India - Third District Primary Education Project

Document of The World Bank Report No. 17102-IN PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT IN THE AMOUNT OF SDR 111.8 MILLION TO INDIA FOR A THIRD DISTRICT PRIMARY EDUCATION PROJECT October 27, 1997 Education Sector South Asia Region  CURRENCY EQUIVALENTS Currency Unit = Rupee US$1.00 = Rs. 35.00 US$0.0285 = Rs. 1.00 GOVERNMENT FISCAL YEAR April 1 - March 31 ACRONYMS AND ABBREVIATIONS AWPB Annual Work Plan and Budget BAS Baseline Assessment Study BEP Bihar Education Project BSPP Bihar Shiksha Pariyojna Parishad BRC Block Resource Center BSTPC Bihar State Textbook Publishing Corporation CRC Cluster Resource Center DFID UK Department for International Development (previously ODA) DIET District Institute of Education and Training DLO District-level Project Office DOE Department of Education DPEP District Primary Education Project ECE Early Childhood Education Center ECU European Commission Unit EMIS Education Management Information System GOB Government of Bihar GOI Government of India ICDS Integrated Child Development Service JSM Joint Supervision Mission.. MHRD Ministry of Human Resource Development MLL Minimum Levels of Learning MS Mahila Samakhya NCERT National Council of Educational Research and Training PMIS Project Management Information System SAS Social Assessment Study SC Scheduled Caste SCERT State Council of Educational Research and Training SIEMAT State Institution of Educational Management and Training SIDA Swedish International Development Agency SIS State Implementation Society SLO State-level Project Office ST Scheduled Tribe TSG Technical Support Group UNICEF United Nations Children's Fund UPBEP Uttar Pradesh Basic Education Project VEC Village Education Committee Vice President Mieko Nishimizu Country Director Edwin R. Lim Sector Manager Ralph W. Harbison Task Manager Juan Prawda  INDIA THIRD DISTRICT PRIMARY EDUCATION PROJECT CONTENTS Page No. PROJECT FINANCING DATA ......................................... .1 BLOCK 1: PROJECT DESCRIPTION ..........................................2 1. Project Development Objectives ..........................................2 2. Project Components ..........................................2 3. Benefits and target population ..........................................2 4. Institutional and implementation arrangements ..........................................3 BLOCK 2: PROJECT RATIONALE ..........................................6 5. CAS objectives supported by the project .6 6. Main sector issues and Government strategy .6 7. Sector issues to be addressed by the project and strategic choices .7 8. Project alternatives considered and reasons for rejection .7 9. Major related projects financed by the Bank, and/or other development agencies . 8 10. Lessons learned and reflected in the project design .8 11. Indications of borrower commitment and ownership .8 12. Value added of Bank support .9 BLOCK 3: SUMMARY PROJECT ASSESSMENTS .......................................9 13. Economic Assessment .9 14. Financial Assessment .10 15. Technical Assessment .1 16. Institutional Assessment .1 17. Social Assessment .11 18. Environmental Assessment .1 19. Participatory Approach .12 20. Sustainability .12 21. Critical Risks .13 22. Possible Controversial Aspects .13 BLOCK 4: MAIN CREDIT CONDITIONS .......................................... 14 23. Effectiveness Conditions .......................................... 14 24. Other .......................................... 14 BLOCK 5: COMPLIANCE WITH BANK POLICIES ........................................ 14 ANNEXES 1 Project Design Summary 2 Detailed Project Description 3 Estimated Project Costs 4 Economic and Social Outcomes of Primary Schooling in India and in Bihar 5 Financial Summary 6 Procurement Arrangements and Allocations of the Credit Proceeds 7 Project Processing Budget and Schedule 8 Documents in the Project File 9 Statement of Loans and Credits 10 India at a Glance   INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION South Asia Region Project Appraisal Document India Third District Primary Education Project (DPEP III) Date: October 27, 1997 [x] Final Task Manager: Juan Prawda Country Director: Edwin R. Lim Project ID: IN-PE-38021 Sector: Education POC: Human Resources Lending Instrument: Specific Investment Credit PTI: [x] Yes Project Financing Data [x] Credit For Loans/Credits/Others: Amount: SDR 111.8 million (US$152.0 million equivalent) Proposed Terms: [x] SDR Grace period (years): 10 Years to maturity: 35 years including grace period Commitment fee: not to exceed 1/2 of one percent per annum Service charge: 3/4 of one percent per annum Financing plan (US$m): Source Local Foreign Total Government 37.7 0.0 37.7 Cofmanciers (UNICEF)' 10.0 0.0 10.0 IDA 144.1 7.9 152.0 TOTAL 191.8 7.9 199.7 Borrower: Govermment of India (GOI), acting by its President Guarantor: Responsible agency: Bihar Shiksha Pariyojna Parishad (BSPP) of the Government of Bihar (GOB) Estimated disbursements (Bank FY/US$M): 1998 1999 2000 2001 2002 2003 2004 Annual 7.0 22.5 41.8 36.5 23.3 16.7 4.2 Cumulative 7.0 29.5 71.4 107.8 131.1 147.8 152.0 Expected effectiveness date: April 1, 1998 Closing date: September 30, 2003 UNICEF confirmed to IDA, GOI and GOB during the appraisal mission its intention to contribute a grant through a parallel cofinancing arrangement. This grant contribution is pending UNICEF Board approval.  Project Appraisal Document Page 2 Country: India Project Tite: DPEP 111 Block 1: Project Description 1. Project development objectives (see Annex I for key performance indicators): The project will assist the Government of Bihar (GOB) to build and strengthen state, district and sub-district institutional capacity to ensure that more children, especially from socially disadvantaged groups (female, scheduled caste [SC] and scheduled tribe [ST] students, working children, children with mild to moderate learning disabilities and other children who have limited access to educational opportunities2), complete a five-year primary education cycle of appropriate quality in districts with low levels of literacy. 2. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown): The proposed project will have the following three components: (a) Expanding access to primary education, particularly for disadvantaged groups by: (i) constructing new classrooms and schools, and repairing or rehabilitating existing classrooms; (ii) sanctioning new teaching posts and appointing teachers; (iii) developing and implementing targeted interventions for socially disadvantaged groups; (iv) mobilizing school and community organizations and carrying out awareness campaigns in support of education; and (v) establishing a Village Education Committee (VEC) for each school in the project districts. (b) Increasing retention and improving learning achievement in primary school by: (i) selectively establishing new, and strengthening existing, early childhood education centers (ECEs); (ii) supporting interventions for women's education and empowerment programs; (iii) installing toilets and water facilities in the primary schools; (iv) establishing and operating block and cluster resource centers (BRCs and CRCs); (v) providing continuous in-service teacher training; (vi) developing and supplying improved textbooks and supplementary instructional materials; (vii) providing grants to schools, community organizations and individual teachers for the purchase of educational supplies and other quality inputs; and (viii) carrying out periodic learning assessments of primary level students. (c) Improving state and district capacity to manage primary education by: (i) building and strengthening state and district program management structures to review and supervise the implementation of state and district investment plans as well as annual work plans and budgets; (ii) establishing and strengthening state and district resource institutions, such as the State Council of Educational Research and Training (SCERT), the State Institution of Educational Management and Training (SIEMAT) and the Bihar State Textbook Publishing Corporation (BSTPC) at the state level, and the District Institutes of Education and Training (DIETs) or equivalent institutions in all project districts, and resource groups at the state and district levels to provide technical support in project implementation; (iii) strengthening state and district capacity for carrying out monitoring, research and evaluation activities; (iv) establishing a facility to support innovative approaches to improve primary education; and (v) developing training modules for micro- planning, VEC training and training of master trainers.3 Component Cost Incl. Contingencies % of Total 1. Expanding access to primary education 103.6 51.9 2. Increasing retention and improving learning 75.5 37.8 achievement in primary school 3. Improving state and district capacity to manage 20.7 10.3 primary education Project total (may not add up) 199.8 100.0 IDA Financing 152.0 3. Benefits:and target population: The proposed project would target about 5.5 million children aged 6-10 in the 17 educationally disadvantaged districts of Bihar. Special attention would be given to the most socially disadvantaged groups: (i) 2.75 million girls; (ii) about 825,000 SC and 500,000 ST children; and (iii) children with mild to moderate learning disabilities, working children (currently estimated at 275,000 for each group) and other children who have limited access to educational opportmities. More 2Hereafter referred to as disadvantaged groups. This last sub-component is fully financed by the UNICEF grant.  Project Appraisal Document Page 3 Country: India Project Title: DPEP III precise numbers and the circumstances that prevent educational access to this latter group are being confrmed by the VECs through the ongoing validation of the results of the district-based social assessment studies. Increased access in the 17 districts: The project will create about 400,000 new places for children aged 6-10 through the construction of 2,350 new schools and 4,400 new classrooms, the repair or rehabilitation of about 300 existing classrooms, and the establishment of about 8,000 non-fonnal (alternative) education centers by the beginning of 2001. It is expected that at least 50 percent of these new places will benefit girls. Improved retention in the 17 districts: By the end of the project, current attendance should rise by 50 percent (from the current 50 to 75 percent). In other words, 660,000 more children per year would attend school on a regular basis during the entire school year. In addition, the current retention rate (children attending class V divided by number of children attending class I) of 37.9 percent should rise to 43.6 percent (a 15 percent improvement) by the end of project implementation. This will imply that about 330,000 additional children will graduate per year from the five-year primary education cycle. Improved learning in the 17 districts: The project aims to improve the quality of instruction and learning achievement for approximately 5.5 million children aged 6-10 attending primary school every year on a regular basis. Social and economic benefits: see para. 13 and Annex 4 . 4. Institutional and implementation arrangements: Implementation period: April 1, 1998 to March 31, 2003 Executing agency: Bihar Shiksha Pariyojna Parishad - BSPP (State Implementation Society - SIS). This autonomous Society headquartered in Patna, Bihar was registered under the 1860 Societies Registration Act in 1991 to manage the Bihar Education Project (BEP) fmanced by GOI, GOB and UNICEF. For purposes of DPEP III, the BSPP will enter a Memorandum of Understanding (MOU) with GOI which has been reviewed by IDA. Project coordination: District Primary Education Program (DPEP) Bureau of the Department of Education (DOE) at the Ministry of Human Resource Development (MHRD) of the Government of India (GOI), established in 1993 to coordinate the DPEP. LPoject oversight: DPEP BureauO GOI Project implementation: The size, complexity and degree of innovation involved in the start-up phases of DPEP III are recognized by GOI and GOB. The Project Implementation Plan (PIP) prepared by the state-level project office (SLO) of the BSPP was reviewed by IDA during the appraisal mission. Prior to negotiations, IDA received a revised version of the PIP incorporating all the suggestions made during the appraisal mission and specified in the corresponding Aide-Memoire. According to the revised PIP, implementation would be through incremental expansion of the state and district components and subcomponents with the release of funding reflecting performance and the rate of utilization of previously released funds. The first year of DPEP III implementation would be primarily focused on developmental activities, including: (a) building management capacity in the SLO and the 17 district-level project offices (DLOs); (b) strengthening state and district resource institutions and/or groups; and (c) establishing the basic professional capacity and providing the physical infrastructure for improved learning in participating districts. In accordance with the DPEP Guidelines, annual funding during project implementation will be based on: (i) good state and district project implementation; (ii) compliance of the annual work plans and budgets (AWPBs) with the DPEP guidelines; (iii) evidence of payment of GOB to the BSPP of the 15 percent state contribution to the ongoing DPEP program; and (iv) demonstrated additionality of DPEP investments compared to 1995/96 elementary education expenditure levels in Bihar. During negotiations, GOB provided assurances that it will carry out, and cause the BSPP to carry out, the project in accordance with the DPEP Guidelines and the PIP agreed with IDA (para. 24(d) and Annex 2). The initial year of project implementation would be based on the state and 17 districts AWPBs for 1998, approved by the DPEP Bureau on the basis of the national appraisal report and process (NARP) carried out by the technical support group (TSG) of the DPEP Bureau last May. This NARP was reviewed by IDA for the state component and five DPEP III districts (Chatra, Purnia, Sitamarhi, West Champaran and West Singhbhum) during the appraisal mission. The IDA mission endorsed the key recommendations of the NARP. The first year AWPBs emphasize project launch and start-up activities. The IDA appraisal mission reviewed the steps taken by the SLO to ensure project implementation readiness. First, the SLO is fully operational and staffed with qualified personnel. Any remaining vacancies will be filled no later than the first semester 1998. Second in addition to the 7 BEP existing DLOs, 10 additional DLOs are being officially established in the other project districts. The process for the appointment of key personnel in the 10 new DLOs has been initiated, and the selection of a full-time qualified fnancial/accounting official, civil works engineer and a management information system computer programmer has been substantially completed for the DLOs. Orientation and professional training packages for the staff positioned at the SLO and all DLOs are being prepared and will shortly be delivered. During negotiations, GOB provided assurances that it will: (i) maintain the SLO and DLOs with responsibilities to coordinate project implementation, with adequate staff, resources and facilities by the end of  Project Appraisal Document Page 4 Country: India Project rdle: DPEP IIl June 1998; and (ii) establish a program of staff training satisfactory to IDA (paras. 16 and 24(e) and Annex 2). Thid, a limited set of key activities to be implemented between the end of the IDA appraisal mission and Credit effectiveness (estimated to occur by April 1998) has been identified at the state and district levels and has been included in the first year AWPBs. Fourth, the BSPP has in its BEP bank account Rs. 26 crores, and an additional Rs. 10 crores in the pipeline, totaling more than the estimated 31 crores needed to implement agreed project activities in the period up to the end of March 1998. A bank account for the DPEP III implementation will be opened by the BSPP with an initial deposit sufficient to cover expenditures for the project start up activities. Fifth, the members of the state resource groups (SRG) for the various project components have been identified, and some groups have already started their activities. Sixth, a draft plan and time schedule for the filling of vacancies in the DIETs is in place. Seventh, twinning arrangements between BEP districts with non-BEP districts to provide technical assistance have been set up. Eigbt, the designs and management plans for the civil works included from October 1997 through March 1998 in the seven BEP districts have been prepared, and the bidding documents are being prepared. Ninth, the DPEP Bureau sponsored a seminar to train SLO personnel in IDA procurement methods in August 1997. Finallv, a project launch workshop for the SLO and the 17 DLOs planning and management teams would be carried out after negotiations. To meet the objectives of increased access and retention and improved learning achievement, the project needs to be implemented, especially during the first two years, in an enviromnent that provides at least the minimum conditions for effective functioning of the system. While several proposed project interventions can help with establishing VECs, community mobilization and awareness campaigns, CRC school-level support, and repair of existing buildings, etc., broader policy measures will also be required. During negotiations, GOB provided assurances that it will: (a) take all necessary measures to ensure that at least 95 percent of the teachers' posts in the project districts, starting the third year of the project, remain filled throughout the project implementation period (paras. 20, 21, 24(g) and Annex 2); and (b) cause the BSPP to establish by December 31, 1999, in an appropriate number of sample of villages in each project district, a reliable education database of: (i) the number of public, private recognized and non-recognized schools through microplanning exercises to be conducted by the VECs; and (ii) the best estimates of teacher and student attendance in such schools through the establishment of attendance reporting mechanisms by the VECs and the educational management information system (EMIS) (para. 24(j) and Annex 2). In addition, at negotiations, GOI and GOB provided assurances that they will carry out with IDA and other external financiers, including UNICEF, a joint in-depth review of the project on two occasions by December 31, 1999 and December 31, 2001; such reviews to include a status report of the positioning of teachers in project districts based on Bihar's norms (paras. 20 and 24(b) and Annex 2). Finally, prior to negotiations, IDA received from GOB a suitable implementation schedule to fill all teacher vacancies in project districts and a statement of the state norm for posting primary school teachers. The procurement arrangements are explained in Annex 6 (Tables 6A and 6B). Disbursements: The IDA Credit would be disbursed over five years, consistent with the new standard profile for PHR projects in India. The project is expected to be completed by March 31, 2003, and close on September 30, 2003. The IDA Credit would be disbursed in accordance with the allo ations and category of expenditure shown in Table 6C. UNICEF financing would be separate from the IDA Credit. UNICEF's accounting mechanisms will be worked out to maintain a clear coded identification of the subcomponents financed by UNICEF within a common account held at the BSPP. Table 6B indicates the contracts of civil works, goods and services subject to prior review. All other expenditures not requiring prior review would be disbursed on the basis of statements of expenditure (SOE), with supporting documentation retained by the SLO and DLOs for review by IDA during the joint supervision missions, to be carried out twice a year. During negotiations, GOI agreed to submit to IDA evidence that a MOU has been entered into between the BSPP and GOI as a condition of disbursement of the proceeds of the Credit (para. 24(o)). In order to accelerate disbursement of IDA's share of expenditures that will be pre-financed by GOI and GOB, and to allow for direct payment of other local and foreign expenditures, during negotiations GOI agreed to maintain a Special Account in the Reserve Bank of India in the amount of US$9 million, to cover four months of estimated disbursements through the Special Account. The GOI would release an advance of an estimated six months of expected project requirements for IDA-financed items as grants to the BSPP. The GOB would also place their own contribution in the account of the BSPP. These provisions are identical to those employed in the DPEP I and II projects. During appraisal, the IDA mission agreed with GOI and GOB to retroactively fnance up to SDR 4.6 million (US$6.2 million equivalent) of eligible project expenditures. This retroactive financing amounts to about 4 percent of the total Credit. During negotiations, GOI agreed that the following expenditures incurred by the project after August 15, 1997 and up to the expected date of Credit signing (January 1998) will be eligible for retroactive fnancing: (i) civil works; (ii) equipment, vehicles, books, teaching materials and furniture; (iii) project management team costs; (iv) training, workshops, fellowships and consultant services; and (v) incremental operating and maintenance costs. Monitoring and evaluation arranuements: During negotiations, GOI and GOB provided assurances that they will maintain policies  Project Appraisal Document Page 5 Country: India Project Title: DPEP IIl and procedures adequate to enable them to monitor and evaluate on an ongoing basis, in accordance with indicators satisfactory to IDA, the carrying out of the project and achievement of the objectives thereof (para. 24(a)). As in DPEP I and II, the central program management monitoring tool would be the annual review by the DPEP Bureau of the AWPBs prepared by the SLO and each participating DLO including: (i) the action plans, investment proposals and fmancing requirements for the next fiscal year; and (ii) reports on the progress of implementation covering physical targets for civil works, procurement, training, software/system development and expenditures. The review would be conducted by the DPEP Bureau in the first quarter of each year. Progress reports and work plans would follow a common framework. Progress towards the achievement of development objectives would be measured in seven ways. First, district-based assessment surveys conducted in the third and last year of the project would monitor progress on key education indicators, most importantly, student learnig achievement against the district-based baseline assessment study carried out during project preparation. The results of these studies would be discussed at one of the annual implementation review workshops (most probably in the first quarter of CYOI) and at project completion (by March 2003). Prior to appraisal, GOB provided IDA with fmal reports on the baseline achievement studies for the 17 districts. During negotiations, GOB provided assurances that it will carry out assessment studies on student learning achievement in all the project districts, with scope and content satisfactory to IDA, in calendar years 2000 and 2002 (para. 24(k) and Annex 2). Project performance indicators developed by the DPEP Bureau/GOI and GOB have also been agreed with IDA and are attached in a Supplemental Letter to the Development Credit and Project Agreements (Annex 1). Program evaluation and research studies would provide a second source of monitoring information. They would monitor the establishment of more effective teaching and learning processes at the school level. A third source would be a computerized project management information system (PMIS) and the EMIS which have been developed and are fully operational in all DPEP I and II project states. Certain modules of the PMIS and EMIS are already operational in the SLO and in the 7 BEP DLOs. The PMIS provides quarterly reports concerning the project's physical targets for civil works, procurement, and training, software/system development and expenditures. The EMIS provides annual reports on district, sub-district and school attendance, enrollment and retention data and rates, disaggregated by type of disadvantaged and non-disadvantaged group. The IDA appraisal mission confirmed that the BSPP is taking appropriate steps to have the PMIS and EMIS in the SLO and each DLO made fully operational with key core staff in place by June 30, 1998. A fourth source of information would be an attendance reporting mechanism through the VECs and sample surveys. These sources of information will improve the reliability and validity of the database being incorporated in the EMIS. During negotiations, GOB provided assurances that it will cause the BSPP to establish by December 31, 1999, in an appropriate number of sample of villages in each project district, a reliable education database of: (i) the number of public, private-recognized and non-recognized schools through microplanning exercises to be conducted by the VECs; and (ii) the best estimates of teacher and student attendance in such schools through the establishment of attendance reporting mechanisms by the VECs and the EMIS (para. 24(j) and Annex 2). The fifithsource of information would be provided by a semi-annual Project Disbursement and Financial Management Reporting System. This reporting system comprises semi-annual reports on: (i) sources of project funding; and (ii) applications of funding by category of expenditure and by project component. This information will provide twice a year the variance between the actual and budgeted allocations and applications of project funding. This information would also ensure the accountability of Bank ftmds and that project implementation is fulfilling the requirements associated with the disbursement process. During negotiations, GOI agreed to explore the possibility of adapting the software of the existing DPEP PMIS and EMIS to prepare the above-mentioned semi-annual reports to be provided to IDA every six months through the Joint Supervision Missions (JSMs). A sixth-source of information would be the annual supervision reports of the DPEP Bureau and the DPEP JSMs carried out twice a year by specialist staff appointed by GOI and program donors, including IDA. In addition, the DPEP Bureau and DPEP Project states, including Bihar, will conduct an annual implementation review workshop where states would report on their project implementation progress and share experiences in the implementation of one program element selected in consultation with the program donors. During negotiations, GOI and GOB confirmed the agreement reached during the appraisal mission to: (i) include DPEP III in the JSM scheme put in place for DPEP I and II; (ii) ensure for the period from February 1, 1998 to November 30, 2000, visits by two 2-member teams, which shall include one IDA and one UNICEF representative, to visit Bihar during each JSM; and (iii) propose, prior to November 30, 2000, a plan, satisfactory to the Association, for supervision missions to DPEP III after such date. Finally, the seventh source of information would be provided by two in-depth reviews of the project to be conducted by GOI and GOB. During negotiations, GOI and GOB provided assurances that they will: (a) carry out, with IDA and other external fmanciers including UNICEF, a joint in-depth review of the project on two occasions by December 31, 1999 and December 31, 2001, which will include: (i) a status report, in both reviews, of the positioning of teachers in project districts based on Bihar's norms; and (ii) a  Project Appraisal Document Page 6 Country: India Project Ttle: DPEP III status report, in the latter review, of the proposed strategies to sustain the capacities and services developed under the project, and the modalities and framework of cooperation between the Borrower's Integrated Child Development and ECEs under the project (paras. 20, 21 and 24(b) and Annex 2); and (b) duly take into account the comments offered by IDA during each joint review in the course of further implementation of the project (para. 24(c)). Accounting. financial reporting and auditing arrangements: The project expenditures incurred by the BSPP would be subject to the normal GOI and GOB accounting and auditing procedures, with the added requirement that the BSPP would establish and maintain a separate account and accounting system to record all project transactions and appropriate support documnentation for the transactions. The project account and the BSPP shall be audited annually, in accordance with its Memoranda of Association and appropriate auditing principles conducted by independent auditors acceptable to IDA. GOI agreed to ascertain that the audit of the BSPP includes a separate opinion on SOEs satisfactory to IDA. The BSPP would make appropriate arrangements satisfactory to IDA for auditing the utilization of funds provided by the BSPP to other institutions, including the SOEs of those other institutions. In addition, the BSPP accounts will be audited by the Accountant General of Bihar. Documentation supporting SOEs would be maintained at least one year after the completion of the audit for the fiscal year in which the last withdrawal was made. The central account and the Special Account would be subject to normal GOI accounting and auditing procedures through the Comptroller and the Auditor General of India and his appointees, which is considered satisfactory to IDA. The audit of the Special Account will be in accordance with IDA guidelines. The Special Account would show all withdrawal requests disbursed, amounts advanced and reimbursed by IDA, and balance at the end of each accounting period. The consolidated audit reports would be submitted to IDA not later than six months after the end of each fmancial year. Audits will cover all project expenditures until such time as the Credit has been closed. The accounting procedures set for the Uttar Pradesh Basic Education Project (UPBEP), DPEP I and II, similar to the ones described above for DPEP III, have proven to be satisfactory to IDA. Consolidated audit reports for these three ongoing Credits have been provided to IDA in a timely fashion. Block 2: Project Rationale 5. CAS objective(s) supported by the project: The project is consistent with the updated version of the Country Assistance Strategy (CAS) Paper discussed by the Board on September 5, 1996. The basic thrust and priorities of the 1995 CAS (discussed by the Board on June 20, 1995) are reconfirmed in the updated CAS. Within the broad objective of promoting economic reform and speeding up economic growth, alleviating poverty is central to IDA's CAS. Human resources development is a key element of this overall strategy, with education playing a central role. Low educational enrollments, high dropout rates, and unacceptably low levels of educational achievement are major constraints to social and economic improvements for the poor and socially disadvantaged groups. Hence, IDA's strategy for education, supported through Economic and Sector Work and substantial IDA lending, is to focus medium-term assistance for education exclusively on primary education given its underdeveloped status in India, its high returns, and its importance to alleviating poverty. Within this strategy, targeting IDA's social assistance to Bihar assumes paramount importance as it is one of the poorest states in India. It has the lowest real per capita NDP of all states (1991 data), the second to lowest annualized per capita real NDP growth rate in the 1961-91 period, holds almost 14 percent of the total Indian population living in poverty and 20 percent of India's out-of-school children, and requires about 170,000 new teachers and 170,000 new classrooms to address the state's primary school issues. 6. Main sector issues and Government strategy: The key sector issues in Bihar are: (i) extreme social stratification resulting in severe disadvantage in primary school access and learning for girls, SC and ST students and working children; (ii) widespread poverty; (iii) public sector institutions in need of strengthening; (iv) a system of public education that manages to retain and teach effectively, at most, 35 percent of first graders through to grade 5; and (iv) public fnances that need to be improved. GOI has expressed its interest in assisting GOB to tackle its enormous educational challenges through the umbrella of the District Primary Education Program (DPEP). DPEP is a national program supported by a multi-donor financed operation that responds to the Revised National Policy on Education and its accompanying National Program of Action, approved by the GOI and the states in 1992 to improve the quality of primary education and to reduce disparities in enrollment, dropout rates, and learning achievement by gender and among socially disadvantaged groups. DPEP is currently being implemented in about 122 educationally disadvantaged districts of thirteen states (Andhra Pradesh, Assam, Gujarat, Haryana, Himachal Pradesh, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Orissa, Tamil Nadu, Uttar Pradesh and West Bengal), affecting around 30 million children enrolled in 180,000 pritnary schools with 600,000 teachers. IDA's DPEP fnancial assistance presently amounts to about US$850 million in three Credits. In addition, the European Commission is contributing with a grant of ECU 150 million (about US$200 million) for DPEP I in Madhya Pradesh, the Government of the Netherlands is contributing with a grant of US$25.8 million for DPEP II in Gujarat, and the United Kingdom's  Project Appraisal Document Page 7 Country: India Project Title: DPEP III Department for International Development (DFID), formerly the Overseas Development Administration (ODA), is contributing with a grant of US$100 million for DPEP II in Andhra Pradesh and West Bengal. UNICEF has confirned a grant contribution of US$10 million for DPEP III in Bihar. 7. Sector issues to be addressed by the project and strategic choices: Given that 6 million children aged 6-10 are out of the primary school system in Bihar, that two out of three primary school students entering first grade will not complete the 5-year primary cycle, and that learing achievement of those completing the primary school is dismally low, the following three issues are to be addressed in this state: (i) low enrollment, especially among girls, SC and ST children, working children, children with mild-to-moderate learning disabilities and other children who have limited access to educational opportunities; (ii) high dropout and repetition rates, resulting in high cost per graduate and low learning achievement; and (iii) weak education management structures and institutions at the state, district, sub-district and school levels, resulting in sub-optimal utilization of available resources. The project addresses these issues as follows: (i) Increasing enrollment, especially among socially disadvantaged groups by: constructing new classrooms and schools and repairing or rehabilitating existing classrooms; sanctioning new teaching posts and appointing teachers; developing and implementing targeted interventions designed from the results of the district-based social assessment studies; supporting the design and trialing of alternative schooling modalities including multi-grade centers, non-formal schools, ashram schools, escort teacher services and peripatetic teachers; mobilizing school and community organizations and carrying out awareness campaigns in support of education; and establishing a VEC for each school in the project districts. (ii) Reducing high dropout and repetition rates and improving low learning achievement by: selectively establishing new and strengthening existing ECEs; supporting interventions for women's education and empowerment programs; installing toilets and water facilities in the primary schools; establishing and operating BRCs and CRCs; providing continuous in-service teacher training; developing and supplying improved textbooks and supplementary instructional materials; providing grants to schools, community organizations and individual teachers for the purchase of educational supplies and other quality inputs; and carrying out periodic learning assessments of primary level students. (iii) Improving weak education management structures and institutions at the state, district, sub-district and school levels by: building and strengthening SLO and DLOs to review and supervise the implementation of state and district investment plans and annual work plans and budgets designed to enhance access to and improve the quality and efficiency of primary education; establishing and strengthening state and district resource institutions, such as the SCERT, the SIEMAT, the BSTPC and the DIETs (sanctioned by GOI) or equivalent institutions in all project districts, and resource groups at the state and district levels, to provide technical support in project implementation; strengthening the state and district capacity for carrying out monitoring, research and evaluation activities; establishing a facility to support innovative approaches to improve primary education; and developing training modules for micro- planning, VEC training and training of master trainers 8. Project alternatives considered and reasons for rejection. During project preparation GOI, GOB, and IDA discussed different project features, including the following: (a) Project implementation by the State Secretariat of Education was rejected, given the poor performance of the Government of Bihar with other IBRD- and IDA-financed projects. Instead, the DPEP implementation scheme, through the existing BSPP, would be adopted. (b) Designing and operating the project separately from the BEP in seven educational districts of Bihar was rejected in order to fully tap into the accumulated positive experience. Instead, the project has been prepared and would be operated in a context where BEP activities will be merged into DPEP III in the current seven and ten newly added educational districts (totaling 17 educational districts equivalent to 27 revenue districts as listed in Annex 2). (c) Implementing the project in the total number of educationally disadvantaged districts in Bihar (55 revenue districts) was ruled out given the financial and operational implications in a state context of public institutions in need of strengthening and with high public fiscal deficits. On the other hand, implementing the project only in the seven BEP districts was also ruled out given the need to take this project to scale to positively enhance primary education in the state. Instead, an agreement was reached with GOI and GOB to implement the project in 17 educationally disadvantaged districts (Annex 2). (d) Implementing the civil works component of the project through the Bihar Zilla Parishad Engineering Divisions, which have discouraging implementation records, was opposed. Instead, the following approach to delivering educational infrastructure was recommended: (i) use of cost-effective construction materials and techniques; (ii) employment of consultant architects to assure cost- effective and appropriate designs and to promote quality control in physical works; (iii) BSPP employment of its own cadre of engineers, on contract, in every district to supervise and monitor all works; (iv) supply of water and sanitation facilities in all schools; (v) awareness and training programs for all stakeholders in use and maintenance of sanitation facilities; and (vi) promotion of community participation in the initial building of the school and continuous maintenance of the education infrastructure. These alternatives were further analyzed, discussed and confirmed by GOI and GOB during the appraisal mission of July 1997.  Project Appraisal Document Page 8 Country: India Project rtle: DPEP Ill 9. Major related projects financed by the Bank and/or other development agencies (completed, ongoing and planned). Sector Issue Latest Form 590 Ratings (a) The primary education issues mentioned in paras. 7(i) to (iii) above are being addressed in 13 (Bank-financed projects only) Indian states by the following Bank- and non-Bank- financed sector investments: Ongoing Bank-financed related projects I?_ 1Q Uttar Pradesh Basic Education Project (Cr. 2509-lN) S HS DPEP I (Cr. 2661-IN) S S DPEP II cofinanced by the Govermment of the Netherlands (Cr. 2661-IN) S S Ongoing ojects being fmanced by other development agencies: DPEP in Madhya Pradesh financed by the European Commission Andhra Pradesh and West Bengal Education Projects fnanced by DFID Bihar Education Project financed by GOI, GOB and UNICEF Rajasthan Lok Jumbish Project fnanced by GOI, the Governemnt of Rajasthan and the Swedish International Development Agency (SIDA) Women empowerment projects, addressed by the Mahila Samakhya (MS) Program and financed by the Govermnent of the Netherlands . ......................w.................................................................................................................................................................................................................................... 10. Lessons learned and reflected in the project design: The project design has incorporated lessons learned from the following sources: (i) current IDA-financed education sector portfolio in India (UPBEP, DPEP I and II); (ii) other donor-financed education projects in India; and (iii) international experience. Primary school enrollnents in the UPBEP districts have increased 30 percent in lower primary (42 percent for girls) and about 40 percent in upper primary since 1993 (the starting implementation year of the project) against 22.6 percent in non-UPBEP districts in lower primary. In the case of Haryana (a DPEP I state), prinary school enrollment in DPEP districts has increased 10.8 percent for girls and 26.2 percent for SC children since 1995 (the starting year of the project). Preliminary fmdings of the second round of assessment studies in 12 districts of Uttar Pradesh carried out at the end of 1995 indicate improvements in language (word knowledge and reading comprehension) as well as in mathematics (see deatils in Annex 2A of the PAD of the Second Uttar Pradesh Basic Education Project). In addition, the DPEP Bureau has commissioned the second round of learning achievement studies of the DPEP I states as part of the mid-term review of October 1997. The results of these studies will be made available to IDA by the end of CY98 through the JSM. To capture changes in retention it is necessary to get at least three years data. The EMIS has been operational only since the 1995-96 school year, therefore it will be possible to calculate retention data in DPEP districts once the 1997-98 data is compiled in 1998. The results of these fmdings will be made available to IDA by the end of CY98 through the JSM. The most important qualitative lessons from ongoing education projects in India (BEP and the total literacy campaign in Bihar, the DFID-assisted project in Andhra Pradesh, and the Lok Jumbish project in Rajasthan), as well as recent international experience in primary education include: (i) the importance of strengthening management structures and staffing skills, providing quality early childhood education, textbooks and learning materials and in-service teacher training; (ii) the relevance of providing such quality learning inputs in clusters of primary schools around resource centers; (iii) the value of enhanced community participation in the operation of schools, monitoring of teacher and student attendance, and school construction and maintenance; (iv) the significance of women's empowerment as a pivotal strategy to create favorable conditions for the enhancement of primary education; and (v) the need to plan and manage education in a decentralized manner involving state, district and sub-district stakeholders, especially to maintain the quality of the services provided when the project goes to scale. In terms of the implementation of educational investments, these experiences have shown the importance of: (a) installing adequate management arrangements at the state and district levels in a timely fashion; (b) ensuring stability of the core state and district management staff; (c) ensuring the timely provision of funds at the operational level; (d) paying appropriate attention to logistics, procurement and the maintenance of school buildings; (e) using new construction initiatives comprising use of cost-effective construction materials and techniques, and employment of consultant architects and an SIS cadre to assure appropriate designs and to promote quality control during the construction process; and (f) making the qualitative aspects of the investments paramount. 11. Indications of borrower commitment and ownership: To tackle the enormous educational challenges faced by the GOI, a Revised National Policy on Education and an accompanying National Program of Action were approved by the GOI and the states in 1992. The Policy gives priority to improving the quality of primary education and reducing disparities in enrollment, dropout rates, and learning achievement by gender and among social groups. Consistent with this Policy, the GOI, in close consultation with the states, established the District Primary Education Program (DPEP) in 1993 as a centrally sponsored program of financial and technical  Project Appraisal Document Page 9 Country: India Project itle: DPEP III assistance to the states and districts for primary education reform. Under the umbrella of the DPEP and related actions, GOI has worked very closely with the thirteen DPEP Project States over the last four years in preparing and implementing over US$1.2 billion worth of educational investments in about 122 socially disadvantaged districts. There has been widespread participation of research institutions, officials, communities and NGOs in the project design and implementation processes of these investments. According to the latest IDA supervision reports, these investments are meeting their qualitative aims to a large extent and have been rated "satisfactory". In addition, GOI has expressed its commitment to increase education spending from the current 3.7 of GDP to 6 percent by the end of the Ninth Plan (2002). Spending on higher education has been tightly curbed in recent years to less than 13 percent of total public education expenditure in India: In spite of Bihar's consistent fiscal deficit, its record in paying its teachers and contributing its share in the BEP is actually quite good. GOI and BEP's accumulated learnig experiences have been used to assist GOB prepare DPEP III. 12. Value added of Bank support: The Bank is one of the few donor agencies with the capability to provide the key technical advice and financial support necessary to assist in the implementation of education programs on a large scale. IDA has been instrumental in mobilizing financial and technical support from other donors into the sector. IDA has also provided a lead role in designing and operationalizing joint supervision mechanisms whereby a group of educational and management professionals nominated by the donors supporting DPEP and GOI review implementation progress twice a year (in March and October). IDA provides education specialists and managers from participating DPEP States and GOI with a much appreciated exposure to the educational innovations of other developing countries which are relevant to the Indian context. Finally, IDA plays a key role in providing continued technical and financial support which are essential to ensure that the potential benefits of the past educational investments come to fruition. Block 3: Summary Project Assessments (Detailed assessments are in the project file. See also Annex 4) 13. Economic Assessment (see Annex 4): The social and economic impact of investment in primary schooling in India has been extensively documented in departmental economic and sector work (ESW) recently published as Primary Education in India in the Bank's Development in Practice Series. Recerit survey data on schooling and social outcomes such as fertility and health and nutritional status support two general conclusions: (i) the relationship between education attainment and social outcomes is very strong; and (ii) the impact on an individual's behavior is greater the more extensive the coverage of primary schooling across the population. The impact on economic outcomes is less well documented and relies much on data collected over a decade ago. However, rate of return studies show relatively high returns to primary schooling (13-15 percent) and studies of farmer productivity in areas of agricultural growth demonstrate much higher returns for the labor of primary school graduates than for the unschooled. There is also evidence of spillover effects from the schooled to the unschooled. Only part of the social and economic outcomes of primary schooling accrue to the individual and his/her own family. If all of the costs of schooling were to be borne privately, the investment would be below that required to optimize the returns to society. This is one justification for public expenditure on primary schooling. Children of poor families would not attend school at the same rate as children of richer families if all of the costs had to be borne by the household. As in all states, the 1992/93 National Family Health Survey (NFHS) for Bihar documents the strong impact of primary schooling for girls on social outcomes, such as actual and desired fertility, child health and nutritional status as follows: (a) the desired number of children for illiterate women is 3.6 compared to 3.1 for women with primary schooling; (b) the infant and child mortality rates for children with illiterate mothers are 103 and 50 per thousand, respectively, while for children with primary schooled mothers they are 80 and 29 per thousand; (c) the rate of complete vaccinations for children with illiterate mothers is 5 percent compared to 21 percent for children with primary schooled mothers; and (d) 34 percent of children with illiterate mothers are severely malnourished compared to 26 percent of children with primary schooled mothers. The second general conclusion of the NFHS also holds true for Bihar: while each successive level of schooling has a strong impact, that impact is less in states with low enrollment ratios than in states with a wider coverage of education. Overall, the social indicators for Bihar describe a very disadvantaged population. Illiteracy and under-5 mortality rates in Bihar are the second highest across all states while the rate of severe child malnourishment is highest and the proportion of vaccinated children is the lowest. The poor social conditions in Bihar are accompanied by severe material poverty. The majority of the population is extremely poor, even by Indian standards. In 1993/94, 64 percent of households were below the poverty line compared to the national average of 36 percent, translating to around 66 million people with access to less than Rs. 33 (US$1) a day. Each of Bihar's three agro-climatic regions is among the poorest six regions in the country. Among the major states, the growth rate of mean consumption and reduction in poverty between 1957/58 and 1990/91 was the lowest in Bihar. While the incidence of poverty has been reduced by one third across the country (and by one half in Kerala), in Bihar there has been little decrease in four decades.  Project Appraisal Document Page 10 Country: India Project Trde: DPEP IlIl Recent Bank research has investigated the causes of differences between levels and changes in living standards and poverty across Indian states. The differences in farm yields, inflation and development expenditures, initial conditions in both physical infrastructure and human resource development were found to have significant effects. Almost half of the differential in the decline in the poverty gap between Bihar and Kerala over a 35-year period could be attributed to the difference in the initial level of human resource development. Bihar currently has the seconi lowest literacy rate and the lowest primary enrollment rate. Unless steps are taken to expand schooling, widespread poverty will remain and the gap between Bihar and the rest of the country will widen. The low enrollment ratio in Bihar is accompanied by a high dropout rate of around 65 percent. This is inefficient The prevailing dropout and repetition rates result in resources for 8.1 years of schooling being required to produce one graduate of the primary five- year cycle. Sixty percent more resources are being used per graduate than would be necessary in a situation of no dropout or repetition. A principal objective of the project is to increase the quality of schooling and to induce a higher retention rate. Reducing dropout and repetition rates by half could result in savings of US$40 million a year across the state or around US$20 million in the 17 project disticts. Baseline studies of primary school achievement and its determinants have been carried out for Uttar Pradesh and DPEP states since 1992. Among those factors positively influencing achievement are instructional time, student and teacher attendance, physical facilities, appropriate instructional materials for teachers and students, the hiring of better educated teachers and the school's academic climate. The specific effective interventions in each of these areas differ between states and between districts. Similarly, the attempted analyses to identify the most cost-effective interventions again demonstrated local variations. Packages of interventions identified locally to meet the needs of specific schools are more likely to be more cost effective than uniform packages. One of the strengths of the DPEP, and this project, is that the development of broad strategies is the responsibility of district level personnel while many of the specific interventions and expenditures are decided by local communities, village education committees and headteachers. 14. Financial Assessment (see Annexes 4 and 5) NPV=US$199.7 million The total cost of the project is estimated at Rs. 8,213.3 million or US$199.7 million equivalent including taxes and duties estimated at US$9 million equivalent (Table 3.1). The direct and indirect foreign exchange cost is estimated at US$7.9 million. In the investment cost dimension, the project would fnance civil works, furniture, equipment, vehicles, books and libraries, teaching materials, consultant services, information campaigns, training, workshops and fellowships. In the recurrent cost dimension, the project would finance salaries of additional staff, operational expenses, maintenance of vehicles and equipment purchased with project funds, honoraria to non-salaried workers involved primarily with non-formal educational programs, and salaries of incremnental staff, all on a declining basis (80%, 80%, 55%, 55% and 35% respectively). In all categories of costs, estimates are based largely on the actual experience for similar work now underway as a part of DPEP I and II. Estimated costs for civil works reflect current unit costs for construction at approximately US$135 per square meter, and costs for furniture, equipment, vehicles, books and teaching materials are based on purchase prices in neighboring districts under the DPEP I and II programs. Estimated costs for the salaries of additional staff are based on the basic pay scales, including standard allowances for social and other benefits applicable in the state of Bihar. All imported goods are subject to customs duties and taxes. The estimated cost of the project includes import duties and taxes valued at about US$9 million equivalent. The estimated foreign exchange component of US$7.9 million is calculated on the basis of estimated foreign exchange proportions as follows: (a) civil works, 9%; (b) equipment, 25%; (c) books and library materials, 5%; (d) locally manufactured vehicles, 25%; (e) incremental operating costs, 5%; and (f) equipment maintenance, 5%. Estimated project costs include physical contingencies (US$14.5 million) estimated at 10% for civil works and all physical components, and 5% for all salaries, technical assistance, training and maintenance items. The estimated costs of the project also include price contingencies (US$4.3 million) to account for expected price escalation at the following rates: (i) for foreign costs 2.2% in CY98, 2.6% in CY99, 2.8% in CYOO, 2.6% in CY01, 2.5% in CY02 and 2.3% in CY03; and (ii) for local costs 6.7% in CY98, 6.5% in CY99, 6.0% in CYOO, 6.0% in CYO 1, 6.0% in CY02 and 6.0% in CY03. The project would be financed by an IDA Credit of US$152.0 million. It is also anticipated that UNICEF would provide DPEP III with a grant of US$10.0 million. The IDA portion of the financing arrangements amounts to about 80 percent of the total project costs net of taxes. The combined contributions of IDA and UNICEF would amount to 85 percent of the total project costs net of taxes. GOB would contribute 15 percent of total project cost (US$28.7 million). GOI/GOB would also contribute all duties and taxes (US$9 million). The yearly breakdown of the total project cost by investment and recurrent expenditures, as well as the yearly fmancing sources as a percentage of total project costs are shown in Table 5.1 in Annex 5. The Credit would be made available to GOI on  Project Appraisal Document Page 11 Country: India Project Title: DPEP III standard terms and conditions and made available to the GOB as a grant. 15. Technical Assessment: DPEP III has been conceived and prepared based on the UPBEP, DPEP I and II projects. In all these ongoing Credits, the following two technical objectives are worth highlighting: (i) the sustained progress towards the implementation on a large scale of project-financed activities for improved pedagogy and enhanced learning achievement (such as child-centered teaching and activity-based learning); and (ii) the introduction of specific interventions to reach girls, working children, students with mild-to- moderate disabilities, ST and SC students and other children who have limited access to educational opportunities, especially those living in remote rural habitations, to increase their regular attendance to school and thus their school retention. These two objectives are in effect not notably different in Bihar than in any of the other 13 DPEP Project States. Changes in classroom practices and student-teacher transaction are slow to become observable. While the thrust of the DPEP-based pedagogical renewal is well focused, it needs to be deepened if it is to result in lasting change. In addition, teachers ought to be provided with practical diagnostic instruments to enable periodic student progress assessment in the classroom during the school year. Specific interventions to reach the socially disadvantaged groups will emerge from the social assessment studies that each DPEP III district carried out during project preparation under TORs agreed with IDA. These studies, completed at the pre-appraisal stage, include relevant information for designing specific activities, some similar in nature to those already proven effective under DPEP and BEP. The challenge is to take such strategies to scale and make them work in the very difficult context of Bihar. 16. Institutional Assessment: Two issues are of particular concern: one pertaining to the project's management; the other involving the project's pedagogical renewal dimension. Previous sector investments in India have required a considerable start-up time to build effective state, district, sub-district and school managerial and professional capacity for sustainable primary education development. Measures to ensure timely project implementation launch and to accelerate building managerial and professional capacity in DPEP III districts were reviewed by the IDA appraisal mission and are described in para. 4 and Annex 2. Concerning pedagogical renewal, SCERT and DIETs in participating districts have proven to be institutions in need of strengthening, often understaffed and/or staffed with faculty with little experience in primary education. The effort to build capacity of these institutions was discussed at appraisal. During negotiations, GOB provided assurances that it will: (a) maintain the SCERT and SIEMAT with responsibilities to coordinate project implementation with adequate staff, resources and facilities by the end of June 1998, and establish a program of staff training satisfactory to IDA (paras. 4 and 24(e) and Annex 2); and (b) establish and maintain DIETs (sanctioned by GOI) or equivalent institutions in project districts and appoint key staff at such DIETs in accordance with a schedule satisfactory to IDA by December 31, 1998 (para. 24(f) and Annex 2). In order not to delay the in-service teacher training activities, state and district resource groups (SRG and DRGs) are being established in the SLO and each DLO to carry out these activities, gradually integrating them with the SCERT and DIETs. During negotiations, GOB provided assurances that by December 31, 1998, it will cause the BSPP to establish technical resource groups at the state level and project district levels to assist in the development and implementation of the project (para. 24(i) and Annex 2). 17. Social Assessment: The National Education Policy and the DPEP implementation program have as priority objectives to reduce disparities in access, completion and learning achievement in primary school among girls, SC and ST students and other children who have limited access to educational opportunities. In addition, DPEP III will address the issue of working children. Several project districts have high concentrations of SC population requiring tailored-made strategies. The districts have prepared draft AWPBs in accordance with information gathered in the social assessment studies (SAS) required as part of project preparation. The state and five district AWPBs.were appraised by the IDA mission. Each DPEP III district carried out SASs in 18 villages selected on the basis of their size and composition of population. The study conducted in each village adopted the Participatory Rural Appraisal Technique to collect primary data. A total of about 1,800 meetings were held in 306 villages involving about 300,000 village participants (between 100 to 200 people per village per meeting). Household heads, women, teachers, and village authorities participated in the focus group meetings required in carrying out the SASs which were completed by pre-appraisal. The SAS results have served the dual purpose of: (i) highlighting the general and specific issues affecting the education of the socially disadvantaged groups of children; and (ii) orienting the community in the basic requirements of planning for the educational development of the village. These results will be the basis for designing and piloting, during the first two years of project implementation, district-tailored strategies to address these issues. In addition, the high female illiteracy rate prevailing in Bihar has slowed down the school enrollment of girls, the reduction of fertility and infant and child mortality rates and delayed an increase in nutritional status, infant vaccinations and use of modern contraceptive methods. To address the high female illiteracy level in Bihar, the project will support convergence and expansion of the MS (women empowerment) program, currently operating in 26 blocks of the seven BEP districts. 18. Environmental Assessment: Environmental [X] C Category  Project Appraisal Document Page 12 Country: India Project Tite: DPEP IIl The project would not raise any environmental concerns. GOB has furnished to IDA an official document dated June 10, 1997 (in the Project's File) confirming that no involuntary resettlement issues will arise from implementing the civil works component of the Credit in the DPEP III districts and explaining how the districts will secure this land. During negotiations, GOB provided assurances that no involuntary resettlements will arise from any use of land, or change of land use for the Project, except to the extent that IDA agrees in writing prior to such resettlement that the arrangements for such involuntary resettlement are satisfactory to IDA (para. 24(i)). In addition, the Bihar laws provide for the maintenance of transfer deeds documents at the District offices. ........... ................................................................................................................................................................................................................... 19. Participatory Approach: Identification/Preparation Inplementation Operation Beneficiaries/community groups IS/CON IS/CON/COL IS/CON/COL Intermediary NGOs IS/CON/COL IS/CON/COL IS/CON/COL Academic institutions IS/CON IS/CON/COL IS/CON/COL Local government IS/CON/COL IS/CON/COL IS/CON/COL Other donors IS/CON/COL IS/CON/COL IS/CON/COL [Information sharing (IS); consultation (CON); and collaboration (COL)] Popular participation is a cornerstone of DPEP. Like DPEP I and II, SASs under terms of reference satisfactory to IDA were required as part of project preparation in each DPEP In district. In addition, documented participatory meetings involving women, SC and ST parents, teachers, NGOs and local officials were held during the preparation of DPEP Im at the district, block and community levels for consultations on problems facing primary education and likely solutions in Bihar. To carry out the district-based baseline assessment studies (BAS), about 5,600 students of class I, 3,200 of class IV, 800 dropouts and 1,150 primary education teachers were selected by simple random sampling in 45 schools per district. The schools were selected on the basis of "multipharic" sample design. Paragraph 17 above descnbes the participatory scheme for carrying out the district-based SASs. Focus group discussions comprising 100- 200 people per village were held as part of the gender and tribal studies. Strengthened community/school organizations in all states and districts through the VECs are already providing a mechanism for continuing beneficiary participation in program implementation. One example of such participation is the involvement of communities in the formulation of AWPBs. Another example would be the establishment, through the VECs, of a reliable data base of teacher and student attendance at schooL During negotiations, GOB provided assurances that by December 31, 1998, it will establish for all schools in each project district VECs with responsibility for assisting with project implementation (para. 24(h)). 20. Sustainability: Public finances in Bihar need to become more efficient (Annex 4). In the immediate future, high interest payment obligations and constraints on further borrowing are likely to result in a continuation of recent trends which have led to low and falling levels of capital expenditures, a falling share of development expenditures in total expenditures and overall increases in development expenditures at a rate below population growth. The Reserve Bank of India (RBI) data show a small decline in education expenditures at constant prices between 1990/91 and 1995/96, while GOB data suggests an increase of around one percent a year. Overall, education expenditures are 23 percent of total revenue expenditures. Expenditure on elementary education has increased at a slightly higher rate (around 2.5 percent a year) than for education as a whole taking 69 percent of the total in 1995/96 compared to 66 percent in 1990/91. In 1995/96, about 99 percent of the combined plan and non-plan expenditure on elementary education was for pay and allowances. Total expenditure on primary schooling (grades I-V) is roughly 60 percent of all elementary education expenditures and equal to Rs. 785 crores in 1995/96 (Annex 4). Plan expenditures on elementary education over the past six years have averaged Rs. 30 crores a year. The annual state project contribution would average about US$7.6 million (Rs. 26 crores), representing a 3.4 percent increase over the 1995/96 level of total primary education expenditure (2 percent of total elementary education expenditure). Maintenance of past trends in education expenditure should be just sufficient to ensure that counterpart funding would be manageable. Further, it has been argued that the tied allocations to backward states for the GOI's Common Minimnum Program (amounting to Rs. 227 crores for Bihar in 1997/98) could be used. However, counterpart funding will not be the only incremental financial obligation for the GOB. In the project districts there are 10,290 teacher vacancies which are required to be filled as a condition of the project. This will add around Rs. 50 crores a year to the budget. Filling these vacancies and providing the counterpart funding will require the equivalent of a trebling of plan expenditures. Further, the GOB plans to fill an additional 22,000 teacher vacancies in non-project districts with an estimated annual cost of Rs. 110 crores. In all, GOB will need to allocate an extra Rs. 186 crores a year during project implementation (Rs. 26 crores as counterpart funding, Rs. 50 crores for filling vacancies in project districts and Rs. 110 crores in non-project districts), equivalent to around 14 percent of current expenditure on elementary education. In spite of the state's fiscal position, the Ministry of Finance of GOB has authorized the Bihar Public Service Commission to advertise and fill all the vacant posts. GOB has assured IDA that this teacher posting process will be completed by January 1, 1999. During negotiations, GOB provided assurances that it will take all necessary measures to ensure that at least 95 percent of the teacher's posts in the project districts, starting the third year of the project, will remain filled throughout the project implementation period (paras. 21 and 24(g) and Annexes 2 and 4);  Project Appraisal Document Page 13 Country: India Project Tif0e: DPEP lIl Sustaining project activities following project completion in March 2003 will require incremental expenditures estimated at Rs 49.6 crores (UJS$14.2 million equivalent). This is equal to 6.4 percent of the 1995/96 expenditure on primary education and should not alone be problematic. More of an issue is the ability of GOB to sustain the overall system with only a minimal level of teacher vacancies without which the long-run benefits of the project would not accrue. The overall trends in public finances in Bihar are disturbing. Both revenue receipts and expenditures have been falling as a share of state domestic product, and development expenditures per capita have also been declining, though more in economic services than in social services. Interest payments are equal to 27 percent of all tax revenues and state non-tax revenues. The ability of GOB to sustain both the existing educational base and project activities will depend on future developments in its overall public finances, including center-state resource transfers. The commitments given by GOB during project preparation, the intention of GOI to ensure that total education expenditures increase from 3.7 to 6 percent of GDP by the end of the Ninth Plan, and the recent directive of the Supreme Court to government to implement universal elementary education, suggest that the financial risk of the project is worth taking in the context of a state which has the highest incidence of poverty, severe child malnutrition, and the second highest level of illiteracy and under five year-old children mortality across all states. The agreement by GOB to prepare modalities for ensuring the post-project sustainability of each component and to discuss these with IDA during the second in-depth review in December 2001 (see paras. 4, 21 and 24(b) and Annex 2) should also increase the likelihood of project and system sustainability. 21. Critical Risks (see fourth column of Annex 1): Project outputs to development objectives Aisk Risk Rating Risk Minimization Measure The status of public finances and competing H The use of the BSPP for flow of funds. demands for state resources may affect the The strong role played by the DPEP Bureau in ensuring state availability of state funds for education governments' annual contributions of 15% of total project cost. during project implementation and following During negotiations, GOI and GOB provided assurances that the second its completion. in-depth review to be carried out by 12/31/01 with IDA and other external financiers of DPEP, including UNICEF, will comprise a status report of the proposed strategies to sustain the capacities and services developed under the project (paras. 4, 20 and 24(b) and Annex 2). During negotiations, GOB provided assurances that it will take all necessary measures to ensure that at least 95 percent of teachers' posts in the project districts, starting the third year of the project, remain filled throughout the project implementation period (paras. 4, 20 and 24(g) and Annexes 2 and 4). Project components to outputs ik Risk Rating Risk Miuimization Measure There are increasing difficulties in efficiently L to M Intensive training would be provided to VECs. managing a large-scale construction program. There may be state opposition to bring the L to M Using student attendance data, specific agreements are proposed for: (i) student/teacher ratio in line with the state filling all teacher vacancies in project districts; (ii) sanctioning additional norm of 50:1, and allow for a more rational teacher posts in project district to lower the student teacher ratio to the teacher deployment policy. state-norm of 50: 1; and (iii) rationalizing teacher deployment. On the basis of current data, community- L Incorporation of health-related matters in the renewed pedagogy. specific cultural patterns in some villages Convergence with other health-related programs in the community. may forestall students' use of toilet facilities financed by the project. Weaknesses in state and district professional M State and district technical resource groups, including skilled personnel resource institutions (SCERT, DIETs) may from SCERT and DIETs, will initiate quality improvement activities at slow down the quality improvement efforts. the same time that resource institutions are being strengthened. Irregular teacher attendance may jeopardize VECs will monitor teacher attendance to school. quality improvement efforts. Overall project risk rating M 22. Possible Controversial Aspects: None. So far, no opposition to the project has been identified. The participatory nature of project preparation will allow such issues to be identified and appropriately addressed, if they ever arise.  Project Appraisal Document Page 14 Country: India Project Tls: DPEP lil Block 4: Main Credit Conditions 23. Effectiveness Conditions: None 24. Other Conditions: At negotiations. GOT and GOB provided assurances that they shall: (a) maintain policies and procedures adequate to enable them to monitor and evaluate on an ongoing basis, in accordance with indicators satisfactory to IDA, the carrying out of the project and achievement of the objectives thereof (para. 4); (b) carry out with IDA and other extemal financiers of DPEP, including UNICEF, a joint in-depth review of the project on two occasions by December 31, 1999 and December 31, 2001, which will include: (i) a status report, in both reviews, of the positioning of teachers in project districts based on Bihar's norms; and (ii) a status report, in the latter review, of the proposed strategies to sustain the capacities and services developed under the project, and the modalities and framework of cooperation between the Borrower's Integrated Child Development and ECEs under the project (paras. 4, 20 and 21 and Annex 2); and (c) duly take into account the comments offered by IDA during each joint review in the course of further implementation of the project. At negotiations. GOB provided assurances that it shall: (d) carry out, and cause the BSPP to carry out, the Project in accordance with the DPEP Guidelines and the PIP agreed with IDA (para. 4 and Annex 2); (e) (i) maintain the SLO, DLOs, SCERT and SIEMAT with responsibilities to coordinate project implementation with adequate staff, resources and facilities by the end of June 1998; and (ii) establish a program of staff training satisfactory to IDA (paras. 4 and 16 and Annex 2); (f) establish and maintain DIETs (sanctioned by GOI) or equivalent institutions in project districts and appoint key staff at such DIETs in accordance with a schedule satisfactory to IDA by December 31, 1998 (para. 16 and Annex 2); (g) take all necessary measures to ensure that at least 95 percent of the teachers' posts in the project districts, starting the third year of the project, remain filled throughout the project implementation period (paras. 4, 20 and 21 and Annex 2); (h) by December 31, 1998, establish for all schools in each project district, VECs with responsibility for assisting with project implementation (para. 19 and Annex 2); (i) by December 31, 1998, cause the BSPP to establish technical resource groups at the state level and project district levels, to assist in the development and implementation of the project (para. 16 and Annex 2); (j) cause the BSPP to establish by December 31, 1999, in an appropriate number of sample of villages in each project district, a reliable education database of: (i) the number of public, private recognized and non-recognized schools through microplanning exercises to be conducted by the VECs; and (ii) the best estimates of teacher and student attendance in such schools through the establishment of attendance reporting mechanisms by the VECs and the EMIS (para. 4 and Annex 2); (k) carry out assessment studies on student learning achievement in all the project districts, with scope and content satisfactory to IDA, in calendar years 2000 and 2002 (para. 4 and Annex 2); (1) ensure that no involuntary resettlements arise from any use of land or change of land use for the Project, except to the extent that IDA agrees in writing prior to such resettlement that the anrangements for such involuntary resettlement are satisfactory to IDA (para. 18);. (m) (i) implement the project in accordance with strategies acceptable to IDA for improving primary education of female students; (ii) implement the project in any tribal area (as designated by GOB in accordance with applicable state laws) in accordance with procedures and delivery strategies satisfactory to IDA; and (iii) ensure that all investments in project districts which are classified by the Borrower as tribal districts, or which include blocks classified by the Borrower as tribal blocks, are appraised and implemented in accordance with a plan satisfactory to IDA for the delivery of project benefits to tribal people (Annex 2); and (n) select non-governmental and community organizations participating in the project in accordance with criteria and procedures satisfactory to IDA (Annex 2). Disbursement Condition: (o) During negotiations, GOT agreed that no withdrawals of the Credit proceeds will be made in respect of payments in or with respect to GOB until BSPP has entered into a MOU with GOI satisfactory to IDA (para. 4 and Annex 2). Block 5: Compliance with Bank Policies [x] This project complie ith all applicable Bank policies. Te r: Juan Prawda Cou"DirectorEdwinR  Annex 1 Page 1 of 4 Annex 1 Project Design Summary Narrative Summary Key Performance Indicators Monitoring and Supervision Critical Assumptions (CA) and Risks (R) CAS Objective: Improve the Literacy rates, especially of Census data. (R) There is considerable quality, effectiveness and women. uncertainty regarding the service delivery of India's Household survey data. stability of the UF government social and anti-poverty Years of education completed and its ability to follow programs, particularly at the by the population of 15 years Economic and Sector Work. through a credible program of state-level, where primary and over, disaggregated by fiscal adjustment and reform. responsibility resides. gender. (CA) Expected economic and social benefits might not materialize because of low quality of schooling. Project Development Increase in the percent of National Educational (R) Lower than anticipated Objectives: Assist the GOB people in the 11-15 and 16-20 Statistics. state growth rate may affect to build and strengthen state, age groups by the the financial sustainability of district and sub-district disadvantaged groups (female, Census Data. the long-term implementation institutional capacity to ensure SC, ST, working children, of the project, thus preventing that more children, especially children with learning Household Surveys. poor people from putting their from socially disadvantaged disabilities and other children enhanced literacy skills to groups, complete primary who have limited access to Educational Management productive use. education of appropriate educational opportunities) Information System (EMIS). quality in low literacy with completed primary districts. education. Project Outputs: 1. Expanded access to 1. About 400,000 additional 1. EMIS; and VECs (CA) More accessible primary education, children in the age group 6-10 attendance reporting education facilities, increased particularly for disadvantaged years, especially from the mechanism. retention, improved quality of groups. disadvantaged groups, will be instruction and community enrolled from 2000 onwards. mobilization result in increased demand for 2. Increased retention and 2.1 Compared to 1998 data, 2.1 Same as 1 above, education among improved leaming and from 2001 onwards: (i) impoverished groups. achievement in primary the attendance rate will schools. improve by 50 percent; (ii) (R) Competing demands on about 660,000 more children state resources may affect per year would attend school availability of funds for on a regular basis during the education, further hampering entire school year; (iii) the meeting increased demand retention rate will improve by generated by project 15 percent; and (iv) about interventions. 330,000 additional children will graduate from the five- year primary cycle. 2.2 Compared with the 1997 2.2 Baseline and periodic baseline assessments, the leaming achievement surveys achievement scores with in the third and fifth year of respect to language and math project implementation. Two by type of disadvantaged in-depth review studies by group (to be measured in 2000 12/31/99 and 12/31/01. and 2002) will improve.  Annex 1 Page 2 of 4 3. Improved state and district 3. By June 30, 1998, the SLO 3. Quality of annual state and capacity to manage primary and 17 DLOs would be fully district AWPBs. education. functional. Every year from 1998 to 2003, the SLO and all DLOs will prepare sound and implementable annual state and district-based AWPBs. Project Components: 1.1 Constructing new 1. I By the end of 2000, 2,350 1.1 Annual Project 1.1 (R) Difficulties in classrooms and schools, and new schools and 4,400 new Management Information efficiently managing a large- repairing or rehabilitating classrooms would have been System (PMIS) reports. scale construction program. existing classrooms. constructed and about 300 classrooms would have been repaired and/or rehabilitated. 1.2 Sanctioning new teaching 1.2 By the end of 2000, about 1.2 Annual EMIS and PMIS 1.2 (CA) Brings the student posts and appointing teachers. 5,700 new teachers would reports; regular attendance /teacher ratio in line with the have been appointed. reporting mechanisms through state norm of 50:1; and allows the VECs; and sample surveys. for a more rational teacher deployment policy. (R) There may be state opposition to this measure. 1.3 Developing and 1.3 Number of targeted 1.3 Annual EMIS and PMIS 1.3 (CA) Targeted implementing interventions interventions designed and reports. interventions address the for socially disadvantaged trialed. By the end of 2002, social patterns of access and groups. about 8,000 alternative schools exclusion to schooling of the would have been opened. disadvantaged groups identified in the district-based social assessment studies; and alternative schooling result in levels of learning equivalent to those in the formal system. 1.4 Mobilizing school and 1.4 Number of awareness 1.4 Annual EMIS and PMIS 1.4 and 1.5 (CA) Communities community organizations and campaigns carried out. reports; progress reports; and are best fit to effectively carrying out awareness field visits by joint supervision address locally specific issues campaigns in support of missions (iSMs). of school access and retention. education. Community support can be sustained for several years. 1.5 Establishing a VEC for 1.5 By 12/31/98, about 32,000 1.5 Annual EMIS and PMIS each school in the project VECs would have been reports; progress reports; and districts. established. By the end of field visits by the JSMs. 2002, about 10,000 five-day training events for VECs members would have been provided. 2.1 Selectively establishing 2.1 By the end of 2002, about 2.1 Annual EMIS and PMIS 2.1 (CA) Early childhood new, and strengthening 700 ECEs would have been reports. stimulation raises the readiness existing, ECEs. opened. levels required to perform adequately in the first grades of primary education and reduces harmful effects of late entry.  Annex 1 Page 3 of 4 2.2 Supporting interventions 2.2 Number of women's 2.2 Annual PMIS reports; 2.2 (CA) Empowered mothers for women's education and groups that have created an progress reports; field visits by from the poorest segments of empowerment programs. enabling self-reliance the JSMs. society will increase accepting environment to sustain their the value of education and will empowerment activities. send and keep their children, especially girls, in school. 2.3 Installing toilets and water 2.3 By the end of 2002, about 2.3 Annual EMIS and PMIS 2.3 (CA) Availability of toilets facilities in the primary 7,600 toilets and 8,100 water reports. increases girls retention at schools. facilities would have been school. (R) Community- provided. specific cultural patterns may forestall students' use of toilet facilities. 2.4 Establishing and operating 2.4 By the end of 1999, 206 2.4 Annual PMIS reports; field 2.4 (CA) CRCs are enabling BRCs and CRCs. BRCs and 2,476 CRCs would visits by the JSMs. enviromnents for teachers' be fully operational. self-reflection and action to improve pedagogical practices. 2.5 Providing continuous in- 2.5 About 100,000 teachers 2.5 Annual PMIS reports; 2.5 (R) Weaknesses in state service teacher training. will receive 10 days of training Classroom observations; and district professional per year during the period External evaluations; resource institutions (SCERT, 1999 - 2002. Institutional visits; JSMs. DIETs) may slow down quality improvement efforts. 2.6 Developing and supplying 2.6 By March 2001, titles for 2.6 Annual PMIS reports; 2.6 Same as above. improved textbooks and classes I to V in language, classroom observations; supplementary instructional math and EVS in Hindi, Urdu, external evaluations. materials. Bangla, Oriya and Tribal languages would have been developed and trialed. 2.7 Providing grants to 2.7 Number of schools and 2.7 PMIS and JSMs. 2.7 (CA) This grant scheme schools, community teachers in project districts induces participation and organizations and individual receiving Rs. 2,000 and Rs. ownership of teachers and teachers for the purchase of 500, respectively, per year. communities in the crusade for educational supplies and other improving the quality of quality inputs. education. 2.8 Carrying out periodic 2.8 Item analysis results of the 2.8 Baseline assessment study. 2.8 (CA) Educational learning assessment of assessment studies to be authorities could detect primary level students. carried out in 2000 and 2002. curricular skills not being mastered by students and apply corrective and/or preventive pedagogical measures. 3.1 Building and 3.1 By 6/30/98, the SLO and 3.1 AWPBs; JSMs. 3.1 (CA) Decentralizing strengthening state and district 17 DLOs would be fully operational tasks to the district program management staffed with full-time qualified and sub-district levels of structures (SLO, DLOs). personnel and operational. decision making will allow the states to focus mainly on strategic and state educational policy issues. Interest to learn from other state and/or worldwide experiences.  Annex 1 Page 4 of 4 intensifies; Transfer of key managerial staff at state and district levels are minimized. 3.2 Establishing and 3.2 By 6/30/98, the staffing of 3.2 AWPBs; JSMs; progress 3.2 See (R) in 2.5 above. strengthening state and district SCERT and SIEMAT with reports. resource institutions and/or full-time qualified personnel groups (SCERT, SIEMAT, would be substantially BSTPC and DIETs or completed. By 2002, equivalent institutions). improved BSTPC efficiency in textbook production for socially disadvantaged students in project districts. By 12/31/98 the: (i) staffing of the DIETs sanctioned by GOI or equivalent institutions with full-time qualified personnel would be substantially completed; and (ii) state and 17 district technical resource groups would have been established. 3.3 Strengthening state and 3.3 Number of project-related 3.3 Research reports. district capacity for carrying studies completed. out monitoring, research and evaluation activities. 3.4 Establishing a facility to 3.4 Number of innovations 3.4 Annual PMIS reports; field 3.4 (CA) Provides an support innovative approaches field tested. visits by the JSMs. environment to test to improve primary education. innovations before they are taken to scale. 3.5 Developing training 3.5 Number of training 3.5 Annual PMIS reports. 3.5 (CA) Ownership of project modules for microplanning, modules developed and innovations is induced by VEC training and training of imnplemented for empowerment master trainers. microplanning and VEC training and number of training programs provided to master trainers.  Annex 2 Page 1 of 9 Annex 2 Detailed Project Description Capitalizing on the experience gained by the ongoing DPEP I and II IDA Credits (Credits 2661-IN and 2876-IN), the Uttar Pradesh Basic Education Credit (Credit 2509-IN) and the recently published ESW (Primary Education in India), the project would assist the DOE/GOI to extend DPEP into 17 educational (27 revenue) socially disadvantaged districts in Bihar. Like the Uttar Pradesh Education Project, DPEP I and II, the project would build state, district and sub-district4 level managerial and professional capacity for the sustainable development of primary education in the project districts, and would support district-based activities aimed at ensuring that more children, especially from socially disadvantaged groups, complete a five-year primary education cycle of appropriate quality in low literacy districts. At negotiations, GOB provided assurances that it shall carry out, and cause the BSPP to carry out, the project in accordance with the DPEP Guidelines and the PIP agreed with IDA (paras. 4 and 24(d)). Scope and Approach: The specific investment Credit, with a strong degree of program and policy content, is designed to continue providing program support to GOI and GOB for the development of primary education in Bihar, with the DPEP Bureau operating as the national management authority which appraises the state and district AWPBs. The project has been prepared based on the experience gained by the BEP project in 7 districts. The project would finance program expansion in the 7 BEP districts plus 10 additional non-BEP districts (see page 9 of this Annex). All 17 educational (27 revenue) districts, with the exception of one BEP district (Purbi Singhbhum), have an average female literacy rate below the national average (39.1 percent). To assist the implementation of DPEP III in Bihar, further strengthening of the national management structure will be financed under DPEP I and II, including the establishment of a national distance education program to assist in-service teacher programs in DPEP Project States (including Bihar). Additional support for the DPEP III in the form of a grant has been confirmed by UNICEF through a parallel financing arrangement. Project Description: The project will have three components: (a) Expanding access to primary education, particularly for disadvantaged groups; (b) increasing retention and improving learning achievement in primary school; and (c) improving state and district capacity to manage primary education. Project Component 1 - Expanding access to primary education, particularly for disadvantaged groups (US$103.6 million, including contingencies; 51.9 percent of total project cost). This component includes the following five sub-components: Constructing new classrooms and schools, and repairing or rehabilitating existing classrooms. Although reducing dropout and improving learnig achievement would have priority under DPEP III, the program would also fmance expanded access through the construction of new schools and classrooms and the rehabilitation of existing ones. Approximately 400,000 new places would be created with the construction of 2,350 new schools and 4,400 new classrooms and the reparation and/or rehabilitation of about 300 existing classrooms financed by the project. Construction would be mostly undertaken by communities through the VECs, with the government engineer as technical adviser. This scheme ensures a greater sense of ownership and a more likely acceptance of responsibility for maintaining the school by the village. The project would employ a cadre of engineers on contract at the SLO, and its own engineers at district level to supervise works and make use of consultant architects to produce a variety of cost-effective designs that reflect end-users requirements. The construction program is built upon the excellent initiatives that are currently being deployed by BEP. The Credit will finance civil works, furniture and equipment, and on a declining basis, the salaries of additional teachers required in new facilities. The Credit will also finance, on a declining basis, the salaries of new teachers required by enrollment expansion resulting from project activities. As in DPEP II, a Rs. 50 lakh School Construction Innovation Fund would be established to assist GOB in undertaking research, experimentation and evaluation of alternative "low cost" techniques for construction of school facilities. This Innovation Fund would be utilized in part to finance design work though a collaborative effort of an architectural advisory group involving consultant architects, education specialists, higher education institutions in the state and state construction agencies. The fund would also finance the actual construction of prototype designs in communities covered by the DPEP HI project. Initially, the construction of these prototype schools would be in parallel to the ongoing project construction of more traditional designs during the early stages of the DPEP III implementation period. However, once an evaluation has been made of successful, replicable techniques in the prototype Sub-district means a level below the district level, consisting of one or more of the following: Sub-division, block, panchayat and village, as well as an area defined as a cluster by a Project state.  Annex 2 Page 2 of 9 schools, it is expected that these alternative methods of construction would be incorporated into the school construction program during the remaining project period. Sanctioning new teaching posts and appointing teachers. The Credit would reimburse, on a declining basis, the salaries of about 5,700 new teachers required by enrolhment expansion and by increased student attendance resulting from project activities. The need for these teacher appointments would be documented by each district based on mitial attendance data collected on a school-by-school basis and would be authorized by DPEP beginning in the third year of the project. New teacher posts in schools not constructed or expanded with project fnancing would be eligible for financing from the third year of the project only on the basis of evidence of increased regular school student attendance provided by a reliable attendance database in each district school. At negotiations, GOB provided assurances that it will cause the BSPP to establish by December 31, 1999 in an appropriate number of sample villages in each project district a reliable education database of: (i) the number of public, private recognized and non-recognized schools, through microplanning exercises to be conducted by the VECs; and (ii) the best estimates of teacher and student attendance in such schools through the establishment of attendance reporting mechanisms by the VECs and the educational management information system (EMIS) (paras. 4 and 24(j)). This reliable database could also be used to rationalize teacher deployment to eliminate unjustified differences in staffmg ratios between schools, and to sanction additional positions based on attendance. GOB has not filled teacher vacancies resulting from retirement since 1993. It is estimated that there are about 10,290 primary education teacher vacancies in the DPEP III districts and another 22,000 in non-project districts. During the appraisal mission, GOB informed the IDA team that: (i) the Bihar Public Service Commission has initiated the process to fill all these vacancies; and (ii) most of these vacant positions will be filled by December 1998. Prior to negotiations, GOB provided to IDA an implementation schedule to fill all teacher vacancies in project districts and the state norm for positioning primary school teachers. During negotiations GOB provided assurances that it will take all necessary measures to ensure that at least 95 percent of the teachers' posts in the project districts, starting the third year of the project, remain filled throughout the project implementation period (paras. 4, 20, 21 and 24(g). In addition, during negotiations GOI and GOB provided assurances that they will carry out with IDA and other external financiers of DPEP including UNICEF, two joint in-depth reviews of the project by December 31, 1999 and December 31, 2001, which will include a status report of the positioning of teachers in project districts based on the state norms (paras. 4 and 24(b)). Developing and implementing targeted interventions for socially disadvantaged groups (girls, SC and ST students, working children, children with mild to moderate learning disabilities and other children who have limited access to educational opportunities). The project will provide for the development, trailing and large-scale implementation of targeted interventions to address equitable access, retention and delivery of quality education to the above-mentioned socially disadvantaged groups of children in DPEP IH districts. To achieve this aim, each district has carried out a required social assessment study (SAS) as part of the preparation of their first year AWPBs. Each one of these district-based studies have analyzed the: (i) existing social structures, their relationship and impact on the education system; (ii) pattern of exclusion to schooling and the constraints of location, gender, social, economic and cultural factors to access; (iii) patterns of working children; and (iv) constraints to women/girls' educational development. These studies have also provided the basis for which district-specific strategies and interventions would be developed and implemented under the Credit. The fmdings of these studies will be discussed with state and district planning teams during the first year of the project. Some DPEP III districts have already identified through their SAS a variety of activities to improve learnig achievement for girls, including a gender sensitive review of curricula and instructional materials, teacher sensitization through training, ECE programs, establishment of alternative schooling modalities including multi-grade centers, non-formal schools, residential schools (Ashrams) for tribal children, escort teacher services and peripatetic teachers. At negotiations, GOB provided assurances that it will: (i) implement the project in accordance with strategies acceptable to IDA for improving primary education of female students; (ii) implement the project in any tribal area (as designated by GOB in accordance with applicable state laws) in accordance with procedures and delivery strategies satisfactory to IDA; and (iii) ensure that all investments in project districts which are classified by the Borrower as tribal districts, or which include blocks classified by the Borrower as tribal blocks, are appraised and implemented in accordance with a plan satisfactory to IDA for the delivery of project benefits to tribal people (para. 24(m)). For these targeted interventions, the Credit will finance educational materials, consumable supplies, training, and consultant services. The Credit will also finance civil works, furniture and equipment for residential schools that may be approved by IDA. Mobilizing school and community organizations and carrying-out awareness campaigns in support of education. Popular participation in the development of district investment proposals has raised awareness among beneficiaries of impending improvements in the quality of schooling. Building from this base, a variety of awareness building activities-campaigns, community meetings, fairs-would be undertaken by the VECs to increase awareness of the program and the benefits to communities and schools. Emphasis would be given to the accessibility of children belonging to the socially disadvantaged groups currently deprived of educational opportunities, on the importance of integrating into primnay school children with disabilities as well as working children, and keeping in school all other children, especially girls, SC and ST students. The Credit will finance training, educational  Annex 2 Page 3 of 9 materials and consumable supplies for strengthening community/school organizations and awareness campaigns and consultant services. Establishing a Village Education Committees (VEC) for each school in the project districts. At the school level, DPEP III, like the UPBEP and DPEP I and II, would be implemented through district-level bodies, including the Panchayati Raj structures and the VECs. The approximate 32,000 VECs to be established under DPEP III are expected to oversee the operations of schools and non- formal education centers, conduct annual surveys of village children to estimate teacher and student attendance and identify non- enrollees and dropouts, contribute services and resources to the school and encourage parents to send their children to school and keep them there. Depending on local circumstances, additional activities such as microplanning may be entrusted to the VECs. In addition, DPEP III envisages a very important role of the VEC in establishing a reliable database of student attendance in primary school (paras. 4 and 24(j)). The constitution of VECs is more or less similar across districts and includes the gaon panchayat president, head teachers, headmasters, NGO representatives, members of panchayat, and representatives of parents/guardians of the village. These organizations function with varying degrees of effectiveness. In states such as Kerala and Maharashtra (both DPEP I and II project states) with long traditions of community involvement in schools, VECs meet regularly and are effective in their tasks. In other states, surveys show that some VECs meet less frequently and, as a result, are less effective. Based on lessons learned from the DPEP I and H projects, and especially from the BEP, the DPEP III district investment proposals have defined the functions of community/school organizations, their membership (including reserving at least one third of all places for women), and a training and supervision strategy. During negotiations GOB provided assurances that by December 31, 1998, it will establish VECs across every school in all project districts with responsibility for assisting with project implementation (paras. 19 and 24(h)). The Credit will finance training, educational materials and consultant services. UNICEF would finance, as a pilot, the development of a training program and learning materials, as well as of strategies, to empower communities through the training of VECs. The development of these tasks would be based on the successes of the training package/process developed for the VEC under BEP (including microplanning, participation, learning and action through analysis and assessment for empowering village communities to plan and monitor both participation in and effectiveness of their local primary school). Project Component 2 - Increasing retention and improving learning achievement in primary education (US$75.5 million, including contingencies; 37.8 percent of total project cost). This component includes the following eight sub-components: Selectively establishing new, and strengthening existing, early childhood education centers (ECEs). ECE is an important DPEP strategy to improve readiness to learn, especially for children from illiterate households. ECE is also expected to contribute to enrollment and retention for girls by providing an altemative source of sibling care during school hours. ECE is provided in Bihar by the centrally-sponsored integrated child development service scheme (ICDS). National evaluations have found that participation in the ICDS program improves retention in primary school. However, the timings of schools and ICDS Anganwadi Centers which provide ECE and supplementary nutrition rarely match, thereby reducing the potential contributions of the program for sibling care. In addition, Anganwadi Centers serve a population of 1000; this catchment area can include as many as three schools, only one of which is likely to be located within easy walking distance. Moreover, ICDS coverage is very low in Bihar. Finally, the ECE component of ICDS is unevenly implemented across the districts, raising concems for quality. Because of these factors, DPEP III districts have proposed to expand or establish ECE programs for the 0 to 6 age group, often on a large scale. Existing programs have rarely been evaluated systematically, and new programs would involve the creation of materials, training and supervision systems, and facilities. For these reasons, the GOI would require that expanded and new ECE programs financed under the Credit first be developed and tested on a pilot basis with concurrent evaluations. Proposals for ECE pilot programs and evaluations would be considered by the DPEP Bureau for financing, beginning with the second year of the project. During negotiations, GOI and GOB provided assurances that they will carry out with IDA and other external financiers of DPEP, including UNICEF, a second joint in- depth review of the project by December 31, 2001, and such a review will include a status report of the modalities and framework of cooperation between the Borrower's ICDS and ECEs under the project (paras. 4 and 24(b)). The Credit will finance the establishment of about 700 ECEs and the provision of educational materials, consumable supplies, training and consultant services, furniture and equipment, salaries on a declining basis and limited civil works. Supporting interventions for women's education and empowerment programs. The project will strengthen existing and expand new women's empowerment programs (Mahila Samakhya [MS]) in the state. These programs which form village women's groups are a forum for discussion, reflection and action on problems confronting village women. They have also included literacy campaigns and health-related activities, as well as education on women's legal rights and on public services available to them. These demand- driven programs are based on facilitation, rather than directive processes. The collective comprised of village women are made accountable for the planning, decision making and evaluative processes of all the activities inherent in their empowerment. The  Annex 2 Page 4 of 9 participating women determine the form, nature, content and timing of all group activities in their village, and the staff selection processes are participatory. These programs take the time necessary to develop and do not have programmatic "targets". Instead they are self-paced processes built on existing knowledge and the women's own priorities for learning. MS in Bihar has been run by an autonomous society, and will continue to be so in the project. At the state and district levels, the MS will interact in a structured way with the SLO and all DLOs to ensure synergy with other DPEP III-fnanced activities, especially those geared to increase access to and improve the retention and learning of girls in schools. The support and expansion of MS in DPEP Ill will be phased in a manner appropriate to their existing principles and methods of operation. The support of MS will be phased out in participating villages once the women's groups have created an enabling self-reliance environment to sustain the empowerment activities developed under the project. During negotiations, GOB provided assurances that it will select NGO and community organizations participating in the project in accordance with criteria and procedures satisfactory to IDA (para. 24(n)). The Credit will fnance training, consulting services, education materials, consumable supplies, incremental operating costs and salaries for MS staff on a declining basis. Installing toilets and water facilities in the primary schools. The absence of toilets and water supply in a large number of schools in DPEP In districts often makes school an unattractive place to parents and their children, especially for girls. The installation of toilets and water supply is expected to make a major and visible contribution to the quality of services, and hence to increase retention in schools. Provision for water and waste disposal at classroom sites financed under the Credit will be fully integrated into the school construction program explained above. These civil works programs would be implemented mainly by community/school organizations. The Credit will fmance the installation and maintenance of about 7,600 toilets and sanitation civil works and 8,100 water facilities in primary schools in all DPEP III districts states, including equipment, costs of electricity connections, and professional services. Establishing and operating block and cluster resource centers (BRCs and CRCs). At the sub-district level, the in-service teacher training envisaged by DPEP Ill would be implemented by block and cluster level offices. Training activities under the project would operate at the block level through a network of 206 BRCs, which would provide the facilities for decentralized training and teacher support activities fmanced under the project. BRCs would be managed by an education department officer. BRC training teams would be drawn from carefully selected teacher trainers. Below the BRC level, and assuming one BRC for every 12 CRCs, DPEP would be implemented through 2,476 CRCs, each comprising a lead primary school serving a group of about 12 to 16 primary schools. These clusters would provide continuous support to primary school teachers within the cluster through classroom visits, short meetings and pedagogical discussions at the lead school. Continuous support would be supplemented by periodic residential training at the BRCs, with trainers drawn from DIETs. A senior and experienced primary school teacher would be assigned to serve as the cluster resource teacher. Construction of these facilities would be completed by the third year of the project. The Credit will finance civil works, equipment, furniture, vehicles, training, consulting services, educational materials, consumable supplies, incremental operating costs, and salaries for block and cluster staff on a declining basis. Providing continuous in-service teacher training. DPEP is seeking to transform India's approach to in-service training by developing the training systems and infrastructure needed to make training a continuous classroom and school-based process. The training conceived in the DPEP is expected to build teacher awareness and motivation for alternative classroom practices and develop further training strategies for enriching the learning environment. The training may include an introduction to child-centered teaching and active learning methods, applications in multigrade settings and possibilities for teacher preparation of teaching aids. The training materials may be adapted as needed and translated into the principal regional languages of Bihar (Hindi, Urdu, Bangla, Oriya and tribal languages). The core activities established for the UPBEP and DPEP I, fine-tuned for DPEP II and enriched with the in-service teacher experiences from BEP, would be the basis for the in-service teacher training to be provided and financed under DPEP m. The basic traits of the strategy are the: (a) development of initial modules and systems for training trainers, teachers and school principals, based on the results of the new pedagogy visioning exercises carried out at the state, districts and sub-district levels with primary education stakeholders; (b) development of the physical infrastructure needed to bring training to the BRCs and CRCs level; and (c) expansion of training modules and materials to incorporate the minimum levels of learning (MLL) instructional materials, teaching and learning materials for the integration of working children and children with disabilities into primary schools, and a variety of effective classroom and school management and leadership practices. Teachers in DPEP districts would be provided with approximately 25 days of training, preferably at the BRC level, throughout the life of the project, reinforced by monthly meetings/workshops at the CRC level and school visits by cluster resource teachers. Key to the success of the program is the development of good training materials and the training of effective master trainers and resource persons. With the assistance of the national program, master trainer programs would be developed to train DIET faculty and other teacher educators. Master training teams would test materials and approaches on a trial basis in districts using the facilities of DIETs and Teacher Training Institutes. One source for carrying out this training would be the prototype training designs and materials for school-based in-service training that have been developed and tested in several states by the Department of Teacher  Annex 2 Page 5 of 9 Education at NCERT and other state resource institutions for UPBEP, DPEP I and II and other primary education projects. Another source for the development and delivery of in-service teacher training strategies would be a strengthened SCERT and the state and district resource groups (SRG and DRGs) which are in the process of being established in the SLO and all the DLOs (see paras. 16 and 24(i)). The in-service teacher training devised for DPEP III includes: (i) implementing visioning workshops at the district and sub-district levels to enable key stakeholders in primary education to understand more clearly what child-centered pedagogy entails and what classrooms will look like by the end of the project under this new pedagogical paradigm; (ii) providing training and technical assistance to DIETs; (iii) adapting national prototype training and classroom materials in regional languages; (iv) providing training to assist teachers in the identification, assessment and teaching of children with mild to moderate disabilities; (v) training of master trainers; (vi) adapting, testing and disseminating ECE materials; (vii) developing instructional materials, pedagogical processes and in-service teacher training for effective multi-grade teaching; and (viii) developing instructional materials in tribal languages, in cooperation with Tribal Welfare Departments and other concerned agencies. The nationally sponsored distance education program fmanced under DPEP II will complement the in-service teacher training activities of DPEP IH. In-service teacher training in participating DPEP III districts would start in the second year of project implementation and would incorporate the first generation of training materials financed under the Credit. In later years, additional training modules would be developed with technical support from DIETs and SCERTs, with priority given to multigrade teaching, teaching of reading and mathematics, using new MLL in the instructional materials as they become available, the use of supplementary materials and teacher preparation of educational aids. SCERTs and the DPEP Bureau/TSG would cooperate throughout the process to identify best practices and innovations for dissemination throughout India. Master trainers and resource persons would participate in refresher training as new training modules are developed and introduced. The Credit will fnance limited civil works, furniture, equipment, vehicles, consultant services, educational materials, visioning workshops, training, fellowships, and incremental staff salaries on a declining basis. Developing and supplying improved textbooks and supplementary instructional materials. The project will assist the BSPP and the Bihar State Textbook Publishing Corporation in improving the quality and efficiency of instructional materials development, production and distribution (including textbooks, student workbooks, supplemental readers, teacher guides and other related materials, as well as appropriate teaching and learnming materials designed to assist in the integration and mainstreaming of children with mild-to- moderate disabilities in primary schools). This program includes: (i) preparation of a new generation of quality instructional materials based on the state's approved MLLs; (ii) field tryout of instructional materials prior to publication; (iii) improvements in the design, illustration, layout and durability of instructional materials; (iv) improvements in distribution efficiency including computerization of stocks; and (iv) professional training for instructional materials agency staff. Technical support to improve pedagogy would be provided by NCERT or equivalent organizations and the SRG and DRGs at the state and district levels. The activities of the SRG and DRGs to develop improved textbooks and supplementary materials will be gradually integrated with the SCERT and DIETs or equivalent institutions. During negotiations, GOB provided assurances that by December 31, 1998, it will cause the BSPP to establish technical resource groups at the state level and project district levels, to assist in the development and implementation of the project (paras. 16 and 24(i)). A teaching and learning material study was completed and analyzed by IDA at pre-appraisal to guide future instructional materials improvement efforts in DPEP III. The Credit will finance equipment required up to the stage of "camera ready copy", training and consulting services. In addition to the annual grants described below for the purchase of teaching materials by teachers, the program would also provide funding for the establishment of small libraries and book banks (for example, for poor boys who are not covered under existing free book schemes) in schools in project districts. Special allocations may be considered for materials purchased for one- and two- classroom schools. Providing grants to schools, community organizations and individual teachers for the purchase of educational supplies and other quality inputs. Evaluations of the centrally sponsored operation blackboard scheme have shown the weaknesses of delivering pre-determined packages of teaching aids to schools, without training and involvement of teachers and local education staff. Under DPEP I and II, districts have been provided annual grants to schools, community organizations and individual teachers for the purchase of consumable educational supplies, materials and other quality inputs. This grant-scheme has proven to be an effective strategy to induce participation and ownership of teachers and communities in the crusade for improving the quality of education in their schools. Likewise, under DPEP III, grants of Rs. 2,000 would be authorized for schools and community organizations. In addition, annual grants of Rs. 500 would be made to each primary teacher in project districts to purchase materials for use in preparing teaching aids. Schools and teachers would keep records and receipts for purchases. In-service training in the development of teaching aids would be provided. The DPEP Bureau and the BSPP will closely monitor the use of these grants by schools and teachers. In addition, the DPEP Bureau will periodically review the grant amounts.  Annex 2 Page 6 of 9 Carrying out periodic learning assessments of primary level students. Baseline assessment studies (BAS) were carried out by each DPEP III district in a random sample of primary schools as a requirement for project preparation. The district-based BAS: (i) measure achievement level in mathematics and language of class I and IV students and its determinants; (ii) assess status and functioning of elementary schools in terms of physical facilities, teaching and teaching processes; (iii) provide a background profile of teachers, headteachers and headmasters; and (iv) determine the achievement level of a random sample of children who have dropped out from the system. Another set of district-based assessment studies are to be carried out at the mid and concluding points of project implementation to assess changes in learning achievements in mathematics and language by type of student (belonging or not belonging to any of the socially disadvantaged groups), region (district, block, school) and type of school (urban or rural). The project would finance the undertaking of these BAS. During negotiations, GOB provided assurances that it will carry assessment studies on student learning achievement in all DPEP m project districts, with scope and content acceptable to IDA, in calendar years 2000 and 2002 (paras. 4 and 24((k)). Prior to negotiations, IDA received information concerning the findings of the second round of learning achievement studies carried out for the UPBEP districts (see the details in Annex 2A of the PAD of the Second Uttar Pradesh Basic Education Project). In addition, the DPEP Bureau has informed IDA that the second round of learning achievement studies for the DPEP I districts are currently being carried out and the findings of the results will be submitted to IDA by December 31, 1998 through the joint supervision missions. Project Component 3 - Improving state and district capacity to manage primary education (US$21 million, including contingencies; 10.3 percent of total project cost). This component includes the following five sub-components: Building and strengthening state and district program management structures (SLO, DLOs). The GOB would implement approved DPEP HII state and district AWPBs (investment proposals) through its SIS (BSPP).; A bank account for the DPEP HI implementation will be opened by the BSPP with an initial deposit from GOI and GOB, sufficient to cover project start-up activities up to effectiveness (estimated by April 1998)6. The BSPP through its State Level Project Office (SLO) would review and supervise the implementation of state and district AWPBs. The BSPP would also coordinate the cooperation of other state agencies, NGOs, consulting companies and individuals to carry out project-related tasks. The SLO is fully operational and substantially staffed with qualified personnel including a full-time State Project Director and full-time Unit Heads for Civil Works, Planning and Monitoring, State Programs, District Programs, and Finance, Monitoring and Accounting. Some vacancies still exist that would be filled no later than the first semester 1998. To ensure rapid start-up of implementation, at negotiations GOB provide assurances that it will: (i) maintain the SLO with responsibilities to coordinate project implementation, with adequate staff, resources and facilities by the end of June 1998; and (ii) establish a program of staff training satisfactory to IDA (paras. 4 and 24(e)). The capacity of districts to plan and manage program delivery to improve the quality and expand the access to primary education would require the strengthening of the district management structure. The day-to-day implementation would be managed by a District Level Project Office (DLO) that would be directed, in most cases, by the District Education Officer (DEO). The staff who participated in the planning teamns that developed investment proposals are expected to also play a key role in the actual implementation. The DLOs would receive advances of funds from the BSPP against AWPBs approved by the BSPP and reviewed by the DPEP Bureau. Funds would be maintained in separate accounts by the DLO director and advanced to schools and communities, as required by individual sub-projects, where they would be maintained in separate dual-signature accounts. The above arrangement would be implemented through local resources with IDA funds disbursed on a reimbursable basis for expenditures incurred. The DLO would be staffed by a small team of specialist staff appointed and fnanced by the SISs. The staff would be headed by a full-time project coordinator and include a fnance/procurement officer and a specialist to coordinate the implementation of program components in functional areas (civil works, PMIS/EMIS and training) or in areas of special emphasis. In addition to managing the DPEP Guidelines mandate the establishment of a registered SIS in each DPEP project state, like Bihar, to receive, disburse and account for program funds, to manage program implementation, and to monitor and report on progress. The SIS is accountable to a General Council chaired by the State Chief Minister or Education Minister and an Executive Committee chaired by the State Chief Secretary/Education Secretary. Membership in both bodies includes representatives from other State Government departments and the GOI. These structures under the UPBEP and DPEP I and II projects have been shown to have administrative flexibility combined with public accountability. 6 The Bihar BSPP was established in 1991 to manage the BEP. The model Memoranda of Association and By-laws used are compatible with the Memorandum of Understanding (MOU) used in the establishment of other SISs for the UPBEP, DPEP I and II Projects. This MOU model was reviewed by IDA against managerial and legal criteria during the appraisal of DPEP I. During negotiations, GOI agreed to submit to IDA evidence that the BSPP has entered a MOU with the Borrower (GOI) as a condition of disbursement of the proceeds of the Credit (paras. 4 and 24(o)).  Annex 2 Page 7 of 9 flow of project funds to project activities and supervising their implementation at the block, cluster, school and village levels, key responsibilities of DLO staff would be awareness building activities, school mapping, management of the school statistics (EMIS) and project (PMIS) management information systems and preparation of AWPBs. The 7 BEP DLOs are already functioning, while the additional 10 DLOs are being officially established in the new districts. The process for the appointment of key DLO personnel in the 10 non-BEP DLOs has been initiated, and the selection process for a full-time qualified fmancial/accounting official, civil works engineer and a management information system computer programmer was satisfactorily completed prior to negotiations. Orientation and professional training packages for the staff positioned at the SLO and all the DLOs are being prepared. At negotiations, GOB provided assurances that it will: (i) maintain the DLOs with responsibilities to coordinate project implementation in each project district, with adequate staff, resources and facilities by the end of June 1998; and (ii) establish a program of staff training satisfactory to IDA (paras. 4 and 24(e)). Establishing and strengthening state and district resource institutions and/or groups (SCERT, SIEMAT, BSTPC and DIETs or equivalent institutions). The project will finance the strengthening of SCERT's capacity to provide technical support for curriculum revisions, improvement of textbook and instructional materials development, development of improved classroom teaching models and in-service teacher training. The SCERT's strengthening activities comprised under DPEP III would be carried out with support from national technical assistance programs developed for DPEP I and II, from the SRG to be established during the first year of project implementation (paras. 16 and 24(i)), and from the experience acquired in the BEP project. SIEMAT, or an equivalent agency, would be established as a small planning and management unit within SCERT to provide technical assistance and training in education planning, school mapping, management and monitoring to state and district education staff. During negotiations, GOB provided assurances that it will: (i) maintain SCERT and SIEMAT with responsibilities to coordinate project implementation with adequate staff, resources and facilities by the end of June 1998; and (ii) establish a program of staff training satisfactory to IDA (paras. 4 and 24(e)). The Bihar State Textbook Publishing Corporation (BSTPC) is an independent organization, established under the 1956 Companies Act and is the sole authorized publisher and copyright holder of the state's core textbooks for Class I to X as well as for their production. Less than 20 percent of the textbook production is carried out in the BSTPC's own printing plant while the larger share is carried out by outside suppliers (printers) which it contracts. The project aims at promoting increased competition and efficiency in the printing services for textbooks being provided under the project by the BSTPC (see Annex 6). The project will also fnance the provision of training, consultant services and publishing software to upgrade BSTPC publishing skills in the development of improved instructional materials (including textbooks) under the project up to camera-ready stage only. The capacity of districts to improve the quality of primary education would require the strengthening of its District Institute of Education and Training (DIET). DIETs would play a key role in the design and implementation of training programs at the district and sub-district levels, in particular, at the block and cluster resource levels. DIETs would be developed as the principal technical and professional resource agency for training, materials development, planning and management for district plans and work programs. The work of the DIETs would be supported by the SCERT and the SRG and DRGs established at the state and district levels. The GOI has recognized that the standard model for DIET organization, staffmg and equipment needs to be adapted to the support requirements of DPEP, especially in regard to primary in-service teacher training. In addition, in some DPEP III districts, substantial enhancement of DIET physical facilities would be needed. During negotiations, GOB provided assurances that it will establish and maintain DIETs (sanctioned by GOI) or equivalent institutions in project districts and appoint key staff at such DIETs in accordance with a schedule satisfactory to IDA by December 31, 1998 (paras. 16 and 24(f)). The Credit will finance civil works in selected DETS, equipment, vehicles, consultant services, educational materials, consumable supplies, incremental operating expenses and salaries on a declining basis. Strengthening state and district capacity for carrying out monitoring, research and evaluation activities. With training and technical support from the national program on program evaluation, research and studies financed under DPEP I and 11, SCERTs would be strengthened and expanded to conduct or contract program evaluation and research studies pertaining to the attainment of the DPEP III objectives, as well as the effectiveness of the innovations implemented for such purposes. To carry out these studies, the SLO may consider contracting out the services of NGOs, universities and other apex institutions. During negotiations, GOB provided assurances that it will select non-governmental and community organizations participating in the project in accordance with criteria and procedures satisfactory to IDA (para. 24(n)). After a start-up period, these agencies would in turn assist DIETs to develop similar capabilities. The Credit will finance civil works, equipment and furniture, vehicles, educational materials, consumable supplies, training, consultant services, incremental operating costs, and salaries on a declining basis. In addition to the above, the Credit would develop the capacity of state, district and sub-district level staff to manage the improved school statistics and project management information systems (EMIS and PMIS), carry out school mapping exercises, consult with  Annex 2 Page 8 of 9 parents and community leaders, prepare annual work programs and monitor project implementation. In support of district capacity development, the Credit would finance limited civil works, vehicles, equipment (including computer equipment for the EMIS), educational materials, consumable supplies, training, consultant services, incremental operating costs and salaries on a declining basis. Establishing a facility to support innovative approaches to improve primary education. The GOB has proposed a number of innovative but un-tested approaches to improve primary education, including new cost-effective construction designs (see School Construction Innovation Fund above). In addition, a number of core intervention strategies, including ECEs, would require pilot testing prior to adoption and replication. Other innovations have been emerging during the UPBEP, DPEP I and DPEP H implementation. Lessons learned from the implementation of these innovations will be considered in the execution of DPEP III. NGOs are already involved in DPEP in a variety of ways, including innovative activities, work with women's groups and carrying out non-formal and alternative education programs financed under DPEP. A facility called the "Fund for Innovations" managed by the DPEP Bureau under DPEP I and II financing in accordance with the DPEP Guidelines, appraises proposals from states and districts and commissions independent evaluation studies through the national program of research and evaluation. Following this model, the DPEP HI Credit will support the establishment of an innovation fund with the BSPP (approximately US$60,000 annually) and with the district implementation teams (approximately US$3,000 annually per district). The DPEP Bureau will approve innovative activities under this fund as part of the DPEP Bureau's review of the state and district annual work programs and budgets. Developing training modules for microplanning, VEC training and training of master trainers. Subject to UNICEF Board approval, UNICEF will finance the development and provision of continuous in-service teacher training and supply of instructional materials for such training, including: (i) a ten-day teacher empowerment module and related training; and (ii) state-level training for master trainers. UNICEF would fund this specific subcomponent under the following general guidelines: (a) building on the successes of the Ujala training initiated under BEP to develop an in-service teacher training program to be provided at the DIETs/BRCs and in recurrent monthly sessions at the CRCs; (b) developing a training package/process for VECs, emphasizing microplanning, participation, learning and action through analysis and assessment for empowering village communities to plan and monitor both participation in, and effectiveness of, their local primary school; and (c) developing learnig materials through participatory approaches for classroom use (such as multigrade materials) as well as for use in teachers' training and VECs. This sub-component is fully financed by the UNICEF grant.  Annex 2 Page 9 of 9 List of Participating Districts Education District Revenue Districts Type of the Included Education District 1. Bhojpur 1. Buxar Non-BEP District 2. Bhagalpur 2. Banka Non-BEP District 3. Chatra BEP District 4. Darbhanga Non-BEP District 5. Dumka Non-BEP District 6. East Singhbhum (Jamshedpur) BEP District 7. Gaya Non-BEP District 8. Hazaribagh 3. Koderma Non-BEP District 9. Munger 4. Jamui 5. Lakhisarai 6. Sheikhpura 10. Muzaffarpur BEP District 11. Pumia 7. Araria Non-BEP District 8. Kishanganj 12. Ranchi BEP District 13. Rohtas 9. Kaimur BEP District 14. Sitamarhi 10. Sheohar BEP District 15. Vaishali Non-BEP District 16. West Champaran BEP District 17. West Singhbhum (Chaibasa) Non-BEP District  Annex 3 Page 1 of 1 Annex 3 Table 3.1 Estimated Project Costs Project Component Local Foreign Total -----------------------US$ million------------------- Expanding access to primary education 90.5 3.3 93.8 Increasing retention and improving learning achievement in primary school 65.3 2.8 68.2 Improving state and district capacity to manage primary education 18.3 0.6 18.9 Total 174.2 6.7 180.9 Total Baseline Cost Physical Contingencies 13.8 0.7 14.5 Price Contingencies 3.8 0.5 4.3 Total Project Cost 191.8 7.9 199.7 (totals may not add up due to rounding errors)  Annex 4 Page 1 of 7 Annex 4 Economic and Social Outcomes of Primary Schooling in India and in Bihar Economic and Social Outcomes of Primary Schooling in India. The economic and social returns to investment in primary schooling in India have been extensively documented in departmental ESW recently published as Primary Education in India in the Bank's Development in Practice Series (1997). The summary of the results of the economic studies are as follows: (a) the most recent rate of return studies are based on data from 20 years ago in Andhra Pradesh. Adjusted to take account of school dropouts, the rates were 13 and 15 percent for primary and upper primary, respectively. These rates are higher than those for secondary and higher education; (b) recent analysis of historical data on rural households (1968-1982) living in areas where rural development programs (IRDPs) were in effect concluded that for every one rupee increase in profit due to the effects of exogenous technical change, those households with primary schooling experienced an additional 1.38 rupees and that schooling had a substantially larger effect on productivity than did the extension services. In addition, farmers with no schooling benefited from their more schooled neighbors who were the first to adopt new technologies; (c) an attempt to disaggregate the sources of economic growth between 1971 and 1981 using a production function approach indicated significant effects from education and from primary education in particular. However, cross-country evidence suggests that there is a threshold level of average educational attainment across the labor force above which the impact is intensified. The Indian labor force is below that threshold; and (d) a recent Bank study to investigate the unevenness in changes in rural living standards and levels of poverty across states between 1957 and 1991 concluded that higher agricultural output, lower inflation and higher state spending on development programs provided only a partial explanation. States with better infrastructure in general, and higher literacy in particular, had significantly higher rates of consumption growth and poverty reduction. The National Family Health Surveys of 1992/93 collected data in each state on fertility, child health and nutritional status by mother's education. The two major sets of conclusions conceming the relationship between schooling and social outcomes are: (a) within each state there are very clear relationships between levels of schooling and total and desired fertility, women's age at first marriage, infant and child mortality, child immunization rates and severely malnourished children. Both individual households and society at large benefit from the impact of schooling on these outcomes; and (b) equally important, comparisons across states indicate that the fertility, health and nutritional outcomes for a given level of education differ between states. They are greater in those states with a wider education coverage. For instance, while a woman in Bihar with secondary schooling has a desired fertility level below a similar woman with primary schooling, the level is still above that of women in Karen with just a primary schooling. This suggests that the social benefits are greatest once the coverage of a particular level of educational has gone beyond some critical point. What are the implications of these conclusions for government financing of primary education in India? The direct and opportunity costs to households of sending children to primary school are significant in India. Two sets of consideration support the sharing of costs between government and parents. First, economic efficiency would be reduced if the provision of schooling was limited to parental willingness to pay since social benefits are greater than the private ones - via, for instance, adoption by unschooled farmers of the more productive agricultural practices followed by their schooled neighbors and of new health practices by unschooled women learned from the behavior of the schooled. The social benefits from girls schooling are particularly high compared to the benefits which accrue to the immediate household which bears the cost of schooling. The second consideration supporting government subsidy is social equity. If credit markets and information were perfect even the poorest parents might borrow to finance their children's education. But they are not. Requiring parents to bear the entire cost of schooling would reduce access to education for much of the Indian population, leading to losses in both equity and efficiency. Government resources, whether generated locally, by the state or by central government, are required for funding the provision of schooling.  Annex 4 Page 2 of 7 Economic and social outcomes of primary schooling in Bihar. The level of economic returns to education depend in large part on the economic environment within which graduates fnd employment and, as argued above, on the degree of coverage across the population. Bihar, at present, is characterized by extensive poverty, low growth rates and the lowest educational coverage in the country. Without complementary changes in the social environment it is not likely that the immediate economic returns to primnary schooling will be large. No rate of return studies have been carried out in Bihar. However, the links between literacy and poverty levels and reductions have been investigated and the results indicate that, in the medium term, raising the literacy level is likely to have a major impact. The majority of the population in Bihar is extremely poor, even by Indian standards. The proportion of households in Bihar below the poverty line is higher, at around 64 percent (1993/94) than in any other state. This translates to 66 million people with access to less than Rs. 33 or US$1 a day. The average proportion across the country is 36 percent. Dividing the country into 61 agro-climatic regions, Bihar falls into three. Each of these is among the six regions with the highest proportion of the population living below the poverty line and two of them are among the ten regions which have witnessed to slowest reduction in poverty levels since the early 1970s. Of the major states, the growth rate of mean consumption and the reduction in poverty between 1957/58 and 1990/91 was the lowest in Bihar. For instance, over this period, the headcount index of poverty fell by an average of 2.26 percent a year in Kerala and only 0.06 percent in Bihar. As a result, while the proportion of households below the poverty line fell from 54% to 36% across all states combined, in Bihar the fall was far less, dropping from 65% to 58% (and in Kerala from 66% to 33%). As a consequence of high population growth rates, more people are below the poverty line today than in the 1950s. Table 4.1 presents estimates of the proportion of rural households living below the poverty line in Bihar, Kerala and across the country for selected years between 19957/58 and 1993/94. The results for Bihar in particular are distressing. While the incidence of poverty has halved in Kerala and been reduced by one third across the country as a whole, in Bihar there has been little decrease over almost four decades. Table 4.1. Proportion of Households Below the Poverty Line. India, Kerala and Bihar. Selected Years (percent) All India Kerala Bihar 1957/58 55.1 66.9 65.4 1963/64 48.5 63.2 55.0 1969/70 57.6 78.2 66.0 1977/78 50.6 52.7 66.2 1983 45.3 43.7 69.9 1988/89 39.6 38.9 58.6 1993/94 36.7 31.1 63.5 Source: G.Datt, Poverty in India and Indian States. IFPRI, Washington DC. Based on National Sample Survey results. Recent Bank research has investigated the causes of differences between levels and changes in living standards and poverty across Indian states since the mid 1950s utilizing the results of the National Sample Surveys (Datt and Ravallion 1995). Higher growth rates in farm yields, lower rates of inflation and higher growth in state development expenditures all led to higher rates of growth of consumption and poverty reduction. However, differences in the initial conditions of physical infrastructure and human resource development, in particular female literacy, were also found to have significant effects on performance. For instance, the question is posed: how much of the difference between each state's and Kerala's rate of poverty reduction is attributable to differences in their initial conditions? In the comparison with Bihar, almost half of the differential in the decline in the poverty gap over a 35 year period could be attributed to differences in the initial level of human resource development. Unless steps are taken now to expand primary schooling in Bihar, the gap between its literacy rate and that of other states will grow. Already, the literacy rate is second lowest (Rajasthan is the lowest) and the net enrollment ratio of 6-10 year olds (estimated at 50 percent) is the lowest across all states. Children not in school tend to be female and poor males. Using enrollment data for 1992/93, there is an enormous 42 percentage point difference between the gross enrollment rate for boys and girls (compared to a national difference of 22 percentage points), and a 27 point gap between children from families with per capita incomes of below Rs. 3,000 and over Rs. 10,000 a year. Enrollment rates between children of landless wage earners and those from families with land differ by 30 percentage points. There is a reasonable presumption that the expansion of primary schooling arising from the project will mostly benefit poor children and particularly girls.  Annex 4 Page 3 of 7 Poverty in Bihar goes side by side with poor social indicators. Table 4.2 presents estimates of actual and desired fertility, maternal and child health and nutritional status for Bihar, Tamil Nadu (the state with the best indicator), the state with the worst indicator and for India as a whole. On all indicators Bihar scores well below the average across all India. In three of the five indicators, the state records the worst situation across all states and in one other the second worst. Undoubtedly, the social and economic situation facing the population of Bihar is dire. Table 4.2. Selected Social Indicators: Bihar, Tamil Nadu and All India. 1992/93 Worst Indicator Bihar Best Indicator India (i) Total fertility rate 5.2 4.1 2.1 3.7 (ii) Ideal number of children 3.4 3.4 2.1 2.9 (iii) Under 5 mortality 131.0 127.5 32.0 109.3 (iv) All vaccinations 10.7 10.7 64.9 35.4 (v) Severely undernourished 31.1 31.1 6.1 20.6 Source: India: National Family Health Survey 1992/93 Note: (i) is rural women 15-49 years; (ii) is ever married women; (iii) is per thousand births; (iv) is percentage; and (v) is percent below 3 standard deviations weight for age. Table 4.3. Total Fertility Rates and Ideal Number of Children by Women's Education Total Fertility Ideal Children Illiterate 4.3 3.6 Less than middle 3.8 3.1 Middle complete 2.7 2.7 Secondary + 2.6 2.5 Table 4.4. Infant and Child Mortality by Woman's Education Infant Child Infant Vaccinations Mortality All None Illiterate 103.1 49.5 5.4 61.7 Less than middle 80.1 28.6 21.1 32.6 Secondary + 54.1 5.7 39.6 16.7 Note: The rates for mortality are per thousand and for vaccinations percent. Table 4.5. Child Nutritional Status by Mothers Education (percent) Severely Malnourished Weight for Age Height for Age Illiterate 33.5 42.2 Less than middle 25.7 32.4 Middle complete 19.3 31.2 Secondary + 19.1 24.7  Annex 4 Page 4 of 7 While the social indicators are generally very poor across the population of Bihar, schooling has a strong effect on an individual's social behavior affecting fertility, health and nutritional outcomes as Tables 4.3, 4.4 and 4.5 demonstrate. Both total fertility and desired number of children decrease by educational attainment with large reductions for both literacy and the completion of middle (upper primary) school. Again, the incidence of maternal and child mortality are decreased substantially through higher levels of schooling, and infant vaccinations are increased substantially. The most significant reduction in malnutrition is associated with the first level of education. The impact of schooling on behaviors which affect social outcomes is significant in Bihar, as elsewhere. However, for the effect of each level of schooling to be maximized requires a much wider educational coverage. Increasing internal efficiency: A principal focus of the DPEP program in general, and the project in particular, is to increase the quality of schooling. This is intended to result in a higher quality education for graduating students. In addition, the expectation is that a higher quality schooling will increase the perceived returns and induce an increasing number of enrolled students to remain at school and not to drop out. Official dropout rates over the primary I-V cycle in India average 35 percent. Repetition rates are also high with an average of around 30 per cent of students repeating at least one year. In Bihar, the dropout rate is estimated to be around 56 percent (Mehta 1995). Roughly 35 percent of dropouts occur during or at the end of the ffrst year, with a further 15, 12, 11 and 10 percent a year in future years. The repetition rate has been estimated to be between 3 and 8 percent a year (Mehta 1995). Using the simulation model outlined by Cuadra and Fredriksen (1992), these rates imply that, in Bihar, for every 1000 students entering the first grade, only 404 graduate from the five-year cycle. To produce these 404 graduates, the system uses an amount of resources equal to 3263 pupil-years or 8.1 years per graduate of a five year cycle. This implies that over 60 percent more resources are being used than would be necessary with no repetition or dropout. Expenditure on elementary education (grades I - VIII) in 1995/96 was Rs. 1297 crores. For the primary cycle I -V, expenditure can be estimated at 60 percent of this total - Rs. 780 crores. With no repetition or dropout, expenditure could have been around Rs. 490 crores, implying a saving of Rs. 290 crores or US$83 million. The cost of the project is US$198 million. Around 40 percent of the expenditures will be used to increase new enrollments. Another 40 percent will be utilized to increase the retention rates and enhance learnig achievement. The rest (about 20 percent) will be utilized for improving the state and district capacity to manage primary education. The first two sets of expenditures will both increase the educational outcomes of those who graduate and decrease dropouts and repetition. Reducing dropout and repetition rates by half might result in savings of the equivalent of US$40 million a year. Effective and cost-effective school-level interventions: As part of the requirement for involvement in the DPEP, state governments are required to carry out baseline surveys of primary pupils' learning achievement and of the factors influencing achievement A research program has assessed the impact of a variety of personal, household and school related factors on achievement. An important overall conclusion from the data analyzed for districts in eight states is that the factors judged important in one district or in one state are not necessarily important in all districts or states. However, multivariate analysis which controlled for student background found that the most consistently significant school-level characteristics are related to the opportunity to learn. Student achievement was higher in schools with more total instructional time and more instructional time on the subjects tested and where both students and teachers attended regularly. The school's academic climate was also found to be important. In addition, physical facilities, the provision of appropriate instructional materials for both teachers and students and the hiring of better educated teachers all had positive effects. An attempt was also made to assess the relative cost effectiveness of a number of interventions. The difficulties of undertaking such analyses are well known and, at most, the results are only meaningful for small variations in mean expenditures per child. Among the most cost effective interventions identified by the analysis are increased floor space per child, packages of instructional materials, increasing the number of years of education prior to teacher training and increased time allocated to language classes. Again, however, variations between districts, and particularly between states, are quite large. Packages of interventions identified locally to meet the needs of specific schools are more likely to be cost-effective than uniform packages. What is effective in a state with a generally high level of educational development may be different to what is effective in a state with a low level of educational development. One of the strengths of the DPEP, and of this project, is that the development of the broad strategies is the responsibility of district level personnel while many of the specific interventions and expenditures will be decided upon more local communities, village education committees and headteachers. Assessment of GOB finances and implications for the DPEP m project. Analysis of Reserve Bank of India (RBI) reports on public expenditures in Bihar show that: (a) revenue receipts increased from 16.8 to 18.6 per cent of GSDP between 1985/6 and 1992/93, falling back to 16.7 per cent in 1995/96. The cause of the recent fall was mainly a decrease in grants from the Center;  Annex 4 Page 5 of 7 (b) revenue expenditures increased from 14.7 to 20.5 percent of GSDP between 1985/6 and 1992/3 falling back to 17.6 percent in 1995/96. Most of the fall occurred under the category Economic Services, mainly for rural development and energy; (c) the revenue budget was in surplus until 1989/90. The deficit peaked at 3.0 per of GSDP in 1991/92 and had fallen to 0.9 percent by 1995/96; (d) net capital expenditure was 4.4 percent of GSDP in 1985/86 peaking at 5.8 percent in 1987/88 and falling to 1.3 percent in 1995/96; (e) the overall fiscal deficit was equal to 2.3 percent of GSDP in 1985/86. It rose to 6.0 percent in 1990/91. Since then it has fallen each year and stood at 2.2 percent in 1995/96. This is below the average for 14 major states of 3.2 percent; and (f) the primary account (obtained after subtracting interest payments from expenditures) was in deficit until 1992/93 but has been in surplus in subsequent years to the equivalent of 1.6 percent of GDP in 1995/96. In spite of the small fiscal deficits and primary account surplus' which seem to suggests a healthy fiscal situation, further analysis dispels such complacency. The level of outstanding debt as a share of GSDP is 35.7 percent, which is almost twice the overall level across 25 Indian states. Interest payments have more than doubled as a share of GSDP over the past decade from 1.6 to 3.8 percent. As a share of tax revenues and state non-tax revenues, they have been equal to over 27 percent in each of the past three years compared to just 13 percent in 1988/89. The fiscal deficit has been contained by measures which are likely to be detrimental to the further development of the economy and which cannot be taken much further. Development revenue expenditures (on social and economic services) as a share of total revenue expenditures have fallen since 1988/89 from 69 to 58 percent while interest payments have increased from 12 to 22 percent. In constant prices, development expenditures increased by just 7.3 percent over the seven year period from 1988/89 - well below the increase in population of around 15.5 percent. Expenditures per capita are falling by around one percent a year. Development expenditures on economic services have fallen from 28 percent of total revenue expenditures to 20 percent of the total. Major changes to revenues and expenditures have occurred since 1992/93. After increasing in each of the previous seven years (at least), their share in GSDP has been falling. On the revenue side this has resulted from slower growth in grants from the center, and to a smaller extent, a reduction in the growth rate of the state's own tax revenues. At constant prices there has been no increase in revenues since 1992/93. To compensate for this reduction and simultaneously reduce the fiscal gap, two major steps have been taken. First, on the revenue account there has been an absolute reduction in expenditures on economic services which translates to a 40 percent decrease in its share of GSDP (down from 6 percent to 3.5 percent in just three years) and a decrease of 14 percent in the share of social services. Within economic services, there have been particularly substantial reductions for rural development and power. The second route taken to contain the fiscal deficit has been to reduce expenditure on capital outlays. The capital share of total expenditures has been falling over the past decade, and not just since 1992/93. The share fell from 18.4 percent in 1985/86 to 9.6 percent in 1992/93 and to 7.9 percent in 1995/96. As a share of GSDP capital expenditures fell from a peak of 5.8 percent in 1987/88 to 1.3 percent in 1995/96. Revenue expenditures at constant prices on social services since 1985/86 have demonstrated two separate patterns over the past decade. Between 1985/86 and 1990/91 they increased by 40 percent at constant prices and from 6.1 to 7.3 percent of GSDP. Since then, real expenditures have fallen by 6 percent and their share of GSDP has been reduced to 6.3 percent. For education, expenditures increased from 3.6 percent of GSDP in 1985/86 to 4.6 percent in 1990/91, falling back to 3.9 percent in 1995/96. In the earlier five year period real expenditure increased by 34 percent and in the later period fell by 6 percent. As shares of total revenue expenditures, social sector spending fell from 41 to 36 percent and education spending from 25 to 22 percent. As described above, capital expenditures on the social sector in general, and education in particular, have been negligible in recent years. The future. Per capita own-tax revenues in Bihar are the lowest across all states, and well below the next lowest levels in Orissa and Uttar Pradesh. At constant prices they have not increased since 1992/93. With grants from the center in 1996/97 ahnost 25 percent below the level in 1993/94 (at current prices), the overall future revenue position appears unhealthy. Adjustmnent has so far been on the expenditure side of the accounts resulting in an almost halving of expenditures on economic services as a share of GSDP and a continuing sharp fall in capital expenditures. In the social sectors such expenditures are now virtually non-existent. To what extent can these overall responses to revenue trends and interest payment obligations continue? With real interest rates of around four percent, even a constant ratio of debt to GDSP will increase the share of interest in a pool of revenues which shows little growth. In addition, even a constant size of government labor force (the increase 1991-95 was 5.2 percent) generates an increased  Annex 4 Page 6 of 7 wage bill as workers move up salary scales. Bank state finance studies have assumed an annual four percent real growth in the wage bill. In the absence of increases in revenues, the share of development expenditures and capital expenditures in GSDP and total expenditure would have to fall further. The growth of real development expenditures which have been increasing by less than one percent a year since 1988/89 would need to be further reduced. Since salaries of existing employees are relatively protected, resources for additional employees, such as teachers, and non-salary items would be particularly squeezed. How much further can the capital budget be reduced? Outlays at current prices in 1987/88 were Rs. 625 crores and just Rs. 345 crores in 1994/95. Such expenditures have virtually disappeared for all but irrigation, water supply and sanitation and a small allocation for roads. Counterpart funding. The data on education expenditure in Bihar presented by the RBI in its surveys of state finances differ somewhat from those received directly from the state government. Table 4.6 presents both sets of data covering the period 1991/92 to 1995/96 plus state government data for elementary schooling. Table 4.6 Estimations of Education Expenditure, Bihar 1990/91 - 1995/96 (Rs. crores) Total RBI State Government Revenue Exp Education Education Elementary 1990/91 4890 1210 1131 749 1991/92 5740 1270 1143 752 1992/93 6570 1330 1411 909 1993/94 7320 1400 1529 992 1994/95 7730 1680 1646 1101 1995/96 8170 1830 1891 1308 % Growth 67 51 67 74 According to RBI data, total education expenditure fell from 25 percent to 22 percent of total revenue expenditure between 1990/91 and 1995/96 and increased by an average of 10 percent a year in current prices. State govermnent data suggest that the share has remained at 23 percent during the period and that growth has averaged around 13 percent a year. The government expenditure deflator increased by 61 percent over the same period. RBI data, therefore indicate a small decline in real expenditure while state government data indicate a real increase of around one percent a year. Expenditure on elementary education has increased at a slightly higher rate than for education as a whole taking 69 percent of the total in 1995/96 compared to 66 percent in 1990/91. Real growth has been around 2.5 percent a year. Taking a longer view, between 1985/86 and 1995/96, real expenditure on education increased by an annual average of 3.5 percent. Expenditure on primary schooling (grades I-V) is roughly 60 percent of all elementary education expenditures - or Rs. 785 crores in 1995/96. The project has a total cost of US$199.7 million over five years. The Bihar Government's obligations under the DPEP Guidelines are to contribute with 15 percent of total project expenditures. The annual state project contribution would average about US$7.6 million (Rs. 26 crores), representing a 3.4 percent increase over the 1995/96 level of total primary education expenditure (2 percent of total elementary education expenditure). Although the project districts cover under half of the population (48 percent), maintenance of past trends in education expenditure should be sufficient to ensure that counterpart funding would be manageable. However, the provision of counterpart funding will not be the only additional financial obligation for the state government. In the project districts there are 10,290 teacher vacancies, resulting from retirements not being filled since 1993, which are to be filled as a condition of the project. This would add around Rs. 50 crores a year to the budget. Filling the 22,000 teacher vacancies in non-project districts would add a further Rs. 110 crores a year. In all, GOB will need to allocate an extra Rs. 186 crores a year during project implementation (Rs. 26 crores as counterpart funding and Rs. 160 crores for filling up teacher vacancies), which is equivalent to around 14.3 percent of current expenditure on elementary education (about 24.3 percent of current primary education expenditures). However, evidence has been presented that, in spite of the state's fiscal position, the Ministry of Finance of GOB has authorized all the vacant primary education teaching posts to be advertised and filled by the Bihar Public Service Commission, and the GOB has assured that posting will be completed by January 1, 1999 (see paras. 4, 20, 21 and 24(g) and Annex 2). Sustainability. Sustaining project activities following project completion in March 2003 will require incremental expenditures estimated at Rs 49.6 crores (US$14.2 million equivalent). This is equal to 6.4 percent of the 1995/96 expenditure on primary education and should not, alone, be problematic. More of an issue is the ability of GOB to sustain the overall system with only a minimal level of teacher vacancies. Without this, the long run benefits of the project would not accrue. The overall trends in public  Annex 4 Page 7 of 7 finances in Bihar are disturbing. Both revenue receipts and expenditures have been falling as a share of state domestic product and development expenditures per capita have also been declining, though more in economic services than in social services. Interest payments are equal to 27 percent of all tax revenues and state non-tax revenues. The ability of GOB to sustain both the existing educational base and project activities will depend on future developments in its overall public finances, including center-state resource transfers. The commitments given by GOB during project preparation, the intention of GOI to ensure that total education expenditures increase from 3.7 to 6 percent of GDP by the end of the Ninth Plan and the recent directive of the Supreme Court to government to implement universal elementary education, suggest the financial risk of the project is worth taking in the context of a state which has the highest incidence of poverty and severe child malnutrition and the second highest level of illiteracy and under five year-old children mortality across all states. The agreement by GOI and GOB to prepare modalities for ensuring the post-project sustainability of the capacities and services developed under the project and to discuss these with IDA during the second in-depth review in December 2001 (see paras. 4, 20, 21 and 24(b)) should also increase the likelihood of project and system sustainability.   Annex 5 Page I of 1 Annex 5 Table 5.1 Financial Summary Operational Period (Calendar Year of Expense) 1998 1999 2000 2001 2002 Project Costs (US$ Million, Including Contingencies) Investment Costs 24.1 39.5 30.6 15.9 14.3 Recurrent Costs 11.7 16.4 15.8 16.0 15.4 Total 35.8 55.9 46.4 31.9 29.7 Financing Sources (% of Total Costs) IDA 85 86 75 68 57 UNICEF 4 3 5 7 8 Govemment of India 11 11 20 25 35 Total 100 100 100 100 100   Annex 6 Page I of 9 Annex 6 Procurement Arrangements and Allocation of the Credit Proceeds 6.1 The procurement plan reflects the widespread and decentralized nature of the activities that will be conducted by the state and the 17 project districts throughout the five year life of the Credit. Many of the procurement actions in support of project work do not lend themselves well to aggregation for bidding as large single contracts. Civil works, for example, is dominated by the small- scale: (i) construction of about 2,350 new two-classrooms schools and about 4,400 additional classrooms in existing schools; (ii) rehabilitation of about 300 existing classrooms; and (iii) additions of about 8,100 wells and 7,600 toilets at thousands of school locations. Likewise, the purchases of consumables, education and teaching materials amount to about US$41.7 million in aggregate, but over 80 percent of it is comprised of small scale purchases of easily acquired local materials for both new and existing schools in the project districts, estimated to cost less than US$15 per classroom each year. 6.2 Table 6A summarizes the project items, their related cost estimates and proposed methods of procurement. Table 6B summarizes the threshold for procurement methods and prior review. Project-related procurement of goods and works would follow procedures acceptable to IDA using National Competitive Bidding (NCB) documents (already approved by IDA for DPEP I and II) and National Shopping Procedures acceptable to the Association. Project-fnanced consultants would be recruited according to Guidelines on the Use of Consultants by World Bank Borrowers. Procurement of equipment, vehicles, furniture, books and educational materials would be bulked to the extent possible and would generally be procured as follows: (a) individual contracts estimated to exceed US$300,000 would be procured using ICB (although there are no plans at present for individual purchases greater than US$300,000); (b) individual contracts with an estimated value between US$50,000 and US$300,000 would be procured using NCB; and (c) individual purchases of off-the-shelf items through rate contracts or prudent shopping procedures would be acceptable in packages of less than US$50,000 up to the aggregate limits as outlined in Table 6A. All the costs shown in parenthesis below include contingencies. 6.3 Civil Works Construction and Maintenance (US$46.4 million). Over eighty-five percent of civil works would be for small, scattered construction of school classrooms, and for classroom rehabilitation and repair, with an average estimated base cost per primary school site of US$8,000. All such school and classroom construction and rehabilitation/repair estimated to cost equal or less than US$20,000, up to an aggregate not exceeding US$37.1 million, would be carried out using one of following three methods: (i) community construction; (ii) prudent shopping with solicitation of price quotations from at least three qualified bidders eligible under the guidelines; or (iii) Force Account as a last resort, and usually in the case of repairs to existing facilities, in a manner satisfactory to IDA (Force Account method will be limited to an aggregate ceiling of not more than US$2.3 million which is roughly 5 percent of all civil works costs). Generally, the day-to-day management and supervision of construction would be done by a cadre of engineering supervisors hired (under terms of reference acceptable to IDA) by the DLOs. Civil works at BRCs buildings or other facilities estimated at more than US$20,000 per site, up to an aggregate not exceeding US$9.3 million, would be carried out through NCB procedures acceptable to IDA under the management of a cadre of engineers hired by the SLO. A summary of the categories of civil works to be constructed under the project is shown in the table 6A. 6.4 Furniture (US$1.9 million) and Equipment (US$2.8 million). Furniture and equipment would be purchased on an annual basis in accordance with the phasing of project activities. Equipment consists of office and audio visual equipment (computers, TVs, VCRs, typewriters) with unit costs less than US$10,000, and small items (science laboratory equipment, science kits) with unit costs of less than US$500. Because of the phasing of the project and the diversity of items to be procured, ICB procedures would generally not be practicable. Contracts for equipment or furniture valued at more than US$50,000 per contract, up to an aggregate not exceeding US$0.6 million equivalent for furniture and US$0.8 million equivalent for equipment, would be made through NCB procedures acceptable to IDA. Purchases of furniture and equipment totaling US$50,000 or less per contract, up to an aggregate not exceeding US$1.3 million equivalent for furniture and US$2.0 million equivalent for equipment, or about 70 percent of total furniture and equipment costs, may be awarded on the basis of rate contract or prudent shopping with solicitation of price quotations from at least three qualified vendors. 6.5 Vehicles (US$0.9 million). The majority of costs are for 4 wheel drive vehicles, automobiles and vans to be used at the SLO and DLOs headquarters. Over the 5 year period of the project, plans call for the acquisition of some 81 vehicles. Experience in DPEP I and II has shown that since competitive bidding of small lots as either ICB or NCB has not yielded adequate vendor interest, the program does not lend itself to ICB. Purchases of like types of vehicles would be bulked whenever possible, but the timing of the purchases will be related to the readiness of the districts, and it is expected that the purchase contracts would be valued at US$100,000 or less. For purchases not exceeding US$100,000 equivalent, procurement will be through national rate contracts entered into by the  Annex 6 Page 2 of 9 Directorate General of Supplies and Disposals (DGS&D) or local shopping procedures, comparing price quotations from at least three qualified suppliers to ensure competitive prices up to an aggregate amount not exceeding US$0.9 million. Bulked purchases estimated to cost in excess of US$100,000 would be procured through ICB. 6.6 Educational and Teaching Materials (US$22.1 million). Educational and teaching materials would be purchased throughout the life of the project in accordance with the phasing and entry of each participating district into the DPEP III Program. These educational materials would be in the district's local language, and are available from local manufacturers. Efficient purchasing, storage and distribution of these types of materials to over 31,500 school sites in the 17 Project districts does not lend itself to bulking of requirements for ICB. With some exception for common reference books or teaching materials, bulking requirements for purchase through NCB is also not a practical solution. Nevertheless, purchases would be bulked whenever possible and procured at the state level in contracts valued at more than US$50,000 equivalent through NCB procedures acceptable to IDA for an aggregate amount not exceeding US$4.4 million equivalent. For small purchases equal of less than US$50,000 equivalent, procurement will be through: (i) national rate contracts entered into by the DGS&D; or (ii) local shopping procedures, comparing price quotations from at least three qualified suppliers to ensure competitive prices up to an aggregate amount not exceeding US$17.7 million equivalent. This amounts to local shopping procedures totaling approximately $210,000 per district per year. 6.7 Books and libraries (US$23.6 million). Provision of textbooks comprise the bulk of this category (US$ 18.0 million), and like the teaching materials, they would also be purchased throughout the life of the project in accordance with the phasing and entry of each participating district into the DPEP III Program. Textbooks financed under the project are to be purchased for free distribution to SC/ST and girls in project districts. Since these textbooks are available only from the BSTPC, which is the sole authorized publisher and copyright holder of textbooks in the state, there is no alternative source for procuring of textbooks for the project except through direct contracting with BSTPC. Nevertheless, to promote competition and efficiency, the project authorities have agreed with IDA that for textbooks being provided to the project the BSTPC would obtain printing services through competitive bidding procedures consistent with IDA procurement guidelines. However, it was recognized there was a practical problem with regard to the purchasing of textbooks for the first year of the project, since there is insufficient time for BSTPC to adopt new procedures for printing services and conduct actual tendering for the new textbooks for delivery by the start of the new school year in January 1998. Therefore, as a one time exception, IDA will permit direct contracting with BSTPC in an amount of up to US$3,000,000 equivalent for production of textbooks in which BSTPC would be allowed to engage private printing firms utilizing its existing contracting procedures. It was further agreed as a condition of disbursement that no Credit withdrawals would be made with respect of payments for the procurement of textbooks for the project over US$3,000,000 until GOB furnishes evidence satisfactory to IDA that BSTPC has adopted and followed competitive bidding procedures acceptable to IDA for the procurement of printing services for the textbooks financed under the Credit. 6.8 Other purchases of books in this category amount to US$5.6 million and would be categorized as: (a) NCB (US$2.0 million); (b) national shopping procedures (US$3.1 million) for stocking of libraries at schools and teacher training centers; and (c) direct contracting (US$0.5 million) for books and library material that may be available from only one source (other than BSTPC). 6.9 Training and Workshops (US$11.5 million). This category includes expenses related to the preparation and delivery of training programs for master trainers, teachers, school principals and other project staff over the life of the project in respect of seminars, workshops, fellowships, travel and subsistence allowances. 6.10 Consulants and Studies (US$22.6 million) and Honorarium ($US4.6 million). Consultants required under the project will be hired following procedures prescribed in the Guidelines on the Use of Consultants by World Bank Borrowers. Documents used for inviting proposals, terms of reference for all consultancies and single source contracts will be subject to prior review for all contracts valued at US$200,000 equivalent or more awarded to firms and US$50,000 equivalent or more to be awarded to individuals. The vast majority of these contract arrangements will be for individual service delivery type agreements at costs not exceeding US$5,000 per annum to be selected under standard terms of reference (including job descriptions, minimum qualifications and terms of employment) already approved by IDA for DPEP I and II. 6.11 Incremental Operating Costs (US$5.6 miUion) and Maintenance (US$0.9 million). Incremental operating costs and maintenance for vehicles and equipment items estimated to cost less than US$20,000 per contract up to an aggregate amount of US$6.5 million would be carried out using one of following four methods: (i) prudent shopping with solicitation of price quotations from at least three qualified bidders eligible under the guidelines; (ii) direct contracting; (iii) rate contracts to qualified contractors or registered NGOs or other beneficiary associations; or (iv) Force Account as a last resort in a manner satisfactory to IDA. The total amount for this category amounts to less than US$77,000 per district per annum.  Annex 6 Page 3 of 9 6.12 IDA Review. The first three procurement contracts for goods and works regardless of value, and thereafter each contract for civil works and goods estimated to cost the equivalent of US$300,000 or more will be subject to prior review by IDA. Each contract for vehicles estimated to cost the equivalent of US$100,000 or more will also be subiect to prior review by IDA. All other contracts for civil works or goods would be subject to random post review in the field by IDA visiting missions. The standard model contract with BSTPC concluded after March 31, 1998, will be subject to prior review by IDA on an annual basis prior to execution All other contracts for textbooks with BSTPC would be subject to random post review in the field by IDA visiting missions. Contracts for the hiring of consulting firms costing US$200,000 equivalent or more and contracts for hiring individual consultants costing US$50,000 equivalent or more would be subject to prior review and approval by IDA. Approximately 20% percent of the value of contracts covered by the IDA Credit would require priur review, which is a reflection of the decentralized nature of the work and substantial reliance on Community Construction of Schools and National Shopping Procedures for small goods purchases throughout the life of the project. This relatively low percentage is considered satisfactory since GOB will have gained experience in procurement from DPEP I and II and other previous Bank projects.  Annex 6 Page 4 of 9 Table 6A: Procurement Arrangements& (Total Costs in US$ Millions) Prourement Metbod Natlonal Competive Nations Other Consuling Biddina Shannina Metbods Benlices N.B.F. Total CIVIL WORKS Civil Works 9.3 7.0 30.1 - - 46.4 (8.4) (6.3) (27.3) (41.9) GOODS Furniture 0.6 1.3 - - - 1.9 (0.5) (1.2) (1.7) Equipment 0.8 2.0 - - 2.8 (0.8) (1.8) (2.5) Vehicles - 0.9 - - - 0.9 (0.9) (0.9) Books & Libraries 2.0 3.1 18.5 - - 23.6 (18.2) (2.8) (0.4) (21.4) Educational & Teaching Materials (incl. contingency fumds at BRC & school levels) 4.4 17.7 - - 0.0 22.1 (2.9) (11.5) (14.3) TRAINING AND CONSULTANTS Project Preparation & Implementation (including Workshops & Fellowships) - - 11.5 - 9.7 21.2 (11.5) (11.5) Insitutional Development (includes Local and Foreign Consultant type contracts, Studies) - - - 22.6 0.2 22.8 (22.6) (22.6) MISCELLANEOUS Salaries of Additional Staff & Project Management - 46.9 - - 46.9 Team (28.5) (28.5) Honorarium (e.g. for ECE program workers) - - 4.6 - - 4.6 (2.8) (2.8) Vehicle & Equipment Maintenance - 0.4 0.4 - - 0.9 (0.3) (0.3) (0.5) Incremental Operating Costs (includes office consumables and expenses) - 2.8 2.8 - - .5.6 (1.7) (1.7) (3.4) TOTAL 35.2 35.2 96.8 22.6 10.0 199.7 (30.7) (26.3) (72.4) (22.6) (152.0) NOTES: /a Figures in parenthesis are the respective amounts financed by IDA  Annex 6 Page 5 of 9 Table 6B: Thresholds for Procurement Methods and Prior Review Expenditure Contract Value Procurement Contracts Subject to Category (Threshold) Method Prior Review 1. Works Civil Works Civil works estimated to cost the equivalent of US$20,000 or less per contract, up to an aggregate not exceeding US$37,200,000 (including Force Account) may be executed by: (i) Community construction methods; Direct Contracting Post review only (ii) on the basis of comparison of price Solicitation of 3 Bids Post review only quotations obtained from at least three qualified contractors eligible under the guidelines; or (iii) by Force Account up to an aggregate not Force Account Post review only exceeding US$2,300,000, usually in the case of small repairs, and as a last resort in a manner satisfactory to the Association. Civil works estimated to cost more than the National Competitive First three works contracts equivalent of US$20,000 per contract, up to an Bidding regardless of value and all aggregate not exceeding US$9,300,000. contracts equal or more than US$300,000 by prior review in accordance with paragraphs 2 and 3 of Appendix I to the Guidelines. All others by post review. 2. Goods (a) Furniture, Equal or less than US$50,000 per contract, up National Shopping Post review only equipment, to an aggregate not exceeding US$21,000,000 Procedures (includes educational and equivalent. DGS&D Rate teaching materials Contracts) More than US$50,000 per contract. National Competitive First three goods contracts Bidding regardless of value by prior review in accordance with paragraphs 2 and 3 of Appendix 1 to the Guidelines. All others by post review. Equal to or more than US$300,000 per contract. International Prior Review Competitive Bidding (b) Books Equal or less than US$50,000 per contract, up National Shopping Post review only to an aggregate not exceeding US$3,100,000 Procedures equivalent. Equal or less than US$50,000 per contract, up Direct Contracting On an annual basis, prior review to an aggregate not exceeding US$18,500,000 of standard model contract with for books available from only one source. BSTPC concluded after March 31, (Note that for textbooks purchased through 1998. All contracts with others BSTPC, the first US$3,000,000 is allowed firms as post review. through BSTPC's existing contracting procedures for printing services. Beyond US$3 million, condition of disbursement requires BSTPC to adopt procedures acceptable to IDA for procurement of printing services.)  Annex 6 Page 6 of 9 More than US$50,000 per contract. National Competitive First three goods contracts by prior Bidding review in accordance with paragraphs 2 and 3 of Appendix I to the Guidelines. All others by post review. Equal to or more than US$300,000 per contract. National Competitive Prior Review Bidding (c) Vehicles Less than US$100,000 per contract, up to an National Shopping Post review only aggregate not exceeding US$900,000 Procedures (includes equivalent. DGS&D Rate Contracts) More than US$100,000 per contract. International Prior Review Competitive Bidding 3. Services (a) Contacts for More than US$100,000 per contract. QCBS. (Short List Prior review of all consultant Procurement Agents, Comprising Domestic contracts shall be governed by the publicity, training Firms only applies for provisions of paragraphs (i), (ii) and workshops, contracts less than and (ii) below: management US$200,000). (i) with respect to each contrc information systems, for the employment of consulting education research, firms estimated to cost the IEC, and NGO equivalent of US$200,000 or services.euvln f S2000o services. more, the procedures set forth in paragraphs 1, 2 and (other than the third subparagraph 2(a)) and 5 of Appendix I to the Consultant Guidelines shall apply. (ii) With respect to each contract for the employment of consulting frms estimated to cost the equivalent of US$100,000 or more, but less than the equivalent of US$200,000, the procedures set forth in paragraphs 1, 2 (Other than the second subparagraph of paragraph 2(a)) and 5 of Appendix I to the Consultant Guidelines shall apply. (iii) With respect to each contract for the employment of individual consultants estimated to cost the equivalent of $50,000 or more, the qualifications, experience, terms of reference and terms of employment of the consultants shall be furnished to the Association for its prior review and approval. The contract shall be awarded only after the said approval shall have been given.  Annex 6 Page 7 of 9 US$100,000 or less per contract, up to an Single Source Selection - Same prior review limits aggregate not exceeding US$21,600,000 (acceptable for tasks as in paragraph 3(a) above equivalent. representing a natural continuation of assignment, when rapid selection essential, when only one firm is qualified, or for small individual consultant contracts). (b) Honorarium, US$5,000 or less per contract, up to an Hiring of Service Post review only services delivery aggregate not exceeding US$4,600,000. Delivery Contractors - contractors (applies to large numbers of service delivery contractors contemplated under project such as ECE centre workers, and small individual consultant contracts). (c) Individual US$10,000 or less per contract. Hiring of Individual Post review only Consultants Consultants - (applies to individual consultants for institutional strengthening procured in accordance with paragraphs 5.1 through 5.3 of the Consultant guidelines). (d) Training, (Normal Government procedures for Not applicable Not applicable workshops & travel and per diem allowance for individuals fellowships and incidental expenses associated with the training being conducted. Estimated aggregate amnount US$11,500,000 equivalent - primarily as TA/DA expenses). 4. Miscellaneous (a) Incremental Incremental operating costs and maintenance operating costs and estimated to cost the equivalent of US$20,000 maintenance or less per contract, up to an aggregate not exceeding US$6,400,000 may be executed by: (i) direct contracting up to an aggregate Direct Contracting Post review only not exceeding US$2,000,000; or (ii) on the basis of comparison of price Solicitation of 3 Bids Post review only quotations obtained from at least three qualified contractors eligible under the guidelines up to an aggregate amount not exceeding US$3,400,000; or (iii) by Force Account, up to an aggregate not Force Account Post review only exceeding $1,000,000, as a last resort and in a manner satisfactory to the Association.  Annex 6 Page 8 of 9 (b) Salaries estimated (Normal Government deputation or staff hiring Not applicable Not applicable at US$46,900,000 practices)  Annex 6 Page 9 of 9 Table 6C: Allocation of Credit Proceeds Expenditure Category Amount in IDA Financing US$ Million Percentage * Civil Works US$37.5 90% * Equipment, vehicles, books, teaching materials, and US$26.3 100% of foreign furniture expenditures, 100% of local expenditures (ex- factory cost) and 80% of local expenditures for other items procured Items (including contingencies) locally US$1.7 Furniture US$2.5 Equipment USS0.9 Vehicles US$24.2 Books & Libraries * Training, workshops, fellowships, and consultant services US$32.3 100% Items (including contingencies) US$22.6 Consultants US$11.5 Staff Training (Incl TAIDA) 3 Incremental operating and maintenance costs US$42.2 80% of local expenditures incurred until March 31, 2000; 55% of expenditures incurred from April 1, 2000 until March 31, 2002; and 35% of expenditures incurred thereafter. Items (including contingencies) US$28.5 Salaries ofAdditional Staff US$14.9 Incr Opn Costs (incl BRC, Office) USS0. 7 Operation & Maint of Vechicles, Equipment & Buildings USS2.8 Honorarium * Unallocated (summation of contingencies) US$13.7 TOTAL US$152.0  I I  Annex 7 Page I of 1 Annex 7 Project Processing Budget and Schedule A. Project Budget (US$000) Planned Actual (At final PCD stage) 360.5 303.9 (Prior to negotiations) 421.0 326.4 B. Project Schedule Planned Actual (At final PCD stage) Time taken to prepare the project (11 months) First Bank mission (identification) 07/22/1996 07/22/1996 Appraisal mission departure 09/24/1997 07/20/1997 Negotiations 01/02/1998 09/15/1997 Planned Date of Effectiveness 06/01/1998 04/01/1998 Prepared by: Bihar Shiksha Pariyoqna Parishad (State Implementation Society - SIS) of GOB under the general coordination of the DPEP Bureau of the Department of Education of the Ministry of Human Resource Development of GOI Preparation assistance: Japanese Grant (TF022582); and BEP Project Funds (this project is being financed by GOI, GOB and UNICEF) Bank staff who worked on the project included: Juan Prawda (Senior Education Specialist, SASED, Task Manager), Audrey Aarons (Education Specialist, SASED), Kevin Casey (Senior Implementation Specialist, SASPH), Keith Hinchliffe (Senior Economist, SASED), N.K. Jangira (Education Specialist, SACIF), V.J. Ravishankar (Economist, SACIF), Sam Thangaraj (Social Development Officer, SACIF), Adriaan Verspoor (Education Adviser, SACIF), Roger Bonner (Consultant, Civil Works Specialist) and Philip Cohen (Consultant, Learning Materials Specialist). Margaret Png and Salman Salman (LEGSA), Cecil Perera (LOAAS) and Agustin Litvak (SARPS) assisted the team prior and during negotiations. David Harding (Chief Education, UNICEF-Delhi) and Tejinder Singh (Education Project Officer, UNICEF- Patna-Bihar) participated as observers throughout the entire project preparation cycle. Jacob Bregman (LASHC, formerly at SAIPH), Bruno Laporte (HDDED) and Jamil Salni (LASHC) acted as peer reviewers. Susan Hirshberg, Mark Schlagel and Gertrude Stubblefield (SASED) assisted in preparing and editing the document. Sudesh Ponnappa (SACIF) assisted in the mission's preparation. At the time of the PAD Review Meeting, and prior to the reorganization of the South Asia Region, the project was endorsed in the South Asia Country Department II (Bhutan, India, Nepal) by Richard Skolnik, Division Chief, Population and Human Resource Division; Kazuko Uchimura, Project Adviser; Robert S. Drysdale, Director, South Asia Country Departnent II and Edwin R. Lim, Director, Resident Staff in India (currently Director, SACIN). After the reorganization, the project was also endorsed by Ralph Harbison, Sector Manager (SASED).   Annex 8 Page I of I Annex 8 Documents in the Project File A. Project Implementation Plans 1. Third District Primary Education Programme. Project Implementation Plan. Bihar. August 1997 2. Third District Primary Education Programme. Transition Plan. Bihar. May 1997 3. Third District Primary Education Programme. Management Plan. Bihar. March 1997 4. Third District Primary Education Programme. Annual Working Plans and Budgets for the Districts of: Bhojpur; Bhagalpur; Chatra; Darbhangal; Dumka; East Singhbhum (Jamshedpur); Gaya; Hazaribagh; Munger; Muzaffarpur; Purnia; Ranchi; Rohtas; Sitamarhi; Vaishali; West Champaran; and West Singhbhum (Chaibasa). May 1997. 5. Third District Primary Education Programme. District Plans (1997-2002) for the Districts of: Bhojpur; Bhagalpur; Chatra; Darbhanga; Dumka; East Singhbhum (Jamshedpur); Gaya; Hazaribagh; Munger; Muzaffarpur; Purnia; Ranchi; Rohtas; Sitamarhi; Vaishali; West Champaran; and West Singhbhum (Chaibasa). May 1997. 6. Third District Primary Education Programme. State Plan. Department of Secondary Education, Prhnary and Adult Education, Government of Bihar, Patna. May 1997 B. Assessment Studies 1 . Third District Prinary Education Programme. Final Reports of the Social Assessment Studies Conducted in the Districts of: Bhojpur; Bhagalpur; Chatra; Darbhanga; Dumka; East Singhbhum (Jamshedpur); Gaya; Hazaribagh; Munger; Muzaffarpur; Purnia; Ranchi; Rohtas; Sitamarhi; Vaishali; West Champaran; and West Singhbhum (Chaibasa). May 1997. 2. Third District Primary Education Programme. Final Report of the Baseline Assessment Study in the Districts of. Bhojpur; Bhagalpur; Chatra; Darbhanga; Dumka; East Singhbhum (Jamshedpur); Gaya; Hazaribagh; Munger; Muzaffarpur; Purnia; Ranchi; Rohtas; Sitamarhi; Vaishali; West Champaran; and West Singhbhum (Chaibasa).. May 1997 3. Third District Primnary Education Programme. Report on Bihar State Finance Study on Education. May 1997 4. Third District Prinary Education Programme. National Appraisal Report of Bihar (May 5-20, 1997). Ed.CIL. May 1997 C. Other 1. Third District Primary Education Programme. Draft Manual ofMaintenance ofSchool Buildings. May 1997 2. Third District Primary Education Programme. Construction Manualfor Buildings Development Program. May 1997 3. Third District Primary Education Programme. Standard LCB Bidding Documents for the Acquisition of Hardware and Software Requiredfor the EMIS and PMIS at the State and District Levels. May 1997 4. Government of Bihar, Secretary of Education. Resettlement Letter. Patna, Bihar, June 10, 1997  Annex 9 Page I of 5 Annex 9 Status of Bank Group Operations in India IBRD Loans and IDA Credits in the Operations Portfolio (As of June 30, 1997) Original Amount in US$ Difference Millions Between expected Loan Fiscal and actual or Year Project IBRD IDA Cancel- Undis- disburse- Credit lations bursed ments a/ No. Number of Closed Loans/Credits: 365 Active Loans C19230 1988 TAMIL NADU URBAN 0.00 300.20 45.47 20.51 65.02 L30960 1989 MAIIARASHTRA POWER 400.00 0.00 62.67 85.04 141.61 L30240 1989 NATHPA JHAKRI HYDRO 485.00 0.00 0.00 227.97 217.27 L29940 1989 STATE ROADS I 170.00 0.00 61.41 9.95 151.36 C20080 1989 VOCATIONAL TRAINING 0.00 250.00 103.33 41.94 168.62 L32370 1990 NOR REG TRANSM 485.00 0.00 0.00 259.06 251.06 L31190 1990 TECHNOLOGY DEVELOP. 145.00 0.00 10.00 27.71 37.71 C21580 1990 SECOND TN NUTRITION 0.00 95.80 29.81 3.49 23.71 C21330 1990 POP. TRG (VII) 0.00 86.70 22.74 8.71 31.93 C21310 1990 WTRSH PLAINS 0.00 55.00 0.00 17.90 9.92 C21300 1990 TECH EDUC I 0.00 235.00 24.26 60.59 78.90 C21150 1990 HYDERABAD W/S 0.00 79.90 0.00 24.36 21.30 C21000 1990 WTRSH HILLS 0.00 75.00 0.00 32.76 40.26 C20760 1990 PUNJAB IRR & DRAINAG 0.00 150.00 4.72 36.70 34.71 C20640 1990 TECHNOLOGY DEVELOPME 0.00 55.00 0.00 24.51 17.53 L33640 1991 GAS FLARING REDUCTIO 450.00 0.00 0.00 25.87 25.87 L33340 1991 IND POLLUTION CONTRO 124.00 0.00 0.00 20.53 -6.07 L33000 1991 AGR.DEV.I (TN) 20.00 0.00 0.00 20.00 1.25 L32590 1991 PETROCHEMICALS 233.00 0.00 70.30 30.77 -131.93 L32580 1991 PETROCHEMICALS 12.00 0.00 0.00 1.88 1.88 C22520 1991 IND POLLUTION CONTRO 0.00 31.60 0.00 19.44 18.30 C22410 1991 DAM SAFETY 0.00 130.00 0.00 99.39 115.38 C22340 1991 MAHARASHTRA RURAL WS 0.00 109.90 0.00 43.21 45.11 C22230 1991 TECH EDUC II 0.00 307.10 51.37 132.95 138.85 C22150 1991 AGR.DEV.I (TN) 0.00 92.80 0.00 17.07 14.39 C21730 1991 ICDS I (ORIS & ANDHR 0.00 96.00 21.65 22.46 41.43 L34980 1992 MAHARASHTRA POWER II 350.00 0.00 0.00 237.75 230.55 L34700 1992 NAT. HIGHWAYS II 153.00 0.00 0.00 153.00 0.00 L34360 1992 POWER UTIL EFFIC IMP 265.00 0.00 25.00 72.31 92.01 C23940 1992 POPULATION VIII 0.00 79.00 0.00 71.51 45.93 C23650 1992 NAT. HIGHWAYS II 0.00 153.00 0.00 79.77 56.68 C23500 1992 AIDS PREVENTION AND 0.00 84.00 0.00 32.13 30.91 C23410 1992 WEST BENGAL FORESTRY 0.00 34.00 0.00 4.67 1.22 C23290 1992 SHRIMP & FISH CULTUR 0.00 85.00 48.51 24.81 58.93 C23280 1992 MAHARASHTRA FORESTRY 0.00 124.00 16.18 63.41 43.52 L36320 1993 NTPC POWER GENERATIO 400.00 0.00 0.00 256.65 256.65 L35770 1993 PGC POWER SYSTEM 350.00 0.00 0.00 189.40 140.20 C25280 1993 NATL LEPROSY ELIMINA 0.00 85.00 0.00 59.30 36.58 C25 100 1993 UP SODIC LANDS RECLA 0.00 54.70 0.00 33.64 10.65 C25090 1993 UTTAR PRADESH BASIC 0.00 165.00 0.00 76.32 4.86 C24830 1993 KARNATAKA WS & ENV/S 0.00 92.00 0.00 70.11 43.04  Annex 9 Page 2 of 5 Original Amount in US$ Difference Millions Between expected Loan Fiscal and actual or Year Project IBRD IDA Cancel- Undis- disburse- Credit lations bursed ments a/ No. C24700 1993 ICDS II (BIHAR & MP) 0.00 194.00 0.00 170.35 73.25 C24490 1993 RENEWABLE RESOURCES 0.00 115.00 0.00 87.81 73.70 C24390 1993 BIHAR PLATEAU 0.00 117.00 0.00 87.29 64.15 C24330 1993 ADP - RAJASTHAN 0.00 106.00 0.00 47.02 16.83 C24090 1993 RUBBER 0.00 92.00 36.58 40.46 46.45 L37530 1994 CONTAINER TRANSPORT 94.00 0.00 0.00 82.54 54.54 C26300 1994 POPULATION IX 0.00 88.60 0.00 75.85 13.06 C26110 1994 BLINDNESS CONTROL 0.00 117.80 0.00 101.34 20.96 C25940 1994 MAHARASHTRA EARTHQUA 0.00 246.00 29.19 63.00 80.11 C25920 1994 WATER RES CONSOLID H 0.00 258.00 0.00 197.61 50.01 C25730 1994 ANDHRA PRADESH FORES 0.00 77.40 0.00 55.97 14.19 C25720 1994 FORESTRY RESEARCH ED 0.00 47.00 0.00 35.04 20.04 L39076 1995 MADRAS WATER SUP II 269.80 0.00 189.30 77.10 -3.40 L38576 1995 FINANCIAL SECTOR DEV 144.00 0.00 0.00 142.46 -1.54 L38560 1995 FINANCIAL SECTOR DEV 350.00 0.00 0.00 200.00 -150.00 L37806 1995 INDUS POLLUTION PREV 50.00 0.00 0.00 45.51 -4.49 L37790 1995 INDUS POLLUTION PREV 93.00 0.00 0.00 85.93 3.98 C27450 1995 TAMIL NADU WRCP 0.00 282.90 0.00 239.67 44.30 C27330 1995 ASSAM RURAL INFRA 0.00 126.00 0.00 108.63 15.59 C27000 1995 MP FORESTRY 0.00 58.00 0.00 43.60 2.53 C26990 1995 AGRIC HUMAN RES DEVT 0.00 59.50 0.00 50.10 19.59 C26630 1995 AP 1ST REF. HEALTH S 0.00 133.00 0.00 117.44 20.01 C26610 1995 DISTRICT PRIMARY ED 0.00 260.30 0.00 192.43 15.67 C26450 1995 INDUS POLLUTION PREV 0.00 25.00 0.00 24.68 25.00 L40560 1996 UP RURAL WATER 59.60 0.00 0.00 57.20 -.20 L40140 1996 ORISSA POWER SECTOR 350.00 0.00 0.00 334.57 -.43 L39920 1996 ILFS-INFRAS FINANCE 200.00 0.00 0.00 175.00 -3.50 L39230 1996 B SEWAGE DISPOSAL 167.00 0.00 0.00 153.85 27.15 C28760 1996 DISTRICT PRIM EDUC 2 0.00 425.20 0.00 398.44 6.51 C28620 1996 COAL ENV&SOCIAL MIT. 0.00 63.00 0.00 57.47 1.11 C28380 1996 ILFS-INFRAS FINANCE 0.00 5.00 0.00 4.74 5.00 C28330 1996 STATE HEALTH SYS II 0.00 350.00 0.00 316.11 16.94 C28010 1996 ORISSA WRCP 0.00 290.90 0.00 237.34 -5.81 C27740 1996 HYDROLOGY PROJECT 0.00 142.00 0.00 119.69 15.24 L41920 1997 STATE HIGHWAYS I(AP) 350.00 0.00 0.00 350.00 0.00 L41660 1997 AP IRRIGATION III 175.00 0.00 0.00 175.00 0.00 L41560 1997 A.P. EMERG. CYCLONE 50.00 0.00 0.00 50.00 0.00 L41140 1997 TA ST'S RD INFRA DEV 51.50 0.00 0.00 47.76 6.26 C29640 1997 MALARIA CONTROL 0.00 164.80 0.00 166.17 0.00 C29520 1997 AP IRRIGATION III 0.00 150.00 0.00 150.70 0.00 C29500 1997 A.P. EMERG. CYCLONE 0.00 100.00 0.00 100.51 0.00 C29420 1997 RURAL WOMEN'S DEV 0.00 19.50 0.00 18.82 0.00 C29360 1997 TUBERCULOSIS CONTROL 0.00 142.40 0.00 132.50 -1.18 C29300 1997 ENV CAPACITY BLDG TA 0.00 50.00 0.00 48.37 0.00 C29160 1997 ECODEVELOPMENT 0.00 28.00 0.00 25.62 -1.00 CN018 1997 REPRODUCTIVE HEALTH1 0.00 248.30 0.00 250.24 0.00 Total 6,445.90 7,688.30 852.48 8,481.50 3,286.36  Annex 9 Page 3 of 5 Original Amount in US$ Difference Millions Between expected Loan Fiscal and actual or Year Project IBRD IDA Cancel- Undis- disburse- Credit lations bursed ments a/ No. Active Loans Closed Loans Ital Total Disbursed (IBRD and IDA): 4,778.67 29,571.14 34,349.81 of which has been repaid: 168.78 8,544.66 8,713.44 Total now held by IBRD and 13,112.93 20,479.55 33,592.48 IDA: Amount sold : 0.00 133.77 133.77 Of which repaid : 0.00 133.77 133.77 Total Undisbursed : 8,481.50 96.81 8,578.31 a. Intended disbursements to date minus actual disbursements to date as projected at appraisal.  Annex 9 Page 4 of 5 India STATEMENT OF IFC's Committed and Disbursed Portfolio (As of June 30, 1997) Amounts in US$ Millions Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Qua Partic Si 1964/75/79/90 MUSCO 0.00 1.08 0.00 0.00 0.00 1.08 0.00 0.00 1978/87/91/93 HDFC 40.00 2.29 0.00 0.00 40.00 2.29 0.00 0.00 1981 Nagarjuna Steel 0.00 .07 0.00 0.00 0.00 .07 0.00 0.00 1981/86/81/91/93/96 ITW Signode 0.00 1.55 0.00 0.00 0.00 1.55 0.00 0.00 1981/86/89/94/92 TISCO 8.45 15.37 0.00 0.00 8.45 15.37 0.00 0.00 1981/90/93 M&M .83 6.49 0.00 3.33 .83 6.49 0.00 3.33 1982 Modi Cement 16.83 0.00 0.00 0.00 16.83 0.00 0.00 0.00 1984/90/94 India Lease 1.31 .86 0.00 0.00 1.31 .86 0.00 0.00 1984/91 Bihar Sponge 13.05 .68 0.00 0.00 13.05 .68 0.00 0.00 1986 EXB-City Mills .48 0.00 0.00 0.00 .48 0.00 0.00 0.00 1986 EXB-CECL .01 0.00 0.00 0.00 .01 0.00 0.00 0.00 1986 EXB-NB Footwear .19 0.00 0.00 0.00 .19 0.00 0.00 0.00 1986 EXB-Paharpur .15 0.00 0.00 0.00 .15 0.00 0.00 0.00 1986 EXB-STG .46 0.00 0.00 0.00 .46 0.00 0.00 0.00 1986 EXB-TAN .03 0.00 0.00 0.00 .03 0.00 0.00 0.00 1986 EXB-Wires & Fab. .07 0.00 0.00 0.00 .07 0.00 0.00 0.00 1986/92/93/94 GESCO 0.00 13.05 0.00 0.00 0.00 13.05 0.00 0.00 1986/93/94/95 India Equipment .60 .77 0.00 1.47 .60 .77 0.00 1.47 1987 Hindustan 7.40 0.00 0.00 0.00 7.40 0.00 0.00 0.00 1987/88/90/93 Titan Watches 2.74 1.03 0.00 0.00 2.74 1.03 0.00 0.00 1988/90/92 Tata Telecom 0.00 .10 0.00 0.00 0.00 .10 0.00 0.00 1988/94 GKN Invel 0.00 1.40 0.00 0.00 0.00 1.40 0.00 0.00 1989 AEC 13.72 0.00 0.00 0.00 13.72 0.00 0.00 0.00 1989 UCAL 0.00 .63 0.00 0.00 0.00 .63 0.00 0.00 1989/90/94 Tata Electric 64.24 0.00 0.00 0.00 64.24 0.00 0.00 0.00 1989/91 Gujarat State 11.35 0.00 0.00 0.00 11.35 0.00 0.00 0.00 1989/95 JSB India 0.00 1.21 0.00 0.00 0.00 1.21 0.00 0.00 1990 HOEL 0.00 .28 0.00 0.00 0.00 .28 0.00 0.00 1990 TDICI-VECAUS II 0.00 1.94 0.00 0.00 0.00 1.94 0.00 0.00 1990/92 CESC 48.79 0.00 0.00 67.00 48.79 0.00 0.00 67.00 1990/93/94 IL&FS 27.75 3.11 1.81 10.00 27.75 3.11 1.81 10.00 1990/94 ICICI-IFGL 0.00 .30 0.00 0.00 0.00 .30 0.00 0.00 1990/95 ICICI-SPIC Fine 0.00 1.88 0.00 0.00 0.00 1.88 0.00 0.00 1991 Block KG-OS-IV 0.00 .02 0.00 0.00 0.00 0.00 0.00 0.00 1991 BSES 45.00 0.00 0.00 0.00 45.00 0.00 0.00 0.00 1991/93 Triveni 0.00 1.11 0.00 0.00 0.00 1.11 0.00 0.00 1991/96 VARUN 11.35 1.35 0.00 5.33 11.35 1.35 0.00 5.33 1992 Indus VC Mgt Co 0.00 .01 0.00 0.00 0.00 .01 0.00 0.00 1992 Indus VCF 0.00 1.00 0.00 0.00 0.00 1.00 0.00 0.00 1992 Info Tech Fund 0.00 .64 0.00 0.00 0.00 .64 0.00 0.00 1992 SKF Bearings 6.70 0.00 0.00 0.00 6.70 0.00 0.00 0.00 1992/93 Arvind Mills 0.00 17.10 0.00 0.00 0.00 17.10 0.00 0.00 1992/94/97 Ispat Industries 85.55 5.77 0.00 85.00 38.19 5.77 0.00 0.00 1992/95 Creditcapital VF 0.00 1.05 0.00 0.00 0.00 1.05 0.00 0.00 1992/96/97 NICCO-UCO 1.88 .50 0.00 0.00 1.88 .50 0.00 0.00 1993/94/96 IndoRama 20.31 11.98 0.00 8.13 20.31 11.98 0.00 8.13 1993/97 20TH Century 15.78 .80 0.00 4.62 5.78 .80 0.00 4.62 1994 Centurion Growth 0.00 2.39 0.00 0.00 0.00 2.39 0.00 0.00 1994 Chowgule 15.00 4.58 0.00 27.00 13.75 4.58 0.00 24.75  Annex 9 Page 5 of 5 Amounts in US$ Millions Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Qua Partic Si 1994 Crdcap Asset Mgt 0.00 .32 0.00 0.00 0.00 .32 0.00 0.00 1994 DLF Cement 11.00 4.94 0.00 17.00 11.00 4.94 0.00 17.00 1994 Global Trust 0.00 3.19 0.00 0.00 0.00 3.19 0.00 0.00 1994 Gujarat Ambuja 0.00 8.23 0.00 0.00 0.00 8.23 0.00 0.00 1994 Taurus Starshare 0.00 7.17 0.00 0.00 0.00 7.17 0.00 0.00 1994 TCAMC 0.00 .16 0.00 0.00 0.00 .16 0.00 0.00 1994/97 GVK 40.00 8.30 0.00 37.65 30.00 8.30 0.00 37.65 1995 Centrion Bank 0.00 3.87 0.00 0.00 0.00 3.87 0.00 0.00 1995 EXIMBANK 25.00 0.00 0.00 0.00 25.00 0.00 0.00 0.00 1995 ISIC 0.00 .32 0.00 0.00 0.00 .32 0.00 0.00 1995 Prism Cement 15.00 5.02 0.00 15.00 15.00 5.02 0.00 15.00 1995 Rain Calcining 19.25 5.40 0.00 0.00 10.50 4.72 0.00 0.00 1995 RPG Communicatis 0.00 8.30 0.00 0.00 0.00 8.30 0.00 0.00 1995 SaraFund 0.00 7.03 0.00 0.00 0.00 1.10 0.00 0.00 1995 SRF Finance 13.89 5.00 0.00 0.00 13.89 4.39 0.00 0.00 1996 CVF Oil Gas-AL 8.00 8.00 0.00 0.00 0.00 0.00 0.00 0.00 1996 India Direct Fnd 0.00 7.50 0.00 0.00 0.00 .82 0.00 0.00 1996 Indus II 0.00 5.00 0.00 0.00 0.00 3.00 0.00 0.00 1996 Indus Mauritius 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1996 Moser Baer 5.70 .60 0.00 0.00 5.70 0.00 0.00 0.00 1996 United Riceland 10.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1997 CEAT 20.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1997 Owens Coming 25.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1997 WIPRO 10.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total Portfolio: 662.86 190.74 1.81 281.53 512.50 166.22 1.81 194.28 Approval Pending Commitment Lon Equity Qui Partic 1997 AEL 16.00 5.50 0.00 0.00 1996 CESC II -BLINC 0.00 0.00 0.00 37.00 1996 . DEV CREDIT BANK 0.00 1.89 0.00 0.00 1997 DUNCAN HOSPITAL 7.00 1.00 0.00 0.00 1997 EEPL 0.00 .03 0.00 0.00 1995 IB VALLEY POWER 50.00 20.00 0.00 0.00 1997 ITC CLASSIC 20.00 0.00 10.00 0.00 1994 NEYVELI POWER 30.00 18.00 0.00 150.00 1997 NUFSL 5.00 0.00 0.00 5.00 1997 SAPL 0.00 .07 0.00 0.00 1995 SPIC-RGHTS ISSUE 0.00 .86 0.00 0.00 1997 SREI 15.00 3.00 0.00 0.00 1996 TARUN SHIPPING 0.00 .80 0.00 0.00 1997 WALDEN - MGMT 0.00 .08 0.00 0.00 1997 WIV 0.00 6.00 0.00 0.00 Total Pending Commitment: 143.00 57.23 10.00 192.00  Annex 10 Page l of 2 India at a glance 8/20/97 POVERTY and SOCIAL South Low- India Asia Income Development dlamond' Population mid-1996 (millions) 943.2 1,264 3,229 GNP per capita 1996 (US$) 380 380 500 Life expectancy GNP 1996 (billions US$) 358.4 481 1,601 Average annual growth, 1990-96 Population (%) 1.7 1.9 1.7 GNP Labor fobre (%) 2.0 2.1 1.7pmry Most recent estimate (latest year available since 1989) capita enroliment Poverty: headcount index (% of population) 35 Urban population (% of total population) 27 26 29 Life expectancy at birth (years) 62 61 63 Infant mortality (per 1,000 live births) 68 75 69 Access to safe water Child mainutrtion (% of children under 5) 63 Access to safe water (% of population) 63 63 53 Illiteracy (% of population age 15+) 48 50 34 / Gross primary enrollment (% of school-age populaion) 102 98 105 - windra Male 113 110 112 Low-ncome group Female 91 87 98 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1976 1985 1996 1996 Economic ratlos GDP (billions US$) 91.0 214.3 328.3 355.8 Gross domestic investmentUGDP 20.8 24.2 26.2 26.5 Openness d economy Exports of goods and services/GDP 6.2 6.0 12.2 12.3 Gross domestic savings/GDP 20.4 21.1 23.6 23.9 Gross national savings/GDP 20.6 21.6 24.0 25.1 Currentaccountbalance/GDP 0.0 -2.8 -1.8 -1.18 Interest payments/GDP 0.3 0.6 1.2 .. Savings Investment Total debtUGDP 15.1 19.1 28.6 27.6 Total debt servicelexports 13.1 22.7 28.2 Present value of debtUGDP .. .. 22.8 Present value of debtlexports .. .. 161.4 Indebtedness 1975-86 1986-96 1996 1996 199746 (average annual growth) India GDP 4.2 5.6 7.3 7.5 Low4ncome gfoup GNP per capita 1.9 3.5 5.4 5.2 ou Exports of goods and serVices 3.9 11.5 31.6 7.4 STRUCTURE of the ECONOMY 1975 198) 1996 1996 Growth rates of output and Investment (%) (X of GDP) Agriculture 40.5 33.0 27.9 27.8 30 Industry 23.7 28.1 30.1 29.2 1 Manufacturing 16.7 17.9 19.7 20.1 Services 35.8 38.8 42.1 43.0 Private consumption 70.2 67.8 65.8 65.6 -1s General govemment consumption 9.4 11.1 10.6 10.5 GDI GDP Imports of goods and services 6.6 9.1 14.9 14.9 1975-8 1986-96 1995 1996 (average annual growth) Growth rates of exports and imports (Y) Agriculture 2.5 3.6 -0.1 5.7 40 Industry 5.3 6.6 11.6 7.0 Manufacturing 5.5 6.7 13.6 8.1 20 Services 5.1 6.7 8.8 7.4 Private consumpton 4.5 4.8 2.6 7.1 02 9 ' / se General govemment consumption 6.5 3.9 5.1 6.4 92 93 94 95 9 Gross domestic investment 4.1 7.1 17.9 8.5 420 Imports of goods and services 9.1 6.0 17.3 7.0 Expots I Iports Gross national product 4.1 5.4 7.2 6:7 Note: 1996 data are preliminary estimates. All GDP data other than sectoral value-added are in market prices. ' The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will  Annex 10 Page 2 of 2 India PRICES and GOVERNMENT FINANCE 1975 1985 1995 1996 Domesticprices Inflation (%) (% change) 15 Consumer prices .. 5.6 10.2 Implicit GDP deflator -1.5 7.5 7.3 7.0 10 Government rinance (% of GDP) 0 I . Current revenue .. 23.8 24.3 .. 91 92 3 94 95 9S Current budget balance .. 2.2 1.0 Overall surplusideficit .. 11.0 10.1 -GOPdel. CPI TRADE 1975 1985 1995 1996 (millions USS) Export and Import levels (mill. USS) Total exports (fob) 8,793 31,783 33,107 40,000 Tea 1 35 Iron 473 518 30,000 Manufactures ,, 5,640 24,483 Total imports (cit) .. 15,957 36,354 38,548 20,5000 Food .. 1,321 1,243 Fuel and energy 4,054 7,201 . 000 Capital goods .. 3,502 6,577 .. o Export price index (1987=100) .. 94 99 90 91 92 93 94 95 so Import prce index (1987=100) .. 90 121 .. Export r Impors Terms of trade (1987= 100) .. 104 81 BALANCE of PAYMENTS 1975 1985 1995 1996 (millions US$) Current account balance to GDP ratio (%) Exports of goods and services 5,650 12.773 40,181 43,855 - Imports of goods and services 5990 19,422 48,788 53,087 90 91 |2 |3 94 95 96 Resource balance -340 -8.e49 -8,607 -9,232 Net income -150 -1,552 4,157 4,429 Net current transfers 470 2,207 7,000 9,780 2 Current account balance, before official capital transfers -20 -5,994 -5,764 -3,881 3_ Financing items (net) 20 6,542 2,040 9,803 Changes in net reserves 0 -548 3,724 -5,922 4 dremo: Reserves including gold (rni/l. US$) 2,085 9,493 22,843 24,919 Conversion rate (bocalUUS$) 8.7 12.2 33.5 35.5 EXTERNAL DEBT and RESOURCE FLOWS 1975 1885 1995 1996 (millions US$) Compositon of total debt 1995 (mill. US$) Total debt outstanding and disbursed 13,708 40,960 93,768 98,193 IBRD 436 2,398 9,849 8,768 G A IDA 2,809 9,750 17,499 17,616 5049 S849 Total debt service 822 3,532 13,123 13,742 IBRD 89 313 1,714 1,514 B IDA 24 124 357 364 17499 29280149 Composition of net resource flows Offidal grants 511 450 556 \ C Official creditors 1,260 1,424 -867 .. 2374 Private creditors 83 2,277 775 D / Foreign direct investment 85 108 1,300 2638 Portfolio equity 0 0 1,517 | 27097 World Bank program Commitments 917 2,882 1,697 1,725 A A-BRD E- 846teraI Disbursements 531 1,375 1,318 1,592 8 - IDA D- Other multilateral F- Private Principal repayments 63 157 1,170 1,074 C-IMF G -Short-efnn Netflows 467 1,218 149 518 __1 Interest payments 50 280 901 804 Net transfers 417 938 -752 -287 Development Economics 8120197