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Implementation Completion Report (ICR) Review - Andhra Pradesh Rural Poverty Reduction Project

1. Project Data:   
ICR Review Date Posted:
Project Name:
Andhra Pradesh Rural Poverty Reduction Project
Project Costs(US $M)
 266.19  472.43
L/C Number:
Loan/Credit (US $M)
 150  333.87
Sector Board:
Agriculture and Rural Development
Cofinancing (US $M)
Board Approval Date
Closing Date
09/30/2008 09/30/2011
General agriculture fishing and forestry sector (40%), General education sector (30%), Other social services (15%), Sub-national government administration (10%), Health (5%)
Poverty strategy analysis and monitoring (23% - P) Social risk mitigation (22% - P) Rural policies and institutions (22% - P) Participation and civic engagement (22% - P) Education for all (11% - S)
Prepared by: Reviewed by: ICR Review Coordinator: Group:
Ebru Karamete
Robert Mark Lacey Soniya Carvalho IEGPS1

2. Project Objectives and Components:

a. Objectives:
According to the Development Credit Agreement (p. 20), the development objective is:

“to assist Andra Pradesh to enable the rural poor, particularly the poorest of the poor, to improve their livelihoods and quality of life."

The project development objective as stated in the Project Appraisal Document (PAD, p. 3) is:

"to enable the rural poor, particularly the poorest of the poor in Andra Pradesh to improve their livelihoods and quality of life".

This Review uses the statement in the Development Credit Agreement.

The main outcome targets were: greater empowerment of the poor through well-functioning community based organizations; increasing and diversifying the income of the poor; increasing the access of the poor to basic services such as health and education; increasing their access to, and ownership of, land; increasing their access to credit and insurance services; increasing the use of community based rehabilitation for the disabled; and increasing local governments’ responsiveness to the needs of the poor.

Two Additional Financing credits were approved on July 10, 2007 (US$65 million) and on December 22, 2009 (US$100 million) that aimed to expand the operation to encompass the vast majority of the poor in the State, as well as to significantly scale up several successful pilots such as insurance initiatives, micro pension, and health and nutrition interventions. There was no change in the project development objective.

b. Were the project objectives/key associated outcome targets revised during implementation?

If yes, did the Board approve the revised objectives/key associated outcome targets? Yes

Date of Board Approval: 12/22/2009

c. Components:
1 . Institution and Human Capital Development (appraisal estimate US$25.19 million, Additional Financing US$ 130.52 million, actual US$155.70 million).

This component aimed to provide technical assistance for the following activities: (i) strengthening and building self-managed institutions of the poor–self-help-groups and federated groups at the village and mandal (federations of village organizations at sub-district level) levels; (ii) building the capacity of line departments and local governments to focus on the needs of the poor and help empower the poorest of the poor through joint planning, monitoring, training, and implementation; and (iii) supporting reorientation of existing Education, Health and Nutrition Department programs to the needs of the poor in 80 selected mandals; and (iv) building private sector partnerships for livelihood opportunities. Additional financing aimed at building higher capacity of community based organizations through technology infusion.

2. Community Investment Fund (appraisal estimate US$ 147.13 million; Additional Financing US$ 43.35 million, actual US$190.48 million).

This component aimed to transfer financial and technical resources to community based organizations and local governments to support subprojects on a demand-driven basis in the following areas: (i) social development (e.g. early childhood centers, and disability interventions), (ii) community-level infrastructure, (iii) income-generation and livelihood improvements; and (iv) land purchases.

3. Support to Pilot Programs (appraisal estimate US$ 7.45 million, actual US$ 7.45 million).

The component aimed to do the following pilots: (i) Strengthening the role of local governments and strengthen their capacity to respond to the needs of the rural poor; and (ii) Social risk management and health - to test different models of community based comprehensive insurance package since the poor are most vulnerable to downslide risks; and (iii) Community Managed Comprehensive Basic Health Package to complement the comprehensive insurance package.

4. Support to Out of School Children (appraisal estimate US$ 57.38 million, actual US$ 57.38million).

This component aimed to support Government of Andra Pradesh's goal to enroll all children in school by 2005, through motivating parents and children to go to regular schools and bridge camps to prepare them for formal education. To retain girl children in formal schools until the completion of their secondary education, 64 residential schools were planned to be constructed.

5. Support to Persons with Disabilities (appraisal estimate US$ 11.32 million, actual US$ 11.32 million).

This component aimed at a targeted approach in 80 mandals to meet the special needs of people with disabilities. Through social mobilization and building of people’s institutions that focused on the needs of disabled persons and their families, the component aimed to improve livelihood opportunities of the disabled and their caregivers. The project planned to promote convergence of interventions in the health and educations sectors to support disabled persons and disability prevention, while encouraging community-based interventions.

6. Project Management (appraisal estimate US$ 17.72million, the Additional Financing US$ 32.38 million, actual was US$50.10 million).

This component aimed to support activities of the main implementing agency, Society for Elimination of Rural Poverty. Activities would include: providing key functional staff at the State Project Management Unit and District Project Management Unit; contracting an independent monitoring and evaluation agency; conducting environmental management training; and undertaking special studies.

d. Comments on Project Cost, Financing, Borrower Contribution, and Dates
Project Costs:
Total costs increased from the appraisal estimate of US$266.19 million to US$472.43 million because the project was scaled up to include all rural villages. A reallocation of funds took place on September 26, 2011, which assigned funds from 2 categories that had savings to the rest of the disbursement categories in order to be able to ensure achievement of key performance targets.
The original Loan for US$150million was fully disbursed. Additional financing of US$65 million equivalent was approved on July 10, 2007 and a second additional financing of US$100million was added on December 22, 2009. By project closing, US$333.9 million had been disbursed. Two Trust Funds provided US$3.6 million out of which US$ 2.1 million was disbursed. There were no other external sources of financing.
It was expected at appraisal that local communities would provide US$13.96 million; and local financial intermediaries were expected to provide $52.13 million. The ICR did not indicate the exact amounts for the local community and financial intermediaries’ contribution but the project team stated that US$1.1 billion, the corpus of savings of the community based organizations, is considered as local community contribution and the cumulative loan amount of US$ 7.9 billion from commercial banks to the community based organizations is regarded as financial intermediary contribution.
Borrower Contribution:
It was expected at appraisal that the Borrower would provide US$59.97million. Although the borrower contribution at project closing was not presented in the ICR, it was stated by the Project team that this amount was US$ 138.56 million.

On July 10, 2007, when the first additional financing was approved, the Project closing date was extended from September 30, 2008, to December 31, 2009. On December 22, 2009, when the second additional financing was approved, a further extension until September 30, 2011 was granted, on which date the project closed.

3. Relevance of Objectives & Design:

a. Relevance of Objectives:
Project objectives are relevant to the 2009 - 2012 Country Strategy, specifically the Goal “Enhancing Development Effectiveness-Social Protection”. This includes assistance to improve the impact of social protection programs and services for the poor, to assist them to cope with extreme/chronic poverty, and manage the impacts of shocks on their welfare. It also complemented past and ongoing Bank operations and analytical work in the rural development sector.
Project objectives are also highly relevant to the Government’s policy of reducing poverty in rural areas. Andra Pradesh was the first state in India to develop a long-term Rural Poverty Reduction Program with two main objectives: (i) promoting economic mobility, and (ii) enhancing social protection by reducing vulnerability for the poor. The project supported the Government of Andhra Pradesh's ongoing program to help eradicate poverty; promote human capital development; focus on the welfare of children—particularly girls, women, and the old; and build a more equitable society in which people participate in making decisions which affect their lives and livelihoods.

b. Relevance of Design:

The results framework in Annex 1 of the Project Appraisal Document clearly sets out the causal chain between the activities to be funded and the intended outcomes. The project was designed to provide technical assistance for strengthening and building self-managed institutions of the poor, both self-help-groups and federated groups; building the capacity of line departments and local governments to focus on the needs of the poor; and building private sector partnerships for livelihood opportunities. Transferring financial and technical resources to community based organizations and local governments to support sub-projects on a demand-driven basis was also relevant to the achievement of the objectives. Technical assistance to help retain girls in formal schools until the completion of their secondary education, as well as building 64 residential schools, was relevant, as was the technical assistance to support persons with disabilities.

Project design also included a pilot program to test different models of community based services, which gave flexibility for testing options and then eventually for expanding successful pilots.

However, design lacked a key component to provide technical assistance services for financial service providers and the project beneficiaries on microfinance lending/borrowing. Since the project helped to leverage billions of dollars worth of credits from financial intermediaries, it should also have been equipped with the necessary tools to improve the operating performance of the microfinance industry.

4. Achievement of Objectives (Efficacy) :

To assist Andra Pradesh to enable the rural poor, particularly the poorest of the poor, to improve their livelihoods and quality of life. Substantial .

  • 11.29 million poor were mobilized into self-help groups, exceeding both the initial target of 2 million and the target of 11 million that accompanied approval of the Additional Financing
  • Over 1 million self-help groups were set up, exceeding the Additional Financing target of 930,000.
  • 38,646 village organizations were formed, exceeding the target of 37,000.
  • 1,098 sub-district organizations were formed, meeting the target
  • 22 district organizations were formed, meeting the target.
  • 173,842 grassroots functionaries were trained exceeding the Additional Financing target of 160,000.
  • The corpus of savings of self-help groups was US$ 1.13 billion, exceeding the target of US$ 772 million
  • 929,356 self-help groups were linked to the banks, exceeding the target of 800,000. The percentage of poor self-help groups that were linked to the banks were 89 %, which also exceeded the target of 60 %.
  • US$ 7.86 billion worth of credits were granted by commercial banks, exceeding the Additional Financing target of US$ 6.71 billion. Interest rate burdens were reduced by between four and ten times for self-help group members through debt swapping.
  • 306,183 jobs were created for rural youth, exceeding the target of 300,000 jobs
  • The area of land accessed by the poor reached 875,000 acres, exceeding the target of 300,000 acres. This started as purchase of land by poor households. By facilitating the resolution of 430,000 land disputes, the project helped to unlock large tracks of land for the use of the poor.
  • Collection of milk from dairy farmers was 344,000 liters per day for the peak season and 197,000 liters per day for the lean season, slightly below the targets of 350,000 and 200,000 liters per day respectively.
  • Annual turnover of community managed procurement centers was US$ 578 million, exceeding the target of US$ 192 million.
  • 3.37 million households benefited from greater food security, exceeding the target of 3 million households. This was achieved through collective purchase of food commodities, access to public distribution systems and food credit facilities, thus making food more affordable and reducing transaction costs.
  • 9.67 million self-help group members and their spouses were covered under life and disability insurance. This was slightly below the target of 10 million members.
  • 5.2 million self-help group members participated in the pension scheme, exceeding the target of 4.31 million members. This scheme is universally implemented by the Andra Pradesh Government.
  • Out of the planned 64 schools, 61 were constructed.
  • The ICR states that (p.29) through self-help groups, the Project reached 11.28 million poor people, which corresponds to 89.2 % of the total poor and the poorest of the poor in Andra Pradesh. There is evidence that the project helped to create higher incomes, consumption and asset levels, and reduced poverty among participants. Although approximately 11 % of the poorest of the poor could not be reached by the project, the project team subsequently stated that the project supported development of a strategy of reaching the remaining poor.
  • The evidence indicates that the household income for project beneficiaries was increased more than for non-beneficiaries. A 2010 Impact Assessment Study (which was carried out by a reputable independent agency and appeared to deploy a sound methodology) showed that participants’ income increased by 124% over the baseline, whereas non participants’ was 111%. The value of assets per household for project participants showed a five-fold increase (from $837 to $3.983 between 2004 and 2009). The study also showed that household expenditures were greater for the poor and poorest participants, compared to the non-participants. Overall, the percentage of households below the poverty line decreased more among participants (around 12% in five years), compared to non-participants (3%).
  • In terms of diversified household incomes, the ICR presents only jobs created for rural youth as evidence that this was achieved, but this is insufficient to demonstrate that incomes are diversified overall. The project team stated that the project helped to diversify incomes via increased access to land, community managed sustainable agriculture practices, commodity marketing, dairy collection centers, and job schemes for rural youth as well as increased access to pension schemes.
  • Regarding empowerment (voice) of rural poor, this has been achieved largely through the number and percentage of community-based organizations functioning well in relation to their social, economic, and political objectives. According to the ICR, the self-help groups and their federations at village, district and sub-district level work well, providing many services for the poor households.
  • There is evidence of increased access to credit and reduced indebtedness. However, the microfinance crisis that occurred in Andra Pradesh during the project period, due to oversupply of credit and unsustainable debt burden for households, mitigates this result. [The microfinance crisis was due to the sudden surge in credit during the period 2008-2010 by microfinance institutions (MFIs). Multiple loans to the same households without proper due-diligence by lenders led to unsustainable debt burdens for these households. A spate of suicides due to indebtedness was reported in the national media leading to promulgation of the Andra Pradesh MFI Ordinance by the Government in October 2010 which put some restrictions on loaning by MFIs and capping of interest rates. This also impacted recovery of self help group loans and the non-performing loan levels of the self-help group portfolios of the commercial banks rose to 2.0 percent of the outstanding loans (ICR p. 10)].
  • In terms of access to land, the impact assessment done in 2010 showed that the frequency with which beneficiary households process land transactions has increased by about 3 % compared to that of non-participant households.
  • For the outcome of improved quality of, and access to, basic services—education, health, integrated child development services --, the results indicate that this has been achieved in general, as more children attend school; health and disability insurance has started to be provided and community managed health and nutrition services are in place. 115,000 girl students were enrolled in schools, exceeding the target of 25,000. 21,718 children were in early childhood education schools, exceeding the target of 17,500. 19,376 poorest of the poor students were facilitated to join corporate colleges for higher education. This was slightly below the target of 20,000 students. In terms of health services, the number of unsafe deliveries has declined by 9 % among participants, and 4,200 villages achieved Millennium Development Goal indicators on prenatal, neonatal and mortality, exceeding the target of 4,000. 297 mandals had 100 % children immunized, exceeding the target of 150 mandals. 4,200 village organizations manage nutrition and day care centers serving over 283,000 families with health education, balanced meals, and regular health check-ups, natal care, and services to pregnant woman and mothers.
  • Regarding improved access to disability certification and increased use of community based rehabilitation, 306,211 persons with disabilities were organized into 32,782 self-help groups and 3 district level federations. US$ 39.96 million were provided through Community Investment Funds to these disabled persons for enhancing their livelihood. 7,984 surgical corrections were carried out and 38,408 persons with disabilities were provided assistive devices at no cost. 938,000 persons with disabilities have been assessed by the District Medical Boards for disability certificates. It was stated by the project team that 772,925 certificates were given out and the software mapped out 1,264,639 households at the close of the project. The number of certificates issues was 67% of the target of 1,155,000.
  • Insufficient evidence is presented concerning the inclusiveness and responsiveness of local governments to the needs of the poor. The result of “25% of women were elected into local governments in 2006 elections” is not sufficient to conclude local governments are more responsive and inclusive to the needs of the poor. The ICR (p.43) states that the Federations have worked closely with local governments to ensure access to various entitlements like pensions, food entitlements.

5. Efficiency:

Efficiency is rated Substantial.
An economic analysis was carried out at appraisal of the two largest components of the project: (i) Community Investment fund and (ii) Educational support for girls’ out-of school and school dropouts. The evaluation of the livelihood subprojects was based on a minimum financial cost benefit return. Each of the sub-projects analyzed yielded a financial return in excess of 12%. For the educational support component, an economic analysis showed an Economic Rate of Return of 12.1%. No overall economic rate of return was calculated.

The ICR carried out an economic and financial analysis for the total project investment of US$472 million, using current prices. Project benefits were from: (i) livelihood investments of US$ 140 million benefiting 33,867 self-help groups; (ii) increased access to US$ 7.86 billion of credit from financial institutions benefiting 0.9 million self-help groups; and (iii) diversified livelihood benefits through community led marketing, production and employment generation activities. The ICR (page19) reports that the provision of US$ 190 million for the livelihood investments resulted in a financial rate of return of 18.1%. Access to credit from financial institutions improved the financial rate of return significantly to 26.3%. Diversifying the income activities through community managed sustainable agriculture, livestock, marketing and employment generation activities further enhanced the financial rate of return to 31.2%. Inclusion of all project costs resulted in a 30.1% financial rate of return for the project as a whole. The net present value increased from Rs 3 billion (only project led Community Investment Fund) to Rs 82 billion (with institutional linkages for additional credit) and further to Rs 112 billion (with diversified income generation activities).

The Project closing was extended for 3 years mainly to utilize the two additional financing agreements and to take account of the scaling up of the project's scope to include the vast majority of the poor in the state. No significant administrative or operational inefficiencies were recorded.

a. If available, enter the Economic Rate of Return (ERR)/Financial Rate of Return at appraisal and the re-estimated value at evaluation:

Rate Available?
Point Value
ICR estimate:

* Refers to percent of total project cost for which ERR/FRR was calculated

6. Outcome:

The relevance of objectives was high and that of design substantial. Efficacy is rated substantial as 89.2% of rural poor was reached through project services, with evidence of increased and diversified incomes, and improved access to basic services and land; however disability services fell short of the target and insufficient evidence was provided on the inclusiveness and responsiveness of local governments to the poor . Efficiency is rated substantial with high financial rate of returns and no significant administrative or operational inefficiencies.

a. Outcome Rating: Satisfactory

7. Rationale for Risk to Development Outcome Rating:

Basic institutional platforms, capacities, systems and assets are in place at the community level, backed up by networks of federations and support institutions. This system is supported by the important political parties and the government. There is continued support from the State budget. Furthermore, the growth in bank linkages and assets is continuing, and more livelihood-enhancing initiatives are starting and increasing in scale. According to the 2010 Impact Evaluation Study, annual income levels increased from US$ 488 per annum to US$ 1,132 per annum for all groups, indicating that sustainability of project interventions is likely.

a. Risk to Development Outcome Rating: Negligible to Low

8. Assessment of Bank Performance:

a. Quality at entry:
The Bank oversaw a design process that was comprehensive, building directly on past and ongoing projects and programs in the State. A flexible design was elaborated, with a consistent set of core components that provided room for innovation and pilots, which could be scaled up further. The project design also incorporated intensive technical assistance, and information sharing and learning processes. Project design was very similar to another Bank project, Andra Pradesh District Poverty Initiatives Project, which had been ongoing for over two years. Also, the project made use of a poverty analysis in Andra Pradesh which was conducted by the Bank. Lessons learnt from other World Bank and UN projects (the ICR does not specify them) were also considered in designing the Project. The Society for Elimination of Rural Poverty was the executing agency for the Project; it had demonstrated from the Andra Pradesh District Poverty Initiatives Project and other previous UN and government initiatives that it was able to implement complex rural development programs. Risks at appraisal were well identified and mitigated. M&E design was adequate.

Quality-at-Entry Rating: Satisfactory

b. Quality of supervision:
According to the ICR, Bank supervision was continuous, comprehensive, and highly responsive to the needs of the Borrower, with an appropriately staffed team providing frequent support to the Society for Elimination of Rural Poverty as needed, with objective feedback highly appreciated by the implementing agency. A key strategy was to conduct a range of thematic oriented supervision missions and not try to cover all aspects of the project in each mission. This allowed the implementing agency and the Bank team to focus a series of missions on developing new innovations and strategies. The Bank provided key support in the form of Additional Financing, which enabled the program to be deepened and extended to a state-wide level. M&E implementation, safeguards and fiduciary compliance presented no significant issues.

Quality of Supervision Rating: Satisfactory

Overall Bank Performance Rating: Satisfactory

9. Assessment of Borrower Performance:

a. Government Performance:
The Government of Andra Pradesh has shown strong commitment through:

  • Numerous supportive policies formulated and implemented during the project period to reinforce and institutionalize initiatives started with the project's support, largely based on presentation of evidence of impacts. Similarly the State modified existing programs and resource allocations, and also brought in new resources to address the needs of the target group.
  • Organizing the implementation of schemes through relevant community organizations, such as tribal welfare, backward cast, minorities, etc.
  • Supporting a continuity and growth of cadres of experienced staff and providing them with supportive career paths, and creating strong incentives for high levels of performance and initiative.
  • Significant investment in use of Information Communication Technologies and of mobile telecommunications for community organizations ahead of time in line with other e-governance initiatives in the State.

Government Performance Rating: Highly Satisfactory

b. Implementing Agency Performance:
The State Rural Development Department and Society for Elimination of Rural Poverty (SERP), the implementing agency, have managed the project as part of a larger, longer term program, building on the methods of earlier projects. SERP was set up in 2000 as a semi-autonomous agency, headed by the Chief Minister, together with a general body comprised of community based organizations and other stakeholders, in order to coordinate rural poverty reduction programs of the state. It has been the lead agency for another World Bank and various UN projects. It was able to promote a process oriented approach and was pro-active in promoting partnerships with non-governmental organizations (NGOs). SERP consisted of a State Project Management Unit (SPMU) and District Project Management Units (DPMUs) in all districts. Each DPMU was headed by a Project Director assisted by functional specialists. At the community level, activities were carried out by Mandal Community Support Cells, NGOs and village level acitivists. Partnerships with NGOs were focused on those that had experience with organizing among the poorest of the poor, generation of awareness and carrying out training programs, and implementing monitoring and evaluation activities. These partnerships were key in assisting the SPMU and the DPMUs to implement the project. SERP had contracted an NGO coordinating body to facilitate collaboration with NGOs in the state in implementing the project. SERP was also able to play an advisory and advocacy role on pro-poor policies and for institutions active in the implementation of such policies. The ICR reports that the agency generated new ideas, and identified and built on innovations at all levels. It managed the program by focusing all components on the core self-sustaining institutional development platform, and managed activities in a highly professional manner. A professional human resources system was created to attract talented staff to work on the program. At the time of the ICR's preparation, the project was developing a technical system with the potential for scaling up activities more widely in India.

Implementing Agency Performance Rating: Highly Satisfactory

Overall Borrower Performance Rating: Highly Satisfactory

10. M&E Design, Implementation, & Utilization:

a. M&E Design:
The design of the Monitoring and Evaluation System was adequate, and most key outcome and output indicators were measurable and monitorable. Also, the institutional set up and the management for the Monitoring and Evaluation were sound. The previously existing system for baseline survey, impact evalution and process monitoring of the Andra Pradesh District Poverty Initiatives Project was used for this Project as well. State and District Project Management Units were responsible for input/output monitoring at all levels. A baseline survey was not carried out during preparation, but was done within a year of Board approval. A close management structure with hands on management supervision at the field level, backed up by various manual and spreadsheet management information systems, was developed to help monitor the project from the beginning. A more integrated computerized Management Information System was developed relatively late.

b. M&E Implementation:
Two NGOs, supervised by a more experienced NGO, carried out the process monitoring in order to assess institutional development at the village level, community satisfaction and mechanisms to ensure inclusiveness. Impact evaluation was carried out by the Center for Economic and Social Studies, an independent agency. The baseline survey that was carried out in 2004, assessed the pre-project conditions on asset and vulnerability status, poverty levels, and conditioning factors such as state policies and programs.The assessments provided regular feedback into the quality of project implementation at the grass roots and community response to project interventions. The Project Management Unit took into account the observations made, and appropriate corrective actions were taken to improve quality of implementation. A monthly video conferencing arrangement between the State and District PMUs, Zilla Samakhyas (district level federations of community based organizations) and community functionaries improved the information exchange and learning process. This concurrent monitoring has improved the adaptability and efficiency of the project.
Impact evaluations were carried out by Centre for Economic and Social Studies in three stages. Base line impact studies were carried out in 2004 and follow-up surveys were taken at the mid-term (2006) and end term (2009). Another household survey for an updated impact assessment by the project was in process at the time of the ICR mission.

a. M&E Utilization:
M&E information, with rapid follow-up field checks and regular meetings, provided a core overview of monitoring information and decision system to address issues, and suggestions for improving systems. It was stated by the ICR (p.11) that the M&E systems were likely to be sustained to a large degree post-project, given the Society for Elimination of Rural Poverty’s ongoing mandate and work program.

M&E Quality Rating: Substantial

11. Other Issues:

a. Safeguards:
The project was classified as Category ‘B’ for purposes of Environmental Assessment. In addition to OP 4.01, safeguards triggered were Pest Management (OP 4.09), Indigenous Peoples (OP 4.10), Physical Cultural Resources (OP 4.11) and Safety of Dams (OP 4.37). As identified during project preparation, indigenous populations of various ethnic groups represented a high percentage of the rural populations in the marginal areas targeted by the project. In accordance with the earlier OP 4.20, the project also had a dedicated and well-integrated tribal development plan covering 730,890 tribal households which was effectively implemented on a large scale in tribal areas. Dedicated Tribal Project Management Units were set up in 7 districts with significant tribal population coordinated by State Level Tribal Management Units.

The ICR reports that the project was supporting a wide range of livelihoods activities without large environmental impact. The project was encouraging use of alternate fuel sources, stall fed goat rearing, restricting sheep rearing to available grazing area, together with other activities expected to mitigate micro level environmental risks. According to the ICR, the project was pro-active in promoting climate friendly initiatives. These included the adoption of sustainable agriculture practices (without the use of chemical pesticides and fertilizers) in over 3 million acres of land leading to improvement in soil carbon for land improvement, ground water development and soil fertility treatments. Other initiatives include the application of tank silt for enhancing soil fertility; promotion of community kitchen gardens; and fodder cultivation to reduce grazing and thereby soil erosion.

The ICR does not state whether there was compliance with safeguards policies. However, the project team subsequently stated that “the project satisfactorily implemented the activities envisaged in the Environmental Management Framework and complied with the relevant safeguard policies. As the project did not support small scale infrastructure there was no adverse environmental impact..”

b. Fiduciary Compliance:
Financial Management

No major financial management issues requiring government or Bank attention emerged during implementation period, as corroborated by audit reports and procurement post-reviews. The project invested in an Electronic Fund Management System that integrated project transaction processing and this system allowed real time monitoring of fund flows and utilization across accounting units.
The project team stated that the project had no major physical works except the residential schools construction component. 89% of the total goods procurement under the project was successfully carried out by the community itself and cross verified through various audits. The project’s Procurement Unit supported community organizations through manuals in local languages and providing training and operational support to these organizations. The only significant contracts were consultancy and service contracts. The procurement of all goods and services had been completed by closure. There were no reported cases of misprocurement.

c. Unintended Impacts (positive or negative):

d. Other:

12. Ratings:

IEG Review
Reason for Disagreement/Comments
Highly Satisfactory
Although relevance of objectives is high, relevance of design is rated substantial due to lack of a TA component to help the borrowers and lenders on microfinance practices, Efficacy in achieving the development objective is rated substantial, since there was a lack of information on achievement of some intermediate outcome indicators. Efficiency is also rated substantial. 
Risk to Development Outcome:
Negligible to Low
Negligible to Low
Bank Performance:
Borrower Performance:
Highly Satisfactory
Highly Satisfactory
Quality of ICR:
- When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006.
- The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate.

13. Lessons:
The ICR offers a number of lessons of which the following are the most important (with some reformulation of language):

1. Addressing the problems of the poor requires a long term strategy and investments with political and institutional dedication by the governments. It is necessary to plan a long term initiative, approximately 10-12 years.

2. Continuous innovation and a multi-pronged approach works well for livelihood development. Keeping a flexible design that could easily respond to emerging ideas and successes and building the ability of communities to develop and test ideas themselves is key to success.

3. Demand and supply side strategies need to be implemented to prevent a crisis in the microfinance sector (for details see Section 4). On the demand side: a) provide financial literacy and debt counseling services; b) promote strong savings focus in self-help groups, c) set up strong financial management and accounting systems at the self-help group /federation level; and d) provide intensive livelihood support and value chain development. On the supply side: a) develop alternate delivery models for reaching financial services to the poor; and b) build robust management and credit information systems. Data need to be systematically shared.

4. Social accountability and good governance approaches are needed when setting up Community Based Institutions. At community level, Community Based Organizations should be facilitated to develop norms and systems for downward accountability and peer supervision. These include shared leadership responsibility, consensual decision making, social audit committees and community auditors, public disclosure of accounts, etc.

14. Assessment Recommended?

The Project had an apparently significant impact on improving lives of millions of the poorest of the poor in Andhra Pradesh, using methods that could be replicated elsewhere. The ICR does not explain clearly the methodology used to select the poorest of the poor, which segments of the poorest of the poor were reached and why the remainder could not be reached. Also an assessment of the microfinance crisis in the region, which affected many poor people including the project beneficiaries, could shed some light on how the project might have prevented or mitigated the crisis.

15. Comments on Quality of ICR:

The ICR is reasonably thorough, although information on some dimensions, such as the sources of funds for project financing, safeguards and fiduciary compliance (concerning which there are no clear statements of compliance) and monitoring and evaluation, is incomplete. There are some internal inconsistencies, for example information and dates on restructuring and additional financing. The ICR does not explain in detail the methodology used to select the poorest of the poor, nor are the data concerning the types of services provided for the poorest of the poor presented in sufficient detail. Although the microfinance crisis was mentioned in the lessons, the link between the crisis and the project is not analyzed. A franker discussion of the challenges and issues encountered during implementation would have enhanced confidence in the report's conclusions.

a. Quality of ICR Rating: Satisfactory

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