Executive Summary

IFAD has been actively engaged in India since 1979. Until 1987 its involvement was based mainly on co-financing five projects designed and supervised by other agencies. Since 1987, however, IFAD has emerged as a significant lender for programmes of rural poverty reduction in India. The 18 projects that IFAD has supported since that period ¹, as well as the associated strategy formulation and non-lending activities, are the subject of this first country programme evaluation (CPE) for India carried out by IFAD’s Office of Evaluation (IOE).

The evaluation found that during the period covered IFAD’s partnership with the Government of India made a satisfactory contribution to the objective of reducing rural poverty. Of the 18 projects evaluated, 16 were rated as moderately or fully satisfactory. In part, this success was achieved through a selective focus on two broad target groups among those living below the poverty line in India: women and tribal communities. In the case of women, in addition to their lower education and health status relative to men, there is evidence that programmes geared to them are more successful in building social capital for the community as a whole than those with membership open to both men and women. India’s tribal population constitutes more than 80 million people, about eight per cent of the total population, but about 16 per cent of the poor. IFAD is the only development agency that has a major focus on reducing poverty in tribal communities. 

Clarity of objective is a necessary condition for success, but it is not sufficient. What has driven the satisfactory ratings of the IFAD-supported programme in India is the evolution of a model of engagement that has demonstrated its effectiveness in the Indian rural context. The model uses a holistic approach to rural development, which entails the building of community groups, including women’s self-help groups and groups of both men and women for natural resources management in tribal areas. These groups usually comprise 10 to 20 members who meet at two weekly or monthly intervals, contribute savings, and lend those savings to individual members. After two or three cycles of lending and repayment, links are established between these groups and commercial banks which in many cases provide loans to the groups that can be used to generate improved livelihoods. The groups are facilitated by NGOs, which are in turn supported and managed through the project management structure that IFAD and the Government of India put in place. Through the NGOs, the project management unit provides the facilitation and training needed to promote social empowerment and enhance the livelihoods of group members. 

The relevance of the approach taken has been satisfactory. The evaluation looks at both the objectives of the IFAD-Government partnership and the design of the programmes in support of those objectives in assessing relevance. On objectives, the priority associated with targeting women and tribal communities is evident, but the evaluation raises the concern that this has meant that IFAD has not been able to specifically target other groups that are disproportionately represented among the rural poor, such as scheduled castes, the landless, and unemployed youth.  It recognizes, however, that these are difficult to be separated out within the village communities and are often members of self-help groups. On programme design, the evaluation recognizes the appropriateness of the basic model, but questions whether IFAD has been sufficiently strategic in choosing the location of programmes and whether it has paid sufficient attention to the linkages that need to be established between the self-help groups and project management on the one hand and the local representative and administrative governance structures on the other.

The effectiveness of the programme is also rated as satisfactory. There is now a considerable body of quantitative evidence demonstrating that the programme has contributed to social empowerment (e.g., more women representatives in local government institutions and greater role for women in decision making), higher levels of food security (particularly in the projects in tribal areas), increased incomes in villages supported by the project than those that are not part of the project, and so on. The evaluation notes, however, that in the area of livelihoods promotion the success of the programme has been mixed, and in particular that, in many projects, there was little support for increasing agricultural productivity of smallholders, a critical area for longer-term poverty reduction in rural India. Only a small share of the loans to group members went for on-farm activities in the area of crop production, as opposed to a much larger share for animal husbandry which tends to be undertaken by the women members of the groups. There was limited interaction with the national research and extension services to identify successful approaches to be shared with smallholders, particularly in rain-fed areas. The projects in tribal areas have focused to some extent on agriculture, given the limited alternative income sources available to tribal communities, but even there more systematic approaches to involvement of the relevant expertise could yield greater benefits.

The evaluation rated the efficiency as moderately satisfactory. The projects have succeeded in reaching a large number of beneficiaries at relatively low cost per beneficiary. There are also a number of good practice examples of constructing local roads, bridges and water structures at costs well below comparators. However, problems have emerged with the processing of projects that could be relatively easily resolved through decisive action on the part of IFAD and the Government of India. The India programme has much longer effectiveness delays than for other countries in the Asia and the Pacific region. There are a number of reasons for these delays: too many effectiveness conditions (a feature of earlier projects), slow processing of legal opinions in the central and state government, and delays in the appointment of project management.  Frequent changes in project directors have been another cause of problems (one project had nine directors in ten years). It is no accident that two of the projects with the highest ratings had project directors who remained in place for most of the life of the project at their own insistence. In the cases of the two projects in the portfolio with less than satisfactory ratings, the problem was a lack of a clear up-front understanding and acceptance of the relative roles of the state government and the leading NGO in the management of the project. The evaluation noted that many of these problems were related to the period before IFAD had a significant country presence in India. It is of the view that the expansion of IFAD’s Country Presence Office has contributed to greater efficiency of programme management in recent years.

Though the project management arrangements were by and large effective in implementation, it was found that the project monitoring and evaluation systems have mainly focused on input-output measurements, which reflects that the evaluation capacity, especially in the agriculture and rural sector, focusing on results and impact is generally insufficient. There are however some recent initiatives by the Government to establish an independent national body capable of undertaking rigorous and useful evaluations of development projects and programmes.

In most cases, the evaluations suggest that the programmes are likely to be sustained. The estimate is that 80 per cent of self-help groups are self-sustaining at the end of project completion, and in many cases (e.g., Andhra Pradesh, Tamil Nadu, and Maharashtra) IFAD projects have been mainstreamed by state governments. In some other cases, a World Bank project in the North East Region is replicating the model developed in the IFAD-funded project on a larger scale. In the area of innovation, the evaluation notes the innovative nature of the basic model that IFAD evolved, and some of the recent innovations in forging greater convergence with government programmes and in promoting linkages with the private sector. It raises the question, however, of whether IFAD could do more in promoting innovations such as the use of renewable energy and information technology in rural India.  

IFAD’s non-lending activities are rated moderately satisfactory. Obviously a small external agency such as IFAD does not expect to be a major player on the national policy stage in India, but the evaluation team was of the view that, given the role IFAD was playing in the specific area of rural poverty reduction and the experience it has gained in dealing with the constraints to improving the situation of the rural poor, it could and should take a more active role in bringing attention to this spectrum of issues at the national level. It noted that this may require some thought to providing a higher level of IFAD representation in India. This is also a factor in promoting more effective partnerships in India, the area in which the evaluation rated IFAD’s performance weakest overall. It was not evident that partnership building was viewed as a critical element of the effectiveness and particularly of the sustainability of IFAD interventions. Finally, knowledge management was another area where more could and should be done by IFAD to broker some of the good practices that are emerging at the project level, and also to promote the development of new knowledge in areas which it identifies as constraints to progress. It was noted, however, that there had been a quantum advance in this area with the expansion of the role of the Country Presence Office in India.

During the period under review, IFAD prepared two country strategic opportunities programmes (COSOPs), in 2001 and 2005. The first of these effectively captured the model that had evolved in the period since 1987. The second COSOP clearly delineated key new directions for IFAD such as promoting greater linkage with the private sector, but in practice these new directions were not delineated in the programme. There was a strategic gap in IFAD’s approach to India between 2002 and 2007 which meant that the strategy did not sufficiently reflect the very substantial evolution of the context that took place at the time. Since 2002 the Indian Government has moved rural poverty to a very high place on its policy agenda and added a large number of centrally supported schemes that earmark considerable funding for state governments to carry out programmes to reduce rural poverty. The effectiveness of these schemes is uneven, reflecting the relative capacities of state and local administrative officials. It has become increasingly clear that the challenge for IFAD is to leverage its effective programmes to help make more effective this substantial funding coming from the Government. Since 2007, IFAD has made a start in this direction through the convergence project in Maharashtra which aims at an integration of its approach into the state administration. Another important area in which the situation has evolved is the increasing role of India’s private sector and its interest in and capacity to serve the rural areas. The recent Rajasthan project is an attempt to forge a closer partnership with the private sector, though perhaps this is only an initial step on which IFAD will need to build further in the coming years.

Based on the ratings of portfolio performance, non-lending activities, and COSOP performance, the overall IFAD-Government partnership has been rated as satisfactory. In spite of non-lending activities being rated as moderately satisfactory, the approach to non-lending activities is slowly improving in recent years, with increased synergies between lending and non-lending activities that together contribute to furthering the objectives in the COSOP. The table below provides the overall assessment of the partnership.

Summary of the CPE Overall Assessment

 

Overall, the evaluation notes that IFAD has a strong comparative advantage in the model it has established to serve poor women and tribal communities. It urges IFAD to build on that comparative advantage to help the Government tackle some of the serious continuing problems of rural poverty. It commends IFAD’s experience in India as a good practice example of what a relatively small agency, through an effective partnership with the Government of India, a clear set of objectives, and a well-developed model of intervention, can help to achieve, even in a setting as large as India.

Recommendations

The CPE offers the below broad recommendations for IFAD and the Government to consider in the development of the new India COSOP and future projects and programmes. The recommendations are clustered in two broad categories: strategic and operational issues.   

Strategic Issues

Give more priority to smallholder agriculture. Sustainable smallholder agriculture should be included as a central strategic objective in the new COSOP, as an engine for promoting pro-poor growth and reducing hunger and rural poverty.

Targeting and reduced geographic coverage. IFAD should devote greater emphasis to smallholder farmers, but also continue to support rural women and tribals. The geographic focus should in principle be narrowed, and not expanded beyond the 11 states covered by ongoing operations.

Enhance private sector engagement in line with corporate social responsibility principles. Private sector enterprises should be mobilised to deliver rural finance and extension services, provide input supply and access to agro-processing infrastructure, facilitate transport of agricultural produce to market points, promote innovations and upscaling, make information and communication technology more widely available in rural areas, and so on.

Innovation with deeper attention to replication and upscaling. The main aim of IFAD-funded projects and programme in India in the future should be to promote pro-poor innovations that can be replicated and upscaled. It is therefore recommended that the new COSOP include a well-defined innovations agenda.

Launch a coherent knowledge programme. One of the key aims of the programme would be to fill any knowledge gaps on agriculture and rural development and more generally in rural poverty reduction in the country.     

Seek deeper convergence with Government. For better effectiveness and efficiency, there must be greater convergence within Government-funded programmes, and between operations and other donor-funded activities and Government-assisted programmes.

Widen partnership with Central Government. IFAD needs to engage more proactively with the central Ministry of Agriculture, other technical Ministries, and the Planning Commission to leverage their expertise and resources.

Ensure ownership and commitment with State Governments.  State governments need to be involved from the very beginning of project design to ensure that they take full responsibility of the activities and act on the issues that IFAD-supported operations are recurrently facing.

Increase loan size. This would contribute to lowering transaction and administrative costs for both Government and IFAD, while allowing greater attention to implementation support, learning, and impact achievement.

Operational Issues

Strengthen the India country office. A strengthened country office is required, inter-alia, to enhance project supervision and implementation support, improve policy dialogue, strengthen cooperation and harmonisation with other donors, and to build partnerships and improve knowledge management. Consideration should be given to establishing the India country office as a sub-regional office.

Ensure greater continuity in project directors. Rapid turn-over of some project directors is a systemic concern. Therefore, IFAD should reach a written agreement right at the beginning of project design with state governments that project directors will remain in their positions for at least three years and preferably longer.

The need to improve project efficiency. Some of the measures recommended above are expected to contribute to better efficiency, such as limiting the geographic coverage, and ensuring deeper convergence. There are other measures that should be deployed to improve efficiency, including streamlining the flow of funds to limit implementation delays, and strengthening the capacity in the project management units and state governments.

Resource issues. Greater attention in the future to non-lending activities, implementation support, mobilisation of expertise in conflict-resolution, upscaling of innovations, deeper engagement with government and private sector, and the strengthening of the country office and establishment of a sub-regional office are likely to have additional recurrent administrative resource implications. It is therefore recommended that the management conduct a detailed cost analysis during the formulation of the next COSOP and make the necessary allocations commensurate with the size, focus and coverage of IFAD-supported activities.

Evaluation capacity development. In close collaboration with the Asia and the Pacific Division, IOE will explore opportunities for supporting the Planning Commission’s efforts to establish an independent evaluation outfit in India.