le., legal support innegotiating contracts, development o f MIS, etc.). (ii)Developmentofacontractstrategythatwouldaddressissuesof(a)howcontractsaretobe awarded (competitive biddingor non-competitive), (b) what criteria will be utilized to identify and select providers, (c) how payments will be determined, adjusted andpotentially be tied to performance indicators, (d) support system requirements (e.g., MIS), (e) what type o f training and technical assistance those responsible for contracting within the PMUmay require to implement the different functions (design and award o f contracts, monitoring and evaluation, administration o f the contract, etc.), and (f)indicators to assess the success o f the contracting pilots. (iii)Developmentofacontracttemplatetobeusedasthebasisforcontractsissuedunderthe project. (iv) Development o fthe management information system (and relateduser manual) to assist with the monitoring and evaluation o f the contracting pilots. (v) Development o f operating manual to assist staff inexecuting the required implementation activities. (vi) Design and execution o f competitive tendering process and required documentation (RFP, -51 -  advertisement o f RFP, award notices, rejection letters, etc.). (vii) Train staffregardingthe design, award, negotiation, monitoring and fundingo f these agreements. (viii) Develop payment reimbursement mechanisms to compensate private providers. (ix) Execute contract award process and negotiate specific agreements. (x) Develop and implement information dissemination campaign, including stakeholder consultations, throughout the design and initial implementation process. TheFranchiser Model of Contracting The above model o f contracting, where the GOR would enter into contracts with NGOs who will themselves provide the contracted services, i s suitable for large NGOs. It would not, however, be suitable for small-scale NGOs and other more informalprivate providers who might nevertheless have valuable potential contributions to make inthis context. This is because the administrative burden on the PMU would be overwhelming ifthey had to contract directly with a large number o f small-scale providers. To circumvent this problem, the project will pilot a "franchiser" modality o f contracting. Inthis modality, the GOR will enter a contract for provision o f services with a large NGO who will inturn enter into contractual relationships with a number o f small-scale providers as appropriate, The "franchiser" NGO would effectively become the purchasing agent for a defined package o f primary and secondary health care services for a defined population or catchment area. The franchiser would be responsible for selecting the providers and operating the business relationship with each one. Inaddition, the franchiser will provide a range o f support services that would be key to the successful operation o f the scheme, including: (i) andperiodic certification o f the providers, (ii) initial provision to providers o f technical assistance and training, (iii) insecuring pharmaceuticals or other assist requiredinputson behalf o f the providers, (iv) monitor and evaluate provider performance, and (v) brand marketing and possibly even demand generation efforts to assist the providers in increasing their client base. The GOR would enter into an arms-length contractual arrangement with the franchiser. Under this agreement, a portion o f the payments made by GOR to the franchiser would be tied to the latter's ability to achieve certain goals interms o f (for example) the following types o f indicators: Output indicators ( percent o f children aged 12-23 months fully immunized, percent o f women with a delivery inthe past year who received two or more tetanus toxoid doses, at least one o f which was during pregnancy, percent o f women who received two or more antenatal checks duringwhich bloodpressure was measured at least once, percent o f BPL children aged 6-60 months who had received high-dose VitaminA twice inthe past 12months, etc.). 0 Outcome indicators ( percent o f women who gave birthinthe past 24 months who knew four or more modem methods o f family planning and locations to receive these services, improvements inbirthspacing, TB cure rates, etc.) 0 Process or input indicators (BPL population facility utilization, patient waiting times, satisfaction levels, number o f appropriate referrals, guidelines compliance, etc.). The contractual framework between GOR and the franchiser should strive to allow the franchiser to have sufficient operational autonomy to determine how best to select and organize its provider network, as well as its own management, procurement and service delivery strategy. One o f the key learning processes o f - 52 -  this initial pilot phase will be striking the balance betweenthe GOR'sperceived needto define service delivery requirements rigorously versus the franchiser's need to have sufficient flexibility to meet the various health targets and operate in a cost-effective, flexible manner. Inaddition to this, monitorable performance targets and a system o f checks and balances that protects against abuses and budget overruns will also needto be formulated. The project will use the services o f a consultant indetermining the strategy most suited for the state, taking into account its policy priorities, local resource constraints, and nature o f the services to be contracted out. It is envisioned that the process for selecting the franchiser would be conducted via some type of competitive tender. The PMU, assisted by consultants, would develop the Request for Proposals (RFP), template o fthe performance agreement, and other supporting documentation. The franchiser would be selected on its technical, management, and financial merits. - 53 -  Annex 3: Estimated Project Costs INDIA: RAJASTHAN HEALTH SYSTEMS DEVELOPMENT PROJECT Local Foreign Total S $million US $million US $million 18.64 0.68 19.32 2. Improving Service Quality at Primary and Secondary levels 50.41 0.00 50.41 of the public health care services 3. Improvinghealth care services for the poor and 31.91 0.01 31.92 disadvantaged population Total Baseline Cost 100.96 0.69 101.65 Physical Contingencies 1.27 0.01 1.28 Price Contingencies 3.03 0.02 3.05 Total Project Costs1 105.26 0.72 105.98 Total Financing Required 105.26 0.72 105.98 al Foreign Total illion US $million US $million Goods 34.81 0.27 35.08 Works 30.45 0.00 30.45 Services 11.oo 0.00 11.00 Training & Workshops 10.51 0.45 10.96 NGO Services 2.49 0.00 2.49 Recurrentcosts 16.00 0.00 16.00 Total Proiect Cost: 105,26 0.72 105.98 Total Financing Required 1I 105.26 1I 0.72 II 105.98 1I I Identifiable taxes and duties are 0 (US$ni) and the total project cost, net of taxes, is 105.98 (US$m). Therefore, the project cost sharing ratio is 83.98% of total project cost net o f taxes. - 54 -  Annex 4 Economic Analysis INDIA: RAJASTHAN HEALTH SYSTEMS DEVELOPMENT PROJECT Health Sector Financing of Rajasthan: A Review Government o f Rajasthan has been undertaking various measures to improve the h c t i o n i n g o f the health sector and to improve the delivery o f health services to achieve better health outcomes. As a result, the infant mortality rate (IMR) has declined substantially from 107 in 1986 to 85 in 1996 (Table 1). In spite o f this decline, the State ranksthe second highest inIMRwhich is a cause o fmajor concern for policy makers. This phenomenon i s often interpreted as cause and effect relationship effect betweenhealth status and income, i.e, the higher the level o f income, the higher will be the capacity to spend on health improving activities and hence better health status. States 1986 1992 1996 India 96 79 72 The overall economic growth interms o f gross state domestic product (GSDP) o fthe state duringthe 1990s has slowed down to about 5 percent from about 10 percent during the late 1980s due to the droughts in 1993-94 andalso in 1995-96. On the fiscal front, the State has been experiencing the growing burden o f fiscal deficit since 1991-92. From about 3 percent o f GSDP in 1991-92, the fiscal deficit rose to 5.4 percent in 1995-96 and further to 7.1 percent in 1999-00 placing the fiscal health o f the state ina precarious position. Irrespective of the pace o f overall economic growth, the State's budgetary allocation to health sector witnessed a deceleration since 1980-81 as inmany other major states. From about 8 percent o f the total revenue budget in 1980-81, the share o f healthbudget inRajasthan declined to less than 6 per cent in2000-01. Substantial improvements inthe IMR during the same period suggest that budgetary spending on health alone does not influence health status to any significant extent. Given this, an attempt is made inthis annex to critically review the structure o f budgetary spending o n health with the following broad objectives. - 55 -  1. Analyze the trends inthe health spending by the Government o f Rajasthan over a period o f two decades. 2. Analyze the functional composition o f spendingon healthin Rajasthan during the 1990s. 3, Estimate the public spending on salary and non-salary components and also the Central share inthe state budget on health. 4. Assess the extent of utilization, cost recovery and budgetary subsidies inpublic health facilities. 5. Examine the role o f existing health insurance mechanisms inthe overall health sector o f the State. 6. Assess the budgetary implications for the State inachieving higher levels o f health status indicators. Trends in PublicSpending on Healthin Rajasthan: The budgetary allocation to health has been declining inmost o f the states inIndia during the 1990sboth in terms o f its share in state domestic product and also intotal revenue budget o f the states (Tables 2 and 3). The decline is more pronounced between 1985-86and 1991-92, a phase when most states experienced severe fiscal stress. The fiscal adjustment programs initiated at the Centre during the early 1990s and consequent squeeze inthe Central grants to states, constrained the states from bringingtheir budget allocation to the health sector to the levels that had prevailed duringearly 1980s. Rajasthan is no exception to this. The implementation o f Fiflh Pay Commission recommendations raised the health sector share inthe State budget, however marginally, to meet the increased salary component. States 198586 1991-92 1995-96 1999-00 6 Karnataka 6.55 5.94 5.82 5.64 7 Kerala 7.69 6.92 6.81 5.89 8 Maharashtra 6.05 5.25 5.18 4.59 9 Madhya Pradesh 6.63 5.66 5.07 5.18 10 Orissa 7.38 5.94 5.42 5.03 11 Punjab 7.19 4.32 4.56 5.34 12 Rajasthan 8.10 6.85 6.18 6.39 13 Tamil Nadu 7.47 4.82 6.28 5.44 14 Uttar Pradesh 7.67 6.00 5.72 4.41 15 West Bengal 8.90 7.31 7.16 6.29 All States 7.02 5.72 5.66 5.32 The allocation o f healthbudget to various heads o f expenditures like medical, public health andfamily welfare does affect the performance o f health sector andhealth outcomes. For instance, substantial investments on primary care services inthe initial years and a slow strengthening o f allocations to secondary care services appear to have improved the health outcomes o f Kerala. On the other hand, continuously increasing allocation to primary care services at the cost o f secondary care services inTamil Nadu, resulted in significant improvements inhealth outcomes inthe initial phase but the health outcomes - 56 -  stagnated duringthe latter years. Therefore, it i s important to maintain an appropriate balance inthe budgetary allocations to various levels o f health services. States 1985-86 1991-92 1995-96 1999-00 1 Andhra Pradesh 1.11 0.87 0.76 0.89 2 Assam -na- -na- -na- ma- 3 Bihar 0.82 0.94 1.11 l.09 4 Gujarat 0.96 0.85 0.65 0.86 5 Havana 0.75 0.54 0.54 0.59 6 Karnataka 1.10 0.91 0.88 0.91 7 Kerala 1.28 1.09 1.02 1.06 8 Maharashtra 1.67 1.38 1.36 1.36 9 Madhya Pradesh 0.46 0.40 0.29 0.35 10 Orissa 1.04 1.07 0.96 1.17 11 Punjab 0.90 0.81 0.67 0.87 12 Rajasthan 1.20 1.05 1.09 1.14 13 Tamil Nadu 1.07 1.03 0.89 0.90 14 Uttar Pradesh 0.93 0.88 0.87 0.68 All States 1.01 0.90 0.82 0.86 Duringthe 1980s and also 1990s, the share o fmedical and public health remained around 80 percent and family welfare programs accounted for around 20 percent o f the total health budget in Rajasthan. However, the proportional allocations to various components within the medical andpublic health budget have undergone a major change duringthis period. The trends inthe shares o f the three major components namely, urban health services, rural health services andpublic health services have been depicted inChart 2. - 57 -  20 10 o ! # ! f # !f4 , , , , , , , , , , , , , , , I A Urban Health Services -a- Rural HealthServices +Public Health 1 The share o f urbanhealth services intotal medical budget has been declining since 1985-86 and the share o f rural health services has been steadily increasing. Being predominantly a rural economy, the increasing share of rural health services inthe budget would not only help reduce the inequalities but also provide the poor and underserved improved access to relatively better public health services. However, the continuously declining share o f public health services inthe budget is a major cause o f concem. A major share o f the budget o f the public health programs i s spent on disease control programs, such as control o f malaria, cholera, blindness and other important programs. Many o f these programs have large positive extemalities. The non-salary recurrent cost budget has been shrinking and the share o f salaries of staff has increased in recent years. An analysis o f the structure o f government health expenditure reveals that the share o f salaries has increased substantially inmost states after the implementation o f the FifthPay Commission's recommendations (Chart 3). - 58 -  Chart 3 Salaries, Drugs and Central Grants in Total Health Spending: Rajsathan (in %) 80 70 % of 60 He :It 50 SP en 40 di ng 30 20 0-I I 1985-86 1991-92 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 j *salaries -@" Drugs* +Central 1 Inthe case o fRajasthan, salaries accounted for about 50 per cent during 1985-86 and increasedto about 70 per cent in 1991-92. During 1998-99, the share o f salaries was about 80 per cent, suggesting that the impact o f pay revisions was not very severe on the health sector o f Rajasthan, as often claimed. However, the growing share o f salaries inhealth budget is a concern because o f its adverse impact on the spending on items like drugs, medicines, etc. Inaddition, budget spending on drugs, which was around 14 per cent in 1985-86, declined to around 10 per cent during the late 1990s. Trends inthe share o f spending on salaries and drugs duringthe period under review suggest that allocations to other items like travel, office expenses, purchase andmaintenance o f minor equipment have been adversely affected due to the growing salary component. The spending on these items is as important as on drugs, for better functioning anddelivery of health services. Therefore, there i s a needto rebalance the structure of budgetary allocation within health sector. FunctionalCompositionof GovernmentHealthExpenditure Both interms o f share o f total health budget and in terms of per-capita spending, allocations to primary care services recorded a significant increase from 1985-86 to 1995-96 in Rajasthan. Thereafter, there has been a near stagnation inthe allocations to primary care services inthe State as revealed by Tables 3 and 4. - 59 -  Levels of Health Services 1985-86 1991-92 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 Levels of Health Services 1985-86 1991-92 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 The extent of allocations to secondary care services declined inthe first phase (1985-86 to 1996-97) and recorded a significant growth inrecent years (second phase). The improvements inthe IMR of the State can well be attributed to the increased allocations to primary health care services duringthe first phase. Levels of Health Services 1985-86 1991-92 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 The allocations to drugs, medicines, materials and supplies also depict a similar picture as revealed by Table 6. - 60 -  Levels of Health Services 1985-86 1991-92 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 Primary Care Services 33.62 40.31 91.67 63.90 59.71 63.96 65.41 45.56 Emerging challenges inthe health sector will warrant measures to improve resource management as well as augmentation o f budgetaryallocations. The Health Policy 2002 o f the Government o f India has taken note o f the deteriorating financial situation o f the states and has proposed to enhance the Central allocations to states and at the same time looks forward to states to augment their resources for the health sector. Achieving the Millennium Development Goals o f the UNwould also need improved resource allocation to the sector. Cost Recovery and Subsidies Withpublic financing already under severe fiscal strain, alternate ways to financing need to be explored. The present level o f cost recovery inthe health sector i s abysmally low at around 2 percent inmost states in India. Attempts are being made by various states, including Rajasthan, to improve the cost recovery rates through various mechanisms. Cost recovery has emerged as a major policy issue ever since the Ministryo f Finance issued the DiscussionPaper on Government Subsidies inIndia in 1997. The Paper points out that cost recovery has been less than 2 per cent inthe health sector and the subsidies on non-merit health services need to be phased out over time. Cost recovery declined to near zero level since 1985-86 as evident from Table 7. Cost Recovery (%) ' Per-Capita Budgetary Year Subsidy (Rs) Merit Non-Merit Merit Non-Merit Services Services Services Services 1985-86 1.06 3.20 2.49 17.44 1991-92 0.15 1.01 2.54 21.55 1993-94' -na- -na- 2.97 25.61 1998-99 0.00 0.29 3.11 36.05 At the same time, the levels of subsidy,inper-capita rupee terms, recorded an increase for bothmerit and non-merit services. The extent o f subsidies is much higher for non-merit services as compared to merit -61 -  services. Government o f Rajasthan has implementedan important cost recovery initiative at the facility level through the Medicare Relief Societies. Despite its critical situation, the State has initiated certain initiatives to revamp its health sector. One such initiative i s the establishment o f such societies at tertiary care level hospitals, at district level inthe beginning and at sub-district levels at later stages. A briefreview o f this initiative i s presented inthe following section. Economic Review of Medicare Relief Society In 1994-95, the Government o fRajasthan alloweddistrict hospitals andhospitals attachedto teaching institutions to form a society namely Rajasthan Medicare Relief Society (RMRS) inorder to improve the functioning and financing o f these hospitals. The Society i s an autonomous body that collects and retains revenue. Government provided seed money to create the Society and the decisions relating to the management o f the society were left to the Board o f Trustees. The trustees decide the modalities to raise revenues o f the hospitals through user charges and also to utilize the funds so raised. The Society is also allowed to receive contributions and donations as well as to raise loans. The premise on which MRS was created was to provide autonomy to hospitals to raise revenue out o f user charges, donations, etc., in order improve the delivery o f services which were otherwise suffering due to lack o f adequate funds. The revenue generated from the Society eases the pressure on the general budgetary resources for maintenance, purchase o f minor equipment, etc. During 1999, it was made mandatory that 25 percent o f the revenues generated by the societies would be earmarked to provide free services to the patients o f population BPL. The society charges for various services rendered by the hospital, such as, X-Ray, laboratory test, etc. The charges are nominal and are below the rates prevailing inthe open market. The Society exempts Below Poverty Line (BPL) patients from the user charges. The Society also runs a life-line fluid store inmany o f the hospitals which caters to the needs o f the patients. The revenue generated through user charges, donations and grants from the Government o f Rajasthan by the RMRSs have increased sharply from Rs.486.92 lakhs in 1996-97 to 1095.47 lakhs in 1999-2000. The resources generated through the RMRSs are spent primarily on the working capital needs o f the hospitals to improve the quality o f the services. Budgetary allocation to the hospitals continues to flow-in from the State. Establishment o f the Society i s an attempt to levy user charges for health services on those who can pay for the services. The revenue generated from the Society also eases the pressure on the general budgetary resources for maintenance o f facility and equipment and purchase o f minor equipment. An attempt was made to analyze the financial strengths and weakness o f these societies and to assess their role inthe overall health sector o f the State. Due to lack o f adequate information the review i s restricted to a few o f the societies namely SMS Hospital, Jaipur; District Hospital, Sikar; District Hospital Tonk; and Taluk level (sub-district) hospitals, Sikar). Salient features o f the review are presented below. 1, User charges account for a substantial portion o frevenue o f societies mainly inmajor hospitals where diagnostic, laboratory, X-ray, etc. facilities are available. Inthe hospitals located at district headquarters like Tonk and Sikar, the revenue out o f user charges to the society is between40-50 percent whereas the same i s about 60-70 per cent in SMS hospital, Jaipur. Interests receipts on accumulated bank deposits, membership fees, etc., account for a substantial share. 2. Donations from public and subsidies from the State were expected to meet the initial capital investment requirements o f the societies. These expectations have been met at district level hospitals to some extent, particularly inwell-off districts. At many o f the sub-district level hospitals, donations have been less substantial. As a result, capital investment didnot take place to the degree needed to improve the services. The proposed project will help to fillup this resource - 62 -  3. Even at facilities where a fair level o f services are being provided, patients tend to use the private sector more, due to lack o f faith inthe public system, possible credit facilities extendedby the private providers, connivance o f private providers through touts -especially drug store operators as existing in Sikar, etc. This i s in spite o f the fact that private facilities are 3-4 times more expensive than the services organized through MRS. This issue could be addressed to a large extent by effective B C C ( Behavior Change Communication) providing the public with accurate information regarding the types o f services provided at different levels o f facilities and the associated charges. But at the present state o f public health/MRS services, BCC should be locatiod district/ facility specific because the type o f facilities provided vary widely from one facility to another. But BCC by locatioddistricb` facility would be uneconomicalbecause o f the scale. Therefore, a common BCC at the state/ regional level would not only be economical but also be more effective. For a strategy like this, a common level o f services needs to be established at a defined level o f facilities unlike the present situation. 4. The possibility o f creating a "fund" from the accumulated reserves o f the societies which can be used to subsidize the poorer regionslpatients i s often debated. A glance at the available information suggests that reserves do exist but only at the major hospitals like SMS, Jaipur. What really happens with the societies located at backward districts and at sub-district levels i s that the initial marginmoney, donations and membership fees received are too meager to be effectively invested in upgrading the facility. Further, drawing on accumulated reserves from better-off societies to create the "fund" as a redistributive measure would act as a disincentive to the better performing societies to effectively collect the user charges, donations, etc. Also, the process o f redistribution may counter the very purpose for which MRS was established-the issue o f autonomy. Above all, the reserves existing infew major hospitals may not really be adequate to cross subsidize all the other societies spread across the State. 5. A crudeestimate of "Fund" The population below poverty line is estimated to be at 27.41 percent in 1993-94 inthe State, implyingthat there are more than 121lakh persons (12.1 million) below poverty line who need medical care from the Society. At the rate o f 53 persons seeking OP services and 14 seeking I P services per 1000 persons from 0-20 expenditure group as per 52ndround o f NSS, provides an estimate as below: Persons possibly needing OPD Services (No): 639288 Persons possibly needing I P D Services (No): 168869 Expenditure per OP treatment at Govt facility (Rs): 174 Expenditure per IP treatment at Govt facility (Rs): 2589 Fundsneeded for OP treatment (Rs): 111,236,150 Fundsneeded for IP treatment (Rs): 437,200,769 Total Funds required (Rs): 548,436,919 Above calculation i s based on the following assumptions: a. Bottom 20 percent o f the population needs to be covered by the Fund b. Treatment seeking behavior remains at 1995-96 level(percent o fpatients availing treatment) c. Treatment costs, coverage and prevalence rate remains at 1995-96 level - 63 -  As per the above estimate nearly Rs.548 million is needed to treat the BPL patients for both inpatient and outpatient treatment annually. In other words, the bottom 20 percent o f the population i s incurring about Rs.548 million annually on treatments as out o fpocket expenditure. 6. Based on the above, two options emerge: (i) a "fund" o f this amount from public create sources to provide services to the poor; or (ii) try to mobilize some portion o f this resource from the very same population, like a premiumon health insurance. The second option is more optimistic inthe sense that this section o fpopulation is already spending on medical care while availing the service at present. Ifan effective BCC i s carried out explaining the situation, this section is likely to get convinced to contribute to the "fund" at a convenient time when they get income rather thanpaying at one time, to avail services when they need. This ineffect meets the principles laid out inthe insurance mechanism, riskpooling and sharing. 7. Inthose areas where donations are not forthcoming andor the revenues o f MRS are inadequate, the State can help those societies to raise loans by providing guarantee. Indoing so, the concerned hospitals should be made/mandatedto function on a more commercial basis. Attempts can also be made to include value adding services like runninga full fledged drug stores, ambulances on rental basis, contractingAeasing out certain areas to private providers for runningmedical stores, and related activities to augment resources for the facility. Cost recovery andor insurance through pooling mechanisms are knownto have their adverse impact on the access and equity o f the poor. Data on the utilization o f health facilities inRajasthan indicates that people depend largely on public facilities for in-patient care while both public and other facilities are usednear equally for out-patient care services. The extent o f utilization o f health services by different expenditure groups as reported inthe NSSO surveys reveals that the poorest 20 percent account for less than 20 percent o f the treatments availed and indicates the unequal access to health facilities by the poorest. The other dimension o f the NSSO surveys is the increasing vulnerability o f the children and elderly to the illnesses. Children (below 14 years) account for a substantial proportion o f cases treated for minorhhort duration ailments whereas the elderly (60 years & above) account for a larger share o f cases treated for major illness. Financial Sustainability The State currently spends about Rs.12,000 million annually on health. Ofwhich, the spending on capital account is about Rs.350 million only and the rest being recurrent expenditures. The project finding will be about Rs.4530 million spread over a period o f five years covering largely the capital investments. Inthe total health spending o f the State, the project will supplement the state budget on health and family welfare to the extent o f 8.37 and 8.99 percent inyears 1 and 2 (Table 8). Year Projected Project Fund Project fund as YO State Outlay o f State Outlay - 64 -  Subsequently the shares decline to 6.94,2.39 and 2.04 percent inyears 3,4 and 5 both on account o f increasing state spending innominal terms as well as by the very nature o f the project design. As the proposed civil works o f the project will be over by the end o f the project period, the state will not have any financial liability on account o f this after the project i s over except for the recurrent cost. The recurrent cost o f the project will be about 0.7 percent (Rs.156.98 million) o f the state's recurrent health budget (Rs.23750 million - projected) at the end year o f the project period. Since the recurrent healthbudget o f the state recorded an average growth rate o f about 15 percent per annum during 1980-81to 2000-0 1, the additional financial liability o f 0.7 percent due to recurrent project cost will not impact the state's health budgetto any significant level. SummaryandImplications The declining trend inthe allocations to public health programs needs an immediate reversal, particularly in a state like Rajasthan where the cost o f provision o f these services will be larger. The prevailing socio-economic and demographic conditions o f the State reinforce the fact that investment` spending by the State on public health programs i s crucial. The performance and functioning o f the Medical Relief Societies can further be improvedby conferring them with more autonomy, power and institutionalization. This would also ensure the sustainability of these societies inthe long run.Since the revenues generated inthese societies ease the pressure on general budgetary resources, State funds may be reallocated to improve other essential health services to improve the delivery and quality o f services. Functioning o f the societies could be strengthened by adding certain services, operating a full fledged medical store, ambulance, canteedcatering facility, telephone, etc., to augment resources. Extensive BCC would help both the patients and the societies inimprovingthe quality o f services and also the scale o f operation o f the society. Fundpooling mechanism could be triedout as the poor are already incurring substantial out-of-pocket expenses for health care. Through effective BCC, an attempt could be made to solicit the active involvement o fpoor households inthe fimd pooling mechanism. Capital expenditures inthe health sector have been abysmally low inRajasthan duringthe 1980s as well as 1990s. They account for less than three per cent o f the total health sector expenditure. This implies no new investments or expansion o f health facilities inthe State. The growing population and the consequent demands on services requires an expansion inthe facilities available. Iffacilities are not expanded, there will be over crowding leading to deterioration inquality, Therefore, attempts should be made to enhance the spending undercapital account o f the budget. - 65 -  ~~~ Annexure 1 Constituents of P mary, Secondary and Tertiary Care Services Primary Care Services Secondary Care Servics 1 Primary Health Centres 1 Employees State Insurance Scheme 2 Health Sub-centres 2 Central Government Health Scheme 3 Other Health Services 3 Hospital and Dispensaries 4 School Health Schemes 4 Community Health Centres 5 Tuberculosis Institutions Tertiary Care Services 6 Ayurveda - Other Systerms 1 Attached to Teaching Institutions 7 Homeopathy - Other Systems 2 Major Hospitals 8 Unani -Other Systems 3 Allopathy Med.Edn, Tr,Research - 9 Sidha - Other Systems General 10 Other Systems 1 Direction and Administration 11 Public Health 2 Health Stat, Research, Evaluation & Trng 12 Family welfare 3 Medi.Stores Depot & DeptLDrug Mfgrs 4 Tribal Area Sub-Plan 5 Other Expenditures 6 Assist.to local bodies, corporates, etc. States 1985-86 1991-92 1993-94* 1998-99 - 66 -  States Primary Secondary Tertiary General Total - 67 -  States Primary Secondary Tertiary General Total -68 -  Annex 5: Financial Summary INDIA: RAJASTHAN HEALTH SYSTEMS DEVELOPMENT PROJECT Years Ending June 30 (FY) 1 IMPLEMENTATION PERIOD Year1 I Year2 I Year3 Iyear4 1 Year5 1 Year6 I Year 7 Total Financing Required Project Costs Investment Costs 4.3 16.6 20.5 18.5 9.3 4.6 0.0 Recurrent Costs 2.1 4.8 7.3 7.4 6.2 4.4 0.0 Total Project Costs 6.4 21.4 27.8 25.9 15.5 9.0 0.0 Total Financing 6.4 21.4 27.8 25.9 15.5 9.0 0.0 Financing IBRDllDA 4.4 18.6 24.5 22.5 12.4 6.6 0.0 Government 2.0 2.8 3.3 3.4 3.1 2.4 0.0 Central 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Provincial 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Co-financiers 0.0 0.0 0.0 0.0 0.0 0.0 0.0 User FeeslBeneficiaries 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total Project Financing 6.4 21.4 27.8 25.9 15.5 9.0 0.0 Main assumptions: - 69 -  Annex 6(A): Procurement Arrangements INDIA: RAJASTHAN HEALTH SYSTEMS DEVELOPMENT PROJECT Procurement 1. Procurement: The procurement arrangements to be undertaken inthe project will be the responsibility mainly o f the implementing agency -Project Management Unit (PMU) inthe Department o f Medical Health and Family Welfare, Government o f Rajasthan, Jaipur inaccordance with the Bank Procurement / Consultancy Guidelines and procedures. The project would be for a period o f five years andwould address key policy issues at the primary and secondary levels o f health care inRajasthan with special focus on enhancing the performance o f the health systems and improving outcomes for the poor and vulnerable. To meet these objectives the project envisages renovations and extensions o f 238 hospitalbuildings, procurement o f medical equipment, office and other equipment, furniture, vehicles, medicines, hospital / Information, Education and Communication (IEC) materials and supplies, consultancy services, training and workshops, IEC services, etc. Procurement o f Works, Goods and Services would be done mainly at State Level by PMU, through Equipment Procurement & Maintenance Cell (EPMC) and Engineering (Civil Works) Cell. Procurement o f works and small value items will be undertaken by the District Project Management Cells (DPMC). Major procurement o f goods/equipment/drugs will be at State level through procurement consultant-Ws. Hindustan Latex Limited(HLL),selected on single source basis for year 1-3. For preparation o f structural drawings andbiddingdocuments o f civil works for year 1o f the project, Ws.IndianInstitute o f Health Management and Research (IIHMR), Jaipur has been selected on single source basis. For civil works for years 2-4, procurement consultant would be selected through competitive process under quality and cost based selection (QCBS) following the World Bank Consultancy Guidelines. Contracts equivalent o f IndianRupees 50 million (US $1.066 million approximately) each or less will be awarded by P M U through its procurement committee comprising o f Project Director (Chairman), Additional Project Director (Member), Financial Advisor & Chief Accounts Officer (Member), Technical Officer -WorkdEquipment etc. (Member), and Head o f EPMC (Member Secretary). Procurement plan o f all five years o f the project are inplace and its implementation would be reviewed every six months with review o f procurement schedule every year. Biddingdocuments for procurement o f goodslequipmentlworks are under preparation by the consultant firms and are expected to be ready by effectiveness o f the project. A. CivilWorks: Civil works under the project will be implementedby the Engineering (Civil Works) Cell, under the project implementationunit. Mainly renovation, extension and repair of 238 hospital facilities (28 district hospitals, 23 sub-divisional hospitals, 113 community health centers at sub-divisional level, 72 community health centers within the blocks and 2 block primary health centers) and civil works relating to Health Care Waste Management Program (HCWMP) o f the hospitals are envisaged inthe project. Although there i s no new major hospital construction under the project, one PMUOffice Buildingi s to be constructed. Total value o f civil works i s $28.80 million. Civil works will be carried out infour phases i.e. 27 hospital facilities and P M U office buildinginthe first year, 42 hospital facilities inthe second year, 89 facilities inthirdyear andremaining 80 facilities in the -70 -  fourth year of the project. All these works (total estimatedcost: $27.63 million), inthe range o f $0.03 million to $0.76 million, will be procured following National Competitive Bidding(NCB) procedures. Renovation o f existingPMU office and civil works for health care waste management for 401health facilities estimated to cost $1.17 million, inthe range of $0.002 million to $0.028 million, will be undertaken inthe first year of the project following National Shopping (NS) procedures. B. Goods: The EquipmentProcurement and Maintenance Cell (EPMC) inPMUwill manage the procurement o f goods, equipment under the various sub-project components. Procurement of goods (Medical /Office and Other Equipment, Furniture,Vehicles, Medicines, Hospital Supplies and MIS/ IEC Materials) would be phased on an annual basis to synchronize with the project / construction activities. (i) MedicalEquipment: There are 105 items to beprocured duringyear 2 -4 ofthe project. Some of these include :- X-Ray machines; Ultrasound Scanners; ECG Machine; OperationTable; Autoclaves; Blood Gas Sterilizer; Microscopes; Incubators; Centrifuges; Weighing Machines etc. Total value of medical equipment would be $10.43 million. Inall there will be 136 packages consisting o f 13 ICB packages(total estimated cost: $6.16 million) inthe range o f $0.10 million to $3.41 million, 47 NCB packages (total estimated cost: $3.38 million) inthe range of $0.01 million to $0.20 million, and the remaining 76 National Shopping packages (total estimated cost: $0.89 million) inthe range o f $0.0004 millionto $0.029 million. (ii) Office & Other Equipment: Inall 50 items are to beprocuredduringthe firstthree years ofthe project. These are computers, printers,air-conditioners, refrigerators, fax machines, typewriters, photocopier, desert coolers, EPABX, LCD/OverheadProjectors, generators and weighingmachines etc. Total estimated cost i s US $2.21 million. There will be 50 packages consisting o f 18 NCB packages (total estimated cost: $1.95 million) inthe range o f $0.03 million to $0.25 million and 32 NS packages(total estimated cost: $0.26 million) inthe range o f $0.0004 million to $0.03 million. (iii)Office&HospitalFurniture: Furniture consisting of chairs, tables, metal shelvingcabinets, side racks, computer tables, mattresses and pillows, galvanized buckets, bedpans etc. for P M U and strengtheningand upgrading o f health facilities at a total cost o f $2.33 million will be procured under the project. There will be 88 packagescomprising of 22 NCB packages(total estimated cost: $1.77 million) inthe range of $0.03 million to $0.21 million and 66 N S packages (total estimated cost : $0.56 million) inthe range of $0.0002 million to $0.029 million. (iv)Vehicles: Only two vehicles inthe first year of the project costing $0.02 million are to be procured for use inP M U following NS procedures or underDirectorate General Supplies and Disposals (DGS&D) rate contract. (v) Medicines: - 71 -  Medicines would be procured by PMUunderNCB procedures and by each o f the 238 hospitals following NS procedures during the five years o f the project at a total cost of $8.48 million. About 34 medicines would be procuredand there will be 98 NCB packages (total estimated cost: $4.35 million) inthe range of $0.0013 million to $0.13 million and 72 N S packages (total estimated cost: $0.63 million) inthe range of $0.00085 million to $0.027 million. The hospitals will be given a budget dependingupon its bed strengthfor procurement o f day to day requirements of essentialI emergency drugs by three quotations method (per monthbudget of hospitals would be- $80 for 50 bedded, $320 for 100beddedand $800for 150 bedded& above. Total budgetwill be US $3.50 million for entire five years period o f the project.) (vi) Hospital Supplies: Inall49 items consisting ofIVCannula sets, disposable syringes & needles, bandages, bed sheets, caps, masks, aprons, gloves, rubber sheets, dental materials, Intra ocular lenses, plastic binsI bags ofvarious colors, protective gloves / boots etc., at atotal cost of $8.18 million, are to be procuredunderthe project. There will be 63 NCB packages(total estimated cost: $4.69 million) inthe range o f $0.0014 to $0.17 million and 1112N S packages (total estimated cost: $3.49 million) inthe range o f $0.0017 million to $0.029 million. (vii) Management Information System (MIS) & Information, Education & Communication (IEC) Materials: MIS I IEC material to be procuredincludes MIS formats, operation manuals / guidelines for MIS I hospital waste managementI maintenance of equipment,referral and feedback cards, signboards I posters, hoardings and leaflets etc. at a total cost o f US $2.04 million. There would be 10NCB packages (total estimated cost: $1.24 million) inthe range o f $0.034 million to $0.21 million and 1182NS packages (total estimated cost: $0.80 million) inthe range o f $0.0006 million to $0.0016 million. C. Services: Procurement o f Services plannedfor a range o f project activities which include hiringo f professional services, personnel on contractual basis for the project implementation unit as well as for DPMCs, training and workshops, Information, Education and Communication (IEC), studies and evaluations andother consultancy services. (i)ProfessionalServices: Professional services would be hiredfor preparation o f design (structural) drawings, preparation o f bidding documents, evaluation of bids and award of contracts, procurement management and field supervision of civil works, inspection o f goods I equipment,and management o f training programs (total estimated cost : $5.23 million). These services will be hiredfollowing single source (estimated cost: US $0.04 million) and quality and cost based selection (QCBS) methodo f selection (estimated cost: $5.19 million). (ii)ContractualServices: - 72 -  Services o f professionals (Health Specialist, Public Health Specialist, Chartered Accountant, Financial Consultant, Consultant Training and Human Resources, Data Entry Operators etc. - total 51numbers) would be hired on contractual basis for all the five years o f the project for the PMUas well as DPMCs. Total number ofpackages would be 255 (total estimated cost : $0.66 million) inthe range o f $0.0018 million to $0.0077 million. (iii)Training: To improve the quality and effectiveness o f clinical services inthe project hospitals, regular periodic in-service training has been planned for all categories o f staff. The training includes training o f trainers, clinical and managerial training, training for health management information system (HMIS) I health care waste management (HCWM) / equipment maintenance I rational use o f drugs and behavioral change communication (BCC). There will be total 19 packages covering 11programs (total estimated cost: $5.73 million) inthe range o f $0.016 million to $13 2 million. Inall 22,300 personnel will be trained in-house and/ or inthe professional institutions to be hired under single source method o f selection being specialized trainings. (iv) Workshops: Workshops under the project will be held for annual consultations at the state and district level and for developing various guidelined protocols, for sensitization and meetings etc. These workshops will be arranged either in-house with technical assistance from the consultants or by hiringprofessional consultant firms. A total of 15,806 workshops I meetings are proposed to be arranged duringthe entire project period (total estimated cost : $3.61 million). Total cost of in-house workshops I meetings would be $3.24 million and those to be arranged by the consultant firms and individuals would cost $0.37 million: under single source ($0.11million), QCBS ($0.24 million), and by individuals ($0.017 million). (v) Information,Educationand Communication(IEC): To make the people at large knowledgeable about the changes that have taken place inthe project hospitals I centers, messages through leaflets, radio, T.V., and street folk plays have to be relayed. Inaddition, to improve health seeking behavior inthe community, IEC services will be hired at the district level as well as state level. These services will be hiredunder single source and the total number o f packages would be 330 (total estimated cost : $0.53 million) in the range o f $0.01 million to $0.02 million. (vi) Studies andEvaluations: The scope under the project includes base line andpolicy research studies, mid-term and end term evaluations and various reviews, patient satisfaction survey, study o n rationale use of drugs etc. A total o f 75 studies I evaluations (8 under QCBS at a cost o f $0.17 million, 25 under QBS at a cost o f $0.87 million, and 42 by individuals at a cost o f $0.43 million) will be carried out during the entire project period (total estimated cost : $1.47 million) inthe range o f $0.005 million to $0.053 million. (vii) Fellowships: - 73 -  For upgrading the skills o f Specialists andto broaden their perspective to recognize the health care needs o f the community, provision has been made inthe project for fellowships in specialized institutions. The total estimated cost i s $0.43 million for about 100 fellowships on single source basis inthe range o f $0.002million to $0.017 million. (viii) Other ConsultancyServices: Various consultant services are required for technical assistance to the project implementation unit. These include designing, developing andimplementinghospitalmanagementinformation system, external revalidation o f data, technical assistance for health care waste management, development o f guidelines for maintenance o f equipment and referral protocols, appointment o f NGOsfor implementing IECBCC activities, developing and implementing CBHI pilot scheme, contracting local private doctors, and operating the contracting program andpilot contracting implementation. Total estimated cost o f these services i s expected to be $4.70 million. Services o f 448 individuals (total estimated cost: $0.82 million) and 143 consultant f u n s { 130 under QBS at an estimated cost o f $2.84 million (NGOs - $2.37 million, and Others - $0.47million), 11under QCBS at an estimated cost o f $1.04 million and 2 under single source at an estimated cost o f $0.004 million} will be hired underthe project. D. Miscellaneous: This involves operational expenses for all the components o f the project and would include office operations and consumables ($5.10 million), operationi hiring/ maintenance o f vehicles ($0.93 million), maintenance o f buildings($1.77 million), maintenance o f equipment ($3.35 million), maintenance o f furniture ($1.50 million), and hiringo f common hospital waste treatment facilities ($0.48 million). Contracts for consumables, hiringo f vehicles and hospital waste facilities, andmaintenance o f vehicles/ buildings/equipmenu furniture would be procured on the basis o f direct contracting or national shopping (three quotations) depending upon the situation. Value o f each contract i s estimated below U S $10,000 equivalent. E. BiddingDocuments: Contracts for I C B andN C B will be awarded by the Procurement Agents while procurement under National ShoppingDirect Contracting will be done by the hospitals. Standard BiddingDocuments, as finalized by the Government o f India Task Force and agreed with the Bank would be used for all I C B and N C B contracts. These are D-1 (new), E-1, E-4, E-6 and W-9. Contracts for National Shopping i.e. by obtaining at three quotations would be concluded based on the formats developed by N e w Delhi Office (NDO) Procurement Unitand approved by the Bank. These are E-5,W-5 and W-6. Similarly, Request for Proposals (FWP) for consultancy services for different assignments which are based on Bank's Standard FWP and available with NDO Procurement Unit o f the Bank shall be adopted. Formats o f letter o f agreements for short term / long term assignments o f individual consultants as well as RFP for small assignments for f m s as per Bank's New Delhi Office model documents shall be adopted. These are C-8 (Lump Sum), C-9, C-10, C-13, C-l3/PFC. F. For the itemdworks to be procured under national shopping procedures, direct contracting, andlor by three quotations, the norms for such procurement i.e. procedure to be followed, range o fprices and - 74 -  acceptable I preferable brandnames etc. shall be clearly indicatedinthe guidelines to be issued by PMUto the DPMCs for following them while procuring the itemslworks. The auditors appointed under the project, apart from the usual financial aspects, should also audit the procurement and comment whether stipulated national shoppinglthree quotations procedures were followed. G. Cost estimates o f the civil works, items to be procured, estimates o f bidpackages for procurement o f works I goods I equipment & consultancy services, details o f value o f works I goods I equipment I consultancy services for each year o f the project andprocurement schedules o f works1 goods1equipment & consultancy services for all the five years o fthe project are attached with the Project Implementation Plan (PIP) o f the borrower (Government o f Rajasthan). H. Post Award Review: Because o f the nature o f this operation, a large number o f contracts would be below prior review limits. It i s expected that the project will have about 40,150 contracts over a five year period. Except a few contracts, all other contracts will be in the range o f US $200 to $30,000. The project itselfprovides for a self audit to be conducted by independent auditors hiredby the Borrower for expenditures as well as procurement reviews for contracts under national shopping procedures. The normal Bank's requirement o f ex-post review o f 1 in 5 contracts for a highriskproject, can not be achieved inthis project due to resource constraints, since annual budget allocations only allow for a total o f roughly 1,000 ex-post contract reviews for the entire India Portfolio. Given the sheer numbers o f contracts envisioned inthis project, the Bank's resource constraints, the mitigating effect o f the self audit and technical audits mentionedabove, we consider the "benchmark" review level o f 1in5 contracts to be excessively large for this type o foperation. Inadditionto a review o fthe independent self-audit reports called for inthis project, Bankstaffwill also conduct post awardreviews during supervision missions. These reviews will be periodically supplemented by an appropriate allocation o f random ex-post reviews conducted by consultant firms engaged by the Region for post award review coverage on the Indiaportfolio as a whole. Procurement methods (Table A) IDA Financed Works and Goods will be procuredinaccordance with Bank Guidelines -Procurement under IBRDLoans and IDA credits [January 1995, revised January and August 1996, September 1997 and January 19991. IDA Financed services will be procured using Bank Guidelines - Selection and Employment o f Consultants by World Bank Borrowers (January 1997, revised September 1997, January 1999 and May 2002). Attachment 1to this Annex summarizes the procedures for undertaking procurement on the basis o f National Competitive Bidding(NCB). Specific Procurement Arrangements summarized inTable 'A' are as follows : 0 Each contract for works valued US $30,000 equivalent or less may be procured through direct contracting or calling at least three quotations or force account. 0 Each contract for works valued more than U S $30,000 equivalent may be procured through National Competitive Bidding. - 75 -  Contracts for the procurement o f goods I equipment valued more than US $250,000 equivalent each may be procuredthrough International Competitive Bidding(ICB). Contracts for the procurement o f goods I equipment valued more than US $30,000 equivalent but equivalent o f U S $250,000 or less may be procured on the basis o f N C B procedures acceptable to IDA. Items or groups o f items valued U S $30,000 equivalent or less per contract may be procured on the basis o f National Shopping procedures. Other items or small groups of items such as furniture, equipment, materials and other supplies valued at less than U S $30,000 equivalent per contract may be procured through direct contracting. Contracts estimated to cost an equivalent of US $10,000 or less per contract for maintenance o f buildings/ equipment I vehicles / furniture, hiringo fvehicles/ hospital waste treatment facilities and office consumables may be awarded through : --- National Direct Contracting; or Shopping for equipment etc, and Three quotations for buildings Table A: Project Costs by ProcurementArrangements (US$ million equivalent) Total 6.53 47.10 52.35 0.00 105.98 (6.53) (39.14) (43.33) (0.00) (89.00) Includescivil works and goods to be procuredthrough three quotations, and goods through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lendingproject funds to local government units. - 76 -  Table A I: Consultant Selection Arrangements (optional) (US$ million equivalent) I"Includingcontingencies Note:QCBS = Quality- and Cost-BasedSelection QBS = Quality-based Selection SFB = Selection under a Fixed Budget LCS = Least-Cost Selection CQ = Selection Based on Consultants'Qualifications Other = Selection of individual consultants (per Section V of Consultants Guidelines), Contractual Services, Single Source Selection, and Commercial Practices, etc. N.B.F. = Not Bank-financed Figures in parenthesesare the amounts to be financed by the Bank Credit. - 77 -  Prior review thresholds (Table B) 0 All contracts for works with an estimated value o fmore thanUS $500,000 equivalent. 0 All contracts for goods /equipment with an estimated value ofmore than U S $250,000 equivalent. 0 Two N C B year 1contracts for works valued more than US $30,000 equivalent but less than US $100,000 equivalent. 0 Three N C B contracts (two inyear 1 and one inyear 2) for works valued more than U S $100,000 equivalent but less than U S $500,000 equivalent. 0 Two N C B contract for goods and eleven contracts for pharmaceuticals valued more than U S $30,000 but less than US $250,000 equivalent. 0 Consultant's contracts with an estimated value o f US $100,000 equivalent or more for firms and U S $50,000 equivalent or more for individuals. Table B: Thresholds for Procurement Methods and Prior Review' Contract Value ect to Threshold W Expenditure Category (US$ thousands) s) I. Works Each Contract o f 3vil Works US$30,000 equivalent or less may be executed by: (i) contracting; or direct Direct Contracting Post review only (ii) thebasisof on Solicitation o f three bids Post review only comparison o f price quotations obtained from at least three qualified contractors eligible under the guidelines; or (iii) by Force Account, as a Force Account Post review only last resort, ina manner satisfactory to the association Civil Works estimated to National Competitive Medical/Office Equipment, cost the equivalent o f more Bidding(NCB) Furniture, MIS/IEC than US$30,000 per materials, Medicines, and contract. Hospital Supplies Prior review o f five contracts below US $500,000 and all contracts above U S $500,000 equivalent. - 78  Value of 6 prior review contracts : US $2.40 million.. All others by post review. :ontracts estimated to cost National Shopping (NS) Post review only MedicaVOffice the equivalent of US Procedures or Directorate Equipment, Furniture, MIS/IEC materials, $30,000 or less per General o f Supplies & Medicines, and Hospital contract may be executed Disposals (DGS&D) Rate Supplies by:National Shopping Contracts. (NS) procedures. U S $250,000 or less per National Competitive Prior review o f certain sontract but more than US Bidding (NCB) contracts below $30,000 equivalent. US$250,000 but above US$30,000, value of prior reviewed contracts of US$0.65 million. All others by post review. More than US $250,000 International Competitive Prior review of all per contract Bidding(ICB) :ontracts costing more thar U S $250,000 each. Value of 13 ICB prior review :ontracts US$.6.15 million All others bypost review Prior review o f 13 contracts valued at US $6.15 million. All others bypost review Professional Services, Quality & Cost Based Consultancy Services and For firms; US $200,000 Prior review o f 13 IEC Services equivalent or more per Selection contracts valued at U S contract $4.96 million All others bypost review Training & workshops, IEC services, Studies and US$200,000equivalent or QCBS method o f selection Evaluations, Contractual less per contract with short list (may Prior review o f all services and other consultancy services :omprise o f entirely national contracts above U S - 79 -  consultants) $100,000 equivalent for f m s and above US $50,000 equivalent for individuals Prior review of one (1) contract valued at US $0.12 million.. Training & Workshops, IEC Services, Studies All others bypost review and Evaluations, US$lOO,OOOequivalent or (i) methodof QCBS Contractual Services and less per contract for firms ;election with short list (may other consultancy mdUS $50,000 equivalent comprise o f entirely Prior review o f all services and less per contract for national consultants) contracts above US individuals $100,000 equivalent for (ii) BasedSelection Quality f m s and above US (QBS) as per paragraph 3.2 $50,000 equivalent for o f Bank's Consultant's Individuals. Guidelines. Value o f Prior review NIL. (iii) Consultant's Qualifications as per All others bypost review paragraph 3.7 o f Bank Consultants Guidelines. (iv) Single Source Selection IS per paragraph 3.8 to 3.1 1 o f Bank's Consultants Guidelines. (v) Service o fDelivery Contractors as per paragraph 3.19 o f Bank's Consultants Guidelines. (vi) Individual Consultants as per Section V o f Bank's Consultants Guidelines 4. Miscellaneous Each contract for hiringo f Incremental operating vehicles/hospital waste costs treatment facility, maintenance o f buildingsI equipmend vehicles/ furniture and supply o f consumables estimated to cost the equivalent of US$lO,OOO or less per - 80 -  contract may be awarded by: Direct contracting Post review only (i) contracting;or direct Solicitation of three Post review only (ii) thebasisof on quotations. comparison o f price quotations obtained from at least three qualified contractorsisuppliers eligible under the guidelines; or Force Account Post review only (iii) Account,asa Force (Departmental Work) last resort 5. Miscellaneous m Total value of contracts subject to prior review: US$14.28 million Overall Procurement Risk Assessment: High Frequencyof procurement supervisionmissionsproposed: One every 6 months (includes special procurement supervision for post-reviewiaudits) Ifneeded, frequency of procurement supervision can be increased. ATTACHMENT-1 IDA FinancedWorks and Goods willbe procuredinaccordance with BankGuidelines -Procurement under IBRDLoans and IDA credits [January 1995, revisedJanuary and August 1996, September 1997 and January 19991. IDA Financed services will be procuredusingBank Guidelines - Selection and Employment of Consultants by World Bank Borrowers (January 1997, revised September 1997, January 1999 and May 2002). All National Competitive Bidding(NCB) contracts to be financed from the credit under the project would follow procedures satisfactory to the IDA, which are: [11 Only the modelbiddingdocuments for NCB, agreed with the Government o f India Task Force (and as amended from time to time), shall be usedfor bidding. [2] Invitations to bid shall be advertised inat least one widely circulated national daily newspaper, at least 30 days prior to the deadline for the submission o f bids. [3] N o special preference will be accorded to any bidder when competing with foreign bidders, state-owned enterprises, small-scale enterprises or enterprises from any given State. [4] Except with the prior concurrence o f the Association, there shall be no negotiation o fprice with the bidders, evenwith the lowest evaluatedbidder. -81 -  [5] Except in cases o f force majeure and/or situations beyond control o f Government o f Rajasthan, extension o f bidvalidity shall not be allowed without the prior concurrence o f the Association (i) for the first request for extension ifit i s longer than eight weeks; and (ii) for all subsequent requests for extension irrespective o f the period. [6] Re-bidding shall not be carried out without the prior concurrence o f the Association. The system o f rejecting bids outside a pre-determined margin or "bracket" o f prices shall not be used. [7] Rate contracts entered into by Directorate General o f Supplies & Disposals (DGS&D), a Central Purchase Organization o f Government o f India, will not be acceptable as a substitute for NCBprocedures. Such contracts will be acceptable for any procurement under National Shopping procedures. "Thresholds generally differ by country and project. Consult "Assessmentof Agency's Capacity to Implement Procurement" and contact the Regional ProcurementAdviser for guidance. -82 -  Annex 6(B): Financial Management and Disbursement Arrangements INDIA: RAJASTHAN HEALTH SYSTEMS DEVELOPMENT PROJECT FinancialManagement 1. Summaryofthe FinancialManagementAssessment The project would have a financial management system which would be able to adequately account for and report the project resources and expenditures. Country SpecificIssues Generic country level issues and specific resolutions underthe project are discussed below. (a) GOR's existing accounting systemconcentrates mainly on book keeping and transactional control over expenditures andthere i s little by way o f a concept o f financial management information being used for decision making. However, a separate projectfinancial management system has been designedfor theproject to address this issue which will enable generation of reliable & timelyfinancial reports for enabling managerial decision making. The issue of availability o f funds on a timely basis to the project implementing entity. A separate PD accountfor theproject would be opened in which creditfor three months requirement of funds would be given in advance every quarter and separate bank account would be openedfor the implementing agency( both at the PMU and in the DPMC's) and one months fund requirement would be available in theproject bank account at any point in time. I t was also confirmed by Additional Chief Secretary (Finance) that govt. contribution in Externally Aided Projects (EAP) where the govt's share is not more than 20 -25%would not be a constraint andfurther that externally aidedprojects are not subject to any embargo on the release of funds for theproject. (c) Quality andtimeliness o f audit reports as the audit: It has been agreed with the C & AG that theprojectfinancial statementsgenerated /prepared by theproject would be audited in accordance with the TORagreed with IDA and consented to by the C & AG 's ofice. (d) The following country issue with respect to non-availability o f the project financial statements does not apply: Theproject wouldprepare project financial statements- sources and uses of funds, initially manually using an off the shelfpackage at the PMU and manual records at the districts and subsequently using the computerized Financial Management System. StrengthsandWeaknesses Strengths The project has the following strengths inthe area o f financial management: 0 It is proposed that PMUo f the project (where over 70% o f the project expenditure would be incurred) would be staffed with personnel who have been exposed to Bank financed projects inthe health & family welfare divisions. 0 a project finance manual has been prepared which details the accounting policies, procedures & - 83 -  processes, operation o f the project financial management system, reporting arrangements etc. and will serve as a guide to the project accounting staff. Signijkant weaknesses Significantweaknesses Mitigation Staffing: Staffing for finance function at A full time FA & CAO has been appointed for the P M U needs to strengthened. P M U andhe would be supported by a full time qualified accountant as Finance Manager. An existingaccounting systemwhich Initially a simple FMS with required levels o f primarily focuses on book keeping, and not computerization at the P M U and manual system at on financial management ' the districts will be developed under the project to capture the fmancial information and generate periodic financial reports. A CFMS will be designed and developed for the project inthe fist year o f the project. A Finance Manualwhich focuses on financial reporting and monitoring has been fmalised for the m-oiect. ImplementingEntitv Refer to Section E:4.1 and 4.2 o f the main text o f the P A D ( Institutional Arrangements) for detailed description. FundsFlow Refer to Section E: 4.4 o f the main text o f the PAD ( Financial Management issues) for detailed description. Finance Staffing & traininp Refer to Section E: 4.4 o f the main text o f the P A D ( Financial Management issues) for detailed description. Budpeting The project would be budgeted under identifiable budget head items (established specifically for the project) through the DOMHFW's (GOR) budget which would suitably designed inlink the with components /activities o f the project. This will facilitate inmonitoring and controlling the project expenditures. The annual budget would be based on the annual work program at the State PMU and the requirements o f the districts inrespect o f their specific annual work plans. Based on the costs and details available ,the majority o f the project costs are expected to be incurred (about 70% o f the project costs) at the State level by the Project Management Unit (PMU) set up within DOMHFWunder the project. This would include a majority o f the expenditures inrespect o f procurement o f goods and equipment required under the project and all the major civil works. The civil works i s proposed to be carried out by a inhouse Engineering (Civil Works) Cell who would engage contractors to design and execute the civil works. The procurement would be carried through a combination o f in-house cell (Engineering and Procurement Cell- EPC) and procurement agent. All the 32 districts in the state (by way o f District Project Management Cells- DPMC's also within the DOMHFW) would participate under the project. The procurements agents would send the certified copy o f the invoices/ running bills and other relevant supporting documents to the P M U for approval and payment/ settlement o f advance. The expenses incurred at the district level would include part o f the training & workshops, minor equipment supplies, small civil works and other incremental operating expenses. - 84 -  Books of accounts and Accountiw Policies& Procedures The project costs incurred at the P M U andthose incurredby the Procurement AgentJs for civil works and equipment would be recorded inthe books o f the P M U at DoHFW inaccordance with procedures and policies prescribed inthe Finance manual. The accounting policies & procedures and the formats for existing financial reports for GOR are captured in the various accounting forms (`Books o f Forms'), cash book, the reports, the public works account code, the PWDmanual andGeneral Financial& Accounting Rules (GF& AR) as issued from time to time. These policies and procedures are exhaustive and capture the requirements o f the A.G., Department o f Finance and other stakeholders requiring financial information. These guidelines also lay down the internal control procedures and the formats o f the reports and books o f accounts. In spite o f an well established system o f accounting and reporting the expenditures, this system, however, has no established method for capturing physical information and integrating / linking it with the financial information. A FinancialManagement System (FMS), for the project has been designed to accurately recordandtimely report the project expenditures at the aggregate project level within the overall reporting system as required within the government. Expenses would be recorded on a cash basis and would broadly follow the government classifications, project components and activities for ease inreporting to various stakeholders. An offthe shelf accounting software (TALLY ) has been installedat the PMUto facilitate maintenance of the books o f the accounts and preparation o f financial statements. Standardbooks o f accounts on a double entry basis (cash and bank books, journals, fixed assets register, ledgers, work registers, contractor registers etc.) will be maintainedunder the project by the PMUand DPMC's. A finance manual laying down the financial policies and procedures, periodic & annual reporting formats including financial statements, flow o f information and methodology o f compilation, budgeting & flow o f funds, format o f books o f accounts, chart o f accounts, information systems, disbursement arrangements, external & internal audit for the project and operation o f the Financial Management System (FMS) has been prepared for guidingthe project personnel A chart o fAccounts has been developed for the project as part o fthe Finance Manual to enable data to be captured and classified by expenditure center, budget heads, project components, activities and disbursement categories. This would match closely with the classification o f expenditures and sources o f funds indicated inthe project documents (Project Cost Tables). Reportinv and Monitoring P M U will prepare the FMR's (on cash basis) inthe prescribed format and also a part o f the Financial Manual), for the project every quarter after consolidating the information received from the participating district level implementing agencies and forward it to the Bank with in45 days o f the end o f the quarter. FMR's will be used for disbursement at the option of the GO1and the GOR, after the project has demonstrated the capability o f producing consistent, timely and accurate FMRs. The Quarterly Financial Management Reports will include: 0 comparison o f budgeted and actual expenditures and analysis o f major variances, including on aspects such as sources o f funds and application o f funds (classified by components, sub-components, summarized expenditure categories); 0 comparison o fbudgeted and actual expenditure and analysis o f major variances on key physical -85 -  parametersandunitrates for selectedkey items; 0 forecastfor nexttwo quarters; and 0 informationfor procurementmanagementofmajor contracts. FMR's wouldmeet the informationneedsandrequirementsof (i) DOHFW; (ii) IDA; and (iii) the project managementandwouldalso be the basis/formatofthe annual financial statement to bepreparedby the PMU.Physicalattributes indicatingprojects'progresson various activities/componentsandprocurement status wouldbe captured inpre-designedformat on a manual basis.Initially the districtswouldbe required to reportinpre-designedexcel sheets for ease incomparison. InformationSystems The projecthas a two stage arrangement: (i) Initially theprojectwill havea hybridsystem; an off the shelf accountingpackageat the PMU (TALLY accountingpackagehas beeninstalled)andmanualaccountingrecords at the DPMC's. Pre-designedmanualreportingformats havebeendevelopedas part ofthe financial managementmanualon the basisof which the DPMC's wouldberequiredto reportto the PMU.Data canbe exportedfrom the TALLY systemto excelspreadsheetswhichwouldfacilitate preparationof FMR's, while the physical progresswill be capturedmanually. (ii) A CFMS will be developedduringthe first year ofproject implementationandimplementedbothat the PMUandthe DPMC's.It is proposedthat an existingCFMS developedfor anotherbank fundedhealth project andwhichis runningwell will be customizedto meet the requirementsof this project.A TOR has beenapprovedfor the developmentofthe CFMS. Ithasbeenagreedthat the CFMS wouldbe installedby September30, 2004. The CFMS will havethe capabilityto generateFMR's. ImDact of Procurement Arranpements The procurementofworks will be managedby the inhouse Engineering(CivilWorks) Cell andthe equipmentunder the project will be managedby a combinationofthe EngineeringProcurementCellanda procurementagent. The procurementagent will receivethe advance funds for this projectfor making paymentsto the suppliers. All the invoices and other supportingdocumentswouldbe certifiedby the procurementagent and submittedto the PMUfor liquidationof advances and accounting for the expenditure. 2. Audit Arrangements External audit: The audit arrangementsunder the projectwouldinclude, (i) a comprehensive audit report (includingconsolidatedprojectfinancial statements- sources anduses of funds by categoriesand components) inrespectof the entire project(PMUandthe participatingdistricts)by the office ofC&AG, who shall be acceptableto IDA as an independent auditor. The C & AG carries out the audit inline with the INTOSAIstandards andthis has beenacceptedby the bank. The audit wouldbe conductedby C&AG as per the terms ofreference approvedby IDA andconsentedto the C & AG, wherein an opinionon the financial statements (preparedby the project)will be givenby the C & AG. Inaddition, anauditreportfor specialaccount heldat Go1wouldalso be submittedinusualmanner. The annualproject financial statements duly auditedwouldbe submittedwithin 6 months o f the close o f GoI's fiscal year. Thus the followingaudit reportswill bemonitoredin Audit ReportsCompliance System (ARCS): - 86 -  ImplementingAgency IAudit I Auditors IAudit Date Consolidated Audit ISOEI I Comptroller & Auditor IMarch 31, each Report, P M U and the Project General o f India year; report to be DPMU's Audit submitted latest by Sept. 30. DEAI GO1 March 31, each year; report to be I submittedlatest by Sept. 30. InternaZAudit: The internal audit would be carried out by the Directorate o f Inspection-DO1 (an independent Department under the Finance Dept. headedby a Financial advisor) as per the TORfor internal audit approved by IDA and consented to by the DOI. The internal auditor i s required under the project to assess the operation o f the project financial management system, including review o f internal control mechanisms andprocurement process. 3. DisbursementArrangements GO1would open a special account with RBIto receive the disbursements under the project from the Bank. Disbursements from the IDA credit would initially be made inthe traditional system (reimbursement with full documentation andagainst statement of expenditure) and couldbe converted to the Financial Management Report (FMR) based disbursement at the option o f GO1andthe GOR after the project successfully demonstrating capacity to generate quality FMRs. Allocation of credit proceeds (Table C) Table C: Allocation of Credit Proceeds Goods, materials and supplies 27.98 100 o f foreign expenditures; 100 o f local expenditures (ex-factory cost); and 80 o f local expenditures for other items procured locally Consultant Services 9.50 90 Training, Workshops and NGO Services 12.90 100 Incremental Operating Costs 9.67 80 through September 30,2006; 70 from October 1,2006 through September 30, 2008; and 40 thereafter Unallocated 4.12 Total Project Costs with Bank 89.00 Financing Total 89.00 - 87 -  Use of statements of expenditures (SOEs): Use of Statement of Expenditure (SOE) : Disbursement will be made on the basis o f statement o f expenditure for (a) civil works for contracts not exceeding US$SOO,OOO ;(b) Goods for contracts not exceeding U S $250,000; (c) consultants for contracts not exceeding U S $100,000 for firms and US$50,000 for individuals and for (d) training, workshops and studies. Retroactive Financing: Retroactive financing will be provided for project preparation and project expenditures incurred after July 31, 2003 up to a maximum o f SDR 3 million. This will cover goods, services and operating expenditures such as salaries, equipments and other expenditures for setting up the PMU. However, as expenditure on project preparation activities till the date o f negotiations have been financed out o f funds provided from the Reproductive and Child Health (RCH) Project, the retroactive claim would not include expenditures already met out o f R C H funds. Special account: A Special Account would be maintained inthe Reserve Bank o fIndia; and wouldbe operatedby the Department o f Economic Affairs (DEA) o f Government o f India (GOI). The authorized allocation o fthe Special Account would be USD 8.0 million that represent about 4 months o f initial estimated disbursements from the IDA Credit. The Special Account would be operated inaccordance with the Bank's operational policies. The project will submit withdrawal applications on a quarterly basis to Controller o f Aid, Accounts and Audit (CAA&A) inDEA for onward submission to the Bank for replenishment o f the special account or reimbursement. Supervision Plan The project would require an in-depth supervision inthe initial year especially for ensuring successful implementation o f the state level FM and fundflow arrangements and ensuring timely audit o f the financial statements generated by the project. Midterm review would be conducted after two anda halfyears o f the project to comprehensively review the FMperformance o f the project. -88 -  Annex 7: Project Processing Schedule INDIA: RAJASTHAN HEALTH SYSTEMS DEVELOPMENT PROJECT Prepared by: Department of Medical, Health and Family Welfare, Government o f Rajasthan Preparation assistance: Savings of the Rajasthan component of the Reproductive and Child Health Project (Cr.N-018) were usedfor preparation support. Name Speciality Sadia Chowdhury Sr. Public Health Specialist Tawhid Nawaz Lead ImplementationSpecialist Preeti Kudesia Sr. Public Health Specialist G. N.V. Ramana Sr. Public Health Specialist Abdo Yazbeck Lead Economist Mam Chand Sr. Procurement Specialist Manoj Jain Sr. Financial Management Specialist Nilufar Ahmad Sr. Social Scientist Jeff Ruster Lead Private Sector Development Specialist Chiaki Yamamoto Private Sector Development Specialist Ruma Tavorath Environmental Specialist SyedAhmed Sr. Counsel Venkatachalam Selvaraju Economist Laura Kiang Operations Officer Jay Satia Consultant on Mangement andInstitutional Assessment ~DavidPorter Consultant on Biomedical Engineering Shreelata Rao-Seshadri Consultant on Tribal HealthCare Vijay Rewal Consultant on Civil Works PradeepKakkar Consultant on Communications Management Mohan Gopalakrishnan FinancialManagement Specialist Michael Ranson Consultant on Health Care Financing Nina h a n d Program Assistant Katia Visconti ProgramAssistant  Annex 8: Documents in the Project File* INDIA: RAJASTHAN HEALTH SYSTEMS DEVELOPMENT PROJECT A. Project ImplementationPlan Department o f Medical, Health, and FamilyWelfare, Govemment o f Rajasthan. April 2003. Draft Project ImplementationPlan. Department o f Medical and Health, Government of Rajasthan.November 2002. UpdatedVersion 01: Project Proposal for Rajasthan Health Systems Development Project. Departmentof Health& Family Welfare, Government ofRajasthan and IndianInstitute of Health Management Research. March2000. Project Proposal (Version-IV). Departmentof Medical & Health, Government of Rajasthan.May 1998: Project ImplementationPlan. Department o f HealthandFamily Welfare and Indain Institute o f Health Management Research, Govemment o f Rajasthan. Special Studies. B. Bank Staff Assessments Onursal, B., Setlur B. Environmental Review o f the Health Sector Portfolio inthe South Asia Region. World Bank Discussion Paper. Washington, D.C. Onursal, B., Setlur B. Environmental Review o fthe Health Sector Portfolio inthe South Asia Region. Second Part. World Bank Discussion Paper. Washington, D.C. World Bank. June 2001. Country Assistance Strategy o f the World Bank for India. Washington, D.C. World Bank. June 2000. India: Rajasthan: AvertingFiscal Crisis andAccelerating Growth. ReportNo. 20368-IN. Washington, D.C. Peters, H.P., Abdo S. Yazbeck, Rashmi S. Sharma, G. N.V. Ramana, Lant H.Pritchett, and Adam Wagstaff. 2002. Better Health for India's Poor. Washington, D. C.: World Bank. World Bank. March 2000. Project Appraisal Document for Rajasthan District Poverty Initiatives Project. Report No. 20203-IN. Washington, D.C. C. Other Department o f Family Welfare, Government of India, European Commission. AugusVSeptember, 2002. ECTA Working Papers. Department of Health & Family Welfare, Government of Rajasthan. 1999. Population Policy of Rajasthan. Department o f Family Welfare, Ministryof Health & Family Welfare, Government o f India. January 1998. Manual on Community Needs Assessment Approach inFamily Welfare Programme. Department of Health and Family Welfare, Government of Rajasthan. July 2001. Rajiv GandhiPopulation Mission. Department of Medical & Health, Government of Rajasthan. February 2000. HealthVision-2025 Rajasthan. Department o f Medical & Health, Government of Rajasthan. October 2002. Tribal Development Plan. Department o f Medical & Health, Government o f Rajasthan. October 2002. Institutional Assessment. Department of Medical & Health, Government o f Rajasthan. October 2002. Social Assessment. Department o f Medical, Health & Family Welfare Services, Government o f Rajasthan. September 2000. Policy to Encourage Private InvestmentinHospitals, Diagnostic Centres and Nursing Homes. Department o f Medical, Health, and Family Welfare, Government o f Orissa. May 1998. Project Implementation Plan. Indian Institute o f Health Management ResearchandPolicy Project. Issues inReproductive and Child - 90 -  Health Financing inRajasthan. India-Rajasthan District Poverty Initiatives Project-I (DPIP). Tribal Development Plan. International Institute for Population Sciences. 1988-99. National Family Health Survey. InternationalLabour Office. 2001. Women Organizing for Social Protection Operations Research Group Baroda. 1996. Beneficiary Assessment Study o f the Migratory Population o f Western Rajasthan. Project Management Cell, MHSDP Public Health Department, Government o f Maharashtra. November 1998. Project ImplementationPlan. Sharma S., David R.Hotchkiss. 2001. Developing Financial Autonomy inPublic Hospitals inIndia: Rajasthan's Model. Health Policy 55:1-18. Society for Education, Research& Voluntary Efforts. Maternal Health Surveillance Survey (MHSS) at SangadBlock o f the Jaisalmer DistrictinRajasthan. Tribal Area Development Department, Udaipur, Rajasthan. 2001-2002. Annual Plan for Tribal Development inRajasthan. UNICEF Rajasthan State Office. 1996. The Progress o f Districts in Rajasthan. Departmentof FamilyWelfare, Government ofIndia. March, 1997.Reproductive and ChildHealth (World BankComponent), Project Proposal andImplementationPlan, Volume-11, StateProject Implementation Plan. Sodani P. R., S. D.Gupta. 0ct.-Dec. 1998. Health Care Expenditure: Results from a Study inTribal Areas o f Rajasthan. MARGINVol. 31, No. 1. IndianInstitute o f HealthManagement Research. January 2000. StrengtheningReproductive & Child Health Finance inRajasthan. IndianInstitute o f HealthManagement Research. March 2002. EndLineEvaluation o fNinthIndia Population Project: Rajasthan. IndianInstitute of HealthManagement Research. April 2002. EndLineEvaluation o f NinthIndia Population Project: Rajasthan. IndianInstitute o f Health Management Research. 1996-1997. A Demographic and Health Survey o f Desert Districts o f Rajasthan. *Including electronic files - 91 -  Annex 9: Statement of Loans and Credits INDIA: RAJASTHAN HEALTH SYSTEMS DEVELOPMENTPROJECT 03-Feb-2004 Difference between expected and actual Original Amount in US$ Millions disbursements' Project ID F Y Purpose IBRD IDA GEF Cancel. Undisb. Orig Frm Rev'd P073369 2004 MAHAR RWSS 0.00 181.00 0.00 0.00 179.41 -7.33 0.00 PO73776 2004 ALLAHABAD BYPASS 240.00 0.00 0.00 0.00 240.00 3.33 0.00 PO79865 2004 GEF Biosafety Project 0.00 0.00 1.00 0.00 0.90 0.08 0.00 PO50649 2003 TN ROADS 348.00 0.00 0.00 0.00 334.52 -9.83 0.00 PO72123 2003 TechiEngg Quality Improvement Project 0.00 250.00 0.00 0.00 274.86 10.63 0.00 PO71272 2003 AP RURAL POV REDUCTION 0.00 150.03 0.00 0.00 155.24 17.70 0.00 PO67606 2003 UPROADS 488.00 0.00 0.00 0.00 459.75 48.32 0.00 P073094 2003 AP COMM FOREST MANG 0.00 108.00 0.00 0.00 119.02 6.94 0.00 P076467 2003 Chatt DRPP 0.00 112.56 0.00 0.00 117.44 0.43 0.00 PO75056 2003 Food & Drugs Capacity Building Project 0.00 54.03 0.00 0.00 56.66 4.78 0.00 PO50653 2002 KARNATAKA RWSS II 0.00 151.60 0.00 0.00 170.54 24.74 0.00 PO50668 2002 MUMBAI URBAN TRANSPORT PROJECT 463.00 79.00 0.00 0.00 510.31 58.34 0.00 PO50647 2002 UTTAR PRADESH WATER SECTOR RESTRUCTU 0.00 149.20 0.00 0.00 166.56 61.86 0.00 PO40610 2002 RAJ WSRP 0.00 140.00 0.00 0.00 153.65 34.35 0.00 PO69889 2002 MIZORAM ROADS 0.00 60.00 0.00 0.00 61.14 3.47 0.00 PO71033 2002 KARN TANK MGMT 0.00 98.90 0.00 0.00 113.64 13.12 0.00 PO72539 2002 KERALA STATE TRANSPORT 255.00 0.00 0.00 0.00 229.87 7.20 0.00 PO74018 2002 Gujarat Emergency Earthquake Reconstruct 0.00 442.80 0.00 0.00 361.15 289.10 0.00 PO67216 2001 KAR WSHD DEVELOPMENT 0.00 100.40 0.00 0.00 108.01 48.72 0.00 PO38334 2001 RAJ POWER I 180.00 0.00 0.00 0.00 102.58 75.41 0.00 PO59242 2001 MP DPlP 0.00 110.10 0.00 0.00 106.92 35.45 0.00 PO55455 2001 RAJ DPEP II 0.00 74.40 0.00 0.00 60.98 6.99 0.00 PO35173 2001 POWERGRID II 450.00 0.00 0.00 0.00 260.11 127.04 2.79 P055454 2001 KERALA RWSS 0.00 65.50 0.00 0.00 63.32 18.74 -6.24 PO50658 2001 TECHN EDUC 111 0.00 64.90 0.00 0.00 54.90 21.62 0.00 PO70421 2001 KARN HWYS 360.00 0.00 0.00 0.00 294.09 78.42 0.00 PO71244 2001 Grand Trunk Road Improvement Project 589.00 0.00 0.00 0.00 486.88 236.88 0.00 PO10566 2001 GUJARAT HWYS 381.OO 0.00 0.00 0.00 283.29 166.62 14.00 PO67543 2001 LEPROSY II 0.00 30.00 0.00 0.00 7.55 4.45 0.00 PO09972 2000 NATIONAL HIGHWAYS 111 PROJECT 516.00 0.00 0.00 0.00 374.31 218.89 0.00 PO10505 2000 RAJASTHAN DPlP 0.00 100.48 0.00 0.00 95.47 61.86 0.00 PO35172 2000 UP POWER SECTOR RESTRUCTURING PROJEC 150.00 0.00 0.00 0.00 20.39 15.73 0.00 PO55456 2000 IN-Telecommunications Sector Reform TA 62.00 0.00 0.00 0.00 48.47 46.41 0.00 PO59501 2000 IN-TA for Econ Reform Project 0.00 45.00 0.00 0.00 40.54 10.73 0.73 P067330 2000 IMMUNIZATIONSTRENGTHENING PROJECT 0.00 142.60 0.00 0.00 120.30 31.90 0.00 PO45049 2000 AP DPlP 0.00 111.00 0.00 0.00 81.24 21.15 0.00 P049770 2000 REN EGY II 80.00 50.00 0.00 0.00 112.24 56.90 13.45 P050667 2000 UP DPEP 111 0.00 182.40 0.00 0.00 63.05 53.57 0.00 PO50657 2000 UP Health Systems Development Project 0.00 110.00 0.00 0.00 96.35 34.34 0.00 PO45050 1999 RAJASTHAN DPEP 0.00 85.70 0.00 0.00 46.83 38.93 15.97 PO41264 1999 WTRSHD MGMT HILLS II 85.00 50.00 0.00 0.00 41.87 38.77 0.00 PO45051 1999 2ND NATL HIV/AIDS CO 0.00 191.00 0.00 0.00 73.55 48.60 0.00 PO50637 1999 TN URBAN DEV II 105.00 0.00 0.00 0.00 18.07 12.37 0.00 PO50646 1999 UP SODIC LANDS II 0.00 194.10 0.00 0.00 86.77 64.22 0.00 PO50651 1999 MAHARASH HEALTH SYS 0.00 134.00 0.00 16.96 75.00 80.63 -12 7 PO10496 1998 ORISSA HEALTHSYS 0.00 76.40 0.00 0.00 56.65 45.25 0.00 PO10561 1998 NATLAGR TECHNOLOGY 96.80 100.00 0.00 0.00 62.77 67.79 3.16 PO49385 1998 AP ECON RESTRUCTURIN 301.30 241.90 0.00 0.00 151.37 151.07 0.00 PO35827 1998 WOMEN CHILD DEVLPM 0.00 300.00 0.00 0.00 179.39 151.70 0.00 PO35824 1998 DIV AGRC SUPPORT 79.90 50.00 0.00 0.00 24.31 26.07 24.47 PO38021 1998 DPEP 111 (BIHAR) 0.00 152.00 0.00 0.00 90.45 81.12 -9.45 P036062 1997 ECODEVELOPMENT 0.00 28.00 20.00 5.86 2.19 9.64 6.07 PO10511 1997 MALARIACONTROL 0.00 164.80 0.00 46.50 49.13 94.78 20.74 - 92 -  Difference between expected and actual Original Amount in US$ Millions disbursements' Project ID FY Purpose IBRD IDA GEF Cancel. Undisb. Orig Frm Rev'd PO09584 1997 ECODEVELOPMENT 0.00 0.00 0.00 2.34 0.10 3.75 0.00 PO10473 1997 TUBERCULOSIS CONTROL 0.00 142.40 0.00 13.04 60.12 77.42 75.91 PO09995 1997 STATE HIGHWAYS I(AP) 350.00 0.00 0.00 0.00 49.81 49.81 -193.19 PO35158 1997 AP IRRIGATION111 175.00 150.00 0.00 45.00 53.30 105.78 37.45 PO44449 1997 RURAL WOMEN'S DEVELOPMENT 0.00 19.50 0.00 6.72 5.81 13.44 1.49 PO43728 1997 ENV CAPACIW BLDG TA 0.00 50.00 0.00 0.94 3.94 9.33 0.00 PO10531 1997 REPRODUCTIVE HEALTH1 0.00 248.30 0.00 0.00 68.04 59.92 59.96 PO35170 1996 ORISSA POWER SECTOR 350.00 0.00 0.00 95.00 37.09 132.09 27.43 PO10529 1996 ORISSA WRCP 0.00 290.90 0.00 0.00 45.76 68.21 41.58 PO35825 1996 STATE HEALTH SYS II 0.00 350.00 0.00 0.00 33.26 69.98 0.00 PO10461 1995 MADRAS WAT SUP II 275.80 0.00 0.00 189.30 4.23 193.53 3.89 PO10476 1995 TAMIL NADU WRCP 0.00 282.90 0.00 25.01 21.32 85.97 54.86 PO10522 1995 ASSAM RURAL INFRA 0.00 126.00 0.00 0.00 16.69 33.94 33.94 Total: 6380.80 6591.80 21.00 446.67 7943.51 3753.16 227.72 I - 93 -  INDIA STATEMENT OF IFC's Held and DisbursedPortfolio June 30 2003 - InMillions US Dollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 2003 NewPath 0.00 10.00 0.00 0.00 0.00 4.50 0.00 0.00 2003 NikoResources 30.00 0.00 0.00 0.00 20.00 0.00 0.00 0.00 2001 Orchid 0.00 6.08 10.00 0.00 0.00 6.08 0.00 0.00 1997 OwensComing 16.24 0.00 0.00 0.00 16.24 0.00 0.00 0.00 1995 PrismCement 11.25 5.02 0.00 6.00 11.25 5.02 0.00 6.00 2001 RCIHL 0.00 1.97 0.00 0.00 0.00 1.97 0.00 0.00 2001 RTL 0.00 0.45 0.00 0.00 0.00 0.45 0.00 0.00 1995198 RainCalcining 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1997 SmL 0.00 0.07 0.00 0.00 0.00 0.07 0.00 0.00 1997100 SREiI 9.50 0.00 5.00 0.00 9.50 0.00 5.00 0.00 1995 Sara Fund 0.00 5.94 0.00 0.00 0.00 5.94 0.00 0.00 2001103 Spryance 0.00 1.oo 0.00 0.00 0.00 1.oo 0.00 0.00 2000102 SundaramHome 10.90 0.00 0.00 0.00 10.90 0.00 0.00 0.00 0 TCFC FinanceLtd 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1998 TCWACICI 0.00 5.59 0.00 0.00 0.00 5.59 0.00 0.00 1990 TDICI-VECAUSI1 0.00 0.15 0.00 0.00 0.00 0.15 0.00 0.00 2002 TELCO 50.00 0.00 0.00 0.00 50.00 0.00 0.00 0.00 1981186189192194 TISCO 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2000 Tanflora Park 0.00 0.5 1 0.00 0.00 0.00 0.00 0.00 0.00 1989190194 Tata Electric 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1987188190193 Titan Industries 0.00 0.32 0.00 0.00 0.00 0.32 0.00 0.00 1989 UCAL 0.00 0.34 0.00 0.00 0.00 0.34 0.00 0.00 1996 UnitedRiceland 9.38 0.00 0.00 0.00 9.38 0.00 0.00 0.00 2002 Usha Martin 21.00 3.60 0.00 0.00 15.00 3.60 0.00 0.00 1991193196101 VARLJN 0.00 0.26 0.00 0.00 0.00 0.26 0.00 0.00 2001 Vysya Bank 0.00 3.66 0.00 0.00 0.00 3.66 0.00 0.00 1997 WIV 0.00 2.05 0.00 0.00 0.00 2.05 0.00 0.00 1988 WTI 0.00 0.20 0.00 0.00 0.00 0.20 0.00 0.00 1997 Walden-Mgt India 0.00 0.02 0.00 0.00 0.00 0.02 0.00 0.00 2002 Webdunia 0.00 2.00 0.00 0.00 0.00 0.67 0.00 0.00 1989 AEC 1.09 0.00 0.00 0.00 1.09 0.00 0.00 0.00 2002 ATL 21.36 0.00 0.00 15.00 15.68 0.00 0.00 11.56 2003 Alok 17.50 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1994 Ambuja Cement 0.00 4.94 0.00 0.00 0.00 4.94 0.00 0.00 1992193 Arvind Mills 0.00 3.39 0.00 0.00 0.00 3.39 0.00 0.00 1997 Asian Electronic 0.00 5.50 0.00 0.00 0.00 5.50 0.00 0.00 2001 BTVL. 0.00 20.00 0.00 0.00 0.00 20.00 0.00 0.00 2003 Balrampur 15.26 0.00 0.00 0.00 15.26 0.00 0.00 0.00 2001 Basix Ltd. 0.00 0.98 0.00 0.00 0.00 0.98 0.00 0.00 1984191 Bihar Sponge 0.00 0.05 0.00 0.00 0.00 0.05 0.00 0.00 0101 CCIL 9.00 0.00 0.00 10.54 9.00 0.00 0.00 10.54 1997 CEAT 19.60 0.00 0.00 0.00 19.60 0.00 0.00 0.00 1990192196 CESC 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2002 COSMO 10.00 0.00 0.00 0.00 10.00 0.00 0.00 0.00 Total Portfolio: 485.48 178.66 38.13 31.54 409.09 142.58 28.13 28.10 - 94 -  Approvals Pending Commitment F Y Approval Company Loan Equity Quasi Partic 2000 APCL 0.01 0.00 0.00 0.00 2003 BHF 0.01 0.01 0.00 0.00 2004 CIFCO 0.02 0.00 0.00 0.00 2003 Dataquest Mgmt. 0.00 0.00 0.00 0.00 2002 Escorts Telecom 0.03 0.00 0.02 0.03 2001 HDFC - Loan GI Wind Farms 0.01 0.00 0.00 0.00 2003 0.00 0.00 0.00 0.05 2003 Niko Resources 0.01 0.00 0.00 0.00 2003 SPL 0.01 0.00 0.00 0.01 2002 TELCO1 0.02 0.00 0.00 0.00 2004 LJPL 0.02 0.00 0.00 0.00 2001 Vysya Bank 0.00 0.00 0.00 0.00 Total Pending Commitment: 0.13 0.02 0.02 0.09 - 95 -  Annex I O : Country at a Glance INDIA: RAJASTHAN HEALTH SYSTEMS DEVELOPMENT PROJECT POVERTY and SOCIAL South Low- India Asia income Developmentdiamond* 2002 Population, mid-year (millions) 1,048.3 1,401 2,495 Life expectancy GNI per capita (Atlas method, US$) 470 460 430 GNI (Atlas method, US$ billions) 494.8 640 1,072 l- Average annual growth, 1996-02 1 Population (%) 1.7 1.8 1.9 Laborforce (%) 2.2 2.3 2.3 GNI Gross per + +primary Most recent estimate (latest year available, 1996-02) capita enrollment Poverty (% ofpopulation below nationalpovettyline) 29 Urban population (% of totalpopulation) 28 28 30 Life expectancy at birth (years) 63 63 59 1 Infant mortality (per 1,000live births) 67 71 81 Child malnutrition (% ofchildren under5J Access to improved water source Access to an improved water source (% ofpopulation) 84 84 76 Illiteracy (% of population age 15+) 41 44 37 Gross primary enrollment (% of school-age population) 102 97 95 Male 111 108 103 India Low-income group Female 92 89 87 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1982 1992 2001 2002 Economic ratios' GDP (US$ billions) 194.8 244.2 478.5 510.2 Gross domestic InvestmenffGDP 21.7 23.8 22.3 22.8 Exports of goods and servicesiGDP 6.1 9.0 13.5 15.2 Trade Gross domestic savingslGDP 18.3 21.8 23.5 24.2 Gross national savingsiGDP 19.2 21.8 25.5 26.3 Current account balancelGDP -2.0 -1.6 0.1 0.6 Interest paymentsiGDP 0.4 1.4 0.8 0.7 Total debUGDP 14.1 37.0 20.4 20.6 Total debt servicelexports 13.6 28.0 11.7 13.9 Present value of debffGDP 14.2 Present value of debffexports 84.7 Indebtedness 1982-92 1992-02 2001 2002 2002-06 (average annual growth) GDP 5.6 6.0 5.2 4.6 6.2 India GDP per capita 3.4 4.2 3.5 3.0 4.7 STRUCTURE of the ECONOMY 1982 1992 2001 2002 [ Growth of investment and GDP (Oh) (% of GDP) Agriculture 35.9 30.9 25.0 22.7 t0 Industry 25.8 26.7 25.7 26.6 Manufacturing 16.2 16.2 15.3 15.6 5 Services 38.3 42.3 49.4 50.7 Private consumption 69.9 65.8 65.9 65.0 General government consumption 10.7 11.2 12.5 12.5 Imports of goods and services 8.4 9.8 14.1 15.6 1982-92 1992-02 2001 2002 (average annualgrowth) Growth of exports and Imports (%) Agriculture 3.1 2.5 6.5 -5.2 30 T Industry 6.7 6.2 3.4 6.4 Manufacturing 6.5 6.6 3.6 6.2 Services 6.8 8.2 6.8 7.1 Private consumption 5.3 5.0 6.2 -0.8 General government consumption 6.1 7.1 3.0 3.1 Gross domestic investment 5.7 7.2 1.6 9.5 Imports of goods and services 5.7 12.0 4.0 8.1 ... . ... . .. ., ..... ..... . , ...,.. ~ , - - - - . .- - - - * ..,- - - -*- --.-- - - - - - .. .. ,.... - 96 -  India PRICES and GOVERNMENT FiNANCE 1982 1992 2001 2002 Domestic prices Inflation(%) 1 (% change) Consumer prices 6.7 12.6 3.1 4.3 1 "1 Implicit GDP deflator 7.7 8.8 3.9 3.5 Government finance (% of GDP, includes current grants) Current revenue 18.7 17.5 19.1 O ' 97 i 6 99 00 01 Current budget balance -3.2 -8.1 -7.4 Overall surplus/deficit ...... -7.2 -10.5 -10.9 GDP deflator - b C P I TRADE 1982 1992 2001 2002 (US$ millions) Export and Import levels (US$ mill.) Total exports (fob) 9,490 18,869 44,915 53,000 Marine products 377 602 1,237 1,381 80'oooT Ores and minerals 445 738 1,262 1,900 60 000 Manufactures 5,109 14,039 33,370 38,353 Total imports (cia 16,468 24,316 57,618 65,474 40 000 Food 1,071 507 2,043 2,368 Fuel and energy 5,957 6,100 14,000 17,640 20 000 I I Capital goods 2,662 4,532 9,882 12,746 0 Export price index (1995=100) 94 95 90 101 96 97 96 99 00 01 Import price index (1995=100) 125 96 93 100 Exports Imports O2 Terms of trade (1995=100) 75 99 97 101 BALANCE of PAYMENTS 1982 1992 2001 2002 (US$ millions) Current account balance to GDP (%) Exports of goods and services 12,377 23,599 65,580 77,986 I Imports of goods and services 18,352 27,917 73,706 84,254 Resource balance -5,975 4,318 -8,126 -6,268 Net income -335 -3,423 -3,601 -4,882 Net current transfers 2,510 3,852 12,125 14,448 Current account balance -3,800 -3,889 398 3,298 Financing items (net) 3,101 4,692 11,359 13,682 Changes in net reserves 699 -803 -11,757 -16,980 Memo: Reserves includinggold (US$ millions) 4,896 9,832 54,106 75,428 Conversion rate (DEC, /oca/lUS$) 9.7 30.6 47.7 48.4 EXTERNAL DEBT and RESOURCE FLOWS 1982 1992 2001 2002 (US$ millions) I Composition of 2002 debt (US$ mill.) Total debt outstanding and disbursed 27,546 90,264 97,516 105,210 iBRD 1,395 9,326 7,015 5,141 G:4,093 A: 5,141 IDA 6,983 15,438 20.402 21,642 I Total debt service 2,054 7,697 9,327 13,042 IBRD 172 1,395 1,372 3,029 IDA 72 267 569 637 Composition of net resourceflows Official grants 394 363 384 410 Official creditors 1,352 2,543 365 -3,657 F 51,061 Private creditors 1,180 1,563 -1,569 -1,861 Foreign direct investment 0 313 4,741 3,611 Portfolio equity 0 244 1,951 944 World Bank program Commitments 1,889 2,678 2,190 1,523 A . IBRD E Bilateral Disbursements 1,397 1,954 2,089 1,465 B IDA D-Other multilateral F Private Principal repayments 98 834 1,467 3,196 C IMF .. G Short-term --- Net flows 1,300 1,119 622 -1,730 Interest payments 146 828 474 470 Net transfers 1,153 292 148 -2,200 uevelopment tconomics Z/Y/U4 - 97 -  Additional Annex 1I: Inequities in Rajasthan INDIA: RAJASTHAN HEALTH SYSTEMS DEVELOPMENT PROJECT Rajasthan Inequities in health status and utilization of health services - The Population Policy o f Rajasthan reflects state's strong commitment to improve health status o f its population, particularly the poor and vulnerable groups including women, children, and those belonging to scheduled tribes, castes and nomadic groups. The goals set by Rajasthan are similar to the internationally committed Millennium Development Goals (Box 1). 0 Reduce InfantMortality Rate from 85 per 1000 live births in 1995 to 68 by 2007 0 Increase Institutional Deliveries from 12% in 1995 to 50% by 2016 0 Increase deliveries conduced by trained personnel from 33% in 1995 to 100% by 2005 While these goals are very relevant, they are also challenging, especially in case o f the poor. Poverty and health are intimately related, and poverty is both a cause and consequence o f illhealth (The World Bank 2001a). The objective o f the current analysis is to study the inequities inhealth status and utilization of health services in Rajasthan usinghousehold level data (National Family Health Survey 1998-99) and techniques developed by Gwatkin et al. (2000). This is followed by a discussion on policy and program options for making health services pro-poor and improvinghealth outcomes among the poor based on international experiences. The findings are summarized through a series o f questions. I.ArehealthoutcomesequitableinRajasthan? Health Outcomes -Ratio between Richest and Poorest 20% C N R IhlR UnderHeight Stunting B\lI <18.S TFR 0 0.5 1 1.5 2 2.5 The analysis suggests that like most developing countries, the health outcomes inRajasthan are much worse among the poorest 20% compared to the richest 20%. This observation holds good for infant mortality (107 vs. 55/1000 live births),under five mortality (162 vs. 69/1000), total fertility (5.1 vs. 3.3) andprevalence of malnutrition among children <3years (stunting: 59% vs.36%, underweight: 6 1 ~ ~ 3 3 % ) as well as among adults (BMK18.5: 38 vs. 23%). Ratios between richest and poorest households are presented inFigure 1highlight these inequities. II.Dopoor haveequalaccesstobasichealthservices? - 98 -  The results suggest that poor tendto have less access to basic reproductive and child health services (Table 2). This difference was found to be most pronounced for childhood immunization. A child born inpoorest household i s 10 times less likely to be fully immunized compared to its richest household (4% vs. 43%). This was followedby place o f delivery (facility delivery (8 vs. 60%) and medically trainedperson attending delivery (16 vs. 79%). Among different services included inthe analysis, poor seem to give higher priority to getting childhood illness treated. Nearly half (45%) o f the children with acute respiratory infection belonging to poorest quintile received medical attention. However, the corresponding proportion among those belonging to the richest quintile was 87%. Figure 2. Accessto BasicHealthServices Ratio - betweenRichestandPoorest20% %Womendeliveredat a healthfacility % Womendeliveredbya MedidyTrained person % Eqectantwomenreceived antenatdCare from a medieaUytrainedperson YOMarriedfemalesusingmodern contraception %Chi!drenHimARIseenmedidy DI I * I 0 2 4 6 8 1 0 1 2 III.Dopoor equally usethepublic healthservices? Two important health services - one each from maternal and child health areas -were analyzed (Table 3). The results suggest that the utilization o f maternal health services i s pro rich (deliveries inpublic sector facilities: 3 vs. 35%). However, the richpoor differentials were less marked incase o f receiving treatment for sick children. About 24% o f children belonging to poorest quintile received treatment at public facility compared to 35% among the richest quintile. Other Benefit Incidence studies also suggest similar trends (A Mahal at a12001). IV. Do rich have access to better quality services? Figure 3. Access to Safe motherhoodServices-Ratio betweenRichest and Poorest20% I I I I Received AN rare from P Doctor 0 2 4 6 8 - 99 -  This analysis is limited to antenatal and delivery services andalso limitedby the fact that seeking care from higher level provider does not necessarily mean better quality. The results (Table 4) suggest that women from richest quintiles had nearly 6 times higher probability o freceiving antenatal care from a doctor, 3 or more antenatal visits as well as being delivered by a doctor. V Are thepoor adequately informed about key health issues? Inequities intwo key healthrelated behaviors were analyzed. Generally, awareness about sexual mode o f HIV/AIDS transmission was low. Only about a quarter o f the women (27%) belonging to poorest income quintile were aware that HIV/AIDS get transmitted through sex compared 45% among the richest quintile. The real challenge is how to translate the knowledge to practice. The results suggests that only 0.3% o f the mothers whose children had diarrhea during the past 2 weeks used oral re-hydration treatment compared to 40% among the richest quintile (Table 4) . VI.Doyouth also experience similar inequities? Less than 1% o f adolescent girls belonging to poorest quintile inRajasthan are aware about sexual transmission o f HIV AIDS. Even among the richest quintile, only a third o f the young women knew about this. Women inRajasthantend to get marriedearlier. More than 80% o fwomen in20-24 years were marriedand 48% have had a child by age 18. Womenbelonging to poorest quintile are around 1.5 times more likely to get married and bear children before 18 years compared to those belonging to richest quintile. Ingeneral, adolescent boys belongingto poorest quintile were more vulnerable to riskfactors such as tobacco smoking (12 vs. 1%) and alcohol consumption (4 vs. 0.2%). What are thepolicy andprogram options? 1. There is urgent needto improve economic access to basic health services by better targeting public subsidies to poor such as health cards, vouchers including direct cash transfers. Examples include national insurance programs for women an children inPeru and Bolivia (World Bank 1999), health card scheme inIndonesia (Saadah et. A1 2001). Direct cash transfers to poor women inMexico (PROGRESA) improved their status and decision makingpower inthe household (Gertler, 2000). 2. Increasing physical access to basic heath services i s also important. Though intra-district variation has not been analyzed inthis paper, the problems inphysical access are well known insparsely populated dessert districts o f Rajasthan. Strategic partnerships with non govemment sector i s an important policy option in such areas. Other cross sector options include investing in transport and road connectivity as done in Vietnam and Malaysia (Van De Walle & Cratty 2002; World Bank forth coming). 3. Enhancing service quality i s critical. Inaddition to clinical quality, enhancing provider responsiveness to client, especially to those from poorer sections, i s important. 4. It is evident from the analysis that there i s considerable gap inpublic awareness and practices about the key health issues. Informing about health issues i s a an important public oversight function. The keyareas for behavior change include age at marriage, conception and HIV/AIDS transmission. 5. Scaling o f adolescent reproductive health services i s critical for Rajasthan to fully exploit the - 100 -  benefit oftemporary demographic bulge due to relative increase in working age populationby 2005. This provides an unique opportunity for the state to enhancehuman capital by investingineducation, job creation and youth services. Table 2. Utilization of basic health services in Rajasthan b y Income Quintiles Indicator I Poorest I Next 20% I Middle I Next 20% I Richest 20% 20% 20% % Expectant women received 29.3 38.6 43.9 53.0 85.3 antenatalCare froma medically trainedperson %Womendeliveredby a 15.8 25.4 31.2 43.5 79.3 Medically Trainedperson % Womendeliveredat a 8.2 15.2 15.3 23.9 59.7 health facility % Children(12-23 months) 4.2 11.7 7.8 24.2 43.4 % Childrenwith A N seen 44.5 51.7 63.2 73.8 86.7 medically % Married femalesusing 25.3 28.8 38.8 41.2 55.2 modemcontraception Table 3. Use of Public Health Services b y Income Quintiles Indicator I Poorest I Next 20% I Middle I Next 20% I Richest 20% 20% 20% % Women deliveredat a 3.O 8.5 8.9 13.3 34.8 public healthfacility % Childrenwith ARI treated 23.9 33.3 40.4 37.2 34.9 at Public facilitv YOeligible beneficiaries Poorest Next 20% Middle Next 20% Richest 20% 20% 20% ReceivedAN care from a 10.5 10.9 18.9 31.7 68.0 Doctor Received3 or more Antenatal 10.5 15.0 14.6 25.2 63.2 visits Deliveredby aDoctor 7.4 12.4 14.9 21.3 53.6 -101 -  Indicator Poorest Next 20% Middle Next 20% Richest 20% 20% 20% % Women aware of sexual 27.1 32.0 30.0 42.6 45.1 transmissiono f HIViAIDs % MothersusedORT when 0.3 1.6 2.8 10.8 40.4 their children haddiarrhea Table 6. InequitiesamongAdolescents Indicator Poorest Next 20% Middle Next 20% Richest 20% 20% 20% % adolescent girls (15- 19) 27.5 36.3 40.5 42.0 66.1 receivingironfolate supplements % Women (20-24 Yrs) 88.6 91.7 89.5 85.3 54.9 marriedby age 18 % women (20-24 yrs.) who 53.8 56.2 52.3 47.2 27.5 hada childby age 18 % adolescent women (15-19 0.7 0.1 3.8 10.7 32.6 yrs.) aware about sexual transmissiono f HIV AIDS % of adolescentboys 3.7 1.4 Smoking % of adolescentboys ((15- 1.3 0.2 19) who drink alcohol - 102-  Additional Annex 12: Rajasthan- Activity Matrix INDIA: RAJASTHAN HEALTH SYSTEMS DEVELOPMENT PROJECT Zomponent I:PolicyDevelopmentandProgramR lnap ment Sub- Activities Yr. Responsibility Component V 1.1.Improving 1.1.1 Strengthening PSC and PIU the strategicplanning capacity Institutional through establishing and Framework for operationalizing the Policy strategic Planning Cell Development 1.1.2. Develop and PIU, SPC Implementation of Stratew for Public Private Partnerships "I (a) Consultations; (b) Studies and surveys; and (c) Designand implementation 1.2. 1.2.1Establishment and PSU, PIU Strengthening operation of the state and management District level project and management and oversight implementation structures. capacity 1.3. 1.3.1Establishment of DoMHFW, Strengthening Hospital Training PIU Human Complex at District Resources: Hosuitals. Training and 1.3.2Provisionof POU, SIHFW Capacity Trainers Training for 576. Building 1.3.3 Provisionof PIU, SIHFW Training (a) Management Training for 2788 (b) ClinicaliTechnical training for 8837 (c) Health systems training for 8698 1.4. 1.4.1Establishing Quality PSC, Strengthening Assurance andInformation DoMHFW Health Cell inPIU. Management 1.4.2. Development and PIU, SPC Information implementation of HMIS System including formats and guidelines and training 1.4.3. Validation of HMIS PSC, PIU, data and training External Consultants -103-  ComponentI1: ImprovingQuality and Efficiencyof public health care services at Primary and Secondary levels Sub- Activities Responsibility Base Component cost 2.1. Physical 2.1.1Renovation/ PIU, CW cell, renovation upgradation of 28 district Consultant for and hospitals, 23 sub- CW upgradation divisional hospitals,185 of district CHCs, 2 BPHCs hospitals, 2.2.1. Iimplementation of PIU, DPMCs, CHCs and the HealthCare Waste eachPMO, BPHCs Management CMHO 2.2.3. Provisionof PIU, equipment and furniture Procurement to the upgraded facilities Cell 2.3 2.3.1. Procurementof PIU, Quality Upgrading drugs and hospitals Cell, HR Cell Quality o f supplies Clinical 2.3.2. Development and PIU, Quality Management implementation of Cell, HR Cell and Support Quality Improvement services guidelines including training- - v 2.3.3. Development of PIU, SPC, guidelines and capacity Quality Cell inequipmentuse and maintenance; 2.3.4. Establishment of PIU, SPC Monitoring systems for Quality Cell (a) useand maintenance of equipment; (b) quality of clinical care; (c) patient satisfaction ; (d) hospital performance; and (e) HCWM practices at upgraded facilities. 2.4. 2.4.1 Development and PIU, SPC Improving implementation of Quality Cell Referral referral mechanisms guidelinesiprotocols including training 2.4.2 Review PIU, C I Cell effectiveness of referral DPMC systems -104-  Component I11Health Care for the Disadvantaged Sub- Component Activities Responsibility Base cost 1, Improving health 3.1.1. Development o f IEC PIU, C I Cell :eking behavior strategy and material DPMC 3.1.2. Implementation o f PIU, C I Cell IEC strategy DPMC 2. Enhancing access 3.2.1. Implementation of PIU, C W Cell Proc Icare Tribal Strategy Cell, C I Cell, DPMC 3.2.2. Renovation/ PIU, C I Cell upgradation o f 138 CHCs/ DPMC BPHCs intribal and poor districts including provision o f required equipment, furniture and drugs. 3.2.3. Study o f existing PIU, C I Cell schemes for exemption to DPMC the poor inthe State including review o f national and intemational best practices for community basedinsurance 3.2.4. Implementation o f PIU, SPC. C I Cell innovations for DPMC (a) strengthening existing exemption schemes for the poor and (b) community based health insurance schemes 3.2.5. Analysis of coverage PIU, C I Cell and utilization o f the DPMC schemes, and scaling up of successful interventions. 3 Public Private 3.3.1. Design and PIU, C I Cell irtnership implementation o f public DPMC private partnerships models for provision o f health care. 3.3.2. Independent PIU, SPC, C I Cell assessmentbf public private partnership models. -105-