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Document of The World Bank FOR OFFICIAL USE ONLY Report No: PAD2678 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT PROJECT PAPER ON A RESTRUCTURING AND A PROPOSED ADDITIONAL LOAN IN THE AMOUNT OF US$96 MILLION TO THE REPUBLIC OF INDIA FOR A Uttarakhand Disaster Recovery Project Additional Financing January 28, 2019 Social, Urban, Rural And Resilience Global Practice South Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized

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Page 1: The World Bankdocuments.worldbank.org/curated/en/318001551063686694/pdf/India-Uttar... · Floods and Cyclone Phailin (2013), Cyclone Hudhud (2014), and Srinagar Floods (2014). Recurrent

Document of

The World Bank

FOR OFFICIAL USE ONLY Report No: PAD2678

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

PROJECT PAPER

ON A

RESTRUCTURING AND A PROPOSED ADDITIONAL LOAN

IN THE AMOUNT OF US$96 MILLION

TO THE

REPUBLIC OF INDIA

FOR A

Uttarakhand Disaster Recovery Project Additional Financing

January 28, 2019

Social, Urban, Rural And Resilience Global Practice

South Asia Region

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

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CURRENCY EQUIVALENTS

(Exchange Rate Effective November 30, 2018)

Currency Unit = Indian Rupee (INR)

INR 69.62 = US$1

US$1.38 = SDR 1

FISCAL YEAR

April 1 – March 31

Regional Vice President: Hartwig Schafer

Country Director: Junaid Kamal Ahmad

Senior Global Practice Director: Ede Jorge Ijjasz-Vasquez

Practice Manager: Christoph Pusch

Task Team Leader(s): Ignacio M. Urrutia Duarte, Deepak Singh

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ABBREVIATIONS AND ACRONYMS

AF Additional Financing

CERC Contingency Emergency Response Component

CPF Country Partnership Framework

DRM Disaster Risk Management

DSS Decision Support System

ESMF Environmental and Social Management Framework

GoUK Government of Uttarakhand

IBRD International Bank for Reconstruction and Development

IDA International Development Association

IP Implementation Progress

PDO Project Development Objective

PIU Project Implementation Unit

PP Parent Project

PMU Project Management Unit

REOI Request for Expressions of Interest

PWD Public Works Department

SGDP State Gross Domestic Product

STEP Systematic Tracking of Exchanges in Procurement

UDRP Uttarakhand Disaster Recovery Project

USAC Uttarakhand Space Applications Center

USDMA Uttarakhand State Disaster Management Authority

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The World Bank Uttarakhand Disaster Recovery Project Additional Financing (P164058)

Page 1 of 40

BASIC INFORMATION – PARENT (Uttarakhand Disaster Recovery Project - P146653)

Country Product Line Team Leader(s)

India IBRD/IDA Ignacio M. Urrutia Duarte

Project ID Financing Instrument Resp CC Req CC Practice Area (Lead)

P146653 Investment Project Financing

GSU18 (9364) SACIN (347) Social, Urban, Rural and Resilience Global Practice

Implementing Agency: Uttarakhand State Disaster Management Authority, Government of Uttarakhand ADD_FIN_TBL1

Is this a regionally tagged project?

Bank/IFC Collaboration

No

Approval Date Closing Date Original Environmental Assessment Category

Current EA Category

25-Oct-2013 30-Jun-2019 Partial Assessment (B) Partial Assessment (B)

Financing & Implementation Modalities Parent

[ ] Multiphase Programmatic Approach [MPA] [ ] Contingent Emergency Response Component (CERC)

[ ] Series of Projects (SOP) [ ] Fragile State(s)

[ ] Disbursement-Linked Indicators (DLIs) [ ] Small State(s)

[ ] Financial Intermediaries (FI) [ ] Fragile within a Non-fragile Country

[ ] Project-Based Guarantee [ ] Conflict

[ ] Deferred Drawdown [✓] Responding to Natural or Man-made disaster

[ ] Alternate Procurement Arrangements (APA)

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The World Bank Uttarakhand Disaster Recovery Project Additional Financing (P164058)

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Development Objective(s) To restore housing, rural connectivity and build resilience of communities in Uttarakhand and increase the technical capacity of the State entities to respond promptly and effectively to an eligible crisis or emergency.

Ratings (from Parent ISR) RATING_DRAFT_NO

Implementation Latest ISR

22-Aug-2016 13-Jan-2017 18-Jul-2017 28-Dec-2017 26-Jun-2018 20-Dec-2018

Progress towards

achievement of

PDO S

S

S

S

S

S

Overall

Implementation

Progress (IP) MS

MS

S

S

S

S

Overall

Safeguards

Rating MS

MS

MS

MS

MS

MS

Overall Risk M

M

M

M

M

M

BASIC INFORMATION – ADDITIONAL FINANCING (Uttarakhand Disaster Recovery Project Additional Financing - P164058) ADDFIN_TABLE

Project ID Project Name Additional Financing Type Urgent Need or Capacity Constraints

P164058 Uttarakhand Disaster Recovery Project Additional Financing

Scale Up No

Financing instrument Product line Approval Date

Investment Project Financing

IBRD/IDA 21-Feb-2019

Projected Date of Full Disbursement

Bank/IFC Collaboration

31-July-2022 No

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Is this a regionally tagged project?

No

Financing & Implementation Modalities Child

[ ] Series of Projects (SOP) [ ] Fragile State(s)

[ ] Disbursement-Linked Indicators (DLIs) [ ] Small State(s)

[ ] Financial Intermediaries (FI) [ ] Fragile within a Non-fragile Country

[ ] Project-Based Guarantee [ ] Conflict

[ ] Deferred Drawdown [ ] Responding to Natural or Man-made disaster

[ ] Alternate Procurement Arrangements (APA)

[ ] Contingent Emergency Response Component (CERC)

Disbursement Summary (from Parent ISR)

Source of Funds Net

Commitments Total Disbursed Remaining Balance Disbursed

IBRD

%

IDA 250.00 200.21 30.98

87 %

Grants

%

PROJECT FINANCING DATA – ADDITIONAL FINANCING (Uttarakhand Disaster Recovery Project Additional Financing - P164058)

PROJECT FINANCING DATA (US$, Millions)

SUMMARY-NewFi n1

SUMMARY (Total Financing)

Current Financing Proposed Additional

Financing Total Proposed

Financing

Total Project Cost 250.00 120.24 370.24

Total Financing 250.00 120.00 370.00

of which IBRD/IDA 250.00 96.00 346.00

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Financing Gap 0.00 0.24 0.24

DETAILSNewFinEnh1- Additional Financing

World Bank Group Financing

International Bank for Reconstruction and Development (IBRD) 96.00

Non-World Bank Group Financing

Counterpart Funding 24.00

Local Govts. (Prov., District, City) of Borrowing Country 24.00

COMPLIANCE

Policy

Does the project depart from the CPF in content or in other significant respects?

[ ] Yes [ ✔ ] No

Does the project require any other Policy waiver(s)?

[ ] Yes [ ✔ ] No

INSTITUTIONAL DATA

Practice Area (Lead)

Social, Urban, Rural and Resilience Global Practice

Contributing Practice Areas

Climate Change and Disaster Screening

This operation has been screened for short and long-term climate change and disaster risks

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Gender Tag Does the project plan to undertake any of the following? a. Analysis to identify Project-relevant gaps between males and females, especially in light of country gaps identified through SCD and CPF Yes b. Specific action(s) to address the gender gaps identified in (a) and/or to improve women or men's empowerment Yes c. Include Indicators in results framework to monitor outcomes from actions identified in (b) Yes

PROJECT TEAM

Bank Staff

Name Role Specialization Unit

Ignacio M. Urrutia Duarte Team Leader (ADM Responsible)

GSU18

Deepak Singh Team Leader Co-Task Team Leader GSU18

Sangeeta Patel Procurement Specialist (ADM Responsible)

GGOPZ

Krishnamurthy Sankaranarayanan

Financial Management Specialist (ADM Responsible)

Financial Management GGOIS

Bokepalli Kanaka Durga Raja

Social Specialist (ADM Responsible)

Social Development GSU06

Drona Raj Ghimire Environmental Specialist (ADM Responsible)

Environment GENSA

Alok Bhowmick Team Member Bridges GSU18

Anup Karanth Team Member DRM GSU18

Deepak Malik Team Member Operations GSU18

Heather Sophia Fernandes Team Member SACIN

Hyunjee Oh Team Member DRM & Climate Change GSU18

Keisuke Iyadomi Team Member Climate Change GSU18

Mark Zeydler-Zborowski Team Member Operations GSU18

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Mridula Singh Team Member Safeguards GSU06

Muthukumara S. Mani Team Member Economic Analysis SARCE

Peeyush Ramawtar Sekhsaria

Team Member DRM GSU18

Prabir Joardar Team Member River Bank Protection GSU18

Victor Manuel Ordonez Conde

Team Member WFACS

Vidya Mahesh Team Member SACIN

Extended Team

Name Title Organization Location

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INDIA

UTTARAKHAND DISASTER RECOVERY PROJECT ADDITIONAL FINANCING

TABLE OF CONTENTS

I. BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING ........................................ 8

II. DESCRIPTION OF ADDITIONAL FINANCING .................................................................... 11

III. KEY RISKS ..................................................................................................................... 13

IV. APPRAISAL SUMMARY .................................................................................................. 13

V. WORLD BANK GRIEVANCE REDRESS .............................................................................. 19

VI. SUMMARY TABLE OF CHANGES .................................................................................... 21

VII. DETAILED CHANGE(S) .................................................................................................... 21

VIII. RESULTS FRAMEWORK AND MONITORING ................................................................... 24

ANNEX I - ECONOMIC ANALYSIS ........................................................................................... 31

ANNEX II - FINANCIAL MANAGEMENT .................................................................................. 36

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I. BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING

A. A. INTRODUCTION

1. This Project Paper seeks the approval of the Executive Directors to provide Additional Financing (AF) of US$96

million to India for the ongoing India Uttarakhand Disaster Recovery Project (UDRP, P146653, Cr. 5313 IN). The

original Credit of SDR163 million (US$250 million equivalent) was approved on October 25, 2013, and became

effective on February 7, 2014.

2. The proposed AF requested by the Government of India (GoI)1 will help finance a set of scaled-up activities that

will in turn further enhance the impact of the well-performing Parent Project (PP). The Project Development

Objective (PDO) and implementation arrangements will remain the same. The Results Framework will be

adjusted to reflect the proposed scaled-up activities under the additional credit. The closing date of the original

credit will remain June 30, 2019 and the proposed closing date of the AF is March 31, 2022. The original Project

is being restructured to ensure that both the original credit and the AF can be used to finance any activities

included in the newly expanded project scope.

B. B. BACKGROUND Country Context

3. India continues to be the world’s fastest growing major economy. The economy has recovered after growth

dipped to 6.7 percent in FY17/18. It has accelerated in the last two quarters to reach 8.2 percent in Q1

FY18/2019 which was supported by a revival in industrial activity, strong private consumption, and a rise in

exports of goods and services. At the same time, the external situation has become less favorable. An increasing

trade deficit has led the current account deficit to widen (on the back of strong import demand, and higher oil

prices) from a benign 0.7 percent of GDP in FY16/17 to 1.9 percent in FY17/18. Meanwhile, external headwinds

- monetary policy ‘normalization’ in the US coupled with recent stress in some Emerging Market Economies-

have triggered portfolio outflows from April 2018 onwards, putting additional pressure on the balance of

payments. As a result, the nominal exchange rate has depreciated by about 12 percent since January 2018, and

foreign reserves have declined by over 4.2 percent (though remaining comfortable at about 9 months of

imports). Going forward, growth is projected to reach 7.3 percent in FY18/19 and to firm up thereafter at around

7.5 percent, primarily on account of robust private and public consumption expenditure, a rise in exports of

goods and services and a gradual increase in investments. However, the current account deficit is also projected

to remain elevated in FY18/19.

4. Since the 2000s, India has made remarkable progress in reducing absolute poverty. Between FY2011/12 and

2015, poverty declined from 21.6 to an estimated 13.4 percent at the international poverty line (2011 PPP

US$1.90 per person per day), continuing the earlier trend of robust reduction in poverty. Aided by robust

economic growth, more than 90 million people escaped extreme poverty and improved their living standards

during this period. Despite this success, poverty remains widespread in India. In 2015, with the latest estimates,

1 In its letter dated April 26, 2017, the Government of India requested an Additional Financing to scale up the rural road connectivity and capacity building components of UDRP.

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176 million Indians were living in extreme poverty while 659 million, or half the population, were below the

higher poverty line commonly used for lower middle-income countries (2011 PPP US$3.20 per person per day).

Recent trends in the construction sector and rural wages, a major source of employment for the poorer

households, suggest that the pace of poverty eradication may have moderated.

5. India is prone to all major types of natural hazards including floods, cyclones, landslides, earthquakes,

heatwaves, and droughts. The estimated average annual loss from natural disasters in India is US$9.8 billion

(UNISDR GAR 2015). Recent examples of large scale disasters include Bihar Kosi Floods (2007), Uttarakhand

Floods and Cyclone Phailin (2013), Cyclone Hudhud (2014), and Srinagar Floods (2014). Recurrent floods occur

in the northern plains, northeast and southeast of the country. The severity and recurrence of these types of

extreme events are likely to be exacerbated due to climate change.

6. The GoI has made great strides in moving from a reactive emergency response to proactively implementing

disaster preparedness and risk reduction initiatives. In 2016, the country’s first ever National Disaster

Management Plan was launched, and the GoI hosted the Asian Ministerial Conference on Disaster Risk

Reduction which led to the signing of the “New Delhi Declaration; the Asia Regional Plan for the Implementation

of the Sendai Framework.”

Project Background

7. The proposed AF is part of the Bank’s response to support the GoI’s efforts after severe floods in the State of

Uttarakhand in June 2013. The flood occurred at the peak tourist season (the State is one of the most important

pilgrimage circuits in India), and affected more than 900,000 people. Over 4,000 lives were lost, 3,320 houses

were fully damaged, and about 900km of roads were affected. In addition, the flood had a significant impact on

livelihoods, tourism and public services.

8. The pace of recovery in the State has been exemplary and among the most successful in recent past. The

recovery has been supported by, among others, the GoI, the Asian Development Bank, civil society, donors, and

the Bank. In the five years and one month since the disaster, all eligible houses have been rebuilt, critical

connectivity and public services have been restored and improved. Importantly, the State’s disaster risk

management capacity has been strengthened along with the investment in long term resilience which

translated into enhanced policies and institutions.

9. The PDO is to “restore housing, rural connectivity and build resilience of communities in Uttarakhand and

increase the technical capacity of the state entities to respond promptly and effectively to an eligible crisis or

emergency.” There have been no changes to the PDO, design or scope since its approval. The components are:

Component 1: Resilient Infrastructure Reconstruction (US$31 million): to restore housing and access to public

services through rebuilding: (i) resilient permanent housing; and (ii) resilient public buildings.

Component 2: Rural Road Connectivity (US$155 million): to restore rural connectivity through the

reconstruction of damaged roads and bridges and improving the original designs to enhance their resilience.

Component 3: Technical Assistance and Capacity Building for Disaster Risk Management (US$38 million): to

enhance the capabilities of government entities in disaster risk management through studies and investments

in institutional capacity building.

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Component 4: Financing Disaster Response Expenses (US$12 million): to support the financing of eligible

expenses already incurred by the State during the immediate post-disaster response period.

Component 5: Implementation Support. (US$14 million)

Component 6: Contingency Emergency Response Component (CERC) (US$0 million)

Project Performance

10. Performance has been satisfactory. Over the life of the Project, 11 Implementation Support & Review (ISR)

missions have been conducted. The overall operation continues to perform well and the Project has been

consistently rated as Moderately Satisfactory or Satisfactory for progress towards the achievement of the PDO.

11. Under Component 1, 2,382 resilient permanent houses were completed (ahead of schedule) under an owner-

driven model, and 23 out of 24 planned public buildings have been completed. Under Component 2, over

1,340km of roads out of about 1,572km and 16 out of 25 bridges have been restored. Remaining works are

under implementation and are expected to be completed within the scheduled period.

12. Under Component 3: (i) The Uttarakhand State Disaster Management Authority (USDMA) is now operational

with initial staffing in place, which will be augmented with additional staffing, equipment and capacity which

are in process. Its establishment led to the reorganization and consolidation of existing agencies and functions;

(ii) the river morphology and slope stabilization studies led to the identification and design of tangible priority

investment opportunities being proposed for this AF; and (iii) the State Disaster Response Force (SDRF) capacity

was significantly strengthened and it is now providing critical search and rescue services in the State. Since its

inception in 2013, the SDRF has conducted over 250 operations rescuing over 3,500 people.

13. The latest ISR Mission (November 19 - 22, 2018) concluded that the Project remains relevant to contributing to

the State’s post-2013 floods recovery process, and its activities are progressing despite delays due to severe

weather in the recent monsoon season. The mission also confirmed satisfactory fiduciary compliance. As of

December 12, 2018, disbursement is 86 percent.

14. The Project's closing date was extended by 18 months from December 31, 2017 to June 30, 2019 to successfully

complete all project activities. The need for extension was due to: i) delays in procurement of infrastructure

given the need to redesign according to improved resilient standards; ii) slower than expected pace of

construction due to weather and other field conditions; and iii) delays in establishing capacity to take on the

studies under the technical assistance and capacity building component. These obstacles have been largely

resolved, and ongoing activities are on track to be completed by the Project’s closing date.

C. RATIONALE FOR ADDITIONAL FINANCING

15. Although the extent and pace of recovery has been significant, connectivity continues to be a challenge. In the

aftermath of the 2013 floods, the number of tourists visiting the State dropped from over 2.5 million in 2012 to

less than 350,000 in 2014. In 2016 and 2017, however, the numbers went back up significantly to 1.5 and over

2 million respectively. Most of them visit one or more of the four main temples in the State, located in remote

and difficult to access areas. Landslides and river bank erosion are common and continue to disrupt movement

and cause accidents, affecting the livelihood and access to services of the local community.

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16. The timing and quantity of precipitation is becoming increasingly unpredictable in Uttarakhand. These patterns

will have multi-dimensional effects on the State’s economy, affecting major sectors including the tourism

industry. Efforts to promote climate resilience in these key natural asset-based sectors will have important

longer-term effects on livelihoods. In addition, Uttarakhand also falls in seismic zones IV and V and frequently

experiences low intensity earthquakes.

17. Against this backdrop, AF is being requested to further support the post-disaster recovery by financing priority

investments based on the studies conducted under the PP. While the impacts of climate change in future

disasters remain uncertain, efforts to ensure that the State has additional capabilities and resilient

infrastructure to reduce the potential damages and more quickly recover from disasters will translate into

important beneficial ripple effects on the State’s economy and livelihoods in the long term. The proposed

activities will serve to increase the effectiveness and extent of the PP’s impact as well as its sustainability.

18. The Bank team considered the option to accommodate support through a new project. However, an AF was

preferred because: (i) additional activities are within the scope of the PP’s PDO and are a direct scale-up of

ongoing work; (ii) it will expedite the preparation process while maintaining the positive momentum of the

results achieved to date; and (iii) it will capitalize on the current effective implementation arrangements which

have generated satisfactory results.

D.

II. DESCRIPTION OF ADDITIONAL FINANCING

A. SCOPE OF THE ADDITIONAL FINANCING 19. The scope of the proposed AF constitutes a scale up of the PP’s activities which are:

a) Bridges, road protection, and river bank protection under Component 2 – Rural Road Connectivity:

i. Reconstruction of about 64 bridges that are damaged to the point of needing replacement,

or where the original bridge is no longer in use due to damage or total collapse;

ii. Road protection works to reduce the risk of landslides in about 15 selected critical slopes to

protect and improve connectivity; and

iii. River bank protection in about 05 critical stretches to reduce the risk of river bank erosion

and resulting loss of connectivity.

b) Training facility for SDRF under Component 3 – Technical Assistance and Capacity Building for

Disaster Risk Management: To finance a permanent physical training facility that will help impart

specialized trainings to SDRF personnel as well as police, firemen, and local communities to strengthen

the State’s disaster response capacity to respond to disasters, most of which are linked to climate

change. Specialized training will focus on the needs of the State’s priorities: collapsed structures,

medical first response, mountaineering and high altitude, and water search and rescue.

c) Component 5 – Implementation Support.

d) Component 6 – Contingent Emergency Response Component.

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20. In addition, the original credit is being restructured to ensure that both the original credit and the AF can

be used to finance any activities included in the newly expanded project scope, including the above

components and remaining works under Subcomponent 1.2. Resilient Public Buildings.

B. ADDITIONAL FINANCING PROJECT COST 21. The project cost by component is as follows:

No Project Component Total

Project Cost

IBRD Financing -

m$

IBRD Financing -

%

1

Subcomponent 1.2. Resilient Public Buildings Component 2. Rural Road Connectivity

Bridges Road protection River bank protection

61.0 16.0 11.0

48.80 12.80 8.80

80%

2 Component 3. Technical Assistance and Capacity Building for Disaster Risk Management

Training facility for SDRF

20.0

16.0

3 Component 5. Project Implementation Support 12.0 9.6

4 Component 6. Contingent Emergency Response Component (CERC)

0.0 0.0 100%

Total 120.00 96.00 80%

C. LINKAGE TO THE COUNTRY PARTNERSHIP STRATEGY 22. The proposed project will contribute to achievement of the Country Partnership Framework (CPF, FY18-

22, 126667 -IN)’s “What” of Focus Area 1: Promoting Resource Efficient Growth by restoring rural

connectivity, building disaster resilience, ensuring asset sustainability and strengthening the state-level

capacity for disaster risk reduction and emergency preparedness. In addition, the proposed project will

apply two of the “Hows” of the CPF - strengthening public sector institutions and Lighthouse India. The

CPF specifically emphasizes India’s global leadership role in promoting disaster resilient infrastructure

development. Through the proposed scale-up of the PP’s activities under AF, WBG will continue to serve

as a model of how to take the state-capacity in disaster risk management to the next level and offer

lessons to other states that will be facing similar challenges in the future.

D. IMPLEMENTATION ARRANGEMENTS 23. The institutional capacity of the existing Project Management Unit (PMU), Project Implementation Units

(PIUs) and delivery mechanism established by the State with the Bank’s support have proven to be

increasingly effective. The institutional and implementation arrangements set up for PP will be

maintained for the AF and will continue to be responsible of fiduciary, safeguards and Monitoring &

Evaluation aspects of the AF under USDMA’s oversight under the Government of Uttarakhand (GoUK).

Additional staff is being recruited to enhance the capacity of the PIUs to manage the additional works.

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24. For implementation of the River Bank Protection work under Component 2, technical staff deputed from

the Irrigation Department will be working together within Public Works Department (PWD) PIU. In

addition, the Public Building PIU for PP’s Component 1 (Resilient Infrastructure Reconstruction) will serve

as the PIU for AF’s SDRF Training Facility under Component 3.

III. KEY RISKS

25. Based on the analysis using the Systematic Operations Risk-rating Tool (SORT), the proposed AF is rated

as Moderate. This factors in the supplementary nature of the proposed AF activities which are an

extension of the PP. Activities do not increase the PP’s technical complexity, existing implementation

arrangements are adequate, and there is strong demonstrated commitment by the State.

IV. APPRAISAL SUMMARY

A. Economic Analysis

26. The economic analysis focuses on how the project interventions would contribute towards reduced

damage from events such as floods and landslides resulting in increased tourism and other ancillary

economic benefits. The assumptions and detailed results of the cost benefit analysis are given in Annex

I. For the purposes of this analysis, investment costs of Components 2 and 3 were considered.

27. The current State Gross Domestic Product (SGDP) of Uttarakhand stands at US$35 billion in current prices

and the share of tourism is about 20 percent or US$7 billion. It is expected that the SGDP will grow at a

constant rate of 7 percent in the coming years but tourism growth rate will be higher owing to the

implementation of the new tourism policy and improved connectivity. Although agriculture contributes

to only around 10 percent to the SGDP, about 75 percent of the State’s population still depends on

agriculture. Over the years, substantial investments have been made by the GoUK through several

programs and projects to build social capital and on improved agriculture and livestock management.

However, frequent disasters such as landslides and flooding have eroded the income gains made by these

programs and projects. The project interventions will not only avert loss of crops and livestock from

landslides and floods, but improved connectivity will enhance transportation of agricultural products to

the respective markets which is often hindered by landslides and flooding.

28. If the avoided loss in tourism revenue, and the agricultural sector from the project interventions is 1

percent per annum, the project benefit cost ratio estimated will be 8.3 with an IRR of 61.5 percent

discounted over a 10-year period. In the limiting case, an avoided revenue loss of 0.12 percent will yield

a benefit cost ratio of 1.0 and an IRR of 12.3 percent. In other words, even if the project succeeds in

avoiding small damage to tourism and agriculture it could still be justified based on the benefit-cost

calculations. While a major event of the magnitude of the 2013 floods remains unique in terms of the

historic trends, it is to be expected that several smaller magnitude events have more or less become a

reality in Uttarakhand. Therefore, the Project interventions can be justified based on this analysis.

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Cost Benefit Analysis

Avoided cost (%) IRR (%) NPV BCR

1.0 61.5 760.1 8.3

0.12 12.3 1.8 1.0

B. Technical 29. The proposed road and river bank protection works under the rural connectivity component were

identified and designed through technical studies on river morphology and slope stabilization financed

under PP. The studies initially identified a long list of unstable slopes and erosion prone river banks. An

analysis was then carried out to prioritize those which presented the highest risk to local communities

including access to common facilities like religious places, schools, hospitals, etc. in the case of extreme

precipitation and floods.

30. Road protection works involve an optimal combination of techniques such as retaining walls, drainage,

geo-mesh, culverts, and other structural measures. Erosion protection works comprise retaining

structures and improved toe erosion protection works including toe wall, launching apron, etc. Designs

were based on detailed hydrological, morphological and geological investigations and designs aimed at:

minimizing the need of land and disruption of vegetation, cost-effectiveness, simplifying maintenance

needs, minimizing disruptions during construction, and building climate-resilience.

31. The bridges were identified during implementation of PP in locations where the original bridges were

destroyed or the existing bridges need to be replaced. Designs of the newly proposed bridges will

incorporate features to increase their seismic and climate resilience, which has been the practice in the

PP. These improved designs will prolong their lifespan to ensure continued access to rural areas

vulnerable to floods, landslides and other events which can be caused by irregular climatic conditions

such as erratic rainfalls.

32. The SDRF training facility aims at strengthening capacity of the recently established SDRF to provide

better search and rescue services. Continued specialized training is at the core of an effective force of

this nature. There is no training facility in India that provides the combination of specialized expertise

relevant for the Uttarakhand context, and SDRF currently relies on a combination of international

trainings and local alternatives with certain specialized domains inadequately addressed. The proposed

facility and campus will be able to provide comprehensive and continuous training to SDRF as well as

combined training with fire and police service, and local volunteers. It is expected that, once established,

the facility will be able to offer training to other similar forces in India and the region. Furthermore, the

proposed training facility for SDRF will be one of the first training campus of its kind in India and will serve

as an example for other states to emulate. The proposed SDRF facility will enable the State to meet the

current and future challenges of climate change.

C. Financial Management (FM)

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33. The implementing agencies for the AF and PP are the same. The PMU under USDMA would coordinate

with all other agencies for all project related FM requirements which is the existing arrangement for the

PP. Each implementing agency namely (PWD, Public Buildings, and CBDRM) would be managed by the

existing PIU at the head office and would coordinate with all divisions working under it for ensuring

proper accounting and reporting for the AF.

34. Performance in PP: The PP has been working well from FM perspective and has been providing both

interim financial reports and audit reports on a timely basis. Accounting systems are established for the

PP, which are working well and are up to date. The overall rating for the PP has been Moderately

Satisfactory or Satisfactory and they have systems to meet the Bank FM requirements.

35. Summary of FM arrangements for AF: Most of the FM systems being used for the PP would be extended

for the AF. A new budget head has been created and adequate provision has been made for the AF.

Through the budget head both state share of 20% and externally aided projects (EAP) share of 80% would

be provided by the Government. The current fund flow practice of transferring amounts from the budget

to the Personal Ledger Account (PLA) and then to the PMU bank account would be followed for the AF.

The accounting systems would be maintained in Tally accounting software and new books of account

would be maintained for the AF. Staffing is adequate and the Government has posted Financial

Controllers (FC) for the AF. Consolidated Interim Unaudited Financial Reports (IUFRs), would be

submitted by the PMU to the Bank on a half-yearly basis within 30 days from the end of the half year.

IUFRs would be used for reporting as well as financial monitoring. External audits would be conducted

by the state office of Comptroller & Auditor General (CAG) as it is being done for the PP while the current

internal auditor scope would be enhanced to cover the AF. There would be a single disbursement

category for the project, with 80% disbursement percentage.

36. FM risks and agreed actions: The FM risk rating for the project is currently rated as “Moderate” based

on the actual implementation done in the PP and the systems operationalized during the PP which are

working well.

D. Procurement

37. Procurement under AF will be carried out in accordance with the World Bank’s Procurement Regulations

for Borrowers for Goods, Works, Non-Consulting and Consulting Services dated July 1, 2016 (hereafter

referred to as “Regulations”). Under the proposed AF, all contracts (goods, works and services) are of

small value and procurement will be done through National Competitive Bidding procedures using the

Government e-procurement portal. For the consultancy services, the Request for Expressions of Interest

(REOI) will be open to international firms as well. The PP is already on the Systematic Tracking of

Exchanges in Procurement (STEP) and the procurement plan for AF will use the same portal.

38. Procurement risk assessment: Given that there will be no changes in the implementation arrangements,

the staff who are currently handling procurement for PP will be handling procurement of AF as well.

Therefore, procurement risk has been retained as Moderate with no change in prior review threshold.

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39. Project Procurement Strategy for Development (PPSD): According to the requirement of the

Regulations, a PPSD (short version) has been developed. In agreement with draft PPSD, all contract

packages for goods, works and services are of small value and there are adequate number of suppliers,

contractors and consultants in India. As per the draft PPSD, there are approximately 75 civil works

packages with the cost estimates ranging from US$300,000 to US$4.5 million and they will be contracted

out following the traditional way of contracting. The contractors are already aware of the Bank’s

procurement procedure and it is noted that there are an adequate number of contractors in the State to

handle such works. One package of contract (construction of SDRF training facility) may be done through

Design and Build. The draft PPSD has done market assessment and it was noted that there are firms who

have executed such works in India. To improve competition, during the bidding process for Design and

Build, a provision for formation of Joint Venture (JV) among the Builders and Design firms will be included

to promote competition. For the Consultancy Services, there are 4 packages with cost estimates ranging

from US$300,000 to 2.7 million. During the REOI stage, participation from foreign firms will be allowed

for packages estimated to cost US$800,000 and above. Based on the draft PPSD, the procurement plan

is prepared to set out the selection methods to be followed by the borrowers during project

implementation in the procurement of goods, works, non-consulting and consulting services. The

procurement plan for AF is available on STEP.

E. Social (including Safeguards)

40. The proposed AF takes up similar kind of works as those of the PP which required small parcels of land

for some of the project components. The PP did not cause any displacement or loss of livelihoods. The

PP has been consistently rated as MS for the last ten missions; there is scope for improvement with

regard to monitoring and documentation of implementation and AF is expected to improve on this. The

AF will take place within the original location/ Right of Way/ land disturbed due to the disaster. All

necessary land has been identified and no land acquisition is required as the required land is government

land and the process to transfer this land to project is on. The SDRF training facility will use government

land. Therefore, the AF will not have significant social impacts which will trigger additional safeguard

policies. The Safeguards category of the AF project is expected to remain the same category (B) as of the

PP. For this reason, the AF project triggers the same social safeguards as that of the PP, i.e., Involuntary

Resettlement. As that of PP, the AF is not dealing with forests or livelihoods or service delivery, because

of this it was considered the policy on Indigenous People is not triggered. However, STs, if present among

the PAPs, are given certain special privileges; they are considered as vulnerable and they will be given

preference in selection for any individual benefits under the project.

41. The PP has a robust Environmental and Social Management Framework (ESMF) including Resettlement

Policy Framework (RPF) which was adopted for all the sub-projects. The ESMF and RPF were revised and

updated to suit the AF keeping in mind: a) AF project activities; b) recent changes in the legislation; and

c) lessons learned during the PP implementation and monitoring. The updated and revised draft ESMF

and RPF are disclosed by the Project. The project has conducted a stakeholder consultation to finalize

the ESMF and RPF, incorporated appropriate feedback from consultation and disclosed both English and

Hindi versions of ESMF.

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42. The PP had adequate arrangements for social safeguards management, which were defined and agreed.

These include; a) social safeguards focal point in the PMU; b) social specialists in the Design and

Supervision Consultants’ teams; c) provisions for social safeguards monitoring in the project MIS; and d)

Half-Yearly Independent External Environmental and Social Audit of the sub-project implementation. The

same social safeguards implementation, supervision, monitoring and audit arrangements, as in PP, will

continue for the AF. In line with PP, the implementation, supervision, monitoring and audit of AF project

activities related to social safeguards will be managed and conducted as part of the overall project

implementation by PMU. The social safeguards focal point will be in charge of managing and coordinating

the implementation, supervision, monitoring and audit of the AF project’s social safeguards aspects and

act as an interface between the project, contractors, local authorities, and other stakeholders.

43. Gender: The female labor force participation rate in Uttarakhand (37%, 2012) is above the national

average (31%, 2012). However, over the past decade, more and more of the State’s women have

withdrawn from the labor force: from 69% in 1994 to 54% in 2005 and to 37% in 20122. According to the

International Labor Organization, over the past two decades, female employment participation in the

industry sector (construction, mining, quarrying, manufacturing, and public utilities) in India went up

from 12% (1997) to 18% (2017)3. However, the participation is still quite low. The construction industry

provides job opportunities to a large number of skilled and unskilled workers. The construction labor

force is generally recruited from villages by contractors who employ them for various projects. These

contractors are responsible for providing safe working conditions and accommodations for the workers.

Given that most women work as unskilled labor, they are often vulnerable and exploited at construction

sites. To make matters worse, women are also less recognized than male workers, receive lower pay, and

often prone to safety hazards and sexual harassment.

44. The PP has initiated sensitizing contractors to employ female workers and to provide them with

amenities as per law. As a result, this initiative has resulted in about 5% women workers in the PP

contracts. However, there is still much room for this number to improve in order to help increase

women’s labor force participation and reduce occupational segregation in alignment with Pillar 2 of the

WBG Gender Strategy – Removing constraints for more and better jobs.

45. The project will enforce contractors to fully comply with the pertinent Indian labor laws to ensure equal

pay between women and men and to provide adequate clean water supply, living, and sanitation to their

workforce during the course of the work. Considering the gender dimensions of how women and men

face different challenges in the same situation, contractors will provide: gender segregated living

quarters; gender segregated toilet and bathroom facilities; personal safety gears and equipment to

enhance the sense of security and safety of women, which will in turn increase the proportion of women

workers at construction sites. In parallel, the project will conduct trainings for contractors to prevent any

unequal treatment towards women in terms of employment opportunities.

2 http://documents.worldbank.org/curated/en/600141504250457271/pdf/119332-BRI-P157572-Uttarakhand-Jobs.pdf 3 https://data.worldbank.org/indicator/SL.IND.EMPL.FE.ZS

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46. Women and children are 14 times more likely than men to die during a disaster4. Given the gender-based

vulnerabilities to disaster and men’s and women’s different roles in disaster risk reduction, management,

and response efforts, both women and men need to be part of the State’s emergency response training

activities. The PP’s Capacity Building for Disaster Risk Management (CBDRM) component has provided

support by strengthening the State’s Disaster Response Force (SDRF) to respond adequately and

effectively to emergency situations. SDRF comprises of volunteers below the age of 40 from key response

agencies including police, fire fighters, community members, etc. Out of all the community members

that were trained by SDRF, only about 5% of the trainees were women. Expanding women’s participation

in SDRF trainings will ultimately improve the entire State’s disaster response capacity and preparedness.

Therefore, the project will increase the number of women community member trainees by making

targeted promotion efforts to encourage more women to participate. Engaging more female participants

in these trainings will strengthen women’s adaptive capacity to cope with disaster events.

47. Additionally, given that women have different capacities, knowledge, perceptions, and needs in disaster

response, training modules/materials need to integrate gender perspectives. Therefore, the project will

develop gender-sensitive training modules/materials which will incorporate gender considerations in

search and rescue/disaster response. These modules/materials will be used for all trainees.

48. To track gender outcomes, three different indicators and targets have been considered. These are: 1)

percentage of women working at project construction sites (5% to 10%); 2) female percentage of SDRF

trainees (5% to 10%); and 3) development of gender-sensitive training modules/materials (0 to 1).

49. Citizen Engagement: The PP has Citizen Engagement arrangements during both planning and

implementation through a) consultations during design, where the beneficiary feedback is used for

design modifications, b) frequent consultations during implementation, where the feedback is used for

quality enhancement and c) grievance redress mechanism. This is planned to be improved in the AF with

more frequent targeted beneficiary feedback arrangements during design and implementation. Multiple

channels such as, a) oral, b) written, c) phone and d) web are available to citizens for providing feedback

and for the project to factor in the feedback for achieving and enhancing and project objectives. The AF

has arrangements for citizen engagement through a) transect walks and consultations during design and

implementation, b) regular and frequent field visits to all communities by cutting edge project staff, c) a

dedicated phone number displaced at all project sites through public information boards and project

literature and d) an easy to use web-based mobile app. The indicators include 1) Number of Consultations

for Citizen Feedback during design and implementation, and 2) Percentage of grievances received and

redressed.

F. Environment (including Safeguards) 50. The AF triggers the same safeguard policies as the PP. Implementation of the PP, as of now, has not

resulted in highly significant environmental issues/impacts, and such impacts are not anticipated from

the proposed AF. The potential environmental issues/impacts of the AF are related to the construction

4 Peterson, K., ‘Reaching Out to Women when Disaster Strikes’, White Paper, Soroptimist, 2007

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and/or rehabilitation of bridges5 on existing roads, stabilization of existing road slopes, river bank

protection works, and construction of SDRF building. The activities proposed under the AF will take place

largely within the right of way of existing roads and already disturbed land. Hence, it is unlikely that the

proposed AF will cause highly sensitive, irreversible, diverse, or unprecedented environmental impacts.

The main environmental issues/impacts anticipated include environmental health and safety (EHS) at

work sites; issues/impacts due to haphazard or inappropriate disposal of construction spoils/debris,

construction waste (e.g. wash water from concrete batching plant, bituminous materials, etc.), damage

or degradation of local community amenity (e.g. foot-trails, access to houses/village, tube-well/water-

pipes, etc.), dust generation, soil erosion and slope failures6 in subproject’s localities.

51. The contractor is likely to bring migrant workers for the construction, although their number is unlikely

to be significant in a subproject site. Engagement of the migrant workers may lead to adverse

environmental and social impacts including improper waste disposal & pollution, pressure on local

resources (water, forest, and burden on public infrastructure & services), social conflicts, risks of

communicable diseases, traffic accidents, etc. The environmental issues/impacts described above are

limited to the activity sites and their close vicinity, and can be mitigated through readily known/available

measures; and hence the AF is assessed to be Category B, as was the PP. The contract clauses, inter alia,

will include provisions to avoid/ minimize/ manage issues related to labor camps and migrant workers.

52. The client, to address the potential environmental safeguard issues, is updating the ESMF of the PP,

tailoring to the AF’s scope of works, internalizing the experiences of the PP, and changes in the country’s

safeguard requirements. The ESMF has been consulted with stakeholders, translated and disclosed. In

addition, environmental site screenings and environmental management plans for the first-year

subprojects have been prepared. Remaining environmental site screening and environmental and social

management plans will be prepared for all the subprojects/activities during implementation.

53. Arrangements for environmental safeguards supervision have been defined and agreed and are similar

to those applicable for social safeguards. The client will, inter alia, further strengthen environmental

safeguard support and supervision as well as independent environmental audit. The PIU will have an

environmental specialist for project level oversight. A supervision consultant team will comprise of

environmental specialist(s) for regular environmental supervision and support at sites. Contractors will

be required to prepare site plans for environmental management and implement mitigation measures.

V. WORLD BANK GRIEVANCE REDRESS

5 The bridges will not be providing access to virgin area because a road already exists on both sides of the river /stream (the bridges were either damaged or significantly deteriorated or was not constructed before). 6 Due to drainage disruption or inappropriate location of drain-out falls or cutting of slopes or disposal of spoils, etc.

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54. Communities and individuals who believe that they are adversely affected by a World Bank (WB)

supported project may submit complaints to existing project-level grievance redress mechanisms or the

WB’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed

in order to address project-related concerns. Project affected communities and individuals may submit

their complaint to the WB’s independent Inspection Panel which determines whether harm occurred, or

could occur, as a result of WB non-compliance with its policies and procedures. Complaints may be

submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank

Management has been given an opportunity to respond. For information on how to submit complaints

to the World Bank’s corporate Grievance Redress Service (GRS), please visit

http://www.worldbank.org/en/projects-operations/products-and-services/grievance-redress-service.

For information on how to submit complaints to the World Bank Inspection Panel, please visit

www.inspectionpanel.org

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VI. SUMMARY TABLE OF CHANGES

Changed Not Changed

Results Framework ✔

Procurement ✔

Implementing Agency ✔

Project's Development Objectives ✔

Components and Cost ✔

Loan Closing Date(s) ✔

Cancellations Proposed ✔

Reallocation between Disbursement Categories ✔

Disbursements Arrangements ✔

Safeguard Policies Triggered ✔

EA category ✔

Legal Covenants ✔

Institutional Arrangements ✔

Financial Management ✔

APA Reliance ✔

VII. DETAILED CHANGE(S)

Expected Disbursements (in US$) DISBURSTBL

Fiscal Year Annual Cumulative

2014 1,042,944.00 1,042,944.00

2015 3,678,816.00 4,721,760.00

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2016 4,593,120.00 9,314,880.00

2017 6,105,312.00 15,420,192.00

2018 8,812,704.00 24,232,896.00

2019 13,102,464.00 37,335,360.00

2020 17,448,576.00 54,783,936.00

2021 20,661,216.00 75,445,152.00

2022 17,916,576.00 93,361,728.00

SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT)

Risk Category Latest ISR Rating Current Rating

Political and Governance Moderate Moderate

Macroeconomic Moderate Moderate

Sector Strategies and Policies Low Low

Technical Design of Project or Program Moderate Moderate

Institutional Capacity for Implementation and Sustainability

Moderate Moderate

Fiduciary Moderate Moderate

Environment and Social Moderate Moderate

Stakeholders Moderate Moderate

Other

Overall Moderate Moderate

LEGAL COVENANTS2

LEGAL COVENANTS – Uttarakhand Disaster Recovery Project Additional Financing (P164058)

Sections and Description Uttarakhand shall maintain: (i) the Core Committee; (ii) the High Powered Committee for Sanctions of Post Disaster Reconstruction Works; (iii) the Project Management Unit (within USDMA); and (iv) the Project Implementation Units (the line departments and agencies); and (iv) the District level Coordination Units. Uttarakhand shall implement the Project in accordance with the Operations Manuals, the Safeguard Documents (ESMF or mitigation plans derived therefrom) and the Governance and Accountability Action Plan. Uttarakhand shall ensure that, prior to commencement of any civil works: (i) all relevant government permits/clearances have been obtained, and/or any conditions imposed have been fulfilled/met; (ii) the respective activities have been screened as per the ESMF and, whenever required the necessary Environment Management

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Plan, Resettlement Management Plan, Social Management Plans have been prepared and disclosed; and (iii) all resettlement measures identified have been properly implemented (including full payment of any resettlement compensation). Uttarakhand shall submit to the Bank a compilation of the safeguards screening reports prepared by the line department and agencies on Project activities. Uttarakhand shall (i) maintain monitoring and evaluation protocols and record keeping procedures to supervise and assess compliance with Safeguard Documents; and (ii) to report on quarterly basis on compliance with Safeguard Documents. Uttarakhand shall include compliance with the Safeguard Documents as part of the contractors’ obligations pursuant to the bidding documents. Uttarakhand shall establish and monthly update a procurement documentation and record keeping system with a freely and publicly accessible database, showing updated procurement information (i.e. notices, bidding invitations, request for proposals, awards, etc.). Uttarakhand to maintain an mechanism for handling procurement complaints with a second tier appeal system and complaint database providing free and public access for the submission of electronic claims. To access funds under this component, the Recipient and the Project Implementing Entity must have determined/declared that an eligible crisis or emergency has occurred, identified response activities and expenditures, prepared and disclosed any required safeguard documents, identified and/or staffed a coordination authority responsible for implementation, and prepared an operations manual.

Conditions

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VIII. RESULTS FRAMEWORK AND MONITORING

Results Framework

COUNTRY: India Uttarakhand Disaster Recovery Project Additional Financing

Project Development Objective(s)

To restore housing, rural connectivity and build resilience of communities in Uttarakhand and increase the technical capacity of the State entities to respond promptly and effectively to an eligible crisis or emergency.

Project Development Objective Indicators by Objectives/ Outcomes

RESULT_FRAME_T BL_ PD O

Indicator Name DLI Baseline End Target

To restore housing, rural connectivity and build resilience of communities in Uttarakhand ...

Targeted affected HHs with multi-hazard resilient housing (Percentage)

0.00 100.00

Targeted affected villages with restored connectivity (Percentage) 0.00 100.00

Depts. that make effective use of information generated by USDMA (Number)

0.00 7.00

PDO Table SPACE

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Intermediate Results Indicators by Components

RESULT_FRAME_T BL_ IO

Indicator Name DLI Baseline End Target

Resilient Infrastructure Reconstruction

Number of resilient houses reconstructed (Number) 0.00 2,500.00

Number of public buildings reconstructed. (Number) 0.00 26.00

Rural Road Connectivity

Village Roads/Other District roads restored (Kilometers) 0.00 3,600.00

Number of bridle bridges restored (Number) 0.00 140.00

Number of river bank protection works (Number) 0.00 5.00

Action: This indicator is New

Number of bridges restored (Number) 0.00 64.00

Action: This indicator is New

Number of road protection works (Number) 0.00 15.00

Action: This indicator is New

Percentage of women working at project construction sites (Percentage) 5.00 10.00

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RESULT_FRAME_T BL_ IO

Indicator Name DLI Baseline End Target

Action: This indicator is New

Technical Assistance and Capacity Building for Disaster Risk Management

Completion of river morphology study (Number) 0.00 1.00

Completion of slope stabilization study (Number) 0.00 1.00

Complete multi hazard assessment (Percentage) 0.00 100.00

Setting up of Decision Support Systems (DSS) (Number) 0.00 1.00

Installation of weather stations, river gauge stations and other hydro-met recording and forecasting equipment (Percentage) 0.00 100.00

Purchase of sets of emergency search & rescue equipment (Number)

0.00 2.00

Creation of GIS database and analytical tools in USAC (Percentage)

0.00 100.00

SDRF Training Facility constructed and operational (Number) 0.00 1.00

Action: This indicator is New

Female percentage of SDRF trainees (Percentage) 5.00 10.00

Action: This indicator is New

Development of gender sensitive training modules/materials (Number)

0.00 1.00

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RESULT_FRAME_T BL_ IO

Indicator Name DLI Baseline End Target

Action: This indicator is New

Citizen Engagement and Safeguards (Action: This Component is New)

Consultations for Citizen Feedback during design and implementation (Number)

0.00 12.00

Action: This indicator is New

Citizens in the project area providing feedback using oral, written, phone and web media (Yes/No) Yes Yes

Action: This indicator is New

Percentage of Grievances registered related to delivery of project benefits that are actually addressed (Percentage)

0.00 100.00

Action: This indicator is New

Contingency Emergency Response

Funds immediately available to respond to a major disaster (Yes/No) No Yes

IO Table SPACE

Monitoring & Evaluation Plan: PDO Indicators Mapped

Indicator Name Definition/Description Frequency Datasource Methodology for Data Collection

Responsibility for Data Collection

Targeted affected HHs with multi-hazard resilient housing

Targeted affected HHs are 2,500 of the 3077 total

PMU ME Reports

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affected HHs.

Targeted affected villages with restored connectivity

Exact no. of targeted affected villages will be determined in the first year of implementation.

PMU Field Reports/Progress Reports

Quarterly

Depts. that make effective use of information generated by USDMA

Depts. Targeted include RD, PWD, Urban, Water supply, Environment & Forests, Tourism and Civil Aviation.

PMU/USDMA

Field reports/ External evaluation will assess ability of depts. to make use of generated information at MTR and closing of project.

Quarterly

ME PDO Table SPACE

Monitoring & Evaluation Plan: Intermediate Results Indicators Mapped

Indicator Name Definition/Description Frequency Datasource Methodology for Data Collection

Responsibility for Data Collection

Number of resilient houses reconstructed PIUs/PMU Progress reports

Quarterly

Number of public buildings reconstructed. PIUs/PMU Progress reports

Quarterly

Village Roads/Other District roads restored

PIUs/PMU Construction works/Progress Reports

Quarterly

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Number of bridle bridges restored PIUs/PMU Progress Reports

Quarterly

Number of river bank protection works

Number of bridges restored

Number of road protection works

Percentage of women working at project construction sites

Completion of river morphology study PMU Progress Reports

Quarterly

Completion of slope stabilization study PMU Progress Reports

Quaterly

Complete multi hazard assessment PMU Progress Reports

Quarterly

Setting up of Decision Support Systems (DSS)

PMU Progress Reports

Quarterly

Installation of weather stations, river gauge stations and other hydro-met recording and forecasting equipment

PMU Progress Reports

Quarterly

Purchase of sets of emergency search & rescue equipment

PMU Progress Reports

Quarterly

Creation of GIS database and analytical tools in USAC

PMU Progress Reports

Quarterly

SDRF Training Facility constructed and operational

Female percentage of SDRF trainees

Development of gender sensitive training modules/materials

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Consultations for Citizen Feedback during design and implementation

Citizens in the project area providing feedback using oral, written, phone and web media

Percentage of Grievances registered related to delivery of project benefits that are actually addressed

Funds immediately available to respond to a major disaster

PMU Progress Reports

Annual

ME IO Table SPACE

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Annex I - ECONOMIC ANALYSIS 1. Uttarakhand has remained one of the fastest growing states in India despite its enormous

geographical constraints. This has been facilitated over the years by a rather conducive industrial

policy and generous tax benefits. The State Gross Domestic Product (SGDP) has increased at a

compound annual growth rate of 6.4 per cent during 2011-12 to 2016-17 (Figure 1). At current

prices, the SGDP of Uttarakhand is about US$35 billion in 2017-18. At 50 percent of the Gross

Value Added (GVA) the secondary sector dominates the economy, followed by tertiary sector at

38 percent and primary sector at 12 percent respectively (Figure 2). The dominance of the

secondary sector, especially manufacturing at 40 percent, stems from a wide range of benefits

historically offered by the state in terms of interest incentives, financial assistance, subsidies and

concessions. Among the tertiary sectors, tourism has been a major revenue earner for the state

accounting for 20-25 percent of SGDP. Both domestic and international tourist arrivals have been

increasing (Figure 3) and are projected to further increase in the coming years.7 The domestic

tourist visits are expected to increase by around 2.5 times in the next ten years. Foreign tourist

visits are expected to increase by around 2.0 times in the same period. The total tourist visits in

Uttarakhand are expected to reach around 67 million by 2026.

Figure 1: Growth rate of Uttarakhand Economy

7 Uttarakhand tourism draft policy 2017. http://uttarakhandtourism.gov.in/sites/default/files/tenders/document/uttarakhand-tourism-draft-policy-2017.pdf

7.278.47

5.29 7.71

7.00

0.001.002.003.004.005.006.007.008.009.00

2012-13 2013-14 2014-15 2015-16Q 2016-17PE

Gro

wth

Rat

e

Year

Growth Rate ofthe Economy withBase year 2011-12

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Figure 2: Share of Sectors in the State Economy, 2016-17

Figure 3: Tourist arrivals in Uttarakhand (millions) - both domestic and international

2. Uttarakhand is also highly vulnerable to climate change and natural disasters. The state has

recently been badly affected by natural disasters, especially in the form of intense and prolonged

unseasonal rainfall, cloud bursts and Glacial Lake Outburst Flood (GLOF) in higher regions. This

often has led to rendering in debris loaded flash floods resulting in the erosion of hill slopes,

erosion of river banks and landslides blocking road networks. The most notable of these events

11.19

50.40

38.41

Primary Secondary Tertiary

0

5

10

15

20

25

30

35

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

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occurred in June 2013, when cloud bursts and heavy to very heavy rainfall hit several parts of the

higher reaches of the Himalayas in the state. This unprecedented rainfall resulted in a sudden

increase in water levels giving rise to flash floods in the Mandakini, Alakananda, Bhagirathi and

other river basins and caused extensive landslides at various locations. The June 2013 event

caused huge disruptions in tourism as well as impacted most economic activities in the state

including agriculture, trade, transportation etc. (Table 1). The economic costs of disruption in

tourism alone is estimated at 8-9 percent of SGDP (PHD Chamber of Commerce of India Survey).

Table 1: Summary of Damages and Reconstruction Costs

Source: Joint Rapid Damage and Needs Assessment

3. Uttarakhand economy is at crossroads today. The recent introduction of the new nationwide Goods

and Services Tax (GST) implies that the state can no longer resort to offering tax benefits for industries

to locate in the state. Also, industries enjoying certain benefits may no longer be able to avail of those

benefits. For example, it was recently reported that more than 3,600 industries enjoying 100 percent

exemption on the central excise duty under the State Industrial Policy 2010 will now have to pay GST.

While some refund may become available in the future, the implications are not entirely clear.

Further, the level playing field created by GST may lead to certain industries to relocate to states with

better access and infrastructure connectivity. In other words, state will be at a disadvantage to keep

its manufacturing sector to contribute to the economy.

4. At the same time, the increased frequency and intensity of natural disasters has rendered the

infrastructure of the state rather fragile which is impacting tourism and trade across the state. There

has recently been an increase in cases of stretches of roads getting washed out either due to toe

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erosion, riverbank erosion or due to sliding from the slopes. River bank erosion also have inflicted

havoc on the human habitations in some of the major tourist destinations like Kedarnath, Badrinath

and Uttarkashi.

5. As Uttarakhand transitions from a manufacture driven economy to one that will be driven in the future

by hydropower, services sector including tourism and primary sector centered on horticulture and

floriculture, it is important for the state to create the necessary investor confidence by improving

connectivity steered by a climate resilient infrastructure. Although the extent and pace of recovery

after the 2013 floods has been exemplary, connectivity continues to be a challenge in the state. In the

aftermath of the 2013 floods, the number of tourists visiting the state dropped from over 2.5 million

in 2012 to less than 350,000 in 2014. In 2016 and 2017, however, the numbers went back up

significantly to 1.5 and over 2 million respectively. Landslides and river bank erosion are common and

continue to disrupt movement and cause accidents, affecting the livelihood and access to services of

the local community. During May 2017 about 13,500 tourists were stuck and 150 vehicles stranded in

one incident alone of landslide that occurred near Vishnuprayag.

6. In addition to tourism, agriculture is an important part of the economy. Although agriculture

contributes to only around 10 percent to the SGDP, about 75 percent of the State’s population still

depends on agriculture. Out of the total area, 14 percent is under some form of cultivation of which

more than 55 percent is rain-fed. The landholdings are also relatively small and scattered. The average

land holding is around 0.7 ha (divided into small holdings) in the hills and 1.8 ha in the plains. Over

the years, substantial investments have been made by the GoUK through several programs and

projects to build social capital and on improved agriculture and livestock management. However,

frequent disasters such as landslides and flooding have eroded the income gains made by these

programs and projects. It is estimated that close to 200,000 people engaged in agriculture,

horticulture and livestock management lost their livelihood as a result of the 2013 disaster. The direct

damages were mainly in the form of perished or lost livestock, un-harvested standing crops in the

field, damaged fishery ponds, and other machineries. The total losses of the agriculture sector was

estimated at US$27.80 million with the overall recovery costs estimated at US$5.4 million.

7. The main objective of the additional financing is to continue and enhance the State’s preparedness to

more effectively respond to future disasters. While the impacts of climate change in future disasters

remain uncertain, efforts to ensure that the State has additional capabilities and resilient

infrastructure to reduce the potential damages and more quickly recover will translate into important

beneficial effects on the State’s economy and livelihoods in the long term.

8. The economic analysis focuses therefore on how the project interventions would will contribute

towards reduced damage from events such as floods and landslides resulting in increased tourism,

avoid loss to the agricultural sector, and other ancillary economic benefits. For the purposes of this

analysis investment costs of components 2 and 3 were considered. The total component costs and

their annual breakdown is given in Table 2.

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Table 2: Project investment costs breakdown by component and year

Investment costs in million US$

2018 2019 2020 2021 Total

Component 2

Bridges 8 22 10 3 43

Road protection 5 10 3 2 20

River bank protection 5 18 5 2 30

Component 3 Training facility for SDRF 4 10 5 1 20

Total 22 60 23 8 113

9. The assumptions are given in Table 3 and the results of the cost benefit analysis in Table 4.

10. The current SGDP of Uttarakhand stands at US$35 billion in current prices and the share of tourism is

about 20 percent or US$ 7billion. It is expected that the SGDP will grow at a constant rate of 7 percent

in the coming years but tourism growth rate will be higher owing to the implementation of the new

tourism policy and improved connectivity. The share of agriculture in current SGDP is 10 percent and

based on the current trends the importance of agriculture in the SGDP is likely to decrease. However,

given the expected strategic shift away from industry in the state it is assumed that the agricultural

sector (mainly horticulture and floriculture) will grow at 2 percent per annum. The project

interventions will not only avert loss of crops and livestock from landslides and floods, but improved

connectivity will enhance transportation of agricultural products to the respective markets which is

often hindered by landslides and flooding.

11. Another ancillary benefit considered in this analysis is the expected avoided repair costs to the road

and other infrastructure because of the project investments. It is assumed that a one in fifty-year

disaster would have resulted in 25 percent of the project investments as additional repair costs. The

project benefit avoids this cost.

Table 3: Assumptions for benefit calculations

Assumptions Value

Annual GDP Growth rate 7% Share of tourism in 2017 25% of SGDP

Tourism growth rate 2018 to 2020 7% Tourism growth rate 2021 to 2024 8% Tourism growth rate 2025 to 2031 9% Share of agriculture in 2017 10% of SGDP

Agriculture growth rate 2018 to 2031 2% Avoided cost to tourism + agriculture 0.12% Avoided marginal repair costs 25% of Project investment

Probability of disaster (1 in 50 years) 2% Expected avoided repair costs in US$ millions $0.6 Discount rate 12% O&M 1%

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12. If the avoided loss in tourism revenue, and the agricultural sector from the project interventions is 1

percent per annum, the project benefit cost ratio estimated will be 8.3 with an IRR of 61.5 percent

discounted over a 10-year period. In the limiting case, an avoided revenue loss of 0.12 percent will

yield a benefit cost ratio of 1.0 and an IRR of 12.3 percent. In other words, even if the project succeeds

in avoiding small damage to tourism and agriculture it could still be justified based on the benefit-cost

calculations. While a major event of the magnitude of the 2013 floods remains unique in terms of the

historic trends, it is to be expected that a number of smaller magnitude events have more or less

become a reality in Uttarakhand. Therefore, the project interventions can be justified based on this

analysis.

Table 4: Cost Benefit Analysis

Avoided cost (%) IRR (%) NPV BCR

1.0 61.5 760.1 8.3

0.12 12.3 1.8 1.0

Annex II - FINANCIAL MANAGEMENT

1. Budgeting and fund flow: A new budget head has already been created for the project with budget

provision for this fiscal year. Through the budget head both state share of 20% and EAP share of

80% would be provided by the government. A personal ledger account (PLA) would be established

in the Treasury for USDMA-PMU in which the amount from budget would be transferred. USDMA-

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PMU would open a separate project bank account and would withdraw money from the state

treasury as per the work plan requirements. The PIUs would be having a separate bank account

at the HO level to which funds would be transferred by PMU based on action plan and needs. This

practice has been working well in the current project and the same process is being followed for

the AF. The PLA and the bank accounts have been operationalized.

2. FM Staffing and capacity building: The USDMA-PMU and PIU accounts section would be headed by a

Finance Controller (from Finance Department) and supported by commerce graduates for maintaining

the project accounts. Currently there is good FM capacity, at PMU and PIU with a mix of government

staff and contractual staff. The existing FCs has been assigned to manage the AF project. PMU and PIU

would review the staff requirements based on project progress and hire staff as required.

3. Accounting system: As the fund flow is happening through Bank accounts, specific arrangements to

maintain the project accounts would be carried out. Since USDMA-PMU, would be the nodal agency,

the accounts would be maintained in TALLY, which would be used for accounting as well as generating

reports for the Bank. The USDMA would be required to maintain implementing agency wise total

releases and expenditure for consolidation and reporting. Each of the nodal PIU would also be

required to maintain the accounts in TALLY and report to the USDMA for accounting and reporting

purpose. Details of the component wise expenditure and advances given would be maintained by the

line departments and the executing offices. In case of field offices TALLY would be implemented as

being done in the current project through outsourcing. Monthly reconciliation of the expenditure with

the Bank account needs to be carried out by these offices. Most of the expenditure is goods, works,

services, and consultancies and calculation of payments/expenditure would be made as per the

established payments mechanism of the government. The above arrangements are same as the

systems for the ongoing project. For the ongoing project the accounting system has been established

and the project has established separate books of accounts for the AF project in Tally.

4. Report based disbursement: Interim unaudited financial reports (IUFR) based disbursement would be

used for reporting as well as financial monitoring. IUFR shall be submitted to the Bank on a half yearly

Budget - PLA

USDMA-PMU

PWD&I-PIUPublic

buildings-PIUUSDMA-PIU

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basis within 30 days from the end of the half year. The IUFRs would disclose receipt and utilization of

project funds (both Bank share and counterpart contribution). IUFR would be based on project

accounts and would reflect the actual expenditure for the project components based on figures

reconciled with Bank. Any advances given by the project would be separately shown in the IUFRs.

IUFRs would provide contract wise payments and project progress in physical and financial terms. The

IUFR format has been developed and finalized during negotiations. In terms of disbursement, the

project would first spend from the budget and then claim reimbursement from the Bank. All

expenditures reported in the IUFRs would be subject to annual project audit. The IUFR would be

submitted by the USDMA-PMU after collating all project expenditure from other implementing

agencies.

5. External Audit: The annual audit of the Project Financial Statements (PFS) would be carried out by

state office of the CAG as per the terms of reference agreed with the Bank. All supporting records and

documents under the project would be subject to this audit. The PFS would summarize all receipts

and expenditures reported in the IUFRs. The annual audit report would consist of (i) annual audited

project financial statements (ii) audit opinion and (iii) management letter highlighting weaknesses, if

any, and identifying areas for improvement. The auditor will audit all implementing agencies under

the project and provide a consolidated report for the project. The annual project audit report and

accounts would be submitted to the Bank by September 30 each year. Any difference between the

expenditure reported in the IUFRs and those reported in the annual project audit reports would be

analyzed and expenditures that are confirmed by the Bank as ineligible for funding would need to be

refunded. After negotiation, the GOU and DEA would be required to formally send the request for

audit to the CAG. Following audit reports would be monitored in the Audit Reports Compliance System

(ARCS):

Implementing Agency

Audit Auditors Due Date for Audit Submission

PMU Project Financial

Statement CAG

30th September (6 months after the end of each fiscal year)

DEA/ GOI Designated account CAG 30th September (6 months after the end of each fiscal year)

6. Internal audit: Internal audit would be an integral part of the project design and would cover all

activities under project. Internal audit would be carried out by the internal auditor (CA firm) who has

been already appointed by the project to carry out the audit of ongoing project. The Terms of

Reference (ToR) for the internal audit would cover review of aspects covering internal controls and

contract management. The audit reports along with the compliance would be shared with the Bank.

PMU would review all the audit reports and follow up on the action taken.

7. Internal Control: All financial controls applicable to routine GOU expenditures would also apply to the

expenditures under the project. All payments would be approved/ vetted in accordance with the

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schedule of powers of GOU. All project related receipts and payments/ withdrawals would be

reconciled with periodic Bank Statements.

8. Disclosure of information: Project would be required to disclose the following on the project website:

(a) Annual Project Audit report and (b) details of major contracts.

9. Adequacy of FM Arrangements: The FM risk rating for the project is currently rated as “Moderate”

based on the actual implementation done in the current project and the systems operationalized

during the current project which are working well.

10. Supervision plan: In the first year, supervision would be done on a half yearly or frequently as required

by the client to monitor the setting up of the accounting and reporting systems. In the first year, 2 to

3 weeks of FM involvement is expected.

11. Designated Advance (to be approved by DEA): A Designated Account (DA) would be maintained in the

Reserve Bank of India (RBI) for the project and would be operated by the Controller Aid, Accounts and

Audit (CAA&A) in accordance with the Bank’s operational policies. Disbursements would be made

based on IUFR. The project would submit withdrawal applications supported by IUFRs to the

Controller Aid, Accounts and Audit (CAA&A) in DEA for onward submission to Bank for

reimbursement. All expenditures reported in the IUFRs would be subject to confirmation/certification

by the annual audit reports. Any difference between the expenditure reported in the IUFRs and those

reported in the annual audit reports would be analyzed and those expenditures which are confirmed

by the Bank as being not eligible for funding, would be refunded.

12. Disbursement categories: There would be a single disbursement category for the project, with 80%

disbursement percentage.:

Category Amount of the Loan

Allocated (expressed in US$)

Percentage of Expenditures to be financed

(inclusive of Taxes)

(1) Goods, works, non-consulting services, consulting

services, Training and Workshops and Incremental

Operating Costs for sub-Components 1.2 and

Components 2, 3 and 5 of the Original Project (as amended)

95,760,000 80%

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Category Amount of the Loan

Allocated (expressed in US$)

Percentage of Expenditures to be financed

(inclusive of Taxes)

(2) Emergency Expenditures for the CER Component (i.e.

Component 6 of the Original Project)

0 100%

(3) Front-end Fee 240,000

Amount payable pursuant to Section 2.03 of this Agreement in accordance with Section 2.07

(b) of the General Conditions

(4) Interest Rate Cap or Interest Rate Collar premium

0 Amount due pursuant to

Section 4.05 (c) of the General Conditions

TOTAL AMOUNT 96,000,000

13. Retroactive financing: The project is planning to finance certain works/supplies/services under

retroactive financing. The project would provide the list of such expenses for scrutiny of the Bank

before these payments are agreed and paid. Following are the Bank rules for retroactive financing:

a. The activities financed are included in the project description;

b. The payments are for items procured in accordance with applicable Bank procurement

procedures;

c. Such payments do not exceed 20 percent of the loan amount;

d. Payments were made by the borrower not more than 12 months before the expected

date of Loan Agreement signing; and

e. Date after which payments may be made is agreed at appraisal, confirmed during

negotiations, and recorded in the Loan Agreement.