Document o f The World Bank

FOR OFFICIAL USE ONLY

Report No: 37377-IN

PROJECT APPRAISAL DOCUMENT

O N A

PROPOSED CREDIT

IN THE AMOUNT OF SDR104.1 MILL ION (US$154 MILLION EQUIVALENT)

TO THE

REPUBLIC OF INDIA

FOR THE

PUNJAB RURAL WATER SUPPLY AND SANITATION PROJECT

November 15,2006

Sustainable Development Unit India Country Management Unit South Asia Regional Office

This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. I t s contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS (Exchange Rate Effective September 30,2006)

Currency Unit = Indian Rupees (INR) US$1 = INR46.15 S D R l = US$1.4802 F ISCAL YEAR

April 01 - March 31

ARWSP cs D D W S DEA DPMC D W S C DWSS EMF FC GP GPWSC Go1 GoP IDA IEC MDGs M&E MoRD MOU MTP MV NABARD N C NGO OM O&M PC PIP PFU sc so SPMC sv SWAP SWSM TOR

ABBREVIATIONS AND ACRONYMS Accelerated Rural Water Supply Program, Go1 Country Strategy Department o f Drinking Water Supply, Go1 Department o f Economic Affairs, Go1 District Program Management Cel l District Water and Sanitation Committee Department o f Water Supply & Sanitation, GoP Environmental Management Framework Fully Covered Gram Panchayat Gram Panchayat Water Supply and Sanitation Committee Government o f India Government o f Punjab International Development Association Information, Education and Communication Mi l lennium Development Goals Monitoring and Evaluation Ministry of Rural Development, Go1 Memorandum o f Understanding Medium Term Sector Program Multi Vil lage National Bank for Agriculture and Rural Development N o t Covered N o n Governmental Organization Operational Manual Operation & Maintenance Partially Covered Project Implementation Plan Panchayati Raj Institution Scheduled Caste Support Organization State Program Management Cel l Single Vil lage Sector Wide Approach State Water and Sanitation Mission Terms Of Reference

Vice President: Praful C. Pate1 Fayez S. Omar Sonia HammadConstance A. Bernard Ghanasham V. Abhyankar

Act ing Country Director: Sector ManagerDirector:

Task Team Leader:

FOR OFFICIAL USE ONLY

INDIA PUNJAB RURAL WATER SUPPLY AND SANITATION PROJECT

CONTENTS Page

STRATEGIC CONTEXT AND RATIONALE ................................................................. 1 Country and Sector issues ................................................................................................... 1

Rationale for Bank involvement ......................................................................................... 3

Higher level objectives to which the project contributes .................................................... 3 PROJECT DESCRIPTION ................................................................................................. 3

1 . Lending instrument ............................................................................................................. 3

2 . Program objective and phases ............................................................................................. 4

3 . Project Development Objective and K e y Indicators ........................................................... 4

4 . Project components ............................................................................................................. 6

5 . Lessons learned and reflected in the project design ............................................................ 8

6 . Alternatives considered and reasons for rejection .............................................................. 9 C . IMPLEMENTATION ........................................................................................................ 10

1 . Partnership arrangements (if applicable) .......................................................................... 10

2 . Institutional and Implementation arrangements ................................................................ 10

3 . Monitoring and evaluation o f outcomes/results ................................................................ 14

4 . Sustainability ..................................................................................................................... 14

5 . Critical r isks and possible controversial aspects ............................................................... 15

6 . Loadcredit conditions and covenants ............................................................................... 16 APPRAISAL SUMMARY ................................................................................................. 16

1 . Economic and Financial Analysis ..................................................................................... 16

2 . Technical ........................................................................................................................... 18

3 . Fiduciary ........................................................................................................................... 19

4 . Social ................................................................................................................................. 21

5 . Environmental Assessment ............................................................................................... 22

6 . Safeguard Policies ............................................................................................................. 24

7 . Policy Exceptions and Readiness ...................................................................................... 24

A . 1 . 2 . 3 .

B .

D .

Annex 1: Country and Sector or Program Background ......................................................... 25

Annex 2: Major related Projects Financed by the Bank and/or other Agencies .................. 30 Annex 3: Results Framework and Monitoring ........................................................................ 31

Annex 4: Detailed Project Description ...................................................................................... 34

Annex 5: Project Costs ............................................................................................................... 42

Annex 6: Implementation Arrangements ................................................................................. 44

Annex 7: Financial Management and Disbursement Arrangements ..................................... 55

Annex 8: Procurement Arrangements ...................................................................................... 66

Annex 9: Economic and Financial Analysis ............................................................................. 76

Annex 10: Safeguard Policy Issues ............................................................................................ 82

Annex 11: Action Plan for Enhancing Transparency and Accountability ............................ 88

Annex 12: Decentralization and role o f PRIs ........................................................................... 94

Annex 13: Social Assessment ................................................................................................... 102

Annex 14: Engineering Aspects ............................................................................................... 110

Annex 15: Project Preparation and Supervision ................................................................... 116

Annex 16: Documents in the Project F i l e ............................................................................... 117

Annex 17: Statement o f Loans and Credits ............................................................................ 118

Annex 18: Country at a Glance ............................................................................................... 122

MAP IBRD No . 35078

INDIA Punjab Rural Water Supply and Sanitation Project

ASSOCIATION Total:

PROJECT APPRAISAL DOCUMENT

24 1.40 20.00 261.40

South Asia

SASSD Date: November 15,2006 Acting Country Director: Fayez S. Omar

Team Leader: Ghanasham V. Abhyankar Sectors: Water supply (80%); Sanitation

Themes: Rural services and infrastructure (P) Environmental screening category: B Partial Assessment

Sector ManagerDirector: Sonia Hammam (20%)

Project ID: PO90592

Lending Instrument: Specific Investment Credit

For Loans/Credits/Others: Total Bank financing (US$m): 154.00 IDA Credit

Borrower: I India Responsible Agency: Government o f Punjab, Department o f Water Supply and Sanitation

Project implementation period: Five and ha l f Years Expected effectiveness date: January 3 1,2007 Expected closing date: March 31,2012 Does the project depart from the Country Strategy (CS) in content or other significant respects? Re$ PAD A.3 Does the project require any exceptions from Bank policies? Re$ PAD D. 7

I s approval for any pol icy exception sought from the Board? Does the project include any critical risks rated “substantial” or “high”? Re$ PAD C.5

[ ]Yes [XINO

[ ]Yes [XINO

[ ]Yes [XINO

[XIYes [ ] N o

Have these been approved by Bank management? [ ]Yes [ IN0

i

[X ]Yes [ ] N o Does the project meet the Regional criteria for readiness for implementation? Re$ PAD D. 7 Project development objective Re$ PAD B.2, Technical Annex 3 Assisting Government o f Punjab (GoP) in increasing access o f rural communities to improved and sustainable rural water supply and sanitation services. Project description Re$ PAD B.3.a, Technical Annex 4 Component 1 : Program Management : Setting up and operations o f Program management Units and support services, M&E, capacity building and implementing Information, education and communication campaigns Component 2 : Community Development : Providing capacity support and building capacity o f the village local governments and user communities in development and management o f rural water and sanitation facilities and services Component 3 : Infrastructure Building : Construction o f new drinking water supply and community sanitation schemes and up-gradation and rehabilitation o f existing schemes Which safeguard policies are triggered, if any? Re$ PAD D.6, Technical Annex 10 OP 4.01 Environmental assessment Significant, non-standard conditions, if any, for: Re$ PAD C.7 Board presentation: None Loadcredit effectiveness: None Covenants applicable to project implementation:

(i) For al l RWSS sector investment schemes, regardless o f the source o f financing, GoP shall take al l necessary steps to ensure that such schemes are consistent with i t s SWAP Program and its implementation strategy, as agreed with the Association, and that the number o f ongoing RWSS sector investments financed outside the SWAP Program are reduced during the period o f Project implementation such that the amount o f investments in such schemes does not at any time exceed Rs 476 Crores.

(ii) In carrying out Part C.2 (a) o f the Project covering Performance improvement o f existing water supply schemes, GoP shall ensure that the operations and management and the financing responsibilities o f selected single village water supply schemes and intra village works o f selected multi village water supply schemes are transferred from DWSS to the relevant GP and GPWSC in accordance with a time-bound action plan, satisfactory to the Association.

(iii) In respect o f components C2 (b) and C3 covering installation o f innovative technologies and community sanitation schemes respectively, no withdrawal shall be made unless the f i rst five pi lot schemes o f each technology option shall have commenced operations satisfactory to the Association.

.. 11

A. S T R A T E G I C CONTEXT AND RATIONALE

1. Country and Sector issues

1. Coverage and Service Levels at National Level: India has achieved significant success in providing basic minimum service level for drinking water supply (40 liters per capita per day) to most o f i t s rural population. However, for various reasons operational and financial sustainability o f Rural Water Supply and Sanitation (RWSS) services has not been achieved. Depleting ground water table and deteriorating ground water quality are threatening source sustainability. Til l recently, the program was almost totally government run without the participation o f other stakeholders resulting in consumer perception o f water as a free (service) commodity with the government having the entire responsibility for running the operation. The RWSS program faces serious challenges in the coming years to meet the needs o f an expanding population and growing demand for improved service levels.

2. The level o f household sanitation in rural areas is extremely l o w (less than 40% households have toilets). The rural population generally lacks an understanding o f the linkages between lack o f sanitation and unsafe hygiene practice, and diarrhea related diseases. The resultant morbidity and mortality, particularly in young children, significantly affects their growth, educational attendance and achievement and productive activity. Progress in sanitation and safe hygiene practice wil l require significant social marketing and awareness campaigns for demand creation.

3. Lack o f reliable household level information and weak monitoring systems make i t difficult to realistically assess achievement o f sector goals. Go1 i s currently undertaking a national habitation survey to update the coverage and sustainability database that would help improve results orientation in the sector.

4. Government of India’s (GoI) Tenth Plan Policy and Strategy: Go1 recognizes the need to improve the functionality and sustainability o f the sector and has launched significant sector reforms since 1999. Thus, GoI’s 10th Plan pol icy objectives (as revised in its mid-term review o f 2005) for RWSS are to: a) accelerate sanitation coverage to achieve 35% coverage by 2007, 50% coverage by 2010, and provide 100% o f rural schools with sanitation facilities; b) strengthen sustainability o f both water supply systems and water sources; c) provide minimum (basic) service level o f safe drinking water to al l rural habitations by 2009; and d) provide demand based higher water service standards to interested rural habitations by 2010. These pol icy objectives are expected to continue in GoI’s llth Plan (2007 - 2012), currently under preparation.

5. The main challenges now are to expand and spread the reform approach countrywide. This i s required to meet GoI’s pol icy objectives and achieve (and even exceed) the sector’s Mil lennium Development Goals (MDGs) o f halving the proportion o f people without access to safe drinking water and basic sanitation by 2015. I ts new centrally sponsored “Swajaldhara” and Total Sanitation Campaign (TSC) programs are a clear indication o f this desire to expand and hasten the reform process. Go1 also plans to work with States to move towards statewide implementation o f RWSS reforms. Establishing the necessary institutional arrangements, building institutional capacity, and bridging financing gaps in scaling-up are the key priorities.

1

6. Key Sector Issues in Punjab: Some 30% o f the villages st i l l do not have access to basic drinking water service. The remaining 70% villages do have piped water systems, but many o f these are suffering from extremely l o w customer base and poor O&M performance. As a result, about 60 % households in Punjab are dependent on unsafe private drinking water sources. With high O & M costs o f the Department o f Water Supply and Sanitation (DWSS) and low O&M cost recovery from users, the water supply systems are becoming unsustainable. About 50% households have toilets. However, highly charged septic tank effluent f lowing in open drains, has degraded the environmental conditions in the villages and pose a serious health hazard. The DWSS accountability and incentive structures favor new construction with little concern for the quality o f service. The new schemes are planned and built with l imited or no participation o f the end users in decision making or service management. Thus, the current institutional, operational and financing arrangements present constraints and challenges in achieving service improvements or ensuring long-term sustainability. M a i n causes for poor sector performance include: lack o f separation o f different roles within the sector institution, limited decentralization and local capacities, fragmented sector finances, highly centralized decision-making and approvals, low priori ty and accountability in ensuring customer satisfaction, and weak monitoring and user feed-back systems.

7. Government of Punjab’s (GoP) Vision and Medium-term Sector Program: GoP’s vision and long te rm strategy aims at covering al l Punjab villages with 100 % water supply coverage with higher service standards and private service connections to most households as well as providing modem underground waste water collection and disposal systems at an estimated cost o f about U S $ 1.2 billion- over a period o f next 15 years. However, in the medium term (over the next 5 years) it proposes to implement a more modest and prioritized Medium term sector Program (MTP) o f about US$ 364 M, considering the l ikely financing envelopes that may be available, the State’s absorptive capacity, and DWSS and rural local government’s implementation capacity.

8. MTP will st i l l a im to achieve full coverage for water supply with at least basic service level o f 40 liters per capita per day in al l Punjab villages, but propose smaller investments in community sanitation schemes. Thus the MTP’s main objectives include: a) coverage o f a l l N o t Covered (NC) and Partially Covered (PC) villages to reach at least a Fully Covered (FC) status, b) ensuring sustainability o f water supply services, and c) initiating measures to improve village level environmental sanitation. This wil l be achieved through empowerment o f GPs and local communities for decentralized service delivery, and implementing institutional reforms to strengthen DWSS capacity to effectively manage and monitor the use o f participatory processes and demand responsive approach.

9. The proposed MTP will be financed from already assured funding o f about US$ 102 M for completing the ongoing schemes and by implementing a US$ 262 M proposed SWAP program with assistance from Go1 and IDA. The SWAP program will fund the schemes that use the new consistent sector pol icy principles and implementation arrangements for al l sources o f financing. GoI’ future commitments and the IDA funding support with contributions from GoP and user communities will be under the proposed SWAP Program.

2

2. Rationale for Bank involvement

10. The overarching challenge o f the Bank’s Current Country Strategy for India (Sept 2004) i s to leverage Bank’s limited resources to scale up its impact. Thus, Bank’s support to India’s RWSS program wil l mainly aim at assisting India in scaling up nationwide reform approach. Go1 has requested the Bank to develop statewide scaling-up projects, adopting SWAP in seven states (Tamil Nadu, Uttaranchal, Punjab, Andhra Pradesh, Rajasthan, Madhya Pradesh and Assam). I t believes that these projects wil l develop best practice examples o f statewide scaling up and provide strong demonstration impact nationwide.

11. Punjab’s ownership and keen desire for reforms is evident from a number o f reform initiatives already taken by the State. Further, despite being a relatively prosperous state, Punjab needs significant improvements in the quality o f rural water and sanitation service delivery requiring both additional investments and reforms. Thus, extending Bank support to Punjab will be a part o f the Bank’s strategy to assist Go1 in scaling up the reforms nationwide and contribute to achieving the water and sanitation related MDGs.

3. Higher level objectives to which the project contributes

12. The project will help GoP in achieving i t s broader development goals o f achieving health and water security, poverty reduction, higher enrollment o f children, particularly girls, in schools, and reduction in infant mortality and maternal mortality rates. The project will also support GoP’s efforts in accelerating the process o f decentralization by building the capacity o f the rural local governments in development and delivery o f rural services.

B. PROJECT DESCRIPTION

1. Lending instrument

13. The proposed instrument i s the Specific Investment Credit o f US$ 154 mi l l ion equivalent, which wil l support GoP’s medium term program (MTP)’ for the Sector. A SWAP has been chosen to implement a consistent sector p o l i c y for a l l new’ investments irrespective o f the source o f financing. GoP’s Medium Term Sector Program (MTP) includes ongoing water supply schemes (US$ 102 million) and implementation o f the proposed SWAP Program (US$ 262 million). Bank will fund a share o f GoP’s expenditure only under the SWAP program.

14. In India’s RWSS sector, this wil l be the first time (along with Uttaranchal) that Bank and Go1 wil l work towards supporting state owned and developed sector program which will adopt single sector pol icy and consistent implementation strategies. This is a major step forward in moving away from the current fragmented sector finances and approaches- and the proposed project will pave way to eventual unifying o f processes and pooling o f funds. This is considered as a pragmatic approach given the current country and the sector context.

The definition as in Section A 1 para 7 o f th is PAD

The definition o f new investments i s described in Section B4 o f this PAD

1

* The key elements o f the new sector policy are in Section B3 para 17 to 27 o f this PAD 3

3

15. The SWAP is expected to enhance the Bank’s development effectiveness through statewide implementation, build stronger partnership with Go1 and the partner state and contribute to efficient management o f sector resources. During project implementation, a plan would be developed to transit from multi programs to just one state RWSS program including phasing out o f the ongoing programs.

2. Program objective and phases Not Applicable

3. Project Development Objective and Key Indicators

16. The Project development objective wil l be to assist GoP in increasing access o f rural communities to improved and sustainable RWSS services. The key outcome indicators will be: (i) percentage o f habitations in the rural areas o f Punjab that are fully covered (FC) for access to drinking water; (ii) percentage o f rural households in the state with access to safe and adequate drinking water supply throughout the year; and (iii) percentage o f participating habitations having satisfactorily performing community sanitation facilities.

GoP’s New RWSS Sector Policy

17. GoP’s new sector pol icy has been approved and communicated to the Bank (vide Chief Secretary, GoP’s letter o f July 12, 2006) and also included in the Project Implementation Plan. The key elements o f GoP’s proposed new sector pol icy are summarized below4 :

Policy/ Institution a1

18. GPs / GPWSCs wil l be responsible for planning, technology selection (type o f scheme), procurement (bid invitation, award), construction and O&M management o f al l new Single Village (SV) water schemes and for al l intra-village water supply works o f Multi Village (MV) water supply schemes with capacity support from DWSS / NGOsl Private sector .

19. The role o f DWSS will mainly cover: (i) overall RWSS program management including IEC and M&E o f activities, outcomes and impacts; (ii) development and management o f common infrastructure o f MV schemes with improved financial and operational performance; (iii) planning and construction o f community sanitation schemes with active participation o f GPs and households; and (iv) arranging social, technical and management support to GPs and GWSCs for al l intra-village RWSS schemes and services.

20. S e l f selection o f Villages based on transparent eligibility and selection criteria - determined upfront by GoP - wil l be adopted in each district. GPs will need to apply to D P M C endorsing the project principles to seek project support.

21. Scheme and Tender approvals: The District Annual plans for each year will be prepared by DWSC and approved by SWSM before the end o f the previous fiscal year and included in the state budget. Thereafter, approvals o f a l l detailed scheme reports and implementation phase proposals upto Rs.30 lakhs wil l be provided by DWSCs. While GP/GPWSC and DPMC will

Various Institutions mentioned in this Section are defined in Section C2 para 40 to 49 o f this PAD

4

approve tenders up to the same value for SV and common infrastructure o f MV schemes respectively.

22. All existing SV water supply schemes wil l be transferred to GPs/ GPWSCs in a time bound manner (in about 2 year’s time). For al l existing MV water supply schemes, transfemng intra-village O&M management and financing responsibility to GPs/ GPWSCs will be progressively completed during the project period.

23. For O & M o f common infrastructure o f al l N e w MV schemes, DWSS wil l deploy private sector service/ management contracts as per its current practice. For O&M o f SV schemes, DWSS will provide guidance to GPs/ GPWSC on entering into management contracts including billing and collections. DWSS wil l also gradually introduce the practice o f O&M management contracts for existing MV schemes linked to natural attrition o f current operating staff o f DWSS.

Financial

24. O&M financing o f Water Supply Schemes: For al l new SV Schemes, users wil l finance the recurrent O&M costs (electricity bill, staff cost, chemical, minor repairs and routine maintenance). For al l existing SV Schemes, full O&M cost recovery from user charges will be achieved in a phased manner. For al l new MV schemes, GPs/GPWSC wil l finance O & M cost o f intra-village water distribution system + bulk water charges to be fixed by DWSS. DWSS will implement a phased program o f installing bulk water meters at the entry to each village in al l i t s existing MV Schemes. This wil l help DWSS to introduce water audit, better assessment o f water supplied to each village, and introduction o f billing based o n volumetric measurement o f bulk water supply in existing MV Schemes.

25. User Capital Cost Sharing for Water Supply Schemes: On the lines o f GoI’s Swajaldhara program, users wil l finance at least 10% o f capital cost irrespective o f the technology choice or SV or MV schemes. The capital cost sharing by users wil l be at 50% o f the above rule for the Scheduled Caste villages, villages in hilly areas and in international border/ flood prone zone. To ensure affordability, an upper ceiling o f Rs.1500/- per house hold wil l be applicable for the scheme-users as a group. GPWSC can adopt internal cross subsidization if they wish.

26. User Capital Cost Sharing for Community Sanitation : the level o f user contribution to capital costs wil l be same as for water supply - except that up to 50 % o f user contribution can come from other sources such a GP funds and private donations.

27. Funds Flow: RWSS investment h n d s wil l be transferred by SPMC to GPs/ GPWSCs- through an independent channel o f SPMC- DPMC-GPWSC (and not through DWSS divisions providing technical and monitoring support) for SV schemes and for intra-village works o f MV schemes. GPWSCs wil l be responsible for management o f investment and O&M f h d s for al l intra-village water supply schemes (with adequate capacity support from DWSS).

5

4. Project components

I I I

28. The Program wil l be implemented in al l 19 districts o f Punjab. There are 12,278 GPs (approximately the same number o f villages or habitations) in Punjab. As per 2001 census, total rural population in Punjab i s 16.1 million, o f which 30 % i s Scheduled Caste (SC) population. There i s no tribal population in Punjab.

I

29. The GoP’s proposed SWAP Program for FY 2006-7 to FY 201 1-12 aims to implement water supply schemes in about 3000 N C F C villages and thereby achieve 100% coverage o f al l villages in Punjab. In addition, the proposed Program intends to improve operational and financial performance o f existing water supply schemes and initiate introduction o f community sanitation schemes on a pi lot basis. The proposed SWAP Program i s expected to directly benefit about 7.4 million people (about 46% the state’s rural population). The program will particularly benefit population belonging to Scheduled Caste (SC) and those living in hilly areas and along the international border (about 40% o f the State’s population).

(US$M)

31.4

24.4

205.6

261.4

30. The size o f the proposed SWAP Program within the MTP i s estimated at Rs.1290 crore or about US$262 million. The SWAP Program will have three main components: Component A: Program Management, Component B: Community Development and; Component C: Infrastructure Building. The estimated investment and operating costs for these components and the Bank financing shares are summarized below.

Go1 GoP Comm.

31.4

24.4

42.1 147.8 15.7

42.1 203.6 15.7

~

*Ban

T Component

Program Management

Community Development

Infrastructure Building

TOTAL - SWAP Program

will reimburse GoPS share o

Total Financing share

program (US$M)

Bank Fin. of GoP

contributions (US$M)

31.4

24.4

98.2

154.0

Bank * financing as a YO o f GoP contribution

100%

100%

66.0%

75.6%

31. Component A: Program Management (US$ 31.4 M): This component wil l finance establishment and operating costs o f the program institutions and training, consultancies, and goods and equipment for: management support to DWSS, information, education and communication (IEC) campaigns, operating M&E and M I S systems, capacity building programs, sector development programs and studies; and grants to be provided as awards to best performing GPs and User groups. The main target group i s the project institutions and support organizations and the main intermediate results indicators are: i) Participating habitations for schemes under SWAP as a % o f total habitations with a N C or PC status (cumulative habitations covered); (ii) Participating habitations for performance improvements o f existing SV/MV schemes as a % o f total habitations planned to be covered (cumulative habitations covered); and (iii) % o f resources disbursed to GPs that are utilized in time.

6

32. Component B: Community Development (US$ 24.4 M): This component wi l l mainly finance consultancy contract fees o f the Support Organizations (SOs) (personnel, other resources, travel, documentation, etc) for their support services to DWSS, GPs and project communities and the operating cost o f DWSS staff (travel and incidental expenses but not their salaries and allowances) for providing support to village communities for both new schemes and for performance improvement o f existing schemes. The DWSS staff will work with village support teams and / or SOs to provide single window assistance to GPs and communities in technical, financial and management aspects. SOs equipped with social mobilization skills, will be enlisted to provide support in implementing the agreed participation framework. Roles and responsibilities o f the key stakeholders (GP/GPWSCs, SOs and DWSS), funds f low and procurement procedures wil l be spelled out in a tripartite agreement. Finally, the component will also finance engineering design support. The intermediate results indicators for this component include : (i) % o f participating GPWSCs with high or medium rating for operational sustainability o f their schemes; (ii) % o f participating GPWSCs meeting the full O&M costs through user charges; and (iii) YO o f participating GPWSCs o f MV schemes with a billing to collection ratio o f >90% for bulk water charges.

33. Component C: Infrastructure Building (US$205.6 M):

C1: New/ Upgrading o f Water Supply Schemes for N C P C habitations (US$ 131.7 MI: This component wil l mainly finance civil works contracts for construction o f new or improvement o f existing drinking water schemes in about 3000 NC/ PC villages in the State. More than 80% o f the drinking water schemes will be based on ground water sources and a range o f technology options which would be selected by the communities and DWSS. Traditionally, DWSS provides only piped water systems with two technology options: deep tube well and canal based schemes to support either SV schemes or MV schemes. MV schemes are selected when local water sources are not o f acceptable quality or do not guarantee adequate quantity. About 30% habitations are expected to demand SV water schemes. Remaining schemes are expected to be MV schemes based on either ground water or surface water (canals) as their source. However, MV schemes in Punjab generally cover only about 2-4 habitations and are small enough for progressive local management by communities and GPs.

C2: Performance Improvement o f Existing Water Supply Schemes (US$ 54.9 M): The sub- component C2 (a) will mainly finance up-gradation o f existing water supply schemes in some 1600 F C villages to improve their operational performance. This i s aimed at transfening the management responsibility to Gram Panchayats for SV schemes and intra-village works of MV schemes. These will include augmenting the source, repairs and replacement o f leaking pipes, rehabilitation of tanks and other system components, repairs o f motors, disinfection units, introducing distribution zoning and extension o f pipelines. In addition, i t will support fixing of bulk water meters in al l the existing MV water supply schemes. The sub-component C2 (b) will finance installation o f defluoridization and reverse osmosis plants and potable water treatment units, ini t ial ly on a pi lot basis. All these schemes are expected to provide greater user satisfaction with small incremental investments.

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C3: Construction o f Community Sanitation Schemes (US$ 19.0 M): This component wil l finance construction o f small bore sewers and sewerage schemes in about 100 villages which already have good household sanitation coverage but where the release o f septic tank effluent on the village streets and open drains creates a serious health hazard. The sub-component wi l l also finance rehabilitation o f existing sullage drains and village ponds in about 1000 villages - to improve water disposal systems and reduce environmental degradation.

34. The main intermediate results for component C are: (i) % o f new (and upgraded) water schemes under SWAP Program completed within planned time and costs; (ii) % o f participating GPWSCs achieving planned performance improvements in rehabilitated schemes measured 6 months after completion; and (iii) % o f new community sanitation schemes completed within planned time and costs.

5. Lessons learned and reflected in the project design

35. International experience: The emerging international good practice calls for treating water as an economic and social good managed at the lowest appropriate level. For the provision o f RWSS, this requires that the consumers be engaged in the process o f selecting, financing, implementing and managing systems that meet their demands and willingness to pay. Yet putting demand responsive principles into practice presents significant challenges. The experiences from the Bank-assisted projects in Paraguay, Bolivia, Ghana, China, Indonesia, Nepal and Sri Lanka have demonstrated the effectiveness o f these approaches in improving the sustainability o f investments. Global experience in use o f SWAPS in the RWSS sector, though limited does provide evidence o f its strength, especially for countrywide scaling up o f reforms. Experience from health sector i s particularly relevant in this regard.

36. Indian experience: The Bank has engaged actively in the RWSS sector in India since 1991. Bank support has helped to pi lot and begin to scale up a reform program for RWSS delivery across several states - targeting over seventeen mi l l ion rural beneficiaries to date. There have been some important lessons from the Bank engagement. Foremost among these i s that sustainability i s a major challenge which i s best addressed by involving coIlimunities in the design, construction and operation o f schemes, including through their contribution to capital costs and their financing o f O&M costs. Given these lessons, i t i s clear that GoVstate investment and Bank support to RWSS should emphasize beneficiary involvement and empowerment; institutional reform and capacity building o f state/local governments and communities; the active participation o f NGOs; promotion o f cost recovery; and targeting o f services to the poorest areas and vulnerable groups. Though official statistics indicate good progress across India, direct observation suggests that the data substantially overstates access to safe drinking water and sanitation. Therefore, i t i s clear that large investments remain to be made if the MDG for access to safe water is to be achieved, and therefore the main challenge i s to ro l l out the lessons learned on a much larger scale.

37. The OED's Impact Evaluation Report o f five Bank-assisted India RWSS projects (May 1998) as well as lessons learned from projects supported by other donor agencies (Netherlands, DANIDA, DFID) and GoI's own sector reform pilots in India have also provided valuable lessons to designing participatory projects and are reflected in designing this project. Some experiences and key lessons learned so far from these national experiences and built into the project are:

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(a) Policv: Ownership o f the project design, at political, bureaucratic and operational levels i s a prerequisite for project success. A conducive policy environment and willingness to learn by doing are equally vital for success. Project design should respond to villages’ desire for high service standards. Villages should be selected based on their felt need and an expression o f the demand through a self-selection process.

(b) Institutional: The PR institutions should be well integrated into the project’s institutional design. Organic links between user committees and GPs are essential for institutional sustainability. NGOs are an important option to build beneficiary capacity, generally due to their better credibility with the communities. Beneficiary participation and capacity building takes time, and this should be factored into project design and implementation. Changing mandates and mind-sets o f state agencies, capacity building o f a l l stakeholders need to be at the core o f project design. Capacity building efforts for project staff should address motivation, team building and managerial aspects. Concurrent monitoring and evaluation, innovating and experimenting, learning from experiences contributes positively to improving project performance. Women’s active participation improves local ownership and the quality o f implementation. Rehabilitation and integration o f existing facilities with the new schemes is essential for cost effective and sustainable system improvements.

(c) Financial: Partial financing o f capital cost by the users has proved to be a viable option, however, the cost recovery rules should be simple and their administration user-friendly. User management and financing o f O&M has also proved to be viable. Even though rural water projects have made great strides in getting rural villagers to cover more o f the operating costs o f their systems, nowhere in the world are communities yet ready to cover the costs o f a major overhaul and/or the complete replacement o f the most expensive components o f their systems after only one project. Achieving financial self-reliance may not be a one-project exercise.

6. Alternatives considered and reasons for rejection

38. below.

Alternatives that were considered and rejected and the selected option are brief ly presented

(a) Continuing Business as usual through DWSS: GoP’s new pol icy framework requires adopting demand responsive and decentralized service delivery responsibility through rural local governments. The current DWSS model supports a top-down supply driven approach with highly centralized decision making with no role for users to participate in any decision making or shoulder service management responsibility. I t focuses o n infrastructure building rather than on service delivery or i t s sustainability. This option in its current form was therefore rejected.

(b) Implementation t h r o u h PRIs: I t would be desirable for rural infrastructure projects to be implemented through PRIs. The process o f devolution o f functions and finances to PRIs and the transfer o f hc t i ona r ies to PRIs has begun. However, it i s too early to move to complete sector management by PRIs in Punjab. Hence this option was also rejected.

39. The Proposed Option: The proposed option is a combination o f the above two models such that the GPs with user committees start taking greater responsibility in RWSS facility improvements and service management and the DWSS starts providing capacity support to them rather than being an implementing agency. Further because o f i t s high technical capacity, DWSS will continue to be

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responsible for more complex MV water supply schemes, but with improved operational and financial performance. Even in MV schemes, the intra-village system wil l be managed by the GPs/GPWSCs. This would be a major change in Punjab’s RWSS service delivery systems and would pave the way for eventual transfer o f fuller RWSS responsibility to GPs and PRIs.

Main Function Policy, Annual Plans and budget approvals

Leading and managing the reform process and outcome monitoring Implementation and service delivery

C. IMPLEMENTATION

Responsible Institution State Water and Sanitation Mission (SWSM) and District Water and Sanitation Committees (DWSC) DWSS Program management wing : State Program Management Cell (SPMC) and District Program Management Cells (DPMC) DWSS Operations wing (ie. regular Circles/divisions/ sub divns) and Gram Panchayat Water and Sanitation Committee (GPWSC) in the Gram Panchayats

1. Partnership arrangements (if applicable)

Comp A: Program management

No other international agencies are financing the project.

State Level SWSM with SPMC District Level DWSC with DPMCs

2. Institutional and Implementation arrangements (Refer Organograms in Annex 6)

Village and Scheme Level

SV water supply schemes and Intra-village works o f M V water schemes

Common infrastructure of M V water schemes; Up gradation o f Existing schemes, Community Sanitation schemes

40. DWSS will have the lead responsibility for program implementation and ensuring that the program development objectives are met. The functions o f policy, managing the reform process, and service delivery would be separated as below:

DWSS OPswing

GPWSCs

DWSS OPs wing in partnership with GPWSCs

41. The State and district level water and sanitation missions have already been set up under the GoI’s Swajaldhara program. They have been reconstituted to expand their mandate to cover the management o f entire MTP. The SPMC & D P M C would be the new structures created by redeployment and reorganization o f some o f the existing divisions o f DWSS. These will be an integral part o f the DWSS’s current structure. The implementation and service delivery responsibility wil l be shared between DWSS’s existing organizational structure (Operations wing) and the GPWSCs. At the village level GPWSC wil l be set up as a committee o f the GP and wil l be the key driver o f community empowerment at that level. Distribution o f primary institutional responsibilities, by component, are described below:

CompB: Community Develo ment Comp C: Infrastructure t Building

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42. The proposed institutional arrangements, roles and responsibilities o f various actors and their organizational linkages have been described in detail and also depicted in f low chart forms in Annex 6 and the PIP. A br ief description o f key actors and their implementation responsibilities i s provided below.

State Level:

43. State Water and Sanitation Mission (SWSM): T h i s wil l be the highest policy making body in the sector. I t wil l be chaired by the Chief Secretary and the Principal Secretary, DWSS, wil l be the Member Secretary. The other members o f the Mission wil l include: a representative o f the Dept. o f Drinking Water, MoRD, GoI; Secretaries o f other relevant GoP departments and three sector experts.

44. State Program Management Cel l (SPMC): SPMC has been set up within the DWSS under the Principal Secretary with an exclusive mandate for providing statewide leadership, collaboration and management o f RWSS sector reform in Punjab. I ts main functions are: overall program planning and management such as to ensure that the Program development objectives are fully achieved in a timely manner, management o f sector funds, capacity building o f a l l program partners, managing statewide IEC campaigns, ensuring appropriate community empowerment and participatory framework, ensuring appropriate procurement practices and high quality o f engineering designs and construction, implementing enhanced transparency and disclosure Action Plan (see Annex ll), and regular monitoring and evaluation o f sector performance. I t i s also responsible for regular review o f strategies and implementation arrangements in the context o f implementation experiences and for ensuring course corrections as needed.

45. SPMC’s mandate, composition, functions and operational procedures have been agreed and are included in the project implementation plan. The SPMC will be headed by a Program Director, an officer not below the rank o f a Chief Engineer or a Joint Secretary o f GoP and wil l have about 20 key staff. The staff wil l be multi-disciplinary including finance, operations, HRD, M&E, water supply and sanitation engineering, procurement and communications disciplines. SPMC wil l recruit project management consultants to support the institutional, finance, participatory development, procurement and management skills or recruit staff from the private sector and NGOs/ Support Organizations (SOs) on contract basis. Most engineering staff wil l be drafted from within the other DWSS offices. DWSS staff members are already in position and a few additional positions are being f i l led with staff o n deputation from other organizations or with staff on a contract basis.

District Level:

46. District Water and Sanitation Committee (DWSC): SWSM’s counterpart at the district level wil l be the District Water and Sanitation Committee (DWSC), chaired by Chairman o f the Zi l la Panchayat and the Superintending Engineer o f the D P M C will be the member secretary. I ts other members wi l l include Deputy Commissioner (or h i s representative), heads o f other departments in the district, and representative o f NGOs and 3 sector experts.

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47. District Program management Cell (DPMC): DPMCs have been set up within the DWSS - one in each district. The DPMCs are headed by a Superintending Engineer (SE) o f the DWSS. One SE may head one or more DPMCs. The DPMCs wil l have mandate, composition and functions exactly l ike that o f the SPMC, but only for intra district activities and except for pol icy and approval o f district plans (which wil l be done by SWSM). In addition, D M P C wil l be responsible for transfer o f investment funds to implementing agencies - viz the GPs / GPWSCs and DWSS divisions. D P M C wil l also be responsible for progress reporting to SPMC.

Village Level:

48. GPs will be mainly responsible for seeking project assistance, constituting a GP level GPWSC representing the user communities and empowering the GPWSCs to take responsibility for program implementation on their behalf. During the post-implementation phase, the GPs wil l monitor the sustainability o f operations and ensure that the GPWSCs satisfactorily discharge their O&M management function including levying and collecting user charges from the beneficiaries. For MV schemes, GPs will be responsible for payment o f bulk water charges to DWSS.

49. GPWSC: The GPWSC will represent the community and will have four main functions: (i) planning, and technology selection, (ii) partial user financing o f capital costs, (iii) procurement and construction, and (iv) management and full financing o f O&M, including levying and collecting sufficient user charges. The composition o f GPWSCs, their functions, and method o f selecting members, bylaws, legal framework and relationship with the GPs have been agreed (included in PIP). The project would make vigorous efforts to maximize women's representation and management role in the GPWSCs. For MV schemes, scheme level committees wil l be set up with representatives f rom participating GPWSCs to perform the same functions.

Role of Operations Wing (OPs Wing) o f DWSS

50. (i) development and management o f common infrastructure o f MV schemes; (ii) planning and construction o f community sanitation schemes with active participation o f user groups; (iii) up gradation o f existing WS schemes; and (iv) arranging social, technical and management support to GPs and GPWSCs for al l intra-village RWSS schemes and services. SMPC and D P M C will ensure capacity building o f the OPs wing o f DWSS, especially that o f the Sub Divisional Engineers and Junior Engineers - the main interface actors with the GPs and GPWSCs.

For al l new investments, the role o f OPs wing o f DWSS wil l mainly cover:

51. For existing WS schemes, OPs wing - DWSS role would be: (i) transfer o f SV schemes to GPs; (ii) transfer o f intra-village works o f a l l MV schemes to GPs in a phased manner; (iii) O&M management o f common infrastructure o f MV schemes, but with improved operational and financial performance; and (iv) providing O&M back-up support to GPs/ GPWSCs in schemes managed by the latter. OPs wing, DWSS will complete construction o f a l l ongoing water supply schemes before March 2009.

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Implementation Arrangements

52. Implementation Schedule: The SWAP Program implementation wil l be launched from January 01, 2007 but wil l include GoP’s current fiscal year’s expenditures that have been incurred in accordance with the new sector policy. The program will be implemented in al l the 19 districts in four batches each covering on an average about 50 villages per district per year. A detailed Program implementation schedule has been developed for a 6-year implementation period.(details in Annex 6).

53. Pilot batch: Program Implementation was initiated in October 2005 in 90 pi lot GPs (4-5 in each o f the districts) to develop the modalities o f conducting a demand driven, decentralized, participatory planning process. The planning phase in some 50 villages has been completed and construction activities are expected to start shortly on those schemes.

54. already started and subsequent batches wil l be launched once every year starting in April.

Batch 1: Selection o f villages for the f i rs t batch o f schemes (about 500 villages) has

55. Scheme Cycle: Each batch would fol low a 21 month scheme cycle consisting o f four distinct phases (Preplanning-3 months, Planning-6 months, Implementation - 9 months, and Post Implementation-3 months) for most schemes (for MV schemes i t wil l be spread over 24 - 30 months). Model scheme cycles have been developed in partnership with al l the key stakeholders (see Annex 6) for SV schemes and MV schemes. These wil l be an important tool for implementation planning and monitoring o f project activities. The scheme cycle i s not intended to be a process blueprint, but would be used flexibly to accommodate the needs o f the communities, GPs and the schemes on a case-by-case basis. However, experience (Karnataka 11, Maharashtra 11, UP and Kerala RWSS projects) has shown the utility o f such a tool in implementing the project’s participatory and demand responsive approach.

56. Capacity Building: The Program will have a full scale capacity building component. Capacity o f the GPs and GPWSCs wil l be built in selection o f schemes, construction and operation o f schemes and management o f investment and O&M finds. External capacity support wil l be provided by DWSS and SOs. The capacity o f the DWSS and SOs themselves wil l be built in adopting participatory process and changing mind sets, attitudes and incentives in supporting such an approach. A detailed capacity building plan has been developed and is included in the PIP.

57. A range o f operational manuals and guidelines to facilitate program implementation and monitoring have been developed. These include guidelines on village selection criteria and process, scheme appraisal criteria, and model formats for various agreements, MOUs to be signed with GPs and GPWSCs. Operational manuals on fiduciary, technical and safeguard aspects have been developed and agreed. Where necessary, GoP orders have been issued to formalize setting up new institutions, their mandates and powers and approval o f various operational manuals. All these have been documented and referenced in the PIP.

Operational Guidelines:

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3. Monitoring and evaluation of outcomeshesults

58. With increasing national and international focus on sustainability o f development over the past decade, GoI, States and the Bank have developed considerable capacity, experience and tools to monitor intermediate results and outcomes o f RWSS services with a particular focus on service quality and sustainability. Well functioning computerized M I S have also been developed and are effectively used in project management in al l recent Bank financed RWSS projects. These systems have set up the indicators and methodology for gathering village-based information on al l four areas: inputs, outputs, sustainability and outcomes. This experience has been drawn upon in developing the results monitoring system for this project.

59. T e e s o f monitoring: In the context o f SWAP, the M&E system i s designed to align with the normal government systems as far as possible, avoid information overload and provide incentives through GP level awards. A key objective o f the M&E system i s continuous learning during implementation.

60. Types o f indicators: GoP has developed three sets o f indicators: (a) inputs-outputs to measure program implementation performance including related process indicators; (b) intermediate results indicators to measure performance on specific program components including service performance and sustainability assessment o f WSS services; and (c) outcome indicators to assess achievement o f program development objectives in relation to access and coverage. Annex 3 provides details o f these indicators.

61. Monitoring reports and MIS: One coordinated set o f program management reports (PMR) has been designed to capture al l monitoring results, which wil l be generated at DPMC and SPMC levels o n a quarterly and annual basis. The quarterly PMRs will focus on routine program implementation whereas the annual PMRs will also include strategic monitoring o f intermediate results and outcomes. Institutional responsibilities for the M&E system at different levels for collection, analysis and reporting o f information, as well as mechanisms to enable efficient use o f the M&E system by managers, pol icy makers and other key stakeholders, have been identified. Consultant recruitment for designing and operating the computerized M I S wil l be done in the first year o f operation.

62. The Bank's global knowledge and experience wil l provide an important input to SPMC in continuously refining the M&E initiatives during implementation as more experience i s gathered.

4. Sustainability

63. Sustainability implies that the water and sanitation system i s operated and maintained beyond the l i fe o f the project, and i s able to generate adequate cash flows for future expansiodrenewal. The factors critical for sustainability o f the project are summarized below:

(a) Ownership and financial sustainability: The proposed self selection process o f GPs and capital cost sharing by users wil l be first indicators o f ownership and demand by the communities. Since the GPs and GPWSCs will have greater control over decisions and resources, there i s a greater chance that they wil l also raise resources to manage scheme operations on a sustainable basis.

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(b) these and implementing associated water conservation measures.

Water source sustainability wil l be enhanced by adopting scientific practices in locating

power with GPs/ communities

GPs/ GPWSCs will fail to manage and account for funds

(c) Water and sanitation systems sustainability wil l be strengthened by improved design and construction practices and by building capacity o f the GPs and GPWSCs in al l aspects o f O&M management and providing init ial support during the post-construction period. Construction and water quality monitoring and surveillance wil l be important program inputs.

S

(d) Institutional sustainability: GoP has set up the new structures within the existing sector institution to take over the responsibility o f shifting the current target driven top down approach to a demand responsive approach over the entire state. Sustainability o f GPWSCs is l ikely because o f their legal empowerment and the positive experience o f the pi lot projects. Thus, the project institutional structure uses the existing delivery channel at the GPs, strengthens them with new enabling government structures at the state and district levels and i s l ikely to be sustainable.

(e) Post Implementation monitoring and back-up support: The Program implementation arrangements provide for regular monitoring o f scheme performance and back-up support to GPs and GPWSCs. It also provides for systematic consumer satisfaction and outcome monitoring surveys. Feedback from these wil l provide ample opportunities to take corrective actions to ensure sustainability o f scheme operations, the ultimate measure o f project success.

5. Critical risks and possible controversial aspects

initiatives; change in accountability and incentive parameters, GoP commitment to progressively strengthen decentralization Fund releases only in installments and based o n satisfactory utilization and physical progress; special accounting support to GPs/ GPWSCs; ensure downward accountabilitv

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Risk GPWSC may lack sufficient capacity to manage and sustain facilities

The GPsl GPWSCs with D W S S divisions may indulge in corrupt practices in award and management o f works contracts

Risk Rating Risk Mitigation Measure M Project’s capacity building programs focus o n

GPWSC and GPs; post implementation hand holding and regular O&M back up support and monitoring by DWSS

M Award decisions by committees, strengthened

Overall Risk Rating

procurement and award procedures, enhanced transparency and disclosure requirements, strict use o f fiduciary manuals, independent monitoring o f construction quality and rigorous supervision by S P M C D M P C will minimize the corrupt practices

S

Possible Controversial aspects: None

6. Loadcredit conditions and covenants

64. The following covenants have been agreed for project implementation:

(i) shall take all necessary steps to ensure that such schemes are consistent with i t s SWAP Program and its implementation strategy, as agreed with the Association, and that the number o f ongoing RWSS sector investments financed outside the SWAP Program are reduced during the period o f Project implementation such that the amount o f investments in such schemes does not at any time exceed Rs 476 Crores.

For al l RWSS sector investment schemes, regardless o f the source o f financing, GoP

(ii) In carrying out Part C.2 (a) o f the Project covering Performance improvement o f existing water supply schemes, GoP shall ensure that the operations and management and the financing responsibilities o f selected SV water supply schemes and intra-village works o f selected MV water supply schemes are transferred from DWSS to the relevant GP and GPWSC in accordance with a time-bound action plan, satisfactory to the Association.

(iii) In respect o f components C2 (b) and C3 covering installation o f innovative technologies and community sanitation schemes respectively, no withdrawal shall be made unless the f i rs t five pi lot schemes o f each technology option shall have commenced operations satisfactory to the Association.

D. APPRAISAL SUMMARY

1. Economic and Financial Analysis

65. The economic analysis has been carried out for the SWAP Program. The cost-benefit analysis uses data from a sample o f representative technology options, based o n six technology types / clusters: tube wel l based SV scheme for N C or PC habitations; canal based S V and MV schemes; tube wel l based MV scheme for N C or PC habitations. The analysis also utilizes data from a representative household sample survey covering about 3000 households (including 523 control households) in 84 GPs.

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66. The following major benefits have been quantified: (i) time saved in water collection; (ii) benefits from increased (incremental) water supply; (iii) savings in recurring and capital costs; (iv) health benefits from reduction in gastroenteritis, diarrhea and malaria diseases; (v) livestock benefits from improved quality and yield o f milk. The average unit cost o f capital investment (Rs) per capita for various technology options range between Rs.lOOO - Rs.2000 (Details in Annex 9). A wide variation in cost is expected across villages, depending on the number o f households in the village, new schemes to be provided, and the extent o f augmentation o f existing water supply schemes. The O&M cost depends on the type o f scheme and varies from Rs.2 to Rs.5 per k i l o l i ter o f water (including bulk water and intra-village O&M cost for MV schemes). The above costs are extrapolated for the entire Program, based on the proposed phasing o f schemes. The entire SWAP is justified on the basis o f direct benefits to more than 659,000 households from 3000 NC/ PC villages.

67. ERR and Sensitivity Analysis: The ERR o f the proposed SWAP program is estimated to be 23%. Sensitivity analysis based on assessed risks indicate that the program is able to absorb negative impacts and s t i l l generate positive ERR: . Significant decrease in benefits or increase in total costs: A 54% increase in total costs or a

36% decrease in total benefits, or a combined 21% increase in total costs and decrease in total benefits reduces the project ERR to 12%; . Delay in implementation : If benefits are delayed by 3 years, the ERR falls to 12%; . Significant decrease in benefits or increase in water supply costs: A combined 26% increase in water supply cost and decrease in benefits reduces the project ERR to 12%; . Failure o f schemes: If 50% o f water supply schemes fai l after 10 years the ERR i s reduced to 18.5%.

Fiscal Impact of Punjab RWSS Project on GoP Budget

68. RWSS sector has been a priority sector for GoP and the proposed program i s in line with GoP’s plan priorities. Total allocation during the 6 year including for the program and ongoing schemes, represents an expenditure o f about Rs.656 Crore (US$135 M) from GoP’s own budget. This expenditure will be greater in the f i rst three years, due to the completion o f ongoing and committed schemes. However, even during these years, this represents an increase o f about 15% over the current levels o f RWSS sector allocations by GoP from i ts own Plan Allocations. The net impact o f this on the GoP budget i s not expected to be substantial.

69. Besides the MTP funding and debt servicing, no significant additional recurrent O&M costs are expected to be borne by GoP since these would be met through user charges collected by the GPWSCs. In addition, i t i s also expected that with the successful implementation o f the SWAP Program, i t will be possible for the DWSS to reduce i t s current non-plan allocations (US$ 7.5 mil l ion per annum) on operations and maintenance o f existing water supply schemes as schemes are transferred to GPs and reduction in staff costs because o f curtailment on new recruitment and gradual rationalization o f bulk water charges for MV schemes.

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2. Technical

70. Water Supply: There are no major technical issues to be addressed during preparation o f water supply schemes or their implementation, since India and Punjab have r ich experience in both simple and complex technologies used in water supply schemes. The schemes will mainly involve (a) construction o f piped water systems - with tube wells or canal sources-for SV and MV schemes; and (b) up gradation, rehabilitation, and improving operational performance o f existing piped water systems.

71. Most water supply schemes wil l be designed by the DWSS engineers with support from private sector engineering consultants. The DWSS engineers possess the required capabilities for design, construction and O&M o f the rural water supply schemes. However with a view to enhance the quality o f designs and drawings and save time in preparation, new techniques such as total station methods for survey, standard software for hydraulic designs, auto C A D and GIS are now being used. Incorporating the above, DWSS has now developed a detailed technical manual covering design criteria, guidelines on sound engineering practices, standard drawings and cost estimates, and specifications for construction materials, goods, equipment and civil works. DWSS has recruited a specialized agency to prepare GIS based water quality and resource maps which wil l enable selection o f sustainable water sources. U s e o f scientific methods, such as geophysical surveys, remote sensing data, and resource mapping coupled with local knowledge, are expected to ensure appropriate selection o f sites for proposed groundwater sources. DWSS wil l recruit consultants to assist i t in independently ensuring quality control in design and construction o f water supply and sanitation schemes.

72. MV piped water schemes: These schemes will involve: (i) combining a top-down planning and bottom-up demand assessment and (ii) developing and implementing alternate institutional models for scheme operations to ensure their sustainability. Though DWSS has built and operated many MV schemes, developing these in partnership with the GPs and improving their operational and financial performance will require change in mind set and a focus on customer satisfaction. DWSS has already initiated service contracts for components o f MV water schemes and the scope o f these contracts would be further expanded during implementation (GoP intends to seek PPIAF support for this).

73. Community Sanitation: The project will include up gradation o f open drains and rehabilitation o f village ponds used for disposal o f waste water as wel l as construction and management o f some small bore sewers/ sewerage schemes. This i s one area where DWSS has l imited capacity and experience. DWSS is seeking expert guidance from Punjab State Council for Science & Technology in preparing a few sample schemes. There are a range o f technical design, O&M and financing issues that need to be addressed and piloted before taking up full scale implantation o f this component. DWSS has agreed that only about 5 schemes wil l be implemented over the first two years and their operational performance studied before taking up more community sanitation schemes under the project.

74. (a) Improving O&M management and capacity building o f GPs/ GPWSCs in procurement, construction and O & M management and (b) technical design and management o f sanitation schemes. The project provides for intensive capacity building o f DWSS and GPs/GPWSCs and also for use o f private- sector support, which i s available.

Thus, the areas that will need further capacity building are:

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3. Fiduciary

75. Overall, financial management arrangements as proposed for the project are considered to be adequate to account for and report on the project expenditure as well as satisfy the fiduciary requirements o f IDA. The project envisages a sector wide approach to implementation, following common principles and common internal guidelines for financial management. The FM arrangements have been built on and integrated with GoPs own systems for budgeting, funds flow, accounting and internal control with specific strengthening in areas o f audit, financial monitoring and control over GPWSC and ensuring timely release o f funds. These arrangements are documented in the Financial Management Manual and the GPWSC Handbook for Procurement & Financial Management. The project wil l provide periodic financial reports and annual audited financial statements broken down by components and expenditure under Go1 and Bank financed schemes. The Bank and GoI, however, wil l not pool funds, but provide them in parallel, to the GoP and there wil l be some differences in financial reporting (frequency and content).

76. The GoP would budget for the project by the components split between Go1 funded and Bank funded schemes on the expenditure side with corresponding provisions in the receipt side in the State Budget. This wil l facilitate accounting by components using mainstream government accounting systems. This will be supported by a detailed Annual Work Plan. Finance Dept. wil l issue L O C to SPMC (within 2 weeks o f the request from DWSS) based o n its quarterly requirement o f funds, which wil l in turn reallocate these funds (LOC) to various DPMCs. DPMCs wil l be responsible for further release o f funds to GPWSCs and allocation o f L O C to DWSS Divisions. The L O C system would be used in the project, except at the GPWSC level, where a separate bank account will be maintained for receipt and payment o f project funds.

77. Additionally, a Note on the Workings of the State Public Financial Management (PFM) System in the State (Report No. 36327-IN, M a y 2006), identified a number o f issues relating to governance and systemic weaknesses. Suitable measures to mitigate the weaknesses that impact project implementation have been agreed to. In addition, GoP has developed and shared an action plan to implement the recommendations contained in the PFM report.

78. Audit: The Comptroller and Auditor General o f India (C&AG) through i ts offices in Punjab wil l be the external auditor for the project. The C&AG’s office wil l conduct an annual audit o f the financial statements o f the project covering al l sources o f funds (Go1 and the Bank). The audit report wil l be submitted to the Bank within six months o f the close o f each financial year. The Terms o f Reference have been sent to the C&AG for their consent. This wil l be supplemented by internal audit o f the project (for SPMC, DPMC and divisions o f DWSS) and concurrent audit o f GPWSCs by independent f i r m s o f Chartered Accountants as per TOR consented by the Bank.

79. Disbursement Arrangements: The Bank will finance approx 75 % o f GoP’s estimated contribution to meet the project expenditure (detailed in Annex 5) subject to a limit o f USD 154 mi l l ion equivalent. Funds from the Bank will be made available to GoP (through the GoI) under the standard arrangements between Go1 and the States. The Bank will provide an init ial advance which wil l be transferred by Go1 to the GoP. Subsequent releases wil l be on re-imbursement basis, based on Bank’s share o f eligible project expenditure. This would be determined on the

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basis o f the interim expenditure reports (Component wise) from the AG’s accounting system and confirmed by annual audited financial statements.

80. eligible project expenditures incurred before Credit signing, but on or after February 1,2006

Retroactive financing: Up to US$l.SM equivalent wil l be available for financing

81. Procurement: DWSS will carry out the procurement o f common infrastructure o f MV water supply schemes, community sanitation schemes and goods to be procured under the project. The procurement o f works for SV water supply schemes and intra-village works for MV Schemes wil l be done by GPWSC with technical assistance from DWSS.

82. As DWSS has not carried out any procurement under the Bank funded project so far, an assessment o f the procurement capacity in RWSS sector o f GoP was carried out and improvements needed to address identified issues have been agreed with GoP. One o f the differences i s that, GoP procures cement, steel, pipes etc. departmentally through centralized procurement and issues these materials to the contractors. This has been specifically discussed and DWSS has agreed that for the works to be undertaken under the SWAP program the supply o f al l materials shall be in the bidders’ scope and that GoP wil l not supply materials to the contractors. A workshop o f contractors was also held during preparation and during which the bidders also preferred this approach. There i s also a requirement o f training o f DWSS officials and that o f GP/GPWSC members to handle procurement under the project.

83. In view o f the findings in the PFM report for Punjab, prepared by the World Bank and forwarded to GOP on M a y 19, 2006 a “Risk Mit igation Action Plan” and an “Action Plan for Enhancing Transparency and Accountability” have been agreed with GoP (Annex 8 A and Annex 11 respectively).

84. To follow common procurement methods, a Procurement Manual has been developed, which addresses the deficiencies observed in the procurement capacity assessment. GoP has opted to carry out procurement o f goods and works under the project as per the Bank’s Procurement Guidelines, M a y 2004, and that o f Consultancy Services as per Bank’s Consultant’s Guidelines, M a y 2004. For procurement o f Consultancy services, Bank’s standard RFP will be used as a base. For N C B procurement, GoP has opted to use the bidding documents agreed by the Bank with Go1 Task Force and as modified from time to time. For procurement following I C B procedures if any, the Bank’s SBD will be used as a base.

85. The procurement o f works by GPWSC will be in accordance with paragraph 3.17 o f Procurement Guidelines. GPWSC wil l also fol low N C B and shopping procedures with technical assistance and guidance from DWSS at various stages. Procurement o f consultancy services wil l be required to access consulting f i rms / NGOs, agencies l ike Punjab Remote Sensing agency and Punjab State Council o f Science and Technology and individual specialist/resource persons in various project planning and implementation activities such as engineering design and construction management, community mobilization and development, financial and program implementation management, sector pol icy studies, M&E and MIS, capacity building and training and monitoring & evaluation.

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4. Social

86. Punjab i s quite diverse socio-economically.. As much as 30% o f the population (highest in an Indian state) belongs to Scheduled Caste. Physically, Punjab has a sizeable proportion o f hilly areas with undulating topography. Further, Punjab attracts a significant seasonal migrant labor population which renders its economic resource base quite diverse. The state’s borders also serve as ‘international border’ with Pakistan. As a result, a sizeable number o f i t s villages are classified as ‘border’ villages (falling within a distance o f 16 Km from the Line o f Control) whose residents encounter/ encountered a variety o f difficulties. Unl ike the situation in many states, a large number o f Punjab’s households possess their own drinking water sources (hand pumps), but quality and cost considerations are compelling them to look for piped water schemes serving the village as a whole. However, the ‘customer base’ viz. number o f households officially drawing water from the Government’s PWS is quite l ow and distribution management i s poor. Sullage water disposal is a serious issue in most villages resulting in unhealthy conditions in most communities.

87. Provision o f RWSS services through a Government Department, with i ts characteristically hierarchical and top-down decision making does not promote accountability to the communities. Given this setting, the program identifies the following as significant social issues : (i) ensuring inclusion and enhancing equity, (ii) decentralizing the service delivery underpinned by the principle o f subsidiarity; (iii) enabling participation, in particular o f women; (iv) improving customer base & demand generation; (v) Community capacity supporthuilding; (vi) change management, enabling transforming the government department into a ‘facilitator’; and (vii) an IEC campaign to reach the stakeholders effectively.

88. Inclusion and Participation: GPs being the focal point, inclusion i s viewed &om two different perspectives: inter and intra GP. Given the project’s demand-driven self-selection processes, GP prioritization criteria are drawn such as to ensure that GPs encountering greater ‘degree o f difficulty’ are not left out. To promote ‘participation’ by SC communities, and in hilly, border and f lood prone areas, special rules o f engagement have been drawn. Once a GP is selected, al l households within a GP wil l have an equal opportunity to participate in, and derive benefit from the project. Beneficiaries wil l be able to be represented in a village-based institution GPWSC. As the women bear greater responsibility for ‘water supplies’, their role needs to be emphasized and supported. Issues related to gender, in general, and women, in particular, will be given special emphasis to ensure full opportunity for the involvement o f women at a l l levels in al l activities in the project. Capacity building initiatives will underpin gender and development as one o f the major themes.

89. Decentralization and Subsidiarity: The program will aim at decentralizing o n a significant scale RWSS service delivery to the GPs and communities. This wil l be premised o n the principle o f ‘subsidiarity’ viz., that a particular decisionl activity wil l be made/ take place at the lowest most appropriate level. Accordingly, GPWSCs will, in most cases, be the primary management units exercising control over resources and decision making. To ensure ownership and effective participation, every village will be enabled to prepare a PRA/SARAR-based community development plan - GPWSC Plan. This wil l form an attachment to a Memorandum o f Understanding to be signed among GP, GPWSC and District Program Management Cells and wil l outline role and responsibilities o f al l the three players along with fund flows/management.

21

This wil l constitute not only the basis for implementation, but would also enable comparative assessments in future.

90. Capacity Support/Buildinq: To provide capacity support to the GPs and GPWSCs, and in turn build their capacity, the program would enlist the services o f non-government support organizations (SO) and or Village Support Teams (VSTs). The latter wil l comprise some development entrepreneurs including GP chairperson, educated youth and other opinion leaders, and complemented by the sk i l ls o f a Jr. Engineer. The designated functions include: awareness creation, mobilizing communities and assisting the communities in the preparation and implementation o f community development plans, conducting andor facilitating in capacity building, liaison with GP and other agencies. Initially, SOsl VSTs wil l be strengthened to allow them to undertake capacity building o f the communities.

91. Change Management: I t is recognized that success depends upon the program’s effectiveness in bringing a ‘change’ in thinking and action among the government engineers. A number o f capacity building interventions wil l be designed, piloted and institutionalized to achieve such a change, including observation study tours, stakeholder workshops, and programs covering: management by objectives, leadership and team building, conflict management etc.

92. E: To achieve a change in mindsets and enable capacity building, the program has recruited consultant services which have identified key messages to be communicated and the various tools for improving communications, including, interpersonal tools, and extensive use o f print and electronic media.

5. Environmental Assessment Environmental Category: B (Partial Assessment)

93. supply and sanitation situation in the state:

The EA study indicated the following baseline environmental issues affecting the water

(a) Water Availability: Shallow groundwater has traditionally been the major source o f water for drinking, irrigation and industrial uses in Punjab. Owing to large-scale extraction o f groundwater, the shallow aquifers in large parts o f Punjab are in a state of over- exploitation, resulting in a significant ongoing decline in groundwater levels. For a large number o f rural households, which are not covered by public water schemes and which are dependent on private sources l ike the shallow hand-pumps or tube-wells, the declining groundwater levels have adversely affected the water supply. However, the water for public piped water systems i s sourced from the deep aquifer layers, ranging in depth from 75m - 335m. This water supply for drinking water from the deep aquifer i s considered abundant from the perspective o f ensuring long-term source sustainability. About 20% o f the water supply schemes in Punjab are based on canal-water supply, and in some cases the water supply i s adversely affected during the periods of canal maintenance shutdown.

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(b) Water Quality: According to DWSS estimates, about 44% o f the total 12,278 villages in Punjab suffer from poor water quality conditions, with salinity, nitrate and fluoride being the key problems. Due to i t s higher depth and relative hydro geological isolation from the shallow aquifer, deep groundwater i s expected to be free from the presence o f bacteriological/chemical contaminants.

(c) Environmental Sanitation: 49% o f the rural households in Punjab have household sanitation coverage, and the main factors affecting the status o f sanitation in the villages are improper drainage o f household wastewater without adequate arrangements for treatment and disposal, effluent overflow from septic tanks and deteriorating water quality in the village ponds.

Environmental Management:

94. addressing these issues has been developed. These include:

An environmental management framework (EMF) prescribing the requisite measures to

95. Water Availability: Piped water systems wil l draw water only from deep aquifers. The current and expected future drinking water abstractions from these aquifers are very small compared to the estimated sustainable yield o f the deep aquifer, and therefore source sustainability for deep groundwater-based schemes is ensured. In areas where deep aquifers are saline, canal-based schemes wil l be implemented, and adequate year-round supply wi l l be ensured through storage or other measures.

96. Water Oualitv: Due to its higher depth and relative hydro geological isolation from the shallow aquifer, deep groundwater is expected to be free from the presence o f bacteriologicaVchernica1 contaminants. Conventional water quality parameters for DWSS’s deep groundwater-based schemes indicate acceptable water quality for drinking purposes. However, in view o f the traditional emphasis on shallow groundwater quality and due to emerging concerns regarding possible presence o f industrial or agricultural chemicals in some locations, the project wil l commence and support a systematic assessment o f deep groundwater quality in the state. Effective and regular disinfection, preventive and corrective maintenance o f water distribution systems and regular water quality testing and control wil l be ensured.

97. Environmental Sanitation and Hygiene: The project wil l support I E C campaign to create and enhance awareness o n hygiene aspects pertaining to hand-washing, water collection, storage and handling practices; and to generate demand for drainage improvement schemes including small-bore sewerdsewerage schemes and village ponds rehabilitation.

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6. Safeguard Policies Safeguard Policies Triggered by the Project Environmental Assessment (OPBP 4.01) Natural Habitats (OPBP 4.04) Pest Management (OP 4.09) Cultural Property (OPN 11.03, being revised as OP 4.1 1) Involuntary Resettlement (OPBP 4.12) Indigenous Peoples (OPBP 4.10) Forests (OPBP 4.36) Safety of Dams (OPBP 4.37) Projects in Disputed Areas (OPBP 7.60) Projects on International Waterways (OPBP 7.50)

Yes No X [I [I X [I X [I X [I [I 11 [I [I [I

X X X X X X

[I X Piloting the Use o f Borrower Systems to Address Environmental and Social Safeguard Issues in Bank-Supported Projects (OPBP 4.00)

98. Projects on International Waterways (OP/BP 7.50): Based on a technical consideration o f the proposed project interventions, the hydro geological characteristics o f the deep aquifers, the state pol icy on provision o f canal water, where needed, for rural water supply schemes, and in the context o f the Bank’s determination o f the applicability o f OPBP 7.50 (International Waterways) on a case-by-case basis, i t has been determined that the proposed project activities do not trigger O P B P 7.50. This determination i s based upon the provision that no bore-wells wil l be installed within 1 km o f the l ine demarcating the international border between India and Pakistan. See Annex 10 for detailed information.

Safeguards - Social

99. N o lands will be acquired involuntarily and hence OP 4.12 i s not triggered. So is OP 4.10 as there are no tribal (indigenous peoples) settlements in Punjab. The project, however, does need lands and mechanisms o f securing the same are described in Annex-10.

7. Policy Exceptions and Readiness

100. There are no Policy exceptions to be sought from the management.

101. Formal GoP approval o f the proposed project concept and design including adoption o f a SWAP, and the cost recovery and institutional reforms to be implemented under the project, has been accorded in the letter o f July 12,2006 from the Chief Secretary, GoP. The Go1 l ine ministry has endorsed the GoP proposal to adopt a consistent sector policy, fiduciary processes, implementation arrangements and a common M&E systems for al l sources o f financing including i t s own Centrally sponsored schemes. M&E indicators and institutional arrangements for M&E have been developed and agreed. The planning phase o f the pi lot batch covering 90 GPs (estimated budget: US$ 8 million) is nearing completion. Selection o f GPs for the f i rst batch o f another 500 villages has been initiated. The institutional arrangements have been agreed and the State level Project management Cell is already under operation and al l the 19 DPMCs have been set up. A range o f Operational manuals - including fiduciary, technical and environmental management have been finalized. The procurement plan for the first 18 months o f implementation has been finalized. A range o f Government orders have been issued formalizing various institutional and implementation arrangements and these have been included in the PIP. All disclosure requirements have been met. Overall the project meets criteria for readiness for implementation.

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Annex 1: Country and Sector or Program Background

INDIA: Punjab Rural Water Supply and Sanitation Project

> Fully covered Partially covered Not covered Number YO Number of YO Number YO

Period Habitations of habitations of

ons ns > . habitati habitatio

2003 Main habitations 3716 30 4525 37 4026 33

1. Access to Water Supply and Sanitation: There are two sources o f information for assessing the coverage o f water and sanitation in Punjab, as in most other states in India: a) household survey based information from the Census o f India (using the results reported in Household Tables) and from a Demographic and Health Survey (DHS); and b) facility inventory linked information as from the GoI-led Habitation Survey. W h i l e the household surveys provide greater clarity on household access, the habitation survey provides supply side information that has generally been used for planning and find allocation.

Total Number of YO habitations

12267 100

2. Based on the supply-side information from the 2003 habitation survey, as illustrated in Table 1, only about 30 percent o f the habitations were F C implying that they had water supply levels o f at least 40 l i t res per capita per day (lpcd). Another 37 percent o f the total 14600 habitations were PC with a level o f supply 20 to 40 lpcd. The per capita levels in this survey are arrived at by dividing design supply quantity by total population with potential access rather than those actually served. As the habitation survey considers only public schemes as acceptable sources, i t does not capture the access to own private sources o f water supply on which a large proportion o f the population in Punjab survives. For example, results from 2001 Household surveys reported in Table 2 provide a different picture o f very high level o f access to water supply within the house (82%), and o f these mainly through hand pumps (84%) and some through taps (12%). The 1998 survey showed similar results. However, in many parts o f the state, hand pumps do not provide safe and potable water due to increasing pollution o f ground water. Thus, it i s necessary to expand the reach o f piped water supply schemes and to enhance their sustainability. Sanitation, however, lags behind with at least 60 percent not having access to toilets.

Source: 2003: based on the Habitation Survey by DWSS; 2006: compiled by DWSS using information on additional schemes completed.

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boreholes Other Total

4. Two recent decisions o f the GoP and their related implementation over the past few years have started to introduce some key changes: a) transfer o f SV water supply schemes to GPs, and b) curtailing al l new recruitment which has resulted in introducing private contracts for operations o f al l new WS schemes.

1.1 N o facility 67.6 100.0 Total 100.0

5. Sector Financing: Table 3 provides details o f main sources o f investment financing for new schemes, which mainly include: a) state government's own resources (from MNP), b) Go1 budget allocations through plan schemes (such as ARWSP, Swajadhara and TSC), and c) borrowing by GoP f'rom NABRAD under its Infrastructure Rural Development Fund (IRDF). In recent years GoP has significantly increased investments in the sector with the annual outlays reaching nearly Rs.200 Crore over the past two years. RWSS investments are at times also mobilized through other sources at district level using general rural development type o f funds, these are not reported to be significant.

6. Funding o f operation and maintenance (O&M) o f rural water supply i s meant to be done mainly through user charges, and GoP has introduced and implemented regular revision o f user charges. Despite that, the total estimated billing levels are only about 25 percent o f total O&M expenditure o f about Rs.770 mi l l ion per annum for the state as a whole. This i s due to l ow levels o f household connections in existing public schemes, very high salaries for the operational staff

26

in the DWSS, as well as the lack o f scheme level tariff determination. With the transfer o f SV schemes to GPs, however, this situation i s l ikely to change.

Source: Compiled by the D WSS based on internal records.

7. Key Sector Issues: Current institutional and financing arrangements present constraints and challenges in achieving service improvements and ensure long-term sustainability. In addition there are some critical issues in environmental sanitation at the village level that affect water quality and public health.

Scheme Operations and Sustainability Issues:

Poor Water Supply coverage: This i s a two fold problem: (a) some 30 % o f the habitations do not have access to public water system at al l and are consuming unsafe drinking water from private shallow bore wells with hand pumps, and (b) the remaining 70 % villages having piped water system suffer f rom poor customer base with only 25 % o f the households drawing water from these systems - mainly due to inadequate supply capacity and/ or poor distribution management.

Poor communitv sanitation standards: most villages in Punjab have road side open drains provided to cany household sullage water to village ponds outside the village for disposal. Despite l o w quantities o f water supply from public water systems, these sullage drains carry significant waste water quantities due to waste water generated from high level o f private water sources used by households. Further, a good number o f households have toilets with septic tanks and i t s highly charged effluents (high BOD and l o w DO levels) i s let out into these open drains creating cess pools in the drains and disposal ponds. All this coupled with poor regime o f drain cleaning i s contributing to poor environmental conditions in the village and a serious health hazard.

Poor O&M management standards: l o w distribution pressures, very short durations o f supply (about 2 hrs per day), highly skewed distribution o f available water amongst the households, leakages and wastages, erratic power supply, inadequate O&M budget to run stand by diesel generating sets, and a large number o f illegal private connections, are al l resulting into l o w O&M standards and poor customer satisfaction.

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(d) Poor O&M cost recovery: Despite a reasonable tari f f structure, the Statewide O&M cost recovery is only about 20%. O n one side the O&M expenditures are high due to high salary levels o f DWSS operating staff, high power tariff and high number o f operating staff per 1000 connections. O n the other side, revenue is paid only by the 10% o f the households who have private connections, while those drawing water from public stand posts do not pay any water charges at a l l (though official tari f f is Rs.15 / month per household for PSP users).

(e) Poor accountability and incentive structures: The DWSS at the pol icy and higher management level rarely, if at all, are demanding accountability for poor quality service at the household level or for poor cost recovery. The attention o f DWSS higher level management is focused on new constructions and capital expenditures and gets itself involved in review, approval and clearances o f routine scheme engineering designs and bid award decisions o f values as small as Rs.2 lakhs (US$4500). Thus there is a need for the higher level management (SE and above) to delegate approvals o f routine designs, tenders and works contract management to the lower levels, and focus its own attention on monitoring and improving the quality o f service delivery on the ground, and ensuring customer satisfaction.

9. Institutional and Sector Finance Issues:

(f) Lack o f separation o f different roles: For delivery o f rural water supply services the DWSS currently combines al l h c t i o n s and roles ranging from policy/ planning and investment decisions, regulation, monitoring, design/ implementation and operation/ maintenance o f water supply schemes - without adequate separation within the organizational arrangements. This makes it difficult to have effective monitoring and regulation in provision and operations.

(g) Limited decentralization and local capacities: Despite their professed role, GPs currently play only a l imited role in provision o f RWSS. There has also been limited success in implementing Swajaldhara with very l o w capacity o f PMs and low GoP Priority at pol icy level to support decentralization. At the same time, there are some good examples from the field with better results that need to be drawn upon in scaling up and building panchayat capacity. Also, while the GoP has taken a major pol icy decision to transfer a l l SV schemes to GPs, i t s f i l l implementation needs to be accelerated and backed by capacity building support.

(h) Fragmented sector finances: Current system o f financing through a number o f different sources results in simultaneous implementation with different and conflicting ru les through different programs in neighboring areas. This leads to different programs undermining each other, adversely affecting demand driven approaches requiring cost sharing by users (as in Swajaldhara Schemes).

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(i) Highly centralized decision-making and approvals: The current process o f design approvals i s centralized with almost al l technical approvals reaching the office o f chief engineers. Current practices result in a majority o f decisions being made in a very centralized manner at the headquarters. This is true even for smaller SV schemes and i t affects efficiency in the use o f resources. This process needs to be decentralized to DWSS division offices and GPs to improve efficiency and avoid undue time delays.

6) Weak monitoring systems: On paper there is monitoring o f inputs, outputs and outcomes through different systems. However, input and output monitoring i s fiagmented by sources o f finance making i t difficult to have an aggregated state level sector assessment. Further, a lack o f reliable household level assessment o f outcomes makes it difficult to realistically assess whether sector goals and targets are being achieved. W h i l e there i s some follow up on the implementation o f new schemes, focus on financial aspects o f O&M o f water supply schemes i s generally missing and the scheme performance is never monitored. Recent studies on performance monitoring conducted by DWSS do suggest that such efforts on a regular basis to assess performance and sustainability would be very useful in identifying measures to improve service delivery.

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Annex 2: Major related Projects Financed by the Bank and/or other Agencies

INDIA: Punjab Rural Water Supply and Sanitation Project

Sector Issue Project Latest Supervision (PSR) Ratings (Bank-financed projects only) Implementation Development Progress (IP) Objective (DO)

Initiatives Project

Second Maharashtra RWSS MS (ongoing) Kerala RWSS (ongoing) S

Watershed Development

Urban Water Supply i and Sanitation

MS

S

Second Kamataka RWSS (ongoing) S S

Uttaranchal RWSS (ongoing) NIA NIA

Karnataka RWSS (closed) I

OED Rating - Satisfactory

Uttar Pradesh and Uttaranchal RWSS (closed)

OED Rating - Satisfactory

Maharashtra RWSS (Closed)

AP DPIP (ongoing) Raj asthan DPIP (ongoing)

OED Rating - Marginally Unsatisfactory S S S S

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Madhya Pradesh DPIP (ongoing) S S

Karnataka Watershed (ongoing) Uttaranchal Watershed (ongoing)

S S S S

Madras WSS (closed) Tamil Nadu WSS (closed) Kerala WSS (closed) Gujarat WSS (closed) Hyderabad WSS (closed) Kamataka Urban Water Sector Improvement (ongoing)

OED Rating - Satisfactory OED Rating - Satisfactory OED Rating - Marginally Satisfactory OED Rating - Marginally Satisfactory OED Rating - Satisfactory S MS

DFID Maharashtra RWSS DANIDA State projects in Karnataka, Orissa,

Tamil Nadu, Kerala The Netherlands State projects in Gujarat, Up, AP,

Karnataka, Kerala

Closed Closed

Closed

Annex 3: Results Framework and Monitoring

INDIA: Punjab Rural Water Supply and Sanitation Project

Capacity o f GPs and GPWSCs built in R W S service delivery

1. Monitoring and Results Framework

vii) % o f participating GPWSCs with hgh or medium rating for operational sustainability o f their schemes viii) % o f participating GPWSCs meeting the full O&M costs through user charges ix) % o f participating GPWSCs o f MV schemes with a b i l l ing to collection ratio o f >90% for bulk charges

Results Framework Matrix

I i) % o f habitations in the rural areas o f the state PDO I Outcome Indicators Assisting GoP in increasing access o f rural communities to improved and sustainable RWSS services

(and each district) who are FC ii) % o f rural households in the state (and each district) with access to safe and adequate water throughout the year iii) % o f participating habitations with satisfactorily performing community sanitation

Use of outcome Information Assess achievement o f targets and determine whether program strategy and implementation plans are working

Intermediate Results I Results Indicators for Each Component Component One: Progr Capacity o f key sector institutions ( 9 s wing o f DWSS, SPMC and DPMC) and other Support Organizations built in facilitating demand responsive and decentralized service delivery in Punjab

rn Management iv) Participating habitations for new schemes under SWAP as a % o f total habitations with a NC or PC status (cumulative habitations covered) v) Participating habitations for performance improvements o f existing S V I M V schemes as a % o f total habitations planned to be covered (cumulative habitations covered) vi) % o f resources disbursed to GPs that are ut i l ized in time

Component Three: Infr Water supply and sanitation schemes built I upgraded at appropriate construction quality standards and with min imal cost and t ime overruns

gtructure Development x) % o f water schemes under SWAP completed withm planned t ime and costs xi) YO o f participating GPWSCs achieving planned service improvements in existing schemes under SWAP measured 6 months after completion xii) %of new community sanitation schemes completed within planned t ime and costs

Use of Results Monitoring

L o w levels would indicate the need to review projected demand, demand mobil ization strategy, funds flow, procurement and expenditure approval procedures

Assess prospects for sustainability and whether program design i s working as intended. L o w levels would indicate need to strengthen capacity support mechanisms and IEC activities for GPs/GPWSCs during planning, implementation andO&Mphases

L o w levels would indicate need to assess adequacy o f design, procurement and construction practices

2. institutional responsibilities for data collection and reporting. Performance on outcomes and intermediate results indicators would be included in annual Program Management Reports prepared for the SWAP Program.

Arrangements for Results Monitoring. The fol lowing table identifies frequency and

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3. The main responsibility for monitoring will be with SPMC and DPMC. A Program Operations Management Information System (POMIS) i s being developed which wil l be aligned with the Financial Management Reporting system. POMIS wil l include: for each quarter achievements o f physical output targets and financial utilization against planned annual budget for each subcomponent, as wel l as annually outcomes and component-wise results indicators.

4. illustrated in the following table, include:

For other outcome and intermediate results the main data collection tools, as also

Habitation survey (indicator 1): DWSS had carried out a habitation survey as per the Go1 guidelines in 2003. This will be updated towards the end o f the program (year 5) to measure achievements and to provide a baseline for the next Program. I t wil l be managed by the SPMC and DPMCs. Necessary additions will be made to the Habitation Survey to also include community sanitation.

Sample household survey for access to and use of rural water supply services (indicator 2): In order to capture the household level information, a sample household survey wil l be carried out with appropriate sampling plan to ensure state and district estimates. SPMC wil l carry out a base line survey in the first year o f the program and repeat the survey at mid-tern (year 3) and at program end (year 6) by outsourcing to independent research/ consultancy organizations. This wil l capture access and use o f water for domestic purposes and household satisfaction.

GP WSC Habitation annual checklist and sustainability assessment (indicators 3, 7, 8, and II): A simple checklist has been developed for habitation level information for sustainability assessment for al l participating habitations to assess operational sustainability for water supply schemes and satisfactory performance for sanitation schemes. This wil l be done once a year to generate the relevant intermediate results. The quantitative information will be combined with PRA techniques for a rapid sustainability assessment in a smaller sample o f habitations in each district.

GPWSC Report on SV schemes (C2/C3) (indicators 4, 5, 6, I O and 12): These reports wil l be prepared quarterly and annually.

DWSS Division Office M V Schemes Report (indicators 4, 5, 6, 9, 10 and 12): These reports wil l be prepared quarterly and annually.

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Annex 4: Detailed Project Description

INDIA: Punjab Rural Water Supply and Sanitation Project

1. Management, Component B: Community Development and; Component C: Infrastructure Building.

The SWAP Program will have three main components: Component A: Program

Component A: Program Management (US$31.4 M)

2. Sub Component Al, Institutional costs (US$19.8M): This subcomponent wil l finance the costs o f setting up and operating the state level and district level Project Management Cells (SPMC and 19 DPMCs). The investment costs wil l include procurement o f computers, office equipment and vehicles and a range o f consultancies for technical assistance (such as for program management, M&E, IEC, capacity building, audit, construction quality monitoring). Recurring costs wil l include individual consultant staff salaries, a l l staff travel costs, and SPMC and DMPC offices’ administrative and operating costs. Costs o f DWSS head offices, circles, divisions etc and staff o f other government departments supporting the project activities will not be financed from the program funds.

’ 3. SPMC and DPMCs are not mandated for direct implementation and service delivery, but would act as facilitating and support units to Operations wing o f DWSS, GPs and GPWSCs. SPMC and DPMC’s composition, functions and operational procedures have been agreed as indicated in the PIP. All these offices wil l be equipped with computers, office facilities, and modem communication facilities and the professional staff would travel at least about 50% o f the time every month to the project GPs and villages. GoP would ensure that status o f SPMC and DPMCs as approving (with SWSM and DWSCs), facilitating and monitoring units i s not compromised and only those decisions are referred to GoP which do not fa l l in SPMC’s authority and mandate.

4. Subcomponent A2: Monitoring and Evaluation (US4.3 M): This subcomponent wil l finance investment and operating costs o f procurement o f goods, equipment and consultancies for the Program’s M&E system. The main activities through this subcomponent wil l include: (i) the initial development o f a management information system and its operations to support regular program implementation monitoring; (ii) two specific outcome monitoring surveys - household surveys for state wide coverage and outcome assessments and statewide habitation surveys; (iii) sustainability monitoring at habitation level using both community monitoring and external sustainability assessment techniques; (iv) documentation o f good practices and periodic state and district level sector performance reports; (v) best GPWSC awards on the basis o f regular performance monitoring; (vi) setting up and regular operations o f the water quality surveillance systems

5. The sub-component will help DWSS to set up sector information, M&E system focusing both on program implementation monitoring as wel l as strategic monitoring to review program performance in envisaged outcomes related to the key development objectives. A monitoring and evaluation fi-amework and strategy has been prepared along with a set o f golden indicators.

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6. Water Oualitv Monitoring (US $2.2 million): The project wil l finance investment cost o f goods and equipment for strengthening the existing laboratories and also supplying field testing kits to GPs / GPWSCs. The recumng cost o f water quality testing done through outsourcing (that cannot be done by DWSS and outsourced) wil l be financed from the program. The cost o f developing computerized water quality mapping and its regular updating wil l also be financed from the Program. The Program will carry out water quality testing o f 100,000 samples in the state, over the project period. The testing wil l be more rigorous and regular in known water quality problem areas (about 20% habitations) and by purposive sampling in rest o f the habitations. A detailed water quality monitoring and surveillance program has been designed - which will be managed by SPMC. Responsibility for ensuring supply o f potable water to its consumers wil l rest with the GPs/ GPWSCs for al l SV water supply schemes and with DWSS for MV schemes. SPMC wil l organize and manage independent water quality surveillance program through private sector consultants/ laboratories. I t is expected that this rigorous monitoring wil l ensure that drinking water o f the required quality alone wil l be supplied to the rural population o f the state.

7. Subcomponent A3: Capacity Building (US$4.0 M): This sub-component wil l finance the costs o f conducting 1,353 training programs designed under 44 modules: 6-Apex; 8- Strategic; 16-Intermediary; and 14 Grassroots Programs. The costs wil l mainly cover consultancy fees for resource institutions and resource persons; the cost o f designing and multiplying training materials, and logistical costs o f conducting the training programs (infrastructure rentals, travel and subsistence for trainees, etc.). Overall, the project will capacitate directly over 30,000 persons, a majority o f them wil l be athelow the district level. This excludes capacity building o f the village communities, wherein another 60,000 persons wil l be capacitated.

8. Capacity building (CB) needs o f each stakeholder group have been identified based on learning requirements essential for performing their designated functions. Essentially, this wil l enhance / develop knowledge, skills and management practices such as to bring in a change and capacitate different stakeholders at different levels. e Apex level -- C B will aim at creating an enabling environment for formalizing the

project's key principles and the targeted audience include administrators, pol icy makers, political representatives and media.

e Strategic level -- target includes chiefly SPMC and other associated government departments who are expected to promote and facilitate in campaigning and mainstreaming the reform approach. Intermediary/Program level stakeholders comprise DPMC, DWSS, and consultants and Support organizations, who are to provide technical, social and management assistance to grassroots level agencies. Grassroots/project level target encompass GPs and user groups who wil l be capacitated such as to enable translate the project's approach into action -- designing, constructing, operating and managing, and monitoring the schemes.

e

e

9. The Capacity Building strategy and details o f the specific programs have been developed and a detailed C B plan has also been prepared. Key themes include: Change Management, Decentralization, Public-Private Sector Partnerships, Gender, Equity & Empowerment, and Technological Excellence. The main training areas include: (i) Change Management comprising team building, staff retreats, cross-visits and study tours and orientation programs at a l l levels;

35

(ii) Knowledge enhancement as well as Decision Making and Best Practice Management programs at the village level; (iii) Engineering design and construction practices for engineers and consultants; (iv) Procurement and Contract Management, enabling better handling o f SOs, consultants and contractors for project staff and GPWSC members; (v) Financial management covering book keeping, accounting and audit; (vi) computerized financial management system, M I S and M&E; and (vii) O&M management to ensure sustainability and equitable distribution for GPWSCs and DWSS Engineers. Specific programs have been designed for technical and institutional aspects o f MV water supply schemes.

10. Guiding Principles- All programs have been designed on the following principles: (a) Participatory and field-based. Lecture mode wil l be as minimum as possible; (b) Ample opportunities wil l be provided for learning and sharing; (c) Attention wil l be paid towards inter- personal communication/ behavioral aspects such as motivation, leadership, team building, conflict resolution, time management, and stress management. (d) Virtues l ike empathy for the poor, SC/ST and women as well as mutual respect, learning to unlearn, careful observations, mentoring and attentive listening will be emphasized in al l the programs; and (e) Special programs to address issues related to gender, Scheduled Castes and water quality affected areas.

1 1. Subcomponent A4: Information, Education and Communication (IEC) Campaign. (US$2.0 M): The main aim o f this subcomponent is to enable the ‘project’ to reach effectively, and bring in a change among the stakeholders at different levels - state, district, block and village. The campaign wil l help in accomplishing three purposes. One, at the apex/ state level, to ensure a ‘buy-in’ from the public, in general, and in particular, from the pol icy makers and administrators. At the intermediary (district/ block) level this wil l help in bringing a ‘change’ in management by the staff o f the DWSS. Grassroots purposes include: disseminating the project rules and regulations, in general, and in particular, generating a demand for ‘potable water supplies’ and ‘sanitation’. For this purpose, DWSS undertook a ‘needs assessment’ study which together with media analysis, has enabled identifylng key messages to be communicated and a strategy to communicate the same. I E C wil l be implemented as a social marketing program and specific activities to be funded include: (i) Establishment o f a Media Resource Group, essentially involving embedding media and other development professionals into the project; (ii) Designing, printing and disseminating across the state a Community Newsletter; (iii) Creating a Brand- Equity through high outdoor visibility; (iv) Designing and disseminating communication materials through mass media - print, folk programs and through electronic media such as radio, TV, cable network etc; and (v) Designing and adopting inter personal materials - brochure, flip charts, manuals, stickers.

12. The village and community level sanitation and hygiene promotion (SHP) will be an integral part o f the larger lEC campaign and would aim at promoting a ‘total health’ perspective by achieving sustainable and equitable health and hygiene benefits across the community through improvements in water and environmental sanitation services. For this, efforts wil l be made at: (i) enhancing awareness about the prevalence o f water pollution, i t s consequences and possible mitigatory measures; (ii) fostering understanding o f complementarities between water, sanitation and health; (iii) increasing awareness o f the benefits o f improved WS&S facilities; (iv) creating a demand for safe water and sanitation; and (v) strengthening local capacities for a self- sustaining and gender sensitive sanitation and hygiene promotion program.

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13. Subcomponent A5: Sector Development Initiatives (US$1.3 M): This subcomponent wil l support the development and pi lot testing o f new initiatives as they become relevant during the medium-term program period. Initially, some initiatives have been identified including: (i) strengthening the ongoing DWSS initiative for engaging private sector contractors for managing WS operations; (ii) development o f district level water quality and resource maps; and (iii) development o f base topographical information on al l participating habitations using total station and engineering surveys.

Component B: Community Development Support: (US$24.4 M)

14. This sub-component will mainly finance consultancy contract fees o f the Support Organizations (personnel, other resources, travel, documentation, etc) towards their support services to DWSS, GPWSCs and project communities and the incremental operating cost o f DWSS staff (travel and incidental expenses but not their salaries and allowances) for providing support to village communities. The DWSS staff wil l work with Village Support Teams and / or SOs to provide single window assistance to GPWSCs and communities in technical, financial and institutional aspects. Support Organizations equipped with social mobilization skills wil l provide support in operationalizing the agreed participation framework. Roles and responsibilities o f the key stakeholders (GPWSCs, SOs and DWSS), h n d s f low and procurement procedures wil l be captured in a tripartite agreement. In view o f increasing work load, the DPMCs/ DWSS OPs wing will recruit engineering design consultants (firms/ individuals) to assist GPWSCs and DWSS OPs wing in engineering design and construction supervision aspects, on as needed basis.

15. The main activities o f community development support will include: awareness creation, community mobilization, preparing engineering designs for technology options, assisting the GPs and GPWSCs to make informed decisions, assisting in procurement, construction supervision and contract management and in management o f project finds. DWSS staff and SOs themselves wil l be capacitated init ial ly to enable them to provide capacity support to their clients. Towards ensuring inclusion and participation o f poorer GPs, a selection criterion with high weightage to SC population and the other special conditions has been agreed. The inclusion at village level wil l be ensured by establishing GPWSCs, vehicles o f community participation, bye-laws o f which provide for participation o f a l l the sub-groups. The different sub-components are described below:

16. Subcomponent B1 (US$14.3 M): This sub component wil l mainly finance the contract fees o f NGOs/ SOs providing village level social development and management support needed for implementing Components C1, C2 and C3. This wil l be done by Village Support Teams or by recruiting SOs to assist and work with the DWSS engineering staff in community mobilization and organization type o f activities including: small workshops, focus group discussions, information campaigns, and participatory community action planning for forming the GPWSC and supporting i t s effective participation in the planning phase o f the scheme cycle. For component C2, the support activities wil l be o f shorter duration as the length o f the scheme cycle would be less for already f inct ioning schemes.

37

17. Sub Component B2 (US$10.1 M): This sub component wil l finance consultant contract costs o f engineering design / construction supervision support needed (through consultants) for implementing components C1, C2 and C3. Agencies l ike Punjab State council for Science and Technology wil l be recruited to prepare engineering designs for community sanitation schemes.

Component C: Infrastructure Development: (US$205.6 M)

18. This component wil l finance works, goods and equipment for constructiod up gradation o f water supply schemes in some 3000 NC/ PC habitations, rehabilitation and transfer o f intra- village water systems in some 1600 habitations, and a few pi lot projects o f Reverse Osmosis, defluoridation, and portable water treatment plants. It wil l also finance works, goods and equipment for sullage drainage and ponds rehabilitation in some 1000 habitations and provision o f underground small bore sewers / sewerage systems in 100 habitations. The three main sub- components are described below:

19. Subcomponent C1: ConstructionKJpgrading of Water Supply Schemes in NC/PC habitations (US$131.7 M): GoP aims to achieve GoI’s objective o f ensuring that al l habitations in the state wil l reach a FC status by 2012. Thus, this sub component wil l finance water supply schemes (new/ upgrading) for the remaining 3000 NC/ PC habitations in Punjab.

20. Traditionally, DWSS provides only piped water systems with two technology options: Deep tube wel l based schemes drawing upon ground water sources and canal based schemes drawing surface water from an extensive canal network - especially in the districts o f Bhatinda, Mansa and Faridkot where the ground water i s heavily polluted with high TDS, fluorides and nitrates. Both technology options support either SV schemes or MV schemes when local water sources are not o f acceptable quality or do not guarantee adequate quantity. However, MV schemes in Punjab generally cover only about 2-4 habitations and are small enough for local management by communities and GPs.

21. The SV tubewell based schemes will typically have a deep tubewell fitted with a submersible pump, a pump house with disinfection unit, rising mains o f short length, Overhead service Reservoirs (OHSRs) and small network o f PVC distribution pipes running along the village roads. The water delivery points are either house service connections (with or without consumer meters) provided based on demand and public stand posts for serving the needs o f the poor households that cannot afford installation and monthly tariff o f house service connections. Water from deep tube wells being safe, only treatment provided is disinfection with chlorination units or recently with silver ionization units. In view o f the erratic power supply fi-om the grid, standby diesel generating sets wil l be provided if their investment costs are fully financed by the GP/ communities - especially because o f their higher operating expenditures that wil l have to be subsequently borne by the users.

22. The MV tubewell based schemes wil l have similar scheme components, except that the tubewell and the OHSR wil l distribute water to 3-4 adjacent habitations- with independent feeder mains to each habitation where needed for equitable distribution. The canal based schemes wil l consist o f an outlet from the canal, a large water storage tank to hold water during canal closure periods (about 2 weeks), a filtration plant and a clear water reservoir. Water from the clear water reservoirs i s pumped into a common OHSR and distributed to one or more habitations - leading to formation o f a canal based SV or canal based MV scheme.

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23. About 80% o f habitations are expected to have ground water as source (tube well) and remaining 20% would have surface water as source (Canals). Of the total 3000 habitations, some 1000 habitations are expected to be covered with S V schemes and the rest requiring MV schemes. In some districts (such as Bhatinda, Mansa and Faridkot) water supply schemes wil l need to rely on canals as the only source for piped water schemes (about 600 habitations out of total 3000 habitations). Selection o f schemes wil l be done in a demand responsive manner at the district level with priority for the NC, PC and quality affected habitations. Of the 3000 N C P C habitations, schemes for some 1000 habitations are expected to be financed from GO1 funding and the rest from Bank financed stream.

24. Subcomponent C2: Performance Improvements in Existing Schemes (US$54.9 M): Under the demand responsive approach the main focus i s on ensuring the principle of subsidiarity by having the management o f a l l SV schemes and intra-village components of MV schemes transferred to the GPWSCs. In order to ensure sustained improvements in service quality (quantity and quality o f water supply and i t s equitable distribution across al l households) this subcomponent focuses o n supporting the transfer process through investments for rejuvenation and service improvements. Each district has identified specific schemes and preliminary investment requirements. I t i s expected that about 1600 habitations will be covered under both SV & MV schemes, benefiting another 2.0 mi l l ion population.

25. Specific activities to be funded include: (i) Rejuvenation (rehabilitation) and service improvements (such as metering, zoning) measures linked to the transfer o f SV schemes to GPs; (ii) Rejuvenation (rehabilitation) and service improvements (such as metering, zoning) measures linked to the transfer o f intra-village component o f the MV schemes to GPs; (iii) Provision o f bulk water meters in habitations served by al l the existing MV schemes; (iv) A district level contingency fund to be managed by the DPMCs to meet any emergency requirements in GPWSC or DWSS managed schemes. All the above activities wil l be covered under Component C2 (a), estimated to cost about US$42.9 M.

26. Sub component C 2 (b) wil l finance installation o f defluoridization and reverse osmosis plants and portable water treatment plants estimated to cost U S $ 12 M. Financing o f this sub component wil l be subject to condition o f satisfactory implementation and operation o f these schemes in about 5 habitations for each technology option over the first two years o f the project.

27. Subcomponent C3: Community Sanitation (US$ 19.0 M): This sub component wil l finance works, goods and equipment for construction/ up-gradation o f village drains and ponds rehabilitation in some 1000 habitations. In addition, i t will finance works, goods and equipment for construction o f small bore sewer/ sewerage schemes o n a pi lot basis in about 100 habitations. Since there i s not sufficient expertise and experience in DWSS for such works, this sub component financing wil l be subject to condition o f satisfactory implementation and operation o f these schemes in about 5 habitations for each technology option over the f i rst two years o f the project

28. Under the proposed SWAP Program, the investment support to environmental sanitation component wil l only be for community sanitation schemes, since the household sanitation is already being implemented by GoP’s Rural development department with financial assistance from GoI’s Centrally sponsored program (Total Sanitation Campaign).

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29. The possible options for village drainage are: (i) Open drainage: provision o f open drains collecting only sullage water (except septic tanks effluent) without any treatment (not needed), (ii) Conventional underground drainage /sewerage system with sewers and manholes connected to both toilets and bathrooms o f houses and led o f f to a treatment plant for disposal (iii) Small bore sewerage system which is designed to receive only the liquid portion o f household wastewater- connected to the septic tank or interception chamber which wil l carry effluent from septic tank/ interception chamber (which retains solids) and led o f f to a treatment plant for disposal.

30. DWSS wil l work out cost effective versions o f small bore sewers and conventional sewerage schemes appropriate for implementation in selected villages. In either proposals the design norms wil l be: (i) to use most economical pipe material either SWG, RCC, PVC or HDPE with no restriction o f minimum size since smaller size o f sewers wi l l result in higher velocities and will prevent silting, (ii) treatment options to use existing ponds where available, (iii) not to include any household facility such as toilet, septic tank or interception chamber (which wil l need to be financed from households). DWSS will implement sewerage schemes in such villages which have at least 70% coverage o f household toilets and disposal o f sewage wil l f low by gravity.

31. Proposed MTP and SWAP Program: The component wise investment needs o f the Proposed SWAP program and the allocations available for ongoing schemes included in the MTP are summarized in the next page.

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Table : Medium Term Sector Program : Estimated Investment Requirement I n US $ Million

Component 2006- 2007- 2008- 2009- 2010- 2011- Total YO to 07 08 09 10 11 12 total

A Program Management A1 Institutional costs (SPMC, DPMC) 2.7 3.4 3.4 3.5 3.6 3.1 19.8 5% A2 Monitoring and Evaluation 0.3 1.3 0.6 0.4 1.3 0.4 4.3 1% A3 Capacity Building 0.4 1.0 1.0 0.6 0.6 0.4 4.0 1% A4 ProgramIEC 0.3 0.3 0.3 0.3 0.3 0.4 2.0 1% A5 Sector development initiatives 0.3 0.3 0.2 0.2 0.2 0.1 1.3 0%

Total- ProgramManagement 4.0 6.3 5.6 5.1 6.1 4.4 31.4 9%

B Community Development Support B 1 Community SUPPOI? - SOS 0.4 0.9 3.8 4.0 4.5 0.8 14.3 4% B2 Engineering Support 0.2 0.6 2.7 2.9 3.1 0.8 10.1 2%

Total- CommunityDev. Support 0.6 1.5 6.5 6.9 7.6 1.6 24.4 6%

C Infrastructure Building C1 Construct iof lp gradation o f Water

Supply Schemes in N C P C habitations a N C Habitations b PC habitations

(a) Performance improvement in existing schemes and transfer

C2 Performance improvements in WS

1.

11.

... 111.

iv.

Stabilizing transfer o f SV schemes to GPs Transfer o f MV intra-village components Bulk Metering in MV schemes District level contingency fund

(b) Pilot Testing o f New Technologies

C3 Community Sanitation a Constructioflp-gradation o f

village drains & Ponds rkhabilitation

b Small bore sewerdsewerage schemes

Total - Infiastructure Buildinn

2.0

1.7 0.3 1.8

0.2

0.4

0.4 0.0

0.8

0.8 0.1

0.7

5.8

3.9 1.9 6.2

0.5

1 .o

2.3 0.9

1.4

1.3 0.5

0.8

4.7 13.2

25.4

21.2 4.3

15.1

2.8

4.2

2.4 0.9

4.9

4.1 2.5

1.6

44.6

38.8

31.5 7.3

13.6

2.8

4.9

0.0 0.9

5.0

4.2 2.6

1.6

56.5

40.9

30.7 10.2 9.4

3.1

5.4

0.0 0.9

0.0

4.3 2.6

1.6

54.6

18.8

13.4 5.4 8.8

2.2

5.7

0.0 1 .o

0.0

4.3 2.7

1.7

131.7

102.3 29.4 54.9

11.5

21.6

5.1 4.6

12.0

19.0 11.1

7.9

31.9 205.6

36%

28% 8%

15%

3%

6%

1% 1%

3 yo

5 yo 3%

2%

57% - TOTAL - SWAP PROGRAM 9.3 21.0 56.6 68.5 68.2 37.9 261.4 72%

Outside SWAP Program - Committed 41.9 39.4 20.7 0.0 0.0 0.0 102.0 28% schemes

TOTAL - GoP Medium Term Sector 51.1 60.4 77.3 68.5 68.2 37.9 363.4 100% Program

Notes: Costs include price and physical contingencies Totals may not add due to rounding

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Annex 5: Project Costs

INDIA: Punjab Rural Water Supply and Sanitation Project

Table 1: Proposed SWAP Program : Cost Estimate I n US $ Mil l ion

Component-wise Base Costs Total SWAP Program A Program Management

A1 Institutional costs (SPMC, DPMC) 18.0 A 2 Monitoring and Evaluation 3.9 A3 Capacity Building 3.7 A 4 ProgramIEC 1.9 A5 Sector development initiatives 1.2

Total - Program Management 28.7

B 1 Community Support -SOs 13.6 B 2 Engineering Support 8.5

22. I

B Community Development Support

Total - Community Dev. Support C Infrastructure Building

habitations C1 ConstructionAJp-gradation o f Water Supply Schemes in N C P C 112.5

C2 Performance improvements in WS (a) Performance improvement in existing schemes and transfer (b) Pilot Testing o f New Technologies

37.0 10.3

C3 Community Sanitation 16.2 I 76.0 226.8

Total - Infastructure Building

Base Costs - Total Program Price Contingencies 24.9 Physical Contingencies 9.8

Total Project Costs 261.4

Interest during construction 0.0 Front-end Fee 0.0

Total Financing Required 261.4

Note: Totals may not add due to rounding

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Table 2: Proposed SWAP Program: Component-wise Sources of Funds I n US $ Mil l ion

Component Total YO to Sources of funds GOI yo GOP % Comm yo

Program SWAP GO1 GOP unity Comm A Program Management

A1 A2 A3 A4 A5

Institutional costs (SPMC, DPMC) 19.8 7.6 0.0 19.8 0.0 Monitoring and Evaluation 4.3 1.6 0.0 4.3 0.0 Capacity Building 4.0 1.5 0.0 4.0 0.0 Program IEC 2.0 0.8 0.0 2.0 0.0 Sector development initiatives 1.3 0.5 0.0 1.3 0.0

Total - Program Management 3 1.4 12.0 0.0 0.0 31.4 100.0 0.0 0.0

B Community Development Support

B 1 Community SUPPOI? - SOS 14.3 5.5 0.0 14.3 B2 Engineering Support 10.1 3.9 0.0 10.1

Total - Community Dev. Support 24.4 9.3 0.0 0.0 24.4 100.0 0.0 0.0

C Infrastructure Building C1 ConstructionAJp-gradation of Water 13 1.7 50.4 42.1 79.8 9.7

Supply Schemes in NC/PC habitations

C2 Performance improvements in WS

a) Performance improvement in 42.9 16.4 0.0 39.5 3.4

b) Pilot Testing o f New 12.0 4.6 0.0 11.0 1 .o existing schemes and transfer

technologies C3 Community Sanitation 19.0 7.3 0 17.5 1.5

Total - Infastructure Building 205.6 78.6 42.1 20.5 147.8 71.9 15.7 7.6

TOTAL - SWAP PROGRAM 261.4 100.0 42.1 16.1 203.6 77.9 15.7 6.0 Notes: *Bank w i l l reimburse GoPS share of sector expenditure under the SWAP program up to the ceiling of US$154 M.

Totals may not add due to rounding

Table 3: Proposed SWAP Program: Expenditure Profile by Financiers I n US $ Mil l ion

Source of Funding 2006- 2007- 2008- 2009- 2010- 2011- Total YO to 07 08 09 10 11 12 total

Government o f India 1 .o 2.7 9.1 11.6 11.2 6.5 42.1 16% Government o f Punjab (own fimds) 1.1 3.2 10.9 13.8 13.3 7.3 49.6 19% World Bank 6.8 14.0 33.2 38.8 39.6 21.6 154.0 59% community 0.4 1 .o 3.4 4.3 4.2 2.4 15.7 6%

Total 9.3 21.0 56.6 68.5 68.2 37.9 261.4 100% Notes: *Bank wil l reimburse GoP’s share of sector expenditure under the SWAP program upto the ceiling of

US$I 54 M. Totals may not add due to rounding

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Annex 6: Implementation Arrangements

INDIA: Punjab Rural Water Supply and Sanitation Project

Organization and staffing:

1. The institutional and Implementation arrangements have been presented in Section C2. The organograms o f the overall institutional arrangements and that o f the SPMC and DPMC are in Attachment 6 A. Further details are in the PIP.

Overall Implementation Schedule:

2. The project will be launched from January 01, 2007 and close on March 31, 2012. However, the expenditures incurred by GoP during i t s current fiscal year (April 2006 to March 2007) adopting the new sector pol icy and implementation arrangements (mainly the pi lot batch implementation) will be included in the proposed SWAP program. The overall implementation schedule over these six years i s presented in one page Bar Chart in Attachment 6 B. Further details are in the PIP.

Village Selection Criteria and Process:

3. Process: The prioritization / selection process will be initiated by SPMC/ DMPCs with support from OPs Wing o f DWSS, District Administration and NGOs in each district through an awareness campaign using both mass media as well as village to village canvassing. An information pamphlet wil l be developed and disseminated to inform and encourage communities to submit applications for project support. The pamphlet wil l include a concise description o f the project, rules and regulations governing participation, instructions on how to apply, and a sample application template to be filled in by the applicant. Fol lowing this, the project wil l invite applications from interested GPs. Applications wil l be called for once a year, before the commencement o f each batch. Village level applications are analyzed at the district level and submitted to the state. District recommendations are collated and reviewed at the state level.

4. Village Selection: Technically, a l l the villages that are willing to adhere to the stipulated rules and regulations are eligible to participate in the program (except GPs where schemes are currently ongoing or were completed during the past 3 years wil l not be eligible). To ensure inclusion and targeting o f the most needy and disadvantaged population - a transparent selection and prioritization criteria has been developed and agreed. The GP applications received wil l be ranked in a descending order starting with GPs scoring maximum marks at the top. The Lists wil l be prepared separately for each district and for each batch. Depending on the Program implementing capacity for each batch and district a pre determined number o f villages at the top o f the list will be selected. Applicant GPs will be prioritized based on marks assigned to: present levels o f water supply (NCPC/FC); water quality affected habitations; extent o f scheduled caste population; and past track record in terms o f resource base (tax collection / revenue generation) as wel l as development activities. Higher marks are assigned for NC/ PC villages and villages having higher SC population and villages located in hilly terrain/ f lood prone zones and those along the international border. Prioritization and selection wil l be done separately for N C P C and F C categories respectively in the ratio o f 70:30. Further, the population identified as

44

‘disadvantaged’ wil l contribute less to the capital cost, thus enabling their participation. The details o f scoring and ranking criteria are in Attachment 6 C.

Project Appraisal Criteria

5. The schemes prepared by GPWSCI DWSS OPs wing wil l go through an independent appraisal and approval by committees in DPMC and by DWSC. A detailed list o f Appraisal criteria and check list have been developed and agreed. These include compliance with project rules, techno economic feasibility and compliance with environmental and social safeguard as well as fiduciary requirement. Proposals for capacity building arrangements as wel l arrangements for post implementation O&M arrangements wi l l also be reviewed. Towards ensuring optimal designs, water resources management and intra- as well as inter- village equity, capital cost ceiling norms will be adopted. For water supply, i t wi l l be Rs.15,000 per household. For Community sanitation schemes, the same wil l be firmed up after getting a f i rst hand experience o f the piloting.

User Cost Sharing:

6. details are in Attachment 6 D and in the PIP.

Rules for user cost sharing towards investment and O&M costs have been agreed and the

Village Level Implementation Arrangements

7. - GP wil l be the grassroots institution for the program implementation. However, as the GP consists o f only elected representatives and that it has other responsibilities too, a special purpose vehicle, a Water and Sanitation Committee o f the GP (GPWSC) will be set up. The advantages o f this are: one, i t provides for participation o f non-elected representatives and two, it enables an exclusive and dedicated attention to RWSS. However, the role and responsibility o f a GPWSC depends upon the extent o f habitation coverage. In the case o f a scheme (s) developed for an intra-Panchayat habitations, a Committee, GPWSC, wil l be the primary management unit and wil l be responsible for planning, designing, procurement, construction and O&M as well as management o f funds for al l Program habitations.

8. GPWSC shall be set up as a sub-committee under the Section 25 o f the Punjab Panchayat Raj Act and provides for broad based membership, both elected and non-elected. The GP’s Sarpanch will be the Chairperson o f the GPWSC and wil l have 11- 21 members depending upon the village population, with a maximum o f 4 elected representatives. One third o f the members shall be women and a fifth from Scheduled Castel Other Backward Caste. The non-elected members wil l be chosen from Gram Sabha. The Junior Engineer o f the DWSS in-charge o f the village will be the technical member cum convener o f the GPWSC.

9. GoP has prepared a model byelaw which makes explicit the role and responsibilities as wel l as functions and powers o f GPWSC as well as the linkages with GP and other institutions. Essentially, a participating GP will set up the committee through a resolution and empower them to perform RWSS functions o n its behalf. The details o f GPWSC composition, functions and powers are elaborated in the PIP.

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10. Scheme Leve l Committee: In the case o f MV water supply schemes, where in the scheme spreads across several GPs and requires higher engineering ski l ls , i t i s thought fit to establish an apex body, Scheme Leve l Committee (SLC), comprising representatives o f participating GPWSCs, to address issues related to the common facility viz., inter-village service delivery. I t is proposed that the DWSS, SLC and GPWSCs wil l be the partners in a MV water supply schemes. DWSS wil l be responsible for overall planning; construction o f common facility as well as providing technical assistance to SLC for its O&M. GPWSCs wil l manage intra-village activities. SLC will oversee the planning and construction, and subsequently, operate and maintain common facilities and provide water to GPWSCs o n a bulk basis.

11. Village Support Team (VST): A rapid SO capacity assessment study indicates that Punjab does not have locally adequate number o f quality SOs to meet the project’s full requirement. To address this, the project has proposed the concept o f a village support team (VST). This i s a team comprising GP/ GPWSC representatives, local youth and the Junior Engineer o f the DWSS, who would be trained specially as a team to undertake the community mobilization responsibility. Thus, VST will be a local level citizen body, transformed into a grassroots institution which shall perform the role o f a SO. I t wil l chiefly be responsible for capacitating and institutionalizing GPWSC.

Support Organizations (SOs)

12. Typically, three types o f SOs are expected: (i) those providing community mobilization and institutional support (SO-CD); (ii) SO-Eng, providing technical support; and (iii) SO-Mgt, providing management support. In such situations where the project finds difficult to secure SO- CD, then, the concept o f Village Support Team (VST) wil l be adopted.

13. SO-Mgt wil l be chiefly consulting f i rms and/ or individual consultants deployed for providing Management Support to SPMC and DPMCs in steering the program as the DWSS wil l take time in building the required (non-engineering) skills internally. They would provide experienced personnel in managing community development interventions, as well as monitoring and evaluation including process monitoring and impact assessments. They will: (i) Support Program Director in developing and guiding implementation o f capacity building, IEC, and communication; (ii) Assist the Program Director in the preparation o f progress reports as well as in consolidating the key learning, document the same and disseminate it statewide; (iii) Assist in developing and disseminating alternative mechanisms to reach and work with the communities, viz. participatory management techniques and methodologies; (iv) Drawing strategies and implementation action plans for transparency, inclusion and accountability; (v) Designing and adopting change management approaches, in particular, and capacity building, in general; and (vi) Designing, rol l ing out and maintaining a web site reflecting status and progress in the RWSS sector in the state. I t is expected that the DWSS will acquire/ learn the non-engineering skills within 2-3 years and thereon the same wil l be managed in-house by DWSS. SO-Enq wil l supplement/ complement chiefly the OPs wing o f DWSS in areas such as total station survey, design engineering, water quality testing, construction quality surveillance etc.

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Scheme/Tender Approvals

14. Whereas the overall annual plan approval (equivalent to administrative approval) rests with SWSM, most technical sanctions as well as Implementation Phase Proposal approvals are devolved to the district level. Similarly, a majority o f the scheme tenders’ acceptance i s devolved to the Village level. The District Annual plans for each year will be prepared by DWSC and approved by GoP/ SWSM before the end o f the previous fiscal year and included in the state budget. This plan wil l have names o f villages selected and l ine estimates only and i t wil l be administratively approved by GoP before beginning o f the next fiscal year. Thereafter, approvals o f al l detailed scheme reports and tender award decisions upto Rs.30 lakhs wil l be taken by GP/ GPWSC per scheme or tender for SV schemes and by D P M C for common infrastructure o f MV schemes. SPMC wil l be responsible for approval o f schemes and tenders o f higher values. Procedures and powers at various levels for such approvals have been detailed in the Procurement Manual.

Model Agreements/ MOUs etc

15. Towards operationalizing the proposed institutional model, the following instruments have been prepared: (i) GP Undertaking Note - reflecting a GP’s demand for and willingness to participate in the program; (ii) Village Selection -- Eligibility criteria and village prioritization processes; (iii) GPWSC bylaws, defining i t s composition, role and responsibilities; (iv) Tripartite MOU to define relationship among DWSS, GPWSC and GP; (v) Scheme Cycle - Single and MV schemes along with responsibility matrix; (vi) Scheme Cycle - Scheme Transfers and Sanitation; (vii) Scheme Leve l Committee - byelaws, defining its composition, role and responsibilities; (viii) Quadrilateral MOU - outlining the role and responsibilities o f the M V W S S partners, GP, GPWSCs, SLC and DWSS; (ix) Scheme (DSR) appraisal criteria - a br ief check-list enabling appraisal from social, economic, institutional, environmental and technical perspectives.

Community Development (Scheme) Cycle (CDC)

16. GoP has developed different scheme cycles corresponding to different time frame (and technological options) as found suitable to the communities. Typically, while, a SV ground water based scheme cycle wil l be o f 21 months duration, i t wil l be 24-30 months for MV and other surface source based water supply schemes. In both the cases, a preliminary plan will be prepared within a period o f two months, to decide o n activities: (a) requiring urgent attention (repairs/ replacements); and (b) those requiring elaborate planning. The latter wil l be visualized in four distinct phases: (i) pre-planning; (ii) planning; (iii) construction; and (iv) post construction O&M. Separate Scheme cycle has been developed for SV and MV water supply schemes (included in the PIP). I t describes the sequence o f activities, processes, success/performance indicators, and roles and responsibilities o f the key actors. A key principle o f the proposed CDC is that i t defines milestones which need to be achieved at the end o f each phase and wil l serve as performance indicators or triggers to move from one phase to the next one. In order to keep track o f the quality o f the CDC implementation process and successful achievement o f the end o f the phase milestones, the entire process will be closely monitored.

47

Outputs during the Scheme Cycle

17. outputs in the Planning, Implementation and Post-implementation Phases.

DWSS-OPs Wing, SOs, GP/ GPWSCs wil l work together and generate the following

Planning Phase Outputs

0 Amee to D o Report (ATD) - initially IEC and mobilization efforts culminating in village agreeing to participate hr ther in the program. These include: community mobilized - Gram Sabhas held, GPWSCs formed, GP / WSC members trained, WSCs bank account for capital cost contribution and O&M opened, Project bank account o f the GP opened, capital cost contribution plans developed and initiated; Baseline survey conducted, Social / Resource mapping done to depict the existing situation and to identify gaps (if any), choice o f technology discussed with DWSS, proposed sanitation plan discussed, existing water supply and sanitation plan recorded, necessary assistance provided to DWSS to prepare Preliminary Scheme Reports (PSRs), GP level Agree-To-Do (ATD) meetings held and ATD report submitted to D P M C through DWSS.

together wil l constitute an IPP that wil l be reviewed and approved by the DWSCs. These include : Water supply development Plan, capacity building plan, Women development Program Plan, Capital cost user contribution plan, O&M Plan and Communities’ own M&E plan

0 Implementation Phase Proposals: A number o f Community Action Plans (CAP)

Implementation/ Construction Phase Outputs

0 Award o f Contracts - procurement o f workshervices through prescribed contracting procedure (tenders invited, tender evaluation done, contract awarded).

0

0

Community Action Plans (CAP) implementation. Implementation monitoring and quality assurance.

0 O & M Plan refined.

Post-Implementation Phase Outputs

0

0

0

0

0

a

0

O&M Plans firmed up on al l aspects - technical, institutional and financial. O & M Budget worked out, tar i f fs fixed and mechanisms for tariff collection put in place. Conduct refresher training programs for the members o f GPs and GPWSCs. Scheme stability support to GPs and GPWSCs. O&M back up support to the user communities. Assisting GPs and VWSCs in conducting sustainability monitoring exercises for the completed schemes. Fol low up on disinfection methods, residual chlorine indicators & healthy home surveys, etc.

48

I’rovidc pxtltcy guide[irrcs

....................................................................................................................

....................................................................................................................

......................................................................................................................

r-zG A

I, 1

:er Smnitation Committee

......................................................................................

anchaynt

~

x * GI’WIIISC

.........................................................

...................................................

I_ Sub Committce of GP (Sec.25) I

i I

1

I I

t

.I1 ! 1111 I!<&: - I ...................... + ~ ~ ~ s p e f i a t i s t i P .......................

I I

Rf&E Unit I i

I

50

Annex:6 Attachment 6 B

I I I 1 I I I I I I I

Annex: 6 Attachment 6 C

I Quantity of Quality Criteria water water

Village Selection

Implementation Efficiency

Ranking and Selection Procedures

Indicators

1. GoP (SPMC) wil l place an advertisement in the local daily newspapers prior to the commencement o f each batch, informing o f the project and seeking an expression o f interest from the willing GPs. Simultaneously, SPMC wil l also write individual letters to al l the GPs along with a copy o f the advertisement. As far as villages wherein SV schemes have been already transferred to GPs (about 876), D P M C will support their rehabilitation and complete the transfer processes. These villages need not apply.

availability availability N PC F Fluor i Othe 240% C C de r s

2. Applications wil l be obtained from GPs in a standard form prescribed by SPMC which will include assurances regarding GPs commitment to adopting project's cost recovery and other administrative rules. Subsequently, each GP will be ranked based on the fol lowing criteria.

40% - <25% 25%

>60% >lo% o f the Uti l izat ion total Revenue i s o f p lan F r o m Own I I I /PTDS I I

Score ( 3 5 120 1 5 ( 3 5 I 10 I 15 I funds I Resources

10 1 5 1 10 ( 5

Selection Process

3. Once the rankings are done, GPs wil l be arranged in a descending order and the toppers wil l qualify for self selection on a priority basis. Towards ensuing adequate geographical spread, rankings will be done district wise. This district wise ranking will be reviewed and finalized by SWSM. Subsequently, toppers will qualify for participation. Actual selection in any batch wil l be made by the SWSM taking into account, resources allocated for different districts, implementation capacity and ensuring that needy ones do receive priority. District wise prioritization l is t as wel l as the final batch wise selected l i s t wil l be put on website as wel l as shared with the district administration, and al l relevant l ine departments. Prioritization and selection wil l be done separately for N C P C and F C categories respectively in the ratio o f 70: 30. The process o f ranking o f GPs wil l be carried out at the commencement o f each batch.

GPsNillages not Eligible

4. Such villages who have had the financial assistance for a water supply scheme from the state in the last 3 years or those villages where implementation o f water supply schemes i s in progress (mainly NABARD assisted and ARWSP & Swajaldhara Schemes) will not be eligible to participate in the program.

52

Annex:6 Attachment 6 D

User Cost Sharing Rules and Procedure for Administration

WATERSUPPLY

I O&M A. WATER SUPPLY 1. New SV schemes

2. New MV Schemes

3. Transferred SV Schemes

4. Existing MV Schemes

1. Capital Costs. As an expression o f their commitment to participation and ownership in the scheme, beneficiaries wil l contribute to the capital cost o f the scheme. While the program wil l follow the GoI’s Swajaldhara principle o f 10% contribution from the users, relaxations have been made for some communities taking into account the socio-economic and geo-physical as well as spatial differentials. Some 1,500 habitations (a little over 30% o f the total) are expected to be benefited out o f this discounting.

Cost Sharing Remarks

total Costs 100 % by users

100% by users

Yo of

GPWSCs w i l l set a tariff adequate enough to cover the full O&M cost f rom the users DWSS w i l l make bulk supplies on volumetric basis and levy water charges to GPWSCs based on tari f f for such bulk supplies to be fixed by DWSS from time to time. O&M cost may exclude the cost o f staff deployed by DWSS which will be progressively phased out over a period o f time Same as for new MV schemes but implemented progressively linked to new investments for scheme up- gradations and transfer o f intra-village distribution

100% by users

100% by users

2. O&M. The O & M cost for al l SV schemes wil l include electricity charges, chemicals, o i l and lubricants, staff for O&M, and insurance charges for source sustainability where applicable. O & M cost for MV schemes wil l in addition, include bulk water charges payable to DWSS on volumetric basis at tariff fixed by DWSS for such supplies. Detailed cost sharing rules are enumerated below:

(Open drains, small bore sewers, ponds rehab.) I1 Investments A. WATER SUPPLY

O&M w i l l be through a service contract.

% of Construction

I responsibility to GPs/ GPWSCs I GPWSC shall recover from the users. B. COMMUNITY SANITATION I 100% bv users

1. All water supply Schemes for al l Technology Options including SV and MV schemes and other technologies l i ke Reverse Osmosis etc.

costs 10 % by users subjectto a maximum o f Rs.1,500 per household

(a) Capital cost shall include common infrastructure f rom source to distribution pipes, but exclude the cost o f house connections and consumer meters (b) Noti f ied SC habitations, International Border Villages, and Hilly Villages - 5% (SC habitation i s defined as per GoP definition o f SC habitations) (c) Community contribution w i l l not be met from other funds such as GP funds, MPLADs, N R I s , etc. (d) Household service connection w i l l entail a minimum o f Rs.500 /(250 for SC) as connection fee. (e) Actual cost o f taking connection and meter w i l l be borne by the respective household. (0 GPs will make available land for the facilities. Public lands w i l l not be counted against ‘contribution’. g) In the case o f MV schemes, the village offering land shall be compensated duly by other benefiting villages. The GP offering lands shall pay 30% less and the same shall be borne duly by the other GPs.

53

Annex: 6 Attachment 6 D

Installment Share (YO)* 1. 50% o f the amount

2. 50% of the amount

~~

B. COMMUNITY SANITATION

Time of payment A t the time o f giving writ ten consent by GPWSC to jo in the project. (after initial round o f project dissemination) Before invitation o f the bids for construction o f water supply and sanitation schemes.

2. Community Sanitation - Drainage Ponds rehabilitation, small bore sewerhewerage schemes.

Yo of Construction costs 10% by users subject to a maximum o f Rs.1,500 per household

Remarks

Sanitation contribution w i l l be separate from that for water

Program w i l l finance only the common facility, and al l household specific investments w i l l be borne by the respective household. In the case o f small bore sewers, scheme w i l l not be taken up unless at least 70% o f the households are ready with Inspection Chamber and ready for connection to the common facility.

supply.

SC habitations, International Border Villages, and H i l l y Villages - 5%

Other finds such as GP’s external funds, MPLADs, NRI donation etc. can be used to meet the ‘contribution’ up to 30% o f the total. GP’s own revenue can contribute an additional 20%. Remaining 50% wi l l be from the users.

54

Annex 7: Financial Management and Disbursement Arrangements

INDIA: Punjab Rural Water Supply and Sanitation Project

1. for and report on the project expenditures incurred.

The project has satisfactory financial management arrangements to adequately account

2. GoP proposes to implement the proposed project adopting a sector wide approach (SWAP) statewide, by which al l future public funding for the sector supports a single sector pol icy and expenditure program under government leadership and adopts common approaches across the sector, irrespective o f sources o f financing. From a financial management perspective while there are elements o f a SWAP with GoP acceptance o f harmonization o f FM arrangements internal to project i.e. budgeting, funds flow, accounting & accounting policies, internal control, internal audit, concurrent audit & external audit and capacity building support in the area o f Financial Management to GPWSCs irrespective o f source o f funding. There will, however, be no pooling o f funds between Go1 and the Bank (with differences in timing, frequency and conditions for fund release) and there wil l be some differences in reporting requirements (to the extent not covered in the consolidated quarterly progress reports.)

Financial Management Assessment: (PRIs and Country Issues)

3. A study on ‘Review o f Accounting and Accountability Arrangements for Panchayati Raj Institutions and financial management capacity o f DWSS was undertaken. The review covered aspects relating to institutional arrangements, funds flow, accounting, internal controls, audits, transparency arrangements, staffing etc at the PRIs. At the DWSS level, the review in addition to covering the aspects mentioned above included an analysis o f budget/ expenditure data for the past 5 years.

Panchavat Level issues

4. Weak Capacity at Panchayat Level: The study identified (i) capacity problems affecting the maintenance o f accounts at the GP level (with one Panchayat Secretary responsible for 5 to 8 GPs) and preparation o f budgets; (ii) while accounting was generally carried out, principles varied; (iii) high level o f cash withdrawals with inadequate control and accounting o f such withdrawals; (iv) Audits o f GPs were generally in arrears, generally upto 3 years, while in a few cases even longer with a very large number o f audit observations pending clearance for long periods. In addition, in most GPs, Standing Committees, which provide a wider forum o f consultation and deliberation, have not been formed. These are sought to be addressed (i) by the a development o f Handbook for GPWSC’s on Procurement & Financial Management (ii) financing o f one accountant at each GPWSC by the project; (iii) audit o f GPWSC by independent C A firms (in accordance with specific terms o f reference) before every tranche release.

D WSS

5. However the fol lowing country issues emerged:

Accounting & financial systems at DWSS, compared to GPs, are much better organized.

e Lack offinancial statements and audit opinion on the same. In this project specific efforts have been made to align the Banks financial reporting requirements with the mainstream

55

accounting system. This wil l facilitate generation o f financial statement (statement o f sources and uses o f funds) on which the State AG would be able to provide an audit opinion. GoP ’s existing accounting system concentrates mainly on bookkeeping and transactional control over expenditures and FM information is not generally used for decision making. However, the project FM system, which builds on to the existing system, has been designed to support MIS information required by the M&E team for monitoring purposes. Delay in release of funds (Letter of Credit - LOC) from the Finance Dept: delay in release o f b d s (LOC) by the finance dept and possible utilization o f L O C for one project being used for another. This i s sought to be addressed by a specific covenant in the legal agreement that L O C wil l be issued for a quarter’s fund requirement by the Finance Dept within two weeks o f the request by DWSS. In addition informal controls exercised by the Treasury wil l be addressed by an administrative order.

e

e

Risk

Funds flow: Risk o f funds intended for the project being diverted for other pressing needs e.g payment o f salaries and/ o r delay in issue o f LOC to the project and allocation o f the same to various implementing u n i t s (40 Divisions and over 3000 GPs).

Public Financial Management & Accountability (PFMA) Issues

Risk Rating

M

Risk Mitigation Measures incorporated into Project Design

Wlule t h i s remains as an lnherent risk, given the current fiscal situation o f the GoP, the probabil ity o f the same is no t lugh. In order to ensure that the funds are made available to the project in a t imely manner a legal covenant has been included in the financing agreement which requires the GoP to make the funds available withm two weeks o f the request o f funds by the DWSS.Funds to the GPWSSC will be directly transferred f r o m the D P M C s in tranches.

6. A recent World Bank study undertaken on the Punjab Financial Management (PFMA) systems has identified a number o f weaknesses with the state’s financial management systems. Some o f the weaknesses related to the tight fiscal position faced by the State have eased in the last one year. The impact o f the issues identified in the report on the project financial management systems was assessed and discussed with the state government. Considering that issues covered in PFM have a larger scope, these are sought to be addressed at three different levels. - A summary o f this analysis, whereby the risks having an impact on the project were

identified and specific mitigating measures built into the design o f the project, is annexed to this assessment. (refer Attachment 7 A). To enhance transparency in implementation o f this project, a cross-cutting Disclosure Framework has been agreed which includes financial management aspects also. Issues which were more o f governance and systemic were taken up with GoP at state level. GoP i s in the process o f implementing longer term measures to improve financial management across the whole o f Government and has developed and shared an action plan to implement the recommendations contained in the report, both in short term as well as in medium term. The Bank team will provide support as requested and monitor the implementation o f these reform initiatives.

-

-

7. Significant Risks and Mitigation Measures

Risk of delav in financial reDorting due to large number o f implementing u n i t s

M Fol lowing CDD principles the tranche releases to GPWSSCs (based o n M O U s and achievement o f milestones) will be i l 56

consequently affecting disbursements

Weakness Treasuw Overations: The project relies to a large extent o n LOC system o f treasury operations. Considering past experience o f delays caused in fund-flow due to inefficiencies and informal controls in the treasury management. No internal audit system is in place.

Weak FM capacities at GPWSCs

GPWSCs are new structures responsible for most implementation activities at the GP level. Current FM practices at GPs o f accounting, reporting, etc. have been found to be quite weak.

Overall R isk Rating

I - High, S - Substantial, M- Modest, N -

Resolution GoP has assured that Treasury operations have improved significantly in recent times with increase in computerization and currently a l l payments are honored within 4 days. Administrative orders will be issued to address informal controls at Treasury and delays in authorization o f LOC. The TOR o f internal audit requires th is aspect to b e reviewed.. The project design provides for regular internal audits for SPMC/ D P M C s by independent chartered accountant fm under a specific TOR approved by the Bank.

S

S

egligible

eligible for reimbursement.

Reliance being placed o n govt. financial systems with respect t o the Divisions o f D W S S responsible for implementation o f MV schemes. These have been assessed to b e regular and t imely in rendering o f monthly accounts to the AG.

Posting o f a senior finance staff f rom the treasury and accounting service at the SPMC supported by a qualif ied chartered accountant.

(i) The development o f Handbook for GPWSSC’s o n Procurement & Financial Management; (ii) financing o f one accountant by the project at each GPWSSC; (iii) audit o f GPWSSC by independent CA firms (in accordance with specific terms o f reference) before every tranche release.

Strengths

8. Since the project proposes to use Govt. accounting systems for its accounting & reporting, this certainly wil l be one o f the strengths o f the program. This wil l be particularly useful, as the project can also extract information from the Govt. system o n other schemes in the sector. FM arrangements in the DPMCs will be based on established FM arrangements o f Divisions and the DWSS’s current divisional accountants, persons who are well-versed with such established processes, will be overall responsible for financial management duties at the DPMCs.

9. Weaknesses and Action Plan

Budgeting

10. The project would be budgeted component wise in GoPs budget with separate budget lines for Go1 funded schemes and Bank funded schemes. In addition, the funds to be transferred to the GPWSC’s for the SV schemes wil l be budgeted as Grant in Aid. The project (SPMC) wil l be responsible for preparing and consolidating an Annual Work Plan by December 3 1 each year for the following financial year, in order to feed into GoPs budget cycle. Similarly on the receipt side the GoP wil l reflect the funds to be received from the Bank and GoI. Community contribution wil l only be reflected in the Annual Work Plan and not in the GoP State budget. Based o n the discussions with the Finance dept i t was confirmed that the L ine Dept (DWSS) wil l

57

have the flexibility to re-allocate budgets between the components, if required and does not need to wait for legislative approval.

State Project Management Cell (SPMC)

of DWSS

Funds Flow - GoP to Project

--, 1 I

11. Pooling o f funds between Go1 and the Bank i s not envisaged, with parallel funds f low arrangements from Goy Bank to GoP. Finance Dept. wil l issue L O C to SPMC based on i t s quarterly requirement o f funds, which wil l in turn reallocate these funds (LOC), as per detailed budget to various DPMCs. DPMCs will be responsible for further release o f funds to GPWSCs (for SV and intra-village component o f MVs) and allocation o f L O C to DWSS Divisions (MV Schemes, Community Sanitation Schemes). This is depicted in the following f low chart: Funds for the Program Management and Community Development Support wil l be retained at the SPMC and DPMCs.

I WoridBank k. I ' D v l A Dept. of Drinking Water, Goi ARWSP, I

Swajaldhara

Dlstrict Project I :::EL: ~ l . " p ~ ~ ~ ~ ~ ~ ~ ~ M . n a g e m e n t Cell (DPMC) Divisions of DWSS B in tranches) of DWSS

'rl, & (I) SVS (ii) 'In Village' (1) Proj. Mgt. (ii) Community *I)

12. In order to address the delays: (i) in the issue o f L O C by FD and (ii) delay in issue o f advice by the DTO to the Banks, the following procedure has been agreed with the GoP: (a) based on the approved budget and annual work plan (broken down quarterly), L O C for the f i rst quarter's fund requirement will be issued by the FD. This wil l be on a lump s u m basis and not broken down by components thereby giving the flexibility to the Line Dept to allocate the L O C as required. Such a request wil l be processed by FD within two weeks o f the request by DWSS; (b) L O C for subsequent quarters would be based on the projected requirement adjusted for actual expenditure in the previous quarter. (c) Informal controls exercised by Treasury (such as requesting for approved pending bills) wil l not be exercised. (d) The Dept (SPMC/ D P M C and Divisions) wi l l not open any Bank accounts to park funds especially at year end. (e) The timely issue o f L O C by FD is a legal covenant.

58

Accounting & Internal Control

SPMC, DPMC and Divisions of D WSS:

13. A Financial Management Manual (FMM) which builds on GoPs existing accounting systems and rules has been prepared for the project. The FMM captures aspects relating to budgeting, funds flow, accounting, internal control, financial & administrative delegation, internal and external reporting, staffing and audit arrangements. T h i s wil l be applicable to al l future funding in the sector irrespective o f the source o f financing. Books o f accounts by the SPMC, DPMC and Divisions o f DWSS will be maintained under the standard Government Accounting Systems and monthly accounts wil l be rendered to the AG and reconciled on a quarterly basis. Our assessment indicates that this system i s functioning wel l and reconciliations are complete t i l l June 2006. However information by project sub- components (for disaggregated financial reporting), movement in security deposit deducted fkondpaid to contractors and community contribution wil l be tracked by the project outside AG accounting system. The key issues that have been addressed in the design o f the accounting systems are: e Tranche releases to GPWSSCs (net o f community contribution) wil l be made directly by

DPMC based on M O U and fulfillment o f conditions o f tranche release, recorded as Grant in Aid in the books and wil l be eligible for reimbursement consistent with guidance on C D D type projects. Community Contribution towards capital cost o f schemes wil l be accounted for by the DPMCs o n a memorandum basis and reported to the SPMC as the same i s not capable o f being accounted in the AG’s accounting system. Funds (LOC) wil l be allocated by the SPMC to various implementing units i.e. D P M C and divisions o f DWSS (for MVS) and no Bank accounts wi l l be opened except at GPWSSC level.

e SWSM will ensure that regular reconciliation takes place between AG and al l expenditure incumng entities on a quarterly basis to ensure correctness o f the accounts, which in turn will form the basis for the interim financial reports and disbursement claims. W h i l e the AG accounting system wil l record project expenditures by components and source o f financing, the implementing units wil l manually prepare monthly summary by project sub- components and submit the same to the SPMC for consolidation and financial reporting.

e

0

e

GP WSC

14. A Handbook for GP covering community procurement, financial management (covering aspects relating to capital costs and 0 & M accounting) and disclosure and transparency requirements has been developed. The key arrangements are as under: e Bank Accounts - GPWSCs will maintain a separate Bank account for Capital and 0 & M

funds. This will be operated under joint signatures o f the GPWSC Chairman and Secretary. Funds wil l be released to GPWSCs by the D P M C in tranches on fulfil lment o f the conditions in the MOU. Accounting - A simple, manual system o f book-keeping (cash book) and reporting has been developed for the GPWSCs. This is responsive to their capacity and has been documented as GPWSC Handbook. Appropriate accounting procedures for community contribution have also been documented in the Handbook.

e

59

0

0

Staffing - An accountant wil l be recruited by the GPWSC (to be financed by the project) to take care o f the accounting requirements at the GPWSC. Capacity Building - Adequate capacity building initiatives for Accounts Assistants, GP Secretaries and GPWSC members have been agreed as part o f project design. This wil l include training on book-keeping, procurement procedures, reporting, banking, reconciliations, records retention, audit certification and social audit. Social Audit/ Transparency - Strong elements o f Social Audit and Transparency wil l be built into the project design. Books o f account as well as expenditure statements shall be available to al l members for viewing. Information on scheme approval, funds received, payments made and balances, wil l be prominently displayed in the village at a l l time and updated regularly.

0

Finance Staffing:

15. At SPMC a senior finance officer, at least o f the rank o f a Joint Controller, would be deputed from the Finance Dept. In addition a Financial Management Specialist, an experienced chartered accountant as per terms o f reference and job descriptions acceptable to IDA, wil l be hired from the market on contractual basis. This team wil l be supported by one section off iced superintendent level person. At each DPMC, a Divisional Accountant will be deputed to the Divisions. H e wil l be supported by a Assistant Finance Manager as per terms o f reference and job descriptions acceptable to IDA, hired from the market on contractual basis. They wil l be supported by two Finance Assistants, commerce graduate with experience o f computer applications.

16. Internal & Concurrent Audit: The project wil l have an internal audit by an independent firm o f Chartered Accountants who will review to ensure that the systems, procedures and rules as documented in the FM Manual are being adhered to at the project level i.e. SPMC, D P M C and divisions o f DWSS. The TOR for internal audit has been reviewed by the Bank. The TOR provides for each D P M C (and a sample o f divisions within the DPMC) to be covered at least once a year and the SPMC twice a year.

17. Since a significant portion o f the funds i s expected to be spent at level o f the GPWSC, a concurrent audit by independent f i r m s o f Chartered Accountants as per TOR agreed to the Bank wil l be carried out before each tranche release, except the first. The TOR covers aspects o f community procurement, financial management and community level transparency. Second (and subsequent) tranche o f funds wil l be released to the GPWSC by the D P M C only on receipt o f ‘Interim Expenditure Statements’ duly certified by the GPWSC Auditors.

18. Financial Reporting: The financial reports for the project (covering al l sources o f funding) have been developed and agreed with DWSS. This has been merged with the Quarterly Progress Report (QPR). The financial reports will provide information by project sub components, with the overall expenditure reconciled with the expenditure report from the AG based on project components. In addition, separate reporting to GoI, to the extent the QPR and Financial reports do not capture the reporting requirements o f GoI, wil l continue to be provided by the GoP to GoI.

60

External Audit

Implementing Agency Government o f Punjab (DWSS)

Department o f Economic A f fa i rdGo I

19. The Comptroller and Auditor General o f India (C&AG) through i t s offices in Punjab wil l be the statutory auditor for the project. The C&AG’s office wil l conduct an annual audit o f the project financial statements (sources and uses o f funds covering al l sources o f funds). The audit report wil l be sent to the Bank within six months o f the close o f each financial year. The Terms o f Reference for the audit (along with the draft format o f the financial statements and audit opinion) have been prepared and sent to the C&AG for their concurrence. Audit by the C&AG may include a sample review o f the GPs implementing the project also. The following audit reports will be monitored in the Audit Reports Compliance System (ARCS):

Audit Auditors Project Audit

Special Account

Comptroller and Auditor General o f India, Punjab Comptroller and Auditor General o f India, N e w De lh i

Financing & Disbursement Arrangements

20. The Bank will finance approx 75 % o f GoP’s contribution to meet the project expenditure (detailed in Annex 5) subject to a limit o f U S D 154 mi l l ion equivalent. Funds from the World Bank will be made available to GoP (through the GoI) under the Standard Arrangements between Go1 and the States. The Bank will provide an initial advance which will be transferred by Go1 to the GoP estimated at U S $ 5 million. The advance will be enhanced subsequently proportionate to the increased level o f expenditure. Subsequent releases will be on re- imbursement method based on actual eligible project expenditure reported by the project. This would be based on the interim expenditure reports (Component wise) from the AG’s accounting system adjusted for movement in security deposit recovered paid to the contractors which is accounted division wise and not project wise by the AG. This wil l enforce discipline and ensure that the divisions are regular and timely in submission / reconciliation o f monthly/ quarterly accounts to the AG. The funds (tranche release) transferred to the GPWSC wil l be eligible for reimbursement from the Bank.

Supervision Plan

21. From a financial management perspective, the project wil l need intensive review looking at internal controls, fund flows, auditing arrangements, and training. This wil l be through a combination o f periodic desk reviews and field visits. Special focus wil l be given to capacity building and training at the GPWSC level.

61

Annex - 7 Attachment 7 A

S.No. Issues raised in PFMS repo r t

Summary of major PFM observations and Project Specific mitigation measures

Relevance t o C u r r e n t status Pro ject Specific Actions proposed the pro ject

1.

2.

3.

Large Committed Expenditure

Large port ion o f committed and non-development expenditure covering the entire amount o f revenue receipts. Thus putting pressure o n funds available for developmental expenditure. Revenue expenditures for 2003-04 were 118% o f the state revenue receipts.

Diversion o f earmarked funds

More than Rs 4500 crores (approx. $ 9 0 0 mil l ion) received f r o m FCI for repayment o f commercial bank credit diverted between 1996-03.

Treasurv Management

- Irregular cash management practices, including priori t izing payments,

- Verbal instructions t o treasuries to release individual payments

- Telephonic instructions to stop sanctioned payments due to cash constraints

- Large arrears o f payments with treasuries

- Cash crunch resulting in delay I reduce release o f funds to development

Large revenue expenditure can put constraints o n availability o f p lan development funds, thus creating uncertainty over availability o f counterpart cont ibut ion o f the state.

There are possibilities that project funds provided by Bank could be diverted for other purposes.

Since the project would re ly o n LOC system for a l l i t s payments (i.e. once LOC i s issued it can issue cheques for a l l payments) hence the r isk o f irregular treasury transaction i s l imited to this extent.

GoP’s state revenues have increased f r o m Rs 59 10 crores in 2001-02 to Rs 10032 crores in 2005-06. Fiscal deficit has declined below 3% o f GSDP compared to 7% Def ic i t o n current account has also reduced f r o m 24% to 7.3% o f revenue receipts. GoP has achieved primary surplus o f 1% o f GSDP in

Sources: Outcome Indicators of States ’ Own Fiscal Correction Path; Assessment by WB Economic Consultant.

2005-06

GoP has stated that the situation was resorted during the period when the state was facing extreme shortage o f funds, which even could have resulted in default in salaries. Since Apr’O5 the said amount has been converted in to loan, and the Govt. i s making regular repayments.

Th is was primarily due to the cash crunch faced by the state during the period 1995-96 till 2002-03. Since then the cash situation has improved. At present state has around Rs 1800 crores surplus with RBI. During the current f inancial year it has paid 93% o f a l l sanctioned payments.

Modernization o f Treasury operations

All 19 district treasuries and 5 1 out o f 67 sub- treasuries have been

62

In v iew o f the improvement in the state’s funding position t h i s inherent r isk has reduced. T lus will be monitored during project supervision.

GoP has committed that the funds would be transferred to the project within 2 weeks. This wil l be monitored by (i) covenant o n t imely issue o f LOC (ii) including review by project internal audit

Considering the improvement in cash situation as w e l l as the modernization o f treasuries, the probabil ity o f the risk o f treasury operations being misused has somewhat reduced. Fol lowing mitigating steps wil l help ensure that these risks are f i r ther minimized.

T imely issue o f release o f LOC as legal covenant

Fixing o f standards for fund transfers between SPMC and other agencies and payment periods for b i l ls presented.

Moni tor ing arrangements through internal audits with specified TOR for

Issues raised in PFMS Relevance to Current status report the project

schemes. computerized. Remaining w i l l be completed within next year. Data from al l districts and sub-districts being stored at the Directorate.

- S.No. Project Specific Actions proposed

non-adherence to these standards.

- BUD( -

4.

- ACC(

5. -

~

INTE 6.

Since the project w i l l be implemented through different agencies, including GPs, DPMCs and SPMC, ensuring

5T MANAGEMENT Poor Budget Execution

The Divisional Offices are manned by divisional accountants posted by the AG (A&E) who are trained in works related accounting/ reporting and internal controls.

. Lack o f ownership o f the budget by the l i ne dept.

9 Large amount o f expenditure i s bunched towards the end o f the year to avoid lapsing o f grants. T h i s would result in funds being parked in the form of PLAs, advances. I t also results in poor implementation, as spending i s done in a rush without adequate planning. LJNTING & FINANCIAL R Reconciliation issues due to different set o f accounts

Accounting at Govt. level i s based on the concept that while l ine depts. prepare the bills, treasury makes the payment and AG undertakes accounting for the same. However t h i s three layer process gives r ise to its own problems mainly that o f reconciliation between the records kept by these different levels and providing up to date information to the decision- makers at various levels within the Govt.

NAL, CONTROLS (includin Internal controls

Although elaborate framework o f internal controls exists through various codes, rules, regulations i s in place. In practice compliance i s low.

Lack o f involvement o f h e l ine dept. in preparing and receiving final plan with budget results in a situation where the emphasis by depts. i s more on budget utilization rather than proper execution.

'ORTING

Since i t i s a LOC based project with the books o f accounts being maintained by AG (A&E), t h i s problem i s mitigated to some extent.

Budget execution i s a much larger issue, involving budget ownership by the executing dept.1 agency, developing better mechanisms for monitoring, etc. This w i l l be addressed as part o f the action plan prepared by the GoP for taken actions on the PFMA report.

AG (A&E) c o n f m e d that al l the Divisional offices o f the DWSS are timely in submission o f monthly accounts and these have also been reconciled upto June 2006. The AG also confirmed that they would be in a position to provide monthly accounts (by components) to the project by the 25" o f the following month (on a consolidated basis)

The Annual Work Plan (AWP) will be prepared by December each year for the following financial year. This w i l l form the input from the project for GoP annual budget exercise.

Since mainstream accounting system i s timely and the program aims to work across the sector, the project would rely on mainstream accounting procedures as t h i s would also facilitate receiving information on RWSS programs fhded through other sources. Adequate finance man- power at various levels o f the project [including a senior officer (at least Finance Controller level) to be deputed by the Finance Dept. and a full-time experienced chartered accountant.

Mechanisms to monitor timely reconciliation o f accounts wi th AG, i s part o f TOR o f the internal audit.

A formal Financial Management Manual has been developed to ensure clarity and uniformity on internal control procedures among different implementing agencies. An integrated manual has also been developed for GPWSCs, covering both financial management and

Annex - 7 Attachment 7 A

Poor fmancial management at GPs

There are weak accounting capacities at the large number o f PRIs, who are ill- equipped to maintain complex scheme-wise accounting.

Local Fund auditor is responsible for audits, but there are huge backlog o f audits.

S.No.

The ma in strategy of the program i s to re ly o n PRIs to b e the ma in instrument o f the implementation.

ACC(

7.

- WEA

8.

Issues raised in PFMS r e p o r t

Inadequate internal audit

N o regular process o f internal audit for l ine departments wh ich are primari ly responsible for budget execution.

JNTABILITY

External audits

Large number o f audit paras remains.

Large Dendency o f audits

Number o f organizations not getting audited due to inadequate staff strength.

Relevance t o the pro ject

compliance to different codes and procedures would be necessary.

Presently n o internal audit process exists at the project.

C u r r e n t status

Considering that there is n o record for monitoring and fo l low up o f outstanding paras at the Head Off ice is indicative o f l o w priori ty given to clearance o f audit paras which remain the responsibility o f individual divisions.

Last report o f AG available i s for FY 2004-05.

Since PRIs were to be the main instrument of implementation, a AAA study was specifically undertaken to assess their capacities. The results o f the study are in l ine with conclusions arrived in the PFM study.

Pro ject Specific Actions proposed

procurement aspects.

The SPMCs / D P M C s D O s would be covered by regular internal audits (with specified ToRs) by chartered accountant fm. GPs would also be subject to concurrent audits based on specific ToRs. Management action o f issues identif ied during these audits wil l be reviewed during supervision

Under the project, i t would be the responsibility o f SPMC to ensure early resolution o f a l l audit observations. These wil l b e regularly monitored during Supervision

Project fmancial statements wil l be audited by CAG through i t s office o f Punjab (AG). A project specific TOR will be agreed with AG to ensure that audit i s taken o n a t imely basis to comply with the Bank’s covenants.

Due to insufficient capacities at the PRIs, project has taken a mix o f Dept. approach with GPWSC (a sub- committee o f the GPs), specifically constituted for implementation o f Water & sanitation program. Addit ional measures include:

- A separate bank account for GPWSC to ensure t imely funds.

- Asst. accountants wil l b e engaged by GPWSC to provide accounting support.

64

Annex - 7 Attachment 7 A

Current status S.No. Project Specific Actions proposed

- firms o f chartered accountants wil l b e appointed to undertake audit o f expenditure incurred by GPWSCs.

- A Plan has been prepared for training GP fimctionaries and asst. accountants.

- A transparency and disclosure framework has also been agreed with the project.

Issues raised in P F M S report

Relevance to the project

65

Annex 8: Procurement Arrangements

INDIA: Punjab Rural Water Supply and Sanitation Project

1. The procurement to be made under the program wil l involve broadly the following:

(a) New piped water Schemes; (b) Rehabilitation and up-gradation o f existing piped water schemes; (c) Community Sanitation schemes l ike renovation o f village ponds and development o f Underground small borehewerage system; (d) Goods l i ke office equipment, computers, bulk water meters; (e) NGO/Consultancy services for project management, MIS, quality assurance, capacity building, engineering design and supervision, accounts and book keeping etc; and (f) Training.

Implementation Arrangements

2. The procurement under the program will be handled as under:

a) DWSS Divisions wil l be responsible for procurement o f common infiastructure o f MV water supply schemes and Community Sanitation schemes under the Project.

b) GP /GPWSC wil l be responsible for procurement o f SV water supply schemes and, intra-village works for MV Schemes with technical support f i om DWSS; and

c) SPMC/ DPMCs wil l be responsible for procurement o f al l goods mentioned in the paragraph entitled “Goods” under the “Procurement Arrangements” and consultancies under the project.

3. For procurement under the program, DWSS has developed a Procurement Manual. This Manual i s acceptable to the Bank and all procurement under the project wil l be handled as per the provisions o f this Manual. The Manual requires that procurement o f a l l goods, works and services wil l be in accordance with the Bank Guidelines o f May, 2004. Similarly, a l l Consultancy Services shall fol low the Bank Consultant Guidelines o f M a y 2004. The Manual also stipulates that for al l procurement following NCB, the Bank’s Standard Bidding Document as agreed with Go1 task force and as amended from time to time wil l be used as a base. For procurement following I C B and procurement o f consultancy services, the Bank’s SBD and Standard FWP wil l be used as a base and wil l be as agreed with New Delhi Office o f the Bank.

Procurement Arrangements

4. Goods: Goods to be procured under the program will generally be office equipment, computers, bulk water meters, goods and equipment for water quality testing laboratories, field kits, vehicles, I E C materials. Most o f the procurement o f goods wil l be small value and wil l fol low NCB/Shopping procedures. However, Bulk Water Meters will be procured fol lowing I C B procedures in two packages.

5. Works: The works under the program will be procured as under-: Water Supply Schemes

a) MV schemes: The procurement o f these works will be handled by DWSS except that intra-village works o f M V s will be procured by GPWSCs. Init ial ly out o f 5 water supply schemes under the pi lot batch, there will be 3 MV Schemes, the procurement for which will be carried out by DWSS and the remaining 2 schemes, which are SV schemes, wil l be procured by GPWSCs. The DWSS wil l procure the complete scheme including works

66

related to tube well (or canal as applicable), pumps, rising mains and OHSR in a single contract package. The procurement wil l be done on a single responsibility basis wherein al l materials and labor component wi l l be arranged by the contractor. DWSS will not do any procurement o f materials l ike cement, steel and pipes etc. for supplying to the contractor. The contractor will arrange al l the materials on h i s own as per the specifications stipulated in the bid document. The distribution works for the MV Schemes wil l be procured by GPWSCs as a separate package.

b) S V Schemes: The procurement o f SV Schemes wil l be handled by GPWSC. GPWSC may engage a single contractor for carrying out al l components o f the scheme (except supply and laying o f pipes for water supply distribution works which will be procured as a separate contract package). GPWSC wil l also have the option to procure the S V schemes in three slices [i] Boring and installation o f tube well (or the canal related works o f filtration plant, clear water reservoir etc.) [ii] Construction o f OHSR and c iv i l works and [iii] Providing and laying o f water supply distribution system. In addition GPWSC wil l also have an option to implement water supply distribution works by procuring pipes separately and installing them either by awarding labor contract or through the community.

6. the above mentioned arrangements. incorporated in the procurement o f the remaining schemes by DWSS and GPWSCs.

The procurement for the other remaining schemes under the project wil l continue as per However the lessons learnt from the pilots wil l be

Water Supply Rehabilitation and Community Sanitation Schemes:

7. The works for rehabilitation o f water supply schemes and o f the community sanitation schemes will be procured by DWSS Divisions (or GPWSC) following NCBBhopping Procedures.

8. Consultancies: These wil l include consulting services (national and international) for hiring o f Support Agencies, specialist f i rms and individual consultants (management, HRD, social development, engineering, monitoring, finance, etc); training institutions; and for sector pol icy and other studies. The major consultancies wil l be:

(a) NGOs/ Support Agencies for providing community development support to GPs through about 80 contracts, each o f value o f about US$80,000 and covering about 30 GPs each (total value US$6.4million); Another about 200 contracts o f values ranging from US$lOOOO- US$ 20,000 for providing only leadership and guidance to Village Support Teams for community mobilization in about another 30 GPs each (total value o f about US$4.0 M).

(b) Engineering design support consultancy: about 250 contracts o f values ranging between US$20,000 to US$40,000 each, (total value about US$7.5 M); One contract to Punjab Remote Sensing agency (value about US$lOO,OOO) for developing water quality and resource maps; about 30 contracts for independent construction and water quality monitoring o f values less than US$lO,OOO each.

(c) Management Support Consultancy: about 5 contracts o f value ranging between US$lOO,OOO to US$200,000, each

67

(d) Chartered Accountancy f i r m s to provide book-keeping and accounting support to project GPs (About 12 contracts each o f value less than US$lO,OOO each)- total value US$O.OS million. The other services wil l include consultant studies for developing sector information management system, benchmarking and sector progress reports, monitoring and evaluation studies, research, water quality testing services, and financial and technical audits. The project will hnd services required for training, workshops and seminars. The training and workshops wil l be arranged at the State, District and Block level, and the expenditure would not exceed US$3,000 per training module. The total training cost would be U S $ 4 million.

9. Short l is ts o f consultants for services estimated to cost less than US$500,000 equivalent per contract may comprise entirely o f national consultants in accordance with the provisions o f paragraph 2.7 o f the Consultant Guidelines.

10. Operating Costs: This wil l cover the cost o f operating project management units, one at the state level and one each in 19 Punjab Districts. The costs wil l include staff salaries (of only contract staff) and al l staff travel, conveyance and subsistence costs and operating costs such as office rental and other expenses, vehicle rentals, equipment maintenance contracts, etc. The contract staff requirement i s estimated to be about 5000 person months spread over 6 years. The project wi l l finance only the contract staff (About 90 staff position in SPMC and DPMCs together wil l be filled in with contract value o f each staff varying from US$15,000 to US$75,000 over 5 year period, but engaged in 2 years extendable contracts).

Assessment of the agency’s capacity to implement procurement

Procurement Legal Framework

The Constitution o f India (Seventh Schedule) l i s ts specific subjects in which the Union Government or the State Government alone can make laws and concurrent subjects in which both the Union and State Government can make laws.

11. Procurement o f goods, works and services by the Go1 and the State Governments i s regulated only by the contract governed by the Indian Contract Act and the Sale o f Goods Act and, in special cases, by the Essential Commodities Act.

12. A CPAR was prepared in the year 2001 which provides an understanding o f the national procurement system. Based on this assessment, the existing basic framework o f rules and procedures in India requires open tenders, open to al l qualified f i r m s without discrimination, use o f non-discriminatory tender documents, public bid opening and selection o f most advantageous tender taking al l factors (preferably pre-disclosed) into consideration. The weaknesses identified in the CPAR are: absence o f a dedicated policy-making department, absence o f a legal framework, absence o f credible complaint/challenge/grievance procedures, absence o f standard tender documents, preferential treatment in procurement and negotiation, delay in tender processing and award decision, and the two-envelope system.

68

Assessment o f existing procurement procedures and capacity o f DWSS and GPWSC

13. The review o f existing procurement policies and procedures was carried out for the rural water sector o f GoP to identify the area for strengthening and for allowing their use under the program. The assessment carried out suggests that the procurement adopted by PWD including DWSS originates from Punjab Financial Codes and Rules, PWD Code, Buildings and Roads Manual. All the codes and manuals are mandatory and some o f them are outdated. Rules and executive instructions o f the GoP now being followed have been drawn from these manuals and are documented. Standard practice i s therefore to rely more o n ru les and executive instructions o f the GoP rather than to Codes and Manuals which are not freely available and i ts interpretation i s vague.

14. Some o f the variations with respect to the practices acceptable to the Bank are, price variation permitted even for contracts o f 6 months execution, no provision o f insurance, defect liability period o f only 3 months, DWSS reserving right to supply cement and steel and other materials l ike pipes etc. in execution o f works, no provision to assess bid capacity, arbitration by department officials only, no RFPs for procurement o f consultants.

15. Other items identified during the assessment are, excessive time taken for finalization o f contracts, l ow delegation o f powers, negotiation with the bidders, no single document which includes al l rules, procedures and standard form to be followed.

16. addressed by the following actions:

The above deficiencies and the applicable deficiencies identified in the CPAR have been

(a) A Procurement Manual has been prepared which contains methods and procedures to be followed for procurement and are acceptable to the Bank. The provisions o f the Manual applicable for GPWSCs wil l be translated in local language and will be issued to GPWSCs. (b) GoP has opted to use the Standard Bidding documents o f the Bank as agreed with Go1 task force (and as amended from time to time) for al l procurement under NCB. (c) For I C B procurement, the Bank’s SBD wil l be used as a base and wil l fol low the Bank’s Procurement Guideline, M a y 2004. (d) For al l procurement o f Consultancy Services, the Bank’s Standard RFP as agreed with the NDO will be used as a basis and wil l fol low the Bank’s Consultant Guidelines M a y 2004. (e) In addition, i t has been agreed that for N C B procurement, the fol lowing wil l apply:

i)

ii)

iii)

iv)

v) vi)

vii)

Invitation to bid shall be advertised in at least one national daily newspaper, at least 30 days prior to the dead line for submission o f bids N o special preference wil l be given to any bidder either for price or for any other terms and conditions when competing with state owned enterprises, small scale enterprises etc. Except with prior concurrence o f World Bank there will be no negotiations o f price with the bidders, even with the lowest evaluated bidder. Extension o f bid validity will not be allowed without prior concurrence o f Wor ld Bank: (a) For the f i rst request for extension if it i s longer than 4 weeks and; (b) For al l subsequent requests for extension irrespective o f the period Re-bidding will not be carried out without prior concurrence o f Wor ld Bank Rate contracts entered into by DGS&D wil l not be acceptable as a substitute for N C B procedures. Such contracts wil l be acceptable for any procurement under Shopping procedures. The two or three envelope system will not be used

69

17. DWSS has specifically agreed that for procurement under the program, the materials like cement, steel and pipes wil l be in the scope o f work o f the contractor and DWSS or GPWSC will not procure these items separately to supply to the contractors.

18. However, for procurement to be done by GPWSCs, at their option, GPWSCs can separately procure pipes and get them installed through separate contracts. The works o f tube well (or canal as applicable) and OHSR will however be executed by GPWSCs through contracts only and cement, steel etc. wi l l be in the scope o f the contractors and not separately procured by GPWSCs for issuing to the contractor.

Methods of Procurement

19. Goods estimated to cost US$200,000 or more per contract and works estimated to cost US$l,OOO,OOO or more per contract wil l be procured fol lowing I C B procedures as per Section I1 o f the Procurement Guidelines. Goods estimated to cost US$30,000 or more but less than US$200,000 per contract and works estimated to cost US$30,000 or more but less than US$l,OOO,OOO per contract wil l be procured following N C B procedures stipulated in the Procurement Manual which generally meet the requirement o f Paragraph 3.3 o f the Guidelines.

20. Goods and works estimated to cost less than US$30,000 per contract may be procured following Shopping procedures stipulated in the Procurement Manual which meet the requirement o f Paragraph 3.5 o f the Bank’s Guidelines.

21. Goods and works estimated to cost less than US$l,OOO and up to an aggregate value o f US$lOO,OOO and the goods and works which meet the requirement o f Paragraph 3.6 o f the Bank Guidelines may be procured following Direct Contracting Procedures. Works that meet the requirement o f paragraph 3.8 o f the Guidelines may be implemented, with prior clearance from the Bank following Force Account methods.

22. Consultancy Services will be procured fol lowing Least Cost Selection, CQ, Single Source, QBS and QCBS methods stipulated in the Procurement Manual and in accordance with the Bank’s Guidelines. The services o f individual consultants will also be procured as per the provisions stipulated in the Procurement manual and the Bank’s Guidelines.

Review by the Bank

23. First contracts for the five pi lot villages to be implemented by DWSS, first three contracts implemented by GPWSCs on single responsibility basis, f i rst three contracts for the three packages if awarded separately by the GPWSCs, contracts for works estimated to cost US$500,000 or more, al l I C B contracts o f goods and a l l contracts o f US$lO,OOO and above awarded on Direct Contracting basis, wil l be subject to prior review by the Bank. In addition, first contract for procurement o f computers following N C B and first contract for other goods wil l also be subject to prior review by the Bank.

24. Consultancy contracts to be awarded to f i rms and estimated to cost US$lOO,OOO or more, contracts award to individuals and estimated to cost US$50,000 or more, wil l be subject to prior review. Further sole source contracts to f i r m s estimated to cost US$50,000 or more and to individuals estimated to cost US$lO,OOO or more wil l be subject to prior review.

70

25. compliance, the following arrangements wil l be put in place:

All other procurement wil l be subject to post review. Further, in order to ensure fiduciary

26. The persons dealing with Procurement in GPWSCs wil l be trained by DWSS, either directly or by hiring support organizations l i ke NGOdconsultants. Social oversight would be in the nature o f requirement o f approval o f a l l schemes by the Gram Sabha, access to community o f al l documents relating to procurement, and suo-mot0 disclosure by the GPWSCs o f contract award data and material procurement data, including cost o f procurement, and labor employment at the place o f work.

Audit

27. Since a significant portion o f the funds i s expected to be spent at level o f the GPWSC, firm o f CAS (2-3 for the entire state) wil l be hired by SPMC/ DPMCs for “Concurrent Financial Audit” o f the GPWSC expenditure. TORS o f these firms wil l also include review for compliance with procurement Procedures.

28. For post review o f the procurement to be done by DWSS and the GPSWCs, the project wil l hire a consultant, whose terms o f reference wil l be agreed with the Bank. The report o f this consultant wil l be made available to the Bank. The Bank wil l review the report o f the consultant. In addition, the Bank may also carry out the post review o f any contracts awarded by DWSS or the GPWSCs on sample basis and the sample wil l be decided by the Bank.

29. Further, in view o f the findings in the PFM report for Punjab, prepared by the World Bank and forwarded to the GOP o n M a y 19, 2006, a “Risk Mit igation Action Plan” and an “Action Plan for Enhancing Transparency and Accountability” has been agreed with GoP and included as Annex 8 A and Annex 11 respectively.

30. procurement procedures proposed for this project

The overall project risk for procurement i s considered high in view o f the changes in

Procurement Plan

3 1. The Borrower, at appraisal, developed a Procurement Plan for project implementation which provides the basis for the procurement methods. This plan has been finalized and agreed between the Borrower and the Project Team on October 25, 2006, and is available at N e w Delhi Office o f the Bank. I t will also be available in the Project’s database and in the Bank’s external website. The Procurement Plan wil l be updated in agreement with the Project Team annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.

32. Freauencv o f Procurement Supervision: In addition to the prior review supervision to be carried out from Bank offices, supervision missions annually to visit the f ield to carry out post review o f procurement actions are considered necessary.

71

1 2

Ref. Contract No. (Description)

PRW Procurement SSPI ofBulk G-3 Water Meters PRW Procurement SSPI o f Computer (3-21 (Server,

Laptop) for DPMCs

PRW Procurement SSPI ofBulk G-27 Water Meters

(b) I C B Contracts estimated to cost above US$200,000 per contract and al l contracts estimated to cost US$lO,OOO and above awarded on direct contracting wil l be subject to prior review by the Bank.

3 4 5 6 7 8 9

Estimat Procurement P-Q Domestic Review Expected Commen ed Method Preference by Bank Bid- ts

cost (yeslno) (Prior / Post) Opening Date

USD ICB N A Yes Yes 12.11.06 2 15,000

USD ICB N A Yes Yes 01.28.07 317,000

USD ICB N A Yes Yes 04.24.07 1.3 million

34. Consulting Services

1 2 3 4 5 6 7

Ref. No.

-NIL-

Description of Estimated Selection Review Expected Comments 1 Assignment 1 Cost Method 1 by Bank 1 Proposals 1 I (Prior I Post) Submission Date

-NIL- I -NIL- I -NIL- I -NIL- -NIL- 1 -NIL-

(b) Consultancy services estimated to cost above US$lOO,OOO per contract and Single Source selection o f consultants (firms) for assignments estimated to cost above US$50,000 wil l be subject to prior review by the Bank.

(c) Short lists composed entirely of national consultants: Short lists o f consultants for services estimated to cost less than US$500,000 equivalent per contract, may be composed entirely o f national consultants in accordance with the provisions o f paragraph 2.7 o f the Consultant Guidelines.

72

Annex - 8 Attachment 8 A

Rapid Procurement Review Report and Risk Mitigation Action Plan

1. Based on Audit and Inspection Reports o f AG for the periods December 2002 to October 2003, November 2003 to December 2004 and January 2005 to October 2005 for RWS Mohal i Division and audit paras o f November 28, 2005 and November 30, 2005 for Chief Engineer’s office; Response o f DWSS to some pending Audit paragraphs; and the Bank’s observations as a result o f review o f some procurement related files, the risks identified and an action plan to mitigate these risks as agreed with GOPDWSS i s as below:

Sr. No. 1. -

2.

- 3.

-

Observation Head

Lack o f clarity on Public Procurement Processes

Deficient Planning Monitoring, Evaluation and Reporting wi th respect to Projects.

Weak implementation

Suggested Mitigation Risks

Inefficient use o f resources; H igh cost; Loss o f confidence in the system; and Incorrect application o f rules and practices resulting in possibility o f collusions. Inefficient utilization or idling or waste o f resources; Diversion o f funds to expenditures not clearly identified or needed for the project; Loose controls and slippages; and Overall system failure to achieve targeted development. Poor quality o f work or product; Delays in completion o f work and cost overruns; Loss o f end-user confidence on the system; and Accrual o f undue exchequer loss.

Organize mentorship and training programs with emphasis on understanding and application o f rules to real cases; and Periodically update the general appreciation o f the procurement staff in global best practices.

Establish clear relation between project objectives and procurement; Establish clear monitoring procedures and mandatory reporting requirements; and ensure timely compliance and follow up formats wi th clear responsibilities.

Prepare implementation Manuals with clear guidelines on each stage o f project implementation with emphasis on the Contractual provisions and Rights and Obligations o f the parties; Establish training modules and ensure that al l staff attends these sessions on a regular mandatory basis; and Engage the Technical (Executive) staff also to share experience on implementation issues across the state and corroborate the decisions with established experts in the field to amend, in future, mistakes if any made.

Agreed Action

GoP will arrange for adequate training on regular basis through dedicated structured modules for the state agencies.

Provide structured training to the officials through reputed Institutions and improve the monitoring and reporting o f the projects for stricter and proper coordination o f project related procurement.

Provide structured training to strengthen the departmental expertise on implementation aspects and develop procedures and formats for pre-audit by the supervising officials to obviate slippages on contractual matters.

73

Annex - 8 Attachment 8 A

Sr. No.

4. -

5.

6.

2.

Observation H e a d

Non- transparency in decision making since the decision making is generally individual centric

Weak procurement Audit and Vigilance Fol low- UP

Inadequate Record keeping

Risks

Experience gained are not institutionalized resulting in inconsistent decision making; Loss o f credibil i ty in the process; and Possibil i ty o f inefficient procurement regime

Loss o f confidence in the system.

Loss o f confidence, n o n availability o f documents when required by supervising agencies and audit and vigilance, delays in responses

Suggested M i t i g a t i o n

Review and standardize Procurement process, including Disclosure Policy for procurement decisions; Establish and implement the Procurement Reforms Ac t ion Plan; and Include Civil Society oversight during the procurement and implementation phases to boost public confidence in the system.

Ensure prompt response to, and effective follow-up o f audit observations and effective monitoring o f the pending Audit and Vigilance cases.

Maintain a l l records duly catalogued and indexed in a manner and the f o r m which facilitates the Right to Information under the RTI Act, 2005 and ensure that a l l records that are appropriate to be computerized are, within a reasonable time and subject t o availabil ity o f resources, computerized and connected through a network a l l over the state o n different systems so that access to such records i s facilitated.

Agreed Act ion

T o develop systems and procurement procedures consistent with international best practices, engaging renowned experts. Ensure oversight o f independent observers during bid evaluation process and c i v i l society during implementation phase o f the projects as confidence building measures, in addition to an elaborate disclosure pol icy and compliance to RTI Act, 2005. The pending audit and vigilance cases to be pursued to conclusion and h t u r e cases to be closely monitored and followed-up with a time-frame for response and compliance. D W S S wil l maintain a l l records duly catalogued and indexed in a manner and the f o r m which facilitates the Right to Information under the RTI Act, 2005 and ensure that a l l records that are appropriate to be computerized are, within a reasonable time and subject t o availabil ity o f resources, computerized and connected through a network a l l over the state o n different systems so that access to such records i s facilitated.

Other specific mitigation measures which have been agreed are:

A Procurement manual has been prepared. The procedures stipulated in the Manual address the requirements o f transparency as under:

a) F B to be published in at least one English daily; b) At least 30 days time to be allowed from IFB to date of bid opening; c) Bids to be opened publicly in the presence o f bidders; d) Bid documents prepared by Go1 and agreed with the Bank will be used; e) Disclosure requirement as stipulated in the Bank Guidelines will be complied with.

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Annex - 8 Attachment 8 A

Actions by State

3. As some o f the systems and procedures need to be amended, the state needs to review the procurement rules, procedures and practices for updating / modification inline with the latest acceptable international practices. This wil l ensure that the procedures are followed uniformly throughout the State.

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Annex 9: Economic and Financial Analysis

INDIA: Punjab Rural Water Supply and Sanitation Project

Summary Economic Analysis

Cost benefit NPV= US$78 million; ERR = 23%

1. Background: The economic analysis has been carried out for entire SWAP Program. A specially designed household survey covering about 2500 households for SVS and M V S was carried out to get baseline information, and an additional sample survey o f 523 “control households” was undertaken to document data on the post-project scenario. The information from the “control households” has been used for assessing the likely benefits due to improved water supply and sanitation services. The cost side information i s based on a representative sample o f schemes selected across 84 villages (17 districts) on the basis o f sources o f water supply and the types o f proposed technology:

Cluster 1: SV Scheme tube well - N C category; Cluster 2: S V Scheme tube well - PC category; Cluster 3: SV Scheme canal; Cluster 4: MV Scheme tube well - N C category; Cluster 5: MV Scheme tube wel l - PC category; Cluster 6: MV Scheme canal source.

2. The economic analysis has been carried out separately for each o f the above six schemes and for the program as a whole, using the l ikely technology mix and the proposed phasing o f the program.

3. Project Benefits: The entire SWAP is justified on the basis o f direct benefits to more than 659,000 households in 3000 NC/ PC villages. The rate o f growth o f population i s considered to be 1.2% per annum. Based on the survey data and secondary sources o f information, the likely quantifiable benefits due to the proposed project interventions are: 0

0

0

0

0

0

0

0

Value o f time saved in water collection; Value o f incremental water supply; Value o f saving in recurring and capital cost (cost incurred to maintain the existing supply o f water in the ‘without’ project situation); Value o f health benefits due to reduction in incidence o f diarrhea, gastroenteritis and malaria; Value o f travel time saved due to shift from open defecation to household toilets; Value o f improved quality and yield o f cattle milk; Value o f time saved in water collection for cattle; Value o f fish sold due to renovation o f pond and f ish breeding.

4. The time spent on water collection has been obtained from the household survey data, with appropriate weights for dry and wet seasons. The expected time savings is about 0.38 hrs / household / day after the project implementation. An assumption o f 60% households preferring domestic connections and 40% preferring stand posts is considered for the analysis. The time saving has been valued at the opportunity cost o f labor, based on the number o f days o f gainful employment.

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5. Incremental (additional) water will be available for consumption to the project beneficiaries due to improvements in the existing service level. The incremental water consumption i s estimated as the difference between the designed supply and present water consumption, after the schemes are operational. In the absence o f a detailed demand curve, the ‘average demand price’ (approximated by the average o f the current and future cost o f water) has been used to value the incremental water. The value o f incremental water i s separately calculated for 65% households who are expected to completely shift from the existing source to a new source (at average demand price) and remaining 35% households who are expected to continue using the existing and the new source (at future value o f incremental water consumption).

6. The capital cost saved i.e. cost saved due to periodic rehabilitation or replacement o f the existing schemes, has been valued by taking the cost o f prevailing technology options (Hand pump, Motorized Hand pump and Submersible Pump) for the analysis. This cost will be avoided due to the project schemes delivering improved services. The saving o f this capital cost works out as Rs.7010 per household saved once in ten years. The corresponding saving in O M cost works out as Rs. 1 123 per household per year.

7. have been considered and the fol lowing three types o f benefits quantified: 0

The benefits from reduced incidence of malaria, diarrhea and gastroenteritis diseases

Reduction in treatment related expenses: Based on household survey and f ield data, the average expenditure incurred on medication per incidence o f diarrhea (Rs.250), gastroenteritis (Rs.300) and malaria (Rs.350) are taken for the economic analysis. The reduction in expenditure on medication o f diarrhea (21 %), gastroenteritis (39%) and malaria (37.5%) are taken as benefit f rom the project. Reduction in mortality and loss o f direct man days: The Disability Adjusted L i fe Years (DALYs) information on morbidity and mortality for India i s used for assessing benefits from reduced incidence o f above diseases, valued at the opportunity cost o f labor. Reduction in loss o f indirect man days: Based o n household survey and field data, the number o f indirect person days lost has been determined for the attendant, usually the female household member. I t i s assumed that indirect man days lost are 3 days for gastroenteritis, 2 days for diarrhea and 5 days for malaria, per incidence o f the disease. The reduction in indirect person days lost i s valued at the opportunity cost o f labor.

0

0

8. The travel time saved due to shift from open defecation to household toilets is considered as a benefit, and it i s assumed that the post project travel time spent by households with toilets is nil. This effective time saving has been valued at the opportunity cost o f labor. I t is assumed that 30% o f total rural households wil l construct toilets and the expected time saving i s 0.70 hrs / household day after the project.

9. The benefits from improved quality and yield of cattle milk have been considered as a result o f improved water supply services to the rural households. Data from the Department o f Animal Husbandry and field survey shows that on an average each household in a village o f Punjab has 3 cattle, split in an overall ratio o f 25 % cows and 75% buffalos. Out o f the cattle owned by villagers, about 24% cows and 34% buffalos produce milk and about 61% cow’s milk and 46% buffalo’s milk i s sold in the open market. Based on the data gathered, i t i s assumed that improved water supply in the villages wil l result in 5% increase in milk production along with improvement in the quality o f milk, benefiting 40% o f the villagers.

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10. The benefits due to time saved in water collection for cattle will accrue to about 30% o f the cattle for whom considerable time i s currently spent in taking the cattle to the water source. In 20% o f such cases, water is fetched from a distance o f 100 meters and time taken is 20 minutes per trip, with 2 trips being taken in a day. For the rest 10% cases, water i s fetched from a distance o f more than 100 meters and the time taken i s 35 minutes per trip. The time saved i s valued at the opportunity cost o f labor.

11. The benefits from selling offish due to renovation of pond are also considered for the economic analysis. The annual revenue generation through sale o f fish from one hectare pond is 2.5 tons @ Rs.30/-per Kg. This benefit will accrue to 1000 habitations / ponds.

12. Apart from the above benefits, other benefits expected from the proposed project include environmental and institutional strengthening and capacity building benefits. But these benefits have not been quantified.

13. Project Cost: The total proposed project cost including the water supply and environmental sanitation i s Rs. 1122 crores for the entire SWAP. The average unit cost (Rupees) o f capital investment per capita for SVS tube well (NC); SVS tube well (PC); SVS canal; MVS tube well (NC); M V S tube well (PC); M V S canal are: 1893, 1284, 1381, 1019, 2000 and 1750 respectively. A wide variation in cost i s expected across villages, depending on the number o f households in the village, new schemes to be provided, and the extent o f augmentation o f existing water supply schemes. The O&M cost depends on the type o f scheme and varies from Rs.2 to Rs.5 per k i lo liter o f water (includes bulk water and intra-village O&M cost for MVS). The above costs are extrapolated for the entire Program, based on the fol lowing phasing o f schemes: 3 % o f schemes expected in the f i rs t year, 7%, 29%, 30% and 32% in second, third, fourth and fifth year respectively. The software cost (including capacity building and program management) are extrapolated based on the projections for six years: 1.7%, 5.1%, 19.9%, 29.3%, 31.2% and 12.9% in first, second, third, fourth, fifth and sixth year respectively. The overall benefit-cost analysis is based on the phasing and m i x o f schemes as given above.

14. ERR and Sensitivity Analysis: The ERR o f the SWAP program i s estimated to be 23%. Sensitivity analysis based on assessed r isks indicate that the program i s able to absorb negative impacts and s t i l l generate positive ERR: a Significant decrease in benefits or increase in total costs: A 54% increase in total costs or

a 36% decrease in total benefits, or a combined 21% increase in total costs and decrease in total benefits reduces the project ERR to 12%; Delay in implementation : If benefits are delayed by 3 years, the ERR falls to 12%; Significant decrease in benefits or increase in water supply costs: A combined 26% increase in water supply cost and decrease in benefits reduces the project ERR to 12%; Failure o f schemes: If 50% o f water supply schemes fai l after 10 years the ERR reduces to 18.5%

a 0

a

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the COSZS and Decrease t u Be

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Fiscal Impact of Punjab RWSS Project on GoP Rudget

Source of Funds 1 2006-07 1 200748 2008-09 2009-10 2010-11 2011-12 'l'otal

expenditure will be more in the first three years, due to the completion o f ongoing and committed schemes. However, even during these years, this represents an increase o f only about 15% from the current levels o f RWSS sector allocations by the GoP from its own Plan Allocations. The net impact o f this on the GoP budget i s not expected to be substantial.

Table 2: GoP - Plan and Non-Plan Budget

Source: based on GoP’s Budget documents

17. Besides the counterpart funding and debt servicing, no additional recurrent O&M costs are expected to be borne by GoP since these would be met through user charges collected by the GPWSCs. In addition, i t i s also expected that with the successhl implementation o f the SWAP Program, it wil l be possible for the DWSS to reduce i t s current non-plan allocations (US$7.5 mi l l ion per annum) on operations and maintenance o f existing water supply schemes as schemes are transferred to GPs and reduction in staff costs because o f curtailment on new recruitment and gradual rationalization o f bulk water charges for MV schemes.

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Annex 10: Safeguard Policy Issues

INDIA: Punjab Rural Water Supply and Sanitation Project

Introduction:

1. The program is not expected to have significant adverse environmental and social impacts and has been classified as a Category B project. However, the program does have the potential to offer significant opportunities to hrther environmental and social development objectives. Safeguards Management Planning has been prepared following Social and Environmental Assessments by independent consultants.

Key Stakeholders and Consultation

2. Key program stakeholders were identified and consultations held to seek their views and incorporate the same into designing o f the program. Grassroots level stakeholders include: (i) benefiting households (including women, poor, Scheduled Castes, and the hamlets); (ii) GPs (men and women elected representatives), (iii) Junior Engineers o f DWSS, and (iv) other community based organizations. Block/ district and State level stakeholders are: the respective Panchayat Raj Institutions; other concerned l ine departments such as health, rural department, power, irrigation; district/ block administration; the DWSS; and non-governmental organizations, contractors/ suppliers and consultants. Departments o f Finance, Drinking Water Supply & Sanitation, Rural Development and Panchayat Raj , Science and Technology, Irrigation, Health, political leaders, NGOs and consultants. There have been consultations throughout the project preparation both by the Bank Missions as wel l as by the GoP.

Social and Environmental Assessments

3. Social Assessment comprised: (i) Beneficiary Assessment (BA), (ii) Stakeholder Analysis (SA), (iii) Institutional Analysis; (iv) Impacts Assessments; and (v) Risk Analysis. BA enabled building socio-economic profiles at the national, district, Upazilla, union and village level; the project beneficiaries’ assessment on the current status o f research/extensiodmarketing; and their linkages with governance/management mechanisms. SA resulted in identifying stakeholders at different levels and mapping the key expectations, issues and concerns as related to each stakeholder and the sub-groups thereof. Institutional analysis led to documenting and analyzing the existing institutional arrangements, conducting a SWOT exercise, and formulating inputs into designing o f the decentralized extension delivery system in consultatiodcollaboration with the stakeholders. This was followed by impact assessments and risk analysis. The results helped in designing the delivery system and addressing safeguards, thus ensuring positive and sustainable impacts .

4. DWSS, with assistance o f consultants, has conducted an Environmental Assessment (EA) study, which comprised an assessment o f the current status o f rural water supply and sanitation in the state, status o f the water resources availability for sourcing o f drinking water in terms o f quantity and quality, identification o f baseline environmental issues pertaining to rural water supply and sanitation, institutional and pol icy assessment, expected environmental impacts o f the proposed project interventions and proposed mitigation measures, development o f an Environmental Management Framework (EMF), and institutional arrangements for implementation o f the EMF.

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5. As a part o f this environmental assessment, DWSS has also carried out a water quality sampling in 40 villages across the state, whereby the quality o f the drinking water available in the village was tested both from the private sources as well as from the DWSS schemes. The quality was assessed in terms o f the standard physical, chemical and bacteriological water quality parameters, and supplemented by other tests (l ike pesticides and heavy metals concentrations) where warranted.

6. The findings o f the EA study indicate that while the proposed project interventions are expected to result in overall environmental and public health improvements in the state, potential adverse impacts could occur if the schemes are not properly designed, sited, implemented, and maintained. To this end, an environmental management framework (EMF) has been developed for identifying and addressing any possible adverse environmental impacts o f the project interventions. Institutional arrangements for the implementation o f the EMF have been agreed with the GoP.

Social Issues:

7. and strategic fronts. Major issues relate to:

The program recognizes that Punjab i s quite diverse on socio-economic, geo-physical,

(i) inclusion and equity - ensure fair and equal opportunities for participation in, and derive benefits from, the program by al l the communities and their subgroups such as scheduled caste, women, women headed households, residents o f international border villages; (ii) decentralization - devolving the decision making along with control over resources to the local se l f governments and user groups; (iii) customer base and demand generation - marketing the program and deriving home the health and hygiene benefits; (iv) capacity support/ building - not only government agencies need to transform themselves into facilitators, but arrange support and capacitate the LSGs and user groups.

Environmental Issues

8. Water Availability: Shallow groundwater has traditionally been the major source o f water for drinking, irrigation and industrial uses in Punjab. Owing to large-scale extraction o f groundwater for irrigation, combined with increasing demands in other sectors due to population and industrial growth, the shallow aquifers in large parts o f Punjab are in the state o f over- exploitation, resulting in a significant ongoing decline in groundwater levels. For a large number o f rural households which are not covered by public water schemes and which are dependent o n private sources l ike the shallow hand-pumps or tube-wells, the declining groundwater levels have adversely affected the water supply.

9. Although about 80% o f the current and proposed DWSS schemes in Punjab are based o n groundwater supply, the water is sourced from the deep aquifer layers, ranging in depth from 75- 300 M. This water supply for drinking water f rom the deep aquifer i s quite abundant from the perspective o f ensuring long-term source sustainability. About 20% o f the water supply schemes in Punjab are based on canal-water supply, and in some cases the water supply i s adversely affected during the periods o f canal maintenance shutdown.

10. Water Quality: The groundwater quality in many parts o f Punjab i s poor owing to natural presence of salinity and fluoride at concentrations exceeding the permissible levels for drinking water use. In addition, the water quality o f groundwater may also indicate bacteriological or chemical contamination due to inadequate treatment and disposal o f sullage, effluent from septic

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tanks or industrial discharges. According to DWSS estimates, about 44% o f the total 12,278 villages in Punjab suffer from poor water quality conditions. Specifically, (a) Salinity i s a significant problem in districts o f Bathinda, Sangrur, Faridkot and Firozepur; (b) Prevalence o f fluoride in groundwater is indicated in Ludhiana, Faridkot, Bathinda, Sangrur, Jalandhar and Amritsar; (c) Nitrate i s present in Patiala, Faridkot, Firozepur, Bathinda, Sangrur and Muktsar; (d) In addition, isolated pockets o f Ludhiana and Bathinda have been reported to have presence o f heavy metals and pesticides, respectively, in shallow groundwater.

11. Due to i t s higher depth and relative hydro geological isolation from the shallow aquifer, deep groundwater is expected to be free from the presence o f bacteriologicalkhemical contaminants.

12. Environmental Sanitation: 49% o f the rural households in Punjab have household sanitation coverage, and the main factors affecting the status o f sanitation in the villages are the following: (i) Wastewater generated by the households, including the wastewater from cattle- sheds, flows into open surface drains leading to stagnation in the lanes and by-lanes (ii) Without adequate arrangements for treatment and disposal, the wastewater often seeps into hand pumps, open dug wells and pipelines, and the water quality o f the village ponds has deteriorated leading to loss o f productive uses and contamination o f the shallow aquifer. (iii) Incidences have been reported o f effluent overflowing from the septic tanks and finding i t s way to the village drains. (iv) The presence o f stagnant water in the villages i s linked to the incidence o f malaria and other vector-born diseases. (v) Due to a combination o f poor environmental sanitation and poor personal hygiene, diarrheal diseases, cholera and typhoid cases have been commonly reported in the rural areas.

13. measures to address the issue o f sullage water disposal as well as solid waste management.

Plans have been made to identify, develop, pi lot and adopt several innovative sanitation

Safeguards Management

Social Safeguards:

14. N o lands will be acquired involuntarily and hence OP 4.12 i s not triggered. So i s OP 4.12 as there are no tribal (indigenous peoples) habitations in Punjab.. The program, however, does need lands and mechanisms o f securing the same are detailed below.

15. Land Availability: Land requirement arises for four purposes: FOR (i) water source; (ii) water treatment plants; (iii) construction o f ground level or overhead tanks (G/OHT) or cisterns; and (iv) Water transmission and distribution pipelines as well as sullage/ storm water drains. Water sources could be either ground water or imgat ion canal based. The ground water sources do require ‘land’ and so is the case with WTPs. In the case o f tanks, if they are constructed in a place other than that o f the ‘source, separate land wil l be essential. Transmission and distribution lines are laid mostly in public land or along public streets and no land needs are to be secured. In a few cases, pipelines may have to pass through private agriculture fields. Since the pipeline are laid at least 90 cms below ground elevation, no land acquisition i s needed, but permission f i om the land owner i s taken. If such permission is not forthcoming, then alternative pipe routing is used, even if it is more expensive to do so. This means, lands are required for SI N o (i), (ii) and (iii). For these, i t i s a tradition in Punjab that, the respective GP and/ or communities should make lands available, else, no construction i s planned. Most villages have some public lands and

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the same are made available. The same tradition wil l continue in respect o f the program construction too.

16. In the case o f MV water supply schemes, the village which houses the source and WTP wil l need to make available lands much more than the other participating villages. Then, the village offering land shall be compensated duly by other benefiting villages. The GP offering lands shall pay 30% less o f the required capital cost contribution and the same shall be borne duly by the other GPs.

Environmental Safeguards:

17. OPBP 7.50 (Proiects on International Waterways) Based on a technical consideration o f the proposed project interventions, the hydro geological characteristics o f the deep aquifers, the state pol icy on provision o f canal water for rural water supply schemes, and in the context of the Bank’s determination o f the applicability o f O P B P 7.50 (International Waterways) on a case-by- case basis, it has been determined that the proposed project activities do not trigger OPBP 7.50. This determination is based upon the provision that no bore-wells will be installed within 1 km o f the line demarcating the international border between India and Pakistan.

18. context o f RWSS Projects/ schemes in India in general, and Punjab, in particular. In addition, experiences from the Bank assisted RWSS projects in the last decade-and-a-half (across the states) were also taken into cognizance. In Punjab, the Department o f Drinking Water Supply and Sanitation (DWSS) i t s e l f has constructed some 2,000 deep tube wells so far. Further, it i s estimated that number o f tube wells dug for irrigation could be close to a mil l ion. Moreover, the Bank too has financed some 7 RWSS projects in India accounting for about 7,000 groundwater based schemes in the last decade and a half. So far, the issue o f cultural property has not arisen. Based on al l these, a decision i s made not to trigger the policy.

OPN 1 1.03 (Cultural Propertv) The mission deliberated extensively on this pol icy in the

19. round adequacy o f water supply and long-term sustainability o f the resource. More specifically: a

Water Ouantitv. Source selection wil l be conducted with due regard to ensuring year-

The current DWSS design practice ensures that water supply for ground-water based schemes is sourced from deep aquifer, with depth ranging from 75 M-300 M. The EA study, supplemented by inputs from regional groundwater experts, indicates that the current and expected future drinking water abstractions f rom the deep aquifer are small compared to their estimated sustainable yield, and therefore source sustainability for deep groundwater-based schemes i s ensured. In areas where deep aquifers are saline, canal-based schemes will be implemented, i f adequate year-round supply can be guaranteed through storage or other measures.

a

20. Water Oualitv. The sitting, planning, design, and operation o f the schemes wil l ensure that source selection is conducted with due regard to water quality o f the source, and that water quality at household delivery level meets the drinking water norms. More specifically: a Due to its higher depth and relative hydro geological isolation f rom the shallow aquifer,

deep groundwater i s expected to be free from the presence o f bacteriologicallchemical contaminants. Conventional water quality parameters for DWSS’s deep groundwater- based schemes indicate acceptable water quality for drinking purposes. However, in view o f the traditional emphasis on shallow groundwater quality and due to emerging concerns regarding possible presence o f industrial or agricultural chemicals in

a

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some locations, the project wil l commence and support a systematic assessment o f deep groundwater quality in the state. Effective and regular disinfection, as well as preventive and corrective maintenance o f water distribution systems wil l be ensured. A protocol for regular water quality testing and control has been developed, which will be implemented through the operations phase o f the water supply schemes.

0

0

21. Sanitation. The project will support interventions on environmental sanitation to ensure that the benefits o f improved water supply are not compromised by poor personal hygiene standards, and inadequate drainage, sullage/wastewater treatment and disposal. More specifically: (i) The project wil l support sustained I E C campaign to create and enhance awareness on hygiene aspects pertaining to hand-washing, water collection, storage and handling practices (ii) The project wil l support, on demand basis, drainage improvement schemes for improving sullage drainage, addressing effluent overflow from septic tanks into village drains, installing small-bore sewers / sewerage systems and undertaking ponds rehabilitation.

22. In addition, the EMF prescribes measures to ensure that: (i) no borewells are installed within 1 km o f the line demarcating the international border between India and Pakistan, to prevent the possibility o f cross-border groundwater impacts. (ii) the temporary adverse environmental impacts associated with construction-stage activities are systematically addressed in the project-sponsored schemes.(iii) appropriate environmental monitoring indicators are integrated in the overall project M&E systems (iv) adequate resources are provided for environmental awareness and capacity building in village communities, GPs and DWSS staff (v) adequate resources are provided for a thorough assessment o f the water availability and quality in deep aquifers

Implementation Arranpements:

23. Safeguards implementation and oversight arrangements have been developed keeping in view that the proposed program will adopt a sector wide approach (SWAP) irrespective o f hnding sources. Essentially, the safeguards management will form an integral part o f the overall scheme cycle including sub-project appraisals and monitoring implementation. Towards ensuring this, DWSS will re-define i t s role, changing from builder /provider to that o f a facilitator/ partner and wil l shoulder responsibility for state wide leadership, collaboration and management o f RWSS sector including undertaking IEC, safeguards, arranging capacity support, Quality Assurance as wel l as monitoring and evaluation o f outputs and outcomes. To enable this transformation, the exiting DWSS structure has been re-organized such as to provide for two, rather independent, channels - one, the Program Facilitation and Monitoring Wing, and the other, Operations Wing. The former, with an unitary structure (through the district), a State Water and Sanitation Program Management Cel l (SPMC) and a District PMC, wil l be responsible, among others, for safeguards management. The operations Wing wil l be largely the current DWSS set-up with Regional Chief Engineers and the existing offices o f Circles, Divisions and Sub-divisions. They will be responsible for providing technical support, including safeguards management, to the GPs and communities. The DPMCs will be guided by a District Water Supply and Sanitation Committee (DWSC) headed by the President o f the Z i l la Parishad. Grassroots level management decision making including construction fund management and procurements will rest with GP and the associated sub-committee, GPWSC.

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24. The SPMC and D P M C staff wil l include Environmental-cum-Social Development Coordinator charged with the overall responsibility o f ensuring the implementation o f the environmental and social development aspects. DWSS being chiefly an Engineering Department, non-engineering skills necessarily needs to be supplemented. For this, the Cell wi l l outsource professional management consultants, at the state as well as district levels. These consultants will: e Provide experienced personnel in managing community development interventions

including safeguards, as well as monitoring and evaluation including process monitoring and impact assessments. Support Program Director in developing and guiding implementation o f capacity building, IEC, and communication. Assist the Program Director in the preparation o f progress reports as wel l as in consolidating the key learning, document the same and disseminate i t statewide.

e

e

25. The consultants will, in particular, assist the SPMC in: (i) developing and disseminating alternative mechanisms to reach and work with the communities viz., participatory management techniques and methodologies as well as safeguards; (ii) drawing strategies and implementation action plans transparency, inclusion and accountability; (iii) designing and adopting change management approaches, in particular, and capacity building, in general; and (iv) designing, rol l ing out and maintaining a web site reflecting status and progress in the RWSS sector in the state. I t is expected that the DWSS will acquire/ learn the non-engineering skills (supplemented by PMC) within 2-3 years and thereon the same will be managed in-house by DWSS.

26. Additionally, a state level environmental resource agency wil l be contracted to provide environmental capacity building, to conduct environmental audits and to provide technical support as and when required. Similarly at the district level, each o f the 18 D P M C wil l include an Environmental/ Social Development Specialist in their staff, who wil l be responsible for providing environmental support and supervision to each project-scheme in the district. In addition, a panel o f environmental experts will be constituted in each district to provide technical support on as required basis. At the village level, the awareness and capacity for environmental management in the local GPWSC and SO would be enhanced through a targeted training and capacity building program.

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Annex 11: Action Plan for Enhancing Transparency and Accountability

INDIA: Punjab Rural Water Supply and Sanitation Project

1. The recent enactment o f the Right to Information Act (RTI) has created additional opportunities for enhancing transparency and accountability. Arrangements under this project wil l make use o f this opportunity to enhance disclosure o f information facilitating c iv i l society oversight resulting in increased accountability. Enhancing disclosure wil l require a change in mind-set and behavior that can be encouraged with incentives and remedies. The agreed action plan builds upon the numerous actions that have been agreed under this project to enhance transparency and accountability actions for procurement and other activities under the Project.

2. The key elements o f this strategy include the following: a) Enhance disclosure o f information; b) Facilitate c iv i l society oversight; c) Develop a creditable system to handle comments, suggestions and grievances; d) Define clearly incentives and remedies available; e) Develop monitoring indicators for compliance to the above agreements and for impact on outcomes

a) Enhanced disclosure of information

3. f ine tuned and details developed during implementation based on the experience gained.

The project has developed the following outline o f a disclosure pol icy that wil l be further

Outline o f the Disclosure Policy and Action Plan

4. The intent o f the disclosure pol icy i s total compliance with the RTI Act both for on- demand disclosure and suo mot0 disclosure. This enhanced disclosure o f information to the citizens i s expected to facilitate c iv i l society oversight. However, the information needs to be maintained and provided in a manner that will maximize the utility o f the information. The following table details the suo mot0 disclosures by DWSS/ GoP.

Topics Project Scope

Community and Infrastructure Development

Environmental Management

Documents to be disclosed Project Appraisal Document o f the Bank Financed Project . Village selection 1. No. o f applications received 2. No. o f Priorit ized villages 3. List o f Implementation phase

proposals approved by S W S M and D W S C with salient features o f the scheme.

4. Scheme completion report for each scheme . Status o f coverage o f habitations . User satisfaction surveys

Environment Assessment Summary

Frequency Once when Project Agreement i s signed for each batch I scheme

Yearly Once in every 2 years Draft f ina l report has been disclosed. Complete EA report finalized after appraisal would be disclosed and remain

M o d e . D W S S website.

DPMC & ZP office notice board /DWSS website

. D W S S website . D W S S website 1 World Bank’s In fo shop. 2 Punjab Environment Information

3 D W S S website system’s website.

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Topics

Financial Management

Procurement

Documents t o be disclosed

Database on District wise water resource maps including water quality o f each dnnking water resource.

Periodic report o f water quality including testing for heavy metal & pesticides.

At Proiect level i) Project Financing Plans ii) Budgetary allocation for the project iii) Progress report (financial and physical) iv) Financial Management Guidelines

At GPWSC level iv) Approved Cost and financing p lan o f individual schemes v) Different stages o f contract award (bids, offers, evaluation, selection, award) vi) Expenditure statement

vii) G r a m Sabha meeting notices

Contracts awards for ICB [and LIB if applicable] containing fol lowing information: [a] Name o f each bidder who submitted the bid [b] bid prices as read out at bid opening [c] name and evaluated prices o f each b id that was evaluated [d] name o f bidders whose bids were rejected and the reasons for their rejection; and

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Frequency available throughout the entire project cycle. A systematic assessment o f deep ground water quality & canal based resources f r o m each water supply scheme in the state i s being conducted once in the entire project cycle as district wise assessments are completed the database would b e made available to public through website . Water quality monitoring including testing for heavy metal & pesticides would be conducted. Annual updates would be made available to public through website Before the start o f the project Yearly Quarterly/ Annually

Before the start o f the project

Before the scheme i s off icial ly launched As per the need

Mon th l y

Prior to notice period requirement o f call ing a Gram Sabha Within 2 weeks o f receiving the Bank’s n o objection to the recommendation o f contract award

M o d e

1 Punjab Environment Information system’s website.

2 D W S S website 3 Off ice o f SPMC & D P M C

1 Punjab Environment Information System’s website.

2 D W S S website 3 Off ice o f SPMC & DPMC

DWSS website throughout the l i fe and updated regularly. DWSS website. DWSS website.

DWSS website throughout the l i fe.

Displayed o n a Sign board at Sites I GPs

Displayed o n a Sign board at Sites IGPs

Displayed o n a Sign board at Sites IGPs Displayed o n a Sign board at Sites IGPs

UNDB online, dg Market and website o f DWSS. In this publication D W S S shall specify that any bidder who wishes to ascertain the grounds o n wh ich i ts bid was no t selected should request an explanation f r o m DWSS. The DWSS shall promptly provide an explanation o f why such bid was no t selected either in writing o r in a debriefing meeting, at the option o f DWSS.

Topics Documents to be disclosed [e] name o f the winning bidder, and the price it offered, as well as the duration and summary scope o f the contract awarded

If after publication o f results o f evaluation DWSS receives protests /complaints from the bidders, and if as a result o f analysis o f such protests DWSS changes i ts contract award recommendation and the Bank accepts such changes, then the revised contract recommendations containing al l the above details shall be published.

Contract awards for National Competitive Bidding: Publication o f results o f evaluation and the award o f contract consisting o f the same information as mentioned above for I C B and LIB.

Contract awards for Direct Contracting containing the following information: [a] Name o f contractor [b] Price [c] Duration; and [d] Summary scope o f the contract

Contract award for consultancies containing the following information: [a] the names o f al l consultants who submitted proposals; [b] the technical points assigned to each consultant; [c] the evaluated prices o f each consultant; [d] the final point ranking o f the consultants; [e] the name o f the winning consultant and the price, duration, and summary scope o f the contract. The same information shall be sent to al l consultants who have submitted proposals.

Contract awards for selection based on the Consultants Qualifications and single source selection containing the following information: [a] name o f the consultant to which the contract was awarded [b] theprice [c] duration and [d] scope o f the contract

Overall project procurement plan including i t s updates.

Frequency

Within 2 weeks o f receiving the Bank’s no objection to the revised recommendation o f contract award

Within 2 weeks o f completion o f evaluatiodreceiving the Bank’s no objection to award.

Quarterly in the format o f a summarized table covering the previous period

After award o f the contract.

Quarterly in the format o f a summarized table covering the previous period

After the Credit i s approved.

Mode

UNDB online, dg Market and website o f DWSS.

DWSS website.

UNDB online, dg Market, DWSS website

UNDB online, dg Market, DWSS website.

UNDB online, dg Market, DWSS website.

Bank’s website, DWSS website.

90

Topics Documents to be disclosed Frequency M o d e

b) Facilitate civil society oversight

GPN, IFB, EO1

Procurement Manual after approval by Wor ld Bank

i) .

ii).

iii).

iv) .

VI.

vi).

vii).

4

6.

As applicable.

Dec’06 website, Local Newspapers. UNDB online, dg Market, DWSS

DWSS website

5. Civ i l Society Oversight is in-built into the project’s resources allocation as well as decision making both at grassroots and apex levels o f implementation and the same are described below :

Village Selection. Villages are not selected by any external body. GPs desirous o f participating in the project would select themselves and init ial ly seek an endorsement from the Gram Sabha and subsequently apply to participate in the project. Applicant villages wil l be prioritized based on 5 key parameters and the same will be used for selection. Citizen Bodv. Control over resources and decision making in respect o f planning, procuring, find managing, implementing and operating and maintaining, rests with a Village level Citizen Body, GPWSC, a broad based institution with their members selected elected from the Gram Sabha. Due representation to women, scheduled castes and other influential persons have been made. GPWSC wil l display the project details including financial particulars prominently on a notice board and update the same on a monthly basis. Social Audit. Provision for Bi-annual social audits from GPWSCs and other citizens, with assistance from NGOs have been provided for. NGO Participation. Project provides for enlisting the services o f NGOs for providing community development support to the GPWSC and communities as wel l as build their capacity such as to enable them exercise due diligence and ensure quality/ cost control. Tender Management. GPWSC members form an integral part o f a committee responsible for tendering processes and award o f contract handled by themselves as wel l as DWSS. All payments wil l be made subject to approval from GPWSC (in the case o f SV schemes) and concurrence from Scheme Level Committee (SLC) in the case o f MV schemes. MOUs. A M O U will be signed among GPs, GPWSCs, SLCs and DWSS in respect o f each scheme outlining role and responsibilities o f each actor. DWSC. At the district level, a DWSC i s set up, headed by Zi l la Parishad Chairperson and with representation from GPs, Block Panchayats, district administration, RWSS experts, district c iv i l surgeon, and representatives o f the departments o f Education, Information and Publicity as we l l as Members o f Legislative Assembly and that o f the Parliament. This committee wil l oversee the program and be responsible for endorsing village prioritization, annual plan reviews and implementation phase approval. This committee wil l also address grievances (if any).

Develop a creditable system to handle comments, suggestions and grievances

A system wil l be developed to handle comments, suggestions and grievances. This system will include the following features:

establish a comments, suggestions and grievance handling system in DWSS with clearly defined responsibilities and procedures

91

establishing a “monitoring system” database** to monitor adherence to the standards

updating the “Procurement monitoring” data base on a monthly basis listing and discussing al l cases received and actions taken in the monthly report agreeing a standard protocol with appropriate triggers for carrying out investigation by

listed in the Procurement Manual. This database would be online with restricted access.

appropriate agencies including and actions to be taken

** The database should specifically allow: (i) complete and adequate record keeping and retrieval o f a l l cases; (ii) cases received, responses sent and actions taken by dates; (iii) monitor response t ime and compare against an agreed response standard, and (iv) publ ish a monthly, quarterly and an annual report based o n an agreed format

Transparency / Disclosure aspect A system needs to be developed to handle comments, suggestions and grievances, which wil l have clearly defined responsibilities and procedures.

AN ACTION PLAN Action to be taken

1) A comments, suggestions and grievances handling system, wh ich includes maintaining a project l o g and filing to monitor status o f fo l low up o f each received comments, suggestions and grievances, will be established by the DWSS. The mechanisms wil l include provision for fo l low up investigations o f substantial complaints by the internal Auditors, o r third party audit to ensure independency and reliabil i ty o f the system.

2) component wil l be included at the DWSS web site

A comments, suggestions and grievances handling

3) Updating the database & tracking o f the status o f investigations and measures taken will b e reported in monthly reports to management and the Bank. Complaints deemed possible serious infringements m a y b e further investigated by the Bank.

Time line

June, 2007

Sei 2007

Dec, 2007 and then annually

Action By

SPMC

SPMC

SPMC

d) Define clearly incentives and remedies available

7. If as a result o f any such information provided by the member o f the public, cost savings are achieved or charges o f misconduct and misappropriation are proven, such members o f the public wil l be awarded some recognition such as a certificate o f excellence or felicitation at a public ceremony with or without a monetary reward, DWSS will formulate general pol icy in this regard and after due approvals o f the GoP, announce these to the public as aforementioned. Simultaneously strict disincentives wil l be announced for the erring members o f the departments.

8. DWSS will establish the remedial actions and sanctions for cases o f fraud and corruption that are reported and for which evidence i s found and charges established after due process o f investigation. This wil l include sanctions to government staff proven to be involved in such cases.

9. Information regarding such cases, where lessons are learned and f inds are retrieved, wil l be widely published for information o f the members o f public. Strict procedures to ensure anonymity o f informants will be enforced.

92

Transparency I Action to be taken Time line Disclosure aspect Disclosure o n 1 A policy describing incentives and June, 2007 incentives and sanctions available

sanctions wil l be developed.

2 Publishing the policy. Sept, 2007

e) Develop monitoring indicators for compliance to the above agreements and for impact on outcomes

Action B y

DWSS

DWSS

10. The Bank will monitor implementation o f these elements, through inter alia:

Disclosure o f information wil l be supervised mainly through (a) checking the frequency and comprehensiveness o f website updates and, (b) checking the distribution o f materials to key participating civil society groups & Panchayats (c) checking the comprehensiveness o f information available at Public information Kiosks. C iv i l society overs ih t wil l be supervised through reviewing the reported inclusion o f C iv i l Society Organizations (CSOs) in project activities, particularly their roles in monitoring procurement and construction. More precise indicators shall be developed during the first year o f project implementation phase. The complaints handling system and the system o f sanctions and remedies wil l be supervised mainly through (a) periodic review o f statistics based on records kept on the website o f DWSS and (b) field level checks to ensure that problems are being reported and acted upon.

93

Annex 12: Decentralization and role of PRIs

INDIA: Punjab Rural Water Supply and Sanitation Project

Decentralization and Role of Panchayati R a j Institutions in Punjab'

1. Following the 73'd and 74th Constitutional Amendments, decentralization efforts in the country have received increased emphasis in several states. Decentralization to Panchayati Raj institutions (PRIs) in Punjab is also gathering momentum. For rural water supply and sanitation, involvement o f local communities in planning, implementation and O&M management i s critical, and therefore, direct and effective participation o f GPs and even lower tiers at the habitation level, through GPWSCs, i s a necessity. This provides an opportunity under the proposed Punjab Rural Water Supply and Sanitation Program to strengthen the lowest tier o f PR institutions in the state.

2. Key Legislative Landmarks on Decentralization in Punjab. The village Panchayats in one form or other existed very early in the villages o f Punjab. The three t ier Panchayati Raj System was introduced in the state in 1961. The existing Act governing the Panchayati Raj Institutions i s the Punjab Panchayati Raj Act 1994 which replaced the earlier Acts. The f i rst State Finance Commission (SFC) to make recommendations regarding principles for distribution o f net proceeds o f taxes levied by the State Government between the State and Panchayati Raj Institutions was appointed in July 1994 and i t s recommendations covered the period o f 5 years from 1996-97 to 2000-01. The second State Finance Commission was set up in September 2000 and recommendation covered the period up to 2005-06.

3. The Organizational Set-up of the Three Tier PR System in Punjab. In Punjab, the PRIs are within the mandate o f Department o f Rural Development and Panchayats (DRDP). The three-tier organization set-up o f the Panchayati Raj Institution in Punjab i s shown in figure 1.

4. GPs - The bottom tier o f PRI i s the Gram Sabha comprising o f every person who i s entered as voter in the electoral role prepared by the State Election Commission pertaining to any revenue village or group o f contiguous villages having population not less than 2006. More than one Gram Sabha can also be constituted with in the boundaries o f the same revenue village if the population i s above 500. Each year every Gram Sabha shall hold two general meetings one in the month o f December after the harvesting o f Swani crop called the Swani meeting and in the month o f June after the harvesting o f Har i crop called the Hari meeting. The quorum for the Gram Sabha i s one fifth o f the total number o f members. The development plans and budget estimates o f the GPs are discussed and approved in Swani meeting. The development plans o f the previous year and statements o f accounts are taken up in Hari meetings. A schedule for the Gram Sabha meetings for each o f the village in the entire Block wil l be prepared in advance and published. The dates for the meetings are thus permanently fixed and prominently displayed in the village. BDPOs give wide publicity to the schedule o f the Gram Sabha meeting. A representative o f the BDPO will attend the Gram Sabha meeting. The Punjab Panchayati Raj Act provides that in the event o f the Sarpanch failing to hold two consecutive General Meetings o f the Gram Sabha, the Sarpanch shall automatically cease to hold office7.

This note i s slightly modified version o f the note prepared by the DWSS and the Project Management Consultant. As per 2001 census the rural population o f Punjab i s 160.96 lakhs living in 12,278 inhabited village comprising o f

Section 5 (2) o f the Punjab Panchayati Raj Act

6

14,605 habitations. There are 12,447 GPs in the State. 7

94

5. Each Gram Sabha elects from i t s members (Single constituency) a GP consisting o f a Sarpanch and Panches (Multi member) based on the population*. The GP i s the Executive Committee o f Gram Sabha and is the body corporate.

Chairpersons o f Panchayat Samitis in the district

ctly elected numbers o f the ZP including

Officer o f the rank of District Development and Panchayat Officer as Deputy Chief Executive Officer Panchayat Samiti - 141 Nos. Block level

Source: Statistical Abstract of Punjab, 2004.

6. The Panchayat Secretary i s in-charge o f the office o f the GP and performs the roles under the control o f the Sarpanch and i s responsible to the GP. The GPs in a Panchayat Samiti area are organized into Panchayat Circles o f 3 contiguous GPs. One Panchayat Secretary is in-charge o f a circle. When the GPs are small, 5 GPs constitutes one Panchayat Circle. The Panchayat Secretary convenes the GP meetings under the direction o f Sarpanch, records proceedings, and maintains account books such as the cash book and stock register. The Panchayat Secretary also acts as the link between the GP and Panchayat Samiti. The Junior Engineers are attached to the BDPO and work under the supervision o f Sub-Divisional Engineers. The Junior Engineer assists the GPs in preparing technical estimates, inspecting the works implemented and in issuing utilization certificates.

7. Section 25 o f the Punjab Panchayati Raj Act, 1994 provides for constitution o f Amenities Committee to perform functions in respect o f education, public heath, public works and other finctions o f GP. The Sarpanch i s the ex-officio member and chairman o f the committee which can have co-opted members as wel l as the prescribed number o f women and Scheduled Caste members.

8. Punchuyut Samiti - The Panchayat Samitis are constituted for every block and consist o f 15-25 members directly elected from the territorial constituencies in the Panchayat Samiti area. The Block Development and Panchayat Officer (BDPO) i s the ex-officio executive officer o f the Panchayat Samiti.

For Population 200 to 1000 five Panches, 1001 to 2000 seven Panches for population 2001 to 5000 nine Panches,

95 5001 to 10000 eleven Panches and exceeding 10000 thirteen Panches.

9. The BDPO office has two branches, General Branch and Accounts Branch. The General Branch to which Panchayat Secretaries are attached with are the employees o f the Panchayat Samitis and i s under the direct administrative control o f Panchayat Samiti. The Accounts Branch consists o f accountant, Gram Sewaks, two Junior Engineers etc. and are treated as on deputation to the Panchayat Samiti. The Panchayat Samiti also has some staff from other departments l ike Industries department, planning department etc.

10. Zila Parishad - Zila Parishad (ZP) i s the highest tier having jurisdiction over the entire district excluding the areas o f municipality, cantonments area or notified area. The ZP consists o f one member each directly elected from temtorial constituencies o f the district, all chairpersons o f Panchayat Samitis, members o f L o k Sabha and members o f State Legislative Assembly representing a part or whole o f the district.

1 1. The ZP Chairperson and Vice-chairperson are elected from the directly elected members o f Zila Parishad including Chairpersons o f the Panchayat Samitis. The chairman o f the Zi la Parishad i s also the Chairman o f the DRDA.

12. The Additional Deputy Commissioner (Development) i s the Ex-officio Chief Executive Officer o f the Zi la Parishad and Officer o f the Department o f the Rural Development and Panchayats not below the rank o f a District Development and Panchayat Officer i s the Deputy Chief Executive Officer. The staffing pattern except the post o f CEO and Deputy CEO differ from district to district. Some districts have less than 10 numbers while some other have up to 100 staff in the Zi la Parishad.

13. Transfer of Functions to PRls. As per the Punjab Panchayati Raj Act the GPs are empowered to construct, repair and maintain community assets based on “the availability o f funds at i t s disposal”. While Zi l la Panchayats do not have any specific related functions, the Act stipulates the “establishment, repairs and maintenance o f rural water supply schemes, prevention and control o f water pollution, and implementation o f rural sanitation schemes’’ as duties o f the Panchayat Samitis. However, these may be overridden by the State Government through general or specific orders. The hnctions relevant to the water and sanitation sector for GPs include: 0

0

“any public place including its sanitation and drains; “wells, water-pumps, baolies, springs, ponds and tanks for the supply o f water for

“supply o f water for domestic use and for cattle; “prevention and control o f pollution; “cleaning o f public roads, drains, tanks, wells and other public places; “construction and maintenance o f public latrines; and Management and control o f washing and bathing ghats.

drinking, washing and bathing; 0

0

0

0

0

14. Punjab Council o f Ministers decided in 2003 to transfer the functions o f several departments to the PRIs. In spite o f this major pol icy decision, the other departments are functioning independent o f the PRIs with their own organizational structure. Departments l ike Agriculture, Horticulture and Animal Husbandry are totally outside the PRI structure. Each o f these departments has i t s own offices and manages their program through their own de- concentrated offices at district or lower levels.

15. To implement the decentralization pol icy approved by the Council o f Ministers, the GoP has devolved the functions and responsibilities for implementing the schemes and programs o f the following six departments o f the state to the PRIs:

96

e

e

e

e

Department o f Social Security, Women and Child Development Department o f Welfare o f Scheduled Caste and Backward classes Department o f Water Supply and Sanitation Department o f Rural development and Panchayats

Department o f Health and Family Welfare e Department o f School Education e

Criteria - Rural population o f the districts as per 2001 census - Short fal l o f per capita own income o f the GPs in the districts as compared to per capita

own income o f al l the GPs in the state - Population o f Scheduled caste in rural area o f the districts

Rural population in the sub-mountainous areas o f the district -

16. D W S f - GoP has taken the decision to transfer 876 SV rural water supply schemes being run by the DWSS to the GPs. Out o f the 774 schemes handed over to the GPs about 308 are operating the schemes. DWSS i s studying the experience and is in the process o f drawing up detailed guidelines for smooth transfer and successful O&M o f the scheme by the GPs.

Weight age 65% 15%

15% 5%

17. Department of Rural Development and Panchayats -The three tier PRIs implements various schemes l ike Swaranjayanti Gram Swarozgar Yojna, Sampuran Gramin Rozgar Yojna, Indira Awaas Yojna, Pradhan Mantri Gramodaya Yojna, Rajiv Gandhi Pendu Jan Sehat Kalyan Yojna and Consolidated Rural Development Scheme.

18. Transfer of Functionaries to PRIs. Consequent to the transfer o f functions, the deployment o f corresponding staff to the PFUs for the effective and efficient delivery o f the various services i s being attempted. GoP is looking at the deployment o f staff to the PRIs both from re-deployment o f those already working in various line departments and those to be recruited fresh. GoP has prepared a detailed proposal to be implemented in a phased manner and has been circulated among the departments for their consideration, acceptance and implementation. The powers o f minor punishment to the employees transferred wil l be vested with the PRIs for effective control and management.

19. Punjab SFC on the transfer o f financial resources to the PRIs as below:

Finances of PRIs. The Govt. o f Punjab has accepted the recommendations o f the second

4% share o f net proceeds o f a l l state taxes to be allocated between PRIs and ULBs in the ratio o f population; the share o f GPs i s 67.5%. The ZPz and PSs will not receive any share o f this as they are entitled to a share on the auction money o f country liquor and excise duty on IMFL which was considered as adequate to meet their expenditure needs.

following criteria: The allocation o f share o f state taxes to PRIs in various districts is done using the

m These funds are to be spent for development works in the village for purposes l ike

Rs. 50 Crores per year from 2002-03 to 2005-06 out o f the total auction money o f

disposal o f Sullage water, rural sanitation, bio-gas plants, solar street lights, cleaning o f ponds with duck weed technology, construction o f community halls etc.

country liquor and additional excise duty on IMFL to be released to PRIs. I

Earlier known as Department o f Public Health. 97

The funds released to PRIs as per the second SFC are given in Table 1.

Financial Year

2002-03 2003-04 2004-05

Table 1 - Fund Releases to PRIs as per Second S F C Recommendations (Rs. I n Lakhs) Recommended

by S F C 148.28 148.28 106.95 161.58 83.85 12.39 173.99 Nil Nil

Actual Allocation Actual Release

Financial Year 2000-01 200 1-02 2002-03

21. The PRI own resources include: local taxes, income from Panchayat land, shops, fishponds etc. All the r ights o f the Shamlat land i s vested with GPs and i s a permanent source o f recurring income to them”. Besides Shamlat lands some portion o f Mustarka Malkan lands are also placed under the management and custody o f GPs. The details o f own income o f PRIs are given in Table 2.

Tax collected Income from Panchayati land, shops, ponds etc. 116.38 8224.24 151.49 8225.71 106.87 9897.26

22. During the year 2004-05, the total own income o f the PRIs from leasing o f land was Rs. 7729.5 lakhs and Rs. 8380.80 lakhs during 2005-0611. As per the Punjab Pachayat Raj Act, GPs are also empowered to levy a “water rate, where arrangement for supply o f water for drinking, irrigation or any other purpose is made by the GP in i t s jurisdiction”.

23. The funds released to the PRIs are tied to different developmental purposes and released to the Panchayat Samitis and GPs through the Distr ict Development and Panchayat Officer. The Zi la Parishads directly receive h d s from the State Government; though the Go1 f inds are routed through the DRDA. The Zi la Parishads release funds to Panchayat Samitis and GPs. During 2002-03 the Panchayats expended an amount o f Rs.20847 lakhs for various activities as given in Table 3.

lo Village Common Lands (Regulation) Act, 1961. l1 Note prepared by Deptt. o f Rural development and Panchayats.

98

Source: Annual Administrative Report of the Department of Rural Development and Panchayats, 2002-03

Source Grants from the Government Grants for local institutions

Amount (Rs. Lakhs.) Percentage 6850.8 40.8

39.5 0.2 Donations 26.2 0.2 Income from disDosal o f refuge

24. Recent Policy Initiatives to Strengthen PRIs. GoP has taken various reforms initiatives to strengthen the PRIs to improve their functioning. I t s vision is to provide basic amenities for good living and human growth to al l rural citizens to bring about a visible improvement in the living conditions o f the rural population in a time bound manner. Whi le GoP wil l be providing, enabling technical and administrative support, the PRIs wil l be in-charge o f execution o f the programs and the policies. The focus o f attention for the PRIs in the Punjab wil l be to build adequate basic rural infrastructure for education, health care, water supply, sanitation and hygiene promotion, village roads etc.

87.3 0.5

25. Enhanced powers to PRh to Execute Development Projects - The GPs are now authorised to sanction and execute works up to Rs. 10 lakhs. The corresponding limit for Panchayat Samiti i s Rs. 20 lakhs. Zi la Parishads can take up works o f any amount.

Income from auction o f fish ponds Income from Shamlat lands Income from house tax Income from profession, octroi and other taxes Income from voluntary contributions Other Total

26. Panchayat Secretaries has been linked to the GP certification o f their attendance.

Panchayat Secretaries made Accountable to GPs - The disbursement o f salaries to the

29.9 0.2 6503.7 38.7

78.3 0.5 20.5 0.1 38.9 0.2

3105.3 18.5 16787.6 100.0

27. Local Registrars o f Deaths and Births in place o f SHO o f the Police Stations12.

Registrar ofBirths & Deaths - The Panchayat Secretaries have been designated as the

28. Enhanced cheque signingpower at the village Panchayat - The cheque signing limits at the GPs level has been enhanced for the smooth operation o f the bank account and timely f low o f funds. The earlier and amended limits13 are formalized by the Government Orders.

l2 Punjab Registration o f Blrths and Deaths Rule 2004.

Punjab. Circular number 5/22/2005-4 10/7058 dated 8-12-2005 o f Director, Rural Development and Panchayats, Govt. o f

99

13

29. ZP Chairperson made chairperson of DRDA - The chairperson o f ZP i s also made the chairperson o f the DRDA. This wil l bring in direct supervision and control o f funds from Govt. o f India on centrally sponsored schemes by the Zila Parishad.

30. Constitution of District Planning commit fee^'^ - District Planning Committees will be set-up in every district to consolidate the plans prepared by the Panchayats and Municipalities in the districts and to prepare draft development plan for the district as a whole. The DPC will have 15 to 40 members depending upon the population in the district. GoP has nominated the Chairperson o f the ZPs to chair the DPC. Four fifth o f the total number o f members in the DPC wil l be elected by and from amongst the elected members o f the Panchayat at the district level and o f the Municipalities in the districts. The proportion o f the elected members between the Panchayat and Municipalities wil l be decided by the ratio between the population o f the rural and urban areas in the district. The GoP from the Members o f Legislative Assembly and others wil l nominate one fifth o f the total number o f members o f the committee. The Deputy Commissioner o f the district i s the ex-officio Secretary o f the committee. The Additional Deputy Commissioner (Development) o f the district wil l be the Additional Secretary o f DPC.

3 1. The existing District Planning and Development Board in the state have been replaced by DPC and DPC have the following key functions: (a) To prepare the draft District Development Plans (b) To prioritize schemes and programs (c) To take measures for proper implementation o f developmental programs (d) To encourage Panchayats and Municipalities to take up and expedite developmental programs (e) To make efforts to generate additional resources for developmental work.

32. areas o f capacity building support required include:

Capacity building of PRIs. Based on a SWOT analysis o f the PRIs in Punjab the main

Human resource capacity: rn Capacity building programs for elected representatives including orientation

Training programs for re-deployed and newly recruited officials o f the PRIs. Information, education, orientation programs and campaigns for the village

Provision o f office building, community centers, information centers etc.

Developing and instituting systems and procedures for planning, monitoring and

programs, interactive and feed back sessions and exposure visits etc. rn

rn

community. Institutional capacity:

especially to the GPs.

governance. This may include developing and implementing accounting and financial management systems, participatory planning methodologies, developing guidelines etc. including preparation o f manuals.

rn

Financial capacity:

streamlined.

can be achieved only by increasing the untied portions o f grants to the PRIs, which i s currently f i l ly tied to state level and central schemes.

The grant-in-aids and other find flows to the PRIs need to be timely and

The flexibility to plan for local needs and priorities o f the village communities

The Punjab Distr ict Planning Committees A c t (Number 22) o f 2005 vide Punjab Government Gazette, 14

Extraordinary, Published by authority. 100

33. The DRDP has two training centers to impart pre-service and in-service training to officials o f the department: State Institute o f Rural Development, Nabha, Patiala district and the Community Development Training Centre, Batala, Gurdaspur district.

34. GoP is engaging NGOs and other professional organizations such as the Institute for Development and Communication (IDC), Centre for Research in Rural and Industrial Development (CRRID) for under taking information education and communication campaigns, to conducting capacity building programs for the elected representatives o f the PRIs advice on capacity building issues etc. A capacity building project worth Rs.5 Crores has been implemented for building the capacity o f elected representatives. The capacity building programs covered areas l ike powers and responsibilities o f the elected members, accounting and financial management, Panchayati Raj Act and legal provisions etc.

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Annex 13: Social Assessment

INDIA: Punjab Rural Water Supply and Sanitation Project

I Introduction

1. This note reflects the proposed project’s social assessment based efforts towards building the elements o f decentralized RWSS service delivery. Initially, social development issues and concerns related to decentralization o f RWSS service delivery are identified based on beneficiary assessment, stakeholder analyses and social impact assessments. These are supplemented with the issues emanated from: (i) Performance Assessment Studies (PAS) conducted as a part o f understanding and appreciating the investment requirements; (ii) experiences o f pi lot ing the program, currently underway; and (iii) external evaluation study sponsored by the National Bank for Agriculture and Rural Development (NABARD). A discussion on the issues and concerns form a basis for designing the delivery system. The results are presented in six sections. Section I serves as an Introduction; Section I1 on the beneficiary assessment, presents the characteristics o f the prospective benefiting community groups and sub-groups. Results o f the PAS and NABARD evaluation studies as wel l as piloting experiences are presented in Section 111. Section IV covers the identification o f stakeholders, their key perceptions/ expectations about/ from the project, potential benefits/ r isks/ impacts and conflicts o f interests (if any) in respect o f each o f the sub-groups. Major issues to be encountered and the design features o f the proposed project addressing the same are presented in Sections V and VI.

I1 Beneficiary Assessment

A. Socioeconomic Profile o f Puniab State

2. Punjab covers an area o f 50,362 Sq Km, amounting to 1.5 % o f the total surface in India”. The state has a population o f about 24.3 mi l l ion (census 2001) with 66% o f the population living in rural areas. Literacy i s close to 70% and the sex ratio is 874. Scheduled Caste persons account for about 30% o f the total population and 80% o f them l ive in rural areas. As per 2001 census there are 12,278 inhabited villages in the state comprising o f 14,605 habitations and 2.8 mi l l ion households. Population living below poverty l ine i s about 6%.

3. Topographically, the state i s mostly a plain and can be divided into three regions: Majha, Doaba and Malwa. The rivers flowing through the state mark the boundaries o f these regions. Overtime, each region has developed into distinct regions, separate in their physical environment, economic structures, social organizations and cultural pattern. Majha, locally called the ‘Upper Bari Doab’(l7% o f the total area) region has a long international boundary adjoining Pakistan. Doaba is the tract o f land between the rivers Beas and Sutlej, i s a cultural buffer zone and adjoins the neighboring state o f Himachal Pradesh through Shivalik hill ranges. This has a ravine-ridden belt in the area bordered by the Shivaliks called the ‘Kandi’. Malwa forms the largest region (65% o f the total area and the political center o f the state. While inter- regional differences are quite high, a region has some uniformity in geography, climate, vegetation, soils, drainage, livelihood and cultural environment.

l5 Data are drawn from: Statistical Abstract o f Punjab, Government o f Punjab, 2005, and the state’s official website - - www.punjabgov.net/about-at-a-glance.asp

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4. The state’s geographical area i s about 5.3 million hectares, and 80% o f which are under cultivation. Punjab i s recognized as the ‘food basket’ or the ‘granary’ o f India, as i t contributes to 40-50 percent o f Rice and 60-70 percent o f Wheat to the India’s Central Pool. The state produces 20 percent o f wheat, 9 percent o f Rice and 14 percent o f Cotton o f the total country’s production. Punjab has been at the forefront o f India’s green revolution, which dramatically transformed the state economy. However, this was followed by a tumultuous period o f Naxalite inspired militancy and subsequently, hard core religious militancy in the 1980s which impacted substantially the l i fe o f the people. The state jumped back to normalcy during the 90s and has recorded high levels o f economic development. I t ranks the highest in the country in terms o f per capita income (Rs26,OOO per annum- 2001-02), energy consumption (almost 2.5 times the national average), 100% rural electrification, and most villages having Pucca road connectivity.

5. The impact o f the green revolution had differing impacts on the three regions. While in- migration o f agricultural laborers increased many times, out-migration o f Punjabis to the western countries, in particular, from the Doaba region too became quite significant. Money remittances from overseas communities were invested in the construction o f houses, purchase/ develop lands and to buy agricultural implements. Recruitment in the army has always been an important adjunct to the agricultural economy, adding on to the remittances. However, the trend o f supplementing agricultural income from other sources was unevenly spread through the different regions. The Doaba region was foremost in this trend, followed by Majha and, only a part o f the Malwa region. One area where the impact o f the Green Revolution was least felt was the Kandi region which continues to remain backward on social and economic fronts.

6. The economic transformation o f rural Punjab is thus chiefly due to green revolution led agricultural development. However, this had i t s impacts on social front resulting in dilution into caste rigidities and the emergence o f the middle and r ich peasants as the dominant peasantry in the state. A significant feature o f the agrarian society in Punjab is the numerical preponderance o f Jat Sikhs (owner farmers) in rural areas. Equally good in numbers are the Scheduled Castes (SC) who form the major labor force. The traditional ‘joint family’ system started vanishing, to be replaced by the ‘nuclear family’ which has led to more usage o f hired laborers and consequently in-migration. Political equations too changed, and the power base shifted from the urban r ich to the rural elites. With the result, agriculture became the focal point o f attention. But, agriculture currently has reached an asymptote, and environmental degradation has set in (nearly ha l f o f irrigation water used for agriculture is found to be polluted), economic returns are not only lower but associated with risks and social issues (very high proportion o f labor class in the society, in- and out-migration, international border conflicts affecting adversely the border villages etc).

7. Literacy and Gender. As per Census o f India 2001, overall literacy rate is about 70% (male-75%; female -65%), doubled in the last 3 decades. The same in respect o f SCs is lower (56% overall, and 48% female). However, the absolute number o f illiterates remains st i l l quite large. Punjab society consists o f hierarchies based on caste, class and communities. In addition, there is another dimension - gender. Gender discrimination i s more pronounced in the state than others. Punjab has shown a consistently an adverse sex ratio over time. W h i l e the country’s overall sex ratio works out to 933 females per 1000 males, i t is 874 in Punjab. This is despite high levels o f economic development, in fact, i t ranks quite high in terms o f Human Development Index (HDI)16. Punjab ranks 5th in Human Development Index in the country, but

l6 Government o f India 2001, “National Human Development Report”, Planning Commission, New Delhi - abstracted from the Human Development Report, UNDP, 2004 -- www.undp.org.in/hdrc/shdr/punjb. HDI i s

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i t i s as l ow as 16‘h in Gender Equality Index (GEI). Inter-district GEI differentials too are also high. The declining sex ratio, rising rates o f female infanticide and foeticides, the poor workforce participation o f women, restriction o f women in the informal sector where there i s a high incidence o f exploitation, the high rates o f crimes against women and continued exclusion o f women from the public sphere, indicates that the overall quality o f l i f e i s yet to catch up with the high economic prosperity in the State.

B. Water Supply and Sanitation Scenario - Puniab State

8. Punjab has a variety o f water sources from which people draw water for domestic purposes. Some are public, and others privately owned. Each source has a definite potential in terms o f service i t can deliver and the extent o f household coverage. Performance o f the hnctioning however depends upon several factors, some external (l ike power supplies) and others internal to the service provider. Salient features and coverage status as on December 3 1, 2005, o f the state’s water supplies are presented below:

i.

.. 11.

... 111.

iv.

V.

vi. vii .

viii.

ix.

X.

O f the 14,605 habitations, 6262 (about 43%) are fully covered (FC)17; 4082 (28%) Partially Covered (PC); and the remaining 29% not covered (NC). Hand pumps are the main stay - a third o f them mechanized - used by as high as 78% o f the households. Rural Water Supply investments have been made for the last 3 decades under several schemes - Minimum Needs Program (MNP) by GOP; Accelerated Rural Water Supply Program (ARWSP) by GOI; Raj iv Gandhi Sub-Mission Program (by GO1 and GOP); Loan Assistance from NABARD; Swajaldhara -I and 11. Department o f Water Supply and Sanitation DWSS), Government o f Punjab, manages 3,148 schemes and cover 8,300 villages - 85% o f which are tubewell based and most o f i t are MV water supply schemes. The remaining 15% draw water from imgation canals. DWSS supplies water through public stand posts and private household connections. The latter accounts for the bulk o f it. About 50% o f the designed population is being served, indicating very l o w efficiency/ utilization. In terms o f the delivery levels, 72% o f the DWSS schemes deliver up to 40 lpcd. Fol lowing GOP’s decision in 2003,858 SV water schemes have been transferred to Gram Panchayats for operation and maintenance. O f these, 774 were taken over by GPs; 29 returned back; and 749 are actually managed by them. Some 100 schemes are s t i l l being managed by DWSS. This means, the transfer management mechanisms are yet to be formalized. The performance o f the GP taken over schemes have been mixed - 319 (nearly 30%) schemes are fully on their own recovering 100% expenses through user charges, and 2 19 (25%) recovering nil. The remaining 45% fal l in between.

About ha l f the rural households possess and use latrines. A third o f them seem to have pit latrines. Hygienic and safe disposal o f sullage as wel l as human faeces is a major problem.

Dairying being an important occupation, upkeep o f cattle shed and disposal o f animal and agricultural wastes compound the sanitation problem in the rural areas.

useful in assessing the performance and progress o f a nation/ statel district at any given point of t ime as we l l as comparisons over time. The composite ranking i s arrived at by aggregating achievements o n income, education and health.

FC: Public Supplies catering 40lpcd and above; PC; Public Supplies catering up to 40 lpcd; and NC: n o public supplies within a reasonable distance 17

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xi. Waste water generated by households as well as cattle shed overflow into open surface drains leading to stagnation in al l the lanes and by lanes o f the village. This contaminated water seeping into the shallow aquifers (hand pumps), open dug wells and pipelines has been very high, with the result, water quality has assumed significance.

I11 Performance Assessments

9. DWSS In-house Study. DWSS, GOP undertook a performance evaluation o f 34 best performing fully covered water supply schemes covering 68 villages, as a part o f the project preparation. The results have been unique and instructive.

Low Customer Base - Only 25% o f the households had availed water connections officially. Ths apart, as high as 33% do draw water f r o m the public supplies, but unofficially, either through stand posts o r sharing with neighbors. Thus, despite availability, over 40% sti l l prefer their own hand pumps. Whi le Tube W e l l based schemes account for 30% o f the households in a village, it i s quite l o w (15%) in canal based schemes. Coverage was particularly lower in MV water supply schemes (being managed by DWSS). Swajaldahra. In contrast, schemes covered under GOI’s sector re form project (community based interventions), coverage i s significantly higher (as high as 80%). Equitable Distribution -Water supplies distribution are highly skewed. Some 20% secure water as high as 15 times the requirement, and the remaining suffer for want o f water.

0 Non-Revenue Water - comprising un-bil led authorized consumption (metered non-metered); apparent losses (unauthorized consumption and metering inaccuracies); and water losses (transmission losses, leakages and overflows)--works out t o as high as 80%. Major reasons for less than expected coverage are: one, cumbersome procedures involved in securing household connection, and lack o f trust/ reliabil i ty in supplies and quality o f service.

0

0

10. Pilot Batch Experiences

DWSS had launched a pi lot batch in October 2005, covering 5 GPs in each o f the 19districts, for: (i) familiarizing and gaining experience in adopting a demand driven, decentralized, participatory planning approach, and (ii) assessing, as well addressing, operational implications - policy, procedures and human resources. O f the 95 villages identified for piloting, 45% were N C habitations and the remaining 55% PC habitations. Five non-government support organizations (SOs) had been deployed to supplement the non-engineering skills o f the DWSS, and provide community development support to the GPs and villagers. Out o f 95 villages where piloting was initiated, 7 got dropped and it i s continuing in the remaining 88 villages. Of these, community mobilization (as indicated through capital cost contribution) has been very good in a little more than hal f the villages. Mobilization, however, is yet to commence in 8 villages. On the technical front, so far, DSRs have been completed in 54 villages and it i s neming completion in another 24 villages. Some major experiences drawn from the pi lot ing are presented below.

0 Communi@ ResDonse. Huge response for the program intervention was visible as evident f r o m endorsement by Gram Panchayats for participation and agreeing for the draft rules o f engagement.

0 Common/Mutual understanding. A common understanding o f the project rules o f engagement among a l l the key stakeholders including communities, engineers and SOs is hghly essential. Adequate and appropriate capacity building and IEC campaigning too are required t o ensure that D W S S (public sector) joins hands with SOs (private sector) and GPs and their representatives (communities) and accomplish the objective. Pe$ormance Enhancement. Enhancing operational efficiency in the functioning o f the existing scheme delivery which may require modest investments was found highly needed. Detailed performance evaluation o f existing facilities and rehabilitation needs should receive greater attention.

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Equitable Distribution. Operational adjustments for ensuring equitable supplies were the need o f the hour. Water Oualitv Tests - marketing tool. Demand for DWSS supplies primarily due to poor quality water f r o m private sources (which seems to have serious adverse impacts o n human and cattle health). Towards making this as a marketing tool, i t is essential that water quality tests are done and the results disseminated widely. Moreover, private water supplies (particularly power driven hand pumps) are becoming too costly (capital as wel l as O&M) and program offers a l o w cost alternative. Enaineerina Support. Full fledged participation and extending capacity support by the grassroots engineers holds the key for success. The engineers need to enmesh with communities and help in undertaking a diagnostic analysis o f the existing situation, identi fy issues, offer options and decide o n the most appropriate one.

LEVEL Village

B lock

NABARD Sponsored RWSS Evaluation

Stakeholders Gram Panchayats - men and women members, Vil lagers - men, women, SCs, poor and landless, Households with / without own sources o f water and or latrines. Junior Engineers, Gurudwara Committees B lock Panchayat, B lock Development Officer, Sub-Divisional Engineers

11. provided to reinforce the beneficiary assessments.

A gist o f an external evaluation o f water supply schemes sponsored by NABARD i s

a

0

e

a

a

e

a

IV

12.

H a l f o f the total household water supply connections belong to higher income group households with an annual income o f more than Rs.60000/- . 64% o f the households are satisfied with the quality and quantity o f the piped water A third o f the respondents felt that piped water reduced the frequency o f water borne diseases in their families. Majority o f the households were not aware o f diseases l ike diahorrea, jaundice, cholera etc caused by contaminated water. A good number o f the households fel t that the Panchayts are not in a position to take the O&M responsibility o f the water supply schemes. The reasons cited are: i) the panchayats were not involved in different stages o f implementation o f the scheme in the past (ii) lack o f h n d s (iii) factional politics (iv) reluctance o f the line department to co-operate and co- ordinate with the Panchayats and (v) lack o f training and capacity building. 56 per cent o f the total households are also using piped water for cooking, bathing, washing o f clothes, besides drinking purposes. In addition 30.88% o f the total households were using the water for toilet and kitchen garden purposes. 13.24% were using for bathing Cattle and as drinking water for Cattle. Some households started anew Dairy activities, particularly rearing mi lch cattle, after taking water connections. Milk production, with water supply connections, is reported to have increased in the households having cows

Stakeholder Analysis

Identification o f stakeholders. A stakeholder i s defined as an individual or agency who can either impacted by, and/ or impact on, the project. Impacts could be positive or negative and the intensity can vary, from high to low. Accordingly a stakeholder is mapped into one o f the four categories - Positive and High; Negative and High; Positive and Low; and Negative and L o w Impact Groups. From an administrative perspective, stakeholder mapping i s done at different levels: village, GP, Block, District, State and country. The mapping i s presented below:

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LEVEL Distr ict

State

National

Kev Expectations, Impacts & Issues and Concerns

Stakeholders Zi l la Panchayat, Distr ict Administration, DRDA, L ine Departments, Consultants, Contractors, NGOs, Suppliers and Traders. DWSS- Executive Engineers, Media GOP- Departments o f WSS, Finance, Rural Development and Panchayat Raj, Irrigation, Ground Water, Power/ Electricity Boards, Agriculture, Science and Technology, Health and Education, Consultants, NGOs, Citizen Bodies, Professional Bodies, Suppliers, Media. DWSS- Chief/ Superintendent Engineers GOI- RGDWM, DEA; Wor ld Bank, NABARD

13. summary o f the same in respect o f key stakeholders are presented below:

Each stakeholder has an expectation and associated with it are the issues and concerns. A

DWSS: Principal Secretary, Chief Engineers and Superintendent Engineers

DWSS - Executive Engineers

DWSS- SDE/ JEs

GOP- Rural Development Department

GOP- Punjab State Counci l for Science and Technology / Health Department

~ ~~~

Media

Z i l la Parishadl Panchayat Samiti

Change i s essential to bring in improvements into service delivery. Capital cost contribution by communities could be a major hurdle. Poor, SC, other disadvantaged may be le f t out Synergy between D W S S staff and GPs need to be designed appropriately. An excellent welcoming opportunity, but highly skeptical about the changes. W o r k Load will increase many times and quality control could be an issue. Rehabilitation o f the existing schemes as we l l as dual supplies should receive due attention Objective criteria for the selection o f villages is a must t o avoid external interference Ambit ious project, tasks are challenging. N e w demands wil l be made, capacity building required. Expl ici t instructions providing household connections, billing, etc are h igh ly essential t o improve operational efficiencies. Appropriate measures to curb i l legal connections are to b e drawn. Proposed project will b e the first ever venture at decentralizing the service delivery o n a significant scale in the state. Project could prove to b e a vehicle for capacitating and empowering GPs A proper p lan to make use o f the existing technical manpower in the department needs to be prepared. Interface between RDD and DWSS o n community sanitation needs t o b e viewed seriously. Project could offer innovative mechanisms for addressing community sanitation issues. Need to market the project in terms o f safe water and safe sullage disposal (including pond rehabilitation) should be h igh o n agenda. Proper manpower planning should be done and recruitments for JE/ SDE should be made at appropriate intervals, else state will b e wanting for RWSS expertise. Sanitation should b e a k e y activity. Disinfection should receive high priority. School sanitation should b e integrated in to the program. Awareness program to curb abuse o f water essential. Transparency and Accountabil ity measures to be inbuilt in to the program.

Decentralization should b e real, no t merely o n paper. Objectivity in selection o f villages i s essential. Capacity Building o f Panchayats i s critical. D W S S should be accountable to the users. Consultation between D W S S and RDD should b e regular and agenda based. High cost schemes should b e avoided. Decision making should b e faster in the department. Community contribution could be bo th in kind and labor

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Grama Panchayati Community

Women

Scheduled Caste

V Punjab Rural Water Supply and Sanitation -Issues

Welcome the intervention f rom a quality and quantity perspective. Timely execution and quality are paramount important. Social Audit i s t o be designed. JE (DWSS) j o b description should be clearly defined. Electricity Supplies i s a major concern. Poor and disadvantaged should not be left out. Household connections manual essential. Frequent water quality testing is a must. Choice - water supply vs. sanitation- should be with the communities. Primary clients - suffer the most and program demand emanates f rom them. Skeptical about provision for their participation. Demand safe water at their door steps Safe water disposal and pond rehabilitation are very important. Women headed household needs to be shown due consideration. Higher service levels essential t o take care o f entire domestic requirements including cattle. Concerned that they m a y be left out. A lways used to subsidies, and hence contributions wil l be new.

14. Major social development issues that emanate from the beneficiary assessments, performance assessments and stakeholder analyses are:

i) .

ii) .

iii).

iv) .

VI*

vi).

vii).

The program recognizes that Punjab i s quite diverse on socio-economic, geo-physical, and strategic fronts. Major issues relate to:

Diversity - Punjab i s quite diverse on many counts - socio-economic, geo-physical and strategic. Inclusion and equity - Diversity generates several sub-groups with differing capacities. Hence, the project designing should ensure fair and equal opportunities for participation in, and derive benefits from, the program by al l the subgroups, in particular the poor and vulnerable such as scheduled caste, women, women headed households, residents o f international border villages. Decentralization - devolving the decision making along with control over resources to the local se l f governments and user groups. Ownership, Transparency, and accountability - Devolution necessarily have to be associated with accountability - both downward and upward which i s possible only when strong sense o f ownership i s developed among the communities. Customer base and demand generation - Currently, customer base, viz., demand for public water supplies seem to be quite low. For this to enhance, not only operational performance has to improve, but also supplementing with efforts at marketing the program and deriving home the health and hygiene benefits. This means designing an appropriate IEC campaign to reach stakeholders effectively. Women Participation - Women are the primary managers o f RWSS and hence the success o f interventions depends upon the provision the program makes for their participation. Capacity support/ building - to enable stakeholders perform the desired role. This includes “Change management”, enabling transforming the government department into a ‘ facilitator’ and promoting partnerships .

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15. Design elements addressing a majority o f these issues have been dealt in the section on these issues in Annex-6, Implementation Arrangements. However, the issue o f ownership, transparency and accountability i s elaborated hereunder.

16. Towards ensuring Ownership, transparency and accountability, every GPWSC will be enabled to prepare a PRA/SARAR based GP Water & Sanitation Plan (GPWSP). This wil l form an attachment to a Memorandum o f Understanding signed by the three principal actors -- GPWSC, GP and DWSS (in the case o f S V schemes) and in addition, SLC, in the case o f MV water supply schemes. Once approved by signatures, this wil l not only be the basis for implementation but also would enable comparative assessments in future. The elements o f such a plan will include the following Community Action Plans (CAP):

GP Water S u d v and Sanitation Plan

(i) Community Mobil ization, comprising (a) Social Mobil izat ion details relating to GPWSC formation as we l l as opening o f the bank account; and (b) Socioeconomic survey for a social mapping; (c) water sources mapping; and (d) superimposing social map o n water resources map, o n a top sheet, to depict the existing situation and identify gaps (if any). (ii) Community Contribution Mobil izat ion p lan detailing household-wise cash and labor shares. (iii) Detailed technical project report (DPR) with details about choices considered and the discussions thereof as we l l as the cost particulars related to water supply and drainage improvements. (iv) Operation and Management (O&M) Plan including the l lke ly tariff, income and expenses. (v) Sanitation and Hygiene Promotion -- Enhance people’s understanding about pure and safe drinking water and change the perception o f the people regarding safe dnnking water and sanitation. Enhance personal and social skills o f the people regarding better handling and storage o f drinking water. (vi) Women Development Initiatives (WDI) will spell out h o w women have been mobilized, the process o f their deciding o n the choice o f activities; financing mechanism; expected outputs and the SO support. (vii) Environmental Management Plan. EMP prepared. GP level initiatives for liquid waste management, sol id waste management and remolding o f Ponds, usage o f treated wastewater etc., and provision o f such other initiatives are to be included. (viii) Capacity Building Initiatives wil l include the programs planned (class r o o d lecture mode as well as f ield based), l ikely participants, scheduling, SO support implementation arrangements, the post implementation

(ix) Implementation schedule, including schedule for delivery o f inputs and services, schedule for monitoring o f the progress, success indicators and capacity enhancements. (x) Community Monitoring. Besides implementation, benefits l ike ly to accrue to different subgroups as we l l as to the community as a whole wil l be monitored by the community. Simple indicators, as identif ied and articulated by the community themselves, will be deployed for the purpose. (xi) Mutual obligations and responsibilities o n the part o f a l l the three signatories -- GPWSC, GP and DWSS will be detailed out in resDect o f each o f the activitv in the scheme cvcle.

follow-up.

17. the Common Facility (Inter-Village) plan and the other, Intra-Village Plans.

In the case o f MV water supply schemes, there will be two major Plans - one related to

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Annex 14: Engineering Aspects

INDIA: Punjab Rural Water Supply and Sanitation Project

Existing Water Supply Systems and Management

1. DWSS o f GoP i s in charge o f planning and implementing Rural Water Supply Schemes and o f O&M management including billing and revenue collection o f user charges. Over the past two years, DWSS has been progressively transferring O& M management responsibility o f SV schemes to GPs. In addition, DWSS i s progressively utilizing private sector service contracts for O&M o f SV and MV schemes.

2 Type o f Schemes: Barring the few villages covered by hand-pumps or dug wells, over 95% o f the villages covered till date in Punjab have piped water supply, with the source being either tube-wells or canals. Tube-wells form the main source for rural water supply schemes in Punjab. About 10 % o f the villages are covered through SV schemes while the balance 90 % villages were covered by multiple-village schemes.

3 Status o f Water Quality: About 16 percent area o f the state mostly in the south-western districts face water quality problems including 8.5 percent area having shallow aquifer’s water quality totally unfit even for agricultural use. In the northern and central districts o f the state, water available in shallow aquifers is not potable due to its contamination from industrial and irrigation operations. Majori ty o f the water quality problems in shallow aquifers are due to excess salinity, fluoride & nitrate content in the ground water, total dissolved solids or bacteriological problem.

4 Ground water Status: Reports o f Department o f Water Resources and Environment indicate that the ground water table in Punjab i s falling rapidly and that the quality o f shallow ground water i s also rapidly changing with over extraction and extensive use o f fertilizers and pesticides. Discussions were held with Director Water Resources and Environment, Govt. o f Punjab, Central Ground Water Board (CGWB), Chandigarh, and Director Punjab Remote Sensing Centre, (PRSC) Ludhiana. Status o f ground water in Punjab that emerged from these discussions is : (i) Irrigation and most o f the industries are extracting water from shallow unconfined aquifers, (ii) DWSS is the only consumer extracting water mostly from deeper confined aquifers; few large irrigation farmers and Industries are also using tube wells with such extraction, (iii) In areas north o f Sutlej river good potential exists in the deep confined aquifers, (iv) In areas south o f Sutlej river water i s not available in deep aquifers, (v) water from shallow unconfined aquifers i s to be extracted in southern districts for water supply also - however the number o f tube wells have to be increased so that the extraction i s limited to prevent ingress o f salinity and tube wells have to be dispersed to avoid interference.

5. Disinfection o f Drinking Water: Disinfection facilities are provided for the water supply schemes and bleaching powder i s supplied by DWSS. Review o f Water quality analysis o f samples collected f i om source and user end for 40 village water supply schemes shows that considerable number o f samples are showing that the water i s bacteriologically affected probably due to lack o f disinfection. As an alternative to disinfection with bleaching powder, DWSS has assessed the performance o f silver ionization disinfection plants and based on the assessment about 20 such plants are so far installed and functioning successfully. DWSS i s closely monitoring the performance and maintenance o f these plants so as to use them extensively in the project water supply schemes.

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6. Water Quality Monitoring: DWSS has a central state laboratory and 4 other testing laboratories in the entire state which have been able to test about 1300 water samples in a year as against about 4000 sources. Seven more laboratories are to be set up in near future-with Go1 funding support.

7. Detailed Engineering and preparation o f Cost estimates: DWSS does in house the field surveys, preparation o f designs and estimates. At present the hydraulic calculations and the drawings are prepared manually. Des ign norms followed by DWSS are as follows: (i) design period 30 years, (ii) design population 150 % o f present population with per-capita consumption of 70liters, (iii) Capacity o f overhead tanks will be worked out at 50 % o f design requirement. (iv) 8 hours o f pumping for S V schemes, (v) 24 hours pumping for MV Canal Based water supply schemes, (vi) required residual head 7 meters, (vii) single tap public fountain one number for every 250 population, (viii) Minimum size o f 63 mm OD P V C pipes are used for Distribution system.

8. lakhs. In view o f limited powers o f the Executive Engineers and the Superintending Engineers, invariably al l estimates including S V water supply schemes require Technical sanction o f the Chief Engineer.

Powers o f Engineers: The cost o f SV water supply scheme i s on an average o f about Rs 25

9. Inviting Tenders and Award o f Works: As in the case o f technical sanction powers the power o f the DWSS engineers for award o f works is also limited and hence is leading to delays in the award process.

10. contractors free o f cost a l l materials like, pumps, pipes, valves, cement steel etc.

Contract Packaging: Present practice in DWSS i s to procure centrally and provide to

11 Time for Planning and Implementation: There are substantial time overruns in planning and completion o f the water supply schemes due to delays in approvals, sanctions, allocation o f funds and statutory approvals from other departments l ike forest, Building & roads etc.

12 Performance Assessment o f Existing S V and MV Schemes: A few o f the rural water supply systems have become inoperative due to various reasons. DWSS had undertaken a perfonnance study at supply level for delivery o f quantity o f water at OHSRs o f the villages and at user end about the service standards regarding the reliability, pressures, quantities and quality o f water as perceived by the users. A household survey was done in the study area during supply hours to assess the service standards.

13. Indicators for assessment o f performance in the Villages / habitations: DWSS has adopted the following indicators in the performance study. i) Delivery o f water at OHSR s and availability o f water at source, ii) whether al l households are getting the required quantity, iii) whether the residual chlorine is present in the water at consumer end, iv) whether adequate pressure is available as indicated at the households located in highest elevation and absence o f pit taps, v) reliability o f water supply - interruptions and timely supplies, vi) type o f interruptions and duration or time taken for rectification, vii) position o f power supply, viii) whether GP is self sufficient in O&M , ix) whether timely and effective technical support i s available to the GP for O&M.

14. Performance o f SV schemes: DWSS has undertaken the performance evaluation including user end service levels o f about 34 existing SV, MV schemes o f both tube we l l based and canal based water supply schemes. Most ly these schemes were selected f rom best performing fully covered water supply schemes. The salient conclusions are: (a) sources are generally adequate

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though acute shortage o f power results in unpredictable water supply timings, (b) accounted coverage o f households was 25.2 %, (c) A few households fetch water from their neighbors, (d) few households have illegal connections, (e) majority o f households use water from DWSS taps provided in common places, (f) unequal distribution o f water- some households get water several times more than their intended service level which results in other households getting far les than the service level, (8) those who are not using the DWSS water are having their own shallow hand pumps or submersible pumps though the water i s not potable.

15. Engineering D e s i r n Issues: The engineering issues (i) At present DWSS i s not monitoring the water levels and water quality o f tube wells developed by them. There i s a need to undertake Water quality analysis o f al l the existing about 4000 sources and proposed about 2000 sources including bacteriological quality at least once in a year, (ii) Lack o f prompt disinfection leading to considerable number o f water samples showing that the water i s unwholesome. (iii) Arbitrary location o f OHSR and f ixing o f reservoir capacity without considering the actual pumping and supply hours, leading to unequal distribution o f water resulting in inadequate pressures and quantity. (iv) Perpetual shortage o f power which affects the pumping hours, (v) Economical designs are not adopted for pumping main and distribution system, (vi) Need for improving the quality o f field survey, preparation o f designs and drawings, (vii) Structural designs o f OHSR s not in conformity with latest codal provisions for water retaining structures and for seismic and wind loads. (viii) Absence o f bulk water meters, which leads to inaccurate assessment o f service levels and hence classification o f coverage as FC, PC etc. (ix) Need for simplification o f procedures in sanctions to cut down delays in approvals and sanctions o f water supply schemes. (x) Lack o f single contract responsibility leading to delays and problems in quality assurance.

Proposed Water Supply Systems and Management

16 Water Supply Schemes: Apart from usual provisions the project will have the following specific provisions: (i) In order to overcome the power problem, DWSS will carry out cost effective study on a case to case to basis for provision o f diesel generating sets in the canal based schemes wherever the power supply situation i s not adequate and if the community can afford to bear the O&M expenses o f the same. (ii) To ensure prompt disinfection silver inoisation plants wil l be provided (iii) Bulk water meters wil l be installed in al l schemes to enable water audit, (iv) The components for the service improvements and rehabilitation o f existing water Supply schemes may include augmenting the source, repairs and replacement o f leaking pipes, tanks, repairs o f motors, disinfection unit, automatic control o f pumping operations, introducing distribution zoning, extension o f pipelines, fixing o f bulk meters, etc. (v) There is now a limited demand for private connections (about 25% o f households); however the project wil l a im at including coverage o f more households with individual house connections. Improve their operational performance. The project wi l l also have provision for installation o f pi lot defluoridization, reverse osmosis plants etc.

17. Improvements in Detailed Engineering: With a view to enhance the quality o f detailed engineering, DWSS has started using computer oriented procedures for survey, preparation o f plans and designs. During project preparation DWSS has adopted the fol lowing improvements in detailed engineering: (i) Location o f OHSR will be decided to ensure equitable distribution o f water, (ii) capacity o f OHSR will be decided on the basis o f mass curve to balance the pumping hours and supply hours, (iii) Realistic peak factors will be used in the design o f distribution system to conform to the actual supply hours, (iv) DWSS has also acquired from the Wor ld Bank the Software for design o f distribution system, (v) DWSS has acquired standard software for design o f Overhead Service reservoirs (OHSR) conforming to latest B IS requirements for water retaining structures with

112

earth quake resistance & wind loadings and required Concrete proportions. With this software DWSS has produced typical designs for various capacities o f the OHSR s with various staging heights. (vi) DWSS has developed in-house software for design o f economical size o f pumping mains. (iv) DWSS has outsourced survey operations for preparation o f digitized village road maps for the Pilot batch water supply schemes, (vi) DWSS i s adopting Auto Cad for preparation o f drawings o f various components o f the Pilot batch water supply schemes.

18. Technical Manual: DWSS has now developed a detailed technical manual covering design criteria, guidelines on sound engineering practices, standard drawings and cost estimates, specifications for construction materials, goods, equipment and civ i l works. The manual contains among other topics, (i) Computer aided procedures for surveys - preparation o f road maps o f villages with levels wherever possible linked to MSL, designs with standard software, drawings on auto C A D and estimates on excel formats, (ii) Rational approach for fixing capacity o f reservoirs and design o f distribution system, (iii) use o f standard software for economical size o f pumping main and distribution system, (iv) type designs for the OHSR i s to be in conformity with the latest BIS codes for RCC and water retaining structures and earth quake and wind loads.

19. District wise Drinking Water Quality and Water Resource maps: DWSS has decided to acquire data and monitor the changes in water table and water quality in the sources o f Water Supply Schemes with Deep Tube wells and canal based sources. DWSS has outsourced to Punjab Remote Sensing Centre (PRSC) the work o f preparation o f digitized water resource and quality maps on GIS for each district on an appropriate scale. These maps wil l indicate habitation wise location o f DWSS tube wells and show the litho-logical details, depth o f water table, yield and water quality. A data base wil l be created for monitoring the tube wells quality and levels. DWSS with the help o f PRSC wil l procure the required software and hardware to establish a water resource and water quality mapping facility for creating and updating the data and monitoring the water quality and water levels o f the existing and new tube wells used by DWSS

20. Capacity Buildinn o f Engineers: The quality o f designs and drawings will be enhanced and planning time will be saved by adopting total station methods for survey with digitized village road amps, standard software for hydraulic designs, auto C A D and GIS for preparation o f plans and estimates. Hence the DWSS engineers will require refresher courses on the use o f the above tools for survey, design, preparation o f designs, drawings and estimates for the water supply schemes.

21 Engineering Support in Planning and Implementation: DWSS has started preparing the detailed scheme reports for the pi lot Batch using the using computer oriented procedures for survey, preparation o f plans and designs. DWSS has outsourced the activities o f survey and proposes to outsource the activities o f finding safe bearing capacity o f OHSR and treatment plant sites and resistivity surveys for location o f tube well sources. DWSS engineers wil l prepare the designs and estimates for pi lot batch and wil l be in charge o f day to day monitoring o f construction quality o f the project works. In view o f inadequate staff DWSS will be able to prepare Water Supply Detailed Scheme Reports (DSRs), designs etc for only about 50% o f villages for further batches. Hence the project provides for recruitment o f Consultants for providing external Engineering support to the GP s in planning and implementation o f water supply Schemes.

22. Procedures for approval and award: DWSS will constitute committees at various levels which wil l have full powers to sanction the DSRs and award the works for the project which will result in cutting down the delays in approvals. DWSS wil l adopt single contract responsibility for implementation o f the project works, which wil l ensure timely completion o f works o f the required

113

quality. All the in village works such as source. development, power pumps overhead tank and distribution system, wil l be implemented by the GPWSC adopting the approved bid documents. However for the common facilities o f MV Schemes the normal procedure for estimation, tenders etc wil l be followed by DWSS duly adopting bank procurement guidelines.

23. Independent Construction Oualitv Surveillance Consultants (ICQSC): DWSS engineers wil l assist the GPs in the day to day monitoring o f the works and materials procured by GPs. Additionally DWSS wil l retain independent construction quality surveillance consultants to monitor the quality o f supervision o f the works and also ensure the quality o f the materials procured and construction quality o f works. Provision for Independent construction quality surveillance consultants i s made on the basis that about 25 % o f the total schemes wil l be selected by the ICQSC as sample for visits and about 4 visits for each such scheme wil l be required in a year.

24. Water Oualitv Monitoring and surveillance: In this project a three t ier Water Quality Monitoring and surveillance program will be used for rural water supply schemes. These three tiers are; state level by DWSS state laboratory, district level through DWSS district laboratory and Village level through GP. Project wil l have provision for distribution o f about 4000 test ki ts and chloroscopes to al l GP s and or schools and habitation Committees. In view o f the large number o f water samples (about 100,000 in the project period) to be sampled and analyzed; DWSS apart from analysis in their own labs will outsource the work o f sampling and analysis.

25. Independent Water Oualitv Surveillance: The project has made provision for Independent water quality Surveillance for the following: (i) Water samples from sources o f first ten schemes in each district wil l be tested for presence o f pesticides and heavy metals, (ii) In subsequent years 100 samples in each year wil l be tested for presence o f pesticides and heavy metals, (iii) Water quality sampling ( about 200 samples every year) and analysis in the sources developed in the project for other parameters ( other than pesticides and heavy metals)

Proposed Community Sanitation Schemes and Management

26. Household sanitation: The rural development department o f GoP i s implementing the provision o f toilets for village households by hnding from GoI. Hence this project wil l not have provision for household toilets.

27. Status o f Village Sanitation: The wastewater generated from various households overflows into the open surface drains and i s ultimately disposed into the village ponds, thus making them highly polluted. Sometimes cow dung also contributes to the pollution o f ponds. Sewage from Toilet soak pits and effluent from septic tanks also flows into the open drains resulting in stagnant pools and finally reaches the village ponds. Polluted and clogged open drains are leading to poor sanitation and unhygienic conditions in the village. The communities are exposed to high r isk o f infection due to water borne diseases l ike cholera, hepatitis, malaria, diarrhea etc. Health risk also arises where villagers are using their own shallow hand pumps and power pumps located near the ponds or soak pits for drinking water.

28. Options Available for village drainage: The options for village drainage are,(i) Open drainage: provision o f open drains collecting only a l l water (except septic Tanks effluent) with connectivity to drain o f f the sullage without any treatment options- since sullage water without septic tank effluent is amenable to disposal without treatment, (ii) Conventional underground drainage /sewerage system with sewers and manholes connected to both toilets and bathrooms o f houses and led o f f to a treatment plant for disposal, (iii) Small bore sewerage system which i s

114

designed to receive only the liquid portion o f household wastewater- connected to the septic tank or interception chamber which wil l carry effluent from septic tank/interception chamber (which retains solids) and led o f f to a treatment plant for disposal.

29. Perfomance o f Small Bore sewerage systems: The project has provision for providing sanitation with small bore sewers or conventional sewerage. GoP has already implemented a few small-bore sewerage schemes with technical support o f the Punjab State Council for Science & Technology (PSCST). From a field review o f three small bore sewers the observations are: (I) Investment is required to construct toilets, septic tanks/ Interception chambers in the household- cost is increasing due to cost o f interception chambers and use o f HDPE Pipes (ii) delay in the users connecting the bath room and other wastewater, (iii) severe shortage o f power is resulting in stoppage o f sewage pumping from last collection point resulting in back up o f sewage and also non functioning o f aeration devices where provided, (iv) households are not paying promptly the O&M cost which i s as much as Rs. 50 per household and they may not be able to pay the enhanced O&M cost if diesel generating set is provided to overcome power shortage (v) village ponds are used as duckweed and fish ponds, (vi) the difficulty in finding the equipment and the high cost there o f for de-sludging the f i l led up septic tanks and interception chambers. There i s a range o f technical design and O&M issues that need to be addressed and piloted before taking up full-scale implantation o f this component. The project wil l support proposals for sewerage either with small-bore sewerage or conventional sewerage as per the option o f the community.

30. Renovation o f Village Ponds: The existing ponds in the villages were used to store storm water run o f f and catered for the many needs o f the villagers such as swimming, cattle bathing and a gathering place for the villagers. These ponds also provided an opportunity to charge the ground water. However over a period o f time, water quality o f these ponds i s deteriorating due to: (a) indiscriminate discharge o f sullage / sewage, (b) encroachments, (c) run o f f from cattle dung dumps around the ponds, (d) growth o f aquatic weeds due to nutrient enrichment. The project has provision for renovation o f about 1000 such ponds and uses them for bio management o f the village wastewater by using them as duckweed ponds or by construction o f wetland. At present PSCST / DWSS are preparing proposals with use o f the ponds as sewage treatment pond. Instead, DWSS wil l also prepare pond renovation proposals to restore the ponds’ original status for which provisions will include: Dewatering, s i l t removal, deepening, partitioning, side bunds, screening chamber, settling tank, plantation, culverts, diversion drains, repair o f existing street drains leading to the pond (drainage improvements), etc.

115

Annex 15: Project Preparation and Supervision

INDIA: Punjab Rural Water Supply and Sanitation Project

Planned Actual P C N review 05/05/2005 Ini t ia l PID to PIC 06/17/2005 Ini t ia l ISDS to PIC 06/21/2005 Appraisal 08/17/2006 08/14/2006 Negotiations 09/25/2006 10/24/2006 Board/RVP approval 12/14/2006 Planned date o f effectiveness 0113 112007 Planned date o f mid-term review 09/30/2009 Planned closing date 03/31/2012

K e y institutions responsible for preparation o f the project: Borrower: Government o f India Ministry o f Finance, N e w Delh i Responsible Agency: Government o f Punjab D W S S. Chandi earh

Name Title Unit G.V. Abhyankar S. Satish Meera Mehta D.M. Mohan Mohan Gopalakrishnan Tanuj Mathur S.K. Bahl Sanjay Pahuja Nina Masako Eejima Sara Gonzalez Flavell Syed I. Ahmed Kenneth Mwenda Thao L e Nguyen Sanjay Srivastava Smita Misra Mamata Baruah Subhash Mittal Caroline Van den Berg Alexander Bakalian

Task Team Leader Sr. Social Dev. Specialist Sr. Financial Specialist Consultant (Engineering) Sr. Financial Mgt. Specialist Financial Mgt. Specialist Sr. Procurement Specialist Environmental Specialist Senior Counsel Senior Counsel Lead Counsel Senior Counsel Senior Finance Officer Sr. Environmental Specialist Sr. Economist Program Assistant Financial Mgt. Specialist Peer Reviewer Peer Reviewer

SASEI SASES EWDAF Consultant S A R F M S A R F M S A R P S SASES L E G M S L E G M S L E G M S L E G M S LOAG2 SASES SASEI SASEI SARFM E W D W S M N S I F

~~

Bank funds expended to date o n project preparation: 1. Bank resources: US$209,045.46 2. Trust funds: US$229,537.30 3. Total: US$438,582.76

1. 2.

Estimated Approval and Supervision costs: Remaining costs to approval: US$30,718.62 Estimated annual supervision cost: US$80,000

116

Annex 16: Documents in the Project File

INDIA: Punjab Rural Water Supply and Sanitation Project

Government of India / Government of Punjab Policy Documents

. GoI’s Swajaldhara, ARWSP and Water Quality Monitoring Guidelines . Relevant GoP Orders

Preparation Study Reports

Baseline assessment o f RWSS coverage Environmental Assessment Study Capacity Building Economic Analysis Study Institutional design Communication Strategy Accounting and Accountability Arrangement in PRI and DWSS Social Assessment

Bank Staff Assessments / Reference Document

. CAS (Sept. 2004) .

. Procurement Capacity Assessment 9 . Bank Mission’s Aide Memoires

PADS for Karnataka RWSS 11, Kerala RWSS, UP RWSS, Maharashtra RWSS, Uttaranchal RWSS

PCN, QER, and Appraisal decision meeting minutes

Project Implementation Documents

. Project Implementation Plan & Operations Manual . Technical Manual Financial Management Manual . Procurement Manual

117

Annex 17: Statement of Loans and Credits

INDIA: Punjab Rural Water Supply and Sanitation Project

Difference between expected and actual

disbursements Original Amount in US$ Millions

Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Ong. F m . Rev’d

PO97036

PO71160

PO75060

PO78539

PO83 187

PO78832

PO79675

P 0 7 9 7 0 8

PO83780

PO93720

PO92735

PO91453

PO86414

PO86518

PO84792

PO84632

PO77977

PO77856

PO84790

PO75058

PO73651

PO73370

PO945 13 PO50655

PO82510

PO79865

PO73369

PO78550

PO73776

PO50649

PO76467

PO67606

PO75056

PO71272

PO72123

PO73094

PO50647

PO71033

PO50653

PO50668

PO74018

PO72539

2007

2007

2007

2007

2007

2006

2006

2006

2006

2006

2006

2006

2006

2005

2005

2005

2005

2005

2005

2005

2005

2005

2005

2004

2004

2004

2004

2004

2004

2003

2003

2003

2003

2003

2003

2003

2002

2002

2002

2002

2002

2002

Orissa Socio-Econ Dev Loan I1

Kamataka Health Systems

RCH I1 TB I1

Uttaranchal RWSS

Kamataka Panchayats Strengthening Proj

Kam Municipal Reform

TN Empwr & Pov Reduction

TN Urban 111

Mid-Himalayan (HP) Watersheds

NAIP

VSBK Cluster Project

Power System Development Project I11

IN SME Financing & Development

Assam Agric Competitiveness

Hydrology I1

Rural Roads Project

Lucknow-Muzaffarpur National Highway

MAHAR WSIP

TN HEALTH SYSTEMS

DISEASE SURVEILLANCE

Madhya Pradesh Water Sector Restructurin

India Tsunami ERC

RAJASTHAN HEALTH SYSTEMS DEVELOPMENT

Kamataka U W S Improvement Project

GEF Biosafety Project

MAHAR RWSS

Uttar Wtrshed

ALLAHABAD BYPASS

TN ROADS

Chatt DRPP

UP ROADS

Food & Drugs Capacity Building Project

AP RURAL POV REDUCTION

TechiEngg Quality Improvement Project

AP Comm Forest Mgmt

UP WSRP

U R N Tank Mgmt

KARNATAKA RWSS I1

MUMBAI URBAN TRANSPORT PROJECT

Gujarat Emergency Earthquake Reconstruct

KERALA STATE TRANSPORT

150.00

0.00 0.00 0.00 0.00 0.00

216.00

0.00 300.00

0.00

0.00

0.00

400.00

120.00

0.00 104.98

99.50

620.00

325.00

0.00

0.00 394.02

0.00

0.00

39.50

0.00 0.00

0.00

240.00

348.00

0.00 488.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00

463.00

0.00

255.00

75.00

141.83

360.00

170.00

120.00

120.00

0.00 120.00

0.00 60.00

200.00

0.00

0.00 0.00

154.00

0.00 300.00

0.00 0.00

110.83

68.00

0.00

465.00

89.00

0.00 0.00

181.00

69.62

0.00 0.00

112.56

0.00 54.03

150.03

250.00

108.00

149.20

98.90

151.60

79.00

442.80

0.00

0.00

0.00 0.00

0.00

0.00 0.00

0.00 0.00 0.00

0.00

0.00

0.00

0.00 0.00 0.00

0.00 0.00 0.00

0.00 0.00

0.00 0.00

0.00

0.00

0.00

0.00

0.00

0.00 0.00 0.00 0.00

0.00

0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00

0.00

0.00

0.00 0.00

0.00 0.00

0.00

0.00 0.00

0.00

0.00

0.00 0.00 0.00

0.00

0.00

0.00 0.00

0.00

0.00 0.00

0.00 0.00 0.00

0.00 0.00

0.00

1 .oo 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00

0.00 0.00

0.00 0.00 0.00 0.00

0.00

0.00

0.00 223.77

0.00 141.61

0.00 359.53

0.00 169.79

0.00 122.53

0.00 121.43

0.00 205.00

0.00 111.25

0.00 268.54

0.00 54.17

0.00 184.58

0.00 2.88

0.00 400.00

0.00 19.40

0.00 142.14

0.00 104.45

0.00 245.74

0.00 508.01

0.00 292.80

20.06 82.70

0.00 61.46

0.00 369.43

0.00 397.14

0.00 72.95

0.00 23.61

0.00 0.70

0.00 113.01

0.00 63.63

0.00 138.27

0.00 260.25

20.06 81.28

0.00 319.99

0.00 42.65

0.00 40.23

40.11 135.20

0.00 56.49

40.11 97.21

25.07 59.58

15.04 76.29

0.00 373.87

80.23 137.31

0.00 128.12

-0.38

0.00 0.00

0.00

0.00 0.00

-5.70

-3.86

9.29 -1.61

-18.00

0.00

0.00

9.40

17.37

33.11

-43.50

-2 1.99

-15.20

12.59

16.97

45.93

181.94

36.53

13.51

0.66

0.40

-0.25

71.07

74.95

38.23

158.54

22.91

5.61

39.77

1.47

107.09

52.50

53.36

185.03

144.92

30.12

0.00

0.00 0.00

0.00 0.00

0.00 0.00 0.00

0.00

0.00

0.00 0.00

0.00

0.00

0.00 1.04

0.00 0.00

0.00 14.60

0.00 0.00

0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00

0.00 41.31

0.00 0.00

1 .55 0.00

0.00

17.97

0.00

118

PO40610 2002

PO69889 2002

PO10566 2001

PO59242 2001

PO71244 2001

PO50658 2001

PO55455 2001

PO55454 2001

PO67216 2001

PO70421 2001

PO59501 2000

PO50657 2000

PO49770 2000

PO45049 2000

P010505 2000

PO09972 2000

PO50646 1999

RAJ WSRF'

MIZORAM ROADS

Gujarat Highways

MP DPIP

Grand Trunk Road Improvement Project

TECHN EDUC I11

Rajasthan DPEP I1

KERALA RWSS

KAR WSHD DEVELOPMENT

Karnataka Highways

TA for Econ Reform Project

UP Health Systems Development Project

REN EGY I1

AP DPIP

RAJASTHAN DPIP

Natl Highways I11

UP Sodic Lands I1

0.00

0.00

381.00

0.00

589.00

0.00

0.00 0.00

0.00 360.00

0.00

0.00 80.00

0.00 0.00

516.00

0.00

140.00 0.00 60.00 0.00

0.00 0.00

110.10 0.00

0.00 0.00 64.90 0.00

74.40 0.00 65.50 0.00

100.40 0.00 0.00 0.00

45.00 0.00

110.00 0.00 50.00 0.00

111.00 0.00 100.48 0.00

0.00 0.00

194.10 0.00

0.00

0.00 0.00

0.00

0.00

0.00 0.00

0.00 0.00

0.00 0.00

0.00 0.00

0.00

0.00 0.00

0.00

15.04

0.00

101.00

20.06

0.00 0.00

0.00 12.27

20.06

0.00

12.03

30.09

18.00

0.00 0.00

0.00

0.00

80.07

32.01

33.46

9.84

202.42

9.02

26. 15

12.28

48.06

66.12

16.81

34.80

36.64

13.50

40.59

124.98

5.83

44.84 0.00

9.35 0.00

134.46 7.63

16.79 -11.28

202.42 0.00 2.88 -5.52

16.11 0.00 12.29 0.97

52.33 35.47

56.12 0.00

24.87 2.88

54.77 2.81

52.84 51.84

5.09 0.00 31.42 31.44

124.98 64.98

2.1 1 -4.14

Total: 6,489.00 5,626.28 0.00 1.00 469.23 7,601.57 2,096.45 170.93

INDIA STATEMENT OF IFC's

Held and Disbursed Portfolio In Millions o f U S Dollars

Committed Disbursed

IFC IFC

FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic.

2005

2006

2005

2005

2002

2003

2005

2006

2003

2004

2001

2003

2001

2005

1984

2003

2006

1990

1992

2004

2004

2002

ADPCL

AHEL

AP Paper Mills

APIDC Biotech

ATL

ATL

ATL

Atul Ltd

BHF

BILT

BTVL

Balrampur

Basix Ltd.

Bharat Biotech

Bihar Sponge

CCIL

CCIL

CESC

CESC

CGL

CMScomputers

COSMO

39.50

0.00 35.00

0.00 13.81

1 .oo 9.39

16.77

10.30

0.00

0.43

10.52

0.00

0.00 5.70

1.50

7.00

4.61

6.55

14.38

0.00 2.50

7.00

5.08

5.00

4.00

0.00

0.00 0.00 0.00 0.00

0.00

3.98

0.00

0.98

0.00 0.00

0.00 2.00

0.00

0.00 0.00

10.00

0.00

0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00

0.00 9.36

0.00 0.00 0.00 0.00 0.00 0.00

10.30 0.00

15.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00 4.50 0.00 0.00 0.00 0.00 0.00

0.00 12.40

0.00 0.00 0.00 14.59

0.00 0.00 2.50 0.00

0.00 0.00

0.00 0.00

25.00

0.00

13.81

0.68

0.00 0.00

10.30

0.00

0.43

10.52

0.00

0.00 5.70

0.59

7.00

4.61

6.55

7.38

0.00 2.50

0.00

5.08

5.00

2.01

0.00

0.00 0.00 0.00

0.00

0.00 3.98

0.00

0.98

0.00 0.00

0.00 2.00

0.00

0.00 0.00 0.00 0.00

0.00 0.00

0.00

0.00 0.00 0.00

0.00

0.00

10.30

15.00

0.00

0.00 0.00

3.30

0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00

0.00 0.00

0.00 0.00 9.36

0.00

0.00 0.00 0.00

0.00

0.00 0.00 0.00

0.00 0.00

0.00 12.40

0.00

14.59

0.00 0.00 0.00

119

2005 2006 2003 2005

2006 2005

2003 2006 2001

2006 1994 2003 1998

1998 2006

2005

2006 2006

1996 2001 2006

2005 2005 2003

2006 2006

2002 2003 200 1

1996 1999 2000

2003

2004 2003 2001 1997

2006 2004 2004

1995 2004

2005 2005 200 1 1997 2000

1995 2004

COSMO

Chennai Water

DQEL

DSCL

DSCL

Dabur

Dewan

Federal Bank

GTF Fact

GTF Fact

GVK HDFC

IAAF

IAL

IDFC

IDFC

IHDC

IHDC

Indecomm

India Direct Fnd

Indian Seamless

JK Paper

K Mahindra INDIA

KF'IT

L&T

LGB

Lok Fund

MMFSL

MSSL MahInfra

Montalvo

Moser Baer

Moser Baer

Moser Baer

Nevis

NewPath

NewPath

Niko Resources

Orchid

Owens Coming

PSL Limited

Powerlinks

RAK India

Rain Calcining

Rain Calcining

R a w Ruchi Soya SBI

S E I SREI Sara Fund

SeaLion

0.00

24.78 0.00

30.00

15.00 0.00

8.68

0.00 0.00

0.00

0.00

100.00

0.00 0.00

0.00

50.00 6.94

7.90 0.00

0.00

6.00 15.00 22.00 11.00 50.00 14.21

0.00

7.89

0.00

0.00

0.00 0.00

0.00

12.75

0.00 0.00 0.00

24.44 0.00

5.92 15.00 72.98 20.00 0.00 10.00 3.74

0.00 50.00

3.21 6.50 0.00 4.40

3.73 0.00

1 S O

0.00

0.00 14.09 0.00

28.06 1.20

0.00 4.83 0.00

0.47 9.79

10.82

0.00

0.00 0.00 2.57 1.10

0.00

7.62

0.00 2.50

0.00 4.82 2.00

0.00 2.29

10.00 3.00 0.82 8.74

10.54 4.00 9.3 1 2.79

0.00 0.73 0.00 4.74

0.00 0.00 2.29

0.00 10.28

9.27 0.00 0.00 0.00 3.43

0.00

0.00

0.00

1 S O

0.00

0.00 0.00

0.00 0.00

0.00 0.99 0.00

0.00 0.00

0.00

0.00 0.00

0.00

0.00

0.00

0.00

0.00 0.00

0.00

0.00 0.00

0.00 0.00

7.51 0.00

0.00 0.00

0.00

0.00 0.00

0.00

0.00

0.00

0.00 0.00 0.00 0.00

0.00 0.00 0.00

0.00 0.00 0.00

0.00 0.00

0.00 0.00

0.00

0.00 0.00

0.00

0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

100.00 0.00

0.00

0.00 100.00

0.00

0.00

0.00

0.00 0.00 0.00

0.00

0.00 0.00

0.00 0.00

0.00 0.00

0.00 0.00

0.00 0.00 0.00

0.00

0.00

0.00

0.00 0.00 0.00 0.00

0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00

0.00

0.00 0.00

0.00

30.00

0.00 0.00

8.68

0.00 0.00

0.00

0.00

100.00

0.00 0.00

0.00

50.00 0.00 0.00 0.00

0.00

6.00 0.00

22.00 8.00

50.00

0.00 0.00

7.89 0.00 0.00

0.00 0.00

0.00

12.75 0.00 0.00 0.00

24.44 0.00 5.92 0.00

64.16 20.00 0.00

10.00 0.00 0.00 0.00

3.21 6.50 0.00 4.40

3.73 0.00

1.50

0.00 0.00

14.09

0.00 23.99

1.20

0.00 4.83 0.00 0.30 7.70

10.82 0.00 0.00

0.00

2.57 0.66

0.00 7.38 0.00

2.50 0.00

4.82

0.00

0.00 2.20 0.79 1 .oa 0.82 8.74

10.54 4.00 8.3 1 2.49 0.00

0.73 0.00 4.54 0.00

0.00 2.29

0.00 0.00

6.77 0.00

0.00 0.00 3.43 0.00

0.00 0.00 1 S O

0.00

0.00

0.00 0.00

0.00

0.00

0.99

0.00 0.00

0.00

0.00 0.00

0.00

0.00

0.00

0.00 0.00 0.00

0.00

0.00 0.00

0.00 0.00

0.00 7.51

0.00 0.00

0.00

0.00 0.00

0.00

0.00

0.00 0.00 0.00 0.00

0.00

0.00

0.00 0.00

0.00 0.00 0.00 0.00

0.00 0.00

0.00 0.00

0.00

0.00

0.00

0.00 0.00 0.00 0.00

0.00 0.00

0.00 0.00 0.00

100.00 0.00

0.00

0.00 100.00

0.00 0.00

0.00

0.00

0.00 0.00 0.00

0.00 0.00

0.00 0.00

0.00 0.00

0.00 0.00

0.00

0.00 0.00 0.00 0.00

0.00

0.00

0.00 0.00 0.00

0.00 0.00 0.00

0.00 0.00 0.00

0.00 0.00

0.00 0.00

0.00

200 1

2003

2004

2000

2002

1998

2005

2004

1996

2005

2002

2001

2005

1997

1997

2006

Spryance

Spryance

Sundaram Finance

Sundaram Home

Sundaram Home

TCW/ICICI

TISCO

UPL

United Riceland

United Riceland

Usha Martin

Vysya Bank

Vysya Bank

w I V

Walden-Mgt India

iLabs Fund I1

0.00 1.86

0.00 0.93

42.93 0.00 0.00 2.18

6.71 0.00

0.00 0.80 100.00 0.00

15.45 0.00

5.63 0.00

8.50 0.00 0.00 0.72

0.00 3.66

0.00 3.51

0.00 0.37

0.00 0.01

0.00 20.00

0.00

0.00

0.00

0.00 0.00

0.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

0.00

0.00 0.00 1.86 0.00 0.00 0.00 0.93 0.00

0.00 42.93 0.00 0.00

0.00 0.00 2.18 0.00 0.00 6.71 0.00 0.00

0.00 0.00 0.80 0.00

300.00 0.00 0.00 0.00 0.00 15.45 0.00 0.00

0.00 5.63 0.00 0.00 0.00 5.00 0.00 0.00

0.00 0.00 0.72 0.00 0.00 0.00 3.66 0.00

0.00 0.00 3.51 0.00 0.00 0.00 0.37 0.00 0.00 0.00 0.01 0.00

0.00 0.00 0.00 0.00

0.00

0.00 0.00 0.00

0.00 0.00 0.00

0.00 0.00

0.00 0.00

0.00 0.00

0.00

0.00 0.00

Total portfolio: 956.52 249.41 42.30 536.35 604.74 175.91 38.60 236.35

Approvals Pending Commitment

FY Approval Company Loan Equity Quasi Partic.

2004 CGL 0.01 0.00 0.00 0.00

2000 APCL 0.01 0.00 0.00 0.00 2006 Atul Ltd 0.00 0.01 0.00 0.00

2001 Vysya Bank 0.00 0.00 0.00 0.00 2006 Federal Bank 0.01 0.00 0.00 0.00 2001 GI Wind Farms 0.01 0.00 0.00 0.00 2004 Ocean Sparkle 0.00 0.00 0.00 0.00 2005 Allain Duhannan 0.00 0.00 0.00 0.00

Total pending commitment: 0.04 0.01 0.00 0.00

121

Annex 18: Country at a Glance

INDIA: Punjab Rural Water Supply and Sanitation Project

1 Access to improved water source

- lndia -- -- Lowincomegroup

POVERTY and SOCIAL India

2005 Population, mid-year (millions) 1094.6 GNI per capita (Atlas method, US$) 730

797.9 GNI (Atlas method, US$ billions)

Average annual growth, 1999-05

Population (Y6 15 Laborforce (%J 19

M o s t recent est imate ( latest year available, 1999-05)

Poverty (% o f population belo wnationalpo verty line) 29 Urban population (%oftotalpopulation) 29 Life expectancyat birth (years) 63 Infant mortality(per lOOOlive births) 62

Access to an improvedwater source (%ofpopulation) 86 Literacy (%of population age 159 61

16 Male PO Female lP

Child malnutrition ("ofchildrenunder5) 47

Gross primaryenrollment (%of school-age population)

KEY ECONOMIC RATIOS and LONG-TERM TRENDS

1985 1995

GDP (US$ billions) 227.2 355.2 Gross capital formation/GDP 23.7 26.5

Gross domestic savingslGDP 8.5 25.1 Gross national savings/GDP 8.9 26.4

Current account balance/GDP -2.3 -18 Interest paymentslGDP 0.9 14 Total debt/GDP 18.0 26.8 Total debt servicelexports 23.0 27.8

Exports of goods and services/GDP 5.4 no

Present value of debtlGDP Present value of debtlexports

1985-95 1995-05 2004 (average annual grolllh) GDP 5.5 6.0 8.5

Exports of goods and services 0.9 9.6 8.2 GDP percapita 3.4 4.3 7.0

Growth o f cap i ta l and GDP (%) 20

M

0

- m

-GCF -GDP - -

South Low- As ia income

1470 684

1005

17 2.1

29 83 88 45 84 60 m 16 0 5

2004

694.7 28.5 8.5 29.1 314

-0.7 0.7 8 . 5 7.5 15.8 72.7

2,353 580

1364

19 2.3

31 59 80 39 75 62 0 4 m 99

2005

797.6 311

20.7 27.3 29.5

-13 0 7 6.1 9.1

2005 2005.09

8.7 7.4 7.2 6.0

218 6.7

Development diamond'

Life expectancy

1 GNI Gross per primary capita enrollment

Economic ratios.

Trade

Capital formation

Domestic savings

indebtedness

-India ~ Lowincomegroup

STRUCTURE o f the ECONOMY 1985 1995

(%of GDP) Agriculture 33.7 28.2 Industry 26.4 28.1

Services 39.9 43.6

Household final consumption expenditure 67.4 63.8 General gov't final consumption expenditure 114 0.8

Manufacturing 6.4 8.1

Imports of goods and services 7.8 P.2

(average annual grolllh) Agriculture Industry

Services Manufacturing

1985.95 1995-05

3.5 2.1 6.5 5.7 6.7 5.4 6.7 8.1

Household final consumption expenditure 5.7 5.6 General gov't final consumption expenditure 4.2 4.7 Gross capital formation 5.4 6.6 Imports of goods and services 9.9 7.0

2004

8 .6 27.3 6 .O 53.2

63.5

217 n 3

2004

0.7 8.8 8.1 9.9

P .8 0 .o P .8

45.0

2005

8.0 27.4

53.8

60.5 P.1

24.4

25.9

2005

3.9 8.7 9.0 D.0

4.9 15.6 0.4 22.0

Growth o f exports and impor ts ( O h )

BO 7

Note: 2005 data are preliminaryestimates. Group data are to 2004

'Thediamonds showfour key indicators in the country(in bold) compared with Rs income-groupaverage. If data are missing, thediamond will be incomplete.

122

India

PRICES and GOVERNMENT FINANCE

Domestic prices (% change) Consumer prices Implicit GDP deflator

Government finance (% of GDP, includes current grants) Current revenue Current budget balance Overall suruluddeficit

1985 1995 2004 2005 Inflation (X)

I I 4.9 10.0 7.2 9.0

3.9 4.2 4.2 4.1

19.2 17.9 -1.7 -3.1 -8.8 -6.7

19.7 20.8 -3.4 -2.8 -7.7 -7.5

00 01 02 03 M

-GDP deflator +CPI

TRADE

(US$ millions) Total exports (fob)

Tea Iron Manufactures

Total imports (cif) Food Fuel and energy Capital goods

Export price index (2000=100) Import price index (2000=100) T e n s of trade (2000=100)

BALANCE of PAYMENTS

(US$ millions) Exports of goods and services Imports of noods and services Resource balance

Net income Net current transfers

Current account balance

Financing items (net) Channes in net reserves

Memo: Reserves including gold (US$ millions) Conversion rate (DEC, locaVUS$)

EXTERNAL DEBT and RESOURCE FLOWS

(US$ mil/ions) Total debt outstanding and disbursed

IBRD IDA

Total debt service IBRD IDA

Composition of net resource flows Official grants Official creditors Private creditors Foreinn direct Investment (net inflows) Porlfolio equity (net inflows)

Wodd Bank program Commitments Disbursements Principal repayments Net flows Interest payments Net transfers

1985 1995

9,461 32,311 334 1,011 544 1,175

5,580 23,747 17,294 43,670 1,310 970 4,261 7,526 3,338 10,330

100 106 115 102 88 103

2004 2005

82,150 104.780 1,440 1,436 5,079 6,189

60,731 71,816 118,779 156,334

3,105 2,681 29,844 43,963 25,135 31,677

120 130 101 115 119 113

Export and Import levels (US0 mill.) 7 150,wO

1w,m

50,wO

0 99 w 01 02 a3 04

Exports Imports

1985 1995

12,777 39,657 19.418 51,213 -6,641 -1 1,556

-776 -3,205 2,207 8,506

-5,210 -6,255

4,639 3,319 571 2,936

2004 2005

128,181 165,390 150,611 194,679 -22,430 -29.289

-2,669 -5,027 20,253 24,095

-4,846 -10,221

31,618 24.874 -26,772 -14,653

Current account balance to GDP (%)

6,520 21,687 12.2 33.4

140,076 150,866 44.9 44.3

1985 1995

40,952 94,464 2,396 9,598 9,750 17,409

3,531 13,566 313 1,320 124 360

2004 2005

121,456 128,446 4,993 5,652

23,191 23,798

11,337 17,510 973 1,104 785 811

Cornposltlon of 2005 debt (US0 mill.)

G: 4,819 A 5.652

349 345 1,421 -1.048 2.273 1,254

0 2,057 0 2.748

591 181 1,908 1.586 4,271 5,405 3,240 5.733 8.907 12,489

F 67,955

2,882 2.078 1,375 2,052

157 796 1,218 1.256

280 884 938 372

2.886 1,416 2,966 3,163 1,458 1,516 1.508 1.647

301 400 1,207 1,247

A - IBRD B - IDA D - Other multilateral F - Primte C - IMF

E - Bilateral

G ~ Short-term

Development Economics 9/29/06

123

DharamkotZira

Makhu

Mallanwala PhilaurRahon

Taran Tarn

Dehlon

Malerkotla

DhuriTepla

Banur

Kharar

Landran

Attari

Pakhokey

TappaHandiaya

Bhucho

Baghapurana

DalaSultanpur

Dadwindi

Srihargobindpur

Batala

Qila LalSingh

Dera BabaNanak

Ajnala

Ramdass

PhagwaraGarhshankar

Khanna

KuraliSiswan

Badbar

Sunam

Bhawanigarh

Longowal

Sitogana

Dabwali

Malout

Harisinghwala

SanehwalDoraha

Jandiala

Tanda

FatehgarhChurian

Nakodar

Raikot

Kotkapura

Jaitu

Goniana

Salabatpura

Barnala

Dhanaula

Budhlada

Sardulgarh

Ratia

Lehragaga

Jakahl

Rupnagar

Patiala

Fatehgarh

Ludhiana

Nawashahr

Jalandhar

Hoshiarpur

Kapurthala

Gurdaspur

Amritsar

Ferozepur

Moga

Faridkot

Mukatsar

Bathinda

Mansa

Sangrur

Chandigarh

P A K I S T A N

G U R D A S P U R

A M R I T S A R

KAPURTHALA

KAPU

RTHA

LA

HOSHIARPUR

J A L A N D H A R

L U D H I A N A

M O G AFERO

ZPUR

F A R I D K O T

M U K T S A R

B A T H I N D A

M A N S A

S A N G R U RP A T I A L A

FATEHGARH

R U P N A G A R

NAWASHAHR

Sutle

j R.

Sutlej R.

Gha

ggar

Beas

R.

R. 30°

31°

32°

76°75°

30°

31°

32°

76°75°74°

74°

I N D I A

PUNJAB RURAL WATER SUPPLY AND SANITATION PROJECT

RIVERS

TOWNS

STATE CAPITAL

DISTRICT BOUNDARIES

STATE BOUNDARY

INTERNATIONAL BOUNDARIES

This map was produced by theMap Design Unit of The World Bank.The boundaries, colors, denominationsand any other information shown onthis map do not imply, on the part ofThe World Bank Group, any judgmenton the legal status of any territory, orany endorsement or acceptance ofsuch boundaries.

0 10 20 30 40 50

KILOMETERS IBRD 35078

NO

VEM

BER 2006