World Bank Document€¦ · Contact Person: Mr. Rahul Bhatnagar Tel: 3015839 Fax: 3012477 Email: [email protected] Other Agency(ies): Department of Elementary Education and

Document ofThe World Bank

Report No: 21955-IN

PROJECT APPRAISAL DOCUMENT

ONA

PROPOSED CREDIT

IN THE AMOUNT OF SDR 58.5 MILLION (US$74.4 million equivalent)

TO

INDIA

FOR A

RAJASTHAN SECOND DISTRICT PRIMARY EDUCATION PROJECT

May 26, 2001

Human Development UnitSouth Asia Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective May 3, 2001)

Currency Unit = Rupee (Rs.)Rs. I = USS0.0218

USS1.0 = Rs. 45.90

FISCAL YEARAprill - March31

ABBREVIATIONS AND ACRONYMS

AWPB Annual Work Plan and BudgetBAS Baseline Assessment StudyBNS Bhavan Nimian SanitiBRC Block Resource CenterCAS Country Assistance StrategyCEM Center for Education ManagementCRC Cluster Resource CenterDEA Department of Economic AffairsDEEO District Elementary Education OfficerDEO District Education OfficerDFID Department for Intemational Development (U.K.)DIET District Institute for Education and TrainingDOE Department of EducationDEEL Department of Elementary Education and LiteracyDPEP District Primary Education ProjectDPO District Project OfficesEEB Elementary Education BureauECE Early Childhood EducationEMIS Education Management Information SystemEMP Environment Management PlanFMS Financial Management SystemGER Gross Enrollment RatioGOI Govenmment of IndiaGOR Govemrnment of Rajasthan[CB Intemational Competitive BiddingIDA Intemational Development AssociationICDS Integrated Child Development SchemeLJP Lok Jumbish PathshalaMHRD Ministry of Human Resource DevelopmentNCB National Competitive BiddingNCERT National Council for Education Research and TrainingNFHS National Family Health SurveyNGOs Non-Govemmental OrganizationsNSSO National Sample Survey OrganizationOBC Other Backward CommunitiesPHED Public Health and Engineering Department

PIP Project Implementation rianPMIS Project Management Information SystemPRD Panchayati Raj DepartmentPRI Panchayati Raj Institution (local government)PSR Project Status ReportRCPE Rajasthan Council of Primary EducationRGSJP Rajiv Gandhi Swarna Jayanthi PathshalaSC Scheduled CasteSKP Shiksha Karni ProgranSIDA Swedish Intemational Development AgencySIERT State Institute for Educational Research and TrainingSMC School Management CommitteeSOE Statement of ExpendituresSPO State Project OfficeST Scheduled TribeTLM Teaching and Learning MaterialsUNICEF United Nations Children's FundWECs Ward Education Committees

Vice President: Mieko NishitnizuCountry Director: Edwin R. Lim

Sector Director: Richard SkolnikTask Team Leaders: Susan E. HirshbergfN.K. Jangira

INDIARAJASTHAN SECOND DISTRICT PRIMARY EDUCATION PROJECT

CONTENTS

A. Project Development Objective Page

1. Project development objective 22. Key performance indicators 2

B. Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 22. Main sector issues and Government strategy 23. Sector issues to be addressed by the project and strategic choices 4

C. Project Description Summary

1. Project components 52. Key policy and institutional reforms supported by the project 73. Benefits and target population 84. Institutional and implementation arrangements 8

D. Project Rationale

1. Project altematives considered and reasons for rejection 92. Major related projects financed by the Bank and other development agencies 103. Lessons learned and reflected in proposed project design 114. Indications of borrower commitment and ownership 125. Value added of Bank support in this project 12

E. Summary Project Analysis

1. Economic 132. Financial 143. Technical 154. Institutional 165. Environmental 186. Social 207. Safeguard Policies 22

F. Sustainability and Risks

1. Sustainability 232. Critical risks 243. Possible controversial aspects 25

G. Main Credit Conditions

1. Effectiveness Condition 262. Other 26

H. Readiness for Implementation 26

I. Compliance with Bank Policies 26

Annexes

Annex 1: Project Design Summary 27Annex 2: Detailed Project Description 33Annex 3: Estimated Project Costs 43Annex 4: Economic and Financial Analysis 44Annex 5: Financial Summary for Revenue-Earning Project Entities, or Financial Summary 55Annex 6: Procurement and Disbursement Arrangements 56Annex 7: Project Processing Schedule 71Annex 8: Documents in the Project File 72Annex 9: Statement of Loans and Credits 73Annex 10: Country at a Glance 77

MAP(S)

INDIA

Rajasthan Second District Primary Education Project

Project Appraisal Document

South Asia Regional OfficeSouth Asia Human Development Unit

Date: May 26, 2001 Team Leader: Susan E. HirshbergCountry Director: Edwin Lim Sector Director: Richard Lee SkolnikProject ID: P055455 Sector(s): EP - Primary EducationLending Instrument: Specific Investment Loan (SL) Theme(s):

Poverty Targeted Intervention: YProgram Financing Data

Loan [X] Credit [ ] Grant [] Guarantee [ ] Other:

For Loans/Credits/Others:Amount (US$m): 74.4

Proposed Terms (IDA): Standard CreditGrace period (years): 10 Years to maturity: 35Commitment fee: 0.5% Service charge: 0.75%

Financing Plan (US$m): Source Local Foreign TotalBORROWER 13.10 0.00 13.10IDA 72.40 2.00 74.40

Total: 85.50 2.00 87.50Borrower:Responsible agency:Government of India, Department of Economic Affairs, Ministry of Finance

Address: 39-B, North Block, New Delhi - 110001Contact Person: Mr. Rahul BhatnagarTel: 3015839 Fax: 3012477 Email: [email protected]

Other Agency(ies):Department of Elementary Education and Literacy, Minstry of Human Resource Development, Government of IndiaAddress: Room No. 116 - C, Shastri Bhavan, New Delhi - 110001Contact Person: Mr. Sumit BoseTel: 91-11-3383451 Fax: 91-11-3070584 Email: [email protected] of Rajasthan, Panchayati Raj DepartmentAddress: Shasan Sachiv, Panchayati Raj Vibhag, Rajasthan Shasan Sachivalaya, Mukhya Bhawan, Jaipur - 380005Contact Person: Mr. Ashish BahugunaTel: 91-141-380012 Fax: 91-141-380012 Email:Estimated disbursements ( Bank FYIUS$m):

FY .2001 2002 2003 2004 2005 l 2006Annual 9.30 22.50 18.80 11.20 8.20 4.40

Cumulative 9.30 31.80 50.60 61.80 70.00 74.40

Project implementation period: Five yearsExpected effectiveness date: 09/30/2001 Expected closing date: 12/31/2006

LDC PAD FlCn, V.I UaO,, 2000

A. Project Development Objective

1. Project development objective: (see Annex 1)

The project is the seventh in the series of the national District Primary Education Program (DPEP) in Indiawhich was launched in 1994 to target educational improvements in low literacy districts across India. Theobjectives of DPEP and this project are to ensure that all 6-11 year old children in nine districts, especiallyfrom socially and economically disadvantaged groups, have access to a five year primary education cycleof appropriate quality. It is expected to result in increased enrollments and community involvement inprimary education, improved teacher performance, greater learning and higher completion rates of theprimary cohort. It is the second phase of an ongoing program, Rajasthan DPEP, the first phase of which isbeing financed by Rajasthan DPEP (I) and covers ten underserved districts of the state.

2. Key performance indicators: (see Annex l)

Key performance indicators of progress towards development objectives include: (a) improvements inteaching-learning conditions and practices in the classroom; (b) establishment of ongoing pedogogicalsupport systems for teachers; (c) effective use of school and teacher grants; (d) increased involvement ofparents and School Management Committees (SMCs) in school construction, maintenance, improvingenrollment and attendance, and other school-level support; (e) established monitoring systems (EMIS,PMIS, and FMS) and better use of data for planning and management; (f) increases in gross enrollmentrates; (g) increased retention and decreased repetition; and (h) gains in learning achievement.

B. Strategic Context1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1)Document number: Report 21852-IN Date of latest CAS discussion: 04/05/01

The project is consistent with the objectives outlined in the Country Assistance Strategy (CAS) datedMarch 13, 2001, of assisting India with its pursuit of poverty reduction to create an environment forgrowth. The strategy outlined in the CAS to achieve this goal emphasizes, inter alia, the need to strengthenthe enabling environment for development and growth, including human resource development, and tosupport critical interventions of special benefit to the poor and disadvantaged. Poverty is severe inRajasthan, and the state has among the lowest social indicators of all Indian states. Differences ineducation development between states have been shown in Bank poverty studies on India to be a majorcause of variation in the incidence of poverty. Therefore, investing in primary education would facilitatehuman development which should lead to higher productivity and incomes. Furthermore, the project willtarget socially and economically disadvantaged groups (females, Scheduled Castes, Scheduled Tribes,Other Backwards Castes, working children and children with disabilities) with the aim of reducing gaps ineducation participation and attainment, to ensure equity in development and growth. The economic andsocial returns to primary education are reported in Bank publications (Primary Education in India, 1998),in Project Appraisal Documents for Bihar, Uttar Pradesh and Andhra Pradesh and in various surveys (e.g.,Family Health Survey and National Sample Survey).

2. Main sector issues and Government strategy:

GOR recognizes that primary education is key to poverty alleviation and growth, and has sought to make itan investment priority despite its current difficult fiscal situation. This effort is evident in recentimprovements in literacy across the state: according to the 52nd Round of the National Sample SurveyOrganization report, the literacy growth rate between 1991 and 1997 was the highest in Rajasthan at 16.5percent compared to the other educationally backward Hindi-speaking states, with a higher female literacy

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growth rate than males at 18 and 14 percent respectively. Preliminary analysis of the 2001 Census alsoreveals that Rajasthan witnessed the highest increase in overall literacy rates across India for the lastdecade at nearly 23 and 24 percent for males and females, respectively. However, much remains to bedone. Issues within the five year lower primary cycle include the following:

Low and inequitable enrollment: Social stratification and poverty have resulted in a severe disparity inaccess to and participation in primary school, particularly in rural areas and for girls, Scheduled Caste(SC) and Seheduled Tribe (ST) students. 1997/98 data revealed a striking imbalance in the GrossEnrollment Ratio (GER) based on household income level and gender: GER for girls in Classes I-V is 30percentage points lower than for boys, and GER for ST girls is 47 percentage points lower than all boys.Combining educational indicators with indicators of economic status, a Bank study portrays variation inenrollment between students from wealthy and poor families across the state (Filmer and Pritchett, 1998).In 1997, only two in five children in the poorest 40 percent of households in Rajasthan attended schoolcompared to over three in five children from the next 40 percent. Sociocultural influences also have anegative impact on enrollment: 90 percent of children from the wealthiest 20 percent of households inRajasthan attend schools, yet in Rajput communities where income is relatively high, up to 90 percent ofgirls still remain out of school. The persistence of obstacles to children attending school due to familyobligations, social, economic or cultural factors, or not attending due to poor quality remain.

Low efficiency (repetition, dropout and retention): Dropout and repetition rates in Rajasthan are high, andretention is poor. Government figures indicate that for every 100 children enrolled in Class I in DPEPdistricts, only 43 children completed Class V after five years. The dropout rate for girls is 4.22 percentagepoints higher than for boys. Given these statistics and using a standard flow model, it is estimated that 60percent more resources are being used than would be required if dropout rates were zero. Student dropoutis exacerbated by uneven attendance and the poor quality of education provided, indicated by lowachievement scores (see below).

Poor teaching and learning outcomes: Achievement levels in Rajasthan are low. The average score on aBaseline Assessment Survey (BAS) in mathematics and language for Class II students is about 50 percent,and worse for Class IV students at below 40 percent. The Public Report on Basic Education (PROBE)published in 1999 identified reasons for low achievement levels, corroborated by the BAS, including: (1)low student attendance, (2) low teacher attendance due to lack of commitment and/or demand from requirednon-teaching activities, (3) insufficient instructional time at about 150 functional working days per yearwith approximately four hours of instruction per day, (4) difficult textbooks, and (5) a lack of focus ondeveloping students' problem solving skills, due to inadequate pre-service and inservice teacher training andan inappropriate curriculum.

Inadequate pedagogical support and weak management: In January 1999, the management of elementaryeducation was shifted in Rajasthan from the Department of Secondary and Higher Education to thePanchayati Raj Department (PRD). This structure has the potential to facilitate and strengthendecentralized authority and resources to the local level which could lead to improved community andschool-based management. However, several weaknesses emerged during the first 18 months. First, thelinks between the technical and administrative support functions of the two departments only exist in aloosely defined relationship: the State Institute of Education Research and Training (SIERT) which isresponsible for primary curriculum and textbooks remains with the Department of Secondary and HigherEducation while hiring, evaluation, salary distribution and school management are the joint responsibilityof the Panchayati Raj Institutions (PRls) and the PRD. Second, supervision is the joint responsibility ofthe Department of Secondary and Higher Education and PRIs, and the Block Elementary EducationOfficers and teachers answer to both the PRIs and the departmental functionaries in the field. Capacity for

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monitoring by the PRD needs strengthening, and the means of providing feedback to the system forinformed planning and decision-making are still weak.

Government Strategy: The GOR is acutely aware and deeply concemed about educational backwardnessin the state. Its strategy had been primarily focused on increasing access to primary educationalopportunities through increased allocations to elementary education; building public-private partnerships tofacilitate greater community involvement in the primary schooling process; and supporting innovationswhich would break through social, economic and cultural traditions to generate more demand. The ShikshaKarmi (SKP -- Education Worker) and the Lok Jumbish (LJP -- People's Movement) Programs constitutetwo such externally-supported schemes established with assistance from the Swedish InternationalDevelopment Agency (SIDA), now financed by the Department for International Development (DFID) ofthe UK. Both projects are jointly (public-private) funded, semi-autonomous schemes which have beenfairly successful, and are well known for their teacher training models and school mapping/microplanninginitiatives, respectively. Other innovative GOR projects include Saraswati Yojana which trains adultwomen to educate girls in their homes or community centers, the centrally sponsored Total LiteracyCampaign, and the Digantar (an NGO) program for tribal education. Even with the success of theseprograms, access to school remained an obstacle to many children in the state. Physical access to schoolingreceived a boost in July 1999 when the state sponsored a scheme [called the Rajiv Gandhi Swarna JayanthiPathshala (RGSJP -- Golden Jubilee Schools) scheme] which opened nearly 12,000 community schoolsacross the state, 9,000 of which are in DPEP districts. Another 6,000 are planned, which could virtuallyeliminate the need for new schools in all but the most remote communities. This large-scale program hascreated near-universal access to the first five years of the eight year elementary cycle, yet providing suchrapid, wide-scale access to schooling requires additional emphasis on the quality of education provided, andcapacity of communities and officials to monitor and supervise the system. DPEP will provide pedagogicalsupport for RGSJP schools to improve their quality and functioning.

In addition to taking steps to eradicate issues of access and equity, in 1998, Rajasthan DPEP I wasdeveloped to cover ten districts, becoming effective in October 1999. This project targeted districts andblocks where SKP and LJP are not functioning, and serves to tackle issues of quality and institutionalcapacity at the state, district, block and school levels more broadly. Since Rajasthan DPEP was originallydesigned, GOR has taken two strategic steps which will have an impact on the education sector: (1) movingall primary schools under the administration of the PRD as described above, and (2) bringing the threelargest primary education schemes of SKP, LJP and DPEP under one umbrella at the state level for bettercoordination (the implications of these are discussed under Institutional Assessment).

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

Many technical, economic and sociocultural reasons can be identified for the low levels of literacy,enrollment, and intemal efficiency. Low enrollment rates could be attributed to the lack of accessibleschool facilities and for girls, to the absence of female teachers. In some communities, the absence of atradition in education or the direct and indirect costs of attending school prevents parents from sending theirchildren to school. Inadequate quality accounts for the high dropout and low achievement levels. Thestrategies currently employed by govemment with donor assistance include increasing access, improvingquality, reducing costs through teacher redeployment and use of parateachers, and decentralizingmanagement of schools to local govemment and communities. Strategically, given the low levels of literacyand school participation in the state, the project will focus on the first five years of elementary educationwhere the economic and social retums are highest. It will address the following basic needs of the system:

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Increased access to and retention in primary school. Efforts to increase access and enrollment will focuson: (i) establishing alternative schools (AS) from a menu of options to be selected by the community in theremaining, mostly remote, villages where schools do not exit; (ii) improving the school environment bystrengthening PRIs and community organizations to take a more active role in enrolling students, andmanaging, supervising, and monitoring school activities; (iii) canying out targeted enrollment drivesdesigned to tackle specific social, cultural and economnic obstacles to children's enrollment and attendance;(iv) selectively establishing Early Childhood Education (ECE) centers; (v) hiring parateachers tosupplement the existing teaching force; (vi) providing infrastructure to schools or AS as required; and (vii)improving existing infrastructure through major repairs, additional classrooms where warrented due toovercrowding or a strong enrollment response, and providing hand pumps and toilets (a known factor forimproving girls' enrollment and attendance).

Improved quality of teaching and learning, thus increasing achievement, completion and retention.Efforts to improve the quality of schooling and the teaching/learning process will include proveninterventions of the broader DPEP program: establishing school cluster resource centers to institute aholistic pedagogical renewal scheme for pedagogical support and follow-up for teacher development;providing inservice training and school-based support to teachers; developing and supplying improvedinstructional materials; providing financial support and training to teachers for developing, using andprocuring teaching and learning materials (TLM); providing funds to SMCs for school improvement; anddeveloping assessment systems both for teachers in the classroom to measure student progress and districtand state education officials to use in overall monitoring.

Strengthened state, district, block and community-level capacity for planning, management, supervisionand monitoring ofprimary edcucation. The same system of support to strengthen capacity for managingprimary education used in Rajasthan DPEP I and across the other six DPEP projects will be utilized.Futhermore, the GOR has brought all projects and schemes in elementary education under one umbrella inorder to better coordinate capacity building efforts, to be overseen by the State Project Director for DPEP.Therefore, the difference in this project from Rajasthan DPEP I is the need to provide better coordinationbetween the institutions which provide technical support for education at the state, district and local levelssuch as the Directorate of Elementary Education, District Elementary Education Officers, and BlockElementary Education Officers with the Panchayati Raj Institutions which now oversee primary education.

C. Project Description Summary

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

(i) Expanding access, retention and enrollments. This component of the project would include targettedinterventions to reach marginalized groups such as establishing altemative schools, short-term bridgecourses to reach out-of-school and dropout children, providing incentives to focus group children,establishing Early Childhood Education (ECE) centers, providing residential facilities for migratorychildren and services/appliances for children with mild to moderate disabilities. The project would alsoprovide parateachers to new and overcrowded schools, giving preference to hiring female teachers, andtrain School Management Commnittees (SMCs) in community mobilization and awareness building, forwhich NGOs would be contracted where feasible. Civil works include new schools for buildinglessschools, alternative schools with an emphasis on designs amenable to multigrade teaching, additionalclassrooms, toilets, and water supply.

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(ii) Improving quality and achievement. This component of the project includes the following activities tobe financed under the Credit: (i) instituting a holistic pedagogical renewal approach for continuous supportfor teacher development for all teachers, parateachers, and ECE workers which includes training ininteractive and child-centered learning activities, establishing supportive school and locally basedsupervision mechanisms, and providing need-based content training; (ii) provision of teaching and learningmaterials (TLM), teacher guides, student workbooks being developed to support the new textbooks andpedagogy; (iii) development and provision of school libraries for all primary schools; (iv) distance learningprograms; (v) improving teachers' capacity to assess student progress; and (vi) improving the physicalschool environment by empowering SMCs to manage school improvement activities.

(iii) Building capacity to manage primary education at the state, district and local levels. Thiscomponent includes the following: strengthening the SPO to meet the expanded scope of DPEP;establishing and strengthening DPOs with a project coordinator, four program officers, financial andaccounts professionals, and support staff; establishing and staffing Block Resource Centers (BRCs) andCluster Resource Centers (CRCs) for teacher training and on-site professional support; providing trainingand professional development opportunities to SIERT and DIET faculty; further strengthening the Centerfor Educational Management as it develops as supported in the first phase of Rajasthan DPEP; andbuilding capacity at the district and subdistrict level for monitoring and evaluation through the EMIS andPMIS systems. District-based Financial Management Systems are expected to be fully functioning by thesecond year of the project.

tIndicative Bank- % ofComponent .; Sector Costs % of financing Bank-

=_ h _ -.(UM. Total (l$ financingExpanding access and retention Primary 38.40 43.9 33.40 44.9

EducationImproving quality and achievement Primary 28.20 32.2 23.20 31.2

EducationBuilding institutional and management Institutional 20.90 23.9 17.80 23.9capacity Development

Total Project Costs 87.50 100.0 74.40 100.0Front-end fee 0.00 0.0 0.00 0.0

Total Financing Required 87.50 100.0 74.40 100.0

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

Fiscal Reform. The 1990s in Rajasthan brought a decline in economic growth and a serious fiscal deficit.At present, the state is simultaneously experiencing a fiscal crisis while social indicators are among thelowest in all India, despite being a leader in budgetary support for education (26 percent of the budget forthe sector, of which 57 percent is allocated to the elementary level). The financial implications for reachingout-of-school children in Rajasthan is of crucial concem: within the current structure of expenditure oneducation, an 11 percent increase per year is required to achieve universal primary education of appropriatequality. Given the state fiscal situation, this level of increased expenditure is putting pressure on thesystem. Govemment is undergoing an overall fiscal reform program which would create some fiscal spaceto increase expenditure in the sector, while implementing different policies to sustain the developmentprocess and provide greater access to basic education. The policies and reforms the project would pursueinclude building capacity for decentralized management of primary schools; improving the efficiency of thesystem; establishing altemative, community-based schools; and using parateachers in both community andregular government schools.

Decentralized education planning and management. The project supports GOR's policy of establishing adecentralized management structure for education to ensure cornnunity ownership of primary education.In 1999, the GOR transferred educational planning, administation and management to the PRIs, or locallyelected self-governing bodies at the district and sub-district levels. School Management Committees(SMCs) will be formed for every school with representation from the local Panchayat of females,Scheduled Castes and Scheduled Tribes, and parents with disabled children to work with the Panchayat andschool to improve the learning environment. SMCs will also be involved in microplanning for school andresource mapping, mobilization of community support for encouraging parents to enroll and retain childrenin school, management of the community construction program and school oversight. For convergence ofresources, the SMCs will work with the PRJs to secure available government funds from variousgovernment schemes such as the Jawahar Rojgar Yojana Scheme, the Employment Assurance Scheme, andthe Battees Zila Battees Kam Scheme -- and local contributions for the construction and maintenance ofprimary schools. In addition, available monetary and non-monetary inputs will be mobilized by the SMCsfor enhancing the effectiveness of project interventions.

Redeployment of teachers and employment ofparateachers. The project will support the redeployment ofexisting teachers to ensure a more rational and efficient use of existing resources, in addition to hiringparateachers in new and existing schools. Currently, teachers salaries consume 97.6 percent of combinedplan and non-plan expenditure on elementary education. Therefore, to employ additional teachers requiredto fill vacancies at government pay scales and service conditions will not help reduce unit costs ineducation. The policy of employing parateachers has been adopted by many states, including Rajasthan, toaddress both the need to expand access to primary education and the issue of declining resources asdescribed in informal World Bank reports. Parateachers are hired by the local community. Compared toregular teachers, locally recruited parateachers have been shown in an evaluation of the SKP to help lowerdropout and repetition rates, increase learning achievement in the first few years of primary schooling andimprove accountability of the teacher to the school. They are hired at a substantially lower salary ataround one-fifth the nornal teachers salary, with Class 12 qualifications (reduced to Class 10 for females).Parateachers working in formal government schools would be required to meet norms set by the NationalCouncil of Teacher Education. The technical and financial sustainability of and career incentives for theseparateachers will be addressed during the course of the project. Student achievement under parateachers,particularly for Classes IV and V, will also be monitored.

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3. Benefits and target population:

The project will focus on the key areas in primary education which would help Rajasthan in its attempts toimprove social indicators, and promote faster development and more equitable growth. According to theNational Family Health Survey, in Rajasthan actual and preferred fertility rates fall consistently as amother's education levels increase, the largest fall (15 percent) being associated with primary schooling.Mortality rates for children under five fall by 14 percent with primary schooling and 40 percent with upperprimary education attainment of mothers. There is a significant reduction in the proportion of unnourishedchildren as mothers' education level rises. In addition to improvements in social indicators, the adoption ofhigh yielding varieties, utilization of extension services and other schemes for raising family incomes islinked to the educational attainment. More intangible future social benefits of the project include theempowerment of future generations of women and the possibilities for more informed participation of thestate's citizenry.

The direct beneficiaries of the project would include all children aged 6-11 years in the nine projectdistricts. It would create approximately 200,000 places for the estimated 350,000 children who are still outof school -- approximately two-thirds of whom are girls, and one third SC/ST, working children andchildren with disabilities -- and seek to improve the teaching and learning environment for all primaryschool going children, thus boosting achievement. Special needs groups such as working children, childrenwith mild to moderate disabilities, SC, ST, OBC and girls would benefit from campaigns to increaseawareness of parents; specific sensitization training for teachers, Panchayati Raj Insititutions (PRIs) andeducation officials; and other incentive/provision schemes to ensure their full participation. The projectwould also benefit about 12,000 children in the 3-6 years age group by establishing 400 ECE centers. Itwould also improve the functioning of 5960 Integrated Child Development Scheme (ICDS) centers whichwould serve the dual purpose of preparing the younger children for primary school and allowing their oldersiblings, usally sisters, to continue to attend school. Teachers will benefit through inservice training andongoing pedagogical support through CRCs and BRCs, as well as new, user-friendly textbooks and teacherguides, and funds for developing teaching and learning materials (TLM). Parateachers in Rajiv GandhiPathshalas and alternative schools would also receive intensive training and ongoing support. Villages andcommunities will benefit from training for their expanded role in school oversight, management of theschool funds provided under the project, and exposure to and engagement with low-costconstruction/repair/maintenance technology.

The system as a whole would benefit from improved levels of internal efficiency. Bank analysis forRajasthan DPEP I has demonstrated that in view of the high dropout and repetition rates, the educationsystem requires the resources for 7.9 years of schooling to produce one graduate of the five year cycle (56percent more). With improvement in quality expected from the interventions in the project andcorresponding improvements in retention levels, system efficiency is expected to improve in termns ofreducing unit and total costs.

4. Institutional and implementation arrangements:

Implementation period: September 30, 2001 through December 31, 2006Executing agency: GOR through an autonomous registered society called Rajasthan

Council of Primary Education (RCPE) established on November 3,1997

Project coordination: Elementary Education Bureau of the Department of ElementaryEducation and Literacy (DEEL) at the Ministry of Human ResourceDevelopment, GOI

Project oversight: Elementary Education Bureau, GOI

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The project will be implemented according to the framework established in the DPEP Guidelines, asadopted by the GOI in 1993 and amended from time to time, and the agreed Project Implementation Plan(PIP) prepared by the state. General oversight and coordination of project implementation would beprovided by the Elementary Education Bureau (EEB, formerly the DPEP Bureau) in the newly createdDepartment of Elementary Education and Literacy (DEEL) of the Ministry of Human ResourceDevelopment (MIHRD) of the GOI. The Bureau was established in 1993 and has had the responsibility ofgeneral oversight for the six Bank-funded DPEP and two UP Basic Education Projects. Implementation ofthe specific project activities will be the responsibility of the RCPE, established in November 1997 forpreparation and implementation of the first phase of Rajasthan DPEP, and managed by a State ProjectDirector (SPD).

D. Project Rationale

1. Project alternatives considered and reasons for rejection:

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

DPEP was developed in 1994, and districts to be financed under the program were selected based onestablished criteria. At that time, the GOR decided that the project would be a Centrally SponsoredScheme (CSS) with arrangements as found in other DPEP projects. In accordance with the national DPEPguidelines, DPEP in Rajasthan is implemented in the proposed project districts through the autonomousRajasthan Council of Primary Education. The possibility of using the existing Lok Jumbish Society orShiksha Karmi Society to implement DPEP instead of establishing the RCPE was discussed with GOR atthe time of developing Rajasthan DPEP I. Instead of opting for one of these programs to manage the CSS,the GOR decided to bring all three programs under one umbrella for better coordination and in order tocapitalize on the strengths of LJP and SKP in the areas of community mobilization and teacher training,respectively.

* GOR requested that DPEP assume financial and technical responsibility for the existing RGSJPschools. This was partially rejected by the Bank: according to the GOI's guidelines, DPEP funds are tobe an addition to the existing state government's education budget. Since the RGSJP had beenestablished by the GOR before DPEP, it was agreed that DPEP would not finance existing RGSJPteacher salaries, but would provide support for teacher training and development, provision of TLM,funds to SMCs, and links to the CRCs as provided to all formal government and alternative schools.

* When the project was first discussed in 1997, the Bank advocated filling new posts and vacancies withregular government teachers. The Bank now supports the GOR's decision to meet the demand ofincreasing enrollments by deploying a combination of parateachers and regular teachers. Parateacherswould receive intensive training based on the successful SKP model of once yearly intensive trainingand regular monthly support meetings, and follow a similar career path as agreed in Rajasthan DPEP I.This intervention will be evaluated by a third party by the mid-term review.

* SKP schools in DPEP districts were initially considered ineligible for DPEP support and excluded fromthe school construction program. The schools are well-established community schools with a provenrecord of enrollment, retention, achievement and community support which serve the mostdisadvantaged communities, but for which buildings could not be financed by SIDA (original fundingagency). Therefore, it was decided that the project would provide funding for SKP buildingless schoolsif the school has maintained enrollments of 50 children and has been operating for at least three years.

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Other resources would be provided as per all alternative schools (e.g., TLM grants, schoolimprovement funds to SMCs, etc) to the extent to which they are not already provided by SKP.

* Most schools being established under Rajasthan DPEP H are in remote habitations with populations ofless than 200, and 30 primnary school-aged children. The GOI and the Bank suggested revising thestate norm of providing all communities with a two-room school and two teachers. Instead, acost-effective one-room building specifically designed to accornmodate multigrade teaching and easilyexpandable to two rooms if enrollments require, will be provided. Similarly, it was decided that urbanslums would be included in the project design to cater to the needs of the urban poor.

Dialogue with the GOI and the Bank is focussing on the need for continued improvement of data collectionand the need for independent, third party evaluation of the overall impact of DPEP.

2. Major related projects financed by the Bank and/or other development agencies (completed,ongoing and planned).

l I Latest SupervisionSector Issue Project (PSR) Ratings

.____i____:______________.____ _ __________________ (Bank-financed projects only)Implementation Development

Bank-financed Progress (IP) Objective (DO)

Primary Education First District Primary S SEducation Project (DPEP I)DPEP II (Cofinanced by the S S

Primary Education Royal Govemment of theNetherlands)

Primary Education DPEP III (Cofmanced by U UUNICEF)

Primary Education Andhra Pradesh Economic S SRestructuring Project --

Education Component

Primary Education Rajasthan DPEP I S S

Primary Education Uttar Pradesh DPEP III S S

Completed Projects:

Elementary Education Uttar Pradesh Basic Education HS HSProjects (I and II) -- World

Bank

Other development agenciesPrimary Education DPEP in Madhya Pradesh

(financed by the EuropeanCommission)

Primary Education DPEP II in Andhra Pradesh andWest Bengal (financed byDFID)

Primary Education Lok Jumbish and ShikshaKarmi in Rajasthan (originallyfinanced by SIDA, nowfinanced by DFID)

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Women Empowerment Mahila Samakhya financed bythe Royal Government of theNetherlands

Primary Education DPEP in Gujarat financed bythe Royal Government of theNetherlands

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

3. Lessons learned and reflected in the project design:

DPEP has been operational since 1994. The lessons which have emerged through the various DPEPprojects over time have confirmed the strengths of some of the initial design assumptions, including: (i)establishing an independent society at the state level for implementation has facilitated the flow of fundsand project implementation; (ii) the importance of placing a cap on civil works expenditure, originally 24percent and recently raised to 33 percent by the GOI for those states which have disbursed at least 50percent of allocations to quality components; (iii) the need for a comprehensive and holistic package ofinterventions for improvement of quality such as continuous teacher development, incentives to teachers tochange the leaming environment with TLM grants and advancement opportunities, and improved booksand workbooks; (iv) the importance of building capacity for planning and implementing educationalinterventions at the district and subdistrict level, phased over time with higher levels of support from thestate in the earlier years of the project; and (v) the need to build community support for education is centralto successful implementation, and establishing SMCs early in the program using fully participatoryprocesses. More specific lessons from DPEP and, more specifically Rajasthan DPEP I, include:

(i) Establishing an autonomous State Implementation Society has facilitated the flow of funds andstreamlined management procedures. However, it is essential that the project management structureremains closely linked with the state's primary education system and structure to ensure longer termownership and sustainability of the program. This is reflected in the project design by ensuring the state,district and subdistrict level Executive Committees and Resource Groups contain representation from allrelevant nodal and local government institutions/governing bodies, and that existing education officials areimplementors of the program. Rajasthan has taken this a step further by bringing management andimplementation of all projects under the SPD to ensure full coverage and integration of educationdevelopment efforts.

(ii) While the quality of initial preparation is important, it is tenuous until tested against field realities.The project design, therefore, requires flexible implementation arrangements which allow investmentpriorities to be determined by districts and blocks. In the case of Rajasthan, this flexibility is encouragingbetter utilization of the skills and strengths already developed in existing innovative projects in the state.

(iii) It was initially assumed that each DPEP project would leam about initial project implementationfrom its predecessors to avoid delays in start up. This has not been the case across the series of projects,and in Rajasthan DPEP I in particular. The lessons are that: building state and district capacity take timeand is only accomplished by "doing" rather than planning, and that much can be done in the preparationprocess to refine plans (e.g., hiring and training staff, developing and approving civil works designs, fieldtesting training modules, providing orientation to state and district officials, etc.). Rajasthan DPEP II willavoid this slow start-up by using civil works and training designs from Rajasthan DPEP I, and provision ofretroactive financing which has allowed the state to hire and train DPEP implementors in the nine newdistricts as of May 1, 2001.

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(iv) Continuity of competent and commnitted project staff for the life of the project is critical to thequality of implementation for which political will of the borrower is required.

The Uttar Pradesh Basic Education Projects were recently completed. The projects were rated highlysatisfactory, however, some concems emerged which would need to be addressed more pointedly in futureprojects. They include the need for more robust third party monitoring and evaluation mechanisms to trackprogress towards project outcomes, the concem for further improvement and data quality and utilization,the need to synchronize enrollment growth with teacher appointments to regulate teacher:student ratios andthe need for improved methods for collecting and using feedback from the field to maximize the potential ofcommunity organizations, including SMCs, for school improvement.

4. Indications of borrower commitment and ownership:

The GOI has demonstrated its commitment, consistent with the revised National Policy on Education(1992), to providing primary education to all children in India, with particular attention to girls andchildren from socially and economically disadvantaged groups. Since 1994, the GOI has worked toimplement and adapt DPEP in 15 states (now 18 due to bifurcation) and 242 low literacy districts with aninvestment of about US$1.3 billion. Overall enrollments in the country are up in the last decade, andaccording to a study by the National Institute of Education Planning and Administration (NIEPA) inNovement 2000, enrollments in DPEP districts have significantly outperformed the national trends. Realpublic spending on elementary education grew by about 5.8 percent a year over the perioud 1991-1998.The GOI aims to further progress, and is formulating a comprehensive 15 year scheme to cover eight yearsof elementary education -- the Sarva Shiksha Abhiyan (SSA) or Education for All -- for which a provisionof Rs. 500 crores (approximately US$110 million) has been allocated in FY2001/02.

Rajasthan has traditionally been among the most educationally backward states in India. The GOR hasdemonstrated its commitment to improving this record with a 53.2 percent increase in total real expenditureat the elementary level between 1991-1998, which resulted in a 45 percent increase in enrollments duringthat time. Preliminary results from the 2001 Census also reveal the highest increase in literacy rates inIndia to be in Rajasthan at 23 percent since the 1991 census. The GOR has further shown its commitmentto improve access to the hardest-to-reach children by initiating and financing the RGSJP scheme, openingnearly 12,000 schools with enrollments of almost 60,000 children since 1999.

Slow implementation start up for Rajasthan DPEP I has been overcome due to renewed commitment of theGOR and the placement of key personnel in the SPO, resulting in expenditure nearly tripling in six monthssince October 2000. The GOR has provided upfront financing for hiring and training key personnel in thenew districts. Recruitment and placement of key project personnel took place prior to negotiations, andremaining posts would be filled by July 2001.

5. Value added of Bank support in this project:

The Banl's experience in India in implementing large-scale programs of education reform, and the design ofextemal assistance strategies to these programs has resulted in it becoming one of the most importantsources of technical support and extemal funding in Ihidia's progress towards universal primary education.This support has served as a catalyst to make primary education a priority at the national level, andmobilized a range of national and state level non-project initiatives. In addition, the Bank has beeninstrumental in mobilizing and coordinating financial and technical support from other donors in the sector(DFID, European Commission, The Royal Govemment of the Netherlands, and UNICEF). The Bank hasprovided a lead role in designing and operationalizing joint project review mechanisms whereby a group of

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education and management professionals, nominated by the donors supporting DPEP and the GOI, reviewimplementation progress bi-annually. The GOI and donors provide education specialists and managersfrom participating DPEP states and the GOI exposure to the education innovations of other developingcountries. It also plays a key role in providing continued technical and financial support, which areessential for ensuring that the potential benefits of past investment come to fruition. Rajasthan DPEP IIwould provide the opportunity for continuing the Bank's international experience in this sector, as well asassisting the GOR to move towards universal primary education in the project districts, with specialattention to the needs of girls and other socially disadvantaged groups.

E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8)

1. Economic (see Annex 4):o Cost benefit NPV=US$ million; ERR % (see Annex 4)O Cost effectiveness* Other (specify)

Primary education and poverty reductionThe six previous DPEP documents and recent background studies for two Bank reports on poverty in India,Achievements and Challenges in Reducing Poverty (1997) and Reducing Poverty in India (1998),demonstrated the very close association between income poverty and low levels of schooling. Simulationstudies have also shown that, of all the major states, low literacy levels have contributed the most inRajasthan to slower reductions in the incidence of poverty over the past five decades.

Until recently, economic evaluations of the impact of primary education in India have relied on relativelyold income data from small surveys and from estimations of the proportions of households below thepoverty line. This is now changing and some of the current economic and poverty research in India beingundertaken by the Bank is utilizing the results of much larger government surveys, both of householdconsumption and of the incomes of wage earners (see Annex 4 for details). The findings include:

m For those in wage employment, the wages of male primary school graduates are 7.8 percent higher perschool year compared to those of a non literate. Part of this results from higher wages among those inregular employment and (a greater) part from the increased probability of gaining regular employmentcompared to casual employment. For females, the increment is lower at 3.8 percent per year.

* The relationship between education and poverty is very strong. For instance, in Uttar Pradesh, 77percent of the poor had less than primary schooling and of those households where the head had noschooling, 52 percent were below the poverty line compared to 36 percent of those whose head hadprimary schooling. Even after controlling for household characteristics that might be expected toinfluence consumption levels (such as demographic composition, social status, principal occupation,land owned, etc.), the predicted mean consumption level of the household rises appreciably withincreasing educational attainment of the household head.

* While the poor have less education, they also appear to have lower returns to whatever amount they dohave. A study across eight states showed that in only two states (not Rajasthan) the income incrementsassociated with primary education are higher for members of scheduled caste households compared tomembers of other households.

Overall, these three findings suggest that while the strategy of increasing access to primary schooling tomembers of scheduled caste households will reduce the incidence of absolute poverty, it is not a sufficientmeasure to reduce income inequality.

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Determinants of the demandfor schoolingAccess to schooling is constrained in Rajasthan. According to the National Sample Survey for 1995/96,only 67 percent of all 6-11 year old rural boys were in school and 37 percent of rural girls (and 58 percentof all 6-11 year olds). To better understand the reasons for such low and gender-differentiated levels ofenrollment, an analysis of the determinants of enrollment was undertaken during project preparation,incorporating several child, household and school characteristics, based on a large household surveyundertaken in the state in 1993/94. Determinants include: (a) being male (increases the probability of beingenrolled by 42 percent); (b) the education of the mother; (c) household income per capita; (d) the effect ofcaste; (e) distance to school; and (f) regular training of teachers. These results point to a number ofconsiderations for project design highlighted in Annex 4.

Cost effectivenessThe Education Management Information System (EMIS) which has been developed through the nationalDPEP is currently being implemented in the ten districts of Rajasthan DPEP I. Until the system generatesthe necessary data, knowledge of the efficiency of the primary school system in Rajasthan remains the sameas in early 1999 and as documented in the PAD. There, it was shown that if the results of the project interms of increasing retention rates are as good as those from the Shiksha Karrni Program, which sharesseveral of the interventions designed for the proposed project, the cost per graduate would fall by around 30percent.

The major intervention to reduce the unit cost of primary schooling in the Rajasthan DPEP I districts is theemployment of approximately 3500 parateachers, based on the success of the Shiksha Karmi Program andappointed locally by representatives of the community, at one fifth of the salary of a regular teacher. Inaddition, since July 1999, the state government has employed an additional 12,000 parateachers from itsown funds. Parateachers will also be employed under the proposed project. Again, the understanding ofthe educational implications of the employment of parateachers is limited to evaluations of the experiencesof similar teachers in the Shiksha Karmi Program. Compared to conventional schools with regular teachersit appears that (a) both dropout and repetition rates are significantly lower, (b) learning achievement ofpupils are at least as high, and (c) accountability of the parateachers to their schools increases and teacherabsenteeism decreases (see Annex 4 for further details).

2. Financial (see Annex 4 and Annex 5):NPV=US$ million; FRR = % (see Annex 4)Levels, patterns and trends in elementary education expenditure: The GOR had one of the highest ratesof growth of expenditure on elementary education across the states during the 1990s. Real spendingincreased by 53.2 percent between 1991/92 and 1997/98 and the proportion of Gross State DomesticProduct (GSDP) spent by the government on elementary education rose from 2.0 percent in 1991/92 to 2.2percent in 1997/98, compared to the all India decrease from 1.4 percent to 1.3 percent of GSDP during thesame time period. The share of revenue expenditure allocated to elementary education rose from 11.1 to13.0 percent over the same period. However, despite these significant increases, the growth in enrollmentshas been such that the state has recorded one of the lowest increases in real spending per student.

Fiscal Impact:

The state's finances have been in decline over the past decade or so. The fiscal deficit which averaged 3.8percent of GSDP in 1988-93 grew to an average of 5.2 percent over the next five years and to an estimatedlevel of 9.0 percent in 1999-2000, requiring considerable financing from the GOI and the Reserve Bank.The GOR has stated its intention to reduce the deficit to 4 percent in the medium term. The education

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sector currently accounts for around 23 percent of total government revenue and capital expenditures andall new interventions require a consideration of the impact on the state government's expenditure.

Rajasthan DPEP I and II are in 19 districts, and Lok Jumbish is covering the remaining 13 in the state.Implementation of Rajasthan DPEP I began in mid-1999 and the current phase of Lok Jumbish began in2000. All three projects have two types of financial implications for the state govermnent: the contributionwhile being implemented and the cost of sustaining the successful interventions once the project iscompleted. For all DPEP projects, the state govermment funds 15 percent of project costs overall, thoughthe share varies by year as the proportion of recurrent costs financed by the Bank declines. In the finalyear of the project, the state typically funds 75 percent of the recurrent cost. The total cost of RajasthanDPEP is around US$101 million with an annual average required contribution from the state of around Rs.14 crores. The annual cost of sustaining the project was estimated to be Rs. 34 crores. The overall size ofRajasthan DPEP II is slightly less than that of the previous project, and hence the state's annualcontributions and the costs of sustainability will be similar. The Lok Jumbish project is to be financed overa five year period by the state government, GOI and DFID through shares of 1:2:3, respectively. The stategovernment's responsibility during implementation will be around Rs. 15 crores annually with recurringannual costs at the end of the project estimated to be around Rs. 65 crores.

Rajasthan DPEP I will close in 2004, Rajasthan DPEP II in 2006 and Lok Jumbish in 2005. In Table 2 inAnnex 4, the state's total liabilities from the three projects during and after their implementation arepresented for each year to 2008. While the three projects (Rajasthan DPEP I and II, and Lok Jumbish) willenable the provision of schooling to be increased in every district in the state, they will not provide all of thefacilities required to universalize primary education. See "Sustainability and Risks" section for a fulldiscussion of this point.

3. Technical:As with Rajasthan DPEP I, capacity to manage and provide increased access to education and improvedteaching and learning are the project's main goals. The key general areas of technical concern in the PADfor the first project remain valid for this project. They include concerns about the effectiveness ofparateachers, the complexity involved in changing classroom teaching practices, and the state's capacity todesign and implement effective human resource development activities that will improve teaching andlearning. This project poses an additional issue: how will the state ensure that the implementation of DPEPin the nine additional districts is coordinated with implementation in the first ten districts, as well as acrossthe remaining 13 districts covered by the Lok Jumbish Program. The key technical challenge is howeffectively state-wide policies and procedures regarding change can be articulated, shared with educationstaff across the system, and monitored and evaluated during implementation. The state's plans and staffingfor improving access (deciding locations for new education activities, the design and construction processesfor civil works, and mobilizing communities to encourage enrollment) pose less of a challenge to integrationthan the efforts to improve the quality of education and improve learning outcomes.

DPEP aims to improve teaching and leaming by providing a program that serves the state's heterogeneouspopulation. It draws the design of interventions from the rich variety of existing educational deliverysystems in Rajasthan which provide services of equal quality and effectiveness through this variety ofeducational delivery mechanisms. This is an ambitious aim to achieve over the life of the project. Thedifferences in socioeconomic and cultural conditions across the state are enormous, hence the need fordifferent delivery mechanisms to provide primary education. NGOs, the state-assisted Lok Jumbish andShiksha Karmi Programs, the state's newly introduced RGJSP, and DPEP alternative school deliverymechanisms respond to the population's diversity. Many of the programs have well-designed andwell-implemented training and supervision systems and classroom materials for improving teaching and

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learning. Some do not. The project's challenge for improving educational quality is to provide a commonprimary education for all the state's children despite the differences in the population and among programs.To do this, the state, through DPEP and in conjunction with LJP and SKP, is developing a comprehensivestate vision and action plan, which would be implemented and refined over the life of the project. It will bea challenge to draw upon the best of the state's experience in improving teaching and learning and to takean integrated approach to scale, while ensuring responsiveness to the needs of the many different targetgroups, staff and students, that participate in primary education. Its implementation would be monitoredand revised as required to make sure that the activities (training, supervision, materials development, etc.)touch all the target groups equitably and that there is an impact on teacher behaviors and student leaming.The Bank expects that project investments in building the capacity of SIERT and the DIETs to assessclassroom practices, in changes in the way schools function and in teacher support systems will contributeto the state's capacity to successfully achieve DPEP's goals.

4. Institutional:

4.1 Executing agencies:

At the national level, DPEP is managed by the Elementary Education Bureau (formerly the DPEP Bureau)in the Department of Elementary Education and Literacy of the Ministry of Human Resource Development.The Elementary Education Bureau was formed in 2000 to amalgamate two separate Bureaus which hadprogram management responsibilities for donor and centrally funded elementary education schemes.

At the state level, overall implementation of Rajasthan DPEP is the responsibility of the Rajasthan Councilfor Primary Education, an autonomous body registered under the Registration of Societies Act 1958,established by GOR and headed by the Minister, Panchayati Raj and Elementary Education. The RCPE iscomprised of 24 members which include several ex-officio members directly or indirectly connected witheducation and child development, some individual members who have distinguished themselves in the fieldof education, and NGO representatives. The Governing Council is responsible for overall policy planning,guidance and review of the project. There is shared membership with the Governing Councils of otherexternally aided programs in the state such as Lok Jumbish and Shiksha Karmi. The State Project Directoris the convenor of the Council. An Executive Committee, headed by the Development Commissioner andwith the State Project Director as the Member Secretary, exercises all administrative, financial andacademic authority over project implementation. The State Project Office has direct responsibility forproject implementation and strengthens, supports and monitors activities undertaken by the project districts.

The district level office is headed by the District Elementary Education Officer, supported by other seniorofficials. The district level governing body under the chairmanship of Zila Pramukh (Elected DistrictChief) is expected to look after policy matters and review progress made by the district project office. Itconsists of inter-departmental ex-officio members, public representatives such as the Pradhan (ElectedBlock level Chief), Sarpanch (Village level Chief) and Zila Parishad (District Council) members,educationists and teachers. The Executive Committee at the district level is headed by the DistrictCollector and is empowered to monitor and review implementation of the district plan. The District ProjectOffice is responsible for the day-to-day management, administration, implementation and monitoring of theproject.

Institutional Arrangements: The State Institute of Educational Research and Training (SIERT) is an apexstate level institution for educational training and research which is expected to provide support to theproject for pedagogical renewal activities. SIERT will conduct regional and district training programs andactivities related to curriculum and development of books and other learning materials. While the SIERT'sbasic capacity is sound, it is constrained by inadequate staffing and a constraint of funds for recurrent and

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routine expenditures. There is also a need for the faculty to update their knowledge and skills in the areasof cognitive development, pedagogy and interactive classroom processes to make a more effectivecontribution to the pedagogical renewal. The DIETs are in a similar situation. They are expected, with thesupport of a District Academic Committee, to be established under DPEP, to provide support to the BRCsfor conducting inservice teacher training, and CRCs to learn methods of school-based professional supportto teachers. However, the DIETs are constrained by a deficit of faculty and a weak knowledge of primarylevel pedagogy. The project is addressing this concern by strengthening professional and physical capacityat all levels. The state has the advantage of some well-established NGOs with years of experience inworking in basic education. The challenge will be to utilize this resource in ways that allow for GORtNGOpartnerships that would not only help improve quality in the system but also contribute to buildinginstitutional capacity in a sustained manner.

Administration of Elementary Education: Shortly after appraising Rajasthan DPEP I, responsibility forelementary education was removed from the Department of Education, and placed in the Panchayati RajDepartment (PRD). The process of integrating technical support from the DOE and its nodal institutionswith the administrative functions of the PRD has progressed, but some transitional difficulties andstructural weaknesses remain (see Section B2, Main Issues and Government Strategy for a detaileddiscussion). Primary sections attached to secondary schools remain with the Departnent of Secondary andHigher Education, yet get covered under DPEP. Similarly, the teacher training and support institutions ofBRCs and CRCs at the subdistrict level are under the administrative control of the Panchayti Rajdepartmnent, while the state level institutions to support the development of training are under theDepartment of Secondary and Higher Education. This lack of clarity in roles and functions between thetechnical and administrative streams adversely influenced the first year of Rajasthan DPEP I projectimplementation. Although the situation has greatly improved, it will need continuous monitoring in thecourse of project supervision.

4.2 Project management:

The State Project Office was established for Rajasthan DPEP I and is functioning with experiencedpersonnel in place. To cope with the expanded coverage of nine districts, nine additional posts will befinanced under Rajasthan DPEP II. It is expected that project management and implementation would besmooth and witness fewer start up delays than Rajasthan DPEP I. Since Rajasthan DPEP I becameeffective, the overall responsibility for DPEP and all other externally aided projects was shifted under theState Project Director, creating a significant administrative burden on this post. The Bank believes thisdecision is likely to bring about a natural convergence of the wealth of experience in the state through theserenowned projects and thus enrich DPEP's effectiveness, but it could also divert attention from morefocused management of DPEP. The GOR has agreed to place an Additional Director in the SPO tomitigate the potential problems. This will require close monitoring.

4.3 Procurement issues:

The Bank is currently carrying out a comprehensive Country Procurement Assessment Review. The firstphase, on central government procurement practices, is completed, and includes recommendations on apublic procurement law; simpler procedures for approval, challenge and debriefing; publishing contractawards, and an annual opinion poll on corruption perception; blacklisting rules; and printing the cost ofeach day's delay on all stationery dealing with procurement and contract processing. These are now underdiscussion with govemment. India has been borrowing for nearly five decades. The RCPE is alreadyexecuting the first project and is familiar with Bank procurement procedures, and since the bulk ofprocurement will be based on community contracting with no ICB/NCB risks are minimal.

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4.4 Financial management issues:

The financial management arrangements are decribed in Annex 6. The project satisfies the Bank'sminimum financial managment requirements. The implementing agency for the project is RCPE. The GOIwould pass on World Bank funds to the RCPE through a funds transfer to the RCPE bank account. TheGOR will pass on its share of counterpart funding through a budgetary allocation under a singleidentifiable line item.

An integrated computerized financial management system (FMS) is being developed for the projectfinanced by Rajasthan DPEP I. There was a considerable delay in development of the system in the firstphase of the project. The first iteration of the FMS software has now been completed. Operationalizationof the FMS is expected to be completed by October 1, 2001.

Disbursements: Disbursements from the IDA Credit would initially be made in the traditional system(reimbursement with full documentation and against statement of expenditure), and would be converted tothe Project Management Report based disbursements after the successful implementation of thecomputerized FMS. The target date for this conversion is October 1, 2002.

Retroactive Financing: Retroactive financing up to an amount of US$1.8 million (SDR 1.4 millionequivalent) would cover eligible expenditures for implementing activities after May 1, 2001. Retroactivefinancing would support hiring and training of staff in the SPO, the District Project Office teams; rent,equipment and vehicle hire for district offices; hiring and training of 49 BRC Facilitators and BRC buildingrentals; hiring and training of 678 CRC Facilitators; training and formation of SMCs and BNS, collectionof initial EMIS data collection; orientation programs on DPEP for district and PRI officials; and otheractivities included in the state and district plans and agreed at negotiations.

Auditing Arrangements: The accounts of the project will be audited by a firm of Chartered Accountants,even though the Comptroller and Auditor General will retain its right to audit the project accounts. Theannual project financial statements audited by the firm of Chartered Accountants would be submittedwithin six months of the close of GOI's fiscal year, as required under the Bank's Operational Policies.Thus the following audit reports will be monitored in the Audit Report Compliance System (ARCS):

Implementing Agency Audit Auditors

RCPE SOE/Project Audit A firm of Chartered AccountantsDEA Special Account Comptroller and Auditor General

The auditors, in the audit report for 1999-2000 for Rajasthan DPEP I, had made some observationson slow utilization of funds, loss of interest, etc. RCPE has drawn a satisfactory action plan toaddress these issues.

Special Account: A Special Account will be maintained in the Reserve Bank of India, and will be managedby the Department of Economic Affairs of GOI. The authorized allocation of the Special Account wouldbe US$7.0 million, or about four months of average estimated disbursements from the IDA Credit. TheSpecial Account will be operated in accordance with the Bank's Operational Policies.

5. Environmental: Environmental Category: C (Not Required)5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (includingconsultation and disclosure) and the significant issues and their treatment emerging from this analysis.

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The proposed project would not raise any significant environmental issues. The environmental issuesconsidered are primarily those related to siting (land clearing), construction, operations and maintenance ofbuildings. Inappropriate construction designs, haphazard construction practices and poor operations mayhave the potential to impact local environments. The project will incorporate provisions to mnitigate anyadverse environmental impacts from inappropriate construction practices and poor operation andmaintenance of sanitation and water supply facilities. Land for new and altemative schools will be allottedfrom Panchayat owned land or voluntarily donated by a community member.

A framework of norms has been laid out in the construction mannual developed under Rajasthan DPEP I,to be utilized in Rajasthan DPEP II, which enables standardization in construction designs, goodconstruction practices and management and operation procedures. During siting, few trees will be cut (onthe contrary, schools and communities often plant trees to enhance the environment), and landscape isemphasized as part of design. All buildings will follow applicable construction building codes, includingthose for water supply, sanitation (boys and girls toilets), ventilation, safety and hygiene. Such provisionswill also be reflected in bidding documents. Certificates will be issued by the project engineers on structuralsafety (including earthquake resistance), waterproofing, ventilation and material usage, confirning that alldesigns are carried out as per relevant Bureau of Indian Standard codes. Drinking water supplied at theschools financed under the Bank project should meet the State standards, and appropriate monitoring andevaluation will be ensured by the Public Health and Engineering Department (PHED).

The designs of new schools have been developed under Rajasthan DPEP I, and are specifically planned touse low-cost local technologies, and to be expandable over time. Emphasis will be placed on utilizinglocally available materials. To keep costs low, construction will be undertaken by subgroups of the SchoolManagement Committees (SMCs) called Bhawan Nirman Samitis (BNS) which will receive training forthis purpose, and will be supervised by engineers.

The project will closely coordinate with PHED in providing adequate coverage of water supply andsanitation facilities, and with UNICEF for provision of hygiene education and sanitation packages forschools. Primary school graduates are expected to become more environmentally conscious citizens sincethe study of environmental issues and use of renewable resources form a part of the revised primarycurriculum. In addition, training will be provided for the use of school water and sanitation facilities, andto develop awareness for good hygiene practices. It is likely that the knowledge gained in school onenvironmental, health and hygiene issues will be shared at home, thus influencing parental attitudes.

5.2 What are the main features of the EMP and are they adequate?

A construction manual has been developed under Rajasthan DPEP I which will be updated as required forRajasthan DPEP II. As part of project preparation, it was agreed that a detailed district-wise "ResourceMapping" exercise would precede the civil works design and planning process, in order to provideinformation regarding appropriate technologies and ensure protection of the environment. The training forproject engineers and BNS at the state and district level also includes a detailed module on environmentalaspects of school construction. The revised manual will contain generic environment managementguidelines and Best Environmental Practices (BEPs) in design and construction/expansion of schools andwater supply and sanitation facilities, including environmental standards for safety, waste disposal, use ofhazardous materials, esthetics and other aspects of the school construction program. This will help inminimizing environmental impacts and generate environment awareness during design, construction andoperation of facilities.

5.3 For Category A and B projects, timeline and status of EA:Date of receipt of final draft: Not applicable

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5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EAreport on the environmental impacts and proposed environment management plan? Describe mechanismsof consultation that were used and which groups were consulted?

See details on stakeholder consultations in social issues section below.

5.5 What mechanisms have been established to monitor and evaluate the impact of the project on theenvironment? Do the indicators reflect the objectives and results of the EMP?

Prior to commencement of works, subgroups of the School Management Committees called BhawanNirman Samitis (BNS) will be set up and provided with adequate training and resources to effectivelyundertake the monitoring and supervision of construction works and operation and maintenance of watersupply and sanitation facilities. Trained engineers on deputation from different line departments'engineering cells will be located in each district to ensure regular inspection and certification, and totrain/assist communities. Technical supervision will be carried out at every main construction stage bydistrict and block-level-based engineers. As in the other DPEP Bank-financed projects, third partyevaluation of environmental aspects of civil works would be conducted, if warranted.

6. Social:6.1 Summarize key social issues relevant to the project objectives, and specify the project's socialdevelopment outcomes.

As the Project's Development Objective is to increase access to and completion of the cycle of primaryeducation of appropriate quality for all children aged 6-11 years, the key social issues to address are thoseof differential knowledge, attitudes and behaviors related to primary education among varioussocioeconomic groups. In Rajasthan, as in other parts of India, the following groups are particularlydisadvantaged with regard to education: girls; children of the Scheduled Castes, Scheduled Tribes, OtherBackward Castes, minorities, working and children with disabilities. Some of the reasons underlying thedifferential access to and use of educational facilities are: (a) the low status of women and, thereby, lack ofvalue attached to girls' education; (b) the social stigma of 'untouchability' attached to Scheduled Castes;(c) the remoteness, isolation and small size of tribal and, often, scheduled caste habitations; (d) somedifferences in mother tongue between the majority population of an area and minorities (Urdu speakers) ora few tribes (mostly in the westem part of the state not covered by DPEP); (e) emphasis given to religiouseducation among certain minorities; (f) dependence among poor families on child labor for economic ordomestic work; (g) seasonal migration among tribal people, wage laborers, and some occupational groups;and (h) lack of awareness among parents and teachers of the potential to integrate children with mild tomoderate disabilities into regular classrooms, or unfavorable attitudes towards this.

The project proposes the following strategies (among others) to deal with the above problems: (i)altemative schools with local parateachers for small, remote/inaccessible habitations; (ii) altemativeevening schools with parateachers for working children; (iii) short-duration bridge courses to bring girlsand working children into mainstream education; (iv) residential facilities for children of migrant families;(v) adoption of Islamic religious schools (Maktab) as full-time altemative schools; (vi) provision of Urduteachers for this language minority; (vii) opening new and strengthening existing Early ChildhoodEducation (ECE) centers to give a head start to pre-schoolers as well as to benefit older siblings(particularly girls) who look after them; (viii) awareness creation and enrollment drives emphasizing theimportance of education of girls and other disadvantaged groups; (ix) provision of facilities, such asdrinking water and toilets, which would make school attendance attractive particularly to girls and childrenof the poor; (x) distribution of free textbooks and TLM to girls and children of disadvantaged groups; (xii)Mother-Teacher Associations and Parent-Teacher Associations; and (xiii) a 'Girl Child Motivator' to help

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increase girls' enrollment and retention in areas where female literacy is below 15 percent.

Social Development Outcomes (SDO): The project's SDO would therefore be greater equality among thedifferent socioeconomic groups in terms of knowledge about schooling, and attitudes and behaviors amongparents as well as teachers and school administrators that result in increased enrollment, retention andlearning achievement among children of disadvantaged groups. Ultimately, educating children in the targetdisadvantaged groups should lead to their future empowerment, greater economic productivity, andincreased quality of life. The project would bring about improvements in knowledge, attitudes andbehaviors and achieve equality in a number of ways. In particular, the project would monitor the closing ofgaps between girls and boys, and Scheduled Caste and Scheduled Tribe children and those from the"general" category. It would also aim to improve the situations of minority, working, migrant and childrenwith disabilities.

6.2 Participatory Approach: How are key stakeholders participating in the project?

The project aims to mobilize communities in the districts, particularly disadvantaged groups and women,by (a) disseminating information on the potential of primary education and innovative approaches adoptedwithin the project; (b) establishing SMCs that would undertake inter alia motivation drives and enrollmentcampaigns, micro-planning and school mapping, school construction, oversight of school enrollment andretention of children, and of teacher attendance, parateacher selection, extra-curricular programs, tours andawards, and managing school facilities funds of Rs. 2000 per annum; (c) orienting grass-root officials andpanchayat members; (d) meeting with ethnic/social groups and their leaders; (e) holding gram sabhas (i.e.,meetings of all voting adults in a village) at which the SMCs would be constituted, school facilities fundsdistributed, and activities planned; (f) establishing community mobilization teams at cluster level; and (g)involving Block Education Committees in enrollment drives and mobilizing financial contributions. SMCswould include representatives of the Scheduled Castes, Scheduled Tribes, women, minorities or OBCs,youth organization, parents and gram panchayat members, in addition to school/ECE functionaries.

6.3 How does the project involve consultations or collaboration with NGOs or other civil societyorganizations?

NGOs were involved in conducting the district-wise Social Assessments for the nine Rajasthan DPEP IIdistricts and have participated in their design. They are expected to collaborate in its implementation in theareas of community mobilization (particularly to ensure the enrollment/retention of girls, children fromdisadvantaged groups, working children and children with disabilities), providing resource support for thedevelopment of pedagogy, early childhood education, alternative schools and bridge courses, women'sempowerment, and research and evaluation. NGO representatives would also be members of the StateResource Group and District Resource Groups which have input into project planning and implementation.As mentioned above, SMCs comprised of private citizens would be established to plan, decide on, manageor implement various aspects of the Project. The SMCs will be chaired by a local (ward) panchayatmember and will include other elected members of the panchayat (i.e., SC, ST and women members).

6.4 What institutional arrangements have been provided to ensure the project achieves its socialdevelopment outcomes?

The village-level SMCs that are to be established under the project would ensure enrollment and retentionof children from disadvantaged groups and girls. The Cluster Resource Centers (one for 15-20 formalprimary schools, 4-6 Alternative Schools and 4-6 ECE Centers) would be responsible for overseeing theSMCs and the community mobilization and environment-building activities, and planning related activitiessuch as enrollment drives. The Girl Child Motivators would be based at the CRCs. Training for theCRCs, SMC, Girl Child Motivators and teachers would be developed with assistance from staff from the

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Lok Jumbish and Shiksha Karmi programs which have significant experience in community mobilizationand community-based school development. The Block Resource Centers would assist the CRCs byanalyzing educational data, ensuring proper planning and functioning of the Alternative Schools, andtraining teachers, parateachers, and ECE workers. State and district level resource groups would overseethe development and utilization of adequate pedagogical inputs to improve the school performance ofchildren from socially disadvantaged communities. The District Institutes of Education and Training willprovide teacher training that is gender and socially sensitive.

6.5 How will the project monitor performance in terms of social development outcomes?

The enrollment, retention and learning outcomes for each of the disadvantaged groups (girls, SCs, STs,working children, disabled children) will be monitored throughout the project period through theEducational Management Information System (EMIS) and Project MIS (PMIS) which monitor educationalindicators and project inputs, respectively, and achievement testing at the project's mid term and end. Aninnovative Child Tracking System being developed under the project will collect data on all children in orout of school, and monitor enrollment, achievement, attendance, while correlating these to their ownbackground as well as teacher and school characteristics (see Annex 2 for details). These data will providecritical information on project progress toward achieving equality in education, and would in turn bemonitored by the Joint Review Mission mechanism set up for the whole DPEP. Systems will be designedfor appropriate analysis and feedback of the MIS data at cluster, block, district and state levels. Otherrelevant key performance indicators on which information would be collected include: number of SMCsholding regular meetings and actively monitoring teacher attendance and managing funds for schoolimprovement; completion of community-developed school mapping and microplanning exercises, children'sparticipation in the classroom and teachers' continuous assessments of children's learning; development ofschool improvement plans by communities; access to drinking water and sanitation facilities; andcommunity contributions received. The State Project Office, with the assistance of a State ResourceGroup, will cause a range of research studies to be carried out to provide additional information andinsights to relevant issues such as classroom practices and participation of girls, SC, ST, OBC and otherdisadvantaged children. Proposed studies include assessments of: strategies for community mobilization;strategies for girl child education; use of community resources in classroom teaching; and provision ofremedial teaching for weaker students.

7. Safeguard Policies:7.1 Do any of the following safeguard policies apply to the project?

Policy Applicability:Environmental Assessment (OP 4.01, BP 4.01, GP 4.01) 0 Yes 0 NoNatural habitats (OP 4.04, BP 4.04, GP 4.04) 0 Yes 0 NoForestry (OP 4.36, GP 4.36) 0 Yes 0 NoPest Management (OP 4.09) 0 Yes 0 NoCultural Property (OPN 11.03) 0 Yes 0 NoIndigenous Peoples (OD 4.20) * YesO NoInvoluntary Resettlement (OD 4.30) 0 Yes 0 NoSafety of Dams (OP 4.37, BP 4.37) 0 Yes * NoProjects in International Waters (OP 7.50, BP 7.50, GP 7.50) 0 Yes 0 NoProjects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60) 0 Yes 0 No

7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies.

The Gross Enrollment Rate of Tribal children in Rajasthan is 84 percent, which is lower than the stateGER of 101. There are significant tribal populations in five of the nine project districts. The GOR

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estimates that approximately 20 percent of ST children in these areas do not enroll in school, and 80percent enroll but have higher-than-average dropout rates. To address these problems and improve theeducation situation for tribal children, the project will undertake the following interventions: (i) use theChild Tracking System being developed under the project to identify out-of-school children, including inTribal Areas, and monitor progress of those in school; (ii) carry out awareness building campaigns to bringthese children to school and strengthen the community's role to ensure the sustainability of educationalimprovements in tribal areas; (iii) open 298 altemative schools and 95 evening schools which would haveflexible timings and a community selected teacher to serve ST children in remote hamlets; (iv) offer 775short-duration bridge courses for ST girls with the intention of mainstreaming them into formal primaryschools; and (v) develop a Tribal language inventory. Other project-supported benefits to ST childreninclude: free school supplies and writing materials, escorts to bring girls to schools, and 250 Girl ChildMotivators in CRCs serving clusters with high ST populations. CRCs monitor school, altemative schooland SMC level participation of tribal populations to ensure adequate access to project benefits. As theproject is district-based, the interventions for tribal areas and children will be tailored to the specific tribalsituations of individual districts, based on the surveys conducted, and included in the annual district plans.

During the process of conducting the district-based Social Assessments, Tribal communities were consultedin order to identify issues and strategies which affect Tribal children's access to and participation inprimary school. The information collected forms the basis of the 'Tribal Development Plan' included in theProject Implementation Plan (on file). District Office staff have received an orientation which includesspecific issues and strategies related to all special needs group in the project, and the State Project Officehas dedicated staff monitoring tribal issues and implementation of tribal strategies across DPEP.Furthermore, the state and district project officials have established links to the Social WelfareDepartment's Tribal Development Authority, a separate unit which specifically deals with Tribal affairsand schemes, to ensure convergence of resources and better meeting Tribal communities' needs.

Evaluations of the impact of project inputs and processes, disaggregated by gender, SC and ST, across theseries of DPEP projects have been undertaken by the GOI and states to monitor progress. Specific studiesinclude, inter alia, analysis of pattems in access and retention, learning achievement, and classroomobservations studies to understand teaching practices including attitudes towards different social groups.These studies will continue to monitor progress for tribal populations in Rajasthan DPEP II.

F. Sustainability and Risks

1. Sustainability:

The major issues relating to the financial sustainability of the proposed project (and the two other on-goingprojects) were summarized in section E2 and are more fully documented in Annex 4. The financialrequirements have been considered in the context of two scenarios of economic growth rates, each resultingfrom a set of fiscal reform. Within each scenario, primary education expenditures have been projected at aconstant proportion (2.1 percent) of state GDP and then netted for anticipated real increases in teachersalaries. This procedure provides estimates of the resources likely to be available to fund the stategovernment's responsibilities during the implementation of the projects, and to sustain the activities beyondthe project period. It is assumed that Rajasthan DPEP I will close in 2004, Lok Jumbish in 2005, andRajasthan DPEP II in 2006. Under the partial reform scenario, in the year following the completion of allthree projects, the anticipated increase in allocations might be just below the additional liabilities requiredto sustain the projects but in the following year they should be more than sufficient and the surplus willgrow. Under the bold reform scenario, the situation is healthier and the anticipated increase in theallocation should more than cover the additional liabilities.

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The ability to sustain the proposed and existing projects will be the very minimum required of stateresources for the basic education sector. There will be additional demands, including the increased demandsfor upper primary schooling as primary completion rates increase. As noted in section E2, while the threeprojects (Rajasthan DPEP I and II, and Lok Jumbish) will enable the provision of schooling to be increasedin every district in the state, they will not provide all of the facilities required for universalization. Twentyto thirty percent of school age children are still not in school. The costs of universalizing primaryeducation by 2005 and elementary education by 2008 have been projected in Annex 4. The implication isthat by the time the full responsibility for the DPEP and Lok Jumbish projects fall on the government,universalization would require an increased allocation to primary education from 2.1 percent to between2.4 and 2.6 percent of state GDP depending on the rate of economic growth and from 9 to 11 percent oftotal government expenditure. If the parateacher scheme is not implemented, or if their payments increaseto those of regular teachers, the requirement will be around 3.3 percent of state GDP. The lower the rate ofeconomic growth, the more difficult it will be to allocate the required resources.

2. Critical Risks (reflecting the failure of critical assumptions found in the fourth column of Annex 1):

Risk Risk Rating Risk Mitigation MeasureFrom Outputs to ObjectiveCompeting demands on limited state S GOR has already demonstrated its commitmentresources in the current fiscal situation to primary education as a state with the highestmay affect the ability to sustain project growth in allocations to the subsector. Theinterventions. project supports lower cost delivery systems

including hiring of parateachers and low-costcivil works designs.

The reform which shifted elementary M Control closer to the local level could improveeducation to the Panchayati Raj administration and accountability. Phase II hasDepartment could serve to de-link integrated state and district level institutionaltechnical support for quality service inputs. At the district and subdistrict levels, alldelivery from the administration of the project officers reside in education offices butsystem. are directly managed by the PRIs.

Interventions for socially disadvantaged M The project strengthens the level of PRI andgroups may not be well-targetted or community involvement in awarenesseffective. campaigns, greater involvement of NGOs in

mobilization efforts, and promotes ownership byhiring locally selected teachers who communitymembers trust.

The nine project districts are among the S The project is employing alternative strategies,most difficult with low indicators of learning from the successes of the SKP and LJPeducation attainment which could result in projects, which have have already provenspecific objectives not being met. effective in the Rajasthan context to target the

hardest to reach groups.

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From Components to OutputsThe burden of additional districts on the M An Additional Director has been appointed toSPO and bringing three large projects each project to strengthen management, staffunder one umbrella could hamper project from each project serve on joint committees toimplementation. ensure coordination, and trainers and training

modules are shared among the programs. Anadditional nine staff are provided for the SPO inthe project, and all DPOs will be fully staffedand trained prior to project signing usingretroactive financing.

Wide use of parateachers could impact M The benefits regarding parateachers includethe quality of the schools. more accountability and less absenteeism,

incentive to perform in order to have theircontract renewed, more engagement of theparateachers with parents and schoolcommittees, etc. The project has developed itsparateacher training and teacher developmentprogram based on the successful SKP modelwhich has been documented to produce greaterachievement at the lower levels of primaryeducation, and similar results to governmentschools in Class 4.

Pedagogic renewal and training developed M State level resource institutions which have aunder the project may not be effectively solid reputation nationally, as well as smallerdelivered. well-known education NGOs are represented on

the committees responsible for developingtraining modules and supervisingimplementation of the training program.Intensive training of trainers will take placeduring the first year.

Rajiv Gandhi Swama Jayanthi Pathshala S RGSJP schools are being brought under the(schools) have received little pedagogic DPEP umbrella and will be provided extensiveand content support which, given their teacher training, continuous pedagogic support,numbers, could affect the overall quality appropriate teaching and learning materials,of education delivery in the project training for SMCs, and school facility grants.districts. The GOR will also be developing a plan during

the project for a possible career ladder forRGSJP teachers.

Overall Risk Rating M

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

3. Possible Controversial Aspects:

None.

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G. Main Credit Conditions

1. Effectiveness Condition

None

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

H. Readiness for Implementation

1 1. a) The engineering design documents for the first year's activities are complete and ready for the startof project implementation.

0 1. b) Not applicable.

1 2. The procurement documents for the first year's activities are complete and ready for the start ofproject implementation.

1 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactoryquality.

0 4. The following items are lacking and are discussed under loan conditions (Section G):

1. Compliance with Bank Policies

E 1. This project complies with all applicable Bank policies.0L 2. The following exceptions to Bank policies are recommended for approval. The project complies with

all other applicable Bank policies.

(36~n E. Hirshberg } /;h ee Sko { Edwin LimTeam Leader Sector Director Country Director

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Annex 1: Project Design SummaryINDIA: Rajasthan Second District Primary Education Project

Key PerformanceHierarchy of Objectives Indicators Monitoring & Evaluation Critical Assumptions

Sector-related CAS Goal: Sector Indicators: Sector/ country reports: (from Goal to Bank Mission)In order to assist the GOI in Increased literacy rates, National Education Statistics Human capital developmentalleviating poverty to create especially among women and (NES). helps alleviate poverty andan environment for growth, socially disadvantaged groups. promotes economic growth.the project would support Research studies.GOR's progress towards Reduction in the gender gap Sustained investment inimproving the quality and in enrollment to less than 5% Household survey data. quality basic education isdelivery of basic social and improvements in Social essential to enhance economicservices, and universalizing Equity Indices (SEIs). Human Development Reports. and social benefits, especiallyaccess to primary education. for disadvantaged

Economic and sector work. populations.

Census data. GOR will realize itscommitment to overall fiscalreform which would enable itto sustain increased levels ofinvestment in primaryeducation.

Increased educationattainment (years completed).

A more efficient and effectiveprimary system in the state.

Project Development Outcome I Impact Project reports: (from Objective to Goal)Objective: Indicators:Assist the GOR in providing Increases in gross enrollment, Educational Management Improved access, retentionaccess to primary education of retention and completion Information System (EMIS). and quality of education willappropriate quality which rates, decreased drop-out and contribute to increasedwould ensure successful repetition in grades 1-5, productivity, better quality ofcompletion of the cycle to all particularly for the target Govemment of India and life and participation in civilchildren between the ages of groups of girls, SC/ST Government of Rajasthan society.6-1 1 in the project districts. children, working children Educational Statistics.

and children with mild tomoderate disabilities. Twice annual supervision

missions.A 25% percent gain inleaming achievement of all Leaming assessment testschildren in language and administered at mid-term andmathematics over the baseline project end.assessment conducted forpreparation, disaggregated by Qualitative studies.girls, SC/ST, and urban/ruraldata.

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Key PerformanceHierarchy of Objectives Indicators Monitoring & Evaluation Critical Assumptions

Output from each Output Indicators: Project reports: (from Outputs to Objective)Component:1. Increased access and Of the estimated 350,000 EMIS data. The GOR is striving toretention in primary out-of-school children, the coordinate the variety ofeducation. project would create and programs which target the

attract 200,000 places, socially disadvantaged groupsespecially for girls, SC/ST, available in the state ofworking children and children Rajasthan.with disabilities.

(a) increase in number of 1(a). approximately 880 Civil works progress reports, Systems to carefully monitorstudent places in formal alternative schools PMIS data, state and district at the local level to ensuregovernment schools and established, 2800 additional education statistics coverage are beingalternative schools; classrooms. established.

Disaggregated data on thenumber of children from thetarget groups in school.

(b) increase the number of 1(b). 3500 parateachers Local teachers selected byteachers and parateachers; provided, pupil:teacher ratio communities will be more

of 40:1. committed to the schools andstudents.

(c) enhanced support from l(c). SMCs and WECs meet Block and district level Awareness of and demand forand involvement of SMCs, regularly and are actively surveys, BRC/CRC reports on education has increased,WECs and parents in working to have all children VEC meetings/minutes. along with communities'enrollment drives and school attend school full time. willingness to participate inmonitoring. Supervision missions and the process.

indepth evaluations.

2. Improved quality of 2(a). Improved quality of Classroom observation The right mix of inputseducation, thus increasing textbooks, teacher guides, and studies. (books, teacher training, etc.)achievement. workbooks and their combined with a more

availability in the classroom, interactive and child-centered(a) Improvements in teaching Greater and effective use of pedagogy will engageand leaming practices in the TLM and number of teachers Reports monitoring teacher children in a manner whichclassroom. who have effectively utilized absenteeism. stimulates leaming, increases

the Rs. 500 annual grant. achievement and retainschildren's interest in school.

Children's participation in theclassroom, especially girls andsocially disadvantaged groups. Student attendance records.

Increased time on task (hoursdirectly engaged in teaching Regular surveys ofand learning activities) and achievement, textbooknumber of days in school. availablity and inservice

training.

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Teachers presence in the Achievement studies atclassroom and ability to mid-term and project end.facilitate the learning process(knowledge of content andpedagogy) using a variety ofteaching methods.

Continuous assessment ofchildren's learning byteachers.

(b) Improvements in the GOI conducted research and Ongoing support to teacherspedagogical support systems 2(b). 49 BRCs and 678 CRCs analysis. in content and pedagogy willfor teachers. established and holding sustain the benefits of training

regular meetings for all State and district institutions and improve learningteachers. field evaluations and outcomes.34,960 teachers provided monitoring reports.training in new pedagogy.3500 parateachers receive 41 Twice'annual supervisiondays induction training, and missions and field visits.30 days of additional trainingannually.

Frequency with whichteachers receive guidance onteaching in their classroomand participate in professionaldevelopment activities.The extent to which there is ashift in the supervisors (SDIs)role in assisting teachers.Fully staffed DIETs, BRCsand CRCs.

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(c) Improvements in the 1800 major repairs and 3200 PMIS data. A clean, safe and stimulatingoverall school environment. minor repairs undertaken in environment with adequate

exisiting schools, structurally Field visits. access to water and toiletssafe, well-lit and well contributes to overallventilated schools. District and block level satisfaction with school and500 schools provided for supervisors' reports. retention of children,buildingless schools. especially girls.7100 toilets, 2300 handpumps Engineer's reports.and 380 PHED connectionsprovide access to safe waterand hygiene.Evidence of communitycontributions to theclassrooms and schools'grounds.Charts and children's workdisplayed on the walls.

3. Strengthened state,district, block and communitylevel capacityfor planning,management, supervision andmonitoring ofprimaryeducation.(a) Effective management of The state, district and block AWPBs. The Dept of Secondary andand planning for primary levels undertake an annual Higher Education andeducation. planning exercise which Updated school maps and Panchayati Raj Department

become aggregated to form microplans. must have close linkages tothe AWPB. ensure appropriate technicalCommunities and schools are Expenditure reports. suppoTt and inputs fromable to develop a school educational entities, providingimprovement plan. Evaluation studies. feedback from the schools upResources and decision into the system to improvemaking are managed closer to planning, and to build thethe schools. PRI's capacity for managing

primary schools.(b) Ability to effectively School and community level EMIS and FMS data. same as abovemonitor the system. data, EMIS, and financial

management systems are VEC and supervisor reports.established, generate relevantdata, and the information isincorporated into schoolsimprovement plans andAWPBs.

(c) Enhanced community and 15,900 SMCs are established Minutes of VEC meetings. Community representation,SMC role in managing and and meet regularly with participation and ownershipmonitoring schools. clearly defined roles. Panchayati Raj department in addressing their school

SMCs monitor teacher reports. needs is essential to achieveattendance, assist with school the projecfs objectives.repairs and manage funds forschool improvement.

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Key PerformanceHierarchy of Objectives Indicators Monitoring & Evaluation Critical Assumptions

Project Components / Inputs: (budget for each Project reports: (from Components toSub-components: component) Outputs)Civil works buildingless schools, Cluster, block, district and Increased number of schools

additional classrooms, major state monitoring reports. and classrooms, andrepairs, alternative schools, providing communities withBRCs and CRCs, toilets, Engineers' reports. alternative schoolinghand pumps and PHED structures will allow forconnections, total $20.7 GOI supervision reports. increased access, easemillion. overcrowding and improve

EMIS and PMIS data. the learning environment.

Water supply and toilets willassist in retention of children,particularly girls.

Staff parateachers, ECE instructors, EMIS and PMIS data. Hiring parateachers selectedBlock and Cluster Resource by communities will provide aFacilitators and other Twice annual supervision sustainable, cost-effective wayResource Persons, state and missions. to improve access, and easedistrict office personnel for a overcrowding, as well astotal of $22.7 million. enhance their commitment

and accountability to theschool and children.

Block and cluster levelsupport to teachers andparateachers will help

Training teachers (once-off and EMIS and PMIS data.ongoing), parateacherstraining and upgrading of ICDS LS reports.skills, ICDS staff and ECEworkers, BRC and CRC staff Field visit reports.in pedagogy, supervision andteacher support skills, SMCs Impact evaluation studies.in school management, PRIinterlocutors in management,supervision andimplementation, state anddistrict officials in planning,management andimplementation for a total of$8.6 million.

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Teaching and Learning provision of workbooks, EMIS and PMIS data. Improved instructionalMaterials funds to teachers to develop materials which reflect the

TLM for use in the classroom Supervisor's reports. new pedagogy and their(US$9.4 million). availability will enhance

PRI and district FMS learning outcomes.Incentives (US$4.8 million monitoring.total) to disadvantaged Minimal funds to teachers forstudents for school supplies materials leads to increasedand writing materials creativity and learning, and

improvement in the schoolenvironment.

Community Mobilization support to SMCs, funds to CRC reporting. Community involvement isSMCs for maintenance and required to improveschool improvement, PMIS data. enrollments, attendance andawareness campaigns, NGO completion.involvement, access toinnovation funds for US$2.1 Fully operationsl SMCs aremillion. necessary to ensure ownership

of schools and improve theuse of funds, monitor teacherattendance.

Monitoring, Evaluation and EMIS, PMIS and FMS at the Joint review mission Improved monitoring andImplementation state and district level; student monitoring. evaluation, and feeding the

achievement; support to state Mid-term and project end information back into theand district institutions; achievement studies by April system, can strengthenstrengthening DIETS; 2004 and October 2006, planning capacity and allowbuilding state, district, block respectively . corrections to be made inand local research capacity, Reports from each component project implementationi ifand the Child Tracking (EMIS, PMIS and FMS) and required.System (US$2.6 million). CTS.

State and local capacity toAction research from the local assess learning outcomes mustlevel. be improved to diagnose

weaknesses in teaching andtraining, and obstacles tolearning.

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Annex 2: Detailed Project DescriptionINDIA: Rajasthan Second District Primary Education Project

The project is the seventh in the series of the national District Primary Education Program (DPEP) in Indiawhich was launched in 1994 to target educational improvements in low literacy districts across India. Theobjectives of DPEP and this project are to (i) increase access to and retention in primary education orClasses I-V, particularly for girls, schedule caste (SC), schedule tribe (ST), other backward communities(OBC), working children and children with mild-to-moderate disabilities; (ii) improve the quality ofschooling and the learning environment in order to increase achievement; and (iii) build state and districtcapacity to manage primary education. Those districts in India with female literacy rates lower than thenational average of 38 percent, based on the 1991 census, were selected for the DPEP intervention. Nowfunctioning in 18 states and 242 districts, DPEP has reached approximately 60 million children, establishedabout 16,000 new formal primary schools and 50,000 alternative schools which serve 1.8 million children;provided inservice training and continuous support to nearly 850,000 teachers; contributed to reducing themean dropout rate from 25 percent in 1996/97 to 18 percent in 1998/99; and increased learningachievement, particularly for Class I language and mathematics, in the majority of districts where theprogram has been running for more than two years.

In Rajasthan, all 32 districts in the state are eligible for DPEP according to the criteria. State-wide femaleliteracy was 20.8 percent in 1991, or the second lowest in the country following Bihar. Of the state's 32districts, 19 are being supported by the Bank-financed DPEP - ten in Rajathan DPEP I which becameeffective in October 1999 and nine districts in the current project - and the remaining 13 districts arecovered by the DFID-financed Lok Jumbish Project (LJP). Synergies between the DPEP, Lok Jumbish,and the third largest education program in the state, Shiksha Karmi (SKP) will be realized by the GOR'srecent decision to bring all education projects under one management umbrella to help achieve the overallgoal of universal primary education.

By Component:

Project Component I - US$38.40 million

Increasing access to and increasing retention in primary education, especially for children in social andeconomically disadvantaged groups includes the following sub-components:

1. Targeted interventions to reach marginalized groups: Rajasthan has among the lowest social andeducation indicators in India. Access to educational opportunities and social traditions particularly affectgirls, SC, ST, OBC, minority, disabled, working and migrant children. Interventions are being developedin DPEP to reach these children broadly, such as providing bridge courses for overage children, especiallygirls; flexible hours of schooling; and adjusting the curriculum to be 30 percent local specific to meetchildren's needs. More specifically, the following interventions will also be employed to attract and retainchildren of the target groups into school:

(a) SC/ST/OBC/minority children. The project would establish 890 of altemative schools in remotehabititations where SC, ST, and OBC children live. To reach minority (Muslim) children, Urdu will beintroduced into formal and alternative schools, and 185 of Maktab/Madarasa, especially those serving girls,will be adopted as full-time altemative schools and provided with resources accordingly. Stationary, schoolsupplies and workbooks would be provided to all children of these groups at an average cost of Rs. 70 perchild.

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(b) Girls. The GOR has already instituted a policy of providing free textbooks for all girls in Classes I-V.In addition, the project would support the following interventions to attract and retain girls:

* Increase the number of female teachers in formal and alternative schools. The lack of female teachershas been identified in the Social Assessments as a primary reason for the non-enrollment and poorretention, particularly in higher grades, of girls in primary schools. Currently, 10,000 parateachers arebeing recruited for lower and upper primary school, and the GOR has instituted a policy for reducingpotential female recruits' academic credentials, and has given preference for female candidates. Thispractice will contine.

* Early Childhood Education. The project will strengthen 5960 Aganwadi Centers under the IntegratedChild Development Scheme (ICDS) by providing training in early childhood education to the Aganwadiworkers, developing teaching kits to be used in the classroom, and extending the duration of thecenters' hours to coincide with school timings to free older sisters from child care responsibilities. Inaddition, 400 new ECE centers will be opened attached to primary schools. The ECE component alsocontributes to quality improvement and retention since it reduces enrollment of underage children inclass 1 and assists in preparing children for leaming (school readiness).

* In villages/clusters where female literacy is less than 15 percent, a Girl Child Motivator (GCM) wouldbe appointed at the CRC to work with parents and communities.

• In these same clusters, a committee known as "Mahila Prerak Dal" will be formed and an orientationimparted to identify out-of-school girls, interact with their guardians, serve as a link to the GCM, andfollow-up to monitor attendance of newly enrolled girls.

v Incentive items such as stationary supplies and exercise books to SC, ST and minority girls in blockswith female literacy below 15 percent (p. 96).

v Rs. 250/month would be provided for escorts to bring girls to and from school in habitations wheredistance to school is an obstacle to parents sending their girls to school.

(c) Working and migrant children. Rajasthan is faced with a serious issue of working and migrantchildren involved in the carpet trade, quarry mining and agricultural work, in addition to household choresand sibling care. Strategies to reach these children are (i) bridge courses of six month duration for childrento help them transition to the formal system; (ii) creating Alternative Schools in the evening; (iii)establishing residential facilities for migratory children; and (iv) providing migrant children with identitycards with their education credentials (ie., class, name of school, marks) in order to allow them to transferto a school in their new habitation. The GOR assured the Bank that NGOs would assist in conununitymobilization and awareness building to bring working and migrant children into school, and that eveningAltemative Schools would not be constructed or permanently established for the purpose of providingworking children with educational opportunities. These AS would be seen as a temporary measure whilestriving to develop mechanisms to eliminate child labor and bring all children into regular day schools.During Negotiations, IDA received assurances that no Alternative Schools would be attached to factoriesor mines.

(d) Children with mild to moderate disabilities. Training would be provided at the Block level to KeyResource Persons in assessing children for disabilities. Where required, schools would build ramps, andthe Resource Persons would link the children with the appropriate groups to receive aids and appliances asneeded.

(e) Children in urban slum areas. Overcrowding of schools, distance, and poverty levels which requirechildren's assistance in household chores and other forms of child labor plague government schools inurban areas. Additional parateachers would be financed in overcrowded schools and classrooms, and dayand evening alternative schools would be provided in urban areas, overseen by Ward Education

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Committees (WEC) with parateachers from the immediate neighborhood.

(f) In addition to the above interventions, an innovation fund of Rs. 80 lakhs (approximately US$174,000)or Rs. 20 lakhs per year (approximately US$44,000) for developing new strategies to attract and retaindisadvantaged children in alternative schools would be established, particularly for engaging NGOs,individuals and educational institutions. There are two means to access the funds: (i) the SPO wouldadvertise the availability of funds for education improvement purposes; and (ii) an invitation for proposals,to be evaluated on a competitive basis, to specific agencies and NGOs, institutions and individuals wouldbe issued. A committee comprised of the SPD, two education professionals, and two specialists from othercomponents in the project (e.g., Community mobilizing, etc.) would shorlist proposals from organizationswith a proven track record in innovation in primary education, community mobilization, and early childdevelopment. Proposals would be evaluated based on their potential contribution to meeting projectobjectives, technical merit, replicability, cost, and competence of the agency or institution.

2. Filling teacher vacancies and providing parateachers: Rajasthan enjoys a fairly comfortablepupil:teacher ratio of close to 40: 1, although distribution of teachers is somewhat uneven in certain areas.Redeployment efforts are undertaken annually in an attempt to maintain an appropriate pupil:teacher ratio.There are 2350 vacancies in the nine project districts which are being filled by June 2001 with regularteachers. Subsequent vacancies in formal primary schools and alternative schools would be filled withparateachers. The project will provide 2600 additional parateachers to ease overcrowding in schools. TheGOR will appoint one female parateacher to each Gram Panchayat in the formal primary schools in alldistricts. Additional teachers to be provided in existing schools would be calculated on the basis ofenrollments: up to 60 students would receive one parateacher, 60-90 students would receive twoparateachers, and above 90 students would be allocated three teachers.

3. Community mobilization and awareness building.(a) School Management Committees (see also under Component 3, Building Capacity to ManagePrimary Education). A total of 15,900 SMCs will be established by election to support each school andalternative school in the project districts. They will be comprised of the Sarpanch, representatives fromSC, ST, minorities, OBC, a parent of a child with disabilities, one third women, a retired educationist,Aganwadi Worker, Youth Club member, a woman activist, two guardians (one male and one female), and aheadmaster. To build community ownership of schools, the SMCs will serve the following functions: assistin conducting school mapping and microplanning exercises; work with community members to monitorenrollment and attendance of children in schools; oversee construction and repairs of the school; managethe Rs. 2000 school facilities grants; serve as a link to the Gram Panchayat to facilitate convergence withother available resources for education development; and select parateachers from the commnunity.

(b) Convergence of resources. Efforts will be made at all levels to combine project human and financialresources with other available complementary skills and funds. At the state level, the GOR took thedecision to bring the three largest education programs, DPEP, LJP and SKP under one managementumbrella. To this end, DPEP will benefit from the skills and knowledge of the other two programs:community mobilization, school mapping and microplanning exercises in DPEP districts will be adaptedfrom the Lok Jumbish Program with assistance from LJP staff; and the parateacher training and supportsystem will be administered by SKP. Similarly, SKP schools in DPEP districts would benefit fromresources under the project (i.e., become eligible for school facilities grants or civil works). Other areas ofconvergence at the state level include collaboration with ICDS in ECE, coordination with PHED inproviding adequate coverage of water supply and sanitation facilities, etc. UNICEF has developed hygieneeducation and sanitation packages for schools and a training program which would be utilized under DPEP.

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Similar efforts would be coordinated at the district level under the guidance of the District Collector, whoserves as Chairman of the District Executive Committee. At the sub-district level, a "communitymobilization team" and "intersectoral facilitating team" will be set up in Gram Panchayats to facilitateconvergence with other schemes to promote social empowerment and coordinating financial resources.

4. Construction and rehabilitation of schools and classrooms: As per the revised DPEP guidelines,there will be an initial ceiling of 24 percent of project costs for civil works, which could be raised to 33percent when the project has disbursed at least 50 percent of allocations to quality components. In 1999,in order to provide all habitations with a school within one kilometer, the GOR established nearly 12,000Rajiv Gandhi Swama Jayanthi Pathshalas (RGSJP) or conmmunity schools, of which 9000 are in DPEPdistricts. The majority of these schools received funds for a two room building, but many remainbuildingless in the nine Rajasthan DPEP II districts. Furthermore, under SKP, many schools have beenfunctioning without buildings for one to five years or more with steady enrollments of over 50 children.Under the project, about 500 one or two room schools will be provided to these community schools whichmeet agreed criteria based on age of the school and enrollments. In addition, 880 of Altemative Schoolswill be established in unserved habitations yet to be covered under the RGSJP scheme or SKP. Each willbe provided one or two room schools, depending on estimated enrollments. Designs of new schools havebeen developed under Rajasthan DPEP I, and are specifically planned so as to use low-cost localtechnologies, and to be expandable over time. Thus, if an altemative school is established with enrollmentof 30 children and receives a one room school, it can be easily enlarged to accommodate up to 90 childrenif there is a future enrollment response. In addition to new schools, 2800 classrooms would be constructedto ease overcrowding, 1760 schools will undergo major rehabilitation, and 3200 schools will be providedfunds for minor repairs. To keep costs low, construction will be undertaken by subgroups of the SchoolManagement Committees (SMCs) called Bhawan Nirman Samitis (BNS) which will receive training forthis purpose, and supervised by engineers. A construction manual has been developed under RajasthanDPEP I and will be used for this project.

The GOR has taken a decision not to establish new formal primary schools except in those villages whichmeet state norrns of size and enrollment, and has decided to finance these from its own rather than projectresources.

Project Component 2 - US$28.20 million

Improving quality of classroom processes and enhancing learning achievement in primary educationincludes the following sub-components:

1. Instituting a comprehensive pedagogic renewal approach for continuous support for teacherdevelopment: A 'cascade model' of training and support would be developed, as implemented in the othersix DPEP projects. In this model, a State Resource Group (SRG) is established with representation fromnodal public and non-govenmuental education institutions. The SRG provides guidance to the StateInstitute of Education Research and Training, which develops and tests training modules, and trains theDIET faculty in the districts. DIETs in tum would provide training and support to the BRCs which havethe primary responsibility of training the teachers. DIET staff would also train the CRCs, which will beresponsible for conducting monthly teacher, parateacher and ECE worker meetings, and for training theSMCs.

Training. Three types of teacher training will be imparted to primary level teachers: (i) new altemativeschool parateachers and parateachers in formal primary schools will receive an initial training of 41 daysthe first year, and 30 days in each subsequent year from the BRCs, based on the SKP model of training; (ii)

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all teachers in formal primary schools will receive six days of inservice training per year to introducepedagogic concepts and methodologies at the BRCs; and (iii) all teachers will attend monthly meetings inthe CRCs for support in curriculurn content and delivery mechanisms. At the pre-primary level, six days oftraining annually would be held for 5960 ICDS workers and 400 ECE "preraks," who would also attendmonthly meetings at the CRCs. SMCs will receive three days of training from the CRCs each year incommunity/school interface, improving the school and learning environment, managing the Rs. 2000 schoolfacilities grants, and community mobilization for improving enrollment and attendance.

Teacher training modules have been developed under Rajasthan DPEP I with extensive input andconsultation from teachers, guardians of children, subject experts, representatives from LJP and SKP, andother non-governmental educational institutions. Needs were identified through a survey of 1000 teachers.The first inservice module has been implemented in Rajasthan DPEP 1, and will be used in RajasthanDPEP II following an impact evaluation and feedback from teachers. The methodologies used in trainingare designed to mirror those activities and learning processes promoted by the new, proven andcomprehensive pedagogic approach: they are interactive, student-centered, and participatory further backedby school-based pedagogic support. The first module includes lessons on the development and use oflow-cost Teaching and Learning Materials (TLM) to support the new pedagogy, following which teachersreceive their first annual Rs. 500 TLM funds (see 2 below). Parateacher training is being adapted fromand designed with significant input from trainers of the Shiksha Karmi Program, well-known for itsstrengths in community teacher training and support.

2. Instructional materials including guidebooks, workbooks and funds for TLM. Rajasthan has apolicy of providing all lower primary students in government and community schools (RGSJP andupcoming alternative schools) with free textbooks. At present, books for Classes I-III have been revised toreflect curriculum changes adopted by the state in 1999. Rajasthan DPEP I is funding the development ofteacher guides and workbooks to support the new textbooks and curriculum. Rajasthan DPEP n will fundfree workbooks for girls, SC, ST, working children, urban slum dwelling children, and children with mildto moderate disabilities in the nine districts.

All teachers in formal government schools, alternative schools and RGSJP schools will be provided withRs. 500 annually for the purpose of developing and purchasing low-cost TLM for use in the classroom.Teachers in SKP schools receive the equivalent in materials at the beginning of the school year during theirannual training, and will thus not receive the TLM funds through the project. Receipt of the grant will becontingent on having received training in effective use of the funds to develop TLM to support interactivelearning in the classroom.

3. Distance Education: Rajasthan DPEP I is supporting development of distance education programsusing print, audio and video/media, and implementing programs in the second, fourth and fifth year.Rajasthan DPEP II will support reviewing the impact of modules and the planning process. RajasthanDPEP II will also finance Rs. 28 lakhs of equipment and training in line with that developed underRajasthan DPEP I and with the support of the EE Bureau.

4. Libraries and Book Banks: The presence of books is a known determiinant of learning. The projectwill fund school libraries in all lower primary schools and lower primary sections in upper primary schools,providing Rs. 2000 the first year, and another Rs. 2000 in the third and fifth years. Storage facilities forthe books could be purchased with the Rs. 2000 school facilities grants provided through the SMCs.Textbook Banks would be made available to supplement the free textbooks the state already provides.

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5. Achievement monitoring and student evaluation: The project would establish a District AcademicCommittee (DAC) in each district which will prepare assessment papers with assistance from the SIERTon the pattern of the baseline studies. These would be transmitted to the BRCs which would serve as a linkbetween the DACs and CRCs. CRCs will supply examination papers to schools, maintain consolidatedrecords of exam results for the cluster, and share results with teachers in their monthly meetings in order todevelop remedial measures to improve learning in weaker areas. Teachers will undergo an orientation oncontinuous student assessment.

A baseline achievement survey has been conducted in all nine districts (see Tables 1 and 2 attached). Atthe mid-term review in April 2004, classes I and 4 language and mathematics would be reassessed, as inother DPEP projects, to measure increases in learning over the baseline. A final achievement survey wouldalso be conducted in time to produce the results by the project closing date. The objective is to increaselearning over the baseline by 25 percent.

6. Improving the physical environment: school facilities grants, toilets and water supply: Thepresence of toilets and adequate water supply are known determinants of school attendance at the primarylevel, particularly for girls. 7100 toilets, 2300 hand pumps, and 380 PHED connections will be financedby the Credit. Furthernore, the state has agreed to investigate alternative water supply sources such asrain water harvesting for areas where PHED connections or hand pumps are not feasible. The Credit willfiuther finance annual allocations of Rs. 2000 to each primary school, to be distributed to and managed bythe SMCs, specifically for school improvement efforts and activities. The SMCs will receive training formanaging and accounting for the funds.

Project Component 3 - US$ 20.90 million

Improving state, district and subdistrict level capacity to manage primary education includes thefollowing sub-components:

State Level. As in the design of the wider DPEP program, a State Implementation Society (SIS) called theRajasthan Council of Primary Education (RCPE), a semi-autonomous body registered under theRegistration of Societies Act of 1958 was established in 1998 to oversee project planning andimplementation for Rajasthan DPEP I. The RCPE has a General Council (GC), headed by Rajasthan'spanchayat Raj Minister as President and the Chief Secretary as Vice President, with members from, interalia, Departments of Finance, Social Welfare, Women and Child Development, teachers, Director LokJumbish, etc. which provides overall policy guidance to the state program. In addition, there is anExecutive Council (EC) constituted with the Development Commissioner as Chairman, which meetsquarterly and is responsible for overseeing all administrative, financial, and academic aspects of projectimplementation. The EC has authority for managing project funds in addition to framing regulations whichguide implementation, as approved by the State government. The State Project Director is theMember-Secretary of both the GC and the EC.

The State Project Office (SPO) established for Rajasthan DPEP I has been responsible for projectimplementation, and monitoring activities and inputs at the state and district level. It will continue in itscurrent capacity, and expand as required to provide adequate coverage of the additional districts. Itprovides oversight of project management, developing and implementing effective monitoring systems,serving as a link to nodal state institutions such as the SIERT and the Directorate of Elementary Education,ensuring appropriate procurement and financial management practices are adhered to, and building districtcapacity to develop Annual Work Plans and Budgets (AWPB). The SPO also facilitates the integrationand strengthening existing state and district resource institutions with the Panchayati Raj Department tosupport primary education development and project implementation. The Credit will support additional

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staff, on a declining basis, and consultants required to manage the additional nine districts and to providetechnical and administrative inputs to reach the DPEP's objectives. The Credit will also fund additionalrequirements for equipment and stationary/office supplies. Additional staff were selected after May 1,2001, and will be funded through retroactive financing as agreed during Negotiations. In addition tosupporting the SPO, the Credit would finance the strengthening of the SIERT and DIETs based oncomprehensive institutional development plans to be agreed upon by the SPO, GOI and IDA, and expectedto be submitted by September 2001. A Center for Education Management (CEM) is being financed underthe first phase of Rajasthan DPEP. Upon full implementation of the agreed staffing and development plansin Rajasthan DPEP I, further strengthening of the CEM may be considered under Rajasthan DPEP II basedon an institutional development plan to be agreed among the state, GOI and IDA.

To support the SPO professionals, State Resource Groups would be established for the areas of civilworks, ECE, training, gender, community mobilization, and Integrated Education for the Disabled (IED).Resource Groups would also be established at the district and cluster level in different functional areas tosupport the efforts of DPEP.

District Level. At the District level, a governing body under the chairmanship of the Zila Pramukh (withthe District Collector as vice-Chairman) would be established to guide policy and review progress relatedto enrollment, retention and the quality of education. The governing body would be comprised of publicrepresentatives, Block level officers, as well as educationists and working teachers. Parallel to the statelevel, a district level EC would also be established headed by the District Collector. The EC would havethe authority to review implementation, and assist in matters of convergence with other resources availableto support DPEP interventions (e.g., water supply, scholarships for tribal children, etc.). The DistrictProject Coordinator (DPC) would be the Member-Secretary for both the GB and district EC.

DPOs would be established in each of the nine project districts, comprised of District Project Coordinators(DPCs), professionals in the areas of teacher training and support, community mobilization, ECE andgender, and monitoring and evaluation. Accounts Officers and Engineers would also be assigned to eachDPO to oversee financial management and civil works, respectively. The DPOs would oversee all projectplanning and implementation of activities from the district to the school and community level. They willcoordinate the work of the District Institutes of Educational Training (DIET), establish and monitor theBlock Resource Centers (BRC) and Cluster Resource Centers (CRC). The DPOs will prepare AWPBs,manage the flow of project funds and monitor the physical and financial implementation process. TheCredit would support establishing and running the office, rental of vehicles, and staff salaries on a decliningbasis and purchase of furniture and equipment. Retroactive financing will be provided for DPO staff put inplace and their orientation/training from May 1, 2001.

At the block level, 49 BRCs would be established with the responsibilities of imparting inservice teachertraining for all teachers and ECE workers, induction training for parateachers, supervisory support forCRCs, collecting and analyzing educational data, guiding SMCs and oversight of Alternative Schools.Each BRC Facilitator would also adopt a CRC to develop a model school for teacher development andsupport. The BRC would also serve as liaison to the Block level panchayat organizations and NGOs, theBlock Education Officer (BEO) and Block Development Officer (BDO), and hold quarterly meetings withBlock Education Committees (BEC) for planning and dissemination of studies. The BRC Facilitator wouldoversee construction of the BRCs and CRCs with the BEC, for which a joint account would be opened. Abuilding which included training rooms, dormitories and a kitchen, along with the relevant furniture andequipment would be financed under the Credit for 49 BRCs in the nine districts. In three districts which donot have DIETs, enhanced BRCs may be considered to compensate for the additional training requirementswhich may be required. In Blocks with less than 15 percent female literacy, a Girl Child Motivator wouldbe provided to strengthen efforts to improve educational opportunities for girls.

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A total of 678 CRCs would be established to cover every 15-20 formal primary schools, alternativeschools, RGSJP schools, ECE and ICDS centers within a radius of 8 km. They play a pivotal role inbuilding the capacity of teachers through monthly meetings, training and interaction with the SMCs,coordinating other mobilization efforts, monitoring enrollment efforts, and collecting data. A room withrequisite furniture would be financed by the Credit, and the CRC Facilitator provided a conveyanceallowance of Rs. 600 per month to conduct his/her work.

SMCs, as described above, would be established and trained to assist with school monitoring, enrollmentdrives, monitoring student and teacher attendance, developing school improvement plans in consultationwith teachers, oversee civil works, and serve as a link to the PRIs for support and convergence of fundsfrom other schemes.

3. Monitoring, Research and EvaluationThe Education Management Information System (EMIS), Project Management Information System(PMIS), and Financial Management System (FMS) would be used to monitor progress. EMIS formats arebeing developed under Rajasthan DPEP I based on those used in other DPEP projects, and will be used inthe Rajasthan DPEP II districts. It is designed to measure progress towards achieving project objectivesregarding access and enrollments, reduction in the gender gap, targeting special focus groups, etc. TheCredit will fund development of capacity of district and sub-district staff to manage the EMIS and PMISsystems, carry out school mapping exercises, consult with parents and community, prepare AWPBs andmonitor project implementation. Third party evaluation studies will also be carried out. There will be anannual review of implementation covering physical targets for civil works, procurement, training, softwaresystems, investment proposals and financing requirements for the following fiscal year. The review will beconducted in the first quarter of each year by DPEP. Progress reports and work plans would follow acomnnon framework for all the districts in Rajasthan DPEP.

Progress towards achievement of development objectives will be measured in several ways: (i)district-based assessment surveys conducted at the mid term and end of the project will monitor progress onkey education indicators against the respective baselines identified during preparation; (ii) classroomobservation studies will assess the impact of project interventions on the classroom climate and pedagogy;(iii) FMS, in compliance with the Bank's LACI requirements will provide quarterly information on theproject's physical targets for civil woks, procurement and training, software system development andexpenditures; (iv) bi-annual supervision missions will be conducted by the Bank including review workshopto report on progress and share experiences; and (v) two in-depth reviews will be conducted by GOI andGOR of the project. The EMIS will provide age-specific enrollment data at village level, year-wiseretention rates by grade, gender and socially disadvantaged students for consecutive school years andaverage student and teacher attendance data. This information will be based on school records in additionto SMC attendance reporting mechanisms and sample surveys. The FMS will monitor disbursements andfinancial management. The project would also fund capacity building for conducting research andevaluation studies pertaining to the project objectives as well as to assess the effectiveness of innovationsimplemented in the project. To cany out these studies the SPO may also consider contracting out to NGOs,universities and other apex institutions.

Rajasthan DPEP II is introducing a new innovation for monitoring primary school age children called a"Child Tracking System" (CTS). It is an integrated monitoring system which first provides every child, inor out of school, with an identity card and number which contains pertinent information related to theirschool, grade level, achievement, attendance, etc., based on the school mapping and microplanning used inLok Jumbish and DPEP. The system would monitor the child's performance and attendance, and link thisinformation to the teachers and the schools. School Management Committees would collect the dataannually, which would be validated on a sample basis and computerized at the district level. It will allow

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for continuous monitoring of attendance, dropout, completion and achievement, even if a child should moveto another school or community. The CTS would be piloted in one block in each of the nine RajasthanDPEP H districts during the first year based on software being developed with the assistance of UNICEF,DFID and the project. After being fully evaluated, it would be extended to all blocks.

Summary Baseline Assessment Surveys by District and Gender (for breakdown by SC/ST, see PIP)

Table I - Class ll(Percen age)

District Gender Language Mathematics

Bharatpur Boys 83.45 77.15Girls 81.35 77.15Total 82.50 77.15

Bundi Boys 57.70 66.40Girls 55.10 59.35Total 56.60 63.45

Churu Boys 69.60 76.70Girls 66.40 72.35Total 68.15 74.75

Dholpur Boys 68.85 77.40Girls 69.90 73.30Total 69.30 76.15

Dausa Boys 53.80 54.15Girls 44.15 42.95Total 49.70 49.45

Hanumangarh Boys 56.65 68.50Girls 57.55 65.20Total 57.10 66.75

Jaipur Boys 75.20 76.70Girls 75.50 75.05Total 75.35 75.90

Karoli Boys 65.05 66.45Girls 64.55 61.45Total 67.20 64.40

Sawaimadhopur Boys 68.35 72.25Girls 69.35 71.50Total 68.75 71.95

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Table II - Class V(Percentage)

District Gender Reading Mathematics Word Languagecomprehension Knowledge

Bharatpur Boys 53.11 47.75 59.57 56.34Girls 52.34 45.83 62.03 57.17Total 52.77 46.95 60.60 56.69

Bundi Boys 42.34 38.43 55.89 49.11Girls 45.46 38.48 56.60 51.01Total 43.60 38.45 56.17 49.89

Churu Boys 42.91 38.08 58.60 50.76Girls 43.17 36.25 58.77 50.97Total 43.00 37.38 58.69 50.84

Dholpur Boys 45.03 39.45 58.51 51.77Girls 45.80 38.80 57.17 51.47Total 45.26 39.28 58.11 51.69

Dausa Boys 40.14 32.13 51.60 45.89Girls 33.74 31.80 45.03 39.39Total 37.69 31.05 49.09 43.39

Hanumangarh Boys 39.74 35.58 54.91 46.76Girls 37.43 34.58 51.74 44.59Total 38.03 35.10 53.37 45.70

Jaipur Boys 58.20 51.35 64.77 61.49Girls 55.20 48.98 63.20 59.20Total 56.89 50.30 64.09 60.47

Karoli Boys 51.83 43.05 58.17 55.00Girls 51.23 40.93 58.57 54.90Total 51.60 42.28 58.31 54.96

Sawaimadhopur Boys 50.60 45.95 59.11 54.86Girls 52.60 42.88 55.26 53.93Total 51.31 44.85 57.74 54.53

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Annex 3: Estimated Project CostsINDIA: Rajasthan Second District Primary Education Project

Local Foreign TotalProject Cost By Component US $million US $million US $milion

Expanding Access and retention 32.70 1.10 33.80

Improving quality and achievement 24.70 0.40 25.10

Building institutional and management capacity 18.50 0.20 18.70

Total Baseline Cost 75.90 1.70 77.60Physical Contingencies 4.70 0.20 4.90Price Contingencies 4.90 0.10 5.00

Total Project Costs 85.50 2.00 87.50Total Financing Required 85.50 2.00 87.50

Identifiable taxes and duties are 0 (US$m) and the total project cost, net of taxes, is 87.5 (US$m). Therefore, the project cost sharing ratio is 85.03% oftotal project cost net of taxes.

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Annex 4: Economic and Financial AnalysisINDIA: Rajasthan Second District Primary Education Project

Economic

Primary education and poverty reductionThe six previous DPEP documents and recent background studies for two Bank reports on poverty in India,Achievements and Challenges in Reducing Poverty (1997) and Reducing Poverty in India (1998),demonstrated the very close association between income poverty and low levels of schooling. Simulationstudies have also shown that, of all the major states, low literacy levels have contributed the most inRajasthan to slower reductions in the incidence of poverty over the past five decades.

Until recently, economic evaluations of the impact of primary education in India have relied on very olddata from relatively small surveys and from estimations of the proportions of households below the povertyline. This is now changing and some of the current economic and poverty research in India beingundertaken by the Bank is utilizing the results of much larger government surveys, both of householdconsumption and of the incomes of wage earners.

An analysis of the employrnent data from the 1993/94 National Sample Survey corroborates the generalpositive effect of primary education on income through estimates of the impact of education on the weeklywage of wage eamers (Wood and Calandrino, 2000). For primary school male graduates, wages are 7.8percent higher per year of school compared to a non literate. Part of this results from higher wages amongthose in regular employment and (a greater) part from the increased probability of gaining regularemployment compared to casual employment. For females the return is less at 3.8 percent per year, or 19percent over the five year primary cycle.

Recent research in India on the distribution of education across households, and of the effects of thehousehold's education (including primary schooling) on per capita household income has been undertakenacross eight states using two large sets of household survey data from 1993/94. While Rajasthan was notone of the eight states, the findings, particularly for the northem states, are likely to be similar. To take theexample of Uttar Pradesh, the relationship between education and poverty was very strong. There, 77percent of the poor had less than primary schooling. Of those households where the head had no schooling,52 percent were below the poverty line compared to 36 percent of those whose head has primary schooling.Further analysis of the data shows that even after controlling for household characteristics that might beexpected to influence consumption levels (such as demographic composition, social status, principaloccupation, land owned, etc.), the predicted mean consumption level of the household rises appreciablywith increasing educational attainment of the household head.

While the poor have less education, they also appear to have lower returms to whatever level they do have.In order to allow analysis of the possible differential impact of household characteristics (includingeducation) on the poor and not-so-poor, households were separated into scheduled caste and others.Educational attainment was much lower in scheduled caste households. On average, only 23 percent of themembers of these households had completed a primary schooling compared with almost 59 percent of themembers of other households. The analysis was broadened to compare the experiences of members ofscheduled caste households with the rest of the population and to investigate whether increased incomesassociated with each schooling level differed between the two types of household (World Bank, 2000). Theresults indicated that the increases in income were lower for members of scheduled caste households in fourstates (Bihar, Madhya Pradesh, Andhra Pradesh and Kerala), similar in two states (Uttar Pradesh andPunjab) and higher in just in two (Karnataka and Orissa). On the whole, the increment in income resulting

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from a primary schooling appears to be less for scheduled caste households than for the general population.Since there is a strong association between poverty and membership of a scheduled caste, it follows that thestrategy of widening access to primary schooling to members of scheduled caste households will reduce theincidence of absolute poverty but, while necessary, is not a sufficient measure to reduce income inequality.

Determinants of the demandfor schooling

Access to schooling is constrained in Rajasthan. According to the National Sample Survey 52nd Round for1995/96, only 67 percent of all 6-11 year old rural boys were in school and 37 percent of rural girls (and58 percent of all 6-11 year olds). To better understand the reasons for such low and gender-differentiatedlevels an analysis of the determinants of enrollment was undertaken during project preparation,incorporating several child, household and school characteristics including subsidy programs, based on alarge household survey undertaken in 1993/4. In Table 1, a subset of the results is presented whichincludes data on each of the variables found to be statistically important. Among the results are:

(a) being male increases the probability of being enrolled by 42 percent;(b) the education of the father has a small but positive influence of the enrollment of both sons and

daughters; the education of the mother has a strong influence on a daughters enrollment;(c) household income (consumption) per capita, does not appear to be a determinant of whether or not

boys enroll but it has a strong influence on the enrolment of girls;(d) the effect of caste of the household is significant for both boys and girls, but is much stronger for

girls;(e) distance to school does not have a negative impact on boys enrollment but it is a factor for girls (at

the six percent level of significance);(f) the proportion of male teachers has a negative effect on the enrollment of boys but has no significant

effect on girls (contrary to the All India results for the same set of calculations);(g) the proportion of teachers who are fully trained has a positive and significant effect on enrollment

probability; and(h) of the several types of subsidy (coverage is very low for each), none appeared to have an impact on

the decision of whether or not to enroll a child.

These results point to a number of considerations for project design.(i) The finding that caste and gender themselves have significant effects on enrollment implies that

specific strategies need to be designed for various targeted groups of children. There is a need toidentify, and to remove, the constraints on girls in general and on low caste girls and boys inparticular beyond those arising from low household income and the low level of parental education.

(ii) The finding that distance from school influences girls enrollment negatively suggests either that moreschools are required or that alternative arrangements need to be made to reduce the anxietiesassociated with distance. Even though the population and geographic norms for citing schools havebeen fulfilled across almost all of the state, it is apparent that the norms themselves are insufficient toovercome the reluctance of parents to send their daughters to school.

(iii) The finding that the level of training of teachers has an effect on enrollment underlines the argumentthat if parateachers are to be employed, their training and professional development programs need tobe a great deal of emphasis.

(iv) The finding that mothers' education has a significant impact of girls schooling points to the need forwomen's literacy and empowerment programs, either within or complementary to the project.

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Table 1. Determinants of Schooling Enrollment in Rajasthan

VARIABLE ALL BOYS GIRLS

Gender 0.42 n/a n/a118.41

Father's education 0.077 0.058 0.08116.791 14.361 15.451

Mother's education 0.16 0.057 0.23[3.081 [1.31] 13.401

Caste 0.12 0.076 0.16[5.051 13.081 [4.501

Per capita income 0.20 0.095 0.2812.851 [1.26] [2.681

Distance: primary -0.016 -0.0058 -0.021School 12.171 [0.73] [1.90]

Male/Total teachers -0.13 -0.18 -0.077[2.641 [3.231 [1.04]

Trained/total teachers 0.14 0.089 0.1813.991 [2.551 13.251

No. of observations 2355 1271 1084

Chi-squared Chi(24) Chi(23) Chi(23)

Statistic 497.26 184.67 246.11

Notes: Dependent variable: whether child was ever enrolled Yes=l, No=0. Probit model marginal effects reportedhere. T statistics are in parenthesis. Figures in bold indicate the variable is significant at a five percent level. Allestimations use age dummies that are significant.

Cost effectivenessThe Education Management Inforiation System (EMIS) which has been developed through the nationalDPEP and which is providing higher quality data on the schools than previous reporting procedures, iscurrently being implemented in the ten districts of Rajasthan DPEP I. Until the System generates thenecessary data, our understanding of the efficiency of the primary school system remains the same as inearly 1999 and as documented in the Project Appraisal Document for Rajasthan DPEP I. There, it iscalculated that if the results of the project in terms of increasing retention rates are as good as those fromthe Shiksha Karmi Program, which shares several of the interventions designed for the proposed project,the cost per graduate would fall by around 30 percent.

The major intervention to reduce the unit cost of primary schooling adopted from other programs byRajasthan DPEP I is the employment of a total of 3,800 parateachers, appointed locally by representativesof the community at under one third of the salary of a regular teacher. In addition, in July 1999, the stategovemment has also employed an additional 11,000 of these teachers from its own funds across the state.Parateachers will also be employed under the proposed project. Again, our understanding of theeducational implications of the employment of parateachers is limited to evaluations of the experiences ofsimilar teachers in the Shiksha Karmii Program. Compared to conventional schools with regular teachers it

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appears that:

(a) both dropout and repetition rates are significantly lower. The most recent evaluation of the1993/94 entering cohort gives a 33 percent completion rate with a further 29 percent still in school. In the1997/98 school year, 77 percent of schools had a daily attendance rate of 80 percent and over. TheShiksha Karmi schools are located in the most remote and generally disadvantaged parts of the state; and

(b) learning achievement of pupils are at least as high as government schools. The BaselineAssessment Survey undertaken during preparation of Rajasthan DPEP I tested levels of learningachievement in language and mathematics for class I and IV children in regular and in Shiksha Karnischools. Scores in the SKP schools were higher in class I in mathematics in six out of eight districts and inthe language test in four out of eight with no significant differences in the other four districts. In the classIV tests, scores were significantly higher in five of the eight districts, while there were no significantdifferences in the remaining three districts.

Financial

Levels, patterns and trends in elementary education expenditureThe GOR had one of the highest rates of growth of expenditure on elementary education across the statesduring the 1990s. Real spending increased by 53.2 percent between 1991-92 and 1997-98 and theproportion of Gross State Domestic Product spent by the Government on elementary education rose from2.0 percent in 1991-92 to 2.2 percent in 1997-98. The share of revenue expenditure allocated toelementary education rose from 11.1 to 13.0 percent over the same period. However, despite theseincreases, the growth in enrollments has been such that the state has recorded one the lowest increases inreal spending per student.

Fiscal implications of education expansionThe proposed project is the second DPEP project for the state and together they would be implemented in19 of the states 32 districts. Elementary education in the remaining 13 districts is being enhanced by aparallel project (Lok Jumbish) supported by DFID, the GOI and the GOR. Implementation of RajasthanDPEP I began in mid 1999 and the current phase of Lok Jumbish began in 2000. These projects are beingimplemented in a wider context of the GOR's attempts to universalize primary schooling. This section ofthe annex is divided into two parts. The first deals with the fiscal impact of the proposed project during itsimplementation (together with the implications of the Rajasthan DPEP I and Lok Jumbish projects) andwith its long term financial sustainability. In the second part, the financial cost of universalizing primaryschooling across the state over the next five or eight years is analyzed. Over the past year, the GOR hastaken steps to begin to reform aspects of its fiscal situation. Implications of this set of reform measures,and of possible additional measures, together with different scenarios regarding the implementation of thenew parateacher scheme run through both parts of the analysis.

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(a) Fiscal impact andfinancial sustainabilityRajasthan DPEP II will be the second primary education project in the state supported by the World Bank.Rajasthan DPEP I was made effective in September 1999 and will be completed in late 2004. Theproposed project will end in 2006. Each of these projects has two types of financial implications for thestate government: 15 percent of the total cost while under implementation, and the cost of sustaining thesuccessful interventions once the project is completed. The total cost of Rajasthan DPEP I was aroundUS$101 million with an annual contribution from the state for averaging around Rs. 14 crores. The annualcost of sustaining the project was estimated to be Rs. 34 crores. The overall size of Rajasthan DPEP IIwill be similar to that of the previous project, and hence the state's annual contributions and the costs ofsustainability will be similar. The Lok Jumbish project is financed over a five year period, to 2005, by thestate government, GOI and DFID through shares of 1:2:3 respectively. The state government'sresponsibility during implementation will be around Rs. 15 crores annually with recurring annual costs atthe end of the project of around Rs. 65 crores.

The first row of Table 2 aggregates the state's total liabilities from the three projects during and after theirimplementation for each year to 2008. From these costs are subtracted the 'savings' which will arise in thefuture from the state's intention to replace retiring regular teachers (assuming an attrition rate of twopercent) with parateachers who are employed on much lower salaries. The result is the net liability rowwhich indicates the additional levels of expenditure the state will need to allocate to fund and sustain theprojects. These can then be compared to the incremental increases in the budgetary allocation to basiceducation, after allowing for annual salary increases of teachers. These sets of calculations are describedin the remainder of Table 2.

The first assumption is that the projected increases in the annual allocations to elementary education will bemaintained at a constant share of the state domestic product - GSDP -which was 2.97 percent in1999/2000. The second is that the shares of this allocation which will be devoted to primary and upperprimary schooling again remain unchanged and (in the absence of precise kn.owledge of the shares) thatthey reflect the relative numbers of teachers in each cycle. Out of the incremental allocations, a large partis required annually to fund the increases in teacher salaries. In the past, between pay rounds, these havebeen increasing by around two percent a year. Subtracting these costs, results in an estimate of the netincrements each year which would be available for financing the projects and another interventions, andwhich are then cumulated.

The growth of GSDP (and consequently the allocation to education) has been projected by Bank staff undertwo scenarios: (a) a partial fiscal reform which reflects the intentions announced by GOR in the 2000budget to alter the trends in revenues and expenditures and which it is anticipated would result in anincrease in the growth rate of GSDP from 3.9 percent in 1999/2000 to 4.6 percent in 2005/06; and (b) abold reform which would include additional measures on both the revenue and expenditure side and lead toa growth rate of GSDP of 5.4 percent by 2005/06. The two scenarios and their implications for incrementalallocations to basic and primary education, and consequently for the government's ability to finance thecosts and future liabilities of the primary education projects, are shown in the bottom half of Table 2.

Under each scenario, elementary education expenditures have been projected at a constant proportion (2.97percent) of GSDP, a constant share of this allocated to primary schooling and then netted for the realincrease in teacher salaries of 2 percent a year. This procedure provides estimates of the resources likely tobe available to fund the state government's responsibilities during the implementation of the projects, and tosustain the activities beyond the project period. It is assumed that DPEP I will close in 2004 and DPEP IIand Lok Jumbish will close in 2005. Under the partial reform scenario, there is a slight deficit in 2001/02(of under Rs. 10 crores) but thereafter the required state contributions would be easily covered with the

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'surplus' rising from Rs. 26 to Rs. 82 crores in 2006. In the year following the completion of all threeprojects (2007), the anticipated increase in allocations is a little below the additional liabilities required tosustain the projects but the surplus increases again in the following year. Under the bold reform scenario,and with a constant share of GSDP for education, the situation is rather healthier with the 'surplus'increasing from Rs. 33 crores in 2003 to Rs. 121 crores in 2006. In the year following completion of allthree projects, the anticipated increase in the allocation should more than cover the additional liabilities.

Table 2. Rajasthan: Financing Project Liabilities (Rs. million)

2001 2002 2003 2004 2005 2006 2007 2008

Project Liabilities

Liabilities constant at 2000/01 prices 290 430 430 430 630 1130 1330 1330(a)

Net Liabilities (b) 290 379 328 277 426 857 1022 970

Partial Reform

GSDP Growth Rate 4.1 4.2 4.3 4.4 4.5 4.6 4.6 4.6

Expenditures on Elementary Education 1855 1933 2016 2105 2200 2301 2407 25176 5 7 4 1 3 2 9

Expenditures on Primary Education 1326 1382 1441 1505 1573 1645 1721 18007 5 9 4 1 5 2 4

Increments to Expenditure on Primary 558 594 635 679 724 757 792

Expenditure requirements to finance 276 288 302 314 328 344 3602.0% increase in teacher salaries

Net increments - Primary 282 306 333 365 396 413 432

Cumulative net increments - Primary 282 588 921 1286 1682 2095 2527

Financing Project Liabilities

Partial Reform -97 260 644 860 825 1073 1557

Bold Reform -47 329 790 1102 1206 1606 2256

(a) includes GOR 's contribution during implementation plus recurring liabilities at end of each project(b) project liabilities after deducting savings from filling vacancies with para-teachers

The ability to provide for and sustain the existing and proposed projects is the very minimum required ofstate resources for the basic education sector. There will be additional demands. While the large numbersof parateachers will be employed on a quarter of the salary of a regular teacher, significant funds will berequired for their training and professional support and development if they are to be effective. Further, theincreased demands for upper primary schooling will be strong and could compete with primary funding.Finally, while the three projects (Rajasthan DPEP I and II, and Lok Jumbish III) will enable the provision

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of schooling to be increased in every district in the state, they will not provide all of the facilities requiredfor universalization. Twenty to thirty percent of school age children are still not in school. In July 1999,the GOR established over 11,000 RGSJP school, each with a parateacher, and there is an intention toestablish another 6000 in the coming months. In addition to the recurring expenditures which will berequired for each of these needs, there are also very large requirements for more and improved buildings forexisting classes as well as for those currently out of school.

Financing the universalization of primary schooling in Rajasthan

Rajasthan is one of India's poorest and educationally most disadvantaged states. The state has beenimplementing the GOI and SIDA (now DFID) Lok Jumbish and Shiksha Kanmi projects since 1993 inselected blocks and the World Bank supported Rajasthan DPEP I project across ten districts since October1999. Each project aims to increase access to, and retention in, primary schooling and to develop local anddistrict level capacity to manage the delivery of this level of schooling. However, much remains to be doneif the objective of universalization is to be achieved in the near future. The 1995/96 National SampleSurvey describes the gross attendance ratio in primary schooling in Rajasthan as 74 percent with just 58percent of the 6-11 years age group in school. This section describes the physical and financialrequirements for the universalization of primary education by 2005 and 2008, and the implications of theserequirements for the state's public finances. A model based on the demographic profile of Rajasthan,describing in some detail the physical and, consequently, the financial requirements to universalize primaryeducation has been constructed. The details of the assumptions and other parameters used are describedbelow.

Enrollments(i) The projection of the growth in school enrollments necessary to attain universalization of the 6-11 year

olds in primary schooling by 2005 and 2008 first required estimation of the age group in each year to2008.

(ii) In addition, the extent of over and under age enrollment was taken into account since reducing this typeof enrollment would reduce the additional resources required to enroll all 6-11 year olds. Thedifference between the gross attendance ratio and the proportion of 6-11 year olds in school impliesthat around 15 percent of primary school enrollments are of over or under age children. Asuniversalization approaches, this share will decrease. It is assumed that the share will be five percentin the terminal year in each of the projections.

(iii) According to the 52nd Round National Sample Survey 1995/96, just under 10 percent of primaryschool enrollments were in private unaided schools. While the measures being introduced in the DPEPand Lok Jumbish projects should improve the quality of governnent schools and encourage additionalenrollment, it is assumed that private schools will maintain a stable share of enrollments.

Teachers(i) Two sets of teacher requirements were made using pupil-teacher ratios of 40:1 and 45:1.(ii) It is assumed that the teacher attrition rate is two percent annually and that, in keeping with current

policy, all of the regular posts whichbecome vacant will be filled by parateachers. In addition, it isassumed that all new teacher posts created in the future will be filled by parateachers

(iii) In calculating the financial requirements for the teaching force, a monthly emolument of Rs. 6,500 permonth for a regular teacher was used together with an annual increase of 2.0 percent. Forparateachers, the monthly payment is Rs. 1200 (and for the relatively small number of Shiksha Karmiteachers it is Rs. 1800). Different rates of increase in the payment to parateachers are assumed inseparate projections.

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Other recurring inputs(i) Teacher training costs for regular teachers were estimated at Rs. 700 per year and, on the basis of

current expenditures, at Rs. 5200 for parateachers and shiksha karmis.(ii) Grants to teachers for preparing low-cost teaching materials were estimated at the DPEP rate of Rs.

500 per year.

Capital expenditureThe estimated capital expenditures cover additional classrooms, toilets and drinking water facilities.Separate estimates were made assuming one classroom for 40 and 45 children by the end of the timeframes.It was also assumed that every school eventually would have at least one toilet and one drinking waterfacility. The costs of constructing one classroom, toilet and drinking water facility were assumed to be Rs.144,000, Rs. 5,000 and Rs. 45,000, respectively.

Financial requirementsBoth the recurrent and capital expenditures required to universalize schooling by 2005 and 2008 have beenaggregated for each year from 2000 under two sets of assumptions for both pupil:teacher andpupil:classroom ration. The results are shown in Table 3.

Table 3. Rajasthan: Financial Requirements for Universalizing Primary Education (Rs. million)

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Base ProjectionsYear

Universalization by 2005

Teachers

Salaries (in millions)

With PTR 40:1 11772.6 11855.0 12466.5 12692.3 13045.4 13452.7 13993.3 14259.5 14456.2 14662.4 14872.7 15092.3

With PTR 45:1 11772.6 12028.2 12466.5 12639.9 12876.0 13085.6 13386.8 13554.1 13726.9 13907.2 14092.9 14286.0

Training (in millions)

With PTR 40:1 194.5 199.3 290.2 339.7 411.6 492.4 596.0 648.5 688.0 727.9 768.5 809.7

With PTR 45:1 194.5 199.3 290.2 330.0 380.5 425.5 486.3 522.0 558.1 594.7 631.9 669.5

Grants for TLMs (inmillions)

With PTR 40:1 184.4 195.1 214.7 230.7 255.6 284.0 317.4 327.2 335.7 344.4 353.4 362.6

With PTR 45:1 184.4 195.1 212.4 227.0 246.0 265.3 283.5 290.8_ 298.4 306.1 314.1 322.3

Classrooms & otherfacilities (in millions)

With PTR 40:1 1738.3 2929.2 2817.0 3995.2 4512.1 5010.2 1046.0 1073.2 1101.1 1129.7 1159.1

With PTR 45:1 1823.3 3818.5 2608.2 3279.4 3460.1 2938.3 929.7 953.9 978.7 1004.2 1030.3

Total

With PTR 40:1 13987.7 15900.6 16079.6 17707.9 18741.2 19916.8 16281.2 16553.0 16835.8 17124.3 17423.7

With PTR 45:1 14245.9 16787.7 15805.1 16781.9 17236.6 17094.9 15296.7 15537.3 15786.8 16043.1 16308.0

Universalization by 2008 _

Teachers

Salaries (in millions)

With PTR 40:1 11772.6 1 2028.2 12435.5 12543.6 12779.1 12991.9 13248.1 13643.8 14015.8 14268.2 14462.6 14665.2

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With PTR 45:1 11772.6 12028.2 12451.1 12579.0 12800.1 12980.7 13224.2 13466.9 13715.5 13906.9 14092.9 14286.0

Training (in milions) = =

With PTR 40:1 194.5 199.3 284.4 316.9 372.7 429.7 495.2 587.4 669.2 727.9 768.5 809.7

With PTR 45:1 194.5 199.3 284.4 307.5 352.9 387.9 428.8 491.6 554.2 594.7 631.9 669.5

Grants for TLMs (inmillions) _

With PTR 40:1 184.4 193.2 206.8 215.1 232.4 249.8 270.7 300.8 332.8 344.4 353.4 362.6

With PTR 45:1 184.4 193.2 206.8 211.9 223.0 234.1 247.6 267.9 289.5 306.1 314.1 322.3

Classrooms & otherfacilities (in millions)

With PTR 40:1 1297.6 2777.6 1533.5 2868.5 2891.9 3401.1 4300.6 4945.7 1260.7 1129.7 1159.1

With PTR 45:1 1297.6 . 2732.6 1098.4 1806.0 2122.9 2483.1 2969.9 3222.7 2716.4 1004.2 1030.3

Total

With PTR 40:1 13718.4 15704.3 14609.1 16252.7 16563.2 17415.1 18832.7 19963.6 16601.3 16714.2 16996.6

With PTR 45:1 13718.4 15674.9 14196.8 15182.0 15725.6 16383.7 17196.4 17781.8 17524.2 16043.1 16308.0

World Bank staffestimates

With 2005 as the target year for universalization, the financial requirement in that year (at constant 1999prices) is estimated to range between Rs. 17 billion and Rs. 20 billion depending on the pupil:teacher andpupil:classroom ratios. With 2008 as the target year, similar requirements would be required, but the buildup would be at a lower rate. Expenditure on primary education in 200/01 was estimated to be Rs. 13.3billion. This implies an increase of between 28 and 50 percent to achieve universalization. Over a fouryear period this would require annual increases of between six and eleven percent; and between 3.5 to 5.5percent over the eight year period. These costs are based on the crucial assumption that all new andreplacement teachers are parateachers whose salaries are constant and remain below one fifth of regularteacher salaries. The detailed policies on this have yet to be finalized. However, taking the extreme casefor illustrative purposes, if it is assumed that all of the new teachers appointed and all of the replacementsfor retiring regular teachers are parateachers, but that there salaries rise to those of regular teachers by thefifth year of employment, the result would be that the requirement in 2005 would increase beyond the Rs.17 - 20 billion by another Rs. 7 billion. Beyond the date of achieving universal primary education, costsfall quite steeply as the demand for additional classrooms declines.

Fiscal implicationsAn initial assumption was made that the allocation to elementary education would grow at the same rate asthe overall economy, and consequently that the share of GSDP would remain at 2.97 percent and that theshare of the elementary education allocation devoted to primary schooling would remain constant (at 71percent). As described above, the growth of GSDP has been projected on the basis of two contrastingscenarios of fiscal reform and consequent economic growth rates. The implications for the allocations forprimary schooling and the resulting financing gap which would require to be filled if universalization is tobe reached by 2005 are described in Table 4.

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Table 4. Financing Gaps for Universalization of Primary Education (Rs. million)

1999/00 2000/01 2001102 2002/03 2003/04 2004/05 2005/06

Base ProjectionsYear

Financial Requirements for 13988 15901 16080 17708 18741 19917Universalization /a

Partial Reform Scenario (PRS)

GSDP Growth Rate 3.9 4.1 4.2 4.3 4.4 4.5 4.6

GSDP at PRS Growth Rate 600168. 624775 651015 679009 708885 740785 774861

0

Allocation to Basic Education /b 17795 18556 19335 20167 21054 22001 23013

Allocation to Primary Education /c 13267 13825 14419 15054 15731 16455

Bold Reform Scenario (BRS)

GSDP Growth Rate 3.9 _ 4.1 4.4 4.6 4.9 5.1 5.4

GSDP at BRS Growth Rate 600168. 624775 652265 682269 715700 752201 7928200

Allocation to Basic Education lb 17795 18556 19372 20263 21256 22340 23547

Allocation to Primary Education /c 13267 13851 14488 15198 15973 16836

Financing Gaps for Universalization

In Partial Reform Scenario 720 2076 1661 2654 3010 3462

In Bold Refonn Scenario 720 2049 1591 2510 2768 3081

1===~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

The partial reform scenario. Implementation of the reform scenario currently adopted by GOR isprojected by Bank staff to lead to a rate of growth of 4.6 percent by 2005/6 compared to a current rate of3.9 percent. If this occurred, and if allocations to primary education maintained their share of GSDP at 2.1percent, then the resources available would be Rs. 16.4 billion and additional expenditures of around Rs.3.5 billion would be required for universalization in 2005 (assuming pupil:teacher and pupil:classroomratios of 40:1). This would be equivalent to an additional 0.5 percent of projected GSDP in that year.Summarizing, the financing of universal primary schooling by 2005 could be achieved throughimplementing the partial set of reforms and increasing the share of elementary education in GDSP from thecurrent 2.1 percent to around 2.6 percent. In the following years, the share could decline as therequirements for additional classrooms tail off.

The bold reform scenario. Implementation of the combination of fiscal reforms outlined by Bank staff isprojected to lead to higher rates of growth of GDSP reaching 5.4 percent by 2005/6. If that occurred,additional expenditure of around Rs. 3.0 billion, over and above those that would maintain the share ofprimary education in GSDP would still be required for universalization by 2005. This would be equivalentto 0.37 percent of GSDP.

The costs of universalization will be kept down if the GOR continues to adopt the policy of appointing onlyparateachers and if their pay remains substantially below that of regular teachers. The calculations above

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assume that such a case prevails. The impact of re-engaging regular teachers or of increasing the pay ofparateachers to that of a regular teacher after five years (one of the policy options being suggested by theGOR) would have the effect of requiring an increase in primary education's allocations to the equivalent ofaround 3.3 percent of GSDP compared to the 2.5 - 2.6 percent estimated above.

The education sector is currently allocated over 23 percent of all revenue and capital expenditures andalmost two fifths of this is for primary education. Universalization would require an increase in primaryeducation's share of total government expenditure from the current 9.1 percent to 11.3 percent. If parateachers salaries were to increase to those of a regular teacher then the share would have to increase to over14 percent.

A significant increase in allocations to primary education could occur through increases in the overall sharefor education or, to some extent, from reallocating post primary funding to the primary level.

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Annex 5: Financial SummaryINDIA: Rajasthan Second District Primary Education Project

Operational Period (Calendar Year of Expense)2001-02 2002-03 2003-04 2004-05 2005-06

Proiect Costs(US$ Million. Includine Continaencies)

Investment Costs 10.7 19.9 15.9 7.4 6.6Recurrent Costs 4.4 4.8 5.4 6.0 6.3

Total 15.1 24.7 21.4 13.4 12.9

Financing Sources(% of Total Costs)

IDA 91% 91% 88% 82% 63%Government of India 9% 9% 12% 18% 37%

Total 100% 100% 100% 100% 100%

All costs include contingencies

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Annex 6: Procurement and Disbursement ArrangementsINDIA: Rajasthan Second District Primary Education Project

Procurement

Procurement Arrangements

Rajasthan Second District Primary Education Project is a follow on project of Rajasthan DPEP I. As such,the procurement arrangements to be undertaken by the project will be the responsibility of the sameimplementing agency, i.e., Rajasthan Council of Primary Education (RCPE). The procurementarrangements in Rajasthan DPEP I so far, are considered satisfactory and the same procedures would befollowed in Rajasthan DPEP II as well. The procurement team at the RCPE is now familiar with the BankProcurement Procedures.

The RCPE will continue to provide a team of qualified engineers in each district to extend technical supportto the School Management Committees (SMCs) and to supervise the progress of civil works. The StateProject Office has one Building Advisor, two Assistant Engineers and one Architect (on contract) who havedone the work for Rajasthan DPEP 1. The same team will carry out the civil works in Rajasthan DPEP II.One Assistant Engineer will be placed in each district level and one Junior Engineer in each block. Staffwill be oriented so that they are able to get civil works done through SMC according to the specified timeschedule and also ensure quality.

All Civil Works procurement under the project will be carried out through local community contracting.

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

Civil Works (US$23.30 Million): The civil works program encompasses the construction of one roombuildings for about 540 new alternative schools, construction of structures for 500 buildingless schools,2800 additional classrooms, 400 ECE Centers, 7100 toilets, 2300 hand pumps and 380 PHED connections,49 Block Resource Centers and 678 Cluster Resource Centers in nine districts of Rajasthan. Theconstruction program also covers major repairs in 1800 schools and minor repairs in 3200 classrooms.The unit construction cost of would be for: (a) primary school US$5,450; (b) alternative school US$3063;(c) additional classroom US$2,800; (d) CRC US$3,191; and (e) BRC US$16,000. The unit cost of repairsand renovation of existing school buildings ranges from US$560 to US$1,200. Toilets and drinking waterfacilities will be provided at a unit cost of US$215 and US$1,064, respectively.

There will be approximately 9500 civil works contracts averaging around $500 each. A few contractswould reach $20,000.

In the spirit of decentralizing project activities, these works will be carried out by community drivenprocess in accordance with paragraph 3.15 of the Procurement Guidelines.

The first year civil works activities have been planned realistically and cover relatively simpler constructionviz drinking water facilities, i.e., installation of hand pumps and direct connections from the PHED,construction of toilets and repairs of existing primary school buildings. The balance planned civil workswill be completed in the second and third year of the project.

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Goods (US$12.40 Million): Procurement of Goods including, inter alia, office equipment, furniture,books, workbooks, software, incentive items/supplies for focus group children would be phased on anannual basis in accordance with the requirement of the project activities. Phasing of the procurement ofequipment and furniture will be closely sequenced with the civil works program. The bulk of theprocurement will be carried out at block/district level. Since the value of most of the items to be procuredunder equipment and furniture, etc., is expected to be below US$50,000, National shopping (US$1.29million) will be used for these items. National Competitive Bidding (NCB) will be used for theprocurement of items such as books and workbooks, valued at more than US$50,000 per contract.Proprietary software (US$50,000) and books (US$7.85 million) costing below US$5000 per contract, willbe procured through Direct Contracting.

Vehicles estimated to cost US$100,000 equivalent or less per contract will be procured through NationalShopping (DGS&D Rate contracts are acceptable as an alternative) up to an aggregate of US$570,000.

For procurement of Goods/equipment, there will be approximately 30 contracts under National Shoppingeach valued at less than $1000, and about 16 contracts under National Competitive Bidding, each valued atmore than US$30,000. No contract will exceed US$300,000.

Services (US$24.90 Million): The project will fund services required for project preparation andimplementation, such as, training, workshops and seminars, which will include training of regular teachers,parateachers, DPEP staff, public representatives as well as MIS training. The training and workshops willbe arranged at the State, District and Block level, and the expenditure would not exceed US$5000 pertraining module. Consultants will be hired for various activities including studies such as those pertainingto classroom observation, mid-term evaluations, etc., and to serve as resource persons for trainingSMC/BNS members, ECE/ICDS workers/teachers/parateachers. Innovation, Research and Evaluationwork in the field of Elementry Education as also awareness activities for community mobilization will alsobe undertaken under the project.

There will be an internal audit of expenditure including asset verification conducted by an auditorappointed by RCPE along with a technical audit of community construction by an independent consultant.

A large number of individuals such as mahila activists, ICDS motivators, girl child escorts, etc., shall behired on a contract basis. There will be approximately 5000 such contracts each valued less than US$1000each. The job description, minimum qualifications, terms of employment, range of remuneration payableand selection procedures shall be agreed with the Association. A Letter of Agreement for short-termassignments for individual consultants will follow the Bank's model format.

In addition, there will be about 530 contracts each valued around an average of US$8,000. There will beone contract of the order of US$600,000.

Miscellaneous Costs (US$26.90 Million): These would be financed on a declining basis and would cover(a) salaries and honorarium to the additional staff and parateachers ($18.23 million); (b) expenses incurredby schools and teachers for school maintenance and teaching and learning materials ($5.10 million); (c)operation and maintenance of equipment and vehicles, hiring cost of vehicles ($0.97 million); (d) officeexpenses and consumables such as telephone, stationery, electricity charges, office rent, printing, etc.,($2.58 million); and (e) civil works maintenance (US$0.03 million).

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Procurement methods (Table A)

IDA-financed works, goods and services will be procured using Bank guidelines of January 1995, revisedJanuary, August 1996, September 1997 and January 1999 for goods/works and January 1997, revisedSeptember 1997 and January 1999 for services. The procurement methods applicable to the variousexpenditure categories are sunmmarized in Table A below. For procurement under the project, the Bank'sstandard bidding documents shall be used.

Procurement arrangements summarized in Table A are as follows:

Contracts for civil works estimated to cost over US$20,000 equivalent will be carried out followingNational Competitive Bidding (NCB) procedures. Contracts for civil works estimated to cost equivalent ofUS$20,000 or less will be procured following procedures acceptable to the Bank: (a) direct contracting; (b)under quotations solicited from at least three qualified contractors; and (c) unit/piece rate system throughqualified contractors or registered NGOs or other beneficiary associations.

Contracts for the purchase of goods valued at more than US$50,000 but less than US$300,000 may beawarded on the basis of NCB procedures acceptable to the Bank. Items or groups of items valuedUS$50,000 equivalent or less per contract may be procured on the basis of national shopping procedures.Other items or small groups of items such as supply of furniture, equipment and books valued at less thanUS$5,000 equivalent per contract may be procured through direct contracting or national shoppingprocedures.

All NCB contracts to be financed from the Credit under the project would follow procedures satisfactory tothe Association, which are:

(i) Only the model bidding documents for NCB agreed with the Government of India Task Force(and as amended from time to time) shall be used for bidding.

(ii) Invitations to bid shall be advertised in at least one widely circulated national daily newspaper, atleast 30 days prior to the deadline for the submission of the bids.

(iii) No special preference will be accorded to any bidder when competing with foreign bidders,state-owned enterprises, small-scale enterprises or enterprises from any given state.

(iv) Except with the prior concurrence of the Association, there shall be no negotiation of price withthe bidders, even with the lowest evaluated bidder.

(v) Except in cases of force majeure and/or situations beyond the control of the GOR extension of bidvalidity shall not be allowed without the prior concurrence of the Association: (a) for the firstrequest for extension if it is longer than eight weeks; and (b) for all subsequent requests forextension irrespective of the period.

(vi) Re-bidding shall not be carried out without the prior concurrence of the Association. The systemof rejecting bids outside a pre-determined margin or "bracket" of prices shall not be used.

(vii) Rate contracts entered into by DGS&D will not be acceptable as a substitute for NCBprocedures. Such contracts will be acceptable for any procurement under national shoppingprocedures.

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Contracts for maintenance of equipment and vehicles may be awarded through: (a) direct contracting; or(b) national shopping procedures.

Procurement methods (Table A)

Table A: Project Costs by Procurement Arrangements(US$ million equivalent)

Procurement Method'Expenditure Category ICB NCB Other' N.B.F.- Total Cost

1. Works 0.00 0.00 23.30 0.00 23.30(0.00) (0.00) (21.00) (0.00) (21.00)

2. Goods 0.00 2.60 9.80 0.00 12.40

(0.00) (2.60) (9.40) (0.00) (12.00)3. Services 0.00 0.00 24.90 0.00 24.90_________________________ (0.00) (0.00) (24.90) (0.00) (24.90)4. Miscellaneous 0.00 0.00 26.90 0.00 26.90

_______________________ _ _(0.00) (0.00) (16.50) (0.00)(16.50)Total 0.00 2.60 84.90 0.00 87.50

._________________ _ __ l_ (0.00) (2.60) (71.80) (0.00) (74.40)

Figures in parenthesis are the amounts to be financed by the IDA Credit. All costs include contingencies.

2' Includes civil works and goods to be procured through national shopping, consulting services, services ofcontracted staff of the project management office, training, technical assistance services, and incrementaloperating costs related to (i) managing the project, and (ii) re-lending project funds to local governmentunits.

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Table Al: Consultant Selection Arrangements (optional)(US$ million equivalent)

Selection MethodConsultant Services

Expenditure Category: QCBS QBS SFB LCS CQ Other N.B.F. Total Cost~~~~~~~~9--Ttl Cost'A. Firms 0.56 0.00 0.00 0.00 2.62 0.00 0.00 3.18

(0.56) (0.00) (0.00) (0.00) (2.62) (0.00) (0.00) (3.18)B. Individuals 0.00 0.00 0.00 0.00 5.87 0.00 0.00 5.87

(0.00) (0.00) (0.00) (0.00) (5.87) (0.00) (0.00) (5.87)Total 0.56 0.00 0.00 0.00 8.49 0.00 0.00 9.05

_ (0.56) (0.00) (0.00) (0.00) (8.49) (0.00) (0.00) (9.05)1\ Including contingencies

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

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

Prior review thresholds (Table B)Prior review will be required for: (a) all contracts for goods with an estimated value of more thanUS$300,000 equivalent; (b) all contracts for works with an estimated value of more than US$300,000equivalent as well as the first NCB contract each for goods and works regardless of the value; (c)consultants' contracts with an estimated value of US$100,000 or more for firms and US$50,000 or morefor individuals; and (d) the Terms of Reference for all consultant contracts estimated to cost the equivalentof US$12,000 or more per contract in the case of firms, and the equivalent of US$5,000 or more percontract in the case of individuals.

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Table B: Thresholds for Procurement Methods and Prior Review

Expenditure Contract Value Procurement Contracts Subject toCategory (Threshold) Method Prior Review /

Estimated Total ValueSubject to Prior Review

1. Civil Works Civil works by community (i)Through Direct Contracting Post review onlyestimated to cost the orequivalent of US$20,000 (ii) By inviting quotationsor less per contract from at least three qualified

contractors

2. Goods(a) Furniture, equipment, (i) US$50,000 or less per National Shopping Procedures Post review onlyworkbooks, books for contract up to an (includes DGS&D Ratelibraries and materials aggregate not exceeding Contracts)

US$1.29 millionequivalent(ii) US$5,000 or less per Direct Contracting Post review onlycontract, up to anaggregate not exceedingUS$7.85 millionequivalent for books andlibraries(iii) Proprietary software Direct Contracting Post review only(0.05 million)

(b) Goods estimated to cost National Competitive Bidding Post Review onlymore than the equivalent (NCB)of US$50,000 per contract

(c) Vehicles US$100,000 or less per National Shopping Procedures Post Review onlycontract upto an (includes DGS&D Rateaggregate not exceeding Contracts)US$570,000.

3. Services(a) Research contracts, IEC (i) More than Quality and Cost Based Prior review of allcontracts, professional US$200,000 per contract Selection (QCBS) consultant contracts shallservices, studies, training, be govemed by theworkshops and fellowships provision of paragraphs (i),

(ii), (iii) and (iv) below:

(ii) US$200,000 or less Quality and Cost Basedper contract Selection (QCBS) with Short

List (could comprise entirelyof national consultants)

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(iii) US$100,000, or less (i) Quality and Cost Based (i) With respect to eachper contract Selection (QCBS) with Short contract for the

List (could comprise entirely employment of consultingof national consultants) firms estimated to cost the

equivalent of US$200,000or more, the procedures setforth in paragraphs 1, 2and [other than the thirdsubparagraph of paragraph2(a)] and 5 of Appendix Ito the ConsultantGuidelines shall apply.

(ii) Selection based on (ii) With respect to eachconsultants qualification (CQ) contract for the

employment of consultingfirms estimated to cost theequivalent of US$100,000or more, but less than theequivalent of US$200,000,the procedures set forth inparagraphs 1, 2 [other thanthe second subparagraph ofparagraph 2(a)] and 5 ofAppendix I to theConsultant Guidelines shallapply.

(iii) Single Source Selection (iii) With respect to eachfor US$ 1,000 or less per contract for thecontract (acceptable for tasks employment of individualrepresenting a natural consultants estimated tocontinuation of assignment, cost the equivalent ofwhen rapid selection is $50,000 or more, theessential, when only one firm qualifications, experience,is qualified, or for small terms of reference andassignments) terms of employment of the

consultants shall befurnished to theAssociation for its priorreview and approval. Thecontract shall be awardedonly after the said approvalshall have been given.

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(iv) Individual consultants in (iv) Terms of Reference foraccordance with the provisions all consultant contractsof paragraph 5.1 to 5.3 of the estimated to cost theConsultants Guidelines equivalent of US$12,000 or

more per contract in case offirms and the equivalent ofUS$5,000 or more percontract in the case ofindividuals shall befurnished to theAssociation for its priorreview and approval. Thecontract shall be awardedonly after the said approvalhas been given.

All other cases Post Review

4. Miscellaneous(a) Incremental operating Incremental operatingcosts: expenses incurred on costs estimated to cost thesalaries of staff, equivalent of US$20,000consumables, teaching or less per contract, up tolearning materials an aggregate notmaintenance and hiring of exceeding US$26.90vehicles, maintenance of million may be executedequipment and civil works by:and school facilityimprovement

(i) Direct contracting up Direct Contracting Post review onlyto an aggregate notexceeding US$16.50million; or(ii) On the basis of price National Shopping Procedures Post review onlyquotations obtained fromat least three qualifiedcontractors eligible underthe guidelines

Total value of contracts US$180,000subject to prior review:

Procurement Risk - AverageSupervision - once in six months

Post Award Review:Because of the nature of this operation, almost all contracts would be below prior review limits. It isexpected that the project will include about 15,000 contracts over a five year period, with about 14,500 ofthese below US$500, and the rest ranging from $500 to $2000, with a few reaching $20,000. The projectitself provides for a self audit to be conducted by independent auditors hired by the Borrower forexpenditures included, as well as asset verification. In addition, the project provides for a technical audit tobe carried out by independent consultants for all community construction works. The normal Bank'srequirement of ex-post review of 1 in 10 contracts for an average risk project, cannot be achieved in thisproject due to resource constraints, since annual budget allocations only allow for a total of roughly 1,000ex-post contract reviews for the entire India Portfolio. Given the sheer numbers of contracts envisioned in

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this project, the Bank's resource constraints, the mitigating effect of the self audit and technical auditsmentioned above, we would consider the "benchmark" review level of I in 10 contracts to be excessivelylarge for this type of operation. In addition to a review of the independent self-audit reports called for inthis project, Bank staff will conduct post award reviews during SPN missions. These reviews will beperiodically supplemented by an appropriate allocation of of random ex-post audits conducted by firmsengaged by the Region for post award review coverage on the India portfolio as a whole.

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Disbursement

Allocation of credit proceeds (Table C)

Expenditure Category Amount i IDA Financing PercentageMillion

* Civil Works US$19.1 90%

* Equipment, Fumiture and Vehicles US$1.5 100% of foreign expenditures, 100of local expenditures (ex-factory c(and 80% of local expenditures forother items procured

* Books US$10.0 100%

- Training, Awareness Campaigns and Consultants US$23.7 100%

Incremental operating and maintenance costs US$15.7 80% for the first two years; 70% ftthe third year; 63% for the fourth yand 25% thereafter

* Unallocated (summation of contingencies) US$4.4

TOTAL US$74.4

Use of statements of expenditures (SOEs):

Disbursement

The proposed allocation of loan proceeds is given in Table C. A Special Account would be maintained inthe Reserve Bank of India, and managed by the Department of Economic Affairs (DEA) of Government ofIndia (GOI). The authorized allocation of the Special Account would be US$7.0 million that representabout four months of average estimated disbursements from the IDA Credit. The Special Account wouldbe operated in accordance with the Bank's operational policies.

Disbursements will initially be made in the traditional system (reimbursement with full documentation andagainst statement of expenditure) and will be converted to Project Management Report (PMR)-baseddisbursement after the financial management system has been demonstrated to be operating satisfactorily.The target date for this conversion is October 1, 2002.

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In the interim period, the SPO will be required to submit a report on sources and uses of funds bydisbursement category and procurement reports on contracts over US$100,000 to IDA on a quarterly basis.The form and contents of these reports have been agreed between IDA and the RCPE and these areincluded in the PIP.

Financial Management System

The project is a follow-on project of Rajasthan DPEP currently under implementation. The implementingagency for the project is the RCPE. The RCPE has the following strengths in the area of financialmanagement: (i) the SPO is adequately staffed with a financial controller and an accounts officer alreadyin place; (ii) the SPO is familiar with the Bank's disbursement procedures; (iii) a project financialmanagement manual has already been prepared which details the funds flow process, the accountingarrangements, financial reporting, auditing, etc.; and (iv) a system of timely submission of accounts fromBRCs/CRCs/SMCs to the district and from districts to the state level exists.

However, in the absence of a computerized financial management system, the project has still not startedpreparing financial statements indicating sources and uses of funds by components which could be of use tomanagement for information and decision making.

Specific areas to be strengthened:

The following aspects need to be addressed to ensure that a satisfactory financial management systemcommensurate with the size and scope of the project is established:

(a) the need to analyze financial information and use it as a decision making tool: Financial reportswhich provide timely and quality information on the financial performance of the project should beprepared. The accounting system should ensure classification and compilation/analysis ofaccounting data in such a manner as to provide useful and timely information for projectmonitoring;

(b) ensuring linking of physical progress with the financial progress;

(c) the monitoring system for funds advanced to and the expenditure reported by DPOs needs to bestrengthened at SPO and DPOs, respectively;

(d) the withdrawal claims preparation process at SPO needs to be more systematized. The claimsshould be based on the expenditure as captured in the books of account, e.g., a ledger, rather thancomplied in an ad hoc manner from the cash book; and

(e) improvement in the flow of funds to the SMCs through (a) making installment payments in such away to ensure that the SMCs do not run out of money and (b) making payments to SMCs throughdemand drafts instead of cheques to facilitate faster transfer of money.

The proposed computerized FMS will address the issues (a) to (c). The project has also agreed tostreamline and systematize its withdrawal claim preparation process to make sure that the claims are basedon the books of account. The project has also accepted to make changes in the mode of bank transfer toensure faster transfer of money to SMCs.

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Proposed Financial Management System

RCPE is already in the process of developing a comprehensive district-based computerized financialmanagement system to be used for both Rajasthan DPEP I and Rajasthan DPEP II projects. ProjectMonitoring Reports of the project would be generated from the financial management information system.The FMS will also help RCPE to perpare its annual financial statements.

The project financial management system has been documented in the form of a 'Financial ManagementManual'. This includes, inter alia, the: (i) funds flow process; (ii) detailed accounting system including theChart of Accounts; formats of books, vouchers, statements, etc.; (ii) formats of financial reports; linkagesbetween the Chart of Accounts and financial reports; inputs of budget and other data; data capture,information flow and processing; (iii) internal control mechanisms; (iv) financial and accounting policiesand procedures; (v) budgeting and forecasting system; (vi) auditing arrangements; (vii) organization andstaffing including job responsibilities of key staff; and (viii) service standards (benchmarks) for variousaccounting and financial activities.

The first iteration of the FMS software has been completed and the system is expected to be fullyoperational by October 1, 2001.

Flow of Funds

GOT would pass on World Bank funds to RCPE, which is a registered society, through a funds transfer toRCPE bank account. The GOR will pass on its counterpart share through a budgetary allocation under asingle identifiable line item. The SPO will retain part of the funds for payments on activities manageddirectly by the SPO, and pass on funds to the nine DPOs through banking channels. The amounts passedon to each DPO would be on the basis of their cash flow forecasts (which in turn would be based on theirannual work programs and budgets). It is expected that the transfer of funds from SPO to DPO would beon a quarterly basis. The DPO would utilize the funds for payments on activities managed directly by theDPO and for expenditures/advances for Block Resource Centres (BRCs), Cluster Resource Centres(CRCs) and School Management Committees (SMCs) as explained below.

DPOs will provide advances to the respective BRCs, CRCs and SMCs through banking channels based onthe approved activities at those levels. Subsequent payments for civil works will be based on theachievement of physical benchmark associated with the first installment as certified by the concerned JuniorEngineerand for other payments on reported expenditure for the quarter and projected expenditure for thenext quarter. It is expected that release of funds for civil works would be in installments of 50%, 35% and15% of the approved amount of the works. This design of the funds release mechanism will take intoaccount the objectives of ensuring that there is sufficient amount of funds available at the works while atthe same time ensuring that internal controls are maintained and that amounts are being promptly andregularly accounted for.

The bank accounts of BRCs would be operated by the BRC Facilitator and Chairman Block EducationCommittee; CRCs by the CRC Facilitator and SMCs jointly by the Chairman and Member Secretary of theSMC. These payments can be to suppliers, consultants, staff, etc., based on approved activities. Thesepayments would be supported by standard documentation.

SMCs have in the other DPEP projects demonstrated capacity to handle funds for school construction.

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SPO will submit the withdrawal claims to CAA&A in GOI for onward submission to the Bank forreplenishment of the special account.

Accounting and Internal Controls

Books of accounts for the project would be maintained using double-entry bookkeeping principles.Standard books of accounts (cash and bank books, joumals, ledgers, etc.) would be maintained at the SPOand DPO levels using the FMS.

A Chart of Accounts has been developed to enable data to be captured and classified by expenditure center,budget heads, project components, and disbursement categories. This would match with the classificationof expenditures and sources of funds indicated in the project documents (Project Implementation Plan andProject Cost Tables).

Accounting for BRCs, CRCs and SMCs in each district would be done at the respective DPO. Theaccounting records (sub-ledgers) at the DPO level would provide details of accounts of the various BRCs,CRCs and SMCs (important tool for monitoring the amounts advanced to and expenditures incurred on thevarious BRCs, CRCs and SMCs). No books of accounts will be maintained at the BRCs, CRCs andSMCs other then basic reporting of expenditures and materials register.

Transaction Information Flow and Accounting:

(i) The SPO and DPO will generate and maintain the transaction vouchers for the various receiptsand expenditures made at SPO and DPO level respectively (including at the DPO level, foramounts advanced by DPO to the BRCs, CRCs and SMCs).

(ii) Each BRC, CRC and SMC would generate the transaction vouchers for receipts and paymentsmade by it on various activities. At the BRC level, the BRC Facilitator will record thetransactions mainly bank receipts and payments. At the CRC level it will be done by the CRCfacilitator. At the SMC level this will be done by the member secretary of the SMC. There willbe a systematic filing of the supporting documentation for the transactions. At the time ofsubrnission of monthly account statement to the district, at the DPO's, these monthly accountsstatements would be approved/authorized after being correctly classified for account heads(based on the Chart of Accounts), and entered into the computerized accounting system. Thiswould enable generation of the sub-ledger giving the details of the accounts of each unit.

(iii) Consolidation of the project accounts at the SPO would be done by consolidation of accounts ofthe SPO and the 9 DPOs, which would be done by the computerized system. Data transferwould be handled through either a diskette transfer from DPOs to the SPO or through anintegrated computer network.

Intemal Controls: Intemal control mechanisms include the following:

(i) the establishment of appropriate budgeting systems, and regular monitoring of actual financialperformance with budgets and targets;

(ii) adoption of simple, clear and transparent financial and accounting policies which governfinancial management of and accounting for the project; and

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(iii) at the transaction level, policies, procedures and systems have been developed for ensuringstandard internal controls such as checking of expenditures, appropriate documentation, levels ofauthorization, bifurcation of duties, periodic reconciliations, physical verification, etc.

Financial Reporting

Project Financial Management Reports would be generated from the project accounting system. The mainobjective of the financial management reports is to provide project management with timely information onvarious financial aspects, and thereby serve as an active project management tool.

The SPO and DPOs would generate quarterly financial management reports from the integratedcomputerized financial management system for the whole project (SPO) and for their respective districts(DPOs). These reports would be management oriented (i.e., summaries rather than transactional details).Quarterly Financial Management Reports will include:

* comparison of budgeted and actual expenditure and analysis of major variances, including onaspects such as sources of funds and application of funds (classified by components,sub-components, summarized expenditure categories, etc.);

3 comparison of budgeted and actual expenditure and analysis of major variances on key physicalparameters;

* forecasts for the next two quarters; and3 infornation on procurement management for major contracts

Staffing

Key Professional Staff: The financial and accounting team for the project would be headed by a FinancialController located in the SPO, who has already been appointed. He will have overall responsibility for thefinancial management aspects of the project. The Financial Controller would report to the Project Director.

At each of the DPOs, the finance function would be headed by an Assistant Accounts Officer with about 4to 5 years experience, including suitable experience in modem accounting and financial practices. TheAAOs for the project districts have already been appointed. The Assistant Accounts Officer will be fullyresponsible for all financial and accounting aspects at the DPO level and below. The Assistant AccountsOfficers would report functionally to the Financial Controller, and administratively to the District ProjectManager.

Auditing Arrangements

The accounts of the project will be audited by a firm of Chartered Accountants, even though CAG willretain its right to audit the project accounts. The annual project financial statements audited by the firm ofChartered Accountants would be submitted within six months of the close of GOI's fiscal year (as requiredunder the Bank's operational policies).

The Terms of Reference of the firm of Chartered Accountants would include a concurrent audit. Thiswould strengthen intemal controls, and would also facilitate early completion of the annual audit. Since asignificant portion of the expense will be made at the level of SMCs, CRCs and BRCs, the Terms ofReference drawn up for the auditors would be oriented towards a strong emphasis on the audit of theseunits involving site visits. The auditors would cany out such tests and controls as deemed necessary by

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them. In accordance with the Bank's operational policies, the Terms of Reference and qualifications of thefirm of Chartered Accountants would be reviewed by the Bank. The firm of Chartered Accountants wouldbe appointed before the start of the project.

Thus, the following audit reports will be monitored in the Audit Report Compliance System (ARCS):

Implementing Agency Audit Auditors

RCPE SOE/Project Audit A firm of Chartered Accountants

DEA/GOI Special Account Comptroller and Auditor General

Readiness for Implementation and Next Steps

An agreement has been reached with the project on the form and content of the Project Monitoring Reportsand these are a part of the PIP.

The next key steps in the institution of a comprehensive computerized financial management system in theproject are:

Operationalization of the FMS in the project October 1, 2001Complete training of RCPE staff on the software October 31, 2001

Retroactive Financing: Retroactive financing up to an amount of US$1.8 million (SDR 1.4 millionequivalent) would cover eligible expenditures for implementing activities after May 1, 2001. Retroactivefinancing would support hiring and training of staff in the SPO, the District Project Office teams; rent,equipment and vehicle hire for district offices; hiring and training of 49 BRC Facilitators and BRC buildingrentals; hiring and training of 678 CRC Facilitators; training and formation of SMCs and BNS, collectionof initial EMIS data collection; orientation programs on DPEP for district and PRI officials; and otheractivities included in the state and district plans and agreed at negotiations.

Special account:A Special Account will be maintained in the Reserve Bank of India, and will be managed by theDepartmentof Economic Affairs of GOI. The authorized allocation of the Special Account would be US$7.0 million,or about four months of average estimated disbursements from the IDA Credit. The Special Account willbe operated in accordance with the Bank's Operational Policies.

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Annex 7: Project Processing ScheduleINDIA: Rajasthan Second District Primary Education Project

Project Schedule Planned .,ActualTime taken to prepare the project (months) 10 10First Bank mission (identification) 12/06/99 04/01/2000Appraisal mission departure 03/29/2000 04/16/2001Negotiations 06/10/2000 05/23/2001Planned Date of Effectiveness 10/15/2000 09/30/2001

Prepared by:

Government of India / Government of Rajasthan

Preparation assistance:

Bank staff who worked on the project included:

Name SpecialitySusan Hirshberg Task Team Leader / Sr. Education SpecialistN.K. Jangira Co-Task Team Leader / Sr. Education SpecialistWard Heneveld Team Leader / Lead Education SpecialistKeith Hinchliffe Lead EconomistVenita Kaul Sr. Education SpecialistVandana Sipahimalani-Rao Education EconomistMeera Chatterjee Sr. Social Development SpecialistRajat Narula Sr. Financial Management SpecialistSanthanam Krishnnan Sr. Procurement SpecialistHiroko Imamura Sr. CounselMohammad Nawaz Legal ConsultantChristophe Bosch Water and Sanitation EconomistSudesh Ponnappa Program AssistantGertrude Cooper Program AssistantLaura Kiang Operations AnalystAnjali Manglik Team AssistantJohn Middleton Peer ReviewerRobert Prouty Peer ReviewerElizabeth King Peer Reviewer

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Annex 8: Documents in the Project File*INDIA: Rajasthan Second District Primary Education Project

A. Project Implementation Plan

Project Implementation Plan. Rajasthan Council of Primary Education (RCPE), Jaipur.State Component Plan.State Investment Proposal.District Investment Proposals: Bharatpur, Bundi, Churu, Dausa, Dholpur, Hanumangarh, Jaipur, Karauli

and Sawaimadhopur Districts. Rajasthan Council of Primary Education (RCPE), Jaipur.District First Year Annual Workplans and Budgets: Bharatpur, Bundi, Churu, Dausa, Dholpur,

Hanumangarh, Jaipur, Karauli and Sawaimadhopur Districts. Rajasthan Council of Primary Education(RCPE), Jaipur.

Project Costs for State and District Investment Proposals.Project Procurement Plan.

B. Bank Staff Assessments

Rajasthan Economic Update.India Education Finance Study.Baseline Achievement Study: Bharatpur, Bundi, Churu, Dausa, Dholpur, Hanumangarh, Jaipur, Karauliand Sawaimadhopur Districts.Social Assessment Surveys: Bharatpur, Bundi, Churu, Dausa, Dholpur, Hanumangarh, Jaipur, Karauli andSawaimadhopur Districts.Loan Administration Change Initiative (LACI) Certificates.Report on the Assessment of Project for PMR-based Disbursement.

C. Other

DPEP Baseline Assessment Survey of Rajasthan (Second Phase). State Institute of Educational Researchand Training, Udaipur. March 2000.Revised District Plans (2001-2006) with First Year Annual Work Plan and Budget: Bharatpur, Bundi,

Churu, Dausa, Dholpur, Hanumangarh, Jaipur, Karauli and Sawaimadhopur Districts.Social Assessment Studies: Bharatpur, Churu, Dausa, Dholpur, Hanumangarh, Jaipur, Karauli, Rajsamand

and Sawai Modhopur Districts. Institute of Development Studies, Jaipur.State Component Plan. Rajasthan Council of Primary Education (RCPE), Jaipur.Government of India Pre-appraisal mission: Aide Memoire.Tribal Plan and Strategies. Government of Rajasthan, Jaipur. April 2001.Rajasthan DPEP II Procurement Plan.Rajasthan DPEP Bidding Documents.Rajasthan DPEP. Teacher Training Modules.Rajasthan DPEP. Construction Manual.

*Including electronic files

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Annex 9: Statement of Loans and Credits

INDIA: Rajasthan Second District Primary Education ProjectApr-2001

Difference between expectedand actual

Original Amount in US$ Millions disbursementsProject ID FY Purpose IBRD IDA GEF Cancel. Undisb. Orig Frm Rev'd

P059242 2001 MP DPIP 0.00 110.10 0.00 0.00 108.95 0.00 0.00

P050658 2001 TECHN EDUC III 0.00 64.90 0.00 0.00 60.93 -0.77 0.00

P038334 2001 RAJ POWER I 180.00 0.00 0.00 0.00 180.00 0.00 0.00

P055454 2001 KERALA RWSS 0.00 65.50 0.00 0.00 65.00 1.41 0.00

P010566 2001 GUJARAT HWYS 381.00 0.00 0.00 0.00 366.00 21.00 0.00

P050667 2000 UP OPEP III 0.00 182.40 0.00 0.00 148.43 26.52 0.00

P050657 2000 UP Health Systems Development Poject 0.00 110.00 0.00 0.00 103.66 2.49 0.00

P010505 2000 RAJASTHAN DPIP 0.00 100.48 0.00 0.00 93.77 1.83 0.00

P045049 2000 AP DPIP 0.00 111.00 0.00 0.00 103.62 -1.06 0.00

P049770 2000 REN EGY II 80.00 50.00 0.00 0.00 125.24 2.00 0.00

P067330 2000 IMMUNIZATION STRENGTHENING PROJECT 0.00 142.60 0.00 0.00 108.37 -17.94 0.00

P035172 2000 UP POWER SECTOR RESTRUCTURING PROJECT 150.00 0.00 0.00 0.00 136.05 14.55 0.00

P059501 2000 TA for Econ Reform Project 0.00 45.00 0.00 0.00 42.07 0.75 0.00

P009972 2000 NATIONAL HIGHWAYS III PROJECT 516.00 0.00 0.00 0.00 485.84 -2.06 0.00

P055456 2000 Telecommunicabtons Sector Reform TA 62.00 0.00 0.00 0.00 58.38 3.85 0.00

P045051 1999 2ND NATL HIV/AIDS CO 0.00 191.00 0.00 0.00 149.35 6.26 0.00

P045050 1999 RAJASTHAN DPEP 0.00 85.70 0.00 0.00 77.82 31.54 0.00

P050651 1999 MAHARASH HEALTH SYS 0.00 134.00 0.00 0.00 122.74 129.67 0.00

P050646 1999 UPSODIC LANDS tt 0.00 194.10 0.00 0.00 162.01 41.83 0.00

P050637 1999 TN URBANDEV It 105.00 0.00 0.00 0.00 43.37 -11.02 0.00

P049537 1999 APPOWERAPLI 210.00 0.00 0.00 0.00 114.65 61.65 0.00

P041264 1999 WTRSHD MGMT HILLS II 85.00 50.00 0.00 0.00 109.37 9.88 0.00

P010561 1998 NATLAGRTECHNOLOGY 96.80 100.00 0.00 0.00 157.29 65.44 0.00

P038021 1998 DPEP tl (BIHAR) 0.00 152.00 0.00 0.00 118.29 75.72 0.00

P035169 1998 UP FORESTRY 0.00 52.94 0.00 0.00 29.73 14.10 0.00

P035824 1998 UP DIV AGRC SUPPORT 79.90 50.00 0.00 0.00 108.85 57.01 0.00

P035827 1998 WOMEN & CHILD DEVLPM 0.00 300.00 0.00 0.00 268.49 41.30 0.00

P049385 1998 AP ECON RESTRUCTURIN 301.30 241.90 0.00 0.00 344.94 122.36 0.00

P049477 1998 KERALA FORESTRY 0.00 39.00 0.00 0.00 23.68 1.75 0.00

P010496 1998 ORISSA HEALTHSYS 0.00 76.40 0.00 0.00 67.93 24.41 0.00

P009979 1998 COAL SECTOR REHAB 530.00 2.00 0.00 269.28 27.87 184.81 184.81

P044449 1997 RURAL WOMEN'S DEVELOPMENT 0.00 19.50 0.00 0.00 15.48 14.30 0.00

P043728 1997 ENV CAPAaTy BLDG TA 0.00 50.00 0.00 0.00 38.48 30.31 0.00

P036062 1997 ECODEVELOPMENT 0.00 28.00 20.00 0.00 16.65 12.56 0.00

P045600 1997 TA ST'S RD INFRA DEV 51.50 0.00 0.00 0.00 13.16 13.16 13.16

P049301 1997 A.P. EMERG. CYCLONE 50.00 100.00 0.00 0.00 85.51 89.26 0.00

P010473 1997 TUBERCULOSIS CONTROL 0.00 142.40 0.00 0.00 106.33 86.99 0.00

P009995 1997 STATE HIGHWAYS l(AP) 350.00 0.00 0.00 0.00 233.89 88.89 0.00

P009584 1997 ECODEVELOPMENT 0.00 0.00 0.00 0.00 9.74 9.18 0.00

P035158 1997 APIRRIGATION III 175.00 150.00 0.00 0.00 214.64 110.47 0.00

P010531 1997 REPRODUCTIVE HEALTH1 0.00 248.30 0.00 0.00 157.10 110.69 70.45

P010511 1997 MALARA CONTROL 0.00 164.80 0.00 0.00 121.96 79.07 0.00

P035170 1996 ORISSA POWER SECTOR 350.00 0.00 0.00 0.00 228.36 163.36 0.00

P010484 1996 UP RURAL WATER 59.60 0.00 0.00 7.20 28.53 23.83 5.53

P010480 1996 BOMBAY SEW DISPOSAL 167.00 25.00 0.00 10.00 85.26 91.47 13.49

P010529 1996 ORISSA WRCP 0.00 290.90 0.00 0.00 98.46 48.00 0.00

P035825 1996 STATE HEALTH SYS It 0.00 350.00 0.00 0.00 153.10 158.18 0.00

P043310 1996 COAL ENV & SOCIAL MITIGATION 0.00 63.00 0.00 0.00 31.10 28.33 0.00

P035821 1996 DPEP It 0.00 425.20 0.00 0.00 155.96 32.57 0.00

P010485 1996 HYDROLOGY PROJECT 0.00 142.00 0.00 19.64 44.32 79.08 13.49

P039935 1996 ILFS-INFRAS FINANCE 200.00 5.00 0.00 0.00 178.60 179.15 0.00

P010563 1995 FINANCIAL SECTOR DEV PROJ. (FSDP) 700.00 0.00 0.00 301.30 29.83 -368.87 0.00

P010461 1995 MADRAS WAT SUP tI 275.80 0.00 0.00 189.30 21.46 206.65 2.36

P010463 1995 INDUS POLLUTION PREV 143.00 25.00 0.00 65.81 74.53 135.79 8.43

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Difference betweenexpected

Original Amount In US$ Millions and actualdisbursements'

Project ID FY Purpose IBRD IDA GEF Cancel. Undisb. Orig Frm Re vdP010489 1995 AP 1ST REF. HEALTHS 0.00 133.00 0.00 0.00 35.60 31.05 0.00P010522 1995 ASSAM RURAL INFRA 0.00 126.00 0.00 0.00 61.68 43.10 27.37P010476 1995 TAMIL NADUWRCP 0.00 282.90 0.00 0.00 119.38 118.53 22.12P010503 1995 AGRICHUMANRESDEVT 0.00 59.50 0.00 0.00 9.86 14.96 2.96P010464 1995 DISTRICT PRIMARY ED 0.00 260.30 0.00 0.00 79.50 69.50 0.00P009870 1994 CONTAINER TRANSPORT 94.00 0.00 0.00 15.00 33.57 48.57 48.56P009964 1994 WATER RES CONSOLID H 0.00 258.00 0.00 0.00 82.11 79.92 0.00P010457 1994 POPULATION IX 0.00 88.60 0.00 0.00 32.88 31.16 0.00P010455 1994 BLINDNESS CONTROL 0.00 117.80 0.00 10.00 53.30 56.30 0.00P010448 1994 FORESTRY RESEARCH ED 0.00 47.00 0.00 0.00 7.16 26.07 -1.91P010410 1993 RENEWABLE RESOURCES 75.00 115.00 26.00 0.00 43.17 75.08 0.00P009977 1993 ICDS II (BIHAR & MP) 0.00 194.00 0.00 0.00 59.96 65.17 65.18P009963 1992 POPULATION VIII 0.00 79.00 0.00 0.00 33.87 36.28 0.00P009946 1992 NAT. HIGHWAYS II 153.00 153.00 0.00 0.00 51.88 41.11 29.91P009869 1989 NATHPA JHAKRI HYDRO 485.00 0.00 0.00 0.00 72.17 72.17 26.62

Total: 6105.90 6794.22 46.00 887.53 7031.23 3140.65 532.54

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INDIASTATEMENT OF IFC's

Held and Disbursed PortfolioApr-2001

In Millions US Dollars

Committed DisbursedIFC IFC

FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic2000 Tanflora Park 0.00 0.51 0.00 0.00 0.00 0.00 0.00 0.001989/90/94 Tata Electric 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001994 Taurus Starshare 0.00 2.53 0.00 0.00 0.00 2.53 0.00 0.001987/88/90/93 Titan Industries 0.00 0.52 0.00 0.00 0.00 0.52 0.00 0.001989 UCAL 0.00 0.54 0.00 0.00 0.00 0.54 0.00 0.001996 United Riceland 10.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001991/96 VARUN 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001997 WIV 0.00 5.00 0.00 0.00 0.00 2.40 0.00 0.001997 Walden-Mgt India 0.00 0.02 0.00 0.00 0.00 0.02 0.00 0.001997 20TH Century 8.50 0.00 0.00 0.00 8.50 0.00 0.00 0.001993 20th Century 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001989 AEC 5.70 0.00 0.00 0.00 5.70 0.00 0.00 0.001994 Ambuja Cement 2.67 4.94 0.00 0.00 2.67 4.94 0.00 0.001992/93 Arvind Mills 0.00 9.88 0.00 0.00 0.00 9.88 0.00 0.001997 Asian Electronic 0.00 5.50 0.00 0.00 0.00 5.50 0.00 0.001984/91 Bihar Sponge 0.00 0.05 0.00 0.00 0.00 0.05 0.00 0.001997 CEAT 19.80 0.00 0.00 0.00 19.80 0.00 0.00 0.001990/92 CESC 21.00 0.00 0.00 46.90 21.00 0.00 0.00 46.901995 Centurion Bank 0.00 4.67 0.00 0.00 0.00 4.67 0.00 0.002000 Chinai 1.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001994 Chowgule 11.71 4.58 0.00 17.97 11.71 4.58 0.00 17.971997 Duncan Hospital 7.00 0.00 0.00 0.00 7.00 0.00 0.00 0.001997 EEPL 0.00 0.03 0.00 0.00 0.00 0.03 0.00 0.001986 EXB-City Mills 0.48 0.00 0.00 0.00 0.48 0.00 0.00 0.001986 EXB-STG 0.31 0.00 0.00 0.00 0.31 0.00 0.00 0.001995 EXIMBANK 11.37 0.00 0.00 0.00 11.37 0.00 0.00 0.001995 GE Capital 6.25 4.39 0.00 0.00 6.25 4.39 0.00 0.001986/92/93/94 GESCO 0.00 1.85 0.00 0.00 0.00 1.85 0.00 0.001988/94 GKN Driveshafts 0.00 0.33 0.00 0.00 0.00 0.33 0.00 0.001994/97 GVK 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001994/98/00 Global Trust 0.00 5.00 0.00 0.00 0.00 2.78 0.00 0.00

Gujarat Ambuja 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001994 HDFC 0.00 0.49 0.00 0.00 0.00 0.49 0.00 0.001978/87/91/93 HOEL 0.00 0.28 0.00 0.00 0.00 0.28 0.00 0.001990 Hindustan 0.61 0.00 0.00 0.00 0.61 0.00 0.00 0.001987 IAAF 0.00 2.30 0.00 0.00 0.00 1.14 0.00 0.001998 ICICI-IFGL 0.00 0.14 0.00 0.00 0.00 0.14 0.00 0.001990/94 ICICI-SPIC Fine 0.00 2.79 0.00 0.00 0.00 2.79 0.00 0.001990/95/00 IDFC 0.00 15.46 0.00 0.00 0.00 15.46 0.00 0.001998 IL & FS 0.00 3.12 0.00 0.00 0.00 3.12 0.00 0.001990/93/94/98 IL&FS Venture 0.00 0.60 0.00 0.00 0.00 0.60 0.00 0.001992/95 ITW Signode 0.00 0.34 0.00 0.00 0.00 0.34 0.00 0.001981/86/91/93/96 India Direct Fnd 0.00 7.47 0.00 0.00 0.00 6.33 0.00 0.001996 India Equipment 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001986/93/94/95

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Committed DisbursedIFC IFC

FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic1984/90/94 India Lease 0.00 0.30 0.00 0.00 0.00 0.30 0.00 0.001993/94/96 Indo Rama 0.00 2.14 0.00 0.00 0.00 2.14 0.00 0.001996 Indus 11 0.00 5.00 0.00 0.00 0.00 4.50 0.00 0.001996 Indus Mauritius 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001992 Indus VC Mgt Co 0.00 0.01 0.00 0.00 0.00 0.01 0.00 0.001992 Indus VCF 0.00 0.92 0.00 0.00 0.00 0.92 0.00 0.001992 Info Tech Fund 0.00 0.64 0.00 0.00 0.00 0.64 0.00 0.001992/94/97 Ispat Industries 0.00 3.64 0.00 0.00 0.00 3.64 0.00 0.001989/95 JSB India 0.00 0.84 0.00 0.00 0.00 0.84 0.00 0.001981/90/93 M&M 0.00 0.55 0.00 0.00 0.00 0.55 0.00 0.001996/99/00 MoserBaer 21.27 15.00 0.00 0.00 0.00 14.80 0.00 0.00

NICCO-UCO 0.00 0.13 0.00 0.00 0.00 0.13 0.00 0.001992/96/97 Owens Coming 25.00 0.00 0.00 0.00 25.00 0.00 0.00 0.001997 Pennar Steel 0.00 0.07 0.00 0.00 0.00 0.07 0.00 0.001981 Prism Cement 13.13 5.02 0.00 9.00 13.13 5.02 0.00 9.001995 RCHL 0.00 2.95 0.00 0.00 0.00 2.95 0.00 0.001995/98 Rain Calcining 17.78 5.46 0.00 0.00 17.78 5.46 0.00 0.001995 SAPL 0.00 0.07 0.00 0.00 0.00 0.07 0.00 0.001997 SREI 0.00 0.00 5.00 0.00 0.00 0.00 5.00 0.001997/00 Sara Fund 0.00 5.93 0.00 0.00 0.00 4.33 0.00 0.001995 Spryance.com 0.00 2.00 0.00 0.00 0.00 2.00 0.00 0.002001 Sundaram Finance 0.00 2.21 0.00 0.00 0.00 1.15 0.00 0.002000 TCW/ICICI 0.00 10.00 0.00 0.00 0.00 10.00 0.00 0.001998 TDICI-VECAUS II 0.00 0.74 0.00 0.00 0.00 0.74 0.00 0.001990 TISCO 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001981/86/89/92/94

Total Portfolio: 183.58 146.95 5.00 73.87 151.31 135.96 5.00 73.87

Approvals Pending Commnitment

FY Approval Company Loan Equity Quasi Partic2000 SREI II 10000.00 0.00 0.00 0.002001 Samruddhi 0.00 0.00 1000.00 0.001999 Sarshatali Coal 30000.00 0.00 5000.00 0.002001 eGurucool 0.00 0.00 250.00 0.002000 APCL 7100.00 0.00 1900.00 0.001999 Carraro 10000.00 0.00 0.00 0.002001 GTB SME Facility 20000.00 0.00 0.00 0.002000 IndAsia 0.00 0.00 15000.00 0.002001 Internet Express 0.00 0.00 5000.00 0.002001 Jetair 0.00 15000.00 0.00 0.00

Total Pending Commitment: 77100.00 15000.00 28150.00 0.00

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Annex 10: Country at a GlanceINDIA: Rajasthan Second District Primary Education Project

POVERTY and SOCIAL South Low- . . .....-.Indla Asia Incomo Development dlamond'

1999Population. mid-vear (millions) 997,5 1,329 2A417 Life expectancyGNP per capita (Atlas method, US$) 440 440 410GNP (Atlas method, USS billions) 441.8 581 988

Average annual orowth, 1993-99

PoDulation (%) 1.7 1.9 1.9Labor force (%) 2,1 2.3 2.3 GNP Gross

per primaryMost recent estimate (latest year available, 1993-99) capita enrollment

Povertv (% of Population below national povorty line) 35 - -Urban population (% of total population) 28 28 31Life oxDectancv at birth (vears) 63 62 60Infant mortalitv (per 1,000 five births) 70 75 77Child malnutrition (% of children under S) 53 51 43 Access to safe waterAccess to improved water source (% of Dooulation) 81 77 64Illiteracy (% oftoopulation ago 15) 44 46 39Gross primarv enrollment (% of school-ago populatlion) 100 100 96 -India Low-income group

Malo 109 110 102Female 90 90 86

KEY ECONOMIC RATIOS and LONG-TERM TRENDS

1979 1989 1998 1999Economic ratios*

GOP (US$ bifi,ons) 150.1 290,5 419.1 447,3Gross domestic investment/GOP 22.8 24.1 21.8 22.9 TradeExports ot goods and services/GOP 6.7 7.3 11.3 12.1Gross domestic savinqs/GDP 20,7 21.8 19,2 20.0Gross national savinqs/GOP 22.2 21.4 20.8 22.1

Cvrrent account balance/GDP -0.5 -1.8 -0.8 0.8 Domestic Ines vmnInterest oayments/GOP 03 1.1 1.1 12 Domes InvestmentTotal debt/GDP 11,9 26.0 23.4 22.9 SavingsTotal debt service/exports 10.1 28.6 17.0 15.6Prosent value of debt/GDP ,, ., 20.1Present value of debt/exports .. .. 143.3

Indebtedness1979-89 1989-99 1998 1999 1999-03

(average annual growth)GDP 5.7 5.8 6.8 6.5 6.4 -India - Low-income groupGNP per capita 3.3 3.9 4.9 4.9 4,7ExDorts of qoods and services 4.9 11.8 12.5 1.7 7,5

STRUCTURE of the ECONOMY1979 1989 1998 1999 Growth of investment and GDP (%)

(% of GDP) 30Agriculture 36.8 31.6 29.1 27.7Industrv 25.0 27.6 25.7 26.3 15 -

Manufacturinq 17.4 17.4 15.6 15.9Services 38.3 40.8 45.2 46.0 0 "9

Private consumption 69.2 66.1 68.6 68.0 -15 rrsGeneral qovernment consumption 10.0 12.2 12.3 12.0 -GDI c GDPImports of qoods and services 8.7 9.6 14.0 15.0

1979-89 1989-99 1998 1999 Growth of exports and Imports (%)(average annual growth)Aqriculture 3.4 3.3 7.2 1.3 40

Industry 6.6 6.5 4.0 8.8 30as

Manufacturing 7.0 7.0 3.6 8.5 2C Services 6.7 7.5 8.3 7.9

10Private consumption 5.5 5.2 3.2 2.9 aGeneral government consumption 7.8 5.9 14.5 10.3 o 94 vs97 -

Gross domestic investment 5.7 6.2 4.3 11.5 -1 -Imports of goods and services 6.5 8.8 -2.5 -3.6 Expons :ImponsGross national Product 5.5 5.8 6.7 6.8

Note: 1999 data are preliminary estimates.

- The diamonds show four key indicators in the countrv (in bold) comPared with its income-group averaqe. It data are missing. the diamond willbe incomplete.

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India

PRICES and GOVERNMENT FINANCE1979 1989 1998 1999 Inflation (%)

Domestic prices 1

(% chanqe) 15Consumer prices .. 6.2 13.2 4.6 1e-Implicit GDP deflator 15.8 8.3 8.9 3.3 K AGovemment finance(% of GDP, includes cunrent grants) oCurrent revenue .. 23.5 21.8 23.6 94 95 96 97 98

Current budget balance . 0.4 -1.7 -0 01 -G DP deflator 0 CPIOverall surplus/deficit .. -12.5 -10.6 -11.4

TRADE1979 1989 1998 1999 Export and import levels (USS mill.)

(US$ millions)

Total exports (fob) .. 16,613 33,667 38,326 60.000Tea .. 550 547 564Iron .. 557 380 374 40.000Manufactures .. 12,730 26,870 31,314

Total imports (cif) .. 21,219 41,858 55,385 _ Food .. 714 2,543 2,459 20,000Fuel and energy .. 3,768 6,435 10,682Capital goods .. 5,288 9,122 10,192 o _ _ _ _ _ _

93 94 95 96 97 99 99Export price index (1995=100) .. 113 94 92Import price index (1995=100) .. 89 92 90 U Exports * ImportsTerms of trade (1995=100) .. 128 102 102

BALANCE of PAYMENTS1979 1989 1998 1999 Current account balance to GDP (%)

(US$ millions)

Exports of goods and services 9,980 21,201 47,484 54,047 0Imports of goods and services 13,120 27,934 58,565 67,250 IResource balance -3,140 -6,733 -11,081 -13,203 * * * :

Net income 527 -798 -2,955 -3,133 i i

Net current transfers 1,852 2,281 10,587 12,638 _1

Current account balance -761 -5,249 -3,449 -3,699

Financing items (net) 985 4,400 7,382 9,487Changes in net reserves -224 850 -3,933 -5,788 2 -

Memo:Reserves including gold (US$ millions) 7,581 4,582 33,584 38,150Conversion rate (DEC, local/US$) 8.1 16.7 42.1 43.3

EXTERNAL DEBT and RESOURCE FLOWS1979 1989 1998 1999

(US$ millions) Composition of 1999 debt (USS mill.)Total debt outstanding and disbursed 17,898 75,407 98,232 102,626

IBRD 728 6,615 7,993 7,879 A 789IDA 4,505 12,521 18,562 18,984 0:4,329 A ,87

Total debt service 1,282 6,955 10,001 10,527 /984IBRD 127 881 1,627 1,415 B 19,994

IDA 43 188 1,372 458

Composition of net resource flows F: 42,241 C:26Official grants 717 698 476 300Official creditors 646 2,489 1,727 1,701 503Private creditors 13 2,870 -1,433 414Foreign direct investment 49 252 2,635 2,155Portfolio equity 0 168 342 3,026 E: 24,664

World Bank programCommitments 766 2,987 2,055 909 A - IBRD E -BilateralDisbursements 695 2,011 1,421 1,592 B- IDA D -Other mulblateral F - PrivatePrincipal repayments 77 450 2,193 1,211 C -IMF G - Short-termNetflows 619 1,561 -772 381Interest payments 93 619 806 663Net transfers 525 942 -1,578 -282

Development Economics

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