OFFICIAL USE ONLY IDA/R2007-0125/1 May 16, 2007 Streamlined Procedure For meeting of Board: Tuesday, June 5, 2007 FROM: Vice President and Corporate Secretary India - Vocational Training Improvement Project Project Appraisal Document Attached is the Project Appraisal Document regarding a proposed credit to the Republic of India for a Vocational Training Improvement Project (IDA/R2007-0125). This project will be taken up at a meeting of the Executive Directors on Tuesday, June 5, 2007 under the Streamlined Procedure. Distribution: Executive Directors and Alternates President Bank Group Senior Management Vice Presidents, Bank, IFC and MIGA Directors and Department Heads, Bank, IFC and MIGA This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank Group authorization. Document o f The World Bank FOR OFFICIAL USE ONLY Report No: 39697-IN PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT INTHE AMOUNT OF SDR 185.1 MILLION (US$280 MILLION EQUIVALENT) TO THE REPUBLIC OF INDIA FOR A VOCATIONAL TRAINING IMPROVEMENT PROJECT May 9,2007 Human Development Sector Unit India Country Management Unit South Asia Region This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective April 30,2007) Currency Unit = Indian Rupee (INR) INR43.01 = US$1 US$1.51326 = S D R 1 FISCAL YEAR April 1 March31 ABBREVIATIONS AND ACRONYMS AG AH1 ASSOCHAM AT1 ATI-EPI BBBT C&AG CII CN COE CPWD css CSTARI CTI CTS cw DC DDO DEA DGE&T DGS&D DMF DVT EA EAP EDUSAT EMF FICCI FMM FTI GFR Go1 GPN HTW ICB IDA IDP IFB Accountant General in States Apex Hi-Tech Institute, Bangalore Associated Chambers o f Commerce and Industry o f India Advanced Training Institute Advanced Training Institute for Electronic and Process Instrumentation Broad Based Basic Training Comptroller and Auditor General o f India Confederation o f Indian Industry Consignment Note Centre o f Excellence Central Public Works Department Centrally Sponsored Scheme Central Staff Training and Research Institute Central Training Institute Craftsmen Training Scheme Civil Works Direct Contracting Drawing and DisbursingOfficer Department o f Economic Affairs Directorate General o f Employment & Training Directorate General o f Supplies & Disposals Disclosure Management Framework Directorate responsible for Vocational Training Environment Assessment Equity Assurance Plan Educational Satellite Environment Management Framework Federation o f Indian Chamber o f Commerce and Industry Financial Management Manual Foremen Training Institute General Financial Rules Government o f India General Procurement Notice Hi-tech Training Wing International Competitive Bidding International Development Association Institutional Development Plan Invitation for Bid i IFD IIT IMC IMP INR ITB ITC IT1 ITN ITW IUFR LIB LO1 LPP LR M&E MES MIS MHRD MoLE MoF MoU NCB NCVT NIMI NIOS NLI NPC NPD NPIU NSC NVTI NVQF OBC PA0 PLA PIP PMU PRI PWD QCBS RBI (CAS) RFP ROR RR RVTI SBD sc SCVT SIL SPD FOR OFFICIAL USE ONLY Integrated Finance Division o f M o L E Indian Institute o f Technology Institute Management Committee Instructional Media Package Indian Rupee Instruction to Bidders Industrial Training Center Industrial Training Institute Instructor Training Network Instructor Training Wing Interim Unaudited Financial Report Limited International Bidding Letter o f Invitation Last Purchase Price Learning Resource Monitoring and Evaluation Modular Employable Skills program o f the Go1 Management Information System Ministry o f Human Resources Development Ministry o f Labor & Employment Ministry o f Finance Memorandum o f Understanding National Competitive Bidding National Council for Vocational Training National Instructional Media Institute at Chennai National Institute o f Open Schooling W Gin National Labour Institute at Noida National Project Coordinator National Project Director National Project Implementation Unit National Steering Committee National Vocational Training Institute for Women National Vocational Qualifications Framework Other Backward Castes Principal Accounts Office, M o L E Personal Ledger Account Project Implementation Plan Project Management Unit Panchayati Raj Institution Public Works Department Quality and Cost Based Selection Reserve Bank o f India (Central Accounting Section) Retroactive Financing Period Rate o f Return Railway Receipt Regional Vocational Training Institute Standard Bidding Document Scheduled Caste State Council for Vocational Training Sector Investment Loan State Project Director .. 11 This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. I t s contents mav not be otherwise disclosed without W o r l d Bank authorization. SPIU ST TCPC TCPO TOR uc UNDB UT VET VTIP WBR No. State Project Implementation Unit Scheduled Tribe Training, Counseling and Placement Cell Training, Counseling and Placement Officer Terms o f Reference Utilization Certificate United Nations Development Business Union Territory Vocational Education and Training Vocational Training Improvement Project World Bank Reference Number Praful C. Pate1 Isabel M. Guerrero Fayez S. Omar Michelle Riboud Nalin Jena/Hong W. Tan Vice President: Country Director: Senior Manager, India Program: Sector Manager: Task Team Leader: ... 111 INDIA India Vocational Training Project CONTENTS . I STRATEGIC CONTEXT AND RATIONALE ................................................................. Page A . Country and sector issues.................................................................................................... B. Rationale for Bank involvement ......................................................................................... C . Higher level objectives to which the project contributes .................................................... ............................................................................................. 1 1 2 2 . PROJECT DESCRIPTION B. Project development objective and key indicators.............................................................. 3 D. Lessons learned and reflected in the project design ............................................................ 6 I1 A . Lending instrument ............................................................................................................. 2 2 C. Project components ............................................................................................................. 3 E. Alternatives considered and reasons for rejection .............................................................. 7 ...................................................................................................... 8 B. Monitoring and evaluation o f outcomes/results .................................................................. 9 . I11 IMPLEMENTATION A . Institutional and implementation arrangements .................................................................. . . . C . Sustainability ....................................................................................................................... D. Critical risks and possible controversial aspects................................................................. E. Credit conditions and covenants ....................................................................................... . IV APPRAISAL SUMMARY ............................................................................................. A . Economic and financial analyses ...................................................................................... B. Technical ........................................................................................................................... C . Fiduciary ........................................................................................................................... D. Social ................................................................................................................................. 8 9 9 11 12 12 13 14 15 E. Environment ...................................................................................................................... 16 F. Safeguard policies ............................................................................................................. 17 G. Policy exceptions and readiness. ....................................................................................... 17 iv ......................................................... Annex 1: Country and Sector o r Program Background Annex 2: Major Related Projects Financed by the Bank and/or other Agencies .................23 ........................................................................ Annex 4: Detailed Project Description...................................................................................... Annex 5: Project Costs ............................................................................................................... Annex 6: ImplementationArrangements ................................................................................. Annex 3: Results Framework and Monitoring ..................................... Annex 8: Procurement Arrangements...................................................................................... Annex 9: Economic and FinancialAnalysis ............................................................................. Annex 10: Safeguard Policy Issues............................................................................................ Annex 11: Project Preparation and Supervision ..................................................................... Annex 12: Documents in the Project File ................................................................................. Annex 13: Statement of Loans and Credits.............................................................................. Annex 14: Country at a Glance ................................................................................................. Annex 7: FinancialManagement and Disbursement Arrangements V 18 24 31 41 42 53 60 67 79 85 86 88 92 INDIA VOCATIONAL TRAINING IMPROVEMENT PROJECT PROJECT APPRAISAL DOCUMENT SOUTH ASIA SASHD Date: M a y 9,2007 Country Director Isabel M. Guererro Sector Managermirector: Michelle h b o u d J u l i a n F. Schweitzer Project ID: PO99047 Lending Instrument: Specific Investment Loan t [ ] Grant [ ] Guarantee Team Leader: Nalin Jena/Hong W. Tan Sectors: Vocational training (100 percent) Themes: Education for the knowledge economy (P); Other human development (S) Environmental screening category: Partial Assessment [ ] Other: For Loans/Credits/Others: Total Bank financing (US$ million): 280.00 Recipient: Government of India, Department o f Economic Affairs Ministry of Finance North Block, New Delh India- 110001 Tel: 91-11-23094140 Fax: 91-1 1-2309251U23092477 Responsible Agency: Government of India, Directorate General o f Employment and Training, Ministry o f Labor and Employment, Shram Shakti Bhawan Rafi Marg New Delhi India- 110001 Tel: 91-11-23710446 Fax: 91-11-23351878 Does the project depart from the CAS in content or other significant respects? Re$ PAD I.C Does the project require any exceptions from Bank policies? Re$ PAD I K G Have these been approved by Bank management? I s approval for any policy exception sought from the Board? Does the project include any critical r i s k s rated “substantial” or “high”? Re$ PAD III.D Does the project meet the Regional criteria for readiness for implementation? Re$ PAD [ ]Yes [XINO [ ]Yes [XINO [ ]Yes [ IN0 [ ]Yes [XINO [XIYes [ ] N o Project development objective Re$ PAD II.B, Technical Annex 3 The objective i s to improve the employment outcomes o f graduates f i o m the vocational training system, by making the design and delivery o f training more demand responsive. Project description [one-sentence summary of each component] Re$ PAD II.C, Technical Annex 4 Component 1: Improving Quality o f Vocational Training -This component focuses on: (a) improving quality and relevance o f training imparted in 400 eligible Industrial Training Institutes (ITIs) selected competitively from eligible StatesNTs, (b) upgrading training o f IT1instructors, and (c) providing incentive funds to States to reward good performance in project implementation. Component 2: Promoting Systemic Reforms and Innovations -This component focuses on activities that lead to enhancement in the overall reach and effectiveness o f the vocational training system in the medium-term. Implementation o f activities under this component will be the responsibility o f the Directorate General o f Employment and Training @GE&T), discharged in collaboration with States, industry associations and private training providers, as necessary. Component 3: Project Management, Monitoring and Evaluation - Support will be provided to: (a) establishment o f project management and implementation structures at the national and State levels, (b) improvements in system management and implementation o f reforms through training o f policy planners, managers and administrators, (c) project monitoring and dissemination o f information with the help o f a computer-based management information system, and (d) project evaluation and, policy and system research studies at the national and State levels. Which safeguard policies are triggered, if any? Re$ PAD I K F , Technical Annex 10 Environmental Assessment and Indigenous People Significant, non-standard conditions, if any, for: Re$ PAD I I I . E Board presentation: NIA b Credit effectiveness: NIA Covenants applicable to project implementation: T h e Government o f India (GoI), through Ministry o f Labor & Employment (MoLE), shall carry out i t s Parts o f the Project in accordance with the Project Implementation Plan (PIP) including the Environmental Management Framework (EMF) and the Equity Assurance Plan (EAP). The GoI, through the MoLE, shall establish and maintain throughout the period o f Project implementation, the National Steering Committee and the National Project Implementation Unit (NPIU) along with the Procurement Unit, the Finance Unit, the Institutional Development Unit, the Academic and Training Unit, the Monitoring and Evaluation Unit and the Policy Development Unit, all in form and with functions, resources and staffing satisfactory to the Association and as set out in the PIP. T h e GoI, through the DGE&T within the MoLE, shall enter into grant agreements with each awardee satisfactory to the Association for implementation o f Part 2.2 (Innovation Fund) o f the Project. The GoI, through the M o L E and in accordance with the PIP, shall: (a) cause each Project State participating in the Project to execute a Memorandum o f Understanding (MoU) with Addendum with each Project State ;(b) cause each Participating State t o carry out i t s activities under the Project in accordance with i t s respective M o U and the Addendum; (c) cause each Participating State to maintain throughout the period o f Project implementation the State Project Implementation Unit (SPIU), the State Steering Committee (SSC), the State Council o f Vocational Training (SCVT), all in accordance with the M o U and in a form and with functions, staffing and resources satisfactory to the Association; and (d) cause each Participating State to: (A) select Industrial Training Institutes (ITIs) in accordance with the eligibility criteria contained in the PIP; and (B) cause Project I T I s within such state to carry out their respective activities under the Project in accordance with the PIP and the respective M o U and the Addendum; all in a manner satisfactory to the Association. The GoI, through the MoLE, shall: (a) establish by July 3 1,2008 and thereafter maintain throughout the period o f project Implementation, a monitoring and evaluation system; and (b) monitor and evaluate implementation o f the Project at the national and state level with such system in accordance with PIP. The GoI, through the MoLE, shall: (a) by April 30 and October 30 o f each fiscal year provide Project Reports to the Association; and (b) by M a y 3 1 and November 30 o f each fiscal year review the implementation o f the Project with the Association; all in a manner satisfactory to the Association and as set forth in the PIP. The GoI, through the MoLE, shall and shall cause the Participating States and Project ITIs, to maintain financial management systems and to carry out the audits in a timely manner and in accordance with terms o f reference set out in the Financial Management Manual (FMM). The GoI, through the MoLE, shall and shall cause the Participating States and Project ITIs, to carry out all procurement under the Project in accordance with the World Bank’s Procurement Guidelines and Consultant Guidelines and the Procurement Manual. The GoI, through the MoLE, shall provide adequate financial and administrative powers to the National Project Coordinator (NPC) in the NPIU to enable such coordinator to facilitate implementation o f the Project. The GoI, through the MoLE, shall and shall cause the Participating States to implement the Disclosure Management Framework (DMF) throughout the duration o f the Project, refrain from taking any action which shall prevent or interfere with the implementation o f the DMF, not waive, amend or abrogate this Framework and, provide a written report on progress achieved in the implementation o f the Framework semi-annually. C I. STRATEGIC CONTEXT AND RATIONALE A. Country and sector issues 1. India i s a fast growing economy with a rising demand for skilled workers. A skilled workforce enhances the efficiency and flexibility o f the labor market, reduces skills bottlenecks, and enhances mobility and productivity. One o f the key suppliers o f such workers i s the vocational education and training (VET) system. A major component o f the VET system i s the Craftsmen Training Scheme (CTS) run under the auspices o f the Ministry o f Labor and Employment (MoLE) and the National Council for Vocational Training (NCVT) at the national level, and the State Departments dealing with vocational training and the State Council for Vocational Training (SCVT) at the State level. 2. The CTS, with 741,000 student places in 51 14 institutions, operates through two types o f institutions: (a) Industrial Training Institutes (ITIs) - financed and managed by State Departments dealing with vocational training and providing places for about 400,000 students in 1,896 institutes; and (b) Industrial Training Centers (ITCs) - owned, financed and managed by private organizations or NGOs and providing places for about 34 1,000 students in 3,218 centers. 3. However, graduates from the CTS system face l o w labor market outcomes. The Baseline Tracer Study (2006) conducted by the World Bank shows that less than 30 percent o f graduates from I T I s find employment upon graduation and employers feel that the lack o f appropriate technical skills (and corresponding “soft” skills -such as teamwork, innovativeness) o f these graduates makes them difficult t o employ. T h e employers believe that with the possession o f these skills, the graduates will become more marketable. 4. Recent analysis conducted by the Government o f India (GoI) and the World Bank has attempted to identify constraints to improving the quality o f vocational training. Key challenges identified include: Lack of information on training - A preoccupation with providing and financing training has resulted in the governments neglecting their key role o f providing information about the availability and effectiveness o f training programs. Nascent involvement of industry in the vocational training system - Until recently, there was limited participation o f employers in defining training policies and developing trade courses. T h i s i s n o w changing, and industry associations and individual employers are showing considerable interest in involving themselves in developing and managing ITIs. Lack of incentives to improve pegormance at the institutional level - Institutional management has l i t t l e freedom to fill student places to capacity, replace trade courses with new ones, and ensure that students receive quality training. 5. Addressing these challenges i s a long-term agenda. Recognizing that the system i s outdated, the Go1 i s keen to undertake reforms to move towards a system where the Central and State governments play a key role in policy development, standards setting, financing, and monitoring and evaluation, while engendering greater competitiveness and accountability by institutions. 6. A key ingredient o f the reform agenda i s moving the private sector into a lead role at all levels of decision making - from policymaking at the national and State levels to managing institutions. The M o L E i s working closely with the private sector to transfer this vision into reality. At the administrative level, employers are being given greater representation in the N C V T and the SCVTs. At the institutional level, Institute Management Committees (IMCs) have been introduced to involve employers in overseeing IT1 operations. IMCs are being actively supported by the Confederation o f Indian Industry 1 (CII), the Federation o f Indian Chamber o f Commerce and Industry (FICCI) and the Associated Chambers o f Commerce and Industry (ASSOCHAM) - India’s largest employer federations, with each I M C being chaired by a local industry representative. I M C s are being invested with decision malung powers and significant financial autonomy. 7. Over the next few years, Go1 aims to use the I M C mechanism to upgrade 500 ITIs, including 100 ITIs with domestic funds. The performance o f these institutions will be closely monitored and evaluated to study the impact o f these reforms on labor market outcomes. 8. At the same time, Go1 i s focusing attention on systemic issues, through working on policy reforms which are expected to lead to significant improvements in the quality o f the system in the medium-term. B. Rationale for Bank involvement 9. The Bank has extensive international experience to draw on in this area. T h i s expertise will be used support institutional development and provide technical assistance; (ii) facilitate formulation o f to: (i) build the foundation for changing vocational training, with policy reforms through this Project; and (iii) involvement o f industry in the management o f ITIs, from a supply driven system to one driven by demand from employers. 10. Furthermore, lessons from analytical and project work done by the Bank in India and other countries support the reforms being proposed by GoI. Some key lessons are being implemented in this Project: (i) the important role o f the Central and State governments in facilitating provision o f information o n vocational training; (ii)fostering competition among I T I s and using incentives t o induce better performance from States; and (iii)refocusing the role o f Central and State governments on selective financing, regulating and monitoring o f vocational training. C. Higher level objectives to which the project contributes 11. The Project contributes to India’s long-term objective o f human capital development for sustaining economic growth and poverty reduction. The Project will also contribute to learning through evaluating the implementation o f innovative public-private partnerships in the delivery o f vocational training. The proposed project i s well aligned with the World Bank Group India Country Assistance Strategy (Report No. 29374) which seeks to provide significant support for improving the performance and reach o f India’s vocational training system, to ensure that the trainees coming out o f the system are able to compete in an increasingly globalized economy. 11. PROJECT DESCRIPTION A. Lending instrument 12. The proposed instrument i s a Sector Investment Loan (SIL) financed through an IDA credit to the Go1 to finance IT1 upgradation, capacity building and policy development. Seventy five (75) percent o f the resources will be provided by the Go1 through Bank financing while 25 percent o f the resources will be provided by the Project States from their own resources.’ For the North-Eastern states and Sikkim, the financing ratio would be 90: 10. ’ Strictly speaking, while the Go1 will be funding 75% o f the project expenditure (cost) in States, it w o u l d actually b e meeting about 78% o f the total project cost, taking into account its own expenditure o n the National Project Implementation Unit (NPIU) and the c e n t r a l l y - h d e d institutions. 2 B. Project development objective and key indicators 13. T h e Project development objective i s to improve the employment outcomes o f graduates from the vocational training system, by making the design and delivery o f training more demand responsive. 14. This will be measured by the following three key performance indicators (KPIs): (i) (ii) Improved internal efficiency o f the project ITIs: 0 20 percent increase over 5 years (to 73 percent) in the proportion o f pass-outs from project I T I s that exit f i o m the CTS system with an NCVT certificate, from a baseline o f 61 percent; Improved external efficiency o f the project ITIs: 56 percent increase over 5 years (to 50 percent) in the proportion o f project ITIs’ pass-outs who find employment within one year o f finishing training, from a baseline o f 32 percent; 25 percent increase over 5 years (to INR 3,206) in the real monthly earnings o f employed pass-outs from project I T I s measured one year after graduation, as compared to the 2006 baseline o f 2,42 1 INR. Other intermediate outputs that affect the K P I s will also be monitored, including: total number o f new entrants benefiting directly f i o m the project; 0 reduction in the time taken for pass-outs from project ITIs to find employment after completing training, as compared to the baseline; 0 number o f instructors trained by category o f training (basic, refresher and advanced); and number o f policy studies commissioned and their policy recommendations formulated. C. Project components 15. T o make the CTS responsive to current and emerging labor market requirements for highly skilled manpower, the Go1 plans to implement the Vocational Training Improvement Project (VTIP), as a centrally-sponsored multi-State project, and: (a) upgrade 500 ITIs (including 100 domestically funded I T I s ) with active managerial participation from industry, (b) enhance curriculum and instructor training capacity, (c) promote innovations in the delivery o f both formal and informal training, (d) develop policylevel reforms; and (e) monitor and evaluate interventions. 16. Competitive funding and incentives will be used as the primary strategy to encourage States to implement reforms in their vocational training sub-systems. Only States willing to undertake administrative and financial reforms will be eligible for financial support under the Project. ITIs will be selected and funded on the merits o f their Institutional Development Plans (IDPs). Improvements in system management and implementation o f reforms will be supported through capacity building o f policy planners, managers and administrators, and commissioning research studies. The establishment o f project management structures at the national and State levels will ensure effective implementation and project monitoring. 17. The Project would fund various activities detailed in Annex 4 and the GoI’s Project Implementation Plan (PIP) according to the prescribed guidelines, including civil works, goods (equipment, books & learning resources, software and furniture); consultant services; training and study tours and workshops; and incremental operating costs (including salaries o f additional full-time instructors and project staff). 18. Go1 has already funded the first set o f 100 o f the 500 ITIs through i t s own resources and i s now seeking Bank assistance to upgrade the remaining 400. Go1 intends to finance ITIs through a cost sharing 3 arrangement o f 75 percent from the Central Government (financed by the Bank credit) and 25 percent from the States (see footnote 1 above). For the North-Eastern states and Sikkim, the financing ratio would be 90: 10. 19. The Project has three components: (a) improving quality o f vocational training, (b) promoting systemic reforms and innovations, and (c) project management, monitoring and evaluation. These are briefly described below: Component 1: Improving Quality of Vocational Training [Total: US$301 million, I D A : US$228 million] 20. This component focuses on: (a) improving quality and relevance o f training imparted in 400 eligible I T I s selected competitively from eligible States/UTs, (b) upgrading training o f IT1 instructors, and (c) providing incentive funds to States to reward good performance in project implementation. 21. The Project will support strengthening o f 400 I T I s to provide quality vocational training through establishment o f Centers o f Excellence (COE) in about 300 I T I s and upgradation o f training facilities in about 100 I T I s . Eligible expenditures from the 100 eligible I T I s that have already joined the Project from August 2006 will be funded retroactively.’ 22. To provide a level playing field, all the eligble I T I s (from the national stock o f 1896 ITIs) will be trained by master trainers in development o f quality IDPs. The I T I s interested in participating in the Project will develop IDPs under the overall guidance o f their respective IMCs and through consultation with the stakeholders (local representatives o f industry associations, faculty members, students and the community). Each I D P would define the long-term goals o f the institution, the issues and challenges facing the institution and the strategies for dealing with them. Each I D P will set targets for institutional improvement, define performance indicators, explain how each IT1 i s going to assist graduates in obtaining employment (through a placement cell or j o b fairs) and detail the annual financial requirements. 23. The selection o f all the remaining 300 I T I s will be carried out in a maximum o f 2 selection cycles o n the basis o f IDPs in a transparent manner. The evaluation process at the State level will take into account issues including: the availability o f a h c t i o n i n g IMC for the entire institution; the extent to which the IDP meet the needs o f the local economy; consideration given to gender, stakeholder participation, and social equity issues; extent to which financing sought i s realistic and whether the institution has adequate absorptive capacity; and whether the IDP proposes to leverage private sector financing to complement public support. The final selections and fund allocations will be posted on the DGE&T website. Unsuccessful I T I s will be provided advice on how to improve their proposals for submission in the subsequent round o f competition. T h e selection decisions will be made well in advance o f the beginning o f the academic year (August). 24. COEs will focus on individual industrial sectors that meet the requirements for high quality craftsmen by the dominant local industry. These include sectors such as automotive, electrical and electronics, garments and IT. This approach will provide multi-entry and multi-exit pathways for students to get training. COEs will conduct broad-based multi-skillingcourses over two semesters during the firstyear, advanced modules during the first half o f the second-year and specialized module through industry Eligible expenditures will be those that are made in accordance with the B a n k guidelines o n procurement o f works, goods and services, financial management and safeguards. The total amount o f retroactive financing o f expenditure by the Bank will not exceed 20 percent o f the total credit. Any expenditure in excess o f 20 percent o f the total credit will have to b e borne by the GoI/States. Eligible expenditures will be borne up t o a maximum o f 12 months p r i o r t o the expected date o f Financing Agreement Signing. 4 attachment during the second h a l f o f the second-year. The ITIs that opt to establish a COE will also be financed to upgrade trades normally which are related to the industrial sector covered by the COE. Any request for additionalhew industrial sectors to be upgraded will need to be justified and will be subject to the availability o f funds. 25. ITIs not wishing to go the COE route may opt to upgrade training facilities for the conventional trades that are in high demand locally. New trades may be introduced in these ITIs only if l o w demand trade courses are closed down. Financing o f these ITIs will normally be for 6 trades inclusive o f existing and new trades. 26. All project ITIs will establish: (a) facilities for linking to a central Management Information System (MIS) and keeping it periodically updated, and (b) a Training, Counseling and Placement Cell (TCPC) to help i t s graduates get employment, and to also help i t s students secure training attachment in industries. 27. Enhancement in the system’s training capacity will be achieved through: (a) establishment o f 10 Instructor Training Wings (ITWs) in selected I T I s to provide an additional 1,000 places for the basic training o f instructors, and to strengthen training facilities in seven centrally-funded institutions already engaged in conducting this type o f training; (b) starting training for would-be instructors in COEs at 11 centrally-funded institutions; and (c) launching refresher courses for instructors in 20 selected COEs. Highly specialized training o f instructors would also be provided in publicly-funded organizations outside the ambit o f MOLE, privately-funded training organizations and industry training centers. 28. For bringmg about system-wide improvement in the quality o f teaching, instructors in all the I T I s (including project I T I s ) in each project State will, during project life, be provided either basic training or refresher training as per the individual instructor’s assessed training needs. T h e Project will finance all such instructor training through the SPIUs. 29. The Apex Hi-tech Institute (AHI), an existing centrally-funded institution, will manage and promote instructor training both within the network o f training institutions called the Instructor Training Network (ITN) comprising 10 ITWs, 11 centrally-funded institutions, and 20 COEs - and outside the ITN. AH1 will be strengthened to perform this management function. - 30. Additional finances will be made available as an incentive to well-performing States to support such activities as: (a) organizing medium-term training programs in emerging and/or export oriented s h l l areas and, short-term training programs for practicing artisans and unemployed youth in both project and nonproject I T I s ; (b) strengthening o f training facilities in non-project ITIs; (c) providing advanced training for instructors in specialized institutions; and (d) translating instructional media packages into regional languages. Component 2: million] Promoting Systemic Reforms and Innovations [Total: US$30 million, I D A : US29 3 1. T h i s component focuses on activities that lead to enhancement in the overall reach and effectiveness o f the vocational training system in the medium-term. Implementation o f activities under this component will be the responsibility o f the DGE&T, discharged in collaboration with States, industry associations, and private training providers, as necessary. 32. The Project will support studies and international and national consultations to: (a) set up a National Vocational Qualification Framework (NVQF); (b) design a policy framework for registering private training providers and the courses/programs offered by them that meet N V Q F set standards; (c) design models for training o f the informal sector workforce; and (d) assess the feasibility o f establishing a 5 training fund for financing both formal training courses in publicly and privately-financed training institutions, and training programs conducted by employers for both new and in-service workers. Other analytical work identified during project implementation will also be supported by the Project. 33. Three centrally-funded institutions will be strengthened to enhance long-term sustainable development o f vocational training through: (a) establishment o f mechanisms for periodically updating curricula and learning resources for CTS trades and instructor training, (b) development o f sound assessment and testing procedures for both students and instructors, and (c) setting student training standards that match international benchmarks. 34. Innovative activities such as setting up a training fund, or using the internet (e.g. through the Education Satellite (EDUSAT)) effectively for vocational training will be undertaken by the DGE&T, States, centrally-funded institutions, employers’ associations, and private training providers. These innovative interventions will be piloted to assess the impact/acceptability o f systemic reforms. 35. Finally, this component will also support the establishment o f mechanisms for periodically updating the curricula and learning resources (e.g. materials and teachindlearning aids) o f NCVT-affiliated trades and instructor training, in consultation with employers. Component 3: Project Management, Monitoring and Evaluation [Total: US$28 million, IDA: US$23 million] 36. The Project will support: (a) establishment o f project management and implementation structures at the national and State levels, (b) improvements in system management and implementation o f reforms through training o f policy planners, managers and administrators, (c) project monitoring and dissemination o f information with the help o f a computer-based management information system, and (d) project evaluation and, policy and system research studies at the national and State levels. D. Lessons learned and reflected in the project design 37. The project design reflects key lessons learned from experience o f implementing vocational training projects worldwide, including: 38. Ensure strongpolitical commitment to reforms. The experience o f countries around the world shows that a strong political will t o reform - the presence o f which i s perhaps neither dependent o n a country’s wealth, nor on its level o f institutional advancement i s the most important prerequisite for successful efforts to restructure VET systems. This Project has been developed in response to the Government’s clear commitment to reforming the system and making it more demand-driven and responsive to the needs o f employers. - 39. Strengthen linkages with the labor market. Promoting linkages between the VET system and the labor market requires the governments to examine their own internal structures and operations. One way t o build the linkages i s to develop strong ties with employers at the institutional level and making operations more flexible by giving managers authority (and accountability) to respond t o dynamic changes in the labor market. The Project supports implementation o f reforms aimed at making employerled IMCs responsible for managing the institutions and vesting institutional managers with authority to make decisions. 40. Ensure that there is greater decentralization to states/institutions regarding decision making. T h i s was one o f the key lessons o f the Bank’s Vocational Training Project which ended in 1998. The proposed 6 project i s providing significant administrative and financial autonomy to institutions, in collaboration with the private sector, to decide on the trades they want to upgrade, procure goods and services and engage contract faculty. Central control over these activities will be negligible. 41. Promote the Government2 role in disseminating information on VET. A preoccupation with providing, regulating, or financing VET can result in governments neglecting their roles as provider or facilitator o f information on the availability and effectiveness o f vocational programs. An expansion o f this role may be one o f the most effective ways for governments to foster the development o f a relevant and cost-effective vocational education and training system. Information on trainee placement rates, costs o f training at different institutions, unemployment rates by s k i l l levels, vacancy rates and returns to different levels o f training should be gathered through labor force surveys and tracer studies, analyzed and disseminated widely by the governments. Better information on training programs helps policy makers redesign policies and interventions, and wider access to information o n availability and quality o f training supply can protect prospective trainees against unfair trade practices. T h i s role has been overlooked or under-emphasized in India. T h e Project supports development o f a strong monitoring and evaluation system, where information on institutions i s widely disseminated and used by policymakers to improve project design. 42. Diversifi the sources offinancing of VET. A financing policy for training should ensure both the stability o f funding for sustainable policy implementation and the level o f financing needed to improve training outcomes. The claim on public resources for vocational training i s much less strong than that for primary and general secondary education. A f i r s t objective, then, i s to solicit and increase the contributions from those that benefit the most - employers and trainees. In some countries, governments bear the major share o f costs and have explored cost recovery from trainees. In others, income from the sale o f products and training services also provide an important source o f revenue to training institutions. The Project supports the implementation o f these options by ITIs. Similarly, the Project will explore the use o f training funds to raise resources from the governments, students and the private sector and allocate it to institutions competitively. 43. Ensure that laws promote private sector participation in vocational training. Experience shows that removing ambiguity regarding the setting-up o f training institutions results in a vigorous response, especially for post secondary training programs. The experience o f many successful countries shows that when private providers are not discouraged by overly stringent laws, rapid industrial growth can lead to a strong private supply o f technical training. A key aim o f the Project i s to develop such policies which will allow the private providers to compete on a level-playing field. E. Alternatives considered and reasons for rejection 44. Several alternative approaches were considered: 45. Upgrading only one industrial sector within ITIs toform a COE. The first batch o f 100 ITIs currently under upgradation using Go1 resources has adopted the COE approach. While this approach has some advantages, a key concern i s that the benefits from upgradation may not necessarily trickle down to the rest o f the institution. For the I T I s to be supported by the Project, the choice i s being l e f t to each IMC to decide on how they want to improve their institution, be that by establishing a single-industrial sector COE or upgrading different trades in the institution. Those opting for the COE approach have to clearly demonstrate, through their IDPs, how the benefits from the COE will accrue to the whole institution. 46. Upgrading 'women only 'ITIs. One o f the options proposed was to upgrade about 100 ITIs that cater only to women. However, many States and the private sector felt that this approach would lead to 7 segmentation. The Project attempts to emphasize full integration o f women into the labor market, rather than forcing them to acquire s k d l s in a limited number o f trades that are offered by ‘women only’ ITIs. For this reason, supporting ‘women only’ ITIs was not considered appropriate. As a part o f project design, women-only ITIs will have to compete with other institutions for resources. 47. Focus only on upgrading ITIs. Upgrading ITIs and making them more relevant to market needs i s undoubtedly an important short-term objective in reforming the vocational training system. However, achieving only that goal stops well short o f the GoI’s long term objective o f reforming the overall vocational training system. The Project supports the GoI’s larger reform agenda by developing and piloting policies and interventions (e.g. training for the informal sector, framework for private providers, curriculum reform, etc.) that will lead to a more effective vocational training system. 48. Providing resources to upgrade institutions as they are currently managed. This option was rejected based on the lessons o f international experience. Experience suggests that a focus on upgrading institutions without accompanying policy changes - for example, creating private sector-led IMCs, or giving institutions greater administrative and financial autonomy - i s unlikely to have long-term positive impact on the labor market outcomes o f interest. 111. IMPLEMENTATION A. Institutional and implementation arrangements 49. At the national level, the Project will be guided by a National Steering Committee (NSC), with significant senior-level representation from industry and industry associations. The NSC, chaired by the Secretary MoLE, will select States and institutions for financial support, and allocate funds to the DGE&T, States, training institutions and others for various activities. 50. At the national-level, the overall responsibility for policy decisions and project management will be vested in the National Project Director (NPD) - an official in the rank o f a Joint Secretary in the M o L E who will head a National Project Implementation Unit (NPIU). The NPIU will have 5 functional units with adequate full-time officials, consultants and staff. I t will be granted functional financial and administrative autonomies sufficient to carry out i t s functions without having t o seek frequent approvals from the NPD. 51. At the State level, the Project will be guided and facilitated by a State Steering Committee (SSC), headed by the Principal Secretary/ Secretary for vocational training. The SSC will have significant representation from industry and industry associations. The SSC will be assisted by a State Project Implementation Unit (SPIU) with adequate full-time officials, consultants and support staff. 52. At the institutional level, each participating IT1will have an Institute Management Committees (IMC) for the whole IT1with significant participation o f industry. I t will be chaired by an industrialist from the local area. T h i s will enhance involvement o f industry in all aspects o f training, and ensure that all training courses are fully demand driven. T h e IMCs will be empowered in academic, administrative, financial and management matters to discharge their functions as set out in the M o U signed between M o L E and the States. 8 B. Monitoring and evaluation of outcomesh-esults 53. Monitoring activities would include ongoing, systematic collection, processing and dissemination o f data at the State and national levels, updating the K e y Performance Indicators (KPIs), and taking corrective measures as needed. SPIUs will undertake at least two visits per year to each Project ITI, assess project implementation progress against a checklist and regularly update the Management Information System (MIS) covering all ITIs in the State. T h i s information would be collated by the NPIU into a Master M I S for the country as a whole and this information will be disseminated widely. The NPIU will collate these monitoring reports and prepare semi-annual monitoring reports for use during Joint Review Missions (JRMs). 54. Project evaluation will be conducted twice during the project life. The NPIU will be responsible for developing the Terms o f Reference for this activity, sharing the same with the Bank, contracting an external agency t o undertake this task and supervising that work. In addition, the NPIU will commission thematic reviewskudies during the course o f the Project. 55. At the national level, project implementation will be reviewed periodically by the NSC, and at the State-level, the SSCs will perform a similar function. Implementation progress will also be reviewed biannually (twice a year), at the mid-term and at the end o f Project, jointly by Go1 and IDA. Data f r o m the MIS, monitoring reports and evaluation studies will constitute important components o f these joint semiannual, mid-term and end-term JRMs. C. Sustainability 56. The key sustainability issue i s t o ensure that the reforms introduced by the Project at the national, State and institutional levels are sustained and deepened, and that these improvements are extended eventually to both publicly and privately funded training institutions not covered under this Project. This will require that: (a) reforms are owned and effectively implemented by States, IMCs and institutions; (b) IMCs and institutions develop the capacity and confidence to exercise their academic, managerial, administrative and financial autonomies, with accountability, t o respond and adapt rapidly t o changing labor market conditions; and (c) the changes introduced in the system management at the State and national levels become internalized and ingrained-the success o f this will depend to a large extent on how the processes for competitive institutional selection and funding o f several Project elements are administered. It i s expected that these changes will lead t o a more demand-driven system, and significant emphasis will be placed o n reviewing progress along these dimensions during the monitoring and evaluation process. D. Critical risks and possible controversial aspects Risks Mitigation Risk Rating undertaking to implement reforms and comply with the fiduciary requirements will be eligible to j o i n the Project. The Project supports development o f a training regulatory fkamework and establishment o f a training fund that should ease private sector entry into training markets and competition for public 9 M Risks Mitigation ITIs that are not selected have n o incentives t o perform. 0 The reforms are not financially sustainable once the Project i s over. A fully competitive process i s not followed in selection o f I T I s resources. The process o f competitive funding will motivate ITIs to set up I M C s and become more responsive t o the labor market, even among non-project I T I s . The Project provides for training o f instructors from all I T I s including those not selected for participation in the Project. Non-project I T I s could also benefit from additional funding that well-performing States could receive under the Incentive Fund. Management and financial reforms put in place are likely t o lead to increased cost-sharing with employers and students in the mediumterm, and induce the Central and State governments to sustain reforms over the longer run. All I T I s in States will b e trained in developing quality IDPs. State Steering Committees (SSCs) will justify their decisions, and post minutes and successful IDPs o n the SPIU websites to ensure transparency. 0 SSCs will also provide comments on h o w unsuccessful I T I s can improve their IDPs for future competition. Slow implementation due 0 Experience acquired from other Bank projects (TechEd and to multi-State nature o f Technical Education Quality Improvement Project (TEQIP)) will help States handle Bank procurement and financial management the Project procedures, and keep project implementation on schedule. Frequent technical assistance provided to States through v i s i t s o f NPIU and Bank team and guidance provided during Joint Review Missions will also help in timely implementation by the ITIs. Poorly performing States Three hundred I T I s will be selected in a maximum o f two cycles. In the second cycle, performance o f Participating States in the past year continue t o get resources will be used as criterion for selection o f I T I s from that particular state. Furthermore, Incentive Fund will not b e accessible to States and institutions that do not show improvements in performance. Component 2: Policy Reform, Support for Innovations and Management Policy reform studies and 0 Go1 i s commited t o reforms o f the vocational training system. pilots are not undertaken Proposed studies were identified after discussions with GoI, and they are being designed in collaboration with MOLEand the private sector. Innovations Fund i s not Proposals for assistance from this Fund will be shared with the Bank accessed in a transparent before these are considered by the NSC. 0 The N S C will justify i t s decisions and post its minutes o n the manner DGE&T website t o ensure transparency. The chosen proposals will also be posted on the DGE&T website. MI,CSTARI, NIMI and 0 NPIU and Bank team will initially provide technical asssitance t o these institutions t o develop and detail their project plans with other centrally funded institutions are not able to realistic time frames perform their roles These institutions will later be closely monitored by both the NPIU and Bank team for timely and effective implementation o f their effectively 0 10 Risk Rating S M M S M S M M Risks Mitigation Component 3:Project Man1 rement, Monitoring and Evaluation 0 NPIU i s not kept DGE&T recognizes the importance o f having a full-time NPIU in place and empowered throughout the duration o f the project and adequately staffed and empowered at all times remains commited to doing so. throughout the Proiect life 0 Financial Management: Simplification o f mechanism for release o f funds, 0 There are likely to be Intensive training o f staff at all levels, 0 delay in funds flow, Follow-up on audit & scheme specific audit certificate, and Enhancement in delegation levels. variation in staff 0 capacities, delay in submission o f audit reports and low delegation o f financial powers 0 Considerable attention has been paid to measuring Project outcomes may be - project - - outcomes, difficult to measure including (a) devising a rigorous-monitoring and evaluation framework, (b) designing surveys for ITIs and their graduates, and (c) piloting and fielding these baseline surveys. 0 These surveys, when continued and integrated into the Project MIS, should provide the information base required to monitor and rigorously evaluate the effects o f the Project. Overall Risk Rating Risk Rating - H (Hig Risk), S - (Substantial Risk), M - (Moderate Risk), N- (Negligible Risk) Risk S S M M E. Credit conditions and covenants 57. Covenants applicable to project implementation: 0 The Government o f India (GoI), through Ministry o f Labor & Employment (MoLE), shall carry out i t s Parts o f the Project in accordance with the Project Implementation Plan (PIP) includingthe Environmental Management Framework (EMF) and the Equity Assurance Plan (EAP). 0 T h e GoI, through the MoLE, shall establish and maintain throughout the period o f Project 0 0 implementation, the National Steering Committee and the National Project Implementation Unit ("IU) along with the Procurement Unit, the Finance Unit, the Institutional Development Unit, the Academic and Training Unit, the Monitoring and Evaluation Unit and the Policy Development Unit, all in form and with functions, resources and staffing satisfactory to the Association and as set out in the PIP. The GoI, through the DGE&T within the MoLE, shall enter into grant agreements with each awardee satisfactory to the Association for implementation o f Part 2.2 (Innovation Fund) o f the Project . The GoI, through the M o L E and in accordance with the PIP, shall: (a) cause each Project State participating in the Project to execute a Memorandum o f Understanding (MoU) with the Addendum with each Project State ; (b) cause each Participating State to carry out i t s activities under the Project in accordance with i t s respective M o U and the Addendum; (c) cause each Participating State to maintain throughout the period o f Project implementation the State Project Implementation Unit (SPIU), the State Steering Committee (SSC), the State Council o f Vocational Training (SCVT), all in accordance with the M o U and in a form and with functions, staffing and resources satisfactory to the Association; and (d) cause each Participating State to: 11 (A) select Industrial Training Institutes (ITIs) in accordance with the eligibility criteria contained in the PIP; and (B) cause Project ITIs within such state to carry out their respective activities under the Project in accordance with the PIP and the respective M o U and the Addendum; a l l in a manner satisfactory to the Association. The GoI, through the MoLE, shall: (a) establish by July 31, 2008 and thereafter maintain throughout the period o f Project implementation, a monitoring and evaluation system; and (b) monitor and evaluate implementation o f the Project at the national and state level with such system in accordance with the PIP. T h e GoI, through the MoLE, shall: (a) by April 30 and October 30 o f each fiscal year provide Project Reports to the Association; and (b) by M a y 31 and November 30 o f each fiscal year review the implementation o f the Project with the Association; all in a manner satisfactory to the Association and as set forth in the PIP. The GoI, through the MoLE, shall and shall cause the Participating States and Project ITIs, to maintain financial management systems and to carry out the audits in a timely manner and in accordance with terms o f reference set out in the Financial Management Manual. T h e GoI, through the MoLE, shall and shall cause the Participating States and Project ITIs, to carry out all procurement under the Project in accordance with the World Bank's Procurement Guidelines and Consultant Guidelines and the Procurement Manual. T h e GoI, through the MoLE, shall provide adequate financial and administrative powers to the in the NPIU t o enable such coordinator to facilitate National Project Coordinator ("C) implementation o f the project. The GoI, through MoLE, shall and shall cause the Participating States to implement the Disclosure Management Framework (DMF) throughout the duration o f the Project, refrain from taking any action which shall prevent or interfere with the implementation o f the DMF, not waive, amend or abrogate this Framework and, provide a written report on progress achieved in the implementation o f the Framework semi-annually. IV. APPRAISAL SUMMARY A. Economic and financial analyses 58. As part o f project preparation, two baseline surveys were undertaken in 2006: (i) an institutional survey o f all government managed and financed ITIs in India, and ii)a tracer study o f pass-out (graduates) from a sample o f ITIs. These surveys are intended t o provide a pre-Project baseline for internal and external efficiency outcomes for a substantial part o f the public vocational training system in India. 59. The economic feasibility o f the project i s examined through cost-benefit analysis and rate.of return calculations based on several assumptions and simulated over a variety o f scenarios. The benefits that are expected from the Project, as reflected in the KPIs, are: (a) improvements in the internal efficiency o f upgradedstrengthened ITIs, in terms o f the proportion o f enrolled students that successfully get trade certification; (b) enhanced labor market outcomes o f IT1pass-outs, as measured by the proportion o f passouts finding employment within 12 months; and (c) by higher life-time earnings, as compared to the baseline prior to project implementation. 60. A comparison o f the present values o f life-time wages o f pass-outs from two year IT1programs with a group having the same level o f general education shows that the former receive at least 20 percent higher wages using real discount rates o f 5-7 percent. Rates o f return (ROR) calculations based on various combinations o f improved internal and external efficiency indicators range from 7.4 percent to 35.4 percent when the discount rate i s 5 percent, depending upon starting pay rising between 10-20 percent, 12 and the proportion getting trade certification increasing modestly t o 65 percent. In the high case scenario, when trade certification increases to 75 percent, the rates o f retum become very high, ranging between 25.9 and 58.1 percent. Even with a higher discount rate o f 7 percent, the rate o f return i s generally positive, between one and 18.4 percent. 61. These simulations highlight the conclusion that ITIs must improve their performance simultaneously o n different fronts for the program to yield positive ROR. At a minimum, it requires attainment o f the low case wage scenario o f 10 percent increase in starting pay as compared to their pre-IT1 upgrading baseline, coupled with a 10 percent increase in rates o f trade certification and modest improvements in first-year employment rates. Larger and more positive RORs are obtained with achievement o f the high case in the different K P I s . The improvements in institutional governance and training reforms supported under the Project should increase the likelihood o f achieving the high case KPIs. B. Technical 62. The technical content o f the Program has been extensively reviewed with the Recipient. Consultations have taken place with several policy planners, both at the national and State levels; with institutional heads, faculty and students; and with employers and industry associations. The Bank has taken an active role in these consultations. Detailed criteria for participation in the program by States and institutions, and for selection o f proposals have evolved out o f these interactions and from discussions at several workshops organized by the DGE&T. Some o f the issues given special attention are: Involvement of the private sector and institutional autonomy: T h i s i s a critical element o f the reforms package. IMCs are being constituted for a l l institutions with a representative f r o m local industry as its chairperson. The I M C s will not just play an advisory role, but will be vested with significant academic, managerial, administrative and financial autonomies t o make decisions on their own training programs, t o engage or otherwise the contract faculty, and to generate, retain and utilize revenues (other than prescribed fees). Participation criteria: Only the States and the institutions that are willing and able t o introduce desired reforms will be permitted to take part in the Project. The participating institutions will have t o accept and implement these reforms along with safeguards t o ensure against misuse or lack o f accountability. Transparency in the institutional selection process: T o ensure confidence in the institutional selection process and to engender competition between I T I s for participation in the program, it i s essential that the selection process be both fair and transparent. I T I s seeking funds under the Project must submit IDPs developed under the guidance o f the respective IMCs and through consultation with the stakeholders. Each IDP will state the long, medium and short term goals o f the institution, and provide an action plan for overcoming constraints to reaching their short-term goals along with the physical, human and financial resources requirements. IDPs will be assessed by the SSCs following transparent criteria, and those recommended by the SSC will be forwarded to the N S C for selection. The role o f the N S C i s one o f quality assurance. I t will ensure that the selection guidelines have been followed, that the overall approach o f each SSC i s consistent with the Project objectives, and that the funds being sought are affordable and realistic. Systemic reforms: A key element o f the Project i s enabling more broad-based and long-term reforms t o be designed, piloted and evaluated. This will ensure that reforms and innovations that are successful can be scaled up in the medium-tern, and that the entire CTS system becomes more demand-driven and responsive to labor market needs. Building capacity for project management and implementation, and monitoring and evaluation: (a) A core group o f 4 middle level officials o f the DGE&T has been involved in project preparation under the guidance o f senior officials. It i s desirable that this core group be inducted 13 into the NPIU, as and when i t i s established. These officials and the new staff to be appointed have n o prior experience o f implementing Bank-funded projects, and will need considerable guidance not only for performing their own functions but also for supporting SPIUs and ITIs in project implementation; and (b) T o facilitate effective use o f data for policy formulation, planning and decision-making, a comprehensive Management Information System (MIS) and accompanying Monitoring and Evaluation (M&E) framework i s being established. The M&E capacity o f the NPIU and SPIUs will need t o be developed to ensure proper program monitoring. Timely availability o f information i s needed for policymakers to make course corrections as needed. Go1 will need to identify institutions that could, with assistance from IDA, provide the required training to the staff o f NPIU and SPIUs to efficiently and effectively discharge their functions. C. Fiduciary Financial Management 63. Overall, financial management arrangements as proposed for the Project are considered t o be adequate. However, considering that many o f the arrangements are yet t o be tested, relatively new staffing arrangements, and the nationwide coverage o f the Project, timely and effective implementation of the proposed financial management arrangements will be a challenge. Therefore, o n an overall basis, the financial management risk o n the Project i s being rated as ‘Substantial’. This risk will partly be mitigated by intensive supervision and support t o the implementing agencies at the Central and State/UT levels. 64. Accounting will be done on a cash basis, using Government systems; expenditure will be recorded and reported at the time o f payments and not at the time o f release o f funds to a subordinate office. Rules for accounting will be guided by the General Financial Rules (GFRs) as applicable t o all transactions at the Go1 and State levels. A Financial Management Manual (FMM) has been prepared by MoLE. The FMM clarifies and documents the procedure relating t o budgeting, funds flow, reporting, auditing, etc. The FMM will be used for the purposes o f monitoring as well as for capacity building o f staff. 65. A National Project Implementing Unit (NF’IU) in the DGE&T in the M o L E and State Project Implementing Units (SPIUs) in project States and U T s will monitor Project activities; these will be resourced with adequate financial management staff. Responsibilities o f staff in the NPIU and SPIUs have been clearly articulated in the Project Implementation Plan (PIP) prepared by the MoLE. 66. Project cost in States and U T s i s being borne by the Go1 and States in the ratio o f 75:25. For the North-Eastern states and Sikkim, the financing ratio would be 9O:lO. The share o f Go1 funds will be released by the M o L E to project States through Go1 channels and the funds so released will be received in the State Treasury. At the State level, the Department responsible for Vocational Training (DVT) will prepare a budget for the State-level project expenditure including i t s share o f 25 percent. Budgets will then be allocated by the State Finance Department t o the DVT, which will further allocate the same to the project ITIs and itself for incurring expenditure. Project expenditures will be reported by the I T I s to the SPIUs and, by the SPIUs to the NPIU. The NPIU will submit consolidated Interim Unaudited Financial Reports (IUFRs) on a quarterly basis t o the Bank within 45 days o f the end o f each quarter; the IUFRs will form the basis for disbursement. 67. Annual accounts o f the DGE&T’s part o f the Project will be audited by the Comptroller and Auditor General o f India (C&AG). The Accountant General (AG) o f each state will carry out an annual audit o f accounts o f the SPIUs and ITIs as per specific TORS.The DGE&T will provide a Consolidated Report on Audit to the Bank for the Project based o n audit reports o f the States and its own audit report. The 14 Consolidated Report on Audit will be submitted to the Bank within six months o f close o f each financial year, i.e. by September 30. Procurem ent 68. The Project will be implemented by the M o L E through the DGE&T, the Directorates concerned with vocational training in the States, and the ITIs as selected. Procurement and financial management capacity assessments have been carried out using the standard proforma adopted by the Bank and proposed arrangements have been agreed with the DGE&T in the M o L E 69. Procurement o f works, goods and services will be carried out in accordance with the World Bank’s “Guidelines: Procurement under lBRD Loans and IDA Credits” dated M a y 2004 as updated; and “Guidelines: Selection and Employment o f Consultants by World Bank Borrowers” dated M a y 2004 as updated and the Procurement Manual prepared by the DGE&T for the Project. The arrangements for procurement are satisfactory assuming that formal and on the j o b training o f procurement staff involved in the Project will be provided as planned. Measures to enhance transparency are summarized in Appendix 1 to Annex 8. D. Social 70. The Project Development Objective i s to improve the employment outcomes o f graduates from the vocational training system, and as such, it seeks to maximize the success o f all the CTS graduates regardless o f their social and economic status. T o this end, a Social Assessment (SA) was carried out to examine h o w students from traditionally disadvantaged backgrounds in India, such as Scheduled Castes (SC), Scheduled Tribes (ST), women and the poor, fare in the I T I s and ITCs, and how any disadvantages they experience in the system might be addressed to improve their outcomes. The SA found that students from disadvantaged backgrounds j o i n the ITIs with little knowledge o f what the education entails and what lies ahead in terms o f employment. Their enrolment, retention and graduation rates are l o w when compared with other students. Many drop out, particularly in the first six months, because o f the ‘alien’ pedagogy and curriculum (very different from the school education they were used to), their poorer economic status, and unsupportive home environments. 71. There were n o reports from students o f social discrimination; and trainers felt that after the first six months there were n o differences between the disadvantaged students and the others. Women students looked at vocational training as a ‘time-filler’ with the potential o f “raising their value in the marriage market”. Many opted for traditional trades (such as tailoring), and their continued training and labor market participation were highly dependent o n their home environment, especially if they were married. The majority o f students were interested in public sector employment (e.g. in the railways) which i s considered secure, in preference to private sector or self-employment. In general, they were unaware o f employment opportunities, received virtually n o career guidance, and had n o career plans. As one would expect, rural institutions had more students from the disadvantaged backgrounds while the less disadvantaged studied at urban facilities. However, on this and other parameters, it was not possible to obtain a good quantitative assessment o f achievements among these students or to make robust comparisons because o f limited data availability. 72. T h e different issues noted above which contribute to continuing disparities among these students are addressed in the Project through an “Equity Assurance Plan” which i s presented in Annex 10. It includes a variety o f actions through several project mechanisms including: the criteria for selection o f ITIs, project management arrangements and, monitoring and evaluation. 15 E. Environment 73. EA Process and Outputs: The planning, development and management o f ITIs involves some important environmental obligations. The Environment Assessment (EA) analyzed the existing situation to provide for effective and optimal utilization o f resources to help design and implement the Project in an environment friendly manner. The process comprised of: (i) Environment Assessment, which was carried out to identify key environmental issues and assessment o f impacts; and (ii)Preparation o f an Environment Management Framework (EMF) to address the identified issues. In this context, the EA/EMF covered review o f standards, statutory and other provisions; assessment o f existing situation through site visits and consultation with various stakeholders; documentation o f current practices and; preparation o f an EMF. 74. Key Environmental Issues: The nature o f activities proposed under the project does not pose significant environmental risks. However, some environmental concerns are associated with activities such as civil works for creatiodexpansiodrepair o f buildings; and introduction o f new trade courses creating pressure on already stressed basic facilities in the campus and particularly if these involve pollution risks. The EA has revealed that a majority o f environmental issues primarily pertain to: (i) poor site planning and design (locatiodsite planning/accessibility/design); (ii) lack o f proper maintenance o f buildings and associated services; (iii) improper resource consumption; and (iv) lack o f environmental augmentative measures. 75. Environment Management in the Project: Appropriate measures have been suggested and developed in the Environment Management Framework (EMF) to minimize and mitigate the likely adverse environmental impacts associated with the Project. The framework provides a useful set o f measures, which would help in preventing, minimizing and/or managing various environmental, health and safety concerns faced during construction, operation and maintenance o f I T I s . These measures can be categorized under the following three heads: 0 Campus environment management - Improvement o f campus environment i s envisaged through adequate provisiodenhancement o f the quality o f basic services/facilities such as water (including potable water); power; waste collection and disposal; drainage; sanitation (clean bathrooms and toilets); adoption o f fire safety practices including safe storage o f inflammable materials; and personal protective equipment (as required for specific activities). This will also include constructionhepair time safety practices. 0 Inclusion of environmental, health and occupational safety aspects in the curriculum Industry specific environmental, health and occupational safety issues will be adequately built in the curriculum for the improved vocational education system. This would also cover incorporation o f industry specific demand driven issues into the curriculum. Documentation of good and bad practices to promote awareness, knowledge and ensure wider recognition o f such practices. - 76. Safeguard Implementation Arrangements. The DGE&T will assume the overall responsibility for adequate maintenance o f the personnel and resources required to supervise, monitor and implement EMF. Management o f environmental aspects shall be addressed by designating an Environment Officer, who will co-ordinate, monitor and provide support for: (a) satisfactory implementation o f the EMF; (b) orientation and training for field level staff o f the concerned State Directorates and concerned ITIs and other stakeholders; and (c) reporting and documentation. The DGE&T will share with the Bank semiannual reports at the JRMs, which will include a section on EMF implementation and related activities. 77. Public Consultation and Disclosure: Consultation with various stakeholders was carried out as a part o f the EA exercise through interviews, formal and informal discussions. T h e stakeholders consulted at the local level included IT1 staff (Principals, faculty and other staff); current students; recent graduates; 16 and senior and middle level managers/ representatives o f the industry. The consultation and disclosure at the central level was carried out through a national level workshop at N e w Delhi. This workshop was organized in January 2007 and the participants included officials o f the DGE&T, officials from the concerned State Directorates and the representatives o f national level industry associations such as C I I and FICCI. These consultations have provided useful inputs in developing the EMF for the Project. The executive summary o f the Environment Management Framework (English and Hindi versions) has also been uploaded o n the DGE&T website (http://dget.nic.in). These have also been placed in the State Directorates and an advertisement has been placed in the newspapers for public information in this regard. The document was also disclosed in the Bank's Infoshop in M a r c h 2007. F. Safeguard policies Safeguard Policies Triggered by the Project Environmental Assessment (OPBP 4.01) N a t u r a l Habitats (OPBP 4.04) Pest Management (OP 4.09) Cultural Property (OPN 11.03, b e i n g revised as OP 4.1 1) Involuntary Resettlement (OP/BP 4.12) Indigenous Peoples (OP/BP 4.10) Forests (OPBP 4.36) Safety o f D a m s (OPBP 4.37) Projects in Disputed Areas (OPBP 7.60)* Projects on International Waterways (OPBP 7.50) Yes [XI [I [I 11 11 [XI [I [I [I [I No [I [XI [XI [XI [XI [I [XI [XI [XI [XI 78. Environmental Assessment (OP/BP/GP 4.01). The nature o f activities proposed under the project does not pose significant environmental risks. However, some environmental concerns are associated with activities such as civil works for creatiodexpansiodrepair o f buildings; and introduction o f new trade courses, creating pressure on the already stressed basic facilities in the campuses and particularly if these involve pollution risks. The EMF would help in enhancing the Project benefits and in avoiding/minimizing adverse impacts o n environment. 79. Indigenous Peoples (OP/BP 4.10): An Equity Assurance Plan has been developed by the Recipient which includes a variety o f actions through several project mechanisms targeted t o disadvantagedindigenous groups, including: the criteria for selection o f ITIs; competitive fknding f r o m the Incentive Fund for States and public organizations; funding from the Innovation Fund for competitive grants open to both public and private institutions; and Project management, monitoring and evaluation. G. Policy Exceptions and Readiness 80. No policy exceptions are sought. Elements o f project readiness, which have been meet, include: Setting up a National Steering Committee and National Project Implementation Unit; 0 Preparing a procurement plan for the first 18 months o f the project; 0 Preparing o f the Project Implementation Plan (PIP), providing detailed guidelines for implementation o f the project; 0 Finalizing the key performance indicators and targets based on a baseline survey; and 0 Meeting disclosure requirements. ' By supporting the proposedproject, the Bank does not intend to prejudice thefinal determination of the parties' claims on the disputed areas 17 Annex 1: Country and Sector o r Program Background INDIA: Vocational Training Improvement Project 1. Largely because o f the growth in factor productivity, India’s economy has grown rapidly over the past decade. Continuing to raise labor productivity while at the same time generating enough jobs for a growing labor force i s proving to be a massive challenge. T h i s issue has come into sharp focus over the previous decade when the country’s economic growth accelerated but employment growth f e l l to less than h a l f that o f the 1980s, raising fears that India i s witnessing jobless growth. However, currently the trend seems to be reversing. 2. The human capital o f the workforce - education and skills - contributes not only to productivity growth but also to the employment and earnings prospects o f individuals. The evidence suggests that since the early 1980s, the demand for workers with secondary education has outstripped supply from the formal schooling system. The relative wages o f workers with qualifications beyond primary school have grown far more rapidly than those o f workers with primary school or lower education, even as their numbers have become relatively more abundant. The evidence for workers with post-school technical and vocational training i s more mixed, and their relative wages and numbers have fallen since the early 1990s. While definitive inferences about supply-demand cannot be drawn, the evidence suggests that this group o f workers may not have the right s k i l l s demanded by the labor market (perhaps because o f the poor quality o f training provided). Alternatively, students may see few labor market benefits from undertahng vocational training and opt, instead, to enter the labor market directly or continue with further education. 3. Consensus i s emerging that for continued economic and j o b growth, India will need t o improve both the supply o f appropriately skilled workers as well as the quality and labor market relevance o f training. A skilled workforce enhances the efficiency and flexibility o f the labor market, reduces skills bottlenecks, and enhances mobility and productivity. One key supplier o f shlled workers i s the Vocational Education and Training (VET) system. A major component o f the VET system i s the Craftsmen Training Scheme (CTS) operated under the auspices o f the Ministry o f Labor and Employment (MOLE), the National Council for Vocational Training (NCVT), and the State Departments dealing with vocational training and State Councils for Vocational Training (SCVTs). The CTS operates through 5 114 training institutes with a total capacity o f 741,000 students (mostly in two year courses) a year. There are two types o f institutions: (a) Industrial Training Institutes (ITIs) - financed and managed by state DVTs and providing places for about 400,000 students in 1,896 institutes; and (b) Industrial Training Centers (ITCs) - owned, financed and managed by private organizations or NGOs and providing places for about 34 1,000 students in 3,218 centers. Vocational Training in the Public Sector 4. Labor market outcomes for graduates o f the training system are fairly poor. One year after graduation, less than 30 percent o f graduates find employment. T h e main reason for this seems to be the mismatch between the skills attained and those actually in demand in the labor market. Employers report experiencing problems finding employees with the right skills. In most cases, these shortages were in trades that were supplied by the ITIs and ITCs, implying that their graduates did not suit employers’ needs. Most employers felt that the IT1 graduates did not perform well enough in the use o f computers, practical use o f machines, communications and team work practices. Employers also felt that the graduates lacked practical knowledge and needed significant on-the-job training to bring their s k i l l levels up to that needed by industry. 5. These poor outcomes arise from the many constraints that the public training system faces, including the following: 18 0 0 Institutions do not have incentives to improve their pe$ormance. Managers o f training institutions have little freedom to fill training places to capacity, replace training courses with new ones, and ensure that students receive quality training. Industly involvement in the vocational training system is nascent. Until recently there was limited participation o f employers in defining training policies and in developing courses. This i s now changing, and industry associations and individual employers are showing considerable interest in being involved in managing ITIs. 6. Recognizing this, the Go1 i s now in the process o f implementingvarious reforms at the policymaking and institutional levels. I t has established a clear demarcation between the roles and responsibilities o f the N C V T and the SCVTs, as well as coordination mechanisms between them, and i s expanding i t s role in the provision o f information and facilitating the evaluation o f training provided in institutions. At the institutional level, both the Central and the State governments are making efforts to involve the private sector in institutional management to promote greater responsiveness to labor market needs. Institute Management Committees (IMCs), chaired by the private sector and involving employers, are increasingly being established. State governments are providing these I M C s with greater autonomy t o make decisions - letting ITIs, in consultation with employers, decide o n their own training programs; giving institution managers the freedom to engage or otherwise contract instructors; allowing ITIs to generate revenues (other than prescribed fees); and allowing I T I s to set more realistic fees (with the governments s t i l l bearing a significant portion o f the institutional financing). 7. In the medium-term, a National Vocational Qualifications Framework (NVQF) will be established to bring about greater consistency and cohesion among the many players. I t will be important to develop an NVQF based on specified standards o f training, leading eventually to the development o f industryrelevant modular training courses. This will also provide a framework for identifjmg and establishing course assessment standards and pre-requisites for entry into training. Trainingfor the Informal Sector 8. Over 90 percent o f employment in India i s in the ‘informal’ sector, with employees working in relatively l o w productivity jobs. Provision o f skills appropriate to this sector will be an important policy intervention to increase the productivity levels o f this segment o f the workforce. B o t h demand and supply-side constraints have inhibited skills development in the informal sector. On the demand-side, few employees in the informal sector see the importance o f skills training; indeed, many identify poor access to capital, cumbersome bureaucratic bottlenecks, and lack o f access to quality equipment as being their main challenges. 9. On the supply-side, there has been various attempts to provide training to the informal sector. T h e most important initiatives are probably the Community Polytechnic Scheme training about 450,000 people a year within communities; Jan Shikshan Sansthan offering 255 types o f vocational courses to almost 1.5 million persons, mostly women; and the National Institute o f Open Schooling (NIOS) offering 85 vocational courses through over 700 NIOS-recognized training providers. None o f these programs has been evaluated rigorously. 10. T o date, public and private formal training institutions play a limited role in producing skills for the informal sector. While one o f the mandates o f ITIs and ITCs i s to train workers for the informal sector, evidence shows that this i s rarely the case. The share o f IT1 graduates who entered self-employment or became employers i s not much greater than 10 percent while only around 5 per cent o f ITC graduates j o i n the unorganized economy. The main reason i s that running a small business requires much more than simply possessing a particular occupational slull. Running a small business requires a person to be multiskilled in a variety o f areas, the kind o f training not imparted currently in ITIs or ITCs. 19 11. The diverse training needs o f the informal sector operators cannot be met by simply reorienting public training institutions to serving a different population. The skills set and experience o f the existing faculty in public training institutions are not readily refocused t o serve both the formal and the informal sectors. Major investments are needed to upgrade facilities and equipment; t o attract, develop and retain new faculty, and to develop new curricula and materials to provide the package o f skills needed by the informal sector. Locally based non-government training providers and NGOs may b e better situated and more effective in providing the kinds o f training services that are suited t o the needs o f the informal economy. 12. Outside o f institutions, training in the informal sector i s provided through traditional apprenticeships but these have significant weaknesses. Although reliable data for India are not available, figures for other countries suggest that many young people acquire competencies through traditional (informal) apprenticeships, with figures ranging anywhere from 50 t o 70 percent o f employees in micro-enterprises. These apprenticeships are based o n traditional technologes and ideas from previous generations, and the quality o f training i s only as good as the skills o f the master and, the master’s willingness and ability t o pass o n those skills. The theoretical aspect o f learning i s often weak or absent; and only the simplest skills are learnt so that l o w quality products are produced and productivity remains low. 13. The Go1i s t a h n g steps t o facilitate training for the informal sector, including: (i) establishing a policy framework (regulations and incentives); (ii) supporting curriculum development, training o f trainers, and competency-based skills testing financed through the GoI’s soon-to-be launched Modular Employable Skills (MES) program. Other steps that the government could take in this direction include: (i) using tax incentives or financial support t o stimulate private investments so as t o increase the capacity and the quality o f training; and (ii) revising the outdated Apprenticeship A c t with regulations that hamper enterprise-based training. Private Provision of Pre-employment Training 14. Apart f r o m the ITCs, India has a weak non-public training market. While it i s not possible t o document the size o f the private training sector because o f the large number o f unaccredited training providers, the number o f training places o n offer appears to be smaller than the places offered by I T I s and ITCs. However, anecdotal evidence suggests that the size o f this sector i s growing. 15. There are significant differences between public and private provision o f training. Only about 15 percent o f students are enrolled in engineering-related trades in the privately funded unaccredited training institutions, as compared t o over 80 percent in the I T I s and ITCs. The average duration o f courses i s also shorter, and studendteacher ratios are significantly higher. While some institutions receive funds from the government, most are financed through fees. In terms o f outcomes, the results appear mixed - ITC graduates do not fare any better in the labor market than the IT1 graduates; self-reported data from other private training providers suggests that only 40-50 percent o f their graduates were employed within six months o f leaving the training centers. 16. K e y problems faced by private training providers include lack o f access to resources and regulatory barriers that hinder entry into the training market. M a n y private providers identified access to credit for working capital, and financing o f initial investments in the private training centers as key constraints t o setting up the training centers with adequate facilities, and to upgrading the existing facilities. According to a World Bank study (“Skills Development in India: The Vocational Education and Training System”, World Bank, 2006), while the level o f regulation i s not uniform across States, most private providers complain about excessive government bureaucracy in registration o f training institutions, as well as in 20 accreditation and certification o f courses offered. In order to get around these bureaucratic constraints, many private institutions simply choose to remain unaccredited. 17. The government should remove constraints on setting-up training institutions to facilitate private provision o f training. Malung legislation clear and registration procedures simple would ensure a vigorous private sector response. Here again, the governments can play a key role in disseminating information about the course offerings and quality o f training provided by different providers, both public and private. W i t h an eye to ‘leveling the playing field between public and private providers’, the State governments can actively disseminate relevant information about, for example, types o f training provided, fees, and dropout and completion rates o f different providers. A deeper analysis o f these issues will be undertaken as part o f the Project Financing Vocational Education and Training 18. Funding i s s t i l l narrowly focused o n publicly provided training. With the State authorities focused o n providing training through the public sector, almost n o attention i s being paid to using innovative financing mechanisms as a means o f encouraging delivery o f good quality training, whether public or private, or o f providing incentives to enterprises to take o n greater responsibilities for in-service training o f their workers. States are losing a valuable opportunity to leverage their limited training resources through such mechanisms. 19. It i s difficult to get a clear picture regarding trends in financing o f training. Data o n the financing o f both vocational education and vocational training are scarce - State-level data o n vocational education funding i s usually reported together with the data for general secondary education, while the vocational training funding data i s often lumped together with other programmatic information. Different departments are responsible for vocational education and training in different states and there i s little data comparability across agencies. Having said that, the limited data available suggest that the total public funding for vocational training i s around US$250-300 million annually. 20. T h e funding model used by the states i s largely ineffective. Although training resources available t o the States are limited, n o State seems to follow a transparent funding formula in the funding o f vocational education or training. Once an institution begins receiving funds, subsequent funding i s usally guaranteed irrespective o f the institution’s performance. The same levels o f funding are allocated to poorly performing institutions with high drop-out rates as t o those that maintain a high quality o f teaching and training performance. 21. Training providers have insufficient interest in their financial state o f affairs. Student fees in I T I s are retained by their respective State governments, leaving the managers o f training institutions with n o financial incentive to meet the labor market needs - a common failing o f supply-driven VET models. Although unit costs are high, few institutions have the incentive to invest in critical training inputs since the majority o f funds provided go towards faculty and staff salaries. 22. This simple financing framework i s n o longer adequate for meeting the emerging s k i l l needs o f the Indian workforce in a rapidly globalizing economy. There i s need for the government to consider h o w financing can be better structured to foster increased in-service training among enterprises, greater private provision o f training, as well as greater cost-sharing with the beneficiaries. Given this, there are two sets o f issues to attain the desired objectives: (a) how to best mobilize resources for training; and (b) h o w to allocate resources most effectively. 21 Resource Mobilization 23. Several steps can be taken to improve resource mobilization, including giving institutions greater latitude t o generate resources and use the proceeds for operating costs; and asking beneficiaries-the students and the employers-to bear part o f the costs o f training. Currently student fees amount t o less than five percent o f the total training cost; a more realistic costing structure might have students paying a larger proportion o f the training costs, an option n o w under consideration in several States. Firms could contribute to training levies (a certain percent o f payroll similar t o the education cess) and be reimbursed in whole or in part on the training they undertake in recognized public or private institutions. This would not only stimulate firms to train or train more, but the competition t o serve these firms would have the additional benefit o f encouraging training providers t o become more responsive t o employers’ s h l l needs. As levy schemes are difficult to design and require a high degree o f administrative efficiency and transparency, this option needs t o be carefully thought through before being pursued in the medium-term. Resource Allocation 24. Irrespective o f the source or volume o f funds, a better mechanism for allocating resources i s needed. A Training Fund could be one vehicle for doing this - it unifies and augments public funding and allocates resources in line with the national policies and priorities. Its main purpose i s to move systems from supply-driven to demand-driven models - and for that reason it should include even government contributions. Institutions are funded directly but are required t o apply for resources, ideally in a competitive field. Instead o f transferring resources to institutions o n an ad hoc basis, resources could be transferred through the Fund o n the basis o f input or output criteria. Institutions could be financed according t o the estimated cost o f inputs (e.g. by using norms such as the number o f trainees enrolled or number o f classes). An alternative method could be to fimd institutions based on outputs or outcomes. Output targets can be defined in absolute terms (e.g. number o f course completions, pass rates on examinations) or in relative terms (e.g. years t o completion). Outcome targets measure the success o f training providers in meeting labor market needs (e.g. j o b placement within a reasonable time). The key i s t o define transparent criteria that are easily measured but not easily manipulated. The feasibility o f setting up such a Fund will be explored by the Project. 22 Annex 2: M a j o r Related Projects Financed by the Bank and/or other Agencies INDIA: Vocational Training Improvement Project Sector Issue Name of the Project B a n k Financed 0 0 0 0 0 0 Improve the quality and efficiency o f basic crafismen and apprenticeship training; Expand and diversify the advanced training programs; and Strengthen the National Vocational Training System Increase participation o f women in all programs. Expand the capacity o f the polytechnic education system; Improve the quality o f polytechnic programs; and Enhance the efficiency o f management and operation o f the polytechnic system. The project covered 279 polytechnics in the States o f Bihar, Goa (included in the project in 1993), Gujarat, Kamataka, Kerala, Madhya Pradesh, Orissa, Rajasthan and Uttar Pradesh and the four regional Technical Teachers’ Training Institutes at Bhopal, Calcutta, Chandigarh and Chennai. 0 Expand the capacity o f the polytechnic education system; Improve the quality o f polytechnic programs; and 0 Enhance the efficiency o f management and operation o f the polytechnic system. The project assisted 249 polytechnics in the States o f Andhra Pradesh, Assam, Haryana, Himachal Pradesh, Maharashtra, Punjab, Tamil Nadu, West Bengal, the National Capital Territory o f Delhi and the U n i o n Territory o f Pondicheny. T o assist in upgrading the training o f medium and high level technical and professional manpower needed for the rapid and efficient growth o f the electronic industry 0 0 Developing/expanding capacity to provide increased access to technician education; Enhancing quality o f education to produce better trained technicians; and Improving efficiency through better planning, administration and utilization o f the system and increasing i t s responsiveness to emerging labor market needs. Latest Supervision R a t i n g Implementation Vocational Training Project (POO9990) (Cr. 2008-IN) (Closed FY 99) Technician Education Project (POO9989) (Cr. 2130-IN) (Closed FY 99) Education Project (POO9988) (Cr. 2223-IN) (Closed FYOO) Electronics Industry Development-HRD Component (Ln. 3093-IN) (Closed FY 96) Third Technician Education Project (P050658) (Cr. 3413-IN) The project assists the industrially and economically underdeveloped and geographically remote states o f the northeastern region (Arunachal Pradesh, Meghalaya, Mizoram, Nagaland, Sikkim, and Tripura), Jammu & Kashmir, and the Union Territory o f Andaman & Nicobar Islands. 23 HS HS HS Annex 3: Results Framework and Monitoring INDIA: Vocational Training Improvement Project Results Framework Project development objective Project outcome indicators The PDO i s to improve the employment outcomes o f graduates from the vocational training system, by making the design and delivery o f training more demand responsive. Intermediate results 0 I Used in conjunction with intermediate output indicators and impact evaluations, these data on ITIs’ internal and external efficiencies are used to confirm whether achievement o f the PDO i s on track. Percent o f pass-outs from project ITIs that exit from the CTS system with a N C V T certificate, as compared to the baseline. Percent o f pass-outs from project ITIs who find employment within one year o f finishing training, as compared to the baseline. Real monthly earnings o f employed pass-outs from project ITIs measured one year after finishing training, as compared to the baseline. 0 I Use of project information Results indicators I I Use of results monitoring Component 1: Improving Quality o Vocational Training Sub-component 1.1: Strengthening Industrial Training Institutes T o improve quality o f IT1training by strengthening 400 existing and competitively selected ITIs with private sector-led Institutional Management Committees (IMCs), through setting up Centers o f Excellence (COEs) or by upgrading IT1 training facilities for high demand local trades. 0 Percent o f ITIs with active private sector participation and leadershlp in IMCs, as measured by attendance at committee meetings and subjectively through field visits by SPIU. T h e proportion o f a StateLJTs allocation that has been expended. T h e proportion o f relevant instructor vacancies that are filled. 24 Private sector leadership o f I M C s i s key to making ITIs more market oriented in training delivery. Competitive selection o f I T I s ensures that resources are allocated to StatesATIs o n merit/performance. Filling instructor vacancies ensures that trainees get quality and appropriate training. Sub-component 1.2: Training o f Trainers T o enhance the system’s capacity to train new instructors and to provide both basic and refresher courses and specialized programs to current instructors as needed. 0 Number o f Instructor Training Wings (ITWs) establishedupgraded to provide entry-level instructor training. Competitive selection o f States to provide training-of-trainer funding ensures resources are allocated to StatedITIs o n meridperformance. Number o f new and current instructors given basic and refresher or specialized instructor courses. These indicators w i l l be used to measure the successful expansion o f instructor training capacity. Number and types o f grants provided to well-performing StatesAJTs and the distribution o f these resources to projecthon-project ITIs. Competitive selection o f states and ITIs for additional funding ensures that resources are allocated o n the basis o f merit and actual performance. Sub-component 1.3 Incentive Fund T o provide additional resources to well-performing StatesAJTs in years 3 and 4 to leverage training in emerging/export oriented areas or to expand coverage o f training to nonproject ITIs. Impact evaluations will be conducted o n activities funded by the Incentive Fund. Component 2: Promoting Systemic Reforms and Innovations Sub-component 2.1: Promotion of Reforms To promote systemic reforms through studies that provide viable reform proposals, and study tours and shortt e r m programs to enhance capacity for reform implementation. Number o f studies commissioned by NPIU. In the medium-term, these studies will provide the basis for undertaking broad-based reforms o f the vocational training system. T h i s indicator will be used to monitor capacity building o f government and private sector leaders about international best practices in vocational training. Sub-component 2.2: Innovations Fund T o support piloting o f innovative activities which improve quality o f formal and informal training provided by ITIs and ITCs through competitive grants. Number o f innovations proposals financed by Innovation Fund. 25 T h i s indicator will be used to identify training strategies and policy reforms that could be implemented in the mediumt e r m if found effective. Sub-component 2.3: Strengthening Capacity to Develop Curriculum and Resource Materials I AH1 - number o f trades upgraded with new technology curricula, and instructor training programs introduced. AH1- development o f norms and standards for COEs’ instructors training and assessment procedures for COE instructors. CSTARI - number o f trade curricula developed with private sector inputs. NIMI - Number o f instructional media packages (IMP) and self-learning uromams develoued and uublished. To build capacity o f 3 central institutions in new curriculum and instructional media packages development, s k i l l assessment and testing, and training standards. 0 Apex Hi-Tech Institute (MI) in Bangalore Central Staff Training and Research Institute (CSTARI) in Kolkata National Instructional Media Institute (NIMI) in Chennai These indicators are monitored to assess progress made by the centrally-funded institutions in upgrading and developing new curricula and instructional media packages, and setting standards for improving skdls o f instructors to provide quality training to students. I Component 3: Project Management, Monitoring and Evaluation Component 3.1: Project Management To establish central and state-level organizations to manage, guide and monitor project implementation by the centrally-funded institutions, States and ITIs. 0 A National Steering Committee (NSC), supported by NPILJ, established. State Steering Committees (SSC), supported by SPIU, established. Capable and well coordinated management structures at the central, state and ITI-levels are key to effective implementation Baseline IT1institutional survey and tracer study o f IT1 graduates. Web-based Management Information System (MIS) implemented, based on baseline surveys and field visits. Semi-annual joint GoI-IDA review o f project implementation progress Project impact evaluation undertaken at mid-tern and end-term by independent localhternational consultant fm. Institutionalized data gathering and analysis, and dissemination o f relevant information o n I T I s and IT1pass-outs facilitate project monitoring, assessing impacts, and making mid-course policy corrections and reforms as needed. Component 3.2: Monitoring and Evaluation To provide an effective monitoring and evaluation system to: (i) monitor resource usage; (ii) assess project implementation progress, and (iii) evaluate program impacts through assessments and studies 0 0 26 x a 2 m PI) El . I L Y 0 . I El m mm wv, m m s !$2 C O N 10 E 0 N + m N N I 23 L (El s $$ P H w worn $ m w $$ P N N N .m c, Q) m P W P PI) El E 2 g w $$ o m \Dr- N d v, N mm mv, In0 N N E2 m a E2 m 5 - - 0 5: x P G 2 0 h P G 0 0 0 Q\ 0 g E: - -s 0 0 0 v, x P G x G 0 W hl 0 0 v, W 0 0 v, hl of. E e . I . I Q G n Q . c )I 2 P LI 0 b . I I Q 6 .-E> M kE .. m 3 .L E . i a E u v, b 0 0 10 2 2 E E a g E 0 4: 4: 0 I d 7-4 7-4 0 l- 4: m to 0 r 4 *z *z . z 0 m Annex 4: Detailed Project Description INDIA: Vocational Training Improvement Project I.Background 1. Recognizing the major role that quality skilled manpower has played in the economic development o f the country and in the export o f goods and services, the Government o f India (GoI) has decided t o focus attention o n the production o f highly skdled craftsmen. In this context, i t i s guided by the observations and directions provided by the Prime Minister and the U n i o n Finance Minister as summarized below: In his 2004-2005 Budget Speech, the Finance Minister pointed to the need for upgrading I T I s in a public-private partnership mode. H e stated: “The skills imparted by ITIs must keep pace with the technological demands of industry and the expanding universe of knowledge..... I n order to produce technicians of world standard, Government proposes to launch a program in the Central sector to upgrade 500 ITIs over the next 5 years at the rate of 100 ITIs a year. Appropriate infrastructure and equipment w i l l beprovided, the syllabi w i l l be upgraded and new trades w i l l be introduced, This is an area where I welcome Chambers of Commerce and Industry to j o i n hands with the Government and create a public-private partnership model for designing and implementing the scheme. The selection of ITIs w i l l be done in consultation with the State Governments. ’’ Similarly, the need to upgrade I T I s within a public-private partnership framework was emphasized by the Prime Minister at the Shram Awards Function on October 4, 2004 at N e w Delhi: “The skill level of our worybrce is an area of concern. The quality of manufacturing output and the wages paid to labour are critically dependent on the quality of labour force .... While strengthening and modernizing our Industrial Training Institutes (ITIs) and the Apprenticeship Training Schemes, we need to realize that there must be active involvement of industry - both in the private sector and in the public sector in the task of curriculum design and management of these programmes. ” 2. These statements have been reiterated by the Prime Minister, Finance Minister and other senior-level policymakers o n several occasions subsequently. 3. Recognizing that the current centralized management style i s malung the craftsmen training system inadequately responsive t o the emerging demands o f the rapidly developing economy, the Go1 i s keen to undertake reforms that would move towards a system where the Government plays the key roles o f policy development, s k i l l standards setting, financing, and monitoring and evaluation while engendering greater competitiveness and accountability in training institutions. 4. A key ingredient o f GoI’s reform agenda i s to move the private sector into a lead role at all levels o f decision making - from policymaking at the Central and State levels t o managing individual training institutions. The Ministry o f Labor and Employment (MOLE)i s working closely with the private sector to translate this vision into reality. T o do this, i t has made the decision that the operations o f all I T I s will be managed by Institute Management Committees (IMCs) with majority representation from employers. The IMCs, chaired by a local industry representative, will be vested with adequate academic, managerial, administrative and financial autonomies. This decision t o form IMCs i s supported by the Confederation o f Indian Industry (CII) and the Federation o f Indian Chamber o f Commerce and Industry (FICCI) -the two largest employer federations in India. 5. Other important ingredients in GoI’s medium-term agenda o f systemic reform include modernizatioddevelopment o f curricula t o meet international standards, development o f a national 31 qualifications framework, leveling the playing field for public and private sector providers, and designing and implementing a training fund. These reforms have support at the highest level o f the GoI. 6. Over the next few years, Go1 aims to use the IMC mechanism t o upgrade 500 ITIs, making i t a condition that only ITIs with an IMC in place will qualify t o receive funding for upgradation. The performance o f these training institutions will be closely monitored and evaluated t o assess the impact o f these reforms on labor market outcomes. The Go1 has already initiated i t s reform agenda with upgadation o f the first set o f 100 I T I s using domestic resources. 11. The Project by Components 7. The Project development objective i s to improve the employment outcomes o f graduates f r o m the vocational training system, by making the design and delivery o f training more demand responsive. 8. The Project, covering about 25 percent o f a l l publicly funded ITIs, will have three components: (i) Improving the quality o f vocational training, (ii) Promoting systemic reforms and innovations, and (iii) Project management, monitoring and evaluation. Component-1: ImprovingQuality of Vocational Training [Total: US$301million, IDA: US$228 million] 9. T h i s component focuses on improving the quality o f training imparted in I T I s , piloting enhancements in system capacity and quality for “training o f trainers”, and providing States with incentive funds to leverage training resources that would further the objectives o f the Project. Sub-Component 1.1: Strengthening of Industrial Training Institutes 10. The Go1 has already started strengthening the first set o f 100 I T I s from domestic resources. The Project will thus direct i t s support towards strengthening 400 eligible ITIs (selected competitively from eligible States) t o provide high quality training through Centers o f Excellence (COE) in about 300 I T I s and by upgrading training facilities in another 100 ITIs. Eligibility criteria for States and I T I s t o participate in the project are laid out in Section 111below. 11. A critical reform being introduced into the system i s the significant delegation o f academic, managerial, administrative and financial autonomies to IMCs and institutions. These include the power to suggest modifications t o different existing courses; add new trades and abolish trades that are redundant or irrelevant; generate, retain and use all revenues from the sale o f goods and services; and engage contract faculty. In addition, while Principals have had almost n o financial authority to award contracts (less than $100 in most States); this power i s n o w being significantly enhanced for amounts up to $20,000 per contract. 12. Greater accountability i s also being fostered. The main responsibility for h o w the project performs will rest with the State governments rather than with individual institutions, which inevitably follow the policies and directions (implicit and explicit) o f State authorities when exercising authority they are given. The Project thus assigns primary accountability for project performance to the State governments, and reflects this in several provisions. Firstly, an Incentive Fund that can be used by States to extend the benefits o f the Project beyond the participating I T I s (see sub-component 1.3 below). Only 20 awards will be made by the NSC and only those States that have performed satisfactorily, judged against outcome and output indicators, will be invited t o apply. The first Incentive awards and any re-allocation o f funds will take place after the joint mid-term review. All indicators will be monitored regularly before then, discussed with States, and made publicly available through the DGE&T website, but i t will only be by the 32 mid-term that robust and justifiable rewards or penalties could be exercised. Secondly, the selection o f ITIs will be done in two cycles and the performance o f the participating states that will be used as a criterion for selection o f IT1in the second cycle. 13. O f the 400 I T I s to be funded through this Project, 100 ITIs have already commenced their institutional project implementation as o f August 2006. Only expenditures from this set o f I T I s will be financed retroactively up to a maximum o f 12 months prior to date o f signing o f Financing Agreement, provided that expenditures were made in accordance with W o r l d Bank guidelines for procurement o f works, goods and services. The total amount o f retroactive financing will be limited t o 20 percent o f the Project Credit.3 14. Strengthening ITIs, and the specific trades selected for funding, will be achieved in several ways, modernization and strengthening o f including: (i)refurbishment o f teaching-training infrastructure, (ii) existing workshopsAaboratories to support revised Curricula, (iii) launching new trade courses and discontinuation o f those in l o w demand, (iv) revision o f existing curricula with significant involvement o f industry, (v) establishment o f workshopsAaboratories for new trade courses in I T I s to be upgraded and for advanced training modules in Centers o f Excellence, (vi) increased utilization o f learning resources and media, and (vii) filling instructor vacancies and appointing additional instructors as needed. 15. Institutions adopting the Center o f Excellence (COE) approach will focus o n upgrading an individual industrial sector that meets the high quality craftsmen needs o f the dominant local industry. The COE approach provides multi-entry and multi-exit pathways for students to get training, and this involves conducting: (a) broad-based multiskilling modules during the first year (semesters 1 and 2), (b) an advanced module during the first h a l f o f the second year (semester 3), and (c) a specialized module through relevant industry attachment during the second h a l f o f the second year (semester 4). For a given sector, the curricula for the first year’s broad-based training and for the advanced module will be common in all the ITIs offering courses in that sector. Trade testing for these modules will be done at the national level under the aegis o f the National Council for Vocational Training (NCVT). Testing and certification for the specialized module will be carried out jointly by the State Council for Vocational Training (SCVT) and industry, and the certificates awarded for the fourth semester will be recognized by the NCVT. ITIs that opt t o establish a trade-specific COE will also be financed to upgrade training facilities in related trades. 16. I T I s not wanting to adopt the COE model may instead opt to upgrade training facilities for conventional trades that are in high demand locally. N e w trades could also be introduced but only if lowdemand trade courses are discontinued. Sectors that I T I s are likely to focus o n for upgrading include automotive, electrical and electronics, garments, IT, and other sectors for which there i s a significant demand in the local labor market. Financing in these I T I s will normally be for a total o f 6 trades inclusive o f existing and new trades. 17. All project I T I s will establish Training, Counseling and Placement Cells (TCPC) to secure: (a) industry attachments for the C O E students for the specialized module, (b) training for IT1 graduates, either as apprentices or otherwise, and (d) employment for the IT1graduates. The TCPC will be managed by a Training, Counseling and Placement Officer (TCPO), who will be an existing faculty in each IT1 (e.g. Vice-principal or Group Instructor), workmg on this additional responsibility o n a part-time basis. The TCPO will responsible for increasing institute-industry interactions to the advantage o f both the 3 After Project Effectiveness, eligible I T I s f r o m this first set o f 100 m a y apply for additional finding over and above the amounts already allocated t o them by the DGE&T t o undertake improvements in training facilities. Such additional requests will be considered by the National Steering Committee (NSC) based o n the merit o f their Institutional Development Plans (IDPs). 33 students and instructors in the form o f industry visits, industry attachments, expert lectures and training, job fairs for campus recruitment, etc. The TCPO would be suitably compensated for h i s h e r extra time inputs. Sub-Component 1.2: StrengtheningInstructor Training 18. There are close to 60,000 instructors in ITIs and ITCs, a significant majority o f whom have not been trained recently. Training capacity i s currently limited to 1,100 places per year for basic (entry-level) training o f instructors in seven centrally funded institutions - 5 Advanced Training Institutes (ATIs) located at Howrah, Hyderabad, Kanpur, Ludhiana and Mumbai; the Central Training Institute (CTI) at Chennai, and the National Vocational Training Institute (NVTI) for Women at Noida. The system’s instructor training capacity will be expanded by: Establishing 10 Instructor Training Wings (ITWs) in selected Project ITIs t o provide an additional 1,000 places for the basic (entry-level) instructor training, and improving training facilities in the seven centrally funded institutions already conducting this type o f training. The basic (entry-level) training will be o f 12 month duration, and will be targeted at instructors who have been in the system for less than five years, and have not received any such training. The training will be accredited by the National Council for Vocational Training (NCVT); Starting refresher training courses for instructors in 20 selected COEs - this training targets instructors who have been in the system for more than five years. The training will be o f four weeks duration, and the participants will be awarded a certificate o f completion ; Organizing training for would-be COE instructors at 11 centrally-funded institutions - AH1 at Bangalore; the six ATIs; two ATI-EPIs; FTI at Bangalore, and NVTI at Noida. This training, o f 10 week duration, will be focused on upgrading the skills o f instructors identifiedrecruited for placement in a COE. The training institutions will award certificates to instructors participating in the program; and Organizing highly specialized training o f instructors in publicly-funded organizations outside the ambit o f the MOLE,and also in privately-funded training organizations and industry training centers. 19. The selection o f States for establishing an ITW or for providing refresher training for instructors in its COEs, or for both will be competitive. Eligible States will need to submit proposals to the NSC to justify why they have a comparative advantage in the training o f trainers. The proposal will provide details about the would-be-host ITI’s qualifications, experience and adequacy o f i t s trainers, training facilities and accommodations for instructor trainees, and sustainability o f the proposed model. Proposals will be vetted by the NSC against objective criteria to ensure selection o f the best proposals. 20. In the States selected for this purpose, the host I T I s will receive additional financial allocations based on selection and funding criteria to be determined by the NSC. The total funding to establish an ITW will be limited to Rs. 20 million (USD 440,000 equivalent) to cover the costs o f additional classrooms and a 50-seat instructor-trainee hostel, fees for guest faculty, honoraria to existing instructors for extra time spent conducting training programs, and additional training costs. Similarly, existing centrally-funded institutions and host COEs will be provided funds for additional equipment, additional training costs, fees for guest faculty, and honoraria to existing instructors involved in instructor training. T h e ITWs, COEs and the centrally-funded institutions are expected to l e v y training fees for both the in-state and out-ofstate instructor trainees; the fees would be determined in consultation with the N C V T . 21. For bringing about system-wide improvements in the quality o f teaching, instructors in all the ITIs (including project ITIs) in each project State will, during the project life, be provided either the basic training or refresher training as per the individual instructor’s assessed training needs. T h e Project will finance all such instructor training through the SPIUs. 34 22. The Apex Hi-tech Institute (AHI) at Bangalore, an existing centrally-funded institution, will be tasked to manage and promote instructor training within the network o f training institutions called the Instructor Training Network (ITN) - which comprises o f 10 ITWs, 11 centrally-funded institutions, and 20 COEs as well as with reputed training establishments outside the ITN. T o meet this management function, the AH1 will: (a) develop and maintain a database o f instructors, (b) undertake training need analysis o f instructors, (c) develop curricula for the 3 types o f instructor training programs (basic, refresher and advanced), (d) organize training o f instructors within and outside the ITN, (e) review the basic (entrylevel) training o f instructors in terms o f duration and responsiveness to the needs o f new instructors, and recommend changes to the N C V T as necessary, (0 set norms and standards for the different types o f instructor training, and (g) carry out periodic inspections to ensure that training network institutions adhere to the prescribed training norms and standards. The AH1 will also prepare brief Annual Training Plans, and through the NPIU share them with the World Bank for review by July 31 o f each year. The Plan will give a schedule o f training programs to be conducted by each ITN institution and the number o f instructors that are expected to benefit from each program. T h e Plan will also state the number o f instructors that would be given specialized training in reputed training establishment outside the ITN. AH1 will be strengthened to perform the above stated management functions. 23. As a result o f these initiatives, it i s expected that the annual training capacity o f the system will increase significantly - the number o f entry-level trainees will increase to 2,000 from 1,100 and refresher courses would be provided to about 10,000 instructors. In addition, infrastructure will be created to train about 3000 COE instructors per year. Sub-component 1.3: Incentive Fund 24. The Incentive Fund i s designed to provide additional funding in the form o f grants to those Statedunion Territories (UTs) that have performed well. T o ensure objectivity o f the selection process, several quantifiable criteria will be used to judge performance: (a) the proportion o f a S t a t e m ’ s allocation that has been utilized; (b) the proportion o f IT1 entrants that obtain NCVT certification; (c) the proportion o f pass-outs finding employment within 12 months o f training completion; (d) the proportion o f relevant instructor vacancies that are filled in participating ITIs; and (e) the proportion o f instructors who have received training. 25. N o more than 20 awards (additional allocations) will be given to States over the life o f the project, with the maximum amount for an award limited to US$2 million. The best performing S t a t e m s will be invited by the N S C to submit proposals for consideration by the NSC. Invitations will be sent to the relevant StateAJTs on two occasions: (a) in Year 3, when about 50 percent o f the awards will be given, based o n assessments o f the performance o f States/UTs in Years 1 and 2 o f the project, and (b) in Year 4 when the remaining awards will be given based on performance over the three previous years. A State/UT may be invited to apply for an allocation on either or both occasions. 26. Examples o f proposals that may be submitted by States include: conducting medium-term training programs in emerging and/or export oriented s k i l l areas and, short-term training programs for practicing artisans and unemployed youth in both Project and non-Project ITIs; strengthening o f training facilities in non-Project ITIs; providing advanced training o f instructors in specialized institutions; and translating instructional media packages into regional languages. Component-2: Promoting Systemic Reforms and Innovations [Total: US$30 million, IDA: US$29 million] 27. Component 1 above, aims to rapidly improve the quality and relevance o f the public vocational training system. However, systemic reform o f the entire system i s a long-term process. Reforms and 35 innovations need to be carried out to bring about improvements in the vocational training system and to sustaining gains made under the Project. T h i s Component focuses on activities that will lead to the design and ultimate implementation o f some o f these reforms. T h e DGE&T will have responsibility for implementing these activities in collaboration with States, industry associations, non-government organizations (NGOs) and private training providers. Sub-component 2.1: Promotion of Reforms 28. T w o groups o f activities have been selected to promote reforms: (a) studies designed to develop viable proposals for reforms, and (b) study tours and short-term fellowshp programs to enhance the capacity o f the policy makers and system managers to implement reforms. 29. Four key areas presently identified by policy makers as critical to the reform process are briefly described below. Additional studies will be identified over the course o f project implementation: 0 0 Developing a National Vocational Qualification Framework (NVQF) to provide uniform procedures for determining the pre-requisites for entry into different training courses and programs, for assessing competencies o f trainees, and for certifying slulls; Developing a framework for registering private training providers and the courseslprograms offered by them that meet N V Q F standards, and for instituting periodic inspection o f all institutions for renewindwithdrawing their registration with the NCVT; Developing replicable models for training o f the informal sector workforce in ITIs, polytechnics, training establishments o f the Central and State governments, public sector undertalungs (PSUs), industries and private sector training establishments. The findings o f this study will feed into the MOLE’SModular Employable Skills (MES) program and the National Mission for Skills;4 and Assessing the feasibility o f establishing a Training Fund - with resources mobilized from Central and State governments, students, PSUs and industry to finance formal vocational training programs in both ITIs and ITCs on the basis o f their performance, and to provide incentives for employers to provide in-service training to their newly hired and current employees. -- 30. Foreign study tours and short-term fellowship programs will be organized by the NPIU to study policies and best practices in areas related to vocational training. Study tours and fellowships will target senior staff o f MoLE, DGE&T, States, NPIU, SPIUs, centrally funded institutions under the administrative control o f MoLE, and senior representatives o f industry associations. Areas o f interest include private-public partnerships; financing o f vocational training; curriculum development especially in emerging technologies; development o f training standards and techniques for benchmarking; assessment and certification o f slulls o f the informal workforce; and development and production o f learning resources. Industry representatives will pay their own way on study tours. The NPIU will share proposals for all foreign study tours and fellowship programs with the World Bank to obtain i t s ‘no 4 Concurrently with this Project, Go1 i s embarking o n a major centrally-financed scheme ($150 million initial allocation from GoI) known as Modular Employable Skills (MES). MES i s designed for training workers in, and entrants to, the informal sector. Trainees w i l l be able to develop skills (or, more appropriately, competencies) that can be individually certified and packaged in whatever way i s relevant to the individual’s needs. Eventually, the training i s to be provided b y the registered public, private and non-profit training organizations. . I t i s expected that ITIs, using the resources (equipment, materials and instructors) developed under this Project, will be in a position to put M E S courses in place on a demand-basis. In addition, the competencies developed under M E S will be strongly influenced by the curriculum development advances made under the Project. Trainees under the M E S w i l l be able to accumulate competencies that add to a complete CTS certificate. 36 objection’ and, will thereafter coordinate and monitor their implementation. The NPIU will disseminate findings and lessons learned from all international programs through the DGE&T website. Sub-component 2.2: Innovations Fund 31. The Fund will support the piloting o f innovative activities that would significantly improve the quality o f the vocational education and training system. Activities that could be supported by this Fund include but will not be limited to: (a) pilot interventions to implement and assess the impact/acceptability o f systemic reforms (identified under Component 2.1 above); (b) developing web-based training programs and materials and using EDUSAT to deliver vocational training by distance-learning modes; (c) piloting methodologies for training in new/emerging technology areas; (d) developing a system for comparing Indian training standards with international ones; and (e) developing new delivery systems for informal training. 32. Financing from the Innovations Fund (specifically earmarked under the Project) will be available to the DGE&T, States, centrally-funded institutions under the administrative control o f MOLE,employers’ associations and private training providers. Preference would be given t o proposals that involve publicprivate partnerships. The maximum award for piloting innovative activities will be $1 million. 33. Proposals seeking financial assistance under this Fund will be shared with the World Bank for review before the NPIU tables them for consideration by the NSC. The NSC will review and select proposals, giving consideration to the wider applicability o f activities being proposed. Funds cannot, for example, be used to finance the training needs o f just one organization, but they could be used to finance the development work o f that organization for subsequent wider public distribution. In comparing proposals, N S C will consider: (a) the extent to which a proposal has been developed in collaboration with other stakeholders-- both public and private; (b) the extent to which a proposal furthers the objectives o f vocational training either nationally or within a S t a t e m [the procedure for selection o f proposals i s detailed in the PIP]. Sub-component 2.3: Strengthening Capacityfor Development of Curricula and Resource Materials 34. Three centrally-funded institutions will be strengthened for long-term sustainable development o f vocational training through: (a) establishment o f mechanisms for periodically updating the curricula and learning resources o f NCVT-affiliated trades and instructor training, (b) development o f sound assessment and testing procedures for both students and instructors, and (c) development o f student training standards that match international benchmarks. 35. AH1 will be strengthened to: (i)develop curriculum inputs in emerging technologies for use in updating curricula o f NCVT-affiliated trades, (ii) benchmark vocational training against international develop curricula for the 3 types o f instructor training programs described under substandards, (iii) component 1.2, and (iv) assess the feasibility o f reducing duration o f entry-level training for instructors. AH1 staff will be exposed t o international best practices, and i t will be provided funding to use the services o f international consultants and experts. 36. T h e Central Staff Training and Research Institute (CSTARI) at Kolkata will be supported to help i t adopt modem curriculum development methodologies and update i t s curricula with inputs from employers to ensure the continued relevance o f curricula. CSTARI will also develop procedures for evaluating COE students’ achievement on the specialized module to ensure uniform joint assessments o f student competencies by States and industry. CSTARI will utilize services o f local consultants, and its staff will be exposed to international practices. 37 37. The capacity o f the National Instructional Media Institute (NIMI) at Chennai will be strengthened t o develop, print/publish and disseminate instructional media packages (IMPS). NIMI will develop question banks for assessing and evaluating trainees o f conventional and COE trade courses, design self-learning packages for students and instructors, and train instructors in the use o f IMPs. Component-3: Project Management, Monitoring and Evaluation [Total: US$28 million, IDA: US$23 million] Sub-component 3.1: Project Management 38. At the central-level, the Project will be guided by a National Steering Committee (NSC), with significant senior-level representation from industry and industry associations. The NSC, chaired by the Secretary o f MoLE, will also select States and institutions, and allocate funds for various activities to the DGE&T, States, centrally funded institutions and others. I t will be assisted by a National Project Implementation Unit (NPIU), headed by the National Project Director (NPD) who will have the rank o f a Joint Secretary in the M o L E . The overall responsibility for policy decisions and project management at the central-level will be vested in the NPD. The NPIU will have 5 functional units with adequate full-time officials, consultants and staff (see Annex 6). It will be granted sufficient functional, financial and administrative autonomy to enable it t o carry out its responsibilities without having to seek frequent approvals from the NPD. 39. At the State level, the Project will be guided and facilitated by a State Steering Committee (SSC), headed by the Principal Secretary/Secretaryfor vocational training. The SSC will have significant representation f r o m industry and industry associations. The SSC will be assisted by a State Project Implementation Unit (SPIU) with adequate full-time officials, consultants and support staff (see Annex 6) * 40. At the institutional level, each participating IT1 will have an Institutional Management Committees (IMC) for the whole ITI, with significant participation f r o m industry. I t will be chaired by an industrialist. The IMCs will be adequately empowered in academic, administrative, financial and management matters to discharge their functions as listed in the Memorandum o f Understanding (MoU) between the DGE&T in the M o L E and the States [ M o U i s detailed in the PIP]. Sub-component 3.2: Monitoring and Evaluation 41. The Project provides for an effective monitoring and evaluation system to: (i) monitor the use o f resources; (ii) assess implementation progress o f various Project elements as measured by intermediate evaluate the impact o f the Project o n outcome indicators through impact output indicators; and (iii) assessments and thematic studies. 42. Project monitoring will be based on information assembled by the Management Information System (MIS) (under development by the NPIU) and through field visits. Institutions, SPIUs and the NPIU will regularly keep the M I S updated. All project ITIs will establish facilities for linkmg to the central M I S and keeping i t periodically updated. Each SPIU will cany out, against a simple checklist, at least one field inspection annually o f its project institutions. NPIU staff will also undertake periodic visits to States and participating institutions. 43. At the national level, project implementation will be reviewed periodically by the NSC, and at the state-level, the SSC will perform a similar function. Implementation progress will also be monitored semi-annually and at the mid-term, jointly by the Go1 and IDA. The NPIU will present State-wise analyses and findings during these reviews. The joint reviews will include visits to selected institutions 38 and interactions with stakeholders such as the private sector, students and teachers. These reviews will help identify problem areas and suggest remedial actions that need to be undertaken at different levels. The Mid-TemReview (MTR), besides assessing project progress, will also suggest corrective actions that may be needed to enhance the pace o f implementation and achievement o f project development objectives. The Go1 and IDA will also jointly undertake an Implementation Completion Review (ICR) mission to assess the overall achievements o f the Project. 44. The Project will be evaluated at the mid-term and end-term. The NPIU will be responsible for developing TORS for these evalutions, contracting the evaluation entity and supervising the work will be shared with the World Bank for i t s review, and “no objection.” Evaluation undertaken. The TORS track improvements in the employment and wage outcomes o f IT1 graduates; results will be used to: (i) (ii)study institution-to-work transitions o f trainees over a two-year period after graduation; (iii)gwe N C V T /CSTARI/ AH1 feedback from graduates on the relevance o f training provided and areas for curriculum improvement; and (iv) evaluate the impacts o f institution-level reforms and institutional upgradation o n employment and earnings o f graduates relative to a comparison group o f trainees not benefiting from the Project, and as compared to their own pre-Project IT1baseline averages. In addition, thematic reviewskudies for identifjmg emerging sectors, s k i l l mix requirements, and employer surveys will also be undertaken. III.Selection of StatesRJTs and Institutions 45. The success o f the Project depends critically on two conditions. Firstly, the States’ willingness to undertake the needed reforms in institutional management, and secondly, the ability and willingness o f project institutions to implement their development plans by exercising the given autonomies through their IMCs. These two conditions make it necessary that the States be selected first, followed by the institutions they then sponsor. Eligibility o f StatesRJTs 46. States/UTs desirous o f joining the Project shall submit their proposals in a prescribed format, stating the activities they plan to undertake under the Project. They shall also demonstrate their commitment and preparedness to meet the eligibility criteria for participation by signing an M o U with the DGE&T in the MOLEwell before the institutional selection takes place. The eligibility criteria to be met and adhered to throughout Project life are: Maintaining and ensuring active and effective industry participation in the State Council for Vocational Training; 0 Establishing a State Steering Committee with significant participation from industry; 0 Establishing and maintaining a State Project Implementation Unit with adequate s t a f f and financial and administrative autonomies to discharge i t s functions without frequently seelung approvals from State authorities; Agreeing to constitute an Institute Management Committee (IMC), with significant participation from industry, for each IT1selected to participate in the Project, and granting the I M C sufficient autonomy to perform i t s functions (as listed in the M o U given in the PIP); 0 Agreeing to grant financial and administrative powers to the Principals o f Project ITIs (as stated in the MoU) to undertake procurement, refkbishment and maintenance activities as required for speedy project implementation; 0 Agreeing to ensure implementation o f the recommendations made in the Environment Management Framework (EMF) and the Equity Assurance Plan (EAP) by each Project ITI; Agreeing to fill all existing instructor and technical staff positions, and ensuring that instructor vacancies do not exceed 10 percent o f respective sanctioned positions; and 39 Agreeing t o sanction all additional positions required by each Project IT1 in accordance with their respective Institutional Development Plans (IDPs). Eligibility o f Institutions 47. T o be eligible for selection into the Project, an IT1 from an eligible State should meet the following criteria: 0 It must have an effectively functioning I M C f o r the entire institution with sufficient autonomy t o perform its functions (as listed in the MoU given in the PIP); 0 There should be a regular full-time Principal in place with adequate financial and administrative powers (as stated in the MoU) t o undertake procurement, refurbishment and maintenance activities as required for speedy project implementation: Instructor vacancy should not be more than 10 percent o f the sanctioned positions in the whole ITI. It should have proper surroundings, sufficient space for landscaping, buildings with adequate space for additiondalterations and other infrastructural facilities; It should b e w e l l connected by road /railway; and 0 I T I s desirous o f being selected as a Center o f Excellence should be located in or close to an industrial area with a critical mass o f industries related to its chosen industrial sector. Selection of Institutions 48. O f the 400 institutions t o be supported under the Project, the first set o f 100 ITIs has already been selected jointly by the States and the DGE&T t o establish COEs-these I T I s have commenced their project operations since August 2006. The remaining 300 I T I s will be selected competitively based on their eligibility and their IDPs through a maximum o f two selection cycles 49. T o provide a level playing field, all the eligible I T I s (from the national stock o f 1896 ITIs) will be trained, well before Project commencement, by master trainers in development o f quality IDPs. The I T I s interested to participate in the Project will develop their IDPs under the guidance o f their respective IMCs and through consultation with stakeholders (local representatives o f industry associations, faculty members, students and the community). The IDPs would define the long-term goals o f the institution, the issues and challenges facing the institution and the strategies for dealing with them. Each IDP will set targets for institutional improvement, define performance indicators, explain h o w each IT1 i s going to assist graduates in obtaining employment (through a placement cell or j o b fairs) and detail the annual financial requirements. The prescribed IDP format i s given in the PIP. 50. The SSCs will evaluate IDPs from institutions in their State [guidelines for IDPs are provided in the PIP] and recommend to the N S C the ones t o be included in the Project and the quantum o f funds to be provided t o each o f them. The evaluation process will take into account issues including: the availability o f a functioning I M C for the entire institution; the extent to which the IDP meet the needs o f the local economy; consideration given to gender, stakeholder participation, and social equity issues; extent to which financing sought i s realistic and whether the institution has adequate absorptive capacity; and whether the IDP proposes to leverage private sector financing to complement public support. The final selections and fund allocations will be made by the NSC, and the decisions, beneficiaries and successful IDPs will be posted o n the DGE&T website. SSCs will advise unsuccessful ITIs o n h o w t o improve their proposals for submission in a subsequent round o f competition. 40 Annex 5: Project Costs INDIA: Vocational Training Improvement Project Project Cost By Component Local US$M 276 26 26 Improving Quality o f Vocational Training Promoting Systemic Reforms and Innovation Project Management, Monitoring and Evaluation Unallocated Total Base Line Costs Physical Contingencies Price Contingencies Total Project Costs' Total Financing Required I I 15 3 2 Total US$M 29 1 29 28 10 338 1 21 11 359 338 338 21 21 - Foreign US$M - 359 359 Identifiable taxes and duties are built into the project costs. 1. Physical contingencies and price contingencies are built into the project costs. 2. The States/UTs, which meet the eligibility criteria, will be funded by the project. A total o f 400 Industrial Training Institutes (ITI) will be funded. These I T I s will be selected on a competitive basis. In addition to 400 ITIs, the project will fund 14 centrally funded institutions (6 ATIs, 2 ATI-EPIs, 1 FTI, 1 CTI, 1 NVTI, 1 Apex Hi-Tech, 1 CSTARI, 1 NIMI), establish 10 ITWs, and training centers for advanced module instructors in 20 COEs), National Project Implementation Unit and State Project Implementation Units. 3. T h e maximum funds that could normally be provided to an IT1establishing a CoE i s US$ 800,000 (or US$ 450,000 (or equivalent o f equivalent o f INR 35 million), which i s comprised o f two elements; (i) INR 20 million) for establishing the CoE itself, and (ii) US$ 350,000 (or equivalent o f INR 15 million) for upgrading related trades. Funds for upgrading an IT1will be normally a maximum o f US$450,000 (or equivalent o f INR 20 million). 4. The total additional funding to an IT1 to establish an ITW will be limited to US$ 450,000 (or equivalent o f INR 20 million) to cover the costs o f additional classrooms and a 50-seat instructor-trainee hostel, fees for guest faculty, honoraria to existing instructors for extra time spent for conducting training programs, and additional training costs. 5. Decision about allocation o f external funds i s guided by the following principles: (1) respective external funds will be additional to, not state/UT will share 25% o f the total costs for the s t a t e m ; (ii) substitute for, domestic funds; (iii)estimation o f needs o f the states/UTs i s based o n the approved Institutional Development Plans submitted by the eligible ITIs. 6. Out o f the total project costs, n o more than 25% could be spent on civil works. 41 Annex 6: ImplementationArrangements INDIA: Vocational Training Improvement Project 1. This i s a centrally coordinated multi-state Project. I t will be implemented by the Directorate General o f Employment & Training (DGE&T) in the Ministry o f Labor and Employment (MoLE) along with all the participating States and Union Territories (UTs). At the M o L E level, the Project will be guided and managed by a National Steering Committee (NSC) assisted by a National Project Implementation Unit (NPIU), and at the State level, by State Steering Committees (SSCs) assisted by their respective State Project Implementation Units (SPIUs). T h e NSC will also provide overall policy directions for project activities and for initiation o f systemic policy reforms. I. National-Level Project Management and Implementation 2. T h e two bodies, the NSC and the NPW, responsible at the central level for implementation, coordination and management o f the Project are briefly described below. National Steering Committee 3. The Ministry o f Labor and Employment (MOLE) will constitute a 7-member National Steering Committee (NSC), composed as below: Secretary o f the Union Ministry o f Labor & Employment, as the Chairperson; The Financial Advisor to M o L E (or h i s h e r nominee), Three industry representatives, nominated one each by the Confederation o f Indian Industry (CII), Federation o f Indian Chambers o f Commerce and Industry (FICCI) and Association o f Chambers o f Commerce and Industry (ASSOCHAM); Three members nominated by GoI, who must be persons with particular expertise and interest in vocational training; and The National Project Director in the MoLE, as the Member-Secretary. 4. The Deputy Director General in the DGE&T, and Chairpersons o f some SSCs may also be invited to the NSC meetings. The NSC will meet quarterly. Special meetings may also be convened by the Chairperson. I t will be assisted in its functioning by the National Project Director (NPD). The operational costs o f the NSC, including sitting fees for industry representatives, will be financed by the Project through the NPlU’s budget. 5. The NSC, besides providing guidance and directions to the Project for maximizing gains f i o m the Project, will: (a) select StatesLJTs and their sponsored ITIs for participation in the Project and decide their respective fund allocations, (b) take corrective actions with regard to the non-performing Statesms, (c) allocate funds for strengthening o f centrally funded institutions covered under the Project, based o n their detailed proposals, (d) select proposals for funding from the Incentive Fund and the Innovations Fund and decide allocations for the awardees, (e) approve international study tours and short-term fellowship programs, (f) review findings from pplicy reform, thematic and evaluation studies, and (g) approve Annual Work Plan and Budget o f the NPIU. National Project Implementation Unit 6. National Project Director: T h e NPIU will work under the guidance o f the National Project Director (NPD), as appointed by the M o L E in the rank o f a Joint Secretary to the Government o f India. The NPD 42 will be responsible for overall project fund management; coordination with Project StatesLJTs, concerned Ministried Departments o f Go1 and the World Bank; overseeing project implementation at the Central and State levels; periodically reviewing project progress; facilitating holding o f semi-annual Joint Review Missions and other implementation support missions, facilitating smooth and efficient working o f the NPIU and ensuring adequate staffing o f the NPIU with appropriate expertise at all times during the Project life. 7. The NPD will be assisted by one full-time coordinator in the rank o f Director in the MoLE. As illustrated in the NPIU organogram, the coordinator designated as the National Proiect Coordinator (NPC) will guide, coordinate, manage and monitor all Project activities, except for the Sub-component 2.1, through 4-6 functional units (Procurement Unit, Finance Unit, Institutional Development Unit, TraininglAcademic Unit and Monitoring & Evaluation Unit). The Deputy Director General (DDG) in the DGE&T, in his capacity as the Policy Development Coordinator (PDC) will be directly responsible for managing Policy Reforms (sub-component-2.1) o f the Project. A Policy Development Unit will be placed under hindher, with an officer not below the rank o f a Deputy Director, who will in turn be assisted by contracted staff7 consultants. 8. Structure ofthe NPIU: The various units supporting both the N P C and PDC will be staffed (with deputed full-time officials from M o L E and, consultants) as shown in the NPIU organogram. The officer responsible for the Institutional Development Unit will also be the nodal officer for Equity Assurance Plan (EAP) and Environment Management Framework (EMF). Shehe will be assisted by a full-time time consultant to develop training manuals/ materials on these aspects and provide training support to the SPIU staff and ITIs. The Monitoring and Evaluation Unit will also functionally support the PDC. The NPC will be empowered to recruit short-term and full-time consultants as required from time to time. The Project will finance the salary cost o f only the full-time staff in the NPIU, fee to consultants, salaries o f contractual support staff, expenditure on rent and refurbishment o f hired offices, goods, study tours and fellowship programs and training workshops, travel and other operating costs o f the NPlU. 9. Functions ofthe NPIU: T h e key functions o f the NPIU will, among others, include: e Guiding States in preparation o f Institutional Development Plans (IDPs); e Preparing Annual Work Plan & Budget for the NPIU, Annual Project Budget, and quarterly Interim Unaudited Financial Reports (IUFRs); e Training and guiding States and ITIs in proper financial practices and procedures as contained in the Financial Management Manual (FMM); e Training States and I T I s in procurement as per the procedures and methods contained in the Procurement Manual for ensuring compliance with Bank financial management and procurement arrangements as agreed with the GoI; e Ensuring timely release o f funds to States, submission o f audit reports, and submission o f reimbursement claims; e Building capacity o f the StatesRJTs and institutions for implementation o f the EAP and EMF for ensuring compliance; e Developing a Management Information System (MIS) for the Project, instituting it in the NPIU, SPIUs and ITIs, and organizing training o f all the concerned personnel in proper use and maintenance o f the MIS; e Publishing results o f all selections, and findings o f studies on the DGE&T website; e Organizing international study tours and fellowship programs; e Building capacity o f SPIUs and IMCs in project and institutional management; 0 Preparing TORSfor various studies to be carried out, organize the studies, and share the findings o f the studies with NSC and the World Bank; e Periodically monitoring progress o f project implementation at the Central and State levels; 43 Preparing quarterly project progress reports for review by the NPD and the NSC; and Preparing semi-annual review reports for use in the Joint Review Missions (JRMs), organizing the J R M s and other implementation support missions in Project States, arranging visits o f Mission members to Project institutions, and organizing interaction meetings with all the stakeholders. 10. Responsibilities of the National Project Coordinator: T h e NPC will provide support to the NPD and will be directly responsible for carrying out the functions listed below: Preparing annual work plans, including annual budgets and detailed semi-annual plans and budget; Selecting (with the approval o f the NSC), managing and arranging training for NPIU staff; Considering and authorizing proposals for local technical assistance for activities undertaken at the national level; Considering proposals for and subsequently procuring international technical assistance for activities undertaken at both national and state levels; Arranging international study tours involving national or state level participants; Liaising with stakeholders (local and foreign) involved in the Project; Arranginglorganizing periodic workshops for SPIUs to discuss progress with the project and to identi@ and solve emerging problems; Ensuring effective transfer o f knowledge and lessons learnt to the counterparts within MOLEand across ministries; Ensuring that any services that can ensure more efficient performance o f the project have been provided; Submitting annual plans and budget, quarterly progress report to the NSC; Organizing joint review missions and other supervision and implementation support mission, as required; and Carrying out related tasks as may be requested by the NPD and the NSC. 11. Responsibilities of NPIU’s Financial Management Unit: Under the guidance o f the NPC and direct guidance o f the concerned Joint Project Coordinator (JPC), the Financial Management Unit (FMU) will: Manage the funds provided for national level activities under the Project, including monitoring project accounts and costs. The procedures for this are described in detail in the Financial Management and Procurement Manual; Ensure full knowledge and systematic application o f the World Bank’s procedures and requirements for financial management. Guide the operations o f Finance Officers in SPIUs through providing advice and operating a clearing house for issues (problems and solutions) raised by States/UTs. A c t as a support and reference person for all project-related financial management tasks; Prepare annual estimates and budget for the project; Ensure timely release o f funds to states as per project norms; Ensure maintenance o f project accounts as per standard procedures; Prepare consolidated project level IUFRs and ensure timely submission o f IUFRs t o the Bank; Timely preparation and submission o f monthly/quarterly claims for reimbursement; Coordinate receipt o f annual audit reports from states and audit o f NPIU. Prepare and submit Consolidated Audit Report to the Bank on a timely basis. Ensure timely compliance o f audit observations by the NPIU and coordinate timely response from States on audit observations; Participate in reviews and monitoring o f States; and Prepare and implement a plan for capacity building in financial management o f the FM staff in SPIUs and review the capacity building requirements o f FM staff at all levels on a regular basis e.g., annually. 44 12. Responsibilities of NPIUs Procurement Management Unit: Under the guidance o f the NPC and the direct guidance o f the concerned JPC, the Procurement Management Unit will: 0 Ensure full knowledge and systematic application o f the W o r l d Bank’s procurement guidelines and provide guidance on queries from States and I T I s regarding W o r l d Bank’s procurement policies; 0 Manage the procurement o f goods and consultancies required for national level activities under the Project and manage the procurement o f international goods and consultancies; 0 Arrange procurement through International Competitive Bidding; 0 Build capacity o f procurement officers in SPIUs and I T I s to procure in accordance with the Bank procurement guidelines; Review the procurement documents and certify technical specifications before forwarding the documents t o the Bank for prior review; 0 Facilitate post-review, which may be conducted by the W o r l d Bank; and 0 A c t as a support and reference person for all project-related procurement tasks. 13. Responsibilities of NPIU’s Institutional Development Unit: Under the guidance o f the NPC and the direct guidance o f the Concerned JPC, the Institutional Development Unit will: Orient the SPIUs and I T I s o n the structure and methodologies o f preparing institutional development proposal, and institutional selection criteria; Review funding requirements from the institutions and the States/UTs; Raise stakeholders’ awareness o f the Project objectives and eligibility criteria for financing; Evaluate Institutional Development Plans; Develop guidelines and modules for capacity building o f Institutional Management Committees (IMC)s and conduct a few regional workshops t o orient SPIUs, institutions and IMCs; Evaluate performance o f I M C s and disseminate good practices; Organize training for SPIU officials and IT1principals o n institutional management; Organize workshops at national and regional levels for sharing o f good practices o n IMCs, institutional development, and innovations; and Develop and oversee procedures for undertaking quality audits o f institutions participating in the project . 14. Responsibilities of NPIU’s AcademidTraining Unit: Under the guidance o f the NPC and the direct guidance o f the concerned JPC, the Training Unit will: Organize and facilitate knowledge and skills upgradation trainings for principals and instructors; 0 Organize and facilitate foreign trainingshtudy tours for policy makers, managers, administrators, principals and instructors; 0 Review the national level Annual Instructor Training Plan prepared by Apex Hi-Tech Institute at Bangalore, and ensure synergy with training plans o f each S t a t e m ; 0 Facilitate strengthening o f central training institutions; and 0 Provide assistance on curriculum revision and refinement. 15. Responsibilities of NPIU’s Monitoring and Evaluation Unit: :Under the guidance o f the NPC and the direct guidance o f the concerned JPC, the Monitoring and Evaluation Unit will: Develop and maintain an appropriate labor market information system; 0 Develop, implement and maintain a project management information system; 0 Monitor and evaluate the internal operations o f the Project; 0 Guide the operations o f Monitoring and Evaluation Specialists in SPIUs through providing advice and operating a clearing house for issues (problems and solutions) raised by States and UTs. 0 Incorporate baseline data on the performance o f institutions into the MIS; 45 0 Develop procedures for the regular monitoring o f performance o f project institutions-- this will include procedures for assisting with ad hoc surveys (such a tracer studies and surveys o f employers’ attitudes); and Conductkommission impact evaluation o f training programs and various types o f other studies, and disseminate the findings. 16. Responsibilities of the Policy Development Unit: Under the direct supervision and guidance o f the PDC, the Unit will undertake activities related to Promotion o f Reforms (sub-component 2.1) through: Developing TORS for policy studies, hiring nationalhternational consultants to undertake studies, and supervisingthe work o f consultants; Organizing workshops with key stakeholders (across different ministries, the private sector and NGOs) to disseminate interim findings and final reports; Preparing progress reports on work undertaken for presentation to the NPD and the NSC; and Developing policy directions that could be implemented in the medium and long-term for bringing about systemic reforms in the Vocational Training System. 46 STRUCTURE OF THE NATIONAL PROJECT IMPLEMENTATION UNIT Director (Director) Support Staff 11. State-Level Project Management 17. The project StatesAJTs will be directly responsible for management, coordination, implementation and monitoring o f the Project at the State level. The two bodies, the State Steering Committee (SSC) and the State Project Implementation Unit (SPIU), responsible at the State level for carrying out these responsibilities are briefly described below. 47 State Steering Committee 18. The State Department responsible for vocational training will constitute a 10-member State Steering Committee (SSC), composed as below: Principal SecretaryEecretary responsible for vocational training, as the Chairperson; 0 Financial Advisor/Financial Controller o f the concerned Department; Chief Engineer o f the State P W D or his nominee not below the rank o f a Superintending Engineer; Three industry members, nominated by major industry Associations; 0 Three members having knowledge o f and interest in vocational training, nominated by the State Government; and The State Project Director (who will be the State Director for vocational training), as the MemberSecretary. 19. The SSC will meet quarterly. Special meetings may also be convened by the Chairperson. I t will be assisted in i t s functioning by the State Project Director (SPD). The operational costs o f the SSC, including sitting fees for industry representatives, will be financed by the Project through the SPIU’s budget. 20. The SSC will be responsible for: (a) guiding the work o f the SPIU and authorizing reports to the state government, to the NSC, and to the World Bank; (b) assessing and recommending the IDPs for financing under the project; (c) overseeing operational activities within the state; (d) preparing applications to the Incentive and Innovations Funds; (e) reviewing and approving the training plans for the staff o f SPIU and the institutions, including foreign training; and (f) meet quarterly or more frequently, as required, to take stock o f the project and facilitate project implementation State Project Implementation Unit 2 1. The concerned department o f the S t a t e m government responsible for managing I T I s will establish a State Project Implementation Unit (SPIU). The States with 10 or more project ITIs will put in place a fullfledged SPIU as suggested in the organogram below. 22. The Director o f vocational training dealing with I T I s will be designated as the State Project Director (SPD), who will be assisted by an Additional State Project Director (ASPD). The ASPD will be involved in day-to-day management, coordination, implementation and monitoring o f the Project. Under the ASPD there will be four units-- Procurement, Financial Management, Institutional Development and Training, and Monitoring and Evaluation (M&E). Each Unit will be under the charge o f a State government official, not below the level o f an Assistant Director except the Finance Unit, which will be managed by a Finance Officer. 23. The SPIUs managing 10 or more I T I s could hire three to four consultants to help the four Units based on the needs o f the Units. A maximum o f two support staff could also be hired by the SPIU to support the team o f professionals. W h i l e salaries o f the officers deputed in SPIU will be paid by the respective StateAJT government out o f the State budget, the remuneration for consultants and the support staff hired for the SPIU could be charged to the Project. The travel and other operating costs o f all staff and consultants will be paid out o f the Project. 24. In the States with less than 10 project ITIs, the SPIU will be staffed with the SPD, the ASPD and two Units functioning under the direct supervision o f the ASPD. These Units are: (i) Procurement and Financial Management, and (ii) Institutional Development, Training and M&E. The incumbent o f these 48 Units will be officers not below the rank o f an Assistant Director in the State/UT. These StatesKJTs could hire one to two consultants t o support the SPIU. PROPOSED STATE PROJECT IMPLEMENTATIONUNIT (SPIU) State Steering Committee ~ Director (Additional Director) (Assistant Director) Development 8 Training Unit (Finance Officer) (Assistant Director) Evaluation Unit (Assistant Director) 25. Responsibilities of the State Project Director (SPD): The SPIU will work under the overall guidance o f the SPD, who will perform the following functions: 0 Overall supervision of the management o f the State’s part of the Project; Obtain clearances, if any, from higher level in the State Government; Coordinate with the NPIU; 0 Furnish information t o the State government and the NPIU as well as to the DGE&T, as required; 0 Launch information campaigns and disseminate information on vocational training facilities within the state for attracting students; 0 Convene the meetings o f SSC on behalf o f the Chairperson; and 0 Act as the ex-officio Member- Secretary o f the SSC. 49 26. Responsibilities of the Additional State Project Director (ASPD): Under the guidance o f the SPD, the A S P D will: 0 Coordinate implementation o f the project and monitor progress o n a day-to-day basis; 0 Prepare project’s annual work plans, including operations and budgets; 0 Select (with the approval o f the SSC) and manage SPIU staff and ensure their proper training and readiness; 0 Consider proposals for and subsequently procure local technical assistance for activities undertaken the State level; 0 Mobilize resources to meet project’s technical assistance needs; 0 Liaise with stakeholders (local and foreign) involved in implementing the project; Ensure the effective transfer o f skills to staff o f counterpart ministries; Facilitate the provision o f required services to ensure efficient performance o f the project; 0 Ensure implementation o f EAP and EMF by project institutions, and ensure compliance; Submit quarterly progress report to the SSC; and 0 Carry out related tasks as may be reasonably requested by the SSC. 27. Responsibilities of SPIU’s Procurement Unit: Under the direct guidance o f the ASPD, this Unit will: 0 Ensure full knowledge and systematic application, including by key staff o f the State Agency, o f the W o r l d Bank’s guidelines for procurement o f works, goods and services; 0 Manage the procurement o f works, goods and consultancies required for State level activities under the Project and manage the procurement o f international consultancies; 0 Execute procurement through National Competitive Bidding, as required by the project it is; 0 Liaise with the Procurement Officer in the NPIU, providing information o n issues (problems and solutions) for the national clearing house; 0 A c t as a support and reference person to I T I s for a l l project-related procurement tasks; and Submit quarterly procurement progress reports t o the SPD. 28. Responsibilities of SPIU’s Finance Unit: Under the direct guidance o f the ASPD, this Unit will: 0 Manage the funds provided for State level activities under the Project, including monitoring project accounts and costs. The procedures for this are described in detail in the Financial Management Manual; e Ensure full knowledge and systematic application, including by key staff o f the state Agency, o f the W o r l d Bank’s procedures and requirements for financial management; 0 Liaise with the Finance Officer in the NPIU, providing information o n issues (problems and solutions) for the national clearing house. A c t as a support and reference person for a l l project-related financial management tasks; 0 Prepare annual estimates and budget for the project at State level and submit to NPIU; 0 Ensure timely release o f funds for project activities at the State level and in ITIs; 0 Ensure maintenance o f project accounts as per standard procedures in state office and in ITIs; 0 Prepare quarterly IUFRs and ensure timely submission o f these reports to the NPIU; 0 Timely preparation and submission o f monthly/quarterly claims for reimbursement to the NPIU; 0 Coordinate submission o f annual audit report fiom State to the NPIU and timely compliance o f audit observations. If a system o f internal audit exists, ensure adequate coverage, scope and timely and satisfactory response to observations by internal auditors; and 0 Reviews and monitor financial management arrangements for the project at ITIs. 29. Responsibilities of SPIU’s Institutional Development and Training Unit: Under the direct guidance o f the ASPD, this Unit will: 50 Raise stakeholders’ awareness o f the Project objectives and eligibility criteria for financing; Contribute to the work plans o f the SPIU; Evaluate IDPs and provide written advice on them to the SSC; Prepare, as required, applications to the Incentive Fund and Innovative Fund and provide them to the SSC for consideration; Undertake quality audits o f project institutions; Implement and monitor EAP and EMF and report compliance to the SPIU; Identify training needs in a participatory way and prepare plan for meeting the training needs o f the institutions’ Principals and instructors, and implement the training plan under the guidance o f the SPIU and the Apex Hi-tech Institute (AHI); and Conduct orientation program for I M C members. 30. Responsibilities of SPIU’s Monitoring and Evaluation Unit: Under the guidance o f the ASPD, this Unit will: Keep the management information system (MIS) updated periodically at the State level; Monitor progress in implementation o f various project elements on a day to day basis; Liaise with the Monitoring and Evaluation Specialists in the NPIU, providing information o n issues (problems and solutions) for the national clearing house; Assist the Monitoring and Evaluation Specialist in the NPIU to incorporate baseline data on the performance o f institutions into the MIS; Implement and oversee procedures for the regular monitoring o f performance o f institutions participating in the Project. This will include procedures for assisting with surveys such as tracer studies and surveys o f employers’ attitudes; Undertake regular field visits t o institutions and develop a simple monitoring checklist, and consolidate quarterly monitoring reports based on the monitoring checklists; and Propose corrective actions (if any) that need to be taken. These will be acted upon by the State Project Director. The NPIU Monitoring and Evaluation Unit will be responsible for collating these monitoring reports, and preparing semi-annual monitoring reports. 111. Institutional Level Management 3 1. Each State will appoint an Institutional Management Committee (IMC) for each project IT1as per the M o U signed by it with the DGE&T. The I M C will comprise up to I 1 members as below: N o t more than five members appointed by the S t a t e m government; N o t more than five local employers nominated by the national or local Industry Associations; and Principal o f the IT1will be the ex-officio Member-Secretary. 32. The I M C will, among other functions listed in the MoU: (a) guide the preparation o f I D P for submission to the SSC for being sponsored to receive funding under the Project, (b) guide preparation o f proposals for funding under the Innovations Fund, (c) approve annual overall and project budget for the ITI, (d) guide and supervise the Principal in implementing all aspects o f the institutional project, (e) engage instructors on contract as per need, (0 assess instructors’ training needs, and sponsor the selected instructors for appropriate training within the ITN institutions and outside, (g) ensure implementation o f the recommendations made in the E A P and EMF, (h) approve proposals from the Principal for review procurements along with specifications at the institutional level and through the SPIU, and (i) progress o f project implementation periodically. 51 IV. R o l e o f the W o r l d Bank 33. IDA will perform i t s fiduciary responsibility through regular supervision o f all the aspects o f project implementation and provide technical and implementation support as and when required. The details of IDA supervision process, as agreed are: Conduct jointly with the Go1 (through the DGE&T), semi-annual, mid-term and end-term Joint Review Missions for monitoring overall progress and achievements in project implementation. Terms o f References for each o f these reviews will be drawn up by the IDA and will incorporate suggestions from the DGE&T; Undertake, jointly with the DGE&T, on-site visits to States and I T I s for implementation guidance, as required from time to time; Undertake periodic stock-tahng o f project implementation progress with the NPDNIU; Provide technical assistance and guidance to the NPIU as requested from time to time; Provide technical assistance and guidance t o the centrally-funded institutions, SPIUs and I T I s in collaboration with the NPIU, as required from time to time; Carry out prior review o f and give ‘no objection’ to: - Annual Instructor Training Plans, prepared by the Apex Hi-Tech Institute, by July 3 1 each year; - DGE&T proposals for re-allocation o f funds from poor performing States to better performing States; - NPIU proposals for all foreign study tours and fellowship programs; - Proposals seeking financial assistance under the Innovation Fund; - TORSfor carrying out annual evaluation o f the project, management audit, and for conduct o f various studies related to policy reforms, labor market outcomes, compliance with EMF and EAP, etc. through independent local/ international consultant firms; and - Contracts for Goods, Works and Services in accordance with the relevant provisions in the GoI’s Procurement Manual for the project. Carry out periodic post-review o f all contracts below prior review threshold limit; Carry out review o f all cases o f extension o f bid validity and re-bidding and give ‘no objection’; and Carry out review of: - Financial Monitoring Reports; and - Consolidated Audit Report for each financial year, and State specific audit reports as per need. 52 Annex 7: Financial Management and DisbursementArrangements INDIA: Vocational Training Improvement Project I. Financial Management Capacity Assessment 1. Financial Management (FM) capacity assessment o f the project included: Visit to two states and obtaining information relating to FM arrangements in through a questionnaire form from five states, Participation in workshops on Financial Management and Procurement held for the Project at Ahmedabad (June 22 - 23,2006), N e w Delhi (August 25 - 26, and September 20,2006) and Kolkata (November 14 - 15,2006), and Regular discussions with official o f the DGE&T/MoLE. 0 2. The assessment showed existence o f a well established system o f budgeting as per a defined cycle o f preparation and approval at the State levels. Accounting at State level i s carried out as per standard state financial procedures and focuses on book-keeping. A simple system o f expenditure reporting by ITIs to the concerned state office exists to report on expenditure against plan and non-plan budget. Audit i s carried out by the State’s Auditor General (AG). The timing o f audit in States varies so that while in some years audit i s completed within a few months o f the end o f each financial year, at other times annual audit may not take place and audit for two financial years may be taken up simultaneously. In addition to the issue relating to audit, the other areas o f weaknesses include: (a) reported delay in receipt o f funds from the treasury in some States, (b) variations in financial delegation at ITIs and States, and generally very l o w delegation o f powers to the IT1Principals, (c) internal audit capacity being variable and generally in the nature o f inspection as per traditional State Government systems, and (d) variation in the number/ quality o f staff responsible for accounts at ITIs and at the state level. Learning from the assessment has gone into the design o f the Project FM arrangements. 11. Country Issues 3. The following country issues are relevant for the Project: 0 Timeliness o f audit reports i s an issue in light o f the fact that Auditor General (AG) in each state will be responsible for audit o f the project activities/ expenditure. T h i s will be mitigated partly by the States’ follow up with the AG to ensure issuance o f the reports within the prescribed timeframe; however delays may s t i l l occur in some instances. 0 At the state level, finds may not be available o n time. There have been instances o f delay in provision o f funds after approval o f the State Budget. In response, firm timelines o n release o f finds have been laid down and t h s will be followed up with strict monitoring by the NPIU. 111. Risk Assessment and Mitigation Risk Inherent Risk Capacity: Different StatesNTs have different capacities. Adherence to u n i f o r m project procedures, timely reporting and coordination will be a Risk Rating Risk Mitigating Measures Incorporated into Project Design Development and implementation o f Financial Management Manual. Robust monitoring by NPIU at Go1 level and SPIUs at State levels 53 Risk I I Control Risk Funds Flow: There could be delavs in flow o f funds both from the Go1 i o the States and at the State level by the State treasuries Risk Rating ~ Substantial Financial Reporting: Existing reporting systems, both by ITIs and States, focus o n utilization against budget heads, to enable release o f next tranche o f funds. Reporting i s mostly in the form o f utilization certificates Auditing: Delay in submission o f audit reports resulting in delay in submission o f Consolidated Report on Audit to the Bank Delegation of Financial Powers: Variation in financial delegation across States. Generally very l o w delegation levels at ITIs. Medium Overall risk rating Substantial IV. 0 0 0 V. High Medium I I Risk Mitigating Measures Incorporated into Project Design Simplification o f norms at the MOLEand close monitoring by the NPIU o f the funds releases. Disclosure/sharing o f information o n releases with the State through the DGE&T website Implementing entities w i l l be required to provide financial/ physical information in the form o f quarterly IUFRs. T h i s will assist project monitoring as well as ensure regular disbursement Follow up by DGE&T/MoLE and request for scheme specific audit certificate to the C&AG/ State AGs I I I I levels and detailed planning through the mechanism o f the Institutional Development Strengths Existing Government systems o f accounting and book-keeping have their own systems o f checks and balances; they ensure reasonable controls before making payments for any goods or services. The process o f preparation and approval o f the Institutional Development Plans (IDPs) ensures discipline in the planning and forms a sound basis for effective monitoring. T h e Institutional Management Committees (IMCs) in I T I s are expected to play an active role in monitoring project activities/ allocation and thus ensuring judicious utilization o f resources. Weaknesses and Action Plan Significant Weaknesses An existing accounting system which mainly focuses on bookkeeping, rather than financial management Accounts staff at ITIs and most State offices do not have experience o f producing project financial reports Action Responsible Person Completion Date Development o f Financial Management Manual MOLE’S Finance Staff Ongoing implementation o f the Manual Training o f accounts staff at all levels o f the project in FM requirements o f the NPIU Finance Officer/SPIU Finance Officer Schedule for ongoing training 54 VI. Implementing Entity 4. A core National Project Implementation Unit (NPIU) has been established by the DGE&T to start guiding the States and institutions that have already joined the Project fi-om August 2006, and to start providing support to the National Project Director and the National Steering Committee in discharging their functions. The fully functional NPIU will be setup by October 31, 2007. State Project Implementation Units (SPIUs) will be established in the project States to manage the Project. 5. The DGE&T will be provided the budget for the Project and will further pass on the funds to the States implementing the Project. This will be done through the Reserve Bank o f India and funds will be transferred to the State Treasury. At the State level, the Concerned Department for vocational training will make a budgetary provision for the entire expenditure in the State including the State’s share o f funding. Expenditure under the Project will either be made centrally by the Directorate concerned with vocational training or at the I T I s . The Principals o f ITIs are designated as drawing and disbursal officers and draw funds from the State Treasury for payments. Each office which makes payments will maintain regular books o f account and records as per the State government procedure. At ITIs, the existing accounts staff will carry out project related financial management tasks such as preparation o f estimates, maintenance o f accounts, financial reporting, procurement, etc. VII. Budgeting 6. Basis for project activities in each state will be the Institutional Development Plan (IDP) which will include financing requirements. T h e IDPs will be screened and reviewed by the State Steering Committees (SSCs) and recommended to the National Steering Committee (NSC). Once approved by the NSC, the I D P will be considered as final and form the basis for preparation o f the budget. Budgeting for Project activities will be carried out as follows: 0 National Level: M o L E will be responsible for preparation o f the budget for i t s own expenditure as well as expenditure to be incurred at the centrally funded institutions. 0 State Level: At the State level, the project budget will be prepared by the concerned Directorate and submitted to the Finance Department for approval and inclusion in the overall budget for the State. T h i s will be for the total expenditure in the State including the Go1 share. 7. As part o f the Project implementation, M o L E will monitor (and share with the Bank every March) the budgetary provision made by i t s e l f and by each State, separately. VIII. Accounting 8. Accounting will be done o n a cash basis, using government systems; expenditure will be recorded and reported at the time o f payments and not at the time o f release o f funds (or at the time o f authorization through the Treasury system) to subordinate offices. Rules for accounting will be guided by the General Financial Rules (GFRs) as applicable to all transactions at the Go1 and State levels. Adequate records will be maintained at accounting locations and will include vouchers, invoices, cash books, ledgers and asset registers. Summary o f transactions will be sent to the next higher level based on specific formats. Process o f consolidation o f expenditure information/ reporting i s explained in the following flow diagram. 55 VTI Project, Expenditure Reporting I Quarterly Reporting I Directorate for Vocational Training (State) 9. Financial Management Manual (FMM: A FMM has been prepared by the DGE&T in MoLE. Though the accounting/ book-keeping will be as described above, the FMM clarifies and documents the procedures relating to budgeting, funds flow, reporting, auditing, etc. The FMM will be a useful document for the purposes o f monitoring as well as for capacity building o f staff. IX. Staffing and Training 10. The M o L E has adequate accounting s t a f f as any other Ministry o f the GoI. The Finance Function i s headed by the Financial Advisor who i s assisted in his/ her functions by Director Finance and a Controller Accounts. I t i s envisaged that under the project a National Project Implementing Unit (NPIU) will be established and will include Financial Management staff under the supervision o f the officers mentioned above. Similarly a State Project Implementing Unit (SPIU) will be setup at the state level. 11. T o ensure effective FM on the program, concerned staff (all staff at NPIU/ SPIUs and some staff from the ITIs) will be provided training as per a project specific FM training module. Significant amount o f the training effort will be concentrated in the early stages o f the project (‘frontloaded’ within the first year o f the project) to ensure correct accounting and timely reporting. X. Internal Control and Internal Auditing 12. Internal controls include procedures laid down for approvals, appropriate documentation, controls exercised by the State treasury at the time o f release o f payments, etc. The internal control procedures have been described in the FMM. These procedures include physical verification o f assets. 13. Internal Audit (IA) in most o f the States i s carried out by a small in-house team which checks compliance with laid down rules, adequacy o f documentation, due approvals for any expenditure, etc. Alternatively, ‘inspections’ are carried out in many States which cover a wider range o f issues. 14. Impact and adequacy o f both internal controls and internal audit will be assessed during the Project supervision. The following enhancements in the arrangements have been agreed with the DGE&T: (a) Management Reviews to be carried out as per specific TORS(to be agreed between the DGE&T and the Bank). Focus o f reviews will be on strengthening implementation. This may cover evaluation o f effectiveness o f delegation, funds flow constraints, documentation/ reporting arrangements, functioning 56 o f IMCs, information sharing arrangements, quality and numbers o f staff, etc; (b) Piloting LA by existing staff as per agreed TORS;and (c) consolidation o f findings o f the I A work at the State level for analysis and implementation o f remedial measures. XI. Funds Flow Arrangements 15. The Project cost i s being borne by the Go1 and the States in the ratio o f 75:25. For the North-Eastern states and Sikkim, the financing ratio would be 90: 10.The share o f Go1 funds for various Project components will be released by MOLEto the States through the Go1 channels and funds will be received in the State Treasury. At the State level, the Directorate responsible for vocational training will prepare a budget for the entire expenditure including its share o f 25 percent. Budgets will then be allocated by the State Finance Department to the concerned Directorate, which will further allocate the same to the ITIS/ i t s e l f for incurring expenditure. As Drawing and Disbursal Officers (DDOs), the IT1 Principals/ Directors for Vocational Training will authorize bills which are then presented t o the State Treasury for release o f payments against the allocated budgets. This i s explained in the flow chart below. VTI Project, Funds Flow Arrangements Government of India (75%) I World Bank MOLE'SBudget Head 1 State Share (25%) State Treasury 1 v Central ly Funded lnstitutionss Directorate for Vocationall Training (State) I -b I ITls 4- - _ _ _ _ - - - _ _ _ _ _ - - - - - - - - V Installment No./ Approximate Date First installment in April Second installment in October Installment as YOof Go1 share 80% 20% 57 Document to be submitted by state Duly approved IDPs/ State Budgetry Provision Furnishingof reasonable evidence XII. Disbursement Arrangements 17. Disbursements from the World Bank will be made against quarterly Interim Unaudited Financial Reports (IUFRs) to be submitted within 45 days o f the close o f each quarter. T h e IUFRs will provide information o n project activities according to Project components and sub-components, and project States. Expenditure as reported in the IUFRs will be subject to confirmation/ certification as per the Annual Audit Reports as submitted for each State/ GoI. The NPIU will be responsible for consolidation and submission o f IUFRs. Funds will be disbursed in a Special Account with the Reserve Bank o f India which will be operated by the Department o f Economic Affairs (DEA) o f GoI. The authorized allocation o f Special Account will be USD 40 million. 18. Other disbursement features: 0 Disbursement would be subject to receipt o f Consolidated Report on Audit which i s due by September 30* o f each year. As per the Bank Policies, if this report i s not received by endJanuary o f the following year, disbursements will have to be suspended till receipt o f the report. Go1 would however continue to submit the quarterly IUFRs as per schedule. If the audit report indicates a higher level o f eligible expenditure as compared to the IUFRs for the same period, the excess will be added to the next report based disbursement. On the other hand, if the audit reports a lower level o f eligible expenditure as compared to the IUFRs for the same period, an adjustment will be made from the next disbursement by way o f a reduction. 19. After the mid-term o f the Project, further disbursement will be subject to achievement o f the instructor Training Wings shall have been established in at least 4 Project following benchmarks: (i) States; (ii)refresher training courses for instructors shall have commenced in at least 10 Centers o f training facilities for CoE instructors shall have been established and training courses Excellence; (iii) commenced in all concerned centrally funded institutions; (iv) at least 2 policy studies related to policy reforms shall have been launched; (v) at least 2 innovation grants shall have been made; (vi) Management Information System shall have been operationalized; and (vii) database o f instructors in all ITIs in project States and their training needs analysis completed by AHI. 20. Retroactive Financing: The Bank will fund cost o f upgradation o f 100 ITIs on retroactive basis for eligble expenditures. The total amount o f retroactive financing o f expenditures by the Bank will not exceed 20 per cent o f the credit for a maximum o f 12 months prior to expected date o f signing o f Financing Agreement. Any expenditure in excess o f these (time lines/ percentage) will have t o be borne by the GoYStates. XIII. Financial Reporting 21. Project expenditures will be reported by the project ITIs to SPIUs and by the SPIUs to the NPIU. The NFW will submit consolidated IUFRs on a quarterly basis t o the Bank within 45 days o f the end o f each quarter. T h e IUFRs will include State-wise and activity-wise expenditure for the previous quarter and the year to date. As per standard procedures for CSS, the States will submit utilization certificates (UCs) to MOLEfor funds received by the State in each financial year. XIV. Auditing 22. Annual accounts o f the DGE&T for i t s part o f the Project (NPIU, centrally funded institutions, etc.) will be audited by the Comptroller and Auditor General o f India (C&AG). The Accountant General (AG) o f each State will carry out annual audit o f accounts o f the State for i t s part o f the Project (SPIUs, ITIs, 58 etc.). These audits will be as per the Terms o f Reference (TOR)which has been agreed with the MOLE, and have been sent to the C & A G for their approval and issue o f necessary communication t o the AGs in each project State. The DGE&T will provide a consolidated Report o n Audit t o the Bank for the Project, based on audit reports o f the States and its own audit report. The consolidated Report o n Audit for each financial year will be submitted to the Bank within six months o f close o f the financial year i.e. September 30. State specific audit reports will also be provided to the Bank, as requested. Further, the NPIU will review the audit findings to ensure necessary corrective actions. 23. The following audit reports will be monitored in ARCS (Audit Report Compliance System) o f the Bank: Audit Report Consolidated Report on Audit Special Account XV. Implementing Agency DGE&T/ States Due Date September 30 DENGoI September 30 Supervision Plan 24. Areas o f focus during supervision will include funds flow, internal/ external audit findings and quality o f reporting. The supervision intensity will be bi-annual including visits to States; this may however be varied in accordance with implementation experience. Supervision efforts may include comparison o f the Project with other Centrally Sponsored Schemes and projects/ programs in comparable sectors. 59 Annex 8: Procurement Arrangements INDIA: Vocational Training Improvement Project I. General 1. The project envisages financing upgradation o f 400 Industrial Training Institutes (ITIs); establishing instructor training wings in ITIs, strengthening o f several centrally funded institutions, capacity building and policy development. O f the 400 ITIs, 100 will be covered under retroactive financing and the balance will be covered during the Project period. Procurement under the Project will include (i) refurbishment, extension, repair and maintenance o f existing buildings; (ii)equipment; (iii)teaching and learning resources and materials; (iv) instructor training; (v) curriculum development, (vi) information campaigns and dissemination; (vii) consultancy and technical assistance; and (viii) operating and maintenance costs. The Project will be implemented by MOLE,States and ITIs. 2. Procurement for the proposed project would be carried out in accordance with the W o r l d Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated M a y 2004; and "Guidelines: Selection and Employment o f Consultants by W o r l d Bank Borrowers'' dated M a y 2004, and the provisions stipulated in the Legal Agreement. The various items under different expenditure categories are described in general below. Items (works, goods and services) t o be financed by the credit, the different procurement methods or consultant selection methods, estimated costs, prior review requirements, and time frame have been agreed between the Recipient and the Bank. 3. A Disclosure Management Framework i s attached as Appendix 1 t o this annex. Procurement NCB Shopping Retroactive Financing 0.293 0.745 Year-I 2007-08 20.722 24.887 Year-I1 2008-09 18.284 14.300 Year-I11 2009-10 3.093 2.641 Year-IV 2010-1 1 1.625 1.185 5. Total cost o f the civil works i s expected to be approximately U S $ 88 million. 60 Year-V 201 1-12 --- 6. Procurement o f Goods: Goods to be procured under this Project include: machines, equipment, furniture, learning resources, software, hand tools, measuring equipment, motor vehicles and other related equipment. Type o f equipment will depend on the industrial sector selected by the IT1 for upgradation as Centre o f Excellence (COE) or as may be required by ITIs for upgradation o f selected trades. The procurement will be done using the Bank’s Standard Bidding Document (SBD) for all I C B and GoI’s Task Force Bidding Documents, as modified from time to time, already agreed with the Bank for National Competitive Bidding will be used. Procurement under ICB, if required, will be carried out by M o L E by hiring a procurement agent. Procurement under NCB, Shopping and Direct Contracting will be done by the StatesLTIs as may be decided by the StatesKJTs. Rate contracts o f Directorate General o f Supplies and Disposals (DGS&D) are acceptable under Shopping. State Government rate contracts could be considered as one o f the quotations under Shopping. 7. Estimated cost o f packages for each year under various methods o f procurement i s given below. *If required, I C B will be carried out by M o L E who will make necessary funds available as per requirement o f the State Govt. 8. Total cost o f the Goods i s expected to be approximately US$ 126 million. 9. Procurement o f Services: Consultants, individual or firms, may be hired under the Project based o n requirements o f the NPIU, SPIUs, centrally funded institutions and ITIs. Training o f Trainers will be arranged through twelve (12) centrally funded institutions - Six (6) Advanced Training Institutes (ATIs) located at Howrah, Chennai, Hyderabad, Kanpur, Ludhiana and Mumbai, Central Training Institute at Chennai, ATI-Electronics and Process Instrumentation at Hyderabad and Dehradun, Foremen Training Institute at Bangalore, Apex Hi-Tech Institute at Bangalore and the National Vocational Training Institute for Women at Noida. Though no fee will be paid to these institutions, other expenditure incurred by them in arranging training will be paid to them. In the case o f procurement o f goods under ICB, M o L E may utilize the services o f a procurement agent selected following Bank’s consultancy procedures. Short lists o f consultants for services estimated t o cost less than $500,000 equivalent per contract may comprise entirely o f national consultants in accordance with the provisions o f paragraph 2.7 o f the Consultant Guidelines. 10. Total cost o f the Services i s expected to be approximately US$9.0 million. 11. Operating Costs: This will include salaries o f full time project staff in NPIU/SPIU, salaries o f staff against positions created under the project in centrally funded institutions and ITIs, payment t o contractual staff, consumables including laboratory/workshop supplies, office rental, cost o f advertisement, office expenditure, hiring o f vehicles, maintenance o f buildings/equipment/vehicles, travel expenses etc. 61 12. Procurement thresholds: The thresholds for adopting different types o f procurement for works, goods and consultant selection methods, which have been discussed and agreed with MOLE,are given in the table below: Works ICB US$ 1.OO million equivalent* NCB US$ 100,000 to US$ 1.OO million equivalent Goods > US$l .OO million > US$ 100,000 up to US$l .OO million equivalent Consultancy Services Quality and Cost Based Selection (for selection o f Firms): Estimated to cost > US$ 500,000 equivalent: international shortlist. Estimated to cost U S $ 500,000 equivalent or less: short l i s t may comprise national consultants only. equivalent DC Shopping <us$loo,ooo equivalent < US$ 100,000 equivalent# < US$50,000 equivalent@ < US$20,000 equivalent** <US$500 equivalent# Quality Based Selection (for selection o f Firms): Estimated to cost < US$200,000 Single SourceLeast Cost Selection: With firms for contracts estimated to cost < US$ 100,000 equivalent each; and Individual Consultants: <US$50,000 equivalent National Competitive Bidding (NCB) Provisions 13. All N C B contracts shall be awarded in accordance with the provisions o f Paragraphs 3.3 and 3.4 o f the Guidelines for Procurement under IBRD Loans and IDA Credits published by the B a n k in M a y 2004 [the Guideline]. In this regard, a l l NCB contracts to be financed from the proceeds o f the credit shall follow the following procedures: Only the model bidding documents for NCB agreed between the Go1 and the Association (and as amended from time to time) shall be used for bidding; 0 Invitation to bid shall be advertised in at least one widely circulated national daily newspaper, at least 30 days prior to the deadline for the submission o f the bids; 0 N o special preference will be accorded t o any bidder either for price or for other terms and condition when competing with foreign bidders, state-owned enterprises, small-scale enterprises or enterprises from any grven State; Except with the prior concurrence o f the Bank, there shall be no negotiation o f prices with the bidders, even with the lowest evaluated bidder; Extension o f bid validity shall not be allowed without the prior concurrence o f the Bank: (i) for the first request for extension i f it i s longer than four weeks; and (ii) for all subsequent requests for extension irrespective o f the period (such concurrence with be considered by the Bank only in cases o f Force Majeure and circumstances beyond the control o f the MoLEhmplementing agencies). 62 0 Re-bidding shall not be carried out without the prior concurrence o f the Bank. The system o f rejecting bids outside a pre-determined margin or “bracket” o f prices shall not be used in the project; Rate contracts entered into by Directorate General o f Supplies and Disposals (DGS&D) will not be acceptable as a substitute for NCB procedures. Such contracts will be acceptable, however, for any procurement under Shopping procedures; and T w o or three envelop system will not be used. Advertising 14. Invitation for Bids (IFB) for Works and Goods for a l l ICB contracts and advertisement for calling o f Letters o f Expression o f Interest (EOI) for short listing o f consultants for services costing more than U S $ 200,000 equivalent will be published widely including in UNDB and dgMarket. In addition, a l l competitively procured contracts will be advertised in at least one widely circulated national daily newspaper as w e l l as on the DGE&T website. 11. Assessment o f the agency’s capacity to implement procurement 15. All States, U n i o n Territories and I T I s as selected will be participating in the Project. I T I s will be selected as per the criteria agreed by the DGE&T with the W o r l d Bank. Procurement activities will be carried out by the respective concerned State Directorates and ITIs except for ICB packages. A procurement manual, developed by the project authorities, has been agreed to with the Bank o n April 11, 2007. All procurement under the project will be undertaken as per this manual. 16. A review o f existing procurement policies, procedures and capacity was carried out through a consultant in respect o f DGE&T at the central level and o n a sample basis for four states (Bihar, Gujarat, Karnataka, and Uttar Pradesh) and eight I T I s (ITIs at Nawada & Digaghat in Bihar, Kubernagar & Gandhinagar in Gujarat, Peenia & Mysore in Karnataka, and Lucknow & Noida in Uttar Pradesh) selected with the agreement o f DGE&T. The assessment reviewed the organizational structure for implementing the project and the interaction between the DGE&T officials responsible for procurement and the relevant central unit for administration and finance o f states’ D V T s . 17. The overall project risk for procurement i s high. 18. The key issues and r i s k s concerning procurement for implementation o f the Project have been identified and corrective measures to mitigate these have been agreed to with the DGE&T. Post Award Review 19. All contracts below prior review threshold procured under the project will be subject to periodic post review. These reviews are meant t o ensure that the laid down procurement procedures are being followed. 20. The ex-post review by the Bank will be conducted either by Bank staff or by independent firms hired by the Bank in accordance with Paragraph 5 o f Appendix 1 o f the Bank’s Procurement Guidelines. Misprocurement 21. The Bank does not finance expenditures for goods, works and services which have not been procured in accordance with the agreed provisions in the Financing Agreement and as further elaborated in the Procurement Plan. In such cases, the Bank will declare misprocurement, and i t i s the policy o f the Bank to cancel that portion o f the credit allocated to the goods, works and services that have been misprocured. The Bank may, in addition, exercise other remedies provided for under the Financing Agreement. Even 63 after a contract i s awarded after obtaining the “no-objection” from the Bank, the Bank may s t i l l declare misprocurement if it concludes that the “no-objection” was issued on the basis o f incomplete, inaccurate or misleading information furnished by the Recipient or the terms and conditions o f the contract had been modified without Bank’s approval. 111. Frequency of Procurement Supervision 22. In addition to regular monitoring and prior reviews, the project will require intensive supervision in the initial stages o f the project. Accordingly, the designated procurement specialist (DPS) will participate in the six monthly supervision missions. DPS may also visit States/UTs/ITIs to carry out post review o f contracts. IV. Procurement Plan 23. Since it i s not feasible to forecast the requirement o f the I T I s as it will depend upon their agreed Institutional Development Plans (IDPs), it i s difficult to prepare the procurement plan for the entire project period at this stage. However, procurement plan for 100 ITIs being retroactively financed has been prepared and shared with the Bank. Similarly, during implementation o f the Project, once the IDPs have been approved, procurement plan will be prepared and shared with the Bank. 24. Prior Review o f contracts for goods and works by the World Bank will be carried out for (i) each contract for civil works and goods/equipment estimated to cost more than U S $ 500,000 equivalent; and (ii) f i r s t N C B document for c i v i l workdgoods, irrespective o f value, from any one o f the States. each 25. Prior Review o f contracts for consultancy services by the World Bank will be carried out for (i) contract for employment o f consulting firms estimated to cost the equivalent o f U S $ 100,000 or more; (ii) each contract for the employment o f individual consultants estimated to cost equivalent o f U S $ 50,000 or more. However, DGE&T will approve the terms o f reference for studies and surveys for US$ 4,450 for individual consultants; and (ii) US$ 11,100 for contracts estimated to cost more than (i) filTIlS. 26. Retroactive financing would be applicable where payments, against contracts for goods, works, and consulting services awarded following Bank’s procurement procedures and included in the scope o f the Project, are made by the Recipient not more than 12 months before the expected date o f Financing Agreement signing. The date after which payments may be made i s recorded in the Financing Agreement. 64 Appendix 1 to Annex 8: Disclosure ManagementFramework I. Introduction, Scope and Purpose 1. The Ministry o f Labour and Employment (MoLE) i s fully committed t o ensuring transparency and accountability under the Project. The MoLE has developed this Disclosure Management Framework, in consultation with the Association, t o enhance transparency and accountability in the implementation o f the Project. The key issues and related agreed actions are set out in the table below. Implementation Status Issue Agreed Actions I.Disclosing information and increasing oversight by the civil society (i) Making the following information publicly available o n the website o f Directorate General o f Employment and Training (DGE&T) and o f the implementation units o f the States participating in the Project (SPIUs): (a) information relating to physical and financial progress under each contract awarded o n the basis o f I C B M C B procedures. Such information to be made available within 30 days from the end o f each calendar quarter; (b) quarterly interimun-audited financial reports within 45 days from the end o f each calendar quarter; (c) all general and specific procurement notices, notices inviting tenders, expressions o f interest, requests for proposals, ICB/NCB documents and addenddcorrigenda to bids. All such information to be promptly disclosed; (d) all information o n bids received, reasons for rejections, and details o f contracts awarded for ICB. Such information shall also be shared with the Association; (e) all information o n bids received, and details o f contracts awarded for NCB; and (0 Annual progress reports (Project and financial information) and mid-tern review report. Annual progress report to be disclosed by M a y 15 o f each fiscal year and mid-termreview report to be disclosed promptly. 65 Implementation to start immediately after Project effectiveness PersonlAgency Responsible for Implementation M o L E and Participating States Issue Agreed Actions Implementation Status ~~ 11. Handling procurement complaints (a) Handling complaints relating to procurement, fraud and corruption and quality o f construction in accordance with Go1 and participating StatesLJTs adrmnistrative procedures; T o be implemented from project effectiveness. (b) A procurement complaints monitoring database shall be maintained T o be implemented from project effectiveness (c) disclosing the system pursuant to (a) and (b) above respectively o n the website o f DGE&T; T o be implemented from project effectiveness (d) submitting quarterly reports to the Association on (a) and (b) above. 66 Reports to be submitted within 30 days from the end o f the quarter. PersodAgency Responsible for Implementation MoLE/Participating States MoLEParticipating States MOLE Annex 9: Economic and FinancialAnalysis INDIA: Vocational Training Improvement Project I.Background 1. India’s objectives o f competing in global markets and achieving sustained high rates o f economic growth require the availability o f well-trained s l l l e d labor. A critical constraint faced by the labor market i s shortage o f such labor. This shortage has largely been due to the inability o f the public vocational training system, one o f the key providers o f skilled labor, to produce trained graduates with the s l u l l s that match employers’ needs. The objective o f the Vocational Training Reforms Project i s to upgrade and reform the vocational training system to re-orient and make i t more responsive to the skills demanded by the labor market, and to improve the quality o f trained graduates produced by it. T h i s annex examines: (a) the labor market context and supply o f skills; (b) the rationale for public investment in the Project; and (c) the financial sustainability and economic benefits o f the Project in terms o f benefit-cost ratios and rates o f returns t o investments over alternative scenarios. 11. The Labor Market Context and Skills Supply from CTS Institutions 2. India’s economy has grown rapidly in the last decade causing a rising demand for a more educated and skilled workforce. In response, the Government o f India has expanded investments in education and sought t o improve delivery o f post-school vocational training for the youth not continuing into further education. In education, the relative wages o f workers with secondary and higher levels o f education have grown even as the supply o f these workers has increased, providing evidence that the demand for educated workers has outstripped supply. The evidence i s mixed for workers with post-school vocational training, whose relative wages and numbers have fallen since the early 1990s. 3. Definitive inferences cannot be drawn about the supply-demand balance for vocationallytrained workers, but this evidence suggests that they may not have the right skills demanded by the labor market. Even with rising demand for skilled labor, nearly 60 percent o f all graduates o f the vocational training system remain unemployed a year after completing training. Moreover, among those who did find employment, nearly two-thirds worked in trades other than those they were trained for. An ILO study (2003) showed that more than eighty percent o f employers in Orissa and Andhra Pradesh, and more than fifty percent o f employers in Maharashtra occasionally or frequently faced problems in finding employees with the right skills. 4. The three most important reasons for poor labor market outcomes for graduates o f the training system are: (a) the l o w quality o f training which results in the supply o f relatively l o w quality skills; (b) the mismatch between sktlls acquired and those in demand in the labor market; and (c) the mismatch between skills taught and the graduates’ own career and labor market aspirations. The l o w quality o f skills supplied by vocational training institutions i s highlighted by the findings o f several recent studies. A survey by FICCI (2001) assessing the quality and relevance o f vocational and technical training from industry’s perspective found that about 60 percent o f employers felt that training institutions were not geared to meeting the needs o f industry, and almost 87 percent felt that training should include exposure to industry practices. A DGE&T (2003) study o f graduates o f apprenticeship training programs in six States came to the same conclusion. In both studies, respondents stressed the importance o f partnerships and collaboration between the public and private sectors for achieving a better match between the supply o f and demand for slulls. 67 5 . A recent Report on Craftsmen Training and Employment (DGE&T, 2005) underscores the findings o f the earlier DGE&T (2003) and FICCI (2001) studies. The report sought to evaluate ITIs in the states o f Punjab, Haryana and Rajasthan. Based on responses from IT1principals, faculty members and students, the Report concluded that course offerings and training in ITIs were rigid and did not respond to the changing demands o f business and industry. The percentage o f students in various trades who were not employed at the time o f the survey (about a year after training) ranged from a little over 10 percent to as high as 80 percent. The Report identified collaboration between ITIs and industryhusiness as a critical factor in improving labor market outcomes o f graduates o f the training system. Greater public and private sector collaboration in training would enhance flexibility in responding to changing labor market s k i l l needs, aid in continuous upgrading o f courses, curriculum development and faculty support, and help mobilize resources, among other benefits. 111. The Rationale for Public Investment 6. T h e vocational training system in India needs to be improved and reformed t o remove the constraints on the supply o f skilled labor in quantities and fields o f training demanded by the labor market. Given the public good nature o f the reforms in training, they will be under- or not supplied by the private sector. As such, public investment in the vocational training system in India i s needed, and needed for the following reasons: Policy Reforms: Institutional and systemic reforms to improve market orientation and flexibility o f the vocational training system so that it becomes more responsive to the changing s k i l l needs o f the labor market and the economy. Contribution to Growth: Greater availability o f skilled labor increases the productivity o f enterprises and contributes t o the speed with which institutional and technological innovations can be adapted and adopted. Increased educational attainment o f one year in a firm’s workforce i s associated with a six percent increase in firm’s productivity (World Bank, 2006). Information Asymmetry: The paucity o f relevant information o n skills needed by the economy and on the availability o f different types o f training lead to inefficiencies in the operation o f the market for skills. The provision o f such information i s a public good and the government has an appropriate role to play in collecting, analyzing and widely disseminating this information to the labor market. Market Failure: Market failure in the market for vocational training i s reflected in supply side constraints which prevent the private sector from expanding the supply o f good quality vocational training. Skill mismatches between skills demanded and skills supplied and the l o w quality o f s h l l s supplied are due in large part to the many constraints faced by the training system in India, especially in the public vocational training system. These include outdated equipment and course curricula, budget constraints, lack o f accountability and responsiveness to the needs o f the labor market, limited involvement o f the private sector in managmg training design and delivery, poor coordination among those managing the sector, and the limited flexibility provided to training institutions to experiment and innovate. 8. The Project addresses these constraints through: (a) competitive grants provided to selected ITIs for up-gradation or for establishing Centers o f Excellence (CoE); (b) provision o f funds to support innovations in training programs and training delivery; and (c) policy reforms, capacity development and incentive funds for well-performing states to further develop their vocational training systems. A more detailed description o f the project components are found in Annex 4. 68 IV. Overview of ITIs and IT1 Graduates from Baseline Surveys 9. As part o f project preparation for the Vocational Training Improvement Project (VTIP), two baseline surveys were undertaken in 2006: (i)an institutional survey o f all government managed and financed industrial training institutes (ITIs) in India, and ii)a tracer study o f pass-out (graduates) from a sample o f I T I s . Both surveys are intended to provide a pre-project baseline for a substantial part o f the public vocational training system in India, and with modifications, the basis for setting up a Management Information System (MIS) for monitoring and evaluation o f the sector under the Project. Baseline Survey of ITIs 10. The 2006 Baseline Survey o f I T I s was fielded in collaboration with the Ministry o f Labour and Employment (MOLE)to all 1896 public ITIs across 23 Indian states. O f these, 1,296 I T I s returned the questionnaire survey for coverage o f approximately 70 percent o f the IT1 population. The survey collected data on the following aspects o f I T I s : 0 0 0 0 0 Management: including questions on staff profiles, vacancies, and existence o f a Centre o f Excellence (COE) andor Institutional Management Committee (IMC). Finance: including disaggregated details on the planned and non-planned budget and expenses o f the ITI, and retained revenues. Students: including total enrolments, with gender and social group breakdowns. Teachers: including composition o f teaching staff, their education, training, work experience, status in the ITI, and trades taught. Trades: including a profile o f trades taught in the ITI, type o f trade, duration and the numbers enrolled, number o f students that took and passed the trade test, separately for the years 2003104, 2004105 and 2005106. 11. Selected summary tables are reported below o n the characteristics o f the sample o f I T I s that responded to the survey, focusing on staffing and measures o f IT1 internal efficiency. (A full report i s forthcoming that will include more detailed tables and analysis, with breakdowns by States and Union Territories). 12. Table 9.1 shows the composition o f IT1 staff summed across all I T I s that responded to the baseline survey. Ninety (90) percent o f staff are vocational instructors, 3.5 percent are contract teachers, 6 percent are management personnel (including principals and vice principals), and less than one percent are nonteaching staff. Women make up less than 12 percent o f IT1 staff, and scheduled caste or schedule tribe (SCIST) staff constitute around 21 percent o f the total sample o f IT1staff. 69 13. According t o the baseline survey, an IT1 o n the average has 24 instructor positions and enrolls 119 students. On average, the teachng faculty consists o f 14 vocational instructors, one contract teacher and one guest lecturer from the private sector; unfilled staff vacancies average 7 instructors. The average age o f a typical IT1 instructor i s 42.5 years, with female instructors being on average slightly younger than males, 39.6 versus 42.9 years respectively. The average instructor’s tenure with the I T I s i s 5.9 years with almost n o difference between male and female instructors. M o r e than h a l f o f the personnel, 56 percent, attended some form o f staff training in the past 3 years. 14. Table 9.2 presents estimates o f the internal efficiency o f I T I s by course duration and demographic characteristics o f students. The indicators of internal efficiency are the proportions o f enrolled students that completed the training course and took the trade test, and those that successfully passed and obtained trade certification. These estimates are for the students enrolled in the 2003/04 year since subsequent cohorts may not have completed training and trade tests by the time o f the survey. On the average, 78 percent o f the two-year program students took the trade test, but only 61 percent passed it. While females in one-year programs are more successful in both taking and passing the trade test than their male counterparts, the difference between them i s negligible when i t comes to students in the two-year program. On the average, SC students are usually more successful than ST students in completing training and passing trade tests. Males Females Scheduled Castes Scheduled Tribes All Graduates Proportion o f enrolled students talung trade test (%) 2-year 1 year program or program or less more 87 79 90 85 91 79 88 84 90 78 Proportion o f enrolled students passing trade test (%) 2-year 1 year program program or or less more 63 61 78 67 75 66 63 65 70 61 Tracer Study of I T I Pass-outs 15. The IT1baseline survey was complemented by a tracer study o f IT1 pass-outs one or t w o years after they completed their training. The objective o f this tracer study was to assess the labor market outcomes of graduates - in terms o f j o b search, employment status, and earnings i f employed - and t o elicit their feed-back o n the quality o f training and market relevance o f trade s k i l l s acquired in ITIs. The field-work for the tracer study was done by a survey firm between the months o f August and December 2006. 16. Out o f a population o f 1896 public ITIs, a sample o f 400 representing nearly one-fifth o f the total was selected for the administration o f the tracer study o f IT1pass-outs. The sample was designed to reflect the actual distribution o f the population o f I T I s across states. I t included the first 200 I T I s selected for upgrading in 2004/05 and 2005/06 as Centers of Excellence (COE), and another 200 I T I s randomly selected from each State by urban and rural strata according t o the actual urbadrural composition o f ITIs in the State. F r o m each ITI, 20 graduates were sampled from administrative records, 10 being pass-outs from the 2004 graduate cohort, another 10 from the 2005 cohort, for a total sample o f 8,000 pass-outs. 17. The tracer study collected several types o f information: (i) personal attributes, including information enrolment, including the trade followed, and time taken to complete o n socio-economic background; (ii) employment history, from the time he/she completed training t o the present (either one or training; (iii) two years hence), including sector o f employment and earnings; (iv) perceptions, o f the quality and 70 usefulness o f the trade(s) studied, and aspects o f training in ITIs that require enhancement and/or improvement. At the end o f the survey, usable data were collected from 7,144 pass-outs in 374 ITIs. Proportion (“A) o f graduating cohort finding f i r s t job within: Average months to f r s t job Year Of graduation Proportion unemployed at time o f survey 6 months 12 months 18 months 2004 2005 62 72 29 24 39 30 40 31 5.0 4.1 2004 2005 78 84 19 14 19 14 3.5 2.8 2004 2005 66 76 35 25 36 26 5.1 3.9 2004 2005 71 83 29 20 30 21 4.8 4.6 2004 2005 65 73 25 23 33 28 34 28 4.9 3.9 2004 2005 63 74 26 21 35 26 35 26 4.6 3.9 2004 2005 65 74 25 21 34 26 34 27 4.8 4.0 16 13 Scheduled Caste 26 21 Scheduled Tribe 22 15 18. Table 9.3 reports several employment outcomes o f tracer study respondents, focusing o n the 2004 graduate cohort. It estimates that 65 percent o f 2004 graduates were unemployed in 2006, where “unemployed” i s defined as not working and looking for work. Sixty-two (62) percent o f males and 78 percent o f females that graduated from I T I s in 2004 were still unemployed in 2006. O f the 2004 graduating cohort, only 34 percent found work within one year - it took 4.8 months for the average 2004 graduate to find the first job. M a l e pass-outs did significantly better than females, with 39 percent finding a j o b within 12 months as compared to only 19 percent o f females. Finally, SC/ST graduates appear t o experience higher unemployment rates as compared to OBC or general social groups. Moreover, only 29 percent o f ST pass-outs find their first j o b within a year after completing training as compared to 33-35 percent among other groups. 19. Table 9.4 reports the monthly wages o f employed graduates f r o m the 2004/5 cohort, normalized o n 22 working days a month. The monthly earnings o f employed 2004 graduates averaged Indian Rupees (INR) 2,392, but there are considerable earnings differences across groups. For example, those in the public sector earned INR 3,819 which i s a 64 percent premium over those employed in the private sector, 95 percent over those in self-employment, and 2.3 times those working in a family business. Males earned significantly more than females (except for those in self-employment), most notably when employed in the public sector. Although SC, ST and OBC groups generally earned less than those in the general category, this i s heavily influenced by the wages paid to the latter group in the public sector. Given these high wages, the preferred employment destination for males in the general category would 71 clearly be the public sector, with self-employment and working in family business being relatively unattractive for this group o f males. Year o f Graduation Public sector Private sector 2004 2005 4,010 2,467 2,359 2,268 2004 2005 2,014 2.347 2,053 2.043 Self-employed 1,924 2,130 Females 2,096 1.250 Helping parents in business Total 1,648 1,381 2,433 2,248 1,540 1.173 2,045 1.897 20. Despite difficulty in finding employment, pass-outs tended t o provide relatively positive feedback o n training provided by ITIs. On the suitability and employment potential o f the trade acquired in the ITIs, 89 percent o f pass-outs responded that the trade was reasonably or very useful; 9 1 percent o f graduates also rated the quality o f training received from ITIs as good or excellent. O f those who found employment, 57 percent reported that they worked in the trade in which they were trained; 9 percent were employed in a trade different f r o m the one in which they were trained, but used the s h l l s they acquired in IT1training; 7 percent worked in a different trade where IT1training was only o f limited use. The remaining 27 percent reported that IT1training did not help at a l l in the work they were doing. 21. However, IT1 pass-outs had more revealing suggestions o n what aspects o f IT1 training could b e improved. Table 9.5 tabulates IT1 pass-outs’ rankings by importance o f the areas o f IT1 training that needed improvement. H a l f o f the pass-outs ranked “information o n employment opportunities”, “meeting with employers” and “training experience in industry” as needing a l o t o f improvement. These suggestions are consistent with widely-held (by industry) views that many ITIs are not market oriented and lack strong links t o industry, and they imply that ITIs should place greater emphasis o n j o b counseling, facilitating j o b placements with employers, and arranging training internships in industry. Other suggestions pertaining to improvements in curricula, equipment, soft skills, use o f drawings and pedagogy are ranked as being less important, suggesting that most pass-outs are relatively satisfied with the training provided, and 44-53 percent o f pass-outs stated that these areas did not need any improvements. 72 V. Economic Analysis o f the VET Project 22. The economic feasibility o f the VET project i s examined through cost-benefit analysis and rate o f retum calculations based on several assumptions and simulated over a variety o f scenarios. The benefits that are expected from the project, as reflected in the key performance indicators (KPI), are: (a) improvements in the internal efficiency o f upgraded ITIs, in terms o f the proportion o f enrolled students that successfully get trade certification; and (b) enhanced labor market outcomes o f IT1 pass-outs, as measured by the reduction in the time taken after training to find employment, and (c) by higher life-time earnings, as compared to the baseline prior to project implementation. 23. The following analysis derives monetized values o f these three KPIs for all student cohorts enrolled in upgraded ITIs and compares them to the per student cost o f upgrading 400 ITIs. About 300 ITIs adopting the Centers o f Excellence (COE) model will enroll 100 students each; the remaining 100 ITIs will upgrade 6 existing trades, each with 16-20 students, or about 100 students each. Assuming that each upgraded IT1enrolls 100 students a year for five years, the total throughput from the 400 upgraded I T I s i s 200,000 students. The corresponding cost o f generating benefits in the form o f higher lifetime wages for IT1 pass-outs i s the cost o f upgradingstrengthening 400 ITIs over 5 years, totaling about INR 13,800 million to be financed through Component-1 o f the Project. The per student cost o f this IT1 upgrading i s thus INR 69 thousand. 24. The cost-benefit analysis and rate o f return calculations are based upon the following assumptions, data sources, and scenarios. Zero rate o f inflation and n o secular trend productivity growth over the lifetime o f IT1 pass-outs, so that wage-experience profiles estimated at one point in time can be used to simulate lifetime wage profiles o f IT1pass-outs and a comparison group with similar educational qualifications but without IT1trade certification. IT1pass-outs and the comparison group earn lifetime wages over 40 years o f work experience in the labor market. The difference between the lifetime wage streams o f the two groups i s the benefit attributable to IT1training. 73 0 Enrolled IT1 students who drop out before completing training or who do not get trade certification earn lifetime wages o f the comparison group. Each upgraded IT1 enrolls 100 students a year for five years, the period over which the investment will be amortized. Note that a longer amortization period, such as 10 years, will reduce per student cost in half. 25. The 2004 India National Statistical Survey (NSS-60) provides data to calculate the lifetime wage profiles o f IT1pass-outs and the comparison group. The NSS-60 Round elicited for the first time several questions about vocational training received by household members aged 15-29 with secondary and higher secondary education but below graduate level. It asked whether respondents received vocational training, type o f training, training institution attended, duration o f training, and degree, diploma or certificate received. These data make i t possible to identify respondents who graduated from ITIs and ITCs with trade certification, as well as a comparison group o f individuals o f similar age with the same levels o f formal (general secondary) educational attainment. Since the interest i s in estimating lifetime wages, the sample i s restricted to those respondents who worked for wages and salaries last week, for whom hours-adjusted monthly wages can be calculated. 26. Figure 9.1 shows, for the IT1 pass-out and comparison groups, the hours-adjusted average monthly wage profiles, both actual averages as well as their statistically-smoothened equivalents. For expositional simplicity, the figures combine the data from both males and females, and the IT1 pass-out group i s restricted to the NSS-60 sample that completed 2-year training courses (the course duration that upgraded ITIs will provide under the Project). Since these wage profiles only cover a maximum o f 11 years o f work experience (the sample i s restricted to those aged 29 years and below), the fitted model from Figure 9.1 i s used in Figure 9.2 to extrapolate wages profiles over the assumed lifetime o f 40 years o f experience. 27. Lifetime wages must be discounted to the present for any cost-benefit comparisons since costs are incurred today while the benefits to IT1 pass-outs are only realized over a long period o f time. Real discount rates o f 5 and 7 percent (inflation-adjusted) are used to calculate the present values o f lifetime wages for the IT1pass-out and comparison groups. These present values may be interpreted as baseline estimates prevailing prior to Project implementation. When ITIs are upgraded under the Project, the anticipated improvements in IT1 internal efficiency (higher rates o f training completion and trade certification) and external efficiency (improved labor market outcomes in terms o f employment and wages) should lead to additional gains in the present values o f lifetime wages o f IT1pass-outs relative to that o f the comparison group. H o w large these incremental gains are will depend upon different scenarios about the attainment o f several key performance indicators (KPIs) by the 400 upgraded ITIs. 74 Figure 9.1 Average monthly wages by potential experience Sample of males and females combined 4500 4000 3500 3000 2500 2000 1500 1000 500 0 0 1 IT1training +no 2 -st- 2 yr 3 4 5 6 IT1training -Log. 7 8 9 1 (no IT1training) -Log. 0 1 1 (2 yr IT1training) Figure 9.2 Predicted annual wages by potential experience Sample of males and females combined 60000 50000 $ 40000 dC 30000 n m f - 20000 10000 0 \ 3 4 2 9 \? 3, 4 , 4 \e, $\ $ 3 $4 r$ $9 3\ flJ d9 j yrs of experience I -no I rn training --)i-- 2 yr rn training 28. Table 9.6 provides comparisons o f the present values o f lifetime wages o f pass-outs from two-year IT1 courses and the comparison group. The first three columns o f panel-A report the present values o f lifetime wages using real discount rates o f 5 and 7 percent, separately for the t w o groups. Note that the real discount rate used can dramatically reduce the present value o f lifetime wages for IT1 pass-outs from INR 641 thousand at 5 percent to INR 479 thousand at 7 percent. Nonetheless, for these two discount rates, IT1pass-outs receive lifetime wages that are about 20 percent higher than the wages o f the comparison group. 75 Present values of wages (over 40 years) Real discount rate 7Yo A. Lifetime Wages (1,000 IR) Comparison group ComDarison erouD IT1pass-outs Returns to I T I traininp B. Baseline Adjustments [l] 58.7 % get trade certificate Returns to I T I training 2 1.9% get job within 1 year Returns to I T I training I 5% 539.6 641.6 102.0 400.6 479.5 599.5 446.9 628.2 466.3 78.9 56.0 88.6 Net present values of wage differential (less per student cost of INR 69,000) Real discount rate 5% 7yo 33.0 9.9 46.3 -I3.0 -22.7 65.7 19.6 -3.3 29. T h e difference in lifetime wages - ranging between INR 102 and 79 thousand- are the returns to IT1 training (shown in italics). The next three columns o f the table report the net present value o f these wage differentials, that is, the incremental present values o f wages from IT1training less the per student cost o f IT1upgrading o f INR 76,667. At 5 percent, the net present value i s INR 33 thousand after subtracting per student cost; at 7 percent, net present value falls t o just INR 10 thousand. 30. In panel-B o f Table 9.6, these simple wage comparisons are adjusted to reflect the fact that not all IT1 students complete training with trade credentials, and o f those that do, only a fraction secure employment within 12 months. The baseline IT1 survey indicates that, on the average, only 58.7 percent o f IT1 students complete their two-year training course and pass their trade tests. They get the lifetime wages o f the IT1 pass-outs in panel A, while those that do not complete training nor get trade credentials are assumed (see assumption 3) to follow the lifetime wage profiles o f the comparison group. W e incorporate this baseline measure o f IT1internal efficiency by computing the weighted average o f lifetime wages for the two groups, with the proportions o f students getting or failing to get trade certification as weights, and then using this downward-adjusted IT1wage profile to estimate the returns to training. Similarly, the IT1 tracer study shows that only 21.9 percent o f IT1 pass-outs find employment within 12 months. It i s assumed that this group gets the IT1wage profile while the group that takes longer than 12 months simply looses the first year o f earnings. The IT1 wage profile i s weighted to reflect the employment histories o f these two groups, and used to recalculate the returns to IT1training. 31. Panel B makes several points. First, the adjustment to reflect l o w rates o f training completion and trade certification has very large negative effects on the returns to IT1 training. I t reduces the average returns to IT1training by between 41-45 percent, depending upon the discount rate used. For example, at a 5 percent discount rate, the adjusted IT1 lifetime wages fall from INR 102 to 56 thousand, or by about 45 percent. Second, after taking into account per student cost, the net present value o f wages from training, adjusted for training completion and trade certification, i s invariably negative for the range o f discount rates considered - minus INR 13 to 23 thousand. Improving the internal efficiency o f ITIs can 76 thus have large positive effects o n the returns t o training, and consequently o n the rate o f return t o upgrading ITIs. Finally, the adjustment for time-to-employment has a relatively small negative impact o n the returns to IT1 training. With this adjustment, net present values f r o m training are only positive (INR 19 thousand) for a 5 percent discount rate; at a 7 percent discount rate, the cost o f training exceeds the wage benefits t o IT1pass-outs and the net present value turns negative (minus INR 3 thousand). 32. The third panel C shows the results, other things being equal, o f several different scenarios about the potential lifetime wage effects o f improved training provided by upgraded ITIs. Three scenarios are considered - starting pay o f IT1 pass-outs increases by 10, 15 and 20 percent over the baseline starting pay. In all scenarios, and for the discount rates considered, increased starting pay results in higher returns t o IT1 training that exceed the per student cost o f IT1 upgrading, that is, positive net present values o f incremental lifetime wages f r o m IT1training. VI. Rate of Return Simulations with Different Scenarios 33. The following sensitivity analysis focuses o n the rates o f return f r o m the joint effects o f attaining different combinations o f the three KPI scenarios using a range o f real discount rates for lifetime wages. The previous analysis looked at the individual effects o f each KPI, other things remaining constant. Here, the interest i s o n the combined effects o f the different outcome indicators, which upgraded ITIs, are designed t o address. The low, medium and high case scenarios considered for each KPI measured relative to the baseline are shown in Table 9.7. 34. Table 9.8 reports the results o f simulations with different combinations o f the KPI scenarios at 5 and 7 percent real discount rates. To simplify exposition with such a large number o f combined KPI permutations, the table only shows the rate o f return estimates which take, as given, the l o w case scenario o f the 2nd KPI, namely, that 25 percent o f IT1pass-outs find employment within 12 months. The earlier analysis indicated (and results not reported here confirmed) that the results are n o t particularly sensitive t o changes in this scenario. Instead, the table focuses o n the simulations with different combinations o f the 1'' and 31d KPI. The columns o n the left are the retums to IT1 training - the incremental gain in the lifetime wages o f IT1 pass-outs relative to the comparison group - and the columns o n the right the corresponding rate o f returns (ROR) - the difference between returns and per student cost, measured as a percentage o f per student cost o f IT1 upgrading. The combined KPI scenarios that yield positive rate o f returns are shaded in green. 77 78 Annex 10: Safeguard Policy Issues INDIA: Vocational Training Improvement Project Social Development 1. Equity Assurance Plan (covering Indigenous Peoples). As the Project i s national in scope and focuses on a specific set o f institutions, an Equity Assurance Plan (EAP) has been developed to meet the requirements o f O.P. 4.12 to ensure commensurate benefits to tribal people, scheduled castes and women. T h e EAP goes beyond IPS,aiming to improve equity for all disadvantaged groups. Improving the internal efficiency o f the I T I s would help to improve the overall situation o f disadvantaged students. T o ascertain this, progress monitoring in the Project will separately examine the progress o f SC, ST and women students. The computerized database which starts at the I T I s and i s aggregated at the State and national levels will provide all relevant data disaggregated by Malememale and SC/ST/General categories. Some institutional baseline data i s already available, and the 2006 tracer study o f two previous batches o f IT1 graduates provides a basis to examine trends in employment outcomes among these groups. In addition to these general improvements to help disadvantaged students, the social assessment led to the formulation o f some specific activities that would be undertaken by the Project to improve their situation and outcomes. These comprise the EAP and are presented in Table A1O.l. The NPIU and all SPIUs would include one professional each who would oversee implementation o f the EAP, compliance with the resettlement requirement (see below) and the EMF. Further details o f the Plan such as the implementation steps, time frames and responsibilities are provided in Section IV (Equity Assurance Plan) o f the Project Implementation Plan (dated April 18, 2007). The Financing Agreement would covenant implementation and monitoring o f the EAP. 2. Involuntary Resettlement. The Project would not finance any major c i v i l works but anticipates the construction o f some extensions or additional facilities at existing institutions o n land that i s already in their possession. Consequently, n o land acquisition or involuntary resettlement i s expected. T o ascertain this, a site review will be conducted by the Central or State authorities as part o f all c i v i l works preparation to ensure that: (a) legal title to the site i s clearly in the name o f the institution or relevant authority; and (b) that the site i s free o f encumbrances, including squatters and encroachers, and that n o one would incur a loss o f residence or livelihood as a result o f the proposed construction. A prescribed format would be utilized and copies o f the filled format for all proposed construction sites would be sent to the Central authorities and made available to the Bank’s semi-annual review missions. In the event that any proposed construction site houses or provides livelihood to any person, an alternative site without any encumbrances would be sought and used. The Financing Agreement will include a covenant to this effect. Environment Management and Safeguards 3. EA Process and Outputs: Planning, development and management o f the Industrial Training Institutes (ITIs) involve some important environmental obligations. In order to fulfill these requirements, integration the environmental assessment was carried out for the project with the following objectives: (i) o f the environmental principles during site selection, design, construction, operation and maintenance o f the IT1 buildings; (ii)incorporation/ inclusion o f the industry-specific environmental, health, and occupational safety issues as well as demand-driven industry-specific environmental issues relevant for international benchmarking o f the industries in the curriculum for the improved vocational education expanding and augmenting the current good practices with regard to environment, health system and; (iii) and safety aspects. 4. In this context, the environmental assessment study covered review o f standards, statutory and other provisions; assessment o f existing situation through site visits and consultation with various stakeholders; 79 documentation o f current practices and; preparation o f an Environment Management Framework (EMF). These decision-malung tools would help in making the project an environmentally sound and sustainable one. 5. EnvironmentalParameterdAspects Assessed: Some o f the important parameters that were assessed during the EA survey and field work include location and site planning; accessibility; building design and maintenance (particularly materials used, ventilation, lighting, fire safety); drainage/water logging; provision and maintenance o f basic facilities (water, sanitation and waste disposal); repair work practices; availability o f class room and laboratory/workshop space per student; resource consumption (energy and water) and; over-all ambience and cleanliness in the campus. 6. These parameters were assessed for a sample base o f 19 ITIs. These were selected o n the basis o f criteria such as geographic location (urban/rural/hilly/coastal/ flood-prone); climatic conditions (hot/humiddry/aridwarm); polluting tradedpollution potential (chemical, plastic, hospitality, civil, automobile, etc.); and status o f the IT1(whether upgraded t o COE or not). 7. The exiting coverage o f environmental, health and occupational safety issues in the present course curriculum was reviewed in detail. A detailed review o f relevant acts, rules, manuals, standards and guidelines at the national level and operational policies o f the Bank was also carried out to assess the various mandatory as well as suggestive provisions that could be suitably incorporated into the EMF for the project. 8. EnvironmentalIssues and Key Findings o f EA: A majority o f environmental issues in the project primarily pertain to: (i) poor site planning and design (locationkite planning/accessibility/design); (ii) lack o f proper maintenance o f buildings and associated services; (iii) improper resource consumption and; (iv) lack o f environmental augmentative measures. 9. The review o f legal provisions, codes and guidelines revealed that while some provisions are being largely adhered to (such as built-up space available per student), some others like siting (locktion in flood prone areas), use o f appropriate construction material, fire safety, access requirement for physically challenged and provisionhse o f safety gear need attention. 10. T h e review o f the existing curriculum revealed that even though the course contents have been revised recently, the content and coverage o f EHS issues i s not sufficient. The curriculum needs inclusion o f more elaborate and relevant trade specific environmental, health, occupational safety concepts such as EMS-14000, good house keeping and OSHAS. The industry-level consultation exercise at various locations also highlighted the need for an improved curriculum with national or global norms o f occupational health and safety and environmental management practices. 11. Environment Management Framework (EMF): Based on the review o f national standards; field survey and assessment and; consultation with stakeholders, an EMF has been developed for the project. The framework provides a useful set o f measures, which would help in preventing, minimizing andor managmg various environmental, health and safety concerns faced during construction, operation and maintenance o f I T I s . 12. The EMF prepared for the project comprises o f the following components: 0 0 Framework for compliance with the existing national standards and norms Framework for up-gradinglconstruction activities Framework for better campus environment management 80 Institutional arrangements for Implementation and compliance monitoring Budgetary requirements for EMF implementation Public disclosure policy 13. T h e major EMF recommendations are as follows: 14. Short Term Actions: (a) National level training and capacity building for effective environmental management; (b) Development o f trade specific EHS course content and; (c) Implementation arrangements for environment management at the DGE&T and State Directorate level. 15. Long Terms Actions: (a) Setting-up o f a Best IT1 Award to be given each year to 3-5 ITIs based on achievements in project implementation and compliance with the EMF; and (b) Initiation o f “ITI- Green Newsletter” for experience sharing. 16. Some other key suggestions provided to improve the quality o f living and working environment in an IT1campus include: Improvement o f campus environment through provision o f better sanitation, drainage, water, power, first aid, personal protective equipment (as relevant to specific trades), waste collection and disposal arrangements, storage o f hazardous and inflammable materials/chemicals and barrier free access for students with disability. The campus environment management plan may also consider landscaping and tree plantation for overall aesthetic improvement. Use o f appropriate materials and construction technology for c i v i l works (hazardous materials such as asbestos should not be used). Adoption o f safe construction andor repair practices. Top soil stripping, stacking, preservation and re-use where additional construction would be taken-up under the project. Promote environmental augmentative measures like re-usehecycling o f materials; rain water harvesting, electricity saving devices, etc. Design o f services to achieve maximum efficiencies. 17. However, the environmental issues on a specific site would depend on the nature and number o f new trades being introduced (particularly, if these are o f polluting nature); additional space requirement and new construction; extent and type o f constructionhepair activity and; increase in student strength and pressure o n basic facilities. Dependingupon the activities proposed in the Institutional Development Plan, the appropriate measures as suggested in the EMF would apply on a case to case basis. 18. The EMF also recommends field testing o f the proposed framework for all identified geo-climatic region (at least one IT1per region). It i s envisaged that learning from such field testing would enhance the EMF for wider applications. Budgetary provisions for EMF implementation including training and capacity building have been made. 19. Stakeholder Consultation: Consultation with various stakeholders was carried out as a part o f the EA exercise through interviews, formal and informal discussions. T h e stakeholders consulted at the local level included IT1 management (Principals, faculty and other staff); current students; recent graduates; senior and middle level managersh-epresentatives o f the industry. The consultation at the central or nodal level was carried out through a national level workshop at New Delhi. This workshop was organized in January 2007 and the participants included officials o f DGE&T, officials from concerned State Directorates and the representatives o f national level industry associations such as C I I and FICCI. These consultations have provided useful inputs in developing the EMF for the project. 81 20. Implementation Arrangements: The DGE&T will assume the overall responsibility for adequate maintenance o f the personnel and resources required to supervise, monitor and implement EMF. Management o f environmental aspects shall be addressed by designating an Environment Officer, who will co-ordinate, monitor and provide support for: (a) satisfactory implementation o f the EMF; (b) orientation and training for field level staff o f the State Directorates responsible for vocational training and project ITIs and other stakeholders and; (c) reporting and documentation. The DGE&T will share with the Bank bi-annual reports, which will include a section o n EMF implementation and related activities. 2 1. Training and Capacity Building: A robust training and capacity building plan i s required to ensure effective implementation o f EMF o n the ground. Some key areas that need to b e covered under the environmental component o f the project training plan would cover environmentally sensitive site selection and building design; campus environment management (issues and measures) and; trade specific environmental and occupational safety issues including good and bad practices. 82 m 00 Annex 11: Project Preparation and Supervision INDIA: Vocational Training Improvement Project Planned 412 012006 PCN review Initial P I D to PIC Initial ISDS to PIC Appraisal Negotiations BoardlRVP approval Planned date o f effectiveness Planned date o f mid-termreview Planned closing date 3/6/2007 411512007 610512007 713012007 11I3Ql2009 12/31/2012 Actual 510412006 611312006 811512006 3/6/2007 411612007 Key institutions responsible for preparation o f the project: Ministry o f Labor and Employment (MOLE),India Bank staff and consultants who worked on the project included: Name Nalin Jena Hong Tan Kin Bing Wu Philip B. O’Keefe Sangeeta Goyal Amit Dar Shashi K. Shnvastava M a m Chand Meera Chattqee Tanuj Mathur Tapas Paul Yegeniya Savchenko Alan Abrahart S. A. A. Alvi Renu Gupta Bertha Mburugu Robin Horn Gordon Betcherman Ahmad Ahsan Title Operations Officer (co-TTL) Lead Economist (co-TTL) Lead Education Specialist Lead Social Protection Specialist Economist Lead Education Economist Senior Education Specialist Sr. Procurement Specialist Sr. Social Dev. Specialist Financial Management Specialist Environmental Specialist ETC (Economist) Consultant (Training Specialist) Consultant (Training Specialist) Program, Assistant Program, Assistant Sector Manager Lead Economist Lead Economist Bank funds expended to date on project preparation: 1. Bank resources: $428,178 2. Trust funds: : $125,000 3. Total: $553,178 Estimated Approval and Supervision costs: 4. Remaining costs to approval: $15,000 5. Estimated annual supervision cost: $120,000 85 Unit SASHD WBFP SASHD SASHD SASHD SASHD SASHD SARPS SASES SARFM SASES SASHD SASHD SASHD SASHD SASHD HDNED, QER Panel Chair ECSHD, Peer Reviewer SASPR, Peer Reviewer Annex 12: Documents in the Project File INDIA: Vocational Training Improvement Project India: Country Assistance Strategy, September 2004. The World Bank DGE&T (2005). Externally Aided Project for Reforms and Improvement in Vocational Training Services rendered by Central and State Governments. Proposal o f the Directorate General o f Employment and Training, Ministry o f Labor and Employment, India. C I I (2005). Position Paper on Managing I T I s . Confederation o f Indian Industries Position Paper. DGE&T (Various Years). Annual Report. Report o f the Directorate General o f Employment and Training, Ministry o f Labor and Employment, India. DGE&T (2003). Trade Apprenticeship in India under the Apprenticeship Training Scheme. Directorate General o f Employment and Training, Ministry o f Labor and Employment, India. DGE&T (2003). Tracer Study of Trained Apprentices to Assess the Effectiveness of Apprenticeship Training Scheme. Directorate General o f Employment and Training, Ministry o f Labor and Employment, India. EDCil (2005). Studying the Eflectiveness of Vocational Training in the Private Sector in India: Analysis of Data in Eight States. Worlung Paper prepared for the World Bank by Educational Consultants India Limited. EDCil (2005). Case Study on Role of Private Providers of Training in Rajasthan and Tamil Nadu. Worlung Paper prepared for the World Bank by Educational Consultants India Limited. FICCI (2002). Survey of Employers on Education and Skill Needs. Survey Conducted by the Federation o f Indian Chamber o f Commerce and Industry. ILO( 2003). Industriual Training Institutes in India: The Efficiency Study Report. ILO Subregional Office for South Asia, New Delhi Middleton, J., A. Ziderman, and A. V. Adams (1993). Skills for Productivity: Vocational Education and Training in Developing Countries. Oxford University Press and World Bank, Washington DC. MHRD (2003). Project Implementation Plan of National Program on Vcational Education and Training. Ministry o f Human Resourceds Development, India. Pillay, G. (2005). Reforms in the Vocational Education and Training System in Korea. Draft Working Paper, World Bank. Planning Commission o f India (2002). Report of the Special Group on Targeting Ten Million Employment Opportunities per Year over the I Oth Plan Period. May, 2002 Planning Commission o f India (2002). Tenth Five Year Plan. 86 Planning Commission o f India (2002). Economic Survey Tan, H. and Savchenko, Y. (2005). In-Service Training in India: Evidence from the India Firm-Level Investment Climate Survey. World Bank Working Paper. World Bank (1999). India Vocational Training Project: Implementation Completion and Results Report World Bank (2004). Washington, DC. India: Investment Climate and Manufacturing Industry. South Asia Region, World Bank (2006) Skill Development in India-The Vocational Education and Training System. 87 Annex 13: Statement o f Loans and Credits INDIA: Vocational Training Improvement Project Difference between expected and actual disbursements Original Amount in US$ Millions FY Pumose PO75060 2007 RCH I1 PO90585 2007 Punjab State Roads Project PO90592 2007 PO78539 Proiect ID IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. Rev’d 0.00 360.00 0.00 0.00 0.00 363.72 10.00 0.00 250.00 0.00 0.00 0.00 0.00 250.00 3.07 0.00 Punjab Rural Water Supply & Sanitation 0.00 154.00 0.00 0.00 0.00 157.40 21.46 TE3 I1 0.00 170.00 0.00 0.00 0.00 159.29 -1 1.oo 0.00 2007 PO90768 2007 TNIAM W A R M 335.00 150.00 0.00 0.00 0.00 485.92 0.00 0.00 PO83187 2007 Uttaranchal RWSS 0.00 120.00 0.00 0.00 0.00 127.33 4.83 0.00 PO78538 2007 National HIV / A I D S Control Project III 0.00 250.00 0.00 0.00 0.00 256.52 0.00 0.00 PO71160 2007 Kamataka Health Systems 0.00 141.83 0.00 0.00 0.00 144.20 2.20 0.00 PO75174 2007 India AP DPL 111 150.00 75.00 0.00 0.00 0.00 75.64 -151.17 0.00 PO97036 2007 Orissa Socio-Econ Dev Loan I1 150.00 75.00 0.00 0.00 0.00 75.36 -150.65 0.00 P100789 2007 AP Community Tank Management Project 94.50 94.50 0.00 0.00 0.00 190.39 0.00 0.00 PO79708 2006 TN Empwr & Pov Reduction 0.00 120.00 0.00 0.00 0.00 111.50 -2.37 0.00 PO83780 2006 TN Urban 111 300.00 0.00 0.00 0.00 0.00 262.16 37.91 0.00 PO79675 2006 Kam Municipal Reform 2 16.00 0.00 0.00 0.00 0.00 198.26 1.19 0.00 0.00 0.00 400.00 0.00 0.00 0.00 0.00 313.55 -86.45 Kamataka Panchayts Strengthening Proj 0.00 120.00 0.00 0.00 0.00 98.54 -25.73 0.00 F A L G Brick Project 0.00 0.00 0.00 0.00 0.00 4.40 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2.88 0.00 0.00 0.00 200.00 0.00 0.00 0.00 185.05 -11.18 0.00 Mid-Himalayan (HP) Watersheds 0.00 60.00 0.00 0.00 0.00 53.41 3.20 0.00 2005 TN HEALTH SYSTEMS 0.00 110.83 0.00 0.00 20.06 79.91 23.53 26.54 PO73370 2005 Madhya Pradesh Water Sector Restructurin 394.02 0.00 0.00 0.00 0.00 363.81 81.70 0.00 PO73651 2005 DISEASE SURVEILLANCE 0.00 68.00 0.00 0.00 0.00 61.38 26.47 0.00 PO77856 2005 Lucknow-Muzaffarpur National Highway 620.00 0.00 0.00 0.00 0.00 453.33 -30.00 0.00 PO77977 2005 Rural Roads Project 99.50 300.00 0.00 0.00 0.00 212.41 -17.38 0.00 PO84632 2005 Hydrology I1 104.98 0.00 0.00 0.00 0.00 94.04 39.06 -2.07 PO84790 2005 M A H A R WSIP 325.00 0.00 0.00 0.00 0.00 292.42 9.42 0.00 PO84792 2005 Assam Agric Competitiveness 0.00 154.00 0.00 0.00 0.00 141.81 42.1 1 0.00 PO86518 2005 IN SME Financing & Development 120.00 0.00 0.00 0.00 0.00 5.00 3.33 0.00 PO94513 2005 India Tsunami ERC PO73776 2004 A L L A H A B A D BYPASS PO78550 PO86414 2006 PO78832 2006 PO90163 2006 PO91453 2006 VSBK Cluster Project PO92735 2006 NAIP PO93720 2006 PO75058 Power System Development Project 111 0.00 465.00 0.00 0.00 0.00 405.20 255.54 0.00 240.00 0.00 0.00 0.00 0.00 121.26 84.46 0.00 2004 Uttar Wtrshed 0.00 69.62 0.00 0.00 0.00 61.53 1.11 0.00 PO73369 2004 M A H A R RWSS 0.00 181.00 0.00 0.00 0.00 71.01 -9.12 0.00 PO50655 2004 RAJASTHAN HEALTH SYSTEMS DEVELOPMENT 0.00 89.00 0.00 0.00 0.00 69.54 43.65 0.00 PO79865 2004 GEF Biosafety Project PO82510 2004 Kamataka UWS Improvement Project PO50649 2003 PO67606 PO76467 0.00 0.00 0.00 1.oo 0.00 0.49 0.48 0.00 39.50 0.00 0.00 0.00 0.00 16.48 10.98 0.00 TN ROADS 348.00 0.00 0.00 0.00 0.00 239.02 103.55 0.00 2003 UP ROADS 488.00 0.00 0.00 0.00 0.00 291.12 202.93 0.00 2003 Chatt DRPP 0.00 112.56 0.00 0.00 20.06 78.11 57.02 0.00 PO71272 2003 AP R U R A L POV REDUCTION 0.00 150.03 0.00 0.00 0.00 25.43 0.09 0.00 PO72123 2003 TecWEngg Quality Improvement Project 0.00 250.00 0.00 0.00 40.11 94.99 28.90 -47.06 PO75056 2003 Food & Drugs Capacity Building Project 0.00 54.03 0.00 0.00 0.00 40.80 26.39 0.00 PO73094 2003 AP Comm Forest Mgmt 0.00 108.00 0.00 0.00 0.00 46.59 2.50 0.00 PO74018 2002 Gujarat Emergency Earthquake Reconstruct 0.00 442.80 0.00 0.00 115.24 97.34 135.90 37.98 PO72539 2002 KERALA STATE TRANSPORT 255.00 0.00 0.00 0.00 0.00 116.95 57.62 0.00 PO71033 2002 KARN Tank Mgmt 0.00 98.90 0.00 0.00 25.07 53.36 51.89 -0.06 PO50647 2002 UPWSRP 0.00 149.20 0.00 0.00 40.11 97.10 111.21 0.00 PO69889 2002 M I Z O R A M ROADS 0.00 60.00 0.00 0.00 0.00 24.31 8.37 0.00 PO50653 2002 K A R N A T A K A RWSS I1 0.00 151.60 0.00 0.00 15.04 64.37 50.41 0.00 PO40610 2002 RAJ WSRP 0.00 140.00 0.00 0.00 15.04 74.25 45.15 0.00 PO50668 2002 MUMBAI URBAN TRANSPORT PROJECT 463.00 79.00 0.00 0.00 0.00 359.46 240.27 0.00 381.00 0.00 0.00 0.00 101.00 19.51 120.51 19.51 0.00 64.90 0.00 0.00 0.00 6.67 0.33 -2.1 1 KERAJA RWSS 0.00 65.50 0.00 0.00 12.27 7.89 11.36 -1.97 PO10566 2001 Gujarat Highways PO50658 2001 TECHN EDUC 111 PO55454 2001 PO55455 2001 Rajasthan DPEP I1 0.00 74.40 0.00 0.00 0.00 22.82 11.99 0.og PO59242 2001 MPDPIP 0.00 110.10 0.00 0.00 20.06 6.16 12.86 -6.87 PO67216 2001 KAR WSHD DEVELOPMENT 0.00 100.40 0.00 0.00 20.06 44.94 47.93 31.07 PO70421 2001 Kamataka Highways 360.00 0.00 0.00 0.00 0.00 21.72 21.72 0.00 PO71244 2001 Grand TrunkRoad Improvement Project 589.00 0.00 0.00 0.00 12.53 149.62 162.15 0.00 PO59501 2000 T A for Econ Reform Project 0.00 45.00 0.00 0.00 12.03 15.08 22.73 11.39 10.18 PO50657 2000 UP Health Systems Development Project PO49770 2000 REN EGY I1 PO10505 2000 RAJASTHAN DPIP PO09972 2000 Natl Highways Ill PO50646 1999 Up Sodic Lands I1 Total: 0.00 110.00 0.00 0.00 30.09 31.27 50.33 80.00 50.00 0.00 0.00 26.00 20.09 43.96 -3.60 0.00 100.48 0.00 0.00 0.00 25.17 14.99 15.01 516.00 0.00 0.00 0.00 25.16 91.26 116.42 116.42 0.00 194.10 0.00 0.00 0.00 0.60 7,318.50 6,238.78 0.00 1.00 549.93 8,131.14 -3.16 -6.22 1,966.97 198.14 INDIA STATEMENT OF IFC’s H e l d and Disbursed Portfolio In M i l l i o n s o f U S Dollars Committed Disbursed IFC IFC Loan Partic. FY Approval Comanv Loan EQuihl Quasi Partic. Equity Quasi 2005 ADPCL 39.50 7.00 0.00 0.00 0.00 0.00 0.00 0.00 2006 AHEL 0.00 5.08 0.00 0.00 0.00 5.08 0.00 0.00 2005 AP Paper Mills 35.00 5.00 0.00 0.00 25.00 5.00 0.00 0.00 2005 APIDC Biotech 0.00 4.00 0.00 0.00 0.00 2.01 0.00 0.00 2002 ATL 13.81 0.00 9.36 13.81 0.00 0.00 9.36 2003 ATL 1.oo 0.00 0.00 0.00 0.00 0.68 0.00 0.00 0.00 2005 ATL 9.39 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2006 Atul Ltd 16.77 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2003 BHF 10.30 0.00 10.30 0.00 10.30 0.00 10.30 0.00 2004 BILT 0.00 0.00 15.00 0.00 0.00 0.00 15.00 0.00 2001 BTVL 0.43 3.98 0.00 0.00 0.43 3.98 0.00 0.00 2003 Balrampur 10.52 0.00 0.00 0.00 10.52 0.00 0.00 0.00 200 1 Basix Ltd. 0.00 0.98 0.00 0.00 0.00 0.98 0.00 0.00 2005 Bharat Biotech 0.00 0.00 4.50 0.00 0.00 0.00 3.30 0.00 1984 Bihar Sponge 5.70 0.00 0.00 0.00 5.70 0.00 0.00 0.00 0.59 0.00 0.00 0.00 12.40 1.50 0.00 0.00 0.00 CCIL 7.00 2.00 0.00 12.40 7.00 2.00 0.00 CESC 4.61 0.00 0.00 0.00 4.61 0.00 0.00 0.00 1992 CESC 6.55 0.00 0.00 14.59 6.55 0.00 0.00 14.59 2004 CGL 14.38 0.00 0.00 0.00 7.38 0.00 0.00 0.00 2004 CMScomputers 0.00 10.00 2.50 0.00 0.00 0.00 0.00 0.00 2002 COSMO 2.50 0.00 0.00 0.00 2.50 0.00 0.00 0.00 2005 COSMO 0.00 3.73 0.00 0.00 0.00 3.73 0.00 0.00 2006 Chennai Water 24.78 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2003 DQEL 0.00 1.50 1.50 0.00 0.00 1.50 1.50 0.00 2005 DSCL 30.00 0.00 0.00 30.00 0.00 0.00 0.00 2006 DSCL 15.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2005 Dabur 0.00 14.09 0.00 0.00 0.00 14.09 0.00 0.00 2003 Dewan 8.68 0.00 0.00 0.00 8.68 0.00 0.00 0.00 2006 Federal Bank 0.00 28.06 0.00 0.00 0.00 23.99 0.00 0.00 2001 GTF Fact 0.00 1.20 0.00 0.00 0.00 1.20 0.00 0.00 2006 GTF Fact 0.00 0.00 0.99 0.00 0.00 0.00 0.99 0.00 1994 GVK 0.00 4.83 0.00 0.00 0.00 4.83 0.00 0.00 2003 HDFC 100.00 0.00 0.00 100.00 100.00 0.00 0.00 100.00 1998 IAAF 0.00 0.47 0.00 0.00 0.00 0.30 0.00 0.00 2006 IAL 0.00 9.79 0.00 0.00 0.00 7.70 0.00 0.00 1998 IDFC 0.00 10.82 0.00 0.00 0.00 10.82 0.00 0.00 2005 IDFC 50.00 0.00 0.00 100.00 50.00 0.00 0.00 100.00 2003 CCIL 2006 1990 0.00 IHDC 6.94 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2006 IHDC 7.90 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2006 Indecomm 0.00 2.57 0.00 0.00 0.00 2.57 0.00 0.00 1996 India Direct Fnd 0.00 1.10 0.00 0.00 0.00 0.66 0.00 0.00 2001 Indian Seamless 6.00 0.00 0.00 0.00 6.00 0.00 0.00 0.00 2006 JK Paper 15.00 7.62 0.00 0.00 0.00 7.38 0.00 0.00 2005 K Mahindra INDIA 22.00 0.00 0.00 0.00 22.00 0.00 0.00 0.00 0.00 2005 WIT 11.00 2.50 0.00 0.00 8.00 2.50 0.00 2003 L&T 50.00 0.00 0.00 0.00 50.00 0.00 0.00 0.00 2006 LGB 14.21 4.82 0.00 0.00 0.00 4.82 0.00 0.00 2006 Lok Fund 0.00 2.00 0.00 0.00 0.00 0.00 0.00 0.00 2002 MMFSL 7.89 0.00 7.51 0.00 7.89 0.00 7.51 0.00 2003 MSSL 0.00 2.29 0.00 0.00 0.00 2.20 0.00 0.00 2001 MahInfra 0.00 10.00 0.00 0.00 0.00 0.79 0.00 0.00 Montalvo 0.00 3 .OO 0.00 0.00 0.00 1.08 0.00 0.00 Moser Baer 0.00 0.82 0.00 0.00 0.00 0.82 0.00 0.00 Moser Baer 0.00 8.74 0.00 0.00 0.00 8.74 0.00 0.00 1996 1999 2000 2003 Moser Baer 12.75 10.54 0.00 0.00 12.75 10.54 0.00 0.00 Nevis 0.00 4.00 0.00 0.00 0.00 4.00 0.00 0.00 NewPath 0.00 9.31 0.00 0.00 0.00 8.31 0.00 0.00 2004 NewPath 0.00 2.79 0.00 0.00 0.00 2.49 0.00 0.00 2003 Niko Resources 24.44 0.00 0.00 0.00 24.44 0.00 0.00 0.00 2001 Orchid 0.00 0.73 0.00 0.00 0.00 0.73 0.00 0.00 1997 Owens Coming 5.92 0.00 0.00 0.00 5.92 0.00 0.00 0.00 2006 PSL Limited 15.00 4.74 0.00 0.00 0.00 4.54 0.00 0.00 2004 Powerlinks 72.98 0.00 0.00 0.00 64.16 0.00 0.00 0.00 2004 RAK India 20.00 0.00 0.00 0.00 20.00 0.00 0.00 0.00 1995 Rain Calcining 0.00 2.29 0.00 0.00 0.00 2.29 0.00 0.00 2004 Rain Calcining 10.00 0.00 0.00 0.00 10.00 0.00 0.00 0.00 10.28 0.00 0.00 0.00 0.00 0.00 0.00 2005 hmky Ruchi Soya 3.74 0.00 9.27 0.00 0.00 0.00 6.77 0.00 0.00 2001 SBI 50.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1997 SREI 3.21 0.00 0.00 0.00 3.21 0.00 0.00 0.00 2000 SREI 6.50 0.00 0.00 0.00 6.50 0.00 0.00 0.00 1995 Sara Fund 0.00 3.43 0.00 0.00 0.00 3.43 0.00 0.00 2004 SeaLion 4.40 0.00 0.00 0.00 4.40 0.00 0.00 0.00 0.00 2005 2001 Spryance 0.00 1.86 0.00 0.00 0.00 1.86 0.00 2003 Spryance 0.00 0.93 0.00 0.00 0.00 0.93 0.00 0.00 2004 Sundaram Finance 42.93 0.00 0.00 0.00 42.93 0.00 0.00 0.00 2000 Sundaram Home 0.00 2.18 0.00 0.00 0.00 2.18 0.00 0.00 2002 Sundaram Home 6.71 0.00 0.00 0.00 6.71 0.00 0.00 0.00 1998 TCW/ICICI 0.00 0.80 0.00 0.00 0.00 0.80 0.00 0.00 2005 TISCO 100.00 0.00 0.00 300.00 0.00 0.00 0.00 0.00 2004 UPL 15.45 0.00 0.00 0.00 15.45 0.00 0.00 0.00 1996 United Riceland 5.63 0.00 0.00 0.00 5.63 0.00 0.00 0.00 2005 United Riceland 8.50 0.00 0.00 0.00 5.00 0.00 0.00 0.00 2002 Usha Martin 0.00 0.72 0.00 0.00 0.00 0.72 0.00 0.00 2001 Vysya Bank 0.00 3.66 0.00 0.00 0.00 3.66 0.00 0.00 2005 Vysya Bank 0.00 3.51 0.00 0.00 0.00 3.51 0.00 0.00 1997 WN 0.00 0.37 0.00 0.00 0.00 0.37 0.00 0.00 1997 Walden-Mgt India 0.00 0.01 0.00 0.00 0.00 0.01 0.00 0.00 2006 iLabs Fund I1 0.00 Total portfolio: 956.52 20.00 0.00 0.00 0.00 0.00 0.00 0.00 249.41 42.30 536.35 604.74 175.91 38.60 236.35 Approvals Pending Commitment Quasi Partic. 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.01 0.00 0.00 Vysya Bank 0.00 0.00 0.00 0.00 2006 Federal Bank 0.01 0.00 0.00 0.00 200 1 G I Wind Farms 0.01 0.00 0.00 0.00 2004 Ocean Sparkle 0.00 0.00 0.00 0.00 2005 Allain Duhangan 0.00 0.00 0.00 0.00 0.01 0.00 0.00 FY Approval Company 2004 CGL 0.01 2000 AFJCL 0.01 2006 Atul Ltd 2001 Loan 0.04 Total pending commitment: 91 Equity Annex 14: Country at a Glance INDIA: Vocational Training Improvement Project POVERTY a n d SOCIAL South Asia LOWincome 1094.6 730 604.2 1470 684 1005 2,353 560 1364 15 19 17 2.1 19 2.3 29 29 63 62 47 86 61 YB PO 1P 29 63 66 45 a4 60 10 16 31 59 60 39 75 62 04 10 99 India 2005 Population. mid-year (millions) GNI per capita (A tlas method, US$) GNI (Atlas method, US$ billions) Development dlamond' Life expectancy T Average annual growth, 1999-05 Population (%I Laborforce(%) M o s t recent estimate (latest year available, 1999-05) Poverty (%of population belownationalpovertyline) Urban population (%of totalpopulation) Life expectancyat birth (pars) Infant mortality(perl0OOlive births) Child malnutrition (%ofchildren under5) Access 10 an impmvedwatersource (%ofpopulation) Literacy(%ofpopulation age 69 Gross primatyenroiiment (%of school-age population) Male Female 05 GNI per capita Gmss primary nroilment Access to impmvedwatersource -India -Lowincome group KEY ECONOMIC RATIOS a n d LONG-TERM TRENDS GOP (US$ billions) Gross capital formation/GDP Exports of goods andserviceslGOP Gross domestic savings/GDP Gross national savings/GDP Current account baiance/GDP Interest payments/GDP Total debt/GDP Total debt service/exports Present value of debt/GDP Present value of debtiexports (average annual growth) GDP GDP percapita Exports of goodsandservices 1985 1995 227.2 23.7 5.4 8.5 B.9 355.2 26.5 695.9 310 -2.3 0.9 8.0 23.0 1985-95 1995-05 5.5 3.4 0.9 6.0 4.3 D.5 2004 2005 25.1 26.4 82 311 33.3 805.7 33.4 20.3 32.4 34.7 -16 14 26.6 27.8 -0.7 0.5 17.9 P.7 15.8 72.7 -13 0.8 6.3 P.6 0.7 57.3 no 2004 8.3 6.8 26.1 (%of GDP) Aoricuiture Industry Manufacturing Services Household final consumption expenditure General gov't final consumption erpenditure Imports of goods andservices (average annualgmwth) Agriculture industry Manufacturing Services Household final consumption expenditure General gov't final consumption eqenditure Gross capital formation Imports ofgoods andservices 1985 1995 2004 201: 33.7 26.4 6.4 39.9 28.2 28.1 8.1 43.6 8.8 27.5 27.3 53.7 54.4 67.4 114 7.8 636 0.8 P.2 59.9 110 20.0 58.3 113 23.3 198545 Indebtedness 8.3 7.0 D6 STRUCTURE of the ECONOMY 1995-05 3.5 6.5 6.7 6.7 2.1 5.8 5.4 8.2 0.0 9.6 6.7 9.5 5.7 4.2 5.4 9.9 5.2 5.5 6.3 0.0 3.8 5.4 18.7 22.3 ii 5.7 9.6 8.8 27.1 I Trade 2005 2005-09 92 7.7 22.0 I E c o n o m l c ratios' -India Low-iicomegmup ~ 7 03 04 /w Y O -GCF ' 02 -GDP / G r o w t h o f exports and i m p o r t s (K) ---Exports -Inports Note:2005data arepreiimlnaryestimates. Groupdataare to 2004.2005 Indicates 2005-06(Apr 110 Mar31). +Thediamondsshowfourkeyindicatorr in thecountry(inboid)comparedwithits income-groupaverage. KdataaremIssing,thediamondwiIi be incomplete. 92 06 1 1 fPPS port and 32Jll 20 I1 2v5 2% oc3 29.737 43 6% @To 7 526 0 930 no a6 74 as $35 a2 BALANCE of PAYMENTS 93 US$
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