|1. Project Data:
ICR Review Date Posted:
|Andhra Pradesh Rural Poverty Reduction Project
Project Costs(US $M)
Loan/Credit (US $M)
|Agriculture and Rural Development
Cofinancing (US $M)
Board Approval Date
|General agriculture fishing and forestry sector (40%), General education sector (30%), Other social services (15%), Sub-national government administration (10%), Health (5%)|
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)|
||ICR Review Coordinator:
||Robert Mark Lacey
|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?
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.
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:High.
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:Substantial.
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.
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:
* Refers to percent of total project cost for which ERR/FRR was calculated