Document of

The World Bank

FOR OMCIAL USE ONLY

61-/i ' -2- / /

Report No. P-6262-IN

MEMORANDUM AND RECOMMENDATION

OF THE

PRESIDENT OF THE

INTERNATIONAL DEVELOPMENT ASSOCIATION

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED CREDIT

OF SDR 177 MILLION

TO

INDIA

FOR A

MAHARASHTRA EMERGENCY EARTHQUAKE REHABILITATION PROJECT

MARCH 14, 1994

MICRCOGRAPHI CS

Report No: P- 6262 INType: PE

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

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CURRENCY EQUIVALENTS(as of March 14, 1994)

Currency Unit = Rupees (Rs)Rs. 1.00 - US$0.032US$1.00 = Rs. 31.20

WEIGHTS AND MEASURES

1 foot = 0.3048 metres1 mile = 1.6093 kilometresI square foot = 0.0929 square metres

ABBREVIArIONS AND ACRONYMS

ADB - Asian Development BankCBRI - Central Building Research InstituteCIG - Central Implementation GroupGOI - Government of IndiaGOM - Government of MaharashtraHUDCO - Housing and Urban Development CorporationICB - International Competitive BiddingLCB - Local Competitive BiddingMMI - Modified Mercalli IntensityMOU - Memorandum of UnderstandingNGO - Non-Governmental OrganizationODA - Overseas Development Administration,

United KingdomPCR - Project Completion ReportPD - Project DirectorPMU - Program Management UnitPPAR - Project Performance Audit ReportSCER - Secretary and Special Commissioner (Earthquake Relief

and Rehabilitation)SOE - Statement of ExpenditureTISS - Tata Institute for Social Sciences

FISCAL YEAR

April 1 - March 31

FOR OFFICIAL USE ONLY

INDIA

MAHARASHTRA EMERGENCY EARTHQUAKE REHABILITATION PROJECT

Credit and Project Summary

Borrower: India, acting by its President

Beneficiary: Government of Maharashtra (GOM), Government of India (GOI)

Amount: SDR 177 million (US$246 million equivalent)

Terms: Standard IDA terms, with 35 years maturity, including a 10-year graceperiod

Onlending Terms: India to the Government of Maharashtra; part of the funds (SDR 171.4) inaccordance with standard arrangements for developmental assistance toStates

Financing Plan:US$ millions

IDA 246GOM 40GOI 1Donors' 41

TOTAL 328

Economic Rateof Return: Not applicable

Poverty Category: Not applicable

Staff AppraisalReport: Not applicable

Includes cofinancing of 10 million Pounds Sterling from the British government agreed in principle.Parallel financing of US$0.6 million for project implementation support from ADB has also been agreedin principle. The majority of the balance of the donors' funds will be provided by private donors,commercial organizations and leading NGOs.

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

MEMORANDUM AND RECOMMENDATION OF THE PRESIDENTOF THE INTERNATIONAL DLVELOPMENT ASSOCIATION

TO THE EXECUTIVE DIRECTORSON THE PROPOSED CREDIT TO INDIA FOR THE

MAIIARASIITRA EMERGENCY EARTHQUAKE REHABILITATION PROJECT

1. The following memorandum and recommendation on a proposed Credit of SDR 177million (US$246 million equivalent) to the Government of India (GOI) is submitted forapproval. It would support the Government of Maharashtra's (GOM) rehabilitatio. program forthe victims of the earthquake at Killari, September 30, 1993. The proposed Credit would be onstandard IDA terms, with a maturity of 35 years, including a grace period of ten years. Theproceeds of the Credit would be passed on by the GOI to the GOM in accordance with itsstandard arrangements for developmental assistance to the states. The GOI will bear the foreignexchange risk.

2. Background. Maharashtra is the third largest state both in terms of land area (308,000square kilometers) and population (78.7 million). It is the country's most heavily industrializedstate with the highest percentage (35.7 percent) of state revenues coming from the industrialsector and a relatively low percentage coming from the agricultural sector (21.3 percent). Theregion where the earthquake occurred is agricultural with primary crops of mustard, sunfloweroil, grapes and sugar cane.

3. On Thursday September 30, 1993, at 3:56 am, an earthquake of a magnitude 6.4 on theRichter scale shook the southeastern region of the State of Maharashtra. The epicenter waslocated at Killari in the Latur district, about 500 kilometers east of Bombay. Major damageoccurred in villages within 20 kilometers of the epicenter. In the three worst-affected districts -Latur, Osmanabad and Solapur - 67 villages were severely damaged, and an estimated 8,0)people were killed and 16,000 injured. The homes of approximately 52,600 families weredestroyed and another 180,000 were damaged.

4. There was limited damage to other infrastructure. However, the water supply wasdisrupted (the water table is said to have fallen in some areas and to have risen in others),electricity and telecommunication systems have sustained some minor damage, and some schoolsand public buildings collapsed or suffered damage.

5. The deaths were caused mainly by the collapse of traditional village houses that were ofan extremely heavy construction. Typically, the walls were 2-3 feet thick and made of smallstone boulders (about 1 foot in diameter) and bonded with dirt and clay. The stones wereirregular in shape and therefore had relatively little binding and bearing capacity. The roofswere constructed with heavy wooden beams and a light framing covered with about 12-18 inchesof dirt. During the quake, the walls shattered and the heavy roofs collapsed, crushing thesleeping residents.

6. Government Response. The combined response of the GOI and GOM to the disasterwas rapid and effective. The GOM has also been commendably quick in making plans forreconstruction and it has managed to retain much of the momentum established by the reliefoperations. In addition to drawing up a program for IDA assistance, they have persuaded a

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number of commercial organizations, non-governrnental organizations (NGOs) and other donorsto sponsor the reconstruction of a rumber of the smaller villages, totaling over 5,000 houses.Several of these organizations have made a quick start on constructing their designated villages.

7. IDA Response. The day after the earthquake, the Association offered to assist theGovermnent of India with reconstruction in the region affected by the earthquake. The offer ofassistance was accepted by the GOI, and on October 5, a Memorandum of Understanding(MOU) that established the framework for this Credit was signed. Simultaneously, anagreement was signed for a Project Preparation Facility (PPF).'

8. A reconnaissance mission from the India Department spent two days in the disaster area10 days after the earthquake. This was followed by the pre-appraisal mission that visited IndiaNovember 1-24, 1993, and the appraisal mission January 3-28, 1994. All three missions visitedthe earthquake affected districts. Negotiations for the Credit were held in Washington March 2-9, 1994.

9. Country Assistance Strategy. The Bank's country assistance strategy (CAS) for Indiais designed to support the govern.ment's reform agenda through policy dialogue, based onintensive economic and sector work, and a lending program heavily weighted towards policy-based operations. Bank support is targeted to have a strong impact on poverty, one of India'smost pressing problems. Infrastructure investments are aimed at expanding capacity andimproving efficiency in both urban and rural areas. In addition the Bank is prepared to assist thecountry in financing reconstruction and rehabilitation works following natural disasters. Themost recent CAS discussion for India was held on December 17, 1992. The CAS was presentedin the President's Report on a Sector Adjustment Credit for the Social Safety Net SectorAdjustment dated November 30, 1992.2

10. Rationale for IDA Involvement. The Bank has extensive international experience inemergency reconstruction projects in many countries. In particular, several have been preparedin response to natural disasters in India, including the recent and successful Andhra PradeshCyclone Emergency Reconstruction Project.3 If the lessons learned can be effectively applied inthis situation the Bank's involvement will have an important impact on how the reconstructionefforts are managed by the GOM. The community base and housing focus of this loancomplements and supports the poverty objectives of the Bank's lending for India.

11. Project Objective'. The objectives of the project are:

(a) to assist with rehabilitation and reconstruction in the earthquake-affected area(restoration of assets and basic services);

(b) to increase the earthquake resistance of buildings and infrastructure through thedevelopment of improved standards for design and construction; and

PiF of US$1.5 million was offered. About US$250,000 out of the PPF is expected to be used by Crediteffectiveness.

2 A list of past and current Bank projects is included as Schedule D.

3 Report No P5363-IN of September 18, 1990 (Credit 2179-IN, Loan 3260-IN).

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(c) to develop the ability of the GOM to respond more effectively to naturaldisasters, including earthquakes.

12. Program Description. The GOM has developed a detailed rehabilitation andreconstruction program. It includes:

(a) a housing component comprising the following:

(i) the reconstruction ard rehabilitation on new relocation sites of about 49villages that were totally destroyed - about 23,000 houses and associatedinfrastructure and civic amenities;

(ii) the reconstruction on existing sites of about 30,000 houses that weredestroyed or substantially damaged and the repair of about 180,000partially damaged houses; and

(iii) the construction of 500 model houses and a pilot strengthening programfor about 5,000 vulnerable houses.

(b) the repair, reconstruction and strengthening of public buildings andinfrastructure (including schools, health centers, social service facilities, roads,bridges, irrigation facilities, public buildings, and historical monuments), andthe improvement of transit shelters, including flooring, drainage and sanitation;

(c) social rehabilitation with a particular emphasis on the needs of women andchildren;

(d) economic rehabilitation (for the replacement of business losses);

(e) community rehabilitation (the cost of works and materials to re-establishessential services); and

(f) a program of technical assistance for the design, supervision and monitoring ofproject components, other consultancy services and equipment, including thedevelopment of a disaster management program for the State of Maharashtra,and a seismic monitoring and research program for the GOI.

13. Rehabilitation Policy and Community Participation. To provide a sound andequitable basis for the implementation of the program, the GOM has prepared a RehabilitationPolicy statement that has been agreed to by the Association. The policy establishes theentitlements for each village, household and individual for all programs, including rel'abilitationof housing, infrastructure, and community, social and economic activities. A baseiine surveyhas already been undertaken in the 49 villages proposed for relocation under the program as wellas in 18 other villages where there was a high degree of damage. Given that the project does notinvolve tribal communities, hence OD 4.20 does not apply. OD 4.30 applies where land is

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acquired for the resettlement villages. A rehabilitation action plan acceptable to IDA has beenprepared by the GOM.

14. The program would be planned and implemented with the active participation of theaffected communities, and the involvement of local NGOs wherever possible. Agreement hasbeen reacbed on procedures to ensure adequate participation by the beneficiaries in all thevillages, including publication of the policy and a clear explanation of who will benefit from it,and what their entitlements will be. Agreement has also been reached on appeals proceduresensuring that all complaints are promptly and fairly redressed. The first level of appeal will beto the District Collector and the second to the Secretary and Special Commissioner (EarthquakeRelief and Rehabilitation) (SCER).

15. In the relocation villages, the houses and the gaotAan layouts would be designed with theactive participation of the different social groups. The views of each identifiable group wouldbe sought before reaching an agreement at village meeings. Every effort would be made toensure that the resulting village and house designs reflect the needs and rural lifestyle of thepeople ir. the affected districts.

16. All families in the relocation villages would be provided with a plot of land and a corehouse of at least 250 square feet (internal floor area). Those with larger land holdings would beentitled to a larger house of either 400 or 750 square feet. For these larger houses, theincremental cost of the additional floor area above 250 square feet would be treated as a loan tothe beneficiary and would be funded by the GOM. The Credit would finance only the corehouses and 250-square feet of the larger houses.

17. The sites for 40 of the relocation villages have already been transferred by thelandowners to the Government. However, so as to ensure that no individual's standard of livingis adversely affected, a time-bound rehabilitation action plan has been developed to thesatisfaction of the Association, so as to ensure that all appropriate rehabilitation measures arebeing taken. The action plan lists the individuals affected, describes the level of benefitsavailable to them, lists other GOM and GOI programs available to mitigate any adverse impactof land acquisition, and provides grievance procedures, an estimate of the budget, and the detailsof the organization that will implement the plan.

18. House Construction. Given the relatively large size of these contracts, construction ofthe relocated villages would be by contractors, who will be encouraged to use local skilled andunskilled labor. Model houses would be built to demonstrate earthquake-resistant constructiontechniques and to facilitate the participatory process. Additionally, GOM would prepare anenvironmental statement for each relocation village.

19. The reconstruction and repair of the houses in-situ would be largely through acommunity-based construction process, controlled by the owners. The owners would besupported by technical personnel and the construction would be carried out by small contractorsor village masons, stone cutters, carpenters and other village-based artisans, and assisted by non-skilled workers. The Program Management Unit (PMIJ) would develop guidelines for screeningand maintaining a list of approved contractors and artisans, who will receive training inseismically-resistant construction techniques.

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20. Before the houses are reconstructed or repaired on their existing sites, the extent of thedamage to each house would be appraised by PMU staff assisted by qualified experts todetermine the type and cost of reconstruction or repair. The GOM would provide grantassistance to repair these houses to the extent of the cost of repair, not exceeding the estimatedcost of a 250-square foot core house (currently estimated at Rs. 54,000 (US$1,730)).Alternatively, owners could be provided with building materials through project-operated orprivate material depots. Funds would be made available through a village fund if the villagersso desire. The GOM has agreed to prepare a detailed action plan for the reconstruction andrepair of houses in existing villages prior to the start of consrcution works for this component.

21. Ernvironmental Impact. This is a Category B project. It would raise the quality of theenvironment in the new villages above the standards to be found in the older villages in theregion. The more generous provision of standpipes for drinking water and the twin-pit latrinesin every dwelling unit would make a major contribution to the health and welfare of the localpopulation. However, no project that involves the relocation of such a large number of people isexpected to have only positive environmental impacts. To examine the potential environmentaleffects of each new village, the GOM has agreed to provide the Association with anenvironmental statement for each relocation village and to demonstrate how any adverse impactswould be mitigated. The issues to be addressed would include surface water drainage, watersupply, sanitation, any reduction in the land available for agriculture and changes in theeconomic status of the farming population.

22. Social Issues. The local population was shocked by the earthquake and continues to bedisturbed by the aftershocks. Throughout the region most people appear to have lost confidencein their old villages and want to move to earthquake-resistant houses in a new location. In manyvillages people are still living in temporary shelters because they are afraid of their old houses.Village relocation under this project is voluntary.

23. To minimize any negative impacts of the resettlement program the GOM has preparedand is in the process of publishing a full rehabilitation policy and has made arrangements forimplementation plans to be discussed in each village. Appropriate appeals procedures have alsobeen built in. The agreed planning process is community-based so as to ensure, as far aspossible, that the designs of the new houses and villages are acceptable to the people who wouldlive in them. Additionally, a rehabilitation action plan has been prepared to the satisfaction ofthe Association, to mitigate the effects of land acquisition for relocation villages.

24. The program also begins to address the problems caused by the loss of confidence of thelocal people in their old houses and in the traditional building materials. The project includesthe construction of model houses and a pilot program for the strengthening of the traditionalhouses. It also includes a confidence-building program as a part of the component fordeveloping a disaster management system.

25. Project Cost and Financing. The total project cost including contingencies is US$328million (including taxes and duties of US$15 million), with an estimated foreign exchangecomponent of US$33 million (10 percent). The project would be financed with an IDA Creditof US$246 million, a GOM contribution of US$40 million, and US$41 million from otherdonors, which includes cofinancing of 10 million Pounds Sterling from the British governmrent,agreed in principle. Separate parallel financing of US$0.6 million from the Asian Development

-6 -

Bank (ADB) has also been agreed in principle. The GOI would contribute US$1 million to theearthquake monitoring and research component. A summary of program costs and a financingplan are presented in Schedule A.4

26. When the MOU was signed on October 5, 1993, retroactive financing was offered foreligible expenditures made during the period between the date of the disaster and loan signature.The GOM proposes to use this financing, up to a maximum. of SDR 10 million (about US$14million equivalent), to cover the cost of works and materials procured after the disaster and usedfor community rehabilitation.

27. Implementation. The project would be implemented over a three-year period with aCredit closing date of June 30, 1997. A list of key dates is provided in Schedule C.

28. The project would be implemented by a Program Management Unit (PMU), headed bythe SCER who would also be the nominated Project Director (PD). The PD has been delegatedfull administrative and financial powers to facilitate speedy implementation and will be assistedby a team of management consultants and other technical experts to ensure that outputs aredelivered timely and as planned. The PD will also be supported by a Chief Engineer and othertechnical staff recruited to the PMU from government departments. The PMU will useconsultant services extensively for preparation and supervision of works. Independent qualityassurance and technical audit arrangements would be put in place. The PMU will dissolve uponcompletion of the program.

29. The PMU will be overseen by the Central Implementation Group (CIG) under thechairmanship of the Chief Secietary. Policy directives will be provided by a Cabinetsubcommittee headed by the Chief Minister of Maharashtra. The Association has reviewed theprogram management plan and found it satisfactory.

30. Procuirement and Disbursement. Procurement of works, goods and services would bein accordance with IDA guidelines using documentation satisfactory to the Association. Due tothe small size and the wide spatial distribution of civil works contracts, these would be executedthrough local competitive bidding procedures (LCB) acceptable to the Association. The majorityof the in-situ house reconstruction and repair work would be community based and carried outthr3ugh small local contractors and NGOs. Small works and those of an emergency naturewould be done through force account or rates contracts. Contracts for equipment, materials andvehicles costing US$200,000 or more would be procured under ICB procedures. Smallercontracts for works and equipment could be procured using local procedures acceptable to theAssociation. Local shopping would be used for the purchase of livestock and selected equipmentcosting than less than US$500 and US$50,000 respectively, up to a total of US$4 million. Allconsultants would be contracted in accordance with the IDA guidelines. Amounts and methodsof procurement, amounts of disbursement by category and the disbursement schedule areprovided in Schedule B.

31. The IDA Credit of US$246 million would finance 75 percent of the housing and othercivil works; 100 percent of foreign expenditures and 100 percent of local ex-factory expenditures

4 An additional USS4 million will be provided by the Second Maharashtra Power Project (Loan 3498-IN).

for materials and equipment under ICB procurement, and 80 percent of local expenditures forother materials and equipment procured locally; 100 percent of technical assistance and traininv;and 75 percent of recurrent expenditures for selected social programs and incremental costs forthe PMU.

32. A Special Account would be established in US dollars in the Reserve Bank of India withan initial deposit of US$20 million from which project expenditures would be reimbursed.Throughout the life of the project, the GOI would advance to the GOM about three monthsworth of anticipated expenditures. After each advance, the GOM would in turn promptlyadvance these funds to the agencies implementing each component of the project.

33. Benefits. The project would bring immediate and sustained economic and social benefitsto the region affected by the earthquake. Over 200,000 families or about one million personswould benefit from the program. It would build on the ielief measures already started by theGOI and the GOM and would benefit from the continued momentum of the rehabilitationprogram. It would rebuild the housing destroyed by the disaster, give an important boost to thelocal economy, and provide employment opportunities to the local residents. Additionally, theproject would give economic and social support to disadvantaged sections of the community,particularly women and children. Long-term benefits would be derived from the strengtheningof infrastructure and housing in the region and from the development of a disaster managementprogram, and seismic monitoring and research.

34. Risks and Lessons Learned from Bank Fxperience. The Andhra Pradesh CycioneEmergency Reconstruction Project demonstrated the importance of focusing early in the projectcycle on procurement procedures and contract documentation.5 It also demonstrated theimportance of establishing a strong project management team with a high degree of delegatedauthority. For housing reconstruction projects, the Mexico Earthquake Rehabilitation andReconstruction Project emphasized the importance of involving the beneficiaries in the plann :gand implementation of the reconstruction process as well as the need to establish a strongimplementation agency.6 In addition, a more general review of the Bank's emergency housingprojects suggests that land acquisition problems, inappropriate or complicated housing designs,and problems with material availability are also potential constraints to the success of a project.7

35. When preparing this project each of the potential constraints has been addressed. Astrong program management structure has been established with community participation built inas an integral part of the planning and implementation processes. Other factors such as land,materials availability and the design of the villages and houses have also been of mutual concernfor IDA and the GOM. However, despite these efforts, substantial risks remain. These may begrouped in four categories - project preparation, technical, management and implementation.

(a) Project Preparation Risk. Almost by definition, no emergency project is likelyto be as well prepared as a regular Bank project. Because of the short time

S Report No P5363-IN of September 18, 1990 (Credit 2179-IN, Loan 3260-IN).

6 Report No 12149 - Performance Audit Report (Loan 2665-ME).

7 Alcira Kreimer, Rebuilding Housing in Emergency Recovery Projects, Divisional Wo.king Papcr No. 1990-17,Environment Department, World Bank, December 1990.

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available much greater emphasis must be given during preparation and ay)provalphase to establishing appropriate design and implementation proces-es. Tominimize preparation risks in this project, a procurement plan and a programmanagement plan have been prepared and agreed on, including the appointmentof consultants to assist with project prepa ;Aion and implementation. In addition,contract documentation has been prepared and approved for a large proportion ofthe infrastructure rehabilitation component and for five of the relocation villages.

(b) Technical Risk. Rebuilding in a proven earthquake zone can never be risk free.Although the expert advice available within India on seismic engineering issuesis of a high quality, it has been agreed that the GOI and the GOM would engagethe services of international experts to complement local expertise.

(c) Management Risk. A major risk is that the GOM will fail to manage theprogram effectively or implement it in a timely fashion. The GOM has alreadydemonstrated a high level of commitment to the program, and has taken steps toestablish and staff the PMU.

(d) Implementation Risks. The community base of this project is both a strengthand a weakness. It should ensure community ownership of the project and thatall house and village construction financed by the project is acceptable to thepeople. However, the very large in-situ house reconstruction and repaircomponent will be very difficult to manage, given the need for owners to takeresponsibility for the repair of their own houses, even if they are provided withmaterial and appropriate technical support. A detailed implementation plan willbe agreed for this component prior to construction works beginning for thiscomponent.

36. Supervision. This project will require intensive IDA supervision, especially during thefirst year of implementation. Th,e budgeted staff inputs are 12 weeks in FY94, 30 weeks inFY95, 20 weeks in FY96, 15 weeks in FY97 and 7 weeks in FY98. The designated TaskManager is resident in the World Bank New Delhi office.

37. Actions Agreed. The following have been agreed by IDA and the GOM:

(a) a rehabilitation policy statement - this is being published to provide a framewoikfor the earthquake rehabilitation program;

(b) a program management plan including staffing, consultant inputs and powersdelegated to the PMU;

(c) a procurement plan, procurement procedures, and procedures for the preparationof the environmental statements;

(d) design and supervision of construction of all housing work - the GOM hasagreed that this will be to the standards satisfactory to the Association;

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(e) relocation villages - (i) the size of the program; (ii) the process for communityparticipation; (iii) the procedures for the design and supervision of all housingwork; (iv) the GOM would prepare a computerized database including thebuilding damage and the baseline social data: (v) the GOM would prepare andpublish lists of beneficiaries in each village; and (vi) the GOM would prepareand publish a comprehensive rehabilitation program for each village. TheAssociation has also reviewed the designs and contract documentation for thefirst five relocation villages and found them satisfactory. The GOM has agreedthat construction, contract drawings and documentation of all other relocationvillages will be of a similar standard;

(f) a rehabilitation action plan to mitigate any adverse effects of the land acquisitionfor the relocation villages - this plan was prepared to the satisfaction of theAssociation, and the GOM has agreed to implement it in a timely manner foreach relocation village;

(g) the villages to be rehabilitated in-situ - the GOM has agreed that constructionwork in these villages will not begin before they provide the Association with adetailed implementation plan for this sub-component; additionally, the followingwere agreed: (i) the limits of the program; (ii) that the GOM will prepare acomputerized database for each village, including the damage survey and theproposed social survey data; (iii) that the GOM will prepare and publish arehabilitation program for each village; (iv) that the GOM will prepare andpublish the lists of beneficiaries in each village; (v) in terms of the repair of thedamaged houses, it was agreed that the works will begin only after theappointment of seismic engineering experts, the social surveys for about 100villages have been undertaken, detailed surveys including damage assessmenthave been carried out with design solutions and cost estimates, properly trainedtechnicians (including engineering supervisory staff, and village-based masons,carpenters and other artisans) have been deployed;

(h) to establish an independent Dam Safety Review Panel to review the proposals forthe strengthening of large dams; and

(i) The GOM has agreed that an indepei.dent quality assurance and technical auditgroup wiHl be established, reporting to the CIG and the PD.

38. IDA and the GOI agreed that the GOI will establish an Advisory Group withinternational participation to advise on the design and implementation of the earthquakemonitoring and research component.

39. Conditions for Credit Effectiveness. Compliance with the following would be acondition for Credit effectiveness:

(a) appointment of the key design and management consultants agreed atnegotiations; and

(b) the submission of the program implementation plan.

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40. Recommendation. I am satisfied that the proposed Credit would comply with theArticles and Agreements of the Association and recommend that the Executive Directors approvethe proposed Credit.

Lewis 'r. PrestonPresident

Attachments

Washington D.C.March 14, 1994

Schedule APage I of 2

INDIA: MAHARASHTRA EMIERGENCY EARTHQUAKE REEABILITATION PROJECT

Program Summary Cost

Si. US$ million Rs. millionNo. Project Component Local Foreign Total Local Foreign Total

1. Housing 144.3 15.6 159.9 4773.5 522.5 5296.02. Infrastructure 64.9 6.8 71.7 2135.5 235.7 2371.23. Social Rehabilitation 10.0 0.7 10.7 327.4 35.7 363.14. Economic Rehabilitation 4.8 0.3 5.1 150.9 16.8 167.75. Community Rehabilitation 7.7 0.9 8.6 250.5 27.8 278.36. Technical Assistance, Training and Equipment

Project Preparation and Implementation Support 2.6 0.5 3.1 85.1 14.9 100.0Incremental Cost of PMU 2.6 0.4 3.0 85.0 15.0 100.0Training and Study Tours 1.6 - 1.6 50.0 - 50.0Materials and Equipment: State Level 2.4 0.2 2.6 75.6 8.4 84.0Materials and Equipment: Central Level 3.0 4.5 7.5 100.0 150.0 250.0Recurring Costs of Social Services 0.4 - 0.4 12.0 - 12.0

Sub Total 244.3 29.9 274.2 8045.5 1026.8 9072.3

Physical Contingencies 6.0 0.1 6.1 178.5 19.0 197.5Design, Supervision & Management 13.6 1.2 14.8 443.8 52.0 495.8Price Contingencies 31.2 1.5 32.7 1030.5 73.7 1104.2

Total 295.1 32.7 327.8 9698.3 1171.5 10869.8

Note: Includes taxes and duties estimated at US$15 million.

INDIA: MAHARASHTRA EMERGENCY EARTHQUAKE REHABELITATION PROJECT Schedule APage 2 of 2

Fiancing Plan(US$ milion)

IDA GOM GOI Donor Total

Housing 140.9 24.8 - 25.4 191.1

Infrastructure 65.4 10.1 - 14.4 89.9

Community Rehabilitation 8.0 - - 1.3 9.3

Social Rehabilitation 8.8 2.8 - - 11.6

Economic Rehabilitation 4.8 0.8 - 5.6

Technical Assistance, Training and EquipmentMaterials and Equipment 10.1 0.2 1.0 - 11.3Preparation and Implementation Support 3.4 - - - 3.4Training 1.8 - - 1.8Incremental Salaries and Recurring Costs 2.8 1.0 - - 3.8

Total 246 39.7 1.0 41.1 327.8

Share 75% 12% 0.50% 12.5% 100%

Note: Includes taxes and duties esfimated at US$15 million.

Schedule BPage I of 2

INDIAs MAHARASHTRA EMERGENCY EARTHQUAKE REHABIUTATION PROJECT

Prom ent Method and Disbursanents(USS mfion)

Category ICB LCB Other N/A Total

Relocation Villages 72.7 15.40(54.4) (0.0)

In-Situ Housing 14.0 27.2(10.5) (15.4)

Small and Emergency Works 7.7(5.1)

Other Infrastructure and Buildings° 55.2 10.60(47.0) (0.0)

Sub Total Civil Works - 141.9 33.7 27.2' 202.8(111.9) (5.1) (15.4) (132.4)

Materials for In-Situ Housing 55.7 33.3(55.7) (26.5)

Other Materials and Equipmeat 10.6 1.9 12.3 1.5(9.4) (1.6) (10.4) (1.2)

Sub Total Equipment, Materials and Vehicles 66.3 35.2 12.3 1.5 115.3(65.0) (28.0) (10.4) (1.2) (104.8)

Consultancy and Training:

Project Preparation 3.4 3.4and Implementation Support - - - (2.4) (3.4)

Training and Study Tours - - 2.5 2.52

(2.5) (2.5)

Miscellaneous:Incremental Cost of PMU - - - 3.4 3.4

(2.6) (2.6)

Recurring Costs of Social Services - - 0.4 0.4

(0.3) (0.3)

TOTAL 66.3 177.1 46.0 38.4 327.8'(65.1) (140.0) (15.5) (25.4) (246.0)'

Notes:Olndicates di ct contracting by donors.'Includcs labor costs or cash grant for owncr-construction.'Includes training component for women include at Social Rehabilitation in Schedule A.'Includes taxes and duties estimated at USSIS rmillion.'Figures in parcnthesis are amounts to be financed from the CreditOlncludcs roads, irrigation, transit housing, public and school buildings, and repairs to monumentsISlncludes disastr management and scismic monitoring cquipment

Schedule BPage 2 of 2

INDIA: MAHARASHTRA EMERGENCY EARTHQUAKE REHABILTATION PROJECT

Disbursement by Category(US$ million)

Loan Category Disbursement Amount Percentage of Expenditures to be Disbursed

Civil Works 122.4 75% of expenditures

Equipment and Materials 104.8 100% foreign expenditures100% local ex-factory expenditures80% of expenditures for other items procuredlocally

Project Preparation and 3.4 100% of expendituresImplementation Support

Training 2.5 100% of expenditures

Incremental Salaries and Recurring 2.9 75% of expenditurescosts

Unallocated 10.0

Total 246.0

Estimated IDA Disbursements by Year(US$ million)

FY94 FY95 FY96 FY97 FY98

Annual 301 50 80 80 6

Cumulative 30 80 160 240 246

Note. 1. Includes S20 nillion initial deposit to Special Account.

Schedule c

INDIA: MAHARASHTRA EMERGENCY EARTHQUAKE AND RECONSTRUCTION PROJECT

List of Key Dates

Killari Earthquake September 30, 1993

Signature of Men.orandum of Understanding October 5, 1993

Reconnaissance Mission October 8, 1993

Pre-Appraisal Mission November 1, 1993

Appraisal Mission January 3, 1994

Negotiations March 2, 1994

Planned Date of Effectiveness May 31, 1994

Anticipated Closing Date June 30, 1997

List of Relevant PCRs and PPARs PPAR 12149 Mexico Earthquake Rehabilitationand Reconstruction Project

SCHEDULE D

PAGE 1 of 5

THE STATUS OF BANK GROUP OPERATIONS IN INDIA

A. STATEMENT OF BANK LOANS AND IDA CREDITS

(As of December 31, 1993)

US$ Million(net of cancellations)

Loan/ FY of ------------- _Credit 4 Approval Purpose IBRD IDA 1/ Undisbursed 2/

1/ 110 Loans/ 8506.01/ 168 Credits fully disbursed/cancelled 13098.3

1356-IN 1983 Upper Indravati Hydro Power - 170.00 18.202442-IN 1984 Farakka II Thermal Power 278.80 - 36.491496-IN 1984 Gujarat Medium Irrigation - 151.17 17.48SF-20-IN 1984 Indira Sarovar Hydroelectric - 13.84 17.26SF-16-IN 1984 Periyar Vaigai II Irrigation - 17.50 3.841426-IN 1984 Population III - 70.00 1.051424-IN 1984 Rainfed Areas Watershed Dev. - 22.35 5.86SF-12-IN 1984 Tamil Nadu Water Supply - 36.50 2.681454-IN 1984 Tamil Nadu Water Supply - 36.50 18.401483-IN 1984 Upper Ganga Irrigation - 105.43 21.581544-IN 1985 Bombay Urban Development - 93.70 5.56

2544-IN 1985 Chandrapur Thermal Power 280.00 - 80.601613-IN 1985 Indira Sarovar Hydroelectric - 13.20 17.132582-IN 1985 Kerala Power 156.00 - 95.992534-IN 1985 National Highways 133.00 - 37.921665-IN 1986 Andhra Pradesh II Irrigation - 140.00 64.662660-IN 1986 Cement Industry 165.00 - 19.552674-IN 1986 Combined Cycle Power 485.00 - 15.25

1643-IN 1986 Gujarat Urban - 50.34 20.192661-IN 1986 ICICI - Cement Industry 35.00 - 3.901622-IN 1986 Kerala Water Supply and Sanitation - 21.80 5.441621-IN 1986 Maharashtra Composite Irrigation - 128.82 109.231631-IN 1986 National Agricultural Research II - 57.21 21.331619-IN 1986 West Bengal Minor Irrigation - 45.45 27.471623-IN 1986 West Bengal Population - 45.85 10.571737-IN 1987 Bihar Tubewells - 22.29 7.651750-IN 1987 Bombay Water Supply & Sewerage III - 145.00 68.932769-IN 1987 Bombay Water Supply & Sewerage III 30.00 - 30.002796-IN 1987 Coal Mining & Quality Improvement 323.06 - 73.48

1757-IN 1987 Gujarat Rural Roads - 96.75 45.902827-IN 1987 Karnataka Power 79.48 - 9.842846-IN 1987 Madras Water Supply 53.00 - 29.091754-IN 1987 National Agric. Extension III - 66.62 24.952844-IN 1987 National Capital Power 408.00 - 137.901770-IN 1987 National Water Management - 114.00 46.822785-IN 1987 Oil India Petroleum 140.00 - 9.382845-IN 1987 Talcher Thermal 367.00 - 205.062813-IN 1987 Telecommunications IX 168.00 - 8.83

1780-IN 1987 Uttar Pradesh Urban Development - 120.95 58.711931-IN 1988 Bombay & Madras Population - 57.00 16.262928-IN 1988 Indus. Fin. & Tech. Assc. 360.00 - 43.212938-IN 1988 Karnacaka Power II 41.69 - 17.692893-IN 1988 National Dairy II 200.00 - 173.142935-IN 1988 Railway Modernization III 270.00 - 33.64

SCHEDULE D

PAGE 2 of 5

US$ Million(net of cancellations)

Loan/ FY of ----------------------------------Credit # Approval Purpose IBRD IDA 1/ Undisbursed 2/

1923-IN 1988 Tamil Nadu Urban Dev. - 254.73 120.223093-IN 1989 Electronics Industry Dev. 8.00 - 7.503058-IN 1989 Export Development 120.00 - 16.183096-IN 1989 Maharashtra Power 354.00 - 296.933024-IN 1989 Nathpa Jhakri Power 48s.00 - 443.571952-IN 1989 National Seeds III - 147.24 59.482022-IN 1989 National Sericulture - 133.35 80.062057-IN 1989 Nat'l. Family Welfare Trng. - 72.76 51.063044-IN 1989 Petroleum Transport 50.00 - 15.001959-IN 1989 States Roads - 80.00 1.752991-IN 1989 States Roads 115.00 - 115.002010-IN 1989 Upper Krishna Irrigation II - 160.00 85.023050-IN 1989 Upper Krishna Irrigation II 45.00 - 45.002008-IN 1989 Vocational Training - 163.85 109.483196-IN 1990 Cement Industry Restructuring 300.00 - 193.172115-IN 1990 Hyderabad Water Supply - 79.90 51. 162064-IN 1990 Industrial Technology Development - 55.00 47.933119-IN 1990 Industrial Technology Development 145.00 - 92.463237-IN 1990 Northern Region Transmission 485.00 - 448.592133-IN 1990 Population Training VII - 63.96 48.263239-IN 1990 Private Power Utilities I (TEC) 98.00 - 42.542076-IN 1990 Punjab Irrigation/Drainage - 145.28 115.562158-IN 1990 Tamil Nadu Integrated Nutrition II - 67.52 52.692130-IN 1990 Techni-ian Education I - 210.74 156.552100-IN 1990 Watershed Development (Hills) - 75.00 64.032131-IN 1990 Watershed Development (Plains) - 55.00 51.643260-IN 1991 A.P. Cyclone Emergency Reconstruction 40.00 - 11.853325-IN 1991 Dam Safety 23.00 - 23.002241-IN 1991 Dam Safety - 130.00 121.563364-IN 1991 Gas Flaring Reduction 450.00 - 159.132173-IN 1991 ICDS I (Orissa & Andhra Pradesh) - 74.35 57.023334-IN 1991 Industrial Pollution Control 124.00 - 92.872252-IN 1991 Industrial Pollution Control - 31.60 30.322234-IN 1991 Maharashtra Rural Water Supply - 109.90 89.833258-IN 1991 Petrochemicals II 12.00 - 11.003259-IN 1991 Petrochemicals II 233.00 - 149.053344-IN 1991 Private Power Utilities II (FSES) 200.00 - 107.582215-IN 1991 Tamil Nadu Agricultural Development - 92.80 71.323300-IN 1991 Tamil Nadu Agricultural Development 20.00 - 20.002223-IN 1991 Technician Education II - 255.73 215.332300-IN 1992 Child Survival and Safe Motherhood - 214.50 174.922394-IN 1992 Family Welfare (Urban Slums) * - 79.00 79.692328-IN 1992 Maharashtra Forestry - 124.00 114.742350-IN 1992 National AIDS Control - 84.00 73.103436-IN 1992 Power Utilities Efficiency 265.00 - 250.983498-IN 1992 Second Maharashtra Power 350.00 - 330.493470-IN 1992 Second National Highway 153.00 - 153.002365-IN 1992 Second National Highway - 153.00 150.012329-IN 1992 Shrimp and Fish Culture - 85.00 82.312341-IN 1992 West Bengal Forestry - 34.00 24.672433-IN 1993 Agricultural Development Rajasthan - 106.00 95.962439-IN 1993 Bihar Plateau Development - 117.00 105.473627-IN 1993 External Sector & Investment 300.00 - 21.762450-IN 1993 Jharia Mine Fire Control - 12.00 11.392483-IN 1993 Karnataka Rural Water Supply * - 92.00 91.562528-IN 1993 National Leprosy Elimination * - 85.00 82.863632-IN 1993 NTPC Power Generation * 400.00 - 400.003630-IN 1993 Power Finance Corporation 20.00 - 20.003577-IN 1993 Powergrid System Development 350.00 - 323.13

SCHEDULE D

PAGE 3 of 5

USS Million(net of cancellations)

Loan/ FY of --

Credit # Approval Purpose IBRD IDA 1/ Undisbursed 2/

3544-IN 1993 Renewable Resources Development 75.00 - 57.73

2449-IN 1993 Renewable Resources Development - 115.00 109.75

2409-IN 1993 Rubber I - 92.00 91.702470-IN 1993 Second Integrated Child Dev. - 194.00 195.56

2448-IN 1993 Social Safety Net Sector Adjustment - 296.20 244.94

2509-IN 1993 Uttar Pradesh Basic Education - 165.00 154.12

2510-IN 1993 Uttar Pradesh Sodic Lands Reclam. - 54.70 52.61

Total 17699.0 19501.7 9181 85

of which has been repaid 4243.8 1086.1

Total now outstanding 13455.2 18415.6

Amount Sold 133.8of which has been repaid 133.8

Total now held by Bank and ILA 13455.15 18415.56

Total undisbursed (excluding *) 4508.5 3925.4

1/ IDA Credit amounts for SDR-denominated Credits are expressed in terms of their US dollar

equivalents, as established at the time of Credit negotiations and as subsequentlypresented to the Board.

2/ Undisbursed amounts for SDR-denominated IDA Credits are derived as the undisbursed balance

expressed in SDR equivalents (in turn derived as the difference between the original principal

expressed in SDRs (based on the exchange rate as established at the time of Credit negotiations)and the cumulative disbursements converted to SDR equivalents at the exchange rates prevailing

at the respective dates of disbursements less cancellations expressed in SDR equivalents converted

to US dollar equivalents at the SDR/US dollar exchange rate in effect on Dec. 31, 1993.

* Not yet effective.

Source: Statement of Loans & Credits (LOALA) of December 31, 1993.

SCHEDULE D

PAGE 4 OF 5

B. STATEMENT OF IFC INVESTMENTS

(As of December 31, 1993)

Amount (USS million)

Fiscal Year Company Loan Squity Total

1959 Republic Forge Company Ltd. 1.50 -- 1.501959-92 Kirloskar Oil Engines Lcd. 0.85 -- 0.851960 Assam Sillimanite Ltd. 1.36 -- 1.361961 K.S.S. Pumps Ltd. 0.21 -- 0.211963-66 Precision Bearings India Ltd. 0.65 0.38 1.031964 For: Gloster Industries Ltd. 0.81 0.40 1.211964 Lakshmi '-_chine Works Ltd. 0.96 0.36 1.321964-75-79/90 Mah:ndra Ugine Sceel Co. Ltd. 11.81 2.84 14.651967 Indian Explosives Ltd. 8.60 2.86 11.461967 Jayshree Chenicals Ltd. 1.0S 0.10 1.151969-70 Zuari Agro-Chemicals Ltd. 15.15 3.76 18.911977-87 Escorts Limited 15.55 -- 15.551978-87/91/93 Housing Development Finance Corp. 106.29 4.05 110.341980/82/87/89 Deepak Fertilizer and Petrochemicals Corporation Ltd. 7.50 4.23 11.731981-82 Nagarjuna Coated Tubes Ltd. 1.50 0.24 1.741981-82 Nagarjuna Steels Limited 2.88 0.24 3.121981-86-89 Tata Iron and Steel Company Ltd. 72.14 24.49 96.631981-90/93 Mahindra & Mahindra Ltd. 29.71 9.30 39.011982 Ashok Leyland Limited 28.00 -- 28.001982 Coromandel Fertilizers Limited 15.88 -- 15.881982 The Bombay Dyeing and Manufacturing Co. Ltd. 18.80 -- 18.801982-87/91-93 ITW Signode 2.99 1.01 4.001982-87 The Indian Rayon Corp. Ltd. 14.57 -- 14.571983 Bharat Forge Company Ltd. 15.90 -- 15.901984-86 The Gwalior Rayon Silk Manufacturing (Weaving) Co. Ltd. 15.95 _ 15.951985 Ba]aj Auto Ltd. 23.93 -- 23.931985 Modi Cement 13.05 -- 13.051985-86/90-91 India Lease Development Ltd. 8.50 0.78 9.281985/91 Bihar Sponge 15.24 0.68 15.921986 Bajaj Tempo Limited 30.54 -- 30.541986/93 India Equipment Leasing Ltd. 5.50 0.30 5.801986 Larsen and Toubro Ltd. 21.78 -- 21.781982-87-93/94 The Great Eastern Shipping Company Ltd. 68.00 13.89 81.891987 Export-Import Bank of India 1S.45 -- 15.451987 Gujarat Fusion Glass Ltd. 7.52 1.70 9.221987 Gujarat Narmada Valley Fertilizer 38.07 -- 38.071987 Hero Honda Motors Ltd. 7.74 -- 7.741987 Hindustan Motors Ltd. 39.14 -- 39.141987 The Gujarat Rural Housing Finance Corp. -- 0.19 0.191987 Wimco Limited 4.70 -- 4.701987-89/90 Titan Watches Limited 22.02 1.15 23.171988 Invel Transmissions Ltd. -- 1.07 1.071989 Ahmedabad Electricity Company, Ltd. 20.83 -- 20.831989 WTI Advanced Technology -- 0.20 0.201989-90/92 Keltron Telephone Instruments, Ltd. -- 0.56 0.561989-92 Gujarat State Fertilizer 40.46 -- 40.461990 JSB India Securities Firms -- 0.37 0.371990 UCAL Fuel Systems Ltd. -- 0.63 0.631990-91 Tata Electric 111.88 -- 111.881991 ATIC Industries Export Finance 0.28 -- 0.281991 Bombay Electric 68.00 -- 68.001991-93 CESC Ltd. 82.51 -- 82.511991 Export Finance - AFDC 0.35 -- 0.351991 Herdilla Oxides and Electronics Ltd. -- 0.29 0.291991 Indust. Credit & Investment Corp. of India -- 26.60 26.601991/93 Infrastructure Leasing & Financial Services 15.00 4.92 19.921991 TDICI Development Finance Companies - 2.05 2.051991/93 TRIVENI -- 1.68 1.681991 Varun Transport, Storage & Communications 17.04 3.06 20.101992-93 Arvind Mills 22.13 19.16 41.29

SCREDULE D

PAGE 5 OF S

Amount (US$ million)

Fiscal Year Company Loan Equity Total

1992 Block KG-OS-IV -- 8.20 8.201992 INDUS VC Mgmt. Co. -- 0.01 0.01

1992 INDUS VCF -- 1.01 1.011992 Kotak Mahindra 0.66 0.66

1992 Nippon Denro 40.00 5.77 45.771992 SKF Bearings 11.50 -- 11.50

1993 Creditcapital VF -- 0.51 0.511993 NICCO-UCO 3.00 0.25 3.25

1993 20th CENTURY 16.00 -- 16.00

1994 Gujarat Ambuja 35.14 8.23 43.371994 Indo Rama Spinning & Weaving 35.00 9.94 44.941994 CRD Cap. Asset Management -- 0.32 0.321994 Information Technology Pund -- 0.64 0.641994 Taurus Strshr. -- 7.17 7.17

TOTAL GROSS COMMITMENTS 1230.52 175.48 1405.99

Less: Cancellation, Terminations, ExchangeAdjustments, Repayments, Writeoffs and Sales 649.30 33.85 683.1S

Now Held by IFC 581.14 141.63 722.77............ , ........ ........... ............-

Undisbursed 12S.55 40.81 166.36......... C,........ ........

Source: IFC, January 7, 1994.

INDIA

MAHARASHTRA EMERGENCY EARTHQUAKE REHABILITATION PROJECT

TECHNICAL ANNEX

INDIA

MAHARASHTRA EMERGENCY EARTHQUAKE REHABILITATION PROJECT

TECHNICAL ANNEX

TABLE OF CONTENTS

A. Background 1

The Earthquake 1Seismicity of the Region 2Government Response 2IDA Response 3

B. The Framework for Rehabilitation 3

Existing Houses and Villages 3Rehabilitation Policy 4Community Participation 6

C. Program Description 7

Program Components and Cost 8Housing 8Infrastructure 11Community Rehabilitation 13Economic Rehabilitation 13Social Rehabilitation 13Environmental Impact 14Social Issues 14Technical Assistance, Training and Equipment 14Program Financing 17

D. Program Management 17

Program Management Structure 18Program Implementation 19Disbursements 22Accounts, Audits and Reports 23

Attachment 1 - Detailed Program CostAttachment 2 - Schedule of DisbursementsAttachment 3 - Community Participation ProceduresAttachment 4 - Implementation ScheduleAttachment 5 - Performance IndicatorsAttachment 6 - List of Main Documents in the Project File

This report is based on the findings of an appraisal mission which visited Maharashtra inJanuary 1994. The mission comprised Richard G. Scurfield (Mission Leader) and Messrs. ChandraGodavitarne (Engineer), Sam Thangaraj (Resettlement Specialist), N. Raman (Procurement Engineer),and Messrs./Mmes. Jelena Pantelic (Urban Planner and Reconstruction Specialist), Kirtee Shah(Housing Specialist), Meera Shah (Community Planning Specialist), and Miha Tomazevic (SeismicEngineering Specialist). This report was reviewed by Messrs. Robert N. Panfil, Division Chief,Infrastructure Operations Division and Heinz Vergin, Director, India Country Department.

INDIA

MAHARAsHTRA EMERGENCY EARTHQUAKE REHABILITATION PROJECT

TECHNICAL ANNEX

1. Maharashtra is the third largest state in India both in land area (308,000 squarekilometers) and population (78.7 million). It is India's most heavily industrialized state with thehighest percentage of state revenues coming from the industrial sector (35.7 percent) and arelatively low percentage coming from the agricultural sector (21.3 percent). The region wherethe earthquake occurred is agricultural with primary crops of mustard, sunflower oil, grapes andsugar cane.

A. BACKGROUND

The Earthquake

2. On Thursday September 30, 1993 at 3.56 am, an earthquake of 6.4 on the Richtermagnitude scale, shook the southeastern region of the State of Maharashtra. The epicenter wasnear the village of Killari located in the Latur district, about 500 km east of Bombay. Theearthquake was followed by three aftershocks, and since then, dozens of tremors have been feltin the region.

3. The earthquake severely affected 67 villages in Latur and Osmanabad districts whereabout 8,000 people were killed and 16,000 injured. Considerable damage also occurred in theneighboring districts, particularly in Solapur. In total, about 230,000 houses were eitherdestroyed or damaged, and more than 52,000 families were left without houses in 13 districts ofthe Marathwada region. In sum, about 52,000 houses need to be rebuilt and about 180,000require repair.

4. The deaths were mainly caused by the collapse of old traditional village houses whichwere of an extremely heavy construction. Typically, the walls were 2-3 ft. thick and made ofsmall stone boulders (about 1 ft. in diameter) and bonded with dirt and clay. The stones wereirregular in shape and therefore had relatively little binding and bearing capacity. The roofswere constructed with heavy wooden beams and a light framing covered with about 12 to 18inches of dirt. During the earthquake, the walls shattered and the heavy roofs collapsed,crushing the sleeping residents.

5. Apart from extensive damage to public buildings, especially school buildings, there wasgenerally moderate damage to other infrastructure. However, water supply was disrupted (insome areas water table is said to have fallen and in other areas it has risen), electricity and tele-communication systems have suffered some damage.

-2-

Seismicity of the Region

6. The northern portion of the Indian sub-continent is subject to many earthquakes and thecauses of this seismicity are well understood. The Himalayas form a belt of veiy high seismicactivity, where two continental plates collide. To the south of this mountain range, in thealluvial region, earthquakes are considered to be caused by fractures in major faults. However,the causes of earthquakes in the relatively stable crust of the Indian Peninsular Shield are lessclearly understood. Some faults that in the past had bken associated with seismic events werewell demarcated, while the presence of others could only be inferred. Although smaller tremorshave been registered in this region, available records show relatively long periods of noearthquake activity, alternat'.ig with short periods of greater earthquake activity.

7. On September 13, 1967, an earthquake of magnitude 6.5 on the Richter scale, occurrednear the Koyna Dam in the State of Maharashtra. Fewer than 200 people died in thisearthquake, but it caused widespread damage to local villages. The scientists of the CentralBuilding Research Institute (CBRI) of Roorkee have suggested that prior to the filling of theKoyna Dam reservoir (which began in 1962), no earthquakes of appreciable intensity had beenexperienced in this area. After the filling started, mild tremors began to increase both infrequency and intensity, and the correlation between high water levels in the reservoir and theseismic activity in the region is now well established.

8. The Killari earthquake, of September 30, 1993, is the largest earthquake to have beenrecorded in this general area, and one of the most devastating earthquakes of its kind. For ayear and a half prior to this date, the region had been experiencing more pronounced seismicactivity. In this early stage of analysis, when seismological information from the aftershocks isstill being gathered, only preliminary geological data are available. No evidence of pre-earthquake faulting was found, nor the evidence of prehistoric deformation in the morphology.Neither geology nor historical seismicity offer clues to this earthquake.

Government Response

9. The combined response of the GOI and the GOM to the disaster was rapid andeffective. By all accounts, the emergency response and relief operations were handled in anexemplary way. Within a week some observers were declaring the relief phase over. The GOMhas also been commendably fast at initiating plans for reconstruction and they have managed toretain much of the momentum established by the relief operations. Even before finalizing therehabilitation program, it had persuaded commercial organizations, non-governmentalorganizations (NGOs) and other donors to sponsor the reconstruction in 20 of the smallervillages, totaling over 5,000 houses. Several of these organizations have made an early start onthe construction of their designated villages.

10. The GOI established an Advisory Group to assist the GOM with the development of therehabilitation program. This group's terms of reference were for it to address and advise uponselected issues, including earthquake-resistant house designs, the layout of the villages andcommunity participation. The group was chaired by the Secretary, Ministry of UrbanDevelopment. It had a membership of 17, including earthquake experts, engineers, architects, asocial scientist and representatives of NGOs. The Advisory Group's report was finalizedbetween the Association's pre-appraisal and appraisal missions. It served to clarify a number ofrelated issues which arose at pre-appraisal.

-3 -

IIDA Response

11. The day after the earthquake, the Association offered to assist the Government of Indiawith the reconstruction in the region affected by ti - earthquake. An ad hoc AdvisoryCommittee was established on October 1 to advise the Director of the India Department upon thepreparation and implementation of the proposed emergency project. The offer of assistance wasaccepted by the GOI and, on October 5, a Memorandum of Understanding (MOU) was signedthat established the framework for this Credit. Simultaneously, an agreement was signed for aProject Preparation Facility (PPF).

12. A reconnaissance mission from the India Department spent two days in the disaster area10 days after the earthquake. This was followed by the pre-appraisal mission which visitedIndia November 1-24, 1993, and the appraisal mission January 3-28, 1994. All three missionsvisited the earthquake affected districts. Negotiations for the Credit were held in Washingtonbetween March 2-9, 1994.

13. The pre-appraisal mission discussed the possibility that existing Bank and IDA projectscould be used to finance rehabilitation. With a single exception, it was agreed that therehabilitation program would be most appropriately handled through this Credit.'

B. THE FRAMEWORK FOR REHABILITATION

14. This section of the Technical Annex describes three essential building blocks for theGOM's rehabilitation program: (a) an understanding of the traditional lifestyle of the localpeople, and in particular, how the form of existing buildings and villages in the Marathwadaregion matches these requirements; (b) the GOM's rehabilitation policy; (c) the decision of theGOM to implement the program with the active participation of the affected communities.

Existing Houses and Villages

15. The villages in this region are generally located in river valleys where watel availabilityis ensured and the agricultural land is fertile. Their sizes vary considerably from more than10,000 residents to only a few hundred. Irrespective of their size, the villages are by and largeold and have an almost medieval urban form. The gaothans (built up village areas) are compactand densely built. The abutting stone masonry walls of houses delineate narrow and windingstreets. House walls facing the streets have very few openings, and the houses are orientedinward.

16. The typical design of traditional iiouses in the Marathwada villages reflects the centuriesof agricultural lifestyle of the local residents. In addition to offering excellent thermal insulationand protection from the elements, the houses have a hierarchical composition of open, semi-openand closed spaces that complement the villagers' way of life-storing agricultural implements andgrain, keeping cattle, and performing a number of post-harvest chores. The houses are fairlylarge, measuring on average about 800 square feet.

1 It has been agreed that the Second Maharashtra Power Project would be used to provide US$4 million forthe construction and repair of power facilities. Report Nos. MOP P5061, SAR 7713 (Loan 3498-IN).

- 4 -

17. In most houses of this region, the following fundamental spaces can be distinguished: acentral courtyard, surrounded by high boundary walls, often used for keeping animals and otheragricultural activities; a semi-open space (which in the poorer households is used for cookingand washing, and in the middle-income households for storage, receiving visitors and sometimessheltering cattle) and a set of inner rooms for sleeping and storage, which tend to be morenumerous in affluent households. Additionally, the larger houses and compounds have anentrance zone, called a baithak, which is used to receive visitors.

18. The primary building material for wall construction is the locally available stone and atypical village house is made of stone and mud mortar. Such stone masonry can be several feetthick, consisting of two faces of partially dressed stone with the space between filled withrubble, earth and clay. Most walls have no appropriate courses, nor through or header stones.Consequently, the walls are not well tied together at the corners, nor functionally connected withthe roof. Timber is traditionally expensive and is used sparsely, and only for the most necessaryparts of the house--roofs, doors, windows, and the courtyard colonnades.

19. Almost half of all the roofs in the two districts consist of heavy earth layers placed onwooden planks, while the rest of the buildings is covered by corrugated iron sheets, tiles orthatch. The use of corrugated iron sheeting is generally limited to covering the semi-openspaces and only infrequently used in residential buildings, given this material's poor propertiesof thermal insulation. Though praised for their thermal comfort, stone masonry houses withheavy roofs perform poorly under earthquake forces.

20. In contrast to the substantial houses of the wealthier villagers and land owners, the poortend to live on the edge of the village settlements in houses consisting of wattle and daub wallsand thatched roofs, which range in size from 150 to 500 square feet. The ratio of usable spacein these buildings is exceptionally high, with covered area amounting to about 80 percent of thetotal floor plan.

Rehabilitation Policy

21. A policy framework for the rehabilitation program has been prepared by the GOM andreviewed and confirmed at negotiations. The policy provides a clear statement of objectives ofthe rehabilitation program by village, household, and individual. It defines the criteria forselecting the villages to be relocated, and those where houses are to be reconstructed on theiroriginal sites. It also describes how and which households and individuals would benefit fromthe program, and clarifies the entitlements of the more vulnerable groups in the society includingtenants, the landless, as well as women and orphans. A baseline survey of the 67 villages mostaffected by the disaster has already been completed by the Tata Institute of Social Sciences(TISS).

22. For the relocation villages, the policy provides for the affected persons to be resettled insocially, culturally and economically self-sustaining commnunities with an emphasis upon theirsocial and kinship relations. It includes provisions for tenants and encroachers who do not payhouse-tax but whose houses have been damaged, and the landless whose houses have not beendamaged (as they lived in huts which survived the earthquake), and those who have beenaffected by the land acquisition. The GOM has accepted that they are an integral part of thecommunity upon which they depend for socio-economic and cultural support.

- 5 -

23. The GOM would relocate those villages where more than 70 percent of the houses wereeither destroyed or substantially damaged. Currently it is estimated that there are 49 villageswhich fall into this category, comprising about 23,000 houses. In 2,500 other villages, in 13districts, it is estimated that about 29,600 houses will have to be rebuilt in-situ and about180,000 require repair.

24. The reconstruction program would be developed in detail through extensive participationof the affected communities. This would include the following major elements:

(a) In the relocation villages, there would be three house types with an internal floorarea of 250 square feet (the core house), 400 square feet and 750 square feet, onplots of 1,575 square feet, 2,520 square feet and 5,000 square feet, respectively.Each new village would be provided with an infrastructure comprising roads,drainage, electricity, drinking water through standposts, public health andmedical and social centers.

(b) The entitlement of the beneficiaries to a particular plot size would be on thebasis of the agricultural land holding and the house tax paid by the beneficiariesfor the dwelling owned in their original village. The landless, including widowsand tenants, and those holding up to one hectare, would be entitled to a plot of1,575 square feet with a core house. Those with a holding of between one andseven hectares would receive a plot of 2,520 square feet, and those with a landholding of more than seven hectares would be entitled to a plot of 5,000 squarefeet with one of the larger houses. The benefits would also be extended to thoseaffected by land acquisition.

(c) Those families with more than 10 members or owning more than 10 hectares ofland would be given an additional bare plot, except where extended familieshave more than one legally separated kitchen in the old house. They would thenbe entitled to more than one plot with a core house for each family with aseparate kitchen.

(d) In the relocation villages, a plot and a core house would be provided for allbeneficiaries in the form of a grant. For those beneficiaries who had ownedlarger houses, the incremental cost of building larger houses would be providedas a loan at an annual interest rate of 8 percent repayable over 20 years. Theloan administration would be handled through the office of the DistrictCollector. The proceeds of the Credit would not be used to finance the loanportion.

(e) The percentage distribution of the three sizes of plots and houses would be basedon the features of the old village configuration, and taking into account the sizesof land holdings. Generally, the ratio of 250 square feet, 400 square feet, and750 square feet core house distribution in the relocation villages would be in therange of 52:39:8, respectively.

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(f) For the houses to be rebuilt in-situ, the maximum benefit would be Rs. 54,000(suitably adjusted fo: inflation), the estimated cost of building a 250 square footcore house.

(g) In addition to those living in the 49 villages which are to be relocated, there are18 villages where the population was moved into transit housing by the GOMafter the earthquake. These villages are to be rebuilt in-situ. In these villagesthe landless would also be eligible for a core house.

(h) Benefits would be provided in the joint names of husband and wife. Provisionwould also be made to protect the rights of children who became orphans butwho have inherited property and land.

25. Other issues addressed in the policy statement relate to social and economicrehabilitation of the affected persons, provision of civic amenities and social infrastructure,ownership of existing house sites and the rubble, repair and strengthening of partially affectedvillages, land acquisition for relocated gaothans, and improvements to transit housing as thevillagers would have to stay in them for longer periods due to the length of the constructionprogram. The policy statement also sets out a framework for monitoring and evaluating theprograni and would provide appropriate grievance procedures, should any of the affected partiesfeel that they are not being fairly treated. The first level of appeal is to the District Collectorand the second to the Secretary and Special Commissioner (Earthquake Relief andRehabilitation) (SCER).

26. Rehabilitation Action Plan for those Affected by Land Acquisition. The GOM hasprepared a rehabilitation action plan to mitigate any adverse effects of land acquisition for therelocation villages and the GOM has agreed to implement this plan in a timely manner for eachrelocation village. Specifically, this plan provides the following: (i) a list of all individualsfrom whom land was acquired; (ii) a list of their respective land holdings, before and after theacquisition program; (iii) a list of all those who have been rendered landless or marginalized;(iv) a commitment to undertake a survey to identify any others who may be affected by the landacquisition program; (v) a list of benefits which affected individuals are entitled under theRehabilitation Policy with an expected timetable for their distribution; (vi) list of other GOMand GOI programs which are available in each village and a timetable for their application; (vii)the budget for the rehabilitation action plan; and (viii) a description of the proposedorganizational structure for implementing the plan, including appropriate grievance procedures.

Community Participation

27. To implement successfully both the rehabilitation policy and the program, activeparticipation of the affected communities is deemed essential. During the life of this project,community participation would extend beyond obtaining consent from Sarpanches (villageleaders), and would ensure that the views of all sections of the community are sought,understood and acted upon. The involvement of communities in the rehabilitation programwould ensure that the people's concerns and needs are better understood and incorporated in theplans. It would also permit the communities to develop a stake in the rehabilitation process,rebuild their self confidence and empower them to shape their own lives rather than becomehelpless victims of a disaster.

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28. The GOM's rehabilitation policy would be shared with the people, and the communitieswould participate in all relevant aspects of the rehabilitation program including:

(a) The house design-to understand the people's perceptions and concerns aboutthe design of their new houses in relation to their requirements and lifestyles.

(b) Planning the village layouts-to determine the people's preferences for thelayout of the new village.

(c) Village rehabilitation plans-to publicize and discuss rehabilitation plans in eachvillage.

(d) Allocation of plots-to inform people who is getting which plot so that they cantake interest in monitoring the construction work and have a stake in theconstruction process. The criteria for allocation would be defined inconsultation with the people.

(e) Construction-to involve the people in the construction process. (Ideally thehouse construction work would be handled by the village community itself.However, given the scale of operations and the time constraint, this would benot a feasible option in the relocation villages. Contractors would have to beused. However, the repair and reconstruction works in the villages to bereconstructed in-situ would be mostly community-based.)

29. The implementation of the participation process would require the full commitment of allgovernment officials. For community participation to become an integral part of thedevelopment process, the GOM would involve local NGOs in the process to the maximum extentpossible. The proposed procedures for use during the design and planning of the relocatedvillages are summarized in Attachment 3.

C. PROGRAm DESCRIPTION

30. The major component of this program is housing reconstruction and repair. In additionto the housing component, the project has five other components:

* Infrastructure

* Economic Rehabilitation

* Social Rehabilitation

* Community Rehabilitation

* Technical Assistance, Training and Equipment

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Program Components and Cost

31. A summary of the components' costs including contingencies is indicated in Table 1below. More detailed cost estimates are provided in Attachment 1.

Table 1: Summary Program Cost

Rupees MWllion US $ millionLocal Foreign Total Local Foreign Total

Housing 5743.1 596.9 6340.0 173.7 17.4 191.1

Infrastructure 2702.5 282.2 2984.7 82.8 7.3 90.1

Social 358.6 37.7 396.3 11.1 0.7 11.8Rehabilitation

Economic 167.4 18.0 185.4 5.3 0.3 5.6Rehabilitation

Community 271.9 29.4 301.3 8.4 0.9 9.3Rehabilitation

Technical 454.7 207.3 662.0 13.8 6.1 19.9Assistance,Training andEquipment

TOTAL 9698.3 1171.5 10869.8 295.1 32.7 327.8

Note: The total project cost is US$327.8 million (about Rs. 10,870 million), inclusive of duties and taxes, estimatedat US$15 million. Of this about US$32.7 million are foreign exchange costs. The base costs were estimated at thetime of appraisal. Physical contingencies amount to about 2% of the total. Price contingencies of 3% per annumwere added to foreign costs and 6% per annum for local costs for the first two years, and 5% for the third year.

Housing (Rs. 6,340 million)

32. This component would finance the reconstruction of 49 villages on new relocation sites,comprising about 23,000 houses (of which about 5,500 would be built by donors); thereconstruction of about 29,600 houses on existing sites; the repair and strengthening of about180,000 damaged houses; the construction of 500 model houses; and the pilot program forstrengthening 5,000 other houses in the region, which are of a similar type of design andconstruction.

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33. Standards for Housing and Village Development. New buildings would beconstructed to the earthquake-resistant criteria established by the GOM upon the advice of suchresearch centers as the CBRI at Roorkee. These have been set, at least in the interim, toconform to those applicable to a seismic Zone IV2, or a high risk seismic zone, of the Bureau ofIndian Standards. This is acceptable for the reconstruction program in the short term, since anychange is unlikely to have a major impact on the cost of a single story house. However, in thecontext of the long term rehabilitation, it would be necessary to expedite further discussionswithin the technical community so as to confirm that this is the most appropriate zoning for theregion. The cost difference for repairs and strengthening between Zone IV standards, and tosay, Zone III standards, may be significant for the larger components of infrastructure, such asdams and long span bridges. Such works may be required after further design studies.

34. As far as possible, the new housing would be built to conform to the layouts of thetraditional houses and villages, and to the preferences and needs of the local residents.Traditional building materials would be used as much as possible. Past housing constructiontechniques, however, would be replaced by earthquake-resistant building practices. Localmasons, carpenters and artisans would be trained in the new building strategies. While stonemay remain the basic building material, the use of reinforced concrete beams at floor, lintel androof level would be required, along with the use of lighter buiiding materials such as hollow andsolid concrete blocks. The selected roofing system would not only have to satisfy the need forseismic resistance, but would also have to have good thermal insulation properties andpreferably enable the farmers to continue using flat roofs for drying their agricultural produce.The building techniques adopted would have to allow replication by the village builders.

35. When choosing building materials, account would be taken of the fact that there may belittle good quality sand available in the area, and that good quality bricks cannot be made duringthe monsoon season. An alternative that merits consideration would be the local production ofconcrete blocks, made from crushed stone. Stone is the most readily available building materialin all the villages. However, given the initial hesitancy of the survivors to rebuild in originallocations and to use the stone that had killed their next of kin, this proposal would requirecareful "marketing".

36. A number of NGOs and other donors have already begun a process of housingreconstruction, using a wide variety of housing layouts, building materials and constructionmethods. This program could be used to test alternative house designs and demonstrate thefeasibility of building earthquake-resistant buildings out of traditional materials.

37. Relocation Villages (Rs. 2,002 million)3. The land for about 40 villages has alreadybeen acquired mainly through negotiations. Village layouts would be efficient, and containabout 60 percent net residential plots. They would reflect the residents' views on the gaothanconfiguration, and location of civic amenities. Every house would be provided with a low cost

2 Indian Standard Criteria for Earthquake Resistant Design of Structures (IS: 1893-1984). The zonescorrespond to the following intensities on the Modified Mercalli scale (MMI): lowest, Zone 1, maximum intensities ofV and under, Zone 11 (MMI VI), Zone III (MMI VII), Zone IV (MMI VIII) and the highest, Zone V (MMI IX andup).

3 The program includes the sum of Rs. 507 million which will be financed by other donors.

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toilet (twin-pit pour-flush latrine) and a smokeless stove, and the location of houses on the plotwould permit future expansion to suit the functional needs of the house owners.

38. An environmental statement would be prepared for each relocation village. It wouldcontain an assessment of relocation impact on the natural and physical environment (bothpositive and negative), water resources, drainage and loss of agricultural land. It would alsospecify the impact of land use conversion on the economic activities of the local agriculturalproducers.

39. Construction of this part of the program would be mainly by contractors, or larger andproven NGOs.

40. Repair and Reconstruction In-Situ (Rs. 4,164 million). According to the preliminarydanage assessment performed by the GOM, about 29,600 houses would have to be totallyreconstructed in-situ. In addition, about 180,000 houses that have suffered various degrees ofdamage require extensive or minor repair.

41. The extent of damage to each house would be assessed to determine the repair solutionand the cost of reconstruction. This exercise would be undertaken by experienced technicalteams in the PMU, assisted by outside specialists, including qualified structural engineers withseismic engineering experience. The current estimates indicate an average cost of Rs. 6,000 forCategory4 I and II and Rs. 20,000 for repair of Category III, or approximately Rs. 35 per squarefeet. The GOM will provide grant assistance to repair such houses to the extent of the cost ofrepair, but not exceeding the estimated cost of a core house (currently Rs. 54,000).

42. The new houses will be built by contractors only if sufficient number of houses can beconveniently packaged for individual contracts. However, given the size of individual works,and the spatial distribution of houses to be reconstructed or repaired, most of this componentwould be implemented under the control of the owners. The owners would be supported bymaterials and appropriate technical personnel, and the construction would be carried out throughsmall contractors or village masons, stone-cutters, carpenters and other village artisans, andassisted by non-skilled workers. The PMU would develop guidelines for screening andmaintaining a list of approved contractors and artisans, who would have undergone training inseismic-resistant construction techniques.

43. Funds for owner construction and repair would be made available through a village fundif the villagers so desire. Owners may also be provided with staged cash advances or buildingmaterial through a project-operated or private material depots. Given the nature of the workinvolved, and the poor availability of chief building materials in the region such as cement andreinforcing steel, one option under consideration by the PMU is the bulk procurement ofmaterials (through ICB) for supply to concessionaires, who in turn would issue the materials toindividual beneficiaries.

44. To manage this component, full time seismic engineering advisors would be appointed tothe PMU. An expatriate seismic engineer with experience in organization of the reconstruction

4 International Association for Earthquake Engineering categories of damage: 0 =no damage; I = slight non.structural damage; II = slight structural damage; III = moderate structural damage; IV = severe structural damage; and,V =collapse.

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process, and the repair and strengthening of stone masonry buildings would also be appointed.This expatriate specialist would help design the strategy for and advise on the methods of repairand strengthening of buildings. He/she would also assist in developing a training plan for thePMU staff. This expert would spend 5-6 months initially in the earthquake affected area, andreturn every 3 months thereafter to monitor and a3sist in implementation. Appointment of theseismic engineering experts would be required prior to Credit effectiveness. Construction worksfor this component would begin only after the GOM have prepared a strategy andimplementation plan satisfactory to the Association.

45. Strengthening of Houses (Rs. 61 million). It is estimated that there are more than 2.5million traditionally built stone masonry buildings in the high risk seismic zones in this region.In view of the total destruction of more than 52,000 similar houses during this earthquake, thebenefits of strengthening the existing housing stock are apparent. However, this process canonly be implemented by the house owners at their cost and at their own pace.

46. To launch the strengthening program, the GOM would initiate a pilot program inselected villages to strengthen about 5,000 houses. Specialized consultants would be employedto develop technical solutions and cost estimates for the pilot houses. For these efforts to besustainable, this program must train local artisans--masons, carpenters, stone cutters and others-in seismically-resistant construction techniques and the repair and strengthening strategies for thetraditional stone masonry building. Agreement on the criteria for the selection of beneficiariesand implementation would be reached prior to construction.

47. Model Houses/Buildings (Rs. 43 million). Early in the rehabilitation program, 500model houses and buildings would be constructed, to demonstrate cost-efficient buildingtechniques, the use of local materials, and incorporation of earthquake-resistant constructionfeatures. Apart from helping improve traditional building techniques, this component wouldhelp generate confidence among residents that stone can be safely used for house construction(along with its by-products, such as hollow and solid concrete blocks). These model houseswould also be used to facilitate participation and solicit comments from the affected personsabout the proposed designs in order to refine them. The buildings could be used for localgovernment offices, staff quarters or other community uses.

Infrastructure (Rs. 2,985 million)

48. The GOM's proposals for infrastructure are consistent with the purposes of anemergency loan. Provision would be to standards applicable to rural areas, and would notgenerally be higher than those already existing in the districts. The agreed project componentswould have the following limited objectives: (a) to make good the damage caused by theearthquake; (b) to raise the standards of basic community infrastructure to an acceptableminimum; and (c) to strengthen infrastructure to withstand a higher degree of seismic intensity.

49. Upgrading the Transit Shelters (Rs. 70 million). A realistic timetable for theconstruction of the new villages is not less than two years. In the interim, it would be necessaryto upgrade the facilities in the transit housing areas, which consist of about 23,000 rooms, oneper family. The improvements would include: raising of the plinths, improvements to surfacedrainage, compaction and dressing of roads and footpaths, improved ventilation and thermalinsulation of the housing units, improved sanitation and water supply, and structuralstrengthening of the buildings before the monsoons begin.

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50. Infrastructure and Arnenities in Relocation Villages (Rs. 1176 million)5. The newvillages would have access roads, internal roads, water supply through standposts with thedistribution system designed for 30 percent individual connections, storm water drainage, powerdistribution and street lighting. Beneficiaries would make arrangements with the utility agenciesfor individual supply connections, upon payment. Except for the larger villages, the maximumright of way for roads would be nine meters with a hierarchy appropriate for village conditions.

51. The program would include repair and rehabilitation of damaged water supply systems inthe districts of Latur and Osmanabad, restoration of borewells in 278 villages, 6 regional watersupply schemes to service about 37 villages supplied from the impounded storage of the Ternareservoir, and 10 independent village water supply schemes in the affected areas. The regionalwater supply schemes from ground water sources would be prepared by consultants, to befinanced under the project. Interim arrangements would be made te supply water to theresettlement villages through the use of existing or new borewells.

52. Amenities would be provided in relocation villages to replace such facilities that existedin the damaged and destroyed villages. These would include panchayat offices, communitycenters, schools, health centers and anganwadis. Some facilities such as schools and healthcenters that were substantially deficient on space and equipment would be upgraded to conformto the norms of the state.

53. Roads and Bridges (Rs. 257 million). This sub-component would include: (a) repair ofdamaged culverts and minor bridges; (b) reconstruction of existing culverts and bridges on ruralroads to facilitate all weather access; (c) strengthening of major bridges in the affected areas,following detailed study by consultants; and (d) construction of off-site roads to resettlementsites.

54. Public Buildings (Rs. 261 million). The project would include repair andreconstruction of: (a) state buildings, comprising residential buildings, administrative buildings,primary health centers, hospitals, polytechnics and industrial training institutes; and (b) ZillaParishad buildings, comprising residential and administrative buildings and rural health centers.

55. School Buildings (Rs. 443 million). This component would include the reconstructionof about 815 rooms in two districts and repairs to 9,811 rooms in eight districts in 955 primaryand 27 secondary schools.

56. Irrigation (Rs. 659 million). The program would include short-term and long-termrepair and strengthening of irrigation structures and buildings to conform to the required seismiczone. The short-term work would include repair and strengthening of embankments in theLower Terna dam and the Talni aqueduct, strengthening of embankments less than 10 meters inheight, repairs to about 1,475 percolation tanks in Latur and Osmanabad districts, strengtheningof 180 kilometers of Kohlapur-type weirs and repair and reconstruction of offices and quarters.

S This component does not include funds for power supply and distribution (Rs. 120 million). It has beenagreed that from the Second Maharashtra Power Project (Loan 3498-IN) would be used to finance repairs to thedistribution system and the connections to the new villages.

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57. The strengthening of 156 embankments, greater than 10 meters height, in Latur andOsmanabad districts, would be undertaken following studies and recommendations of the stateDam Safety Panel, which has yet to be appointed. To conform to the Association'srequirements, the findings will be subject to a review by an independent dam safety reviewpanel. Following this review, the GOM Irrigation Department would prioritize the works forexecution. A provisional sum of Rs. 348 million has been allowed for these works. Once thestudy is completed, a prioritization exercise would be undertaken to develop the investmentprogram, which would be agreed with the Association prior to implementation.

58. Repairs and Strengthening of Historic Monuments (Rs. 119 million). Acomprehensive study would be undertaken by specialist consultants to review the damage toprotected (state) monuments and other monuments administered by private trusts, in order todevelop a meaningful rehabilitation program. Following this study, the essential and necessaryrestoration program would be undertaken after a prioritization exercise. The study would alsoinclude preparation of drawings necessary for repairing the structures and would cover 19protected monuments and a sample of other monuments yet to be identified. An expertcommittee would be formed to assist in identification and selection of consultants, and advise onthe methods of repair and restoration.

Conununity Rehabilitation (Rs. 301 million)

59. The costs of works and materials borne by the GOM when re-establishing the essentialservices in the transit housing areas would be eligible for financing under the project, providedtheir procurement was carried out under procurement procedures acceptable to the Association.The items that fall under this category are: (i) the replacement of medicine stocks (other thanthose provided by donors) for human and veterinary services; (ii) the construction of transitshelters; and (iii) the provision of services for the transit housing areas.

Economic Rehabilitation (Rs. 185 million)

60. The program includes the provision for replacement and reconstruction, on a grant basis,of business losses. This would include replacing farm implements, minor equipment, bullocks,milch cattle, sheep and goats, repairing dug irrigation wells, and providing rehabilitationprograms for artisans and those operating small businesses.

Social Rehabilitation (Rs. 397 million)

61. The program would make provision for special facilities and activities to address theneeds of women and children affected by the earthquake, and marginal improvement of facilitiesthroughout the 13 districts. It would address the broad areas of: shelters for destitute womenand female children, orphans and the handicapped children; counseling and trauma care; andeconomic rehabilitation to assist women in becoming independent. The program would provide2 district resource centers, 10 Balika Sadans, 52 community centers, construction of homes forthe aged and the handicapped, and 2,067 anganwadis. Start-up recurring costs would also beprovided for the district resource centers. Provision would also be made for employmenttraining and a village development fund, which would provide opportunities for self-helpincome-generating activities for women affected by the earthquake. Prior to utilization of fundsearmarked for the village development fund, the GOM will prepare a detailed proposalacceptable to the Association.

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Environmental Impact

62. This is a Category B project. It would raise the quality of the environment in the newvillages above the standards to be found in the older villages in the region. The more generousprovision of standpipes for drinking water and the twin-pit latrines in every dwelling unit wouldmake a major contribution to the health and welfare of the local population. However, noproject that involves the relocation of such a large number of people is expected to have onlypositive environmental impacts. To examine the potential environmental effects of each newvillage, the GOM has agreed to provide the Association with an environmental statement foreach relocation village and to demonstrate how any adverse impacts would be mitigated. Theissues to be addressed would include surface water drainage, water supply, sanitation, anyreduction in the land available for agriculture and changes in the economic status of the farmingpopulation.

Social Issues

63. The local population was shocked by the earthquake and continues to be disturbed by theaftersho.,ks. Throughout the region most people appear to have lost confidence in their oldvillages and want to move to earthquake-resistant houses in a new location. In most villagesmany people are still living in temporary shelters because they are afraid of their old houses.Village relocation under this project is voluntary.

64. To minimize any negative impacts of the resettlement program the GOM has preparedand is in the process of publishing a full rehabilitation policy and has made arrangements forimplementation plans to be discussed in each village. Appropriate appeals procedures have alsobeen built in. The agreed planning process is community-based so as to ensure, as far aspossible, that the designs of the new houses and villages are acceptable to the people who wouldlive in them. Additionally, a rehabilitation action plan has been prepared to the satisfaction ofthe Association, to mitigate the effects of land acquisition for relocation villages.

65. The program also begins to address the problems caused by the loss of confidence of thelocal people in their old houses and in the traditional building materials. The project includesthe construction of model houses and a pilot program for the strengthening of the traditionalhouses. It also includes a confidence-building program as a part of the component fordeveloping a disaster management system.

Technical Assistance, Training and Equipment (Rs. 662 million)6

66. This component would provide assistance to both the GOM and the GOI for projectpreparation and implementation, training and equipment. At the state level, the inputs wouldinclude training of small contractors and artisans, and of NGOs, consultants' advice for variousstudies and services, incremental costs connected with the PMU operations, recurrent costs ofsocial programs and off.ce equipment, field equipment, vehicles, and ham radio communicationsfor the disaster management system. At the GOI level, assistance would be provided to the

6 Excludes recurrent costs of social programs, which are shown under Social Rehabilitation.

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Ministry of Science and Technology to develop a program for seismic monitoring and research.About US$250,000 would be used from the Project Preparation Facility offered by IDA.

67. Project Preparation and Implementation. The services needed by the GOM tofacilitate project preparation and implementation would include:7

(a) program management experts;

(b) local and foreign earthquake engineering experts to design the strategy for thereconstruction, in-situ, and the methods for reconstruction, repair andstrengthening of existing buildings;

(c) consultants for the condition survey and rehabilitation of public buildings;

(d) consultants for the condition survey and rehabilitation of historical buildings;

(e) consultants to undertake the condition survey and advise on strengthening ofmajor bridges;

(f) the independent dam safety review panel to study dam strengthening;

(g) consultants experienced in earthquake engineering to investigate and test, both inthe laboratory and in the field, stone masonry strengthening and repair solutionsto be adopted in the affected areas;

(h) experts for preparation of educational video films for confidence-building andpublic awareness;

(i) architectural, engineering and planning consultants to prepare detailedarchitectural and engineering designs and drawings and contract documentation;

(j) consultants for quality assurance and technical audit functions;

(k) consultants to advise on community participation and to monitor the process;

(I) consultants for preparing the detailed engineering and contract documentation forthe regional water supply schemes;

(m) consultant for developing the State of Maharashtra disaster management system;

(n) consultant to advise on emergency radio communication network;

(o) experts to train village builders and artisans, and NGOs; and

(p) consultants to advise on the development, implementation and managing of theearthquake monitoring and research.

Terms of Reference have been prepared and agreed for each consultancy.

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68. Training of Construction Personnel. A primary objective of the housing programn isthe transfer of technology to small contractors and local artisans so as to promote the use ofearthquake-resistant building technology and the safe use of local building materials, particularlystone. The program would develop three approaches to meet this objective: (a) establishment ofbuilding centers by the Housing and Urban Development Corporation (HUDCO) for trainingvillage builders and artisans of various profiles; (b) introduction of new least-cost buildingmaterials; and (c) provision of training programs organized by a PMU.

69. The structured program of training by the PMU would include the use of specialists totrain the trainee instructors who would, in turn, train local artisans and NGOs. The trainingwould cover hands-on building works, educational materials and training classes throughout the13 districts where stone masonry has been used to build the traditional village houses. ThePMU would organize the training through individual specialists or through an appropriatequalified institution. Proposals would be developed by the PMU for review and approval by theAssociation.

70. Disaster Management System. It h?s been agreed that the disaster managementprogram for the state of Maharashtra will have a multi-disaster focus. In addition to being anearthquake-prone area Maharashtra is known to be affected by floods and cyclones on a regularbasis and portions of its Marathwada region are long-term drought areas. A hazardpreparedness, mitigation and prevention strategy that addresses all relevant disasters would bemuch more likely to engage and maintain the attention of the general public and interest ofpolitical decision makers. The plan would be defined with the help of consultants financedunder the project. In addition the project would finance mobile HAM communication equipmentat 24 centers.

71. Disaster management system consists of the following components: (a) risk assessment,(b) research and technology transfer, (c) education and training, (d) implementation of hazardreduction strategies in the built environment, and (e) emergency preparedness planning. Allfive components are of equal importance, and the absence of any one of them could underminethe efficiency of the whole system. The program would develop a disaster management systemfor the state of Maharashtra, with an emphasis on disaster emergency response, disasterawareness, and education. One educational component would be to build confidence in the newconstruction techniques within the communities recovering from the earthquake.

72. The system would have a multi-disaster, natural and manmade hazard focus, and wouldtarget the political and administrative decision-makers, school chiidren, and the public at large.Audience-specific awareness and education campaigns would be organized; attention would bepaid to continuing education; and training workshops would be planned and conducted forcontractors, developers, design professionals (including architects, engineers and planners), andmembers of the construction industry in both the formal and the informal sectors. In this respect,special attention would be paid to education and training of village masons and artisans in soundconstruction practices, including the aseismic component. A consultant would be appointed tostudy the available institutional structuie of the State of Maharashtra and to develop a proposalfor a state-wide system of integrated disaster management.

73. Earthquake Monitoring and Research. This would be a GOI-managed projectcomponent. The Killari disaster points to the need to augment earthquake research efforts inSouth India. India has a well-developed earthquake research community, including a number of

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leading seismologists and earthquake engineers. Several national and state organizations have along track record of significant contributions to the overall understanding of Indian and globalseismicity, as well as of the effect of earthquakes on buildings.

74. To initiate a systematic study of earthquake activity in the southern part of India, itwould be necessary to deploy an array of strong motion instruments in the middle and southernportion of the Indian peninsular shield. Additionally, portable strong motion instruments wouldalso be provided to enable appropriate monitoring of earthquake aftershocks. The project wouldfinance earthquake monitcring equipment to be managed by the GOI's Ministry of Science andTechnology. The component would be implemented through a consortium of research agenciesin India. The proposed improvements to seismic monitoring, data processing, staff training anddata sharing would be refined following discussions between all interested parties in India andwith the assistance of an international advisory group. A provisional allocation of Rs. 250million would be provided in the project. Expenditures for this component would be approvedonly after the Association had reviewed a formal proposal endorsed both by the members of theIndian research conmmunity and the international advisory group.

Program Financing

75. The total program cost estimate including contingencies is US$327.8 million, with aforeign exchange component of US$32.7 million (10 percent). The proposed Credit of US$246million would finance about 78 percent of program costs, excluding taxes and duties, which areestimated at US$15 million. The GOM would finance US$39.7 million (12 percent of programcost) and the GOI would finance US$1.0 million (0.5 percent of program cost). Donors wouldfinance US$41.1 million (12.5 percent of program cost). The donor contribution includes 10million Pounds Sterling (about US$15.3 million) of cofinapcing from the British government,which has been agreed in principle. Parallel financing of US$0.6 million from ADB has alsobeen agreed in principle to finance program implementation support. The repair andreconstruction of power supply and distribution estimated to cost about US$4.0 million would beseparately financed out of the Second Maharashtra Power Project.

D. PROGRAM MANAGEMENT

76. Experience from other emergency projects indicates that effective project managementwould require the following:

(a) a strong manager and management team with drive, leadership, and authority;

(b) an autonomous implementing agency with full administrative and financialpowers including delegated powers to procure goods, works and serviceswithout reference to higher levels;

(c) a steering committee that would provide guidance and prompt action to removeobstacles;

(d) availability of requisite technical inputs recruited from outside theadministration;

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(e) availability of project management experts recruited from outside theadministration; and

(f) capability and capacity to monitor and report on the program, trouble shoot, andadopt corrective measures where appropriate.

Program Management Structure

77. To address these requirements, the GOM has introduced a three-tier institutionalframework:

(a) cabinet sub-committee under the chairmanship of the Chief Minister for programpolicy and guidance;

(b) Central Implementation Group (CIG) under the chairmanship of the ChiefSecretary for monitoring and facilitation. Other members of the CIG wouldinclude: Principal Secretary (Finance Department), Secretary and SpecialCommissioner (Earthquake Relief and Rehabilitation); and

(c) Program Management Unit (PMU) with overall responsibility for implementingthe program. The PMU would be headed by the SCER, which is a special postcreated for implementing the program. The SCER-PMU would be thenominated Project Director (PD), who would have full administrative andfinancial responsibility including approval of village and house planning, projectpreparation, contract awards, construction supervision, monitoring andreporting. The PD would be assisted by a consultant project management teamassembled from outside the GOM.

78. The GOM has agreed to introduce the following operating procedures to facilitateprogram implementation:

(a) the PD will be delegated full administrative and financial powers for theimplementation of the program, including the award of contracts;

(b) a new budget head will be created for the Emergency Earthquake RehabilitationProject;

(c) the PD will have the powers to allocate funds to the line departments forprogram implementation;

(d) the PD will employ a program management consultant team to drive and monitorprogram implementation;

(e) the PMU will be staffed with technical officers, administrative officers (ofDeputy Collector rank), financial officers and sociologists from othergovernment departments against posts created for the PMU-

(f) the PMU would engage external experts for village planning and design ofhousing and infrastructure services, earthquake and structural engineering,

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damage assessment, monitoring and supervision of works, communityparticipation, and for any other specific short-term activities;

(g) the PMU will be fully responsible for all housing components;

(h) for non-housing activities, teams of specialist staff will be created in eachconcerned line department for program implementation;

(i) for contract awards, the special teams from line departments will carry out bidevaluations and submit their recommendations directly to the PMU, withoutrouting them through their own departments;

(j) the District Collector of each district in the affected area would act as an agentof the PMU to coordinate and monitor project activities and provide logisticalsupport to the PMU. The District Collector would be assigned an AdditionalDistrict Collector who would be engaged full time on the program activities.The District Collector would be empowered to provide administrative approvalsfor sub-projects up to a fixed value;

(k) the Chief Engineer of the PMU will have full power for technical sanctions andaward of contracts; and

() an independent full-time quality assurance and technical audit team will beestablished to review the delivery and quality of the program outputs and toassess whether they meet program objectives.

Program Implementation

79. Implementation Period and Credit Closing. The program would be implemented overa three-year period. The Credit closing date has been fixed for June 30, 1997.

80. Agencies. The PMU will be responsible for implementation of the whole program. ThePMU will be directly responsible, through its own staff and consultants, for implementation ofthe housing components. For the relocation villages, PMU would engage consultants to preparehouse designs, village layouts, engineering designs and contract documentation. They wouldalso carry out supervision of works and contract administration. PMU's technical officers,assisted by specialists, would be responsible for the reconstruction of individual houses in theold villages and the repair and rehabilitation components. The non-housing components wouldbe implemented by the line departments, but under the overall supervision of the PMU. A barchart indicating the implementation phasing of the various components is given in Attachment 4.

81. Ownership and Quality at Entry. Considerable emphasis would be placed on theproject ownership through an extensive consultative process with the affected people,particularly those slated for relocation to new relocation villages, even though this would be anentirely voluntary exercise. Through village groups and committees, the affected people wouldbe involved in site selection, layout development, house designs, plot allocation, and monitoringthe construction by contractors, and sometimes, the construction process itself. For theindividual house construction (of 29,600 units), and repair and rehabilitation (of 180,000 units),the work would be undertaken as a community-based owner-controlled exercise assisted by the

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PMU officers and specialists. The GOM has agreed that the time investment in communityparticipation would be worthwhile. Despite the emergency nature of the program, detailedengineering design, working drawings and contract documentation were ready by negotiationsfor about 25 percent of the relocation villages, and for other infrastructure such as roads andirrigation works these were ready by negotiations.

82. Quality Assurance and Technical Audit. In addition to the supervisory functionscarried out by program consultants and line agency staff, the project would provide foradditional independent checks of quality of work and an audit of assets created. Thismanagement tool would be used by the PMU and the CIG to review the delivery and quality ofproducts, to assess whether they meet program objectives, and to take necessary corrective steps.The functions of quality assurance and technical audit would be done by independent consultantswho would visit the work sites periodically, but no less than once a quarter. They would reporttheir findings to the PD and the Chief Secretary (in the capacity of chairman of the CIG).

83. Procurement. All procurement of works, goods and consultancy services would be inaccordance with the Association Guidelines. Procurement plans, giving details of theprocurement arrangements for all project expenditures to be financed by the Association, areagreed. The procurement methods are summarized in Schedule B attached to the MOP. Biddocuments have been agreed, based on the Association's standard bid documents for civil worksand goods procurement. These will be used by all agencies.

84. For housing and infrastructure in the 49 relocation villages, about a quarter of thehouses to be reconstructed in situ (7,000 units), and other civil works, the contracts would besmall. They would also be scattered over the districts of Latur, Osmanabad and Solapur, located500 kilometers from Bombay. The contracts for these would be unlikely to attract interest offoreign contractors, and the bidding would use LCB procedures acceptable to the Association.These would total about US$142 million and vary in value from Rs. 10 million (about US$0.3million) to Rs. 100 million (about US$3.2 million). Bids would be invited on a "slice andpackage" basis. Post-qualification would be adopted for all LCB contracts with the minimumqualifying criteria fixed for each slice and group of slices.

85. Procurement of small and emergency works, such as restoration of essential services,and embankment repair costing less than US$100,000 each (estimated total of US$7.7 million)would be carried out either by force account, or by limited local bidding (that is, inviting bidsfrom not fewer than three bidders, from a pre-selected list of bidders meeting minimumqualification criteria).

86. The balance of the sub-component for housing reconstruction, repair andrehabilitation in-situ (22,600 houses and 180,000 damaged houses) will be carried out throughcommunity-based construction by owner-controlled mechanisms using small contractors,artisans, or the house owner's own labor, assisted by NGOs, with PMU staff providing thetechnical support to produce earthquake-resistant houses and using materials provided by thegovernment. The GOM is required to prepare an action plan acceptable to the Association toimplement this sub-component prior to construction. Subject to the agreement of the actionplan, it is proposed that the GOM would procure the materials through a mixture of ICB,estimated at US$56 million, and LCB procedures estimated at US$27 million. They would bedistributed through materials stores operated by the PMU or concessionaires. Except for sand,

-21 -

gravel, bricks, blocks and other basic building materials, all other materials would be procuredon the basis of ICB.

87. To estimate the cost of the repairs the PMU would develop unit labor rates for differentitems of work, based on bid prices received for contractor-built houses. Contracts would bebetween the homeowner and small contractors or NGOs. Fund allocations to beneficiarieswould be based on the extent of damage, varying from about Rs. 1,000 (about US$35) up to amaximum of Rs. 54,000 (about US$1,730), the latter being the value of a 250 square foot corehouse. Materials and funds would be made available to eligible beneficiaries on a staged basiswith appropriate control mechanisms. Labor cost for owner-controlled works is estimated atUS$15 million.

88. Contracts for other equipment, materials and vehicles costing US$200,000 or morewould be procured under ICB procedures. Contracts under US$200,000, up to an aggregate ofUS$30 million, would be procured using LCB procedures acceptable to the Association. Localshopping following three quotations would be used for items such as seismic equipment andcomputers, and for the purchase of equipment, materials and vehicles, costing less thanUS$50,000 each, up to a total of US$2 million.

89. Beneficiary purchases at livestock markets and fairs, under the supervision of veterinaryofficials, would be used for procurement of livestock costing up to US$500 each, up to anaggregate of US$2 million.

90. Prior reviews would apply to contracts for works costing US$500,000 or more, totalingan estimated US$100 million (about 50 percent of works), and contracts for equipment, materialsand vehicles costing US$200,000 or more, totaling an estimated US$80 million (70 percent ofmaterials and equipment).

91. Consulting services would be procured in accordance with Association Guidelines onthe Use of Consultants. Some services which are required on an emergency basis and wherework must begin immediately may be procured on a sole-source basis, subject to theAssociation's approval of the consultant selection and the consulting contract including terms ofreference and work plan. A mixture of consulting firms and individuals is anticipated. Thesesole-source consultancies would be for community planning, village and house designs,infrastructure service designs and seismic experts. Consultant services will be procured largelyfrom Indian sources, but some experts for the dam safety review panel and some seismic expertswould be from overseas. The aggregate value of sole-source consulting services is estimated atUS$1.5 million, out of the total of about US$3.4 million allocated. Other consulting serviceswould be procured following the preparation and Association approval of short lists, terms ofreference and draft contracts, the invitation of proposals, and the award of the contract after theAssociation's approval of the proposal evaluation report and the Association's review of thewinning proposal.

92. Bid Evaluation and Award. Pre-qualification of contractors is not proposed because ofthe nature and size of works and the time constraints. Post-qualification criteria would beexplicitly stated in the bidding documents, and those who do not meet the criteria would bedeclared unresponsive. The two-envelope system for civil works contracts would not beacceptable. Bids would be received on the prescribed day, following a bidding period of 30days minimum (this would vary from 30 to 90 days depending on the size of the package), and

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opened in public. All bids would be opened and read out irrespective of whether or not the bidsecurity was enclosed. If the bid did not meet the post-qualification criteria or did not containthe bid surety, such bids wou'.. be rejected, even if they were the lowest bid. Bids would beevaluated and awarded within the original bid validity period, which would not exceed 90 days.Re-bidding to obtain lower prices will not be permitted, unless adequately justified and approvedby the Association beforehand.

93. The Association's prior review and approval of tender documents, prior to tenderinvitation, and of tender evaluation reports prior to contract award would be required forcontracts for works costing US$500,000 equivalent or more, and contracts for equipment,materials and vehicles costing US$200,000 equivalent or more.

Disbursements

94. The project is expected to be implemented in three years, with a Credit closing date setfor June 30, 1997. Retroactive financing for expenditures incurred between the date of theearthquake and Credit signature would be eligible for disbursement. A maximum of SDR 10million (about US$14 million equivalent) will be required for this purpose.

95. The proceeds of the Credit would be disbursed against eligible expenditures at thefollowing percentages: 75 percent of expenditures for civil works, 100 percent of foreignexpenditures, 100 percent of local ex-factory expenditures, and 80 percent of expenditures forother items procured locally for materials, equipment and vehicles; 100 percent for projectpreparation and implementation support and training; and 75 percent of expenditures forincremental costs of PMU and recurrent costs of social services. An estimated schedule ofdisbursements is given in Attachment 2 and summarized in Schedule B of the MOP.

96. To facilitate project implementation, a Special Account would be established in USdollars at the Reserve Bank of India with an initial deposit of US$20 million, equal to aboutthree-months expenditures, from which project expenditures would be reimbursed. The GOIwould, throughout the life of the project, release about three months worth of anticipated projectexpenditures, in advance, to the GOM. The GOM would make similar advances to theimplementing agencies promptly after such releases, for project expenditures, through setting upthe Letters of Credit, release of funds and governrnent orders to implementing agencies, inaccordance with the normal procedures for financing state expenditures.

97. Disbursements against civil works contracts of under US$0.5 million, contracts formaterials under $200,000 and incremental operating costs would be made against Statements ofExpenditures (SOEs). All other payments would be made against full documentation. Allsupporting documents for SOEs would be retained by the responsible participating agencies, andappropriately filed to enable easy access for subsequent review and audit.

98. For those expenditures that have been authorized for the use of SOEs, the Association'snormal procedures would be followed. SOEs would be certified by the GOI as representingeligible project expenditures and on which basis (in addition to the normal documentation suchas Withdrawal Application and Special Account Statement) the expenditures would bereimbursed from the Special Account, which would subsequently be replenished by theAssociation.

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99. The procedure for preparing SOEs would be as follows:

(a) project expenditures would be summarized monthly for each participating agencyor department under expense headings agreed %,ith the Association and wouldaccompany a sub-SOE (an SOE for a single agency or department) which wouldbe certified by the designated signatory ar.d forwarded to the PMU within fiveworking days of the end of each month;

(b) the PMU would summarize the sub-SOEs into an SOE which would be certifiedand forward within 10 days of the end of each month to the of the GOI forprocessing and reimbursement from the Special Account. (All supportingdocumentation for the SOEs would be retained by the responsible participatingdepartment or agency and filed for purposes of future review and audit);

(c) throughout the life of the project, the GOI would advance about three monthsworth of expenditures to the GOM. Promptly after each advance is received, theGOM would make similar advances, for project expenditures, to theparticipating departments and agencies, through setting up the Letters of Credit,release of funds and government orders; and'

(d) the GOM would make counterpart funds available in a timely manner throughinclusion in the annual state budgets including a supplementary provision untilthe next budget plan is prepared.

Accounts, Audits and Reports

100. The project accounts would be maintained according to the following guidelines:

(a) the project accounts prepared by each participating department or agency wouldbe subject to the normal GOI and GOM accounting procedures and controls withthe added requirement that a separate heading would be created in the accountsfor each department or agency with appropriate sub-headings for each sub-component of the project;

(b) the monthly summaries, prepared to support the sub-SOEs, would provide the"basic building block" for the project accounts maintained by the PMU withappropriate cross-referencing to allow the "paper trail" to be followed. Non-SOE expenditures would be separately incorporated into the accounts and copiesof the related documentation retained for inspection;

(c) the project accounts would be summarized on an ongoing basis to show:

(i) actual versus planned expenditures for each quarter;(ii) how expenditures are financed, by the Association and the

GOM;(iii) actual versus planned expenditures to date; and

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(d) appended to the project accounts would be a listing of the WithdrawalApplications for the period concerned, showing the amounts reimbursed.Unaudited project accounts with this attachment would be eubmitted by thePMU, on a quarterly basis to reach the Association within 45 days after the endof the quarter.

101. The Accountant General of the Maharashtra would be considered the acceptable auditor.Audited project accounts, including SOEs and accompanied by an auditor's report, would besubmitted annually to the Association, no later than nine months after the end of each fiscalyear.

102. The Auditor General of India would be the acceptable auditor for the Special Account.The Auditor's Report, accompanied by a Summary Statement of the Special Account, would besubmitted to the Association no later than nine months after the end of each fiscal year.

103. The PMU would prepare a quarterly progress report in an agreed format, showing thephysical progress of each project component, compared against the agreed plan with anexplanation for each deviation and listing the remedial action taken. Such quarterly reportswould be submitted to the Association concurrently with the quarterly accounts discussed above.A list of performance indicators is included as Attachment 5.

Attachment 1

INDMA: MAHARASHTRA EMERGENCY EARTHQUAKE REHABILITATION PROJECT

Si. US$ million Rs. millionNo. Component Local Foreign Total Local Foreign Total

1.0 HOUSINGLand 2.2 0.0 2.2 70.0 0.0 70.052,600 Core Houses(1) 17,500 in 49 resettlement villages 34.4 3.8 38.2 1135.4 126.2 1261.6(2) 5,500 in 49 villages by Donors 12.1 1.3 13.4 393.3 43.7 437.0(3) 29,600 in other villages 43.1 4.8 47.9 1432.3 159.1 1591.4

Repair, Restoration of damaged houses(180,000 nos) 50.2 5.5 55.7 1665.0 185.0 1850.0Pilot Strengthening of undamaf 4 houses 1.3 0.2 1.5 45.0 5.0 50.0Model houses (500 nos) 1.0 0.0 1.0 32.5 3.5 36.0

2.0 INFRASTkUCTUREIn Resettlement Villages:On and Off-site Infrastructure 15.2 1.5 16.7 498.8 54.3 553.1Civic Amenities 10.6 1.1 11.7 348.4 38.6 387.0In the Districts:Roads, culverts and minor bridges 5.6 0.6 6.2 178.0 19.8 197.8Irrigation 13.5 1.5 15.0 449.2 49.8 499.0Transit housing 1.7 0.1 1.8 55.3 6.0 61.3Public Buildings 5.9 0.7 6.6 194.7 21.6 216.3School Buildings 9.9 1.1 11.0 330.1 36.6 366.7Repair to Historical Monuments 2.5 0.2 2.7 81.0 9.0 90.0

3.0 SOCIAL REHABILITATIONConstruction of social infrastructure buildings 7.2 0.5 7.7 236.6 25.7 262.3Social forestry in old & new villages 0.3 0.0 0.3 10.0 1.0 11.0Training and village development fund 2.5 0.2 2.7 80.8 9.0 89.8Recurring costs 0.4 0.0 0.4 12.0 0.0 12.0

4.0 ECONOMIC REHABILITATION 4.8 0.3 5.1 150.9 16.8 167.7

5.0 COMMUNITY REHABILITATION 7.7 0.9 8.6 250.5 27.8 278.3

6.0 TECHNICAL ASSISTANCE, TRAININGAND EQUIPMENTProject preparation and implementation supp 2.6 0.5 3.1 85.1 14.9 100.0Incremental cost of Project Management Unit 2.6 0.4 3.0 85.0 15.0 100.0Training, study tours 1.6 0.0 1.6 50.0 0.0 50.0Materials & equipment: State Level 2.4 0.2 2.6 75.6 8.4 84.0Materials & Equipment: Central Level 3.0 4.5 7.5 100.0 150.0 250.0

PROGRAM BASE COST 244.3 29.9 274.2 8045.5 1026.8 9072.3TOTAL PHYSICAL CONTINGENCIES 6.0 0.1 6.1 178.5 19.0 197.5TOTAL DESIGN, SUPERVISION AND MG 13.6 1.2 14.8 443.8 52.0 495.8TOTAL PRICE CONTINGENCIES 31.2 1.5 32.7 1030.5 73.7 1104.2TOTAL OF PROGRAM 295.1 32.7 327.8 9698.3 1171.5 10869.8

Attachment 2

INDIA: MAHARASHTRA EMERGENCY EARTHQUAKE REHABILITATION PROJECT

Estimated Schedule of Disbursements

IDA CreditUS$ million

Quarter Ending Year Bank Fiscal Year Quarter Cumulative Percent Total Credit

March 31 1994 1994 0.0 0.0 0.0%June 30 1994 9.3 9.3 3.8%

September 30 1994 1995 10.0 19.3 7.8%December 31 1994 12.0 31.3 12.7%March 31 1995 15.0 46.3 18.8%June 30 1995 17.0 63.3 25.7%

September 30 1995 1996 17.0 80.3 32.6%December 31 1995 18.0 98.3 40.0%March 31 1996 20.0 118.3 48.1%June 30 1996 22.0 140.3 57.0%

September 30 1996 1997 25.0 165.3 67.2%December 31 1996 26.0 191.3 77.8%March 31 1997 28.0 219.3 89.1%June 30 1997 20.0 239.3 97.3%

September 30 1997 1998 6.7 246.0 100.0%

Attachment 3Page 1 of 2

INDIA: MAHARASHTRA EMERGENCY EARTHQUAKE REHABILITATION PROJECT

Community Participation Procedures

Rapid Assessment of People's Views on House Design

1. Identify major groups within a village (on the basis of caste, class, etc.).

2. Ask each of the identified groups to show layouts of their earlier houses (on paper or onthe ground).

3. Visit some of the existing old houses in the village with the people.

4. Discuss space use and important features of the houses.

5. Ask them to list out the features of the earlier houses that they would like to retain (to beshown on the diagram with the location).

6. Ask them if there are any new features that they would like to see in their new houses andwhere should these be located (to be shown on the diagram).

7. Ask the people to sketch out the layout of the new houses (as they would like to seethem). Provide outeines of the plots in square and/or rectangular shapes.

8. Architects to prepare 3-4 different house designs (for each of the three categories) on thebasis of these inputs from the people.

9. Prepare scale models of these designs.

10. Take these back to the village and show them to the people (in groups) and get theirfeedback.

11. Make necessary changes and finalize the choice of designs.

Planning the Village Layouts

12. This process has to be carried out in every village.

13. Ask the people to prepare a layout of the old village (on ground or on paper).

14. Ask them to show (on the diagram) the important features of the old village.

Attachment 3Page 2 of 2

15. Walk through the old village with the people and ask them to explain the layout (alsoobserve and ask questions).

16. Walk through the new site with different groups of people to understand the spaceavailable.

17. On a blank site outline (on paper) ask different groups to indicate their preferred spaceuse (houses, open spaces, roads - shape, width and length, configuration, infrastructure, services,community buildings and spaces, etc.

18. Refer to the old village layout and ask them to indicate the features that they would liketo retain (also what they don't want and any new features that they may like).

19. Presentation of the analysis done by different groups in a village meeting and arrive at aconsensus on broad delineation of space use and infrastructure.

20. Planners to prepare a site layout on the basis of inputs provided by the people. (Morethan one option can also be generated.)

21. Take the proposed layout(s) to the village and discuss, in groups, with the people.

22. Incorporate their feedback and finalize the plan.

23. Display the plan in the village.

Attachment 4

INDIA: MAHARASHTRA EMERGENCY EARTHQUAKE REHABILrTAnON PROJECT

Implementation Schedule

1994 1995 1996 1997ID Name Qtr 4 Qtr I1 Otr 2 Qtr 3 Otr 4 Qtr Otr 2 Qtr 3 tr4 Qtr1 QItr 2 tr 3 Qtr4 Qtr 1 Qtr 2 Qtr 3 |Otr 4

2 17,500 Houses __

3 5,500 Donor Houses

4 29.000 Owner Houses

5 180,000 repair housing

6 500 Model Houses

7 5,000 Strenghthening

8 Infrastructure

9 On/Off site

10 Civic Amenities

11 Roads

12 Irrigation

13 Transit housing

14 Public buildings

15 Schools

16 Monuments

1.7 Community Rehabilitation

18 Social Rehabilitation

19 Construction of builOings

20 Program Actvities _ __

21 Economic Rehabilitation

22 TA. Training & Equipment

23 Consultancy services _ /'

24 Trainirng , I ~ ' ' "

25 Equipment & VehNcles

Attachment 5Page 1 of 3

INDIA: MAHARAsHTA EMERGENCY EARTHQUAKE REHABIUTATION PROJECT

Performance Indicators

Project Objectives Activity Indicator Comment

1. Assist with earthquake Establish PMU Alra establishedrehabilitation and reconstruction

Appoint consultants for:

- project management Appointment of consultants TOR and short list prepared forreview by Bank

- project preparation Appointment of consultants TOR and short list prepared;consultants appointed for first fourvillages

Villages reconstruction on new sites Number of plans approved by Five appmvedcommunities

Number of villages where complete Five approvedrehabilitation plans are published

Number of contracts advertised Procurement plans prepared for atlvillages

Number of contracts awarded

Percentage completion of eachcontract

Repairs to houses in-situ Appointment of seismic advisors TOR agreed; appointment prior toeffectiveness.

Preparation of action plan To be agreed before disbursement

Attachment 5Page 2 of 3

Infrastructure repair Number of contracts advertised Procurement plan agreed for all sub-components

Economic rehabilitation Number of villages where list ofbeneficiaries has been published andagreed with the community

Percentage completion ofprocurement

Percentage completion of benefitdistribution by village

Social rehabilitation Appoint consultants to prepar ICDScomponent

Prepare and agree implementationplan with IDA

Percentage implementation byvillage

GOM prpare implementation plan TOR agreed at negotiations

2. Increase resistance of buildings Strengthening of housing Select sample of housesand infrastructure

Number of houses strengthened

Strengthening of bridges Appoint consultants for survey

Approve plan

Advertise and award contract

Percentage completion of contract

Attachment 5Page 3 of 3

Strengthening of dams Appoint dam safety panel TOR approved at negotiations

GOM prepare dam strengtheningprogram

Panel to approve program

Advertise and award contracts

Percentage completion of contracts

3. To improve disaster Prepare disaster management plan Appoint advisors TORs agreed; appointment isresponsiveness and strengthen condition of effectivenessseismic research capability

Prepare plan

Approve plan

Purchase HAM radios

Implement seismic research Appoint international advisory panel TOR agreed at negotiationscomponent and IDA to approve research

proposal

GOI to establish/staff selectedorganization

Advertise and award contract

Percentage completion of contract

Attachment 6

INDIA: MAHARASHTRA EMERGENCY EARTHQUAKE REHABILITATION PROJECT

List of Main Documents Available in the Project File

Advisory Committee to the Government of India. 1993. Reconstruction of Houses Damaged inMaharashtra and Karnataka during the Earthquake of September 30, 1993. Report of the AdvisoryCommittee submitted to Government of India, New Delhi, on December 8, 1993. (Xeroxeddocument.)

Baker, Laurie. 1993. A Report concerning the Marathwada Earthquake. October 1993. (Xeroxedmaterial.)

Government of Maharashtra (GOM). 1993. Proposal for Maharashtra Earthquake RehabiliationProgram. Bombay: GOM.

IAEE. 1986. Guidelines for Earthquake Resistant Non-engineered Construction. Tokyo: TheInternational Association for Earthquake Engineering.

Indian Standard (IS). 1993. Improving Earthquake Resistance of Low Strength Masonry Buildings -- Guidelines. (S 13 828: 1993). New Delhi: Bureau of Indian Standards.

Indian Standard (IS). 1993. Repair and Seismic Strengthening of Buildings - Guidelines. (CED 395270). New Delhi: Bureau of Indian Standards.

Indian Standard (IS). 1990. Code of Practice for Earthquake Resistant Design and Construction ofBuildings (First Revision). (S: 4326 - 1976). New Delhi: Bureau of Indian Standards.

Indian Standard (S). 1986. Criteria for Earthquake Resistant Design of Structures (FourthRevision). (IS: 1893 -1984). New Delhi: Bureau of Indian Standards.

Intertect and the University of New Mexico. 1984. Vernacular Housing in Seismic Zones of India.Office of Foreign Disaster Assistance (OFDA), Agency for International Development (AID).

Jain, Sudhir K. et al. 1994. "The September 29, 1993, M6.4 Killari, Maharashtra, Earthquake inCentral India." EERI Special Earthquake Report, EERI Newsletter. January 1994. Oakland, Ca.:Earthquake Engineering Research Institute.

Seeber, Leonardo et al. "Surface Rupture and Damage Patterns in the Ms=6.4, September 29, 1993,Killari (Latur) Earthquake in Central India." NCEER Buletin. October 1993. Buffalo, NY:National Center for Earthquake Engineering Research.

TARU for Development. 1993. Action Plan for Reconstruction in Earthquake Affected Regions ofMaharashtra. New Delhi: Building Materials and Technology Promotion Council (Ministry of UrbanDevelopment, Government of India). October 21, 1993. (Xeroxed material).