Submitted to – Garima Baluja (Faculty In-charge)

Submitted by-


The project will improve water and sanitation services for 1.5 million people, specifically
targeting Kerala's poorer and disadvantaged communities in the Kozhikode, Malappuram,
Palakkad and Thrissur districts. The project will assist local and state public agencies in shifting
focus from direct service delivery to supporting community groups in planning, constructing and
operating piped water supply and environmental sanitation systems. It will also assist the
Government of Kerala and the Government of India in building their capacity to implement
India's sector reform policies.

Pre-requisites analysis

1. Government permission for the site work.
2. Understand the site of work.
3. Collect information regarding the site and its advantages and
disadvantages and its limitations.
4. Applying loan from the different banks.
5. Contact the contractors for the best tenders for the execution of project
6. Choose the best tender with fewer less prices.


Economic and Financial Analysis

1. Comparing Estimates and Assumptions. Making use of household data collected
for 23 water supply schemes, the economic appraisal estimated that (a) about 1.37 hours,
on average, are spent on water collection to meet household needs (this figure can be
further broken down by type of scheme and district); (b) the burden of water collection
falls disproportionately on women, i.e. about two-thirds of all cases; and (c) the average
daily consumption of water is 64 liter per capita at the start of the project.

2. The appraisal analysis assumed that (a) 70 percent of the households would opt
for private connection, while the remainder would choose a stand post; (b) 90 percent of
the time spent collecting water could be saved when choosing a private connection versus
75 percent of time to be saved when collecting water from a nearer stand post; (c) the
value of the opportunity cost for time saved from avoided water collection was 57 Rupees
daily or 7.13 Rupees per hour, derived from discounting the daily wage for unskilled
labor (Rs.122.5 for men and Rs.71.4 for women in 1999) by availability of work,
irrespective of whether increased time is converted to productive uses, leisure or other;
(d) consumption of water would be increased from 64 to 70 liter per capita, as per the
project’s design parameters; (e) cost for O&M would be, on average, 31 Rupees per
month (being, incidentally very close to the average observed O&M cost of 33 Rupees
per household per month, but lower than households actual contribution to O&M, which
is 46 Rupees per month); (f) average incremental water consumption is an average of
actual costs of supply (derived from the present values of time savings and incremental
consumption benefits per liter) and the future cost of supply (derived from the total cost
of provision, including O&M, per liter); and finally (g) the salvage value after 20 years of
operation of the systems amounts to 5 percent of the capital cost.
3. The ICR economic analysis followed closely this methodology, using the baseline
estimates on time savings and consumption as benchmark, replacing estimated or
assumed parameters with observed ones, and deviating slightly from some of the
assumptions, where there was either a potential for improvement or where data
limitations did not allow for another approach. The respective indicators for both
appraisal and completion analysis are outline in the table 3.1 below, followed by a brief
explanation when different parameters were computed.

Assumptions and Estimates underlying the Appraisal and
Implementation Completion Analyses

Appraisal Completion

Water Consumption at
Water Consumption
after the Project

Time Spent at
Time Savings after the
Opportunity Cost of
Consumption Benefits
O&M cost
Salvage Value of
Time Horizon

64.2 lpcd

70 lpcd

1.37 hours

1.17 hours

Rp.57 per day

Rp 0.013/liter

Rp. 31/hh/month

5percent of capital cost

20 years after project

64.2 lpcd

70 lpcd

1.37 hours

1.0 hour

Rp. 44.48 per day

Rp 0.004/liter

Rp. 46/hh/month

5percent of capital cost

20 years after project

Population Growth

Standard Conversion Factor
Included Cost

Included Benefits

1.5 percent up to design
Capital Cost of WS
Watershed Protection
Institution Building
Software Component
Time Savings
Incremental Consumption
Avoided O&M Cost of
Existing Systems

1.5 percent up to design
Capital Cost of WS
Watershed Protection +
Environmental Management
Institution Building
Training + Social
Time Savings
Incremental Consumption

5. Two key constraints of the ICR analysis were that the monitoring system of the
Project does not deliver actual water consumption or the time avoided for collecting
Water. In fairness, integrating such monitoring indicators into any M&E system requires a
complex and costly household survey to be repeated at completion, in which neither
indicator is easily observable, especially in the absence of metering in the case of the
consumption parameter. However, implementation results of the project indicate that
almost all households chose a private connection suggesting an elimination of the time
spent collecting water from a distanced source. Although one may argue that this could
mean all time spent for water collection is now eliminated, the ICR analysis remains on
the conservative side, assuming that householders will still need to spend some time for
water handling, if only for storing water due to intermittent supply. While there is no
systematic data collection on the hours of water supply available to households, anecdotal
evidence suggest it may be as low as only 4 hours in some communities.


6. Two minor constraints in the analysis were how to treat existing systems that have
been rehabilitated and how to differentiate the benefits between different water supply
system options, i.e. piped, well or other. In order to reduce the complexity of the analysis
and for lack of detail on the latter (and, at times, no information on either), systems were
treated the same with simple average computations.

7. In addition, the reason why incremental water consumption is computed
differently to the appraisal analysis is that, even if erring on the conservative side,
households are currently paying approximately 0.004 Rupees per liter, based on the
average tariff of 46 Rupees per household per month and the average household size of
5.5 people. Since this ICRR analysis assumes households to fully reap the benefits of the
now 70 liters per capita per day of water available to them as per the project’s design, it is
only consistent to assume the incremental value to be equal to what households pay for
that consumption (though the welfare benefits may be significantly higher,
notwithstanding the decreasing returns from the incremental consumption of an
additional liter of water).

8. Lastly, it required some finesse to model population growth increase while not
overstating the benefits, when systems are assumed to become non-operational after 20
years. Other than in the computations at appraisal that assumed a 1.5 percent growth rate
until 20 years after the first system has become operational and then assumed zero growth,
the ICRR analysis deducted the number of beneficiary households from the total
(included their assumed growth in number over the years) 20 years after water systems
have become operational, leaving only the salvage value of 5 percent. One may also
argue that including population growth, in the first place, in such analysis may overstate
the benefits since connecting additional households, even if there is sufficient capacity in
the water production system, will come at additional connection cost not assessed here.
Among other parameters, the sensitivity analysis estimates a scenario of zero population
growth to verify the robustness of this and other assumptions.

9. All cost and benefit streams were converted in 2000 Indian Rupees, to replicate
the perspective at the start of the economic appraisal of the project.

10. Findings. Before assessing the robustness of the results mentioned above, it is
worthwhile investigating whether the project did observe significant deviations per water
scheme with respect to investments spent per household. This is generally a useful
monitoring tool to identify excess expenditure or economies of scale, both may be
explicable after further investigation. As one can see from graph 3.1 only very few
outliers, in terms of the total cost spent on a village scheme per household, can be
observed from the existing data. There are some economies of scale that suggest that
about 5 Rupees per household can be saved if adding an additional household in the
water scheme, but these are small compared to the average, more than 4 thousand Rupees
Of cost per each household for providing this level of service.

11. Though limited data is available on time saved and time spent, a sample

household survey that was not used for the computation of the ERR because of its small

sample size of only 27 households, yields that the time saved per household was
approximately 1.65 hours per day (thus exceeding the appraisal estimate of time spent)
and it suggests that almost 80 percent of poorer households (poverty status judged by
appearance) have benefited from reduced time spent on collecting water. The same
survey also reveals that about 26 percent of poorer households spent part of their saved
time for work, compared to only 5 percent of better-of households. Because of only 20
percent of the observed households taking on work after saving time collecting water, the
opportunity cost of time savings were revisited adopting the lowest unskilled women
labor wage applicable to Kerala (as shown in the table above). However, the value of
activities women increase their time on in lieu of water collection should not be
discounted, and it is difficult to assume a value any lesser than the lowest unskilled labor
cost for activities that may result in better health, feeding, improved schooling or overly
improved well-being. The distribution of spent time is displayed in graph 3.2 below,
distinguishing perceived poor and non-poor households.

12. Sensitivity Analysis. A robustness check on the estimates of key parameters was
carried out, suggesting that the economic rate of return changes mostly, and significantly,
with changes in the projected benefits from saved time for water collection. This is not
surprising since this indicator is the major benefit assessed for the implementation of the
project. All things equal, only if saved time is assessed at half of the value projected now
– i.e. even below the baseline estimate – the ERR would equal the assumed discount rate
of 12 percent and the net present value of the investment would become zero.
13. If one iterates time savings estimates with other parameters, like consumption, the
value of incremental consumption, population growth assumptions or opportunity cost,
the following values for the ERR emerge, as displayed in table 3.2 below.

Baseline ERR Estimate

Consumption at
70.0 lpcd
64.2 lpcd
60.0 lpcd
Value of Incremental
0.004 Rupees/liter
0.002 Rupees/liter
0 Rupees/liter
Population Growth
1.2 percent
0.5 percent
0 percent
Opportunity Cost of Time
5 Rupees per hour
4 Rupees per hour
3 Rupees per hour
2 Rupees per hour
Time Savings
1.0 hours/hh/day




0.8 hours/hh/day









14. The shaded areas outline the benchmark estimate of the ERR of this ICR analysis
against variations of different assumptions. As one can see from the table above, there is
only little sensitivity to changes in parameters other than time saved for water collection
and the opportunity cost of time. If both time savings and opportunity cost of time are
lowered significantly, the ERR would become lower than 12 percent and the net present
value of the project would become negative. However, the question is whether these
decreases in values are likely, given the already conservative assumptions adopted for the
15. As with all economic analyses, the benefits assessed always remain incomplete.
Benefits from water investments are at times difficult to quantify as they do require solid
household data for understanding the time savings, consumption and household storage
patterns in the presence of intermittent supply, or they require epidemiological data to
trace health improvements back to project investments. The case of the water investments
reviewed above is no different. While further increases in assessed benefits on time
savings may be feasible by reducing intermittency in supply, this would come at a higher
maintenance cost, thus reducing other consumption by households. Reducing
intermittency of supply may also increase health benefits, as additional handling of water
for storage may increase contamination, but again at the trade-off of higher maintenance
cost. Whether these benefits outweigh the cost and whether households are willing to pay
for better service is ultimately an empirical question that is not being examined further in
this ICRR.

(b) Staff Time and Cost
Stage of Project Cycle
No. of staff weeks

US$ Thousands (including
travel and consultant costs)

FY 1

Total :- 606.43





Project Evaluation Report
Kerala Rural Water Supply & Sanitation Agency

Name of the Project : Kerala Rural Water Supply & Sanitation Project (Jalanidhi)
Area of Operation : State wide
Project Implementation Period: 2000 – 2006, extended to September 2008

Project Finance Data
Project Outlay: US$ 65.5 Million Rs.451 Cr. revised at MTR to Rs. 381.5 Cr.
Terms: Standard Credit, Grace Period: 10 Years, Years to Maturity: 35 years

Fund Flow Details (Rs. in Cr) Actual Received up to Sept’08 (Rs. Crores
GOK Pre- Finance Sanctioned 310.00
GP 27.12
Communities 53.20
Total Amount expended in the Project till the end of
Rs. 368.62 Cr.
Reimbursement claimed from World Bank Rs. 267.82 Cr.
Reimbursement received from GOI as ACA Rs. 240.92 Cr
Outstanding Claims pending reimbursement Rs. 26.90 Cr
Gram Panchayats (GPs) targeted
GPs covered
Tribal GPs covered
Households participating for water supply schemes
Benefitting population (water supply schemes)
11.28 lakh
Percentage of participating BPL Households
52 percent
Percentage of participating SC/ST households 16percent
Total number of households covered by the completed
1.67 lakhs
Total Beneficiaries covered (Completed schemes) 9.95 lakhs
Participating NGOs

Water Supply
No of Beneficiary Groups (BGs) implementing Water
Supply Schemes
Total Water Supply Schemes started
Total Water Supply Schemes commissioned
KWA schemes handed over for rehabilitation
KWA schemes rehabilitated
Tsunami rehabilitation Water Supply scheme
GP schemes rehabilitated
Schemes provided to Schools/Anganwadies

Cost Analysis
Annual O&M collection by BGs at the end of project
Rs.7 crores
Cost per KL (operating cost) Rs. 3/-
Average O&M cost per month/HHs Rs. 31.45/-
Average scheme cost Rs.5.75 lakhs
Average household cost per water supply scheme Rs.13783
Average household contribution per water supply
5. Assessment of Bank and Borrower Performance
5.1 Bank Performance
(a) Bank Performance in Ensuring Quality at Entry

The Bank’s performance during preparation is rated satisfactory. The process of
selection of Kerala state for Bank support itself was innovative. The Bank prepared a
Generic Project Concept Note which was disseminated by GOI amongst all states for
assessing interest and reform-readiness of the States and then recommended Kerala as the
first State for Bank support. Though the Bank generally adopted focus-state approach at
that time the Bank agreed to support Kerala because of its unusual sector merit. In view
of the willing partner and enabling socio-political environment the Bank pursued
implementation of major sector reforms under the project.
The project was speedily prepared within 11 months. By appraisal, significant progress
was achieved in launching the first batch of RWSS schemes and first lessons learned
were included into the project design. The Team made conscious efforts to rope in the
PRI department in designing the project along with the nodal water resources department
which was exemplary and beneficial to the project.
The project design ensured consistency with the Bank’s fiduciary and safeguard policies.
The national and international experiences and lessons learned (refer Section 2.1) were
well integrated into the project design. The institutional design and implementation
arrangements were well thought through. The project risks were well identified and
measures to address them were built in. As subsequent experience proved, the project
design did not require any major modifications during implementation.
(b) Quality of Supervision
The Bank’s performance during supervision is rated satisfactory. Project implementation
benefited from the smooth preparation phase. The Bank attained team continuity, with the
same team leader and social expert in charge throughout the entire supervision period.
Supervision teams were consistently substantial, covering all project aspects. Seventeen
supervision missions were carried out, two every year, all of them well documented. In
addition to the interaction with GOK’s high level relevant officials and the Project
Management Unit and desk reviews of reports, continuous efforts were made to carryout

field visits to participating GPs and beneficiary communities, to gain feedback and onsite
direct understanding of project effectiveness and impact. Splitting the Bank
supervision teams into several groups enabled reaching significant visit coverage (each
GP visited at least twice and about 500 schemes visited during project life). The Bank
particularly made substantial efforts to monitor and support measures towards enhancing
project sustainability.
The Bank team worked hard to respond to the emergency situation that arose after the
Tsunami in December 2004 by allocating project funds and quickly designing the new
component with related changes in the legal documents.
Supervision aide memoirs and Implementation Status Reports (ISR) indicate that due
attention was consistently provided to PDOs, project implementation progress and
monitoring of legal covenants and agreed actions and issues, particularly including
fiduciary and safeguards issues. Ratings provided at ISR, consistently satisfactory
throughout the implementation period, are considered realistic.

(c) Justification of Rating for Overall Bank Performance
Because of the above mentioned factors, the overall rating for Bank’s performance has
been rated Satisfactory.

5.2 Borrower Performance
(a) Government Performance

Borrower performance is rated as satisfactory. GOK promptly set up the new KRWSA
and fully staffed and equipped it within the first four months of identification mission.
GOK largely maintained autonomy of KRWSA and most decisions of scheme and
procurement approvals were taken by KRWSA. As and when required, GOK issued
guidelines to reiterate the necessary policy support and environment. Advance project
funds were provided consistently and the key project covenants were always in

Borrower performance, however, slipped from highly satisfactory to satisfactory during
the last 3 years (of which 20 months were in the project extension period) due to failure
in maintaining KRWSA directors and some of the other key staff for a reasonable period.
Though these failures resulted in some implementation delays, GOK still ensured that the
basic project principles were never compromised. Equally important for the future of the
sector reform, GOK has committed itself to maintaining project staff and in providing
adequate budget for KRWSA to implement any further rural water supply program.
(b) Implementing Agency or Agencies Performance
Implementing Agencies performance is rated as Satisfactory. The performance of
KRWSA was highly satisfactory in preparation and during the first three years of
implementation and then declined to satisfactory. The main factors contributing to this
performance were: strong ownership of the project principles, commitment of its diverse
and multi disciplinary staff, emphasis on forging collaboration with the GPs, SOs and
User groups, developing and signing MoUs between them, adopting scheme cycle
approach for activity sequencing, developing and managing an excellent M& E system,
computerized financial management system, field based capacity building programs,
constant endeavor to stakeholder consultations and regular learning and correcting
implementation strategies where needed. The leadership especially by the first two
Project directors was inspiring and supportive of its staff and the project approach. The
KWA who was in charge of implementing the Tsunami scheme also had a satisfactory
The performance of GPs in partnership with the BGs was satisfactory all along project
life. GPs provided strong leadership and support to BGs while still allowing them to
independently handle implementation and procurement responsibilities. Beneficiary
Groups too demonstrated high level of interest, ownership and capacity in planning,
implementing and managing WSS services –Extensive capacity support provided by the
project – mainly through SOs- was extremely useful to GPs and BGs in managing this

(c) Justification of Rating for Overall Borrower Performance
Therefore, overall borrower performance is rated as satisfactory.Decentralized service delivery
approach for RWSS has the potential for scaling-up
access. The project's ability to exceed most of the targets in the Development Objective
coupled with the strengthening of the sector institutions and local governments to ensure
sustained delivery capacity demonstrates the potential of this approach to go statewide.
However, as demonstrated with this project, the step by step approach taken to scaling up
is a sound way to build capacity and prepares the ground for moving toward a sector wide
approach and scaling up. Capacity building for implementation at local level and the
existence of clear and enforceable "rules-of-the-game" contributes greatly to the success
of decentralized implementation. "Learning-by-doing" approach to capacity-building is
time-consuming but has proven to be effective. Developing implementation capacity is
initially slow but when fully achieved results in accelerated delivery of services.
Need for Enabling Environment: Ownership of the project design and continuous
support during its implementation at the political, bureaucratic and operational levels is a

prerequisite for project success. Conducive policy environment and willingness to learn
by doing are equally vital for success.
Community Demand Driven is certainly the most appropriate approach for
providing sustainable and high quality WSS services in rural areas, specially in the
context of India. Responsibility drives capacity. Informed choice by the communities
leads to innovative, appropriate, cost-efficient and sustainable solutions, as shown in the
project through the various technology options implemented, the spontaneous
implementation of meters and the unexpected and impressive number of latrines
conversion, ground water point recharges, environmental management facilities and rain
water harvesting structures constructed. All these communities participated in the
planning, design, procurement, implementation and management of their facilities,
including the most vulnerable groups, therefore ownership is strong. If demand for
reliable, equitable and sustainable water service remains high, experience and freedom to
act as autonomous body would definitely help the communities to address the next
challenges, including expansion of the schemes, major breakdowns or sources
sustainability issues. Nowhere in India, has such achievement been reached using a
different approach.
Active participation of local governments is also critical to ensure greater
accountability and long term sustainability. If most of the responsibility would be in
the hands of the BGs, the Panchayat Raj Institutions should be well integrated into the
project’s institutional design. In addition, organic and sustained links between state,
districts, GPs and BGs are essential to guarantee the institutional sustainability and to
ensure the appropriate operation and maintenance and long term management of the
facilities. It is quite unrealistic to assume that the water and sanitation committees would
become sustainable at the end of the project. Continued support and regular monitoring
will be immensely useful in consolidating the institutions. This is particularly relevant in
the case of the larger water supply schemes, for which sustainability challenges are
obviously bigger.
Bank needs to have effective remedies during supervision: While piloting new
approaches and implementing paradigm shifts – the borrowers must consistently provide
sound and continuous leadership and staff in the project management units - throughout
the project period. The Bank too should have adequate remedies (such as suspension of
disbursements) to address the issue of frequent and arbitrary turnover of key project staff which
can affect pace and quality of implementation.

Improved assessment of cost estimates. Projects implemented directly by communities
can earn cost savings than when done through contractors. In this project, for example,
actual costs were approximately 15% less than those estimated at appraisal. Greater
accuracy can be introduced in cost estimation at appraisal by factoring-in the
procurement selection method and implementation procedures.

Avoid inclusion of a national component in State projects: The small national TA
component of the project which aimed at supporting nationwide advocacy of the sector
reform policy did not take off due mainly to diminishing of GOI's interest during

implementation. It may be best for the Bank to continue concentrating its support on
state- level projects only.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
(a) Borrower/implementing agencies
The Borrower’s own evaluation report is comprehensive (attached unedited in Annex 7).
GOK has in a separate letter of February 13, 2009, endorsed Bank assessments and
ratings contained in the Draft ICR that was sent to it by the Bank for review and
(b) Co financiers
(c) Other partners and stakeholders

Project Costs and Financing
Components Appraisal Estimate
(US$ millions)
(US$ millions) *
Percentage of
10.10 10.23 101%
62.70 62.70 116.4%
2.00 0.04
Total Baseline Cost 76.00 83.32
Physical Contingencies 5.40
0.00 0.00
Price Contingencies 8.40 0.00
Total Project Costs 89.90 83.32
Project Preparation
0.29 0.29
Front-end fee IBRD 0.00 0.00
Total Financing
0.00 0.00


Source of
Type of Co
(US$ millions)
(US$ millions)
Percentage of
6.80 3.52 51.7%
Borrower 0.00 0.00 0.00%
10.70 11.80 110%
Association (IDA)
6.50 62.00 94.6%
Local Govts.
(Prov., District,
City) of
6.80 6.00 88 %


Technical analysis
There are no major technical issues to be addressed during preparation of schemes or
implementation since India and Kerala have rich experience in both simple and complex
technologies used in RWSS. The project will mainly involve construction of small-scale piped
water systems, household latrines, a few simple road side surface drains, and GWR schemes
around open wells. Most water supply schemes will be designed bythe SO engineers with
capacity building support and monitoring by KRWSA. KRWSA has developed a
detailed technical manual covering design criteria, guidelines on sound engineering practices,
standard drawings and cost estimates, specifications for construction materials, goods,
equipment, and civil works. A rate list for items to be procured has been developed for
eachproject district based on market prices. These together withguidelines on community
contracting will ensure cost effectiveness, quality of materials procured and theiraccounting, and
internal checks and balances. Use of scientific methods such as geophysical surveys,
remotesensing data, resource mapping and test wells, coupled with local knowledge, are
expected to ensure appropriateselection of sites for proposed drinking water sources. A large
number of experienced engineers are available inKerala including those retired from KWA
(earlyretirement is at 55-years of age). GPs and BGs commonly usethese engineers on payment
of consultancy fees to prepare and approve their plans prepared under decentralizedplanning.
Transfer of existing KWA schemes to GPs: The project involves the transfer of existing single
panchayat piped water schemes (currently owned and managed by KWA) to GPs and BGs, per
the new GOK policy, as well as the project requirement. This will be a challenge because of
KWA's possible lack of cooperation, and the degree of complexity involved in developing sound
engineering proposals for their rehabilitation, reorganization, and integration with other water

supply schemes being formed within a GP. To implement this process, GOK has finalized a
comprehensive strategy for phased transfer of such schemes (GOK )order dated May 29, 2000).
KRWSA will ensure that SOs recruit experienced rural water supply engineers for
short periods (as needed) specifically to develop sound rehabilitation proposals. GOK, with
assistance from the Governmnent of The Netherlands, has developed a few models, from which
the project will learn. In addition, lessonslearned from the earlier models (developed by GOK
with assistance of the govenunent of The
Netherlands) will be applied.

Multipanchavat piped water schemes: KRWSA will recruit qualified consulting and construction
firms from the private sector (with support from KWA) to construct about six multipanchayat
water supply schemes. The work will involve the design and construction of technically complex
schemes. However, for O&M of these schemes, the project will support the set up of
multipanchayat user associations that will manage the scheme
operations themselves, or through private sector service management contracts. Detailed
guidelines for planning construction and management of scheme operations will be developed
during the first two years of the project, initially through learning by doing for one such scheme.
Quality control of design and construction: KRWSA will recruit an independent agency to assist
it in ensuring quality control in design and construction of water supply, GWR, drainage, and
latrine schemes. The consultant agency will have two main responsibilities: (a) to monitor the
quality of supervision by the SO engineers and the construction quality in the ongoing schemes;
and (b) to simultaneously check the quality of engineering designs for the next batch of schemes.
The SO engineers are responsible for preparing the detailedscheme reports and day-to-day
supervision of all procurement and construction activities while the qualitycontrol agency will be
responsible for concurrent monitoring of these activities through periodic reviews and
inspections. KRWSA will recruit such an agency for Batch 1 prior to commencing the
implementation phase.

Social Cost Benefit Analysis

The project is directly benefitting 1.8 million people in the rural areas of the
thirteen districts of Kerala. Communities in project villages, especially women
particularly the poor and the vulnerable, has been benefitted from an improved and
sustainable water supply and environmental sanitation services through time savings in
collecting water, better health benefits from more and cleaner water and improved
sanitation and hygiene practices etc.

2. Development Objectives
The overall project development objective was to assist Government of Kerala in
improving the quality of rural water supply and environmental sanitation (RWSS) service
delivery to achieve sustainability of investments. Specific project development objectives
where: (a) demonstrate the viability of cost recovery and institutional reforms by

developing, testing and implementing the new decentralized service delivery model on a
pilot basis; and (b) build the state’s capacity in improved sector management in order to
scale up the new model state wide.

2.1 Achievements on Development Objectives
2.1.1. Jalanidhi project was able to achieve its development objectives by successfully
testing and implementing (a) the cost recovery reforms and new decentralized service
delivery model in the 112 GPs; (b) 348 existing single panchayat water supply schemes
in the project GPs owned by Kerala Water Authority (KWA) and/or GPs were taken
over, rehabilitated and managed by beneficiary groups (BGs); (c) operation and
maintenance (O&M) of 3712 water supply schemes are fully managed by BGs with their
own funds in the project GPs; and (d) sanitation and hygiene behavior of the 112 project
GPs have significantly improved. (85 Jalanidhi GPs have received Nirmal Gram Puraskar
for achieving 100percent household latrine coverage). All the 5 rounds of sustainability
evaluation studies conducted so far indicated the fact that more than 90percent of the
commissioned Jalanidhi schemes were technically, financially and institutionally
sustainable and the people of rural Kerala were capable of successfully operating and
maintaining the schemes owned by them.
2.1.2. Jalanidhi project was first experimented in 5 GPs of Malappuram, Palakkad,
Thrissur and Calicut districts. After the successful implementation of 135 schemes in
those panchayats, the project was scaled up to another 87 GPs (2785 schemes) of the
same districts against the PAD target of 80 GPs (2500 schemes). During the Mid Term
Review of the project, it was found that the project was achieving its targets, with no
compromise on quality, at a lower cost than estimated earlier. Based on the reworked
budget, it was decided to scale- up this approach in other districts of Kerala on
experimental basis. Accordingly 2 GPs each were selected in all the 9 districts of Kerala
and successfully implemented 926 schemes, thus enhanced the project coverage to 110
3. Project achievements
3.1. Coverage: Experimenting in 4 districts initially was scaled up to all districts of
Kerala except one to achieve a coverage of 110 GPs through 3712 schemes in different
batches .Besides 2 GPs of Kollam districts were also included to implement Tsunami
rehabilitation water supply project under a joint venture program of KWA and KRWSA
on community based participatory model. Thus Jalanidhi Project has covered 112 GPs
through 122 projects of which 10 were tribal projects.
3.2. Decentralization: Kerala has been one of the most successful states in
implementing the 73rd and 74th amendment and devolving responsibilities to the lowest
tier of the Local Self Government Institutions- the gram panchayats. This project has
successfully carried out decentralization a step further by forming cluster groups of
communities needing water and willing to be a part of the project through legally
registered bodies called the Beneficiary Groups (BGs) in partnership with GPs. There
were 4099 active registered BGs in Jalanidhi with an average membership of 42 families
per group.
3.3. Community Ownership: Proof of willingness to participate, accept and own the

scheme was validated by the willingness of the community to share the financial costs.
Out of the total project funding of Rs.390.32 crores mobilized as on end of Sept’08,
Rs.53.2 crores (14 percent) have come as Community Contribution and Rs. 27.12 crores
(7 percent) from the GPs. Even the tribal, who hitherto have only received free service,
have accepted the change in thinking and contributed Rs.83.6 lakhs in cash and labor
towards capital cost contribution. This has been considered as an effective means of
“ownership” and a commitment for the maintenance of the assets created under the
project for the Beneficiaries.

3.4. O&M Management: 100 percent of the O & M expenses are being met by the
community with no subsidies either from the local self govt. institutions or the state Govt.
At an average of Rs.31.45 per family per month, the total O M expenses to be met by the
community annually would be approximately Rs.7 crores. BGs bearing full O&M cost
means revenue gain for the State Govt. & GP thus, enabling GPs to venture new
developmental activities with the savings so achieved to the exchequer and has been
going on for years now. Thus Jalanidhi schemes unlike other water supply schemes are
no more a burden on the Public Exchequer.
3.5. Equity: The myth that “the poor will be marginalized from such a project” was
proved wrong by extending the project benefit to about 52percent of BPL families against
the state BPL population of 36percent. Besides 16percent of the Jalanidhi beneficiaries
were from SC / ST families which are another good indication of the inclusion of poor in
the project. Apart from this, there are 10 tribal panchayats in Jalanidhi project. This is
probably the only project where tribes had paid their beneficiary contribution well in time
for the implementation of the scheme. There are 162 functional schemes in the tribal
areas covering a population of about 35,000.
3.6. Community Contracting: The community contracting and transparency in the
project execution had resulted in 10- 15 percent cost savings. It has also been proved
wrong that the involvement of neither educated nor technically qualified local people
have affected the quality of scheme, but, on the contrary, majority of the schemes have
been completed well in time with superior quality standards.
3.7 Strengthening of GPs: The Jalanidhi Project has also earmarked an amount of
Rs.10 lakhs per panchayats for the overall strengthening of the Local self Government
through capacity building, Provision of computers, Exposure visits to GP members,
modernizing the panchayat building and overall development of their resource centre etc.
GPs representatives (President/Secretary) have appreciated the inclusion of these
components in the project during a State wide workshop attended by GP representatives.
3.8 Pre & Post Coverage: Pre & Post project water supply and sanitation coverage
in Jalanidhi Gram Panchayats are shown below
• Time saved per day due to availability of water at door step through Jalanidhi
schemes has been arrived at 48190 man days (average time saved per
household per day has been 2 hours) which is as good as generating 178 Cr
yearly by considering Rs.100/- as man-day cost.
• Jalanidhi water supply schemes produce potable quality of water approximately
at Rs.3/kilo liter, which is one third of the rate at which other supply driven

programs produce water in the state.
• Capacity Building was the corner stone of Jalanidhi Project. KRWSA has
followed the “cascade effect”- found to create local knowledge centers,
economic viability and maximum reach.

4. Project Benefits
4.1. The project is directly benefitting 1.8 million people in the rural areas of the
thirteen districts of Kerala. Communities in project villages, especially women
particularly the poor and the vulnerable, has been benefitted from an improved and
sustainable water supply and environmental sanitation services through time savings in
collecting water, better health benefits from more and cleaner water and improved
sanitation and hygiene practices etc.
4.2. GPs participating in the project benefitted from the GP strengthening component,
increased generation of internal resources from the beneficiaries and full O & M burden
shouldering by the beneficiaries. The GPs were also benefitted from the local social asset
creation made possible through the strong capacity building component of the project.
The increased demand /opportunities to provide efficient support services and setting up
supply chains to the local communities; demands for materials for the scheme etc. have
benefitted NGOs and private sector business group.
4.3. 12 lakhs people who were trained at the community level, in various aspects,
apart from the 6 Community Facilitators engaged per GP who were all from the local
community. The social assets created by this project will be the intangible benefits which
will act as catalysts and tools for community and social development in the coming years.
All the pump operators were members of the BGs thus with 2 operators trained per BG,
jobs for at least 3700 operators at one per BG have been created. Apart from this there
were women trained as masons, plumbers etc. who become income generators of the
Panchayat population.
4.4. The most valuable benefit for the elected representatives of the Panchayat was
the good will created and the improvement in their individual credibility. All the elected
representatives of BG groups who were in the initial batch had been reelected with clear
majority in the next election.
6. Bank’s performance
6.1. Lending: The reasonable terms of lending by the bank helped the GOK to
improve the quality of rural water supply and sanitation delivery system in selected
panchayats of Kerala through the Jalanidhi project. The preparation team from the Bank
with experts from various related sectors having vast experience could successfully blend
that with the decentralized planning program in Kerala for the formation of a balanced
project. The sustainability of investments which was aimed from the beginning of the
project was also materialized. This experiment in WATSAN sector with partial capital
cost sharing and hundred percentage O&M cost met by the community was found
successful. Project identification process initially brought out crucial sector issues as well
as protests from various stake holders but, could contain all such issues and made the

project principles to be accepted by the community and others. The project which started
on a pilot basis in 5 panchayats of 4 districts initially was scaled up to the whole of state
on experimental basis at the behest of Bank on the request of GOK by extending to 110
panchayats for utilizing the balance funds estimated at the time of Mid term review.
Further during the lending period, Bank agreed to take up Tsunami rehabilitation water
supply projects in 2 coastal panchayats of Kollam district with the joint participation of
KWA and Jalanidhi, a unique venture in Kerala, thus throwing opportunity to develop a
new model in the sector. The World Bank mission team also was agreeable to extend the
project period from December `06 to September `08 for implementing the Tsunami
rehabilitation project along with other progressing schemes.

6.3 In each mission the bank team closely monitored the progress by conducting field
visits and interacting with all stake holders. The resultant aide memoires, detailing the
agreed actions with GOK helped the agency to complete the project on a time bound
basis. Thus the team was very much committed to see that the time bound project
achieved its targets and goals as set out in the project appraisal document. On all vital
issues, concurrence of the bank on solutions received expeditiously. Further the
continuity of the core bank team through out the span of project implementation actually
helped the project a lot in its stability and smooth Going. The enthusiasm shown by the
team to discuss any and all matters in detail with the BGs and other stake holders were
6.4 The deliberations, discussions, seminars and workshops conducted during the
supervision mission with different stake holders were really productive. Bank had
stipulated clean guidelines through their project appraisal document for the selection of
Jalanidhi GPs as well as NGOs. Further they had given clear targets for all other
components to be achieved and thus helped the agency.
6.5 Throughout the planning and implementation phase, Bank helped to sort out
execution problems, in a bilateral basis after discussing the issues with senior officials of
KRWSA as well as at Government level so that there were mutual trust and coordination.
6.6 Bank has taken keen interest in the independent sustainability evaluation exercise
of the project and helped the agency to frame the terms of references. The proactive role
played by the team leader and each member of the team in supervising the various
activities can be described as excellent. For example large number of Government Orders
and circulars were issued by GOK based on their comments and discussions with other
stake holders for the effective implementation of the project. The bank’s timely
reimbursement of claims helped GOK for the smooth fund flow of the project.
6.7 The courtesy and co-operation extended by the Bank to the GOK was really worth
7. Overall performance of Bank
The overall performance of the bank is rated as excellent.

8. Borrower Performance

a. During Preparation

Jalanidhi project was a unique project in Kerala since it aimed at a bold and courageous
turn from the conventional approaches. Though challenges and difficulties were
envisaged in acceptance and implementation of the project philosophy by social/political
sections the borrower had managed the situations with its long term vision of the
sector .The project was prepared with active cooperation and participation of key stake
holders including LSG department along with the bank team. Again the confidence on
project acceptance by the community in terms of partial capital cost sharing and full
O&M was another bold decision that was conceived in the project. The ownership by the
community was a remarkable shift in the WATSAN history of Kerala for making the
project a sustainable one. During strategy preparation care was taken to integrate water
supply activities along with other related components like GWR, Sanitation, Capacity
building, WDI etc, indeed a welcome attempt!
At the preparation stage itself, provisions were made to include the economically weaker
section in the project by lowering the beneficiary contribution rate and also by cross
subsidization. The project clearly developed agreements that has to be signed between the
different stake holders and clear guidelines were issued on the roles and responsibilities
of each stake holder, scheme cycle, funding pattern for the project, procurement rules,
purchase of land, estimate preparation and registration of BGs etc
b. During Implementation
(i) Performance of Government of Kerala
The Government of Kerala has initiated reforms as part of a well designed and coherent
development strategy much before the advent of the Jalanidhi project. In line with the
development objectives of the World Bank funded Rural Water Supply project and the
reform process at the national level, the Govt. of Kerala was also initiating policies and
programs to improve service level, ensure sustainability of investment and effective
management of water resource as an economic good. The much acclaimed “Olavanna
model” which was a trendsetter in community based, participatory service delivery model
started in one of the project districts of Kozhikode in the mid eighties.
GOK has largely followed the Govt. of India’s policies and priorities for its RWS
schemes. Until recently in Kerala the, drinking water services have been the sole
responsibility of the KWA, a statutory agency set up in 1986. Since 1997,
decentralization received a major boost in Kerala through devolution of over a third of
the state plan funds to local authorities as "untied Grams". The main features of
decentralization comprise transfer of functions and staff to local authorities, financial
allocation through statutory and formula based transfers a participatory and rational local
level planning process to ensure appropriate and equitable utilization of funds. It aims to
be flexible while ensuring accountability and transparency in the process.
The Water and Sanitation sector in the state was substantially strengthened from the
lessons learned including those of community participatory schemes through
development and announcement of a comprehensive and holistic water policy in 2008 for
the state.
The following events summarize the key sector development in the Water and Sanitation
segment undertaken by GOK.
a. (i) “Olavanna” Model with the community base, participatory, service delivery with

partial capital cost sharing and full O&M cost recovery was repeated in the Jalanidhi
project. (ii) About 1050 single Panchayat water supply schemes of the KWA was to be
handed over to the GPs concerned .In all Jalanidhi panchayats this transfer was made a
mandatory condition for executing agreement. (iii) State and District level Water &
Sanitation Mission was constituted by Government (iv) In 2004 Government of Kerala
had appointed KRWSA as the nodal agency for State-level coordination of the statewide
campaign for promotion of Rain Water Harvesting (RWH). (e) KRWSA was designated
as the nodal agency / secretariat for sector development in the State to kick-start the
reform initiative and to provide conceptual inputs, chart, guide, and monitor the reform
process. (f) Comprehensive water policy for the state of Kerala was enacted by the state
legislature in 2008.
b. The GOK has undertaken the responsibility to release funds in time through budget
provision for timely implementation of the project. In consideration of the BG’s demand,
for the sustainability of the schemes, GOK issued an order reducing the electricity tariff
from commercial rate to domestic rate for Jalanidhi and other community owned schemes.
c. For the effective co-ordination of KRWSA, at the apex level GOK constituted a
General Body with Minister for Water Resources as President and a Governing Council
with Principle Secretary Water Resources as Chairman. These bodies effectively made
policy decisions in terms of anchoring the ongoing project and provided suitable support
like staffing, financing, linkages with other project etc. The GOK has thus accorded high
priority to the institutional strengthening.
d. The GOK has been positive towards the results shown by this pilot project as is
evidenced by the reforms model being accepted in the planning process for the water and
sanitation sector not only in the 10th and 11th five year planning exercise but also in the
“modernization of GOK programs”. Inspiring from the success of this model GOK has
decided for a follow on project for Jalanidhi and accordingly submitted a proposal of
Rs.1200 crores to GOI for approval which has been duly recommended and forwarded to
World Bank for their consideration.
In the light of the above, the performance of GOK is rated as Excellent.
(ii) Performance of KRWSA
The Government has created an autonomous institution “Kerala Rural Water Supply and
Sanitation Agency (KRWSA)” which was registered on 17-11-1999 under Travancore
Cochin Literary, Scientific and Charitable Societies Registration Act 1955 (Act XII of
1955) with Registration No.T.1812 with enormous vested powers to Governing
Executive Council .
The Governing General Body with Hon’ble Minister for Water Resources as the
President along with representatives of Government Secretaries, NGOs, Panchayat
Presidents, Kerala Water Authority & Social Organizations in the water & sanitation
sector acts as the policy making forum.
The Governing council of KRWSA, a regular decision making body has been functioning
as an effective board overseeing the project implementation. During the period of 8 years
of existence the board met 29 times to take necessary policy decisions for effective
functioning and the meetings were all well attended.
The project had developed a unique institutional implementation arrangement where by
the requirements of carrying out a project dedicated vertical system, (PMU-DPMU),

ensuring the operational autonomy and functional decision making while maintaining
acceptable accountability standards for Government of Kerala, Government of India and
the World Bank.
KRWSA was mainly implementing the project by coordinating the activities of all the
stake holders namely SOs, GPs and BGs. KRWSA has developed an excellent MIS
system for monitoring the field level activities which has been well appraised by all stake
holders and World Bank has termed the MIS system as one of the best in the country in
the RWS sector. The Project finance Management team with a practicing Chartered
Accountant from Private Sector as the Finance Manager along with commerce graduate
assistants have been the strength for the smooth functioning of FMIS .Further the FMIS
system operationalized by KRWSA has been successfully monitoring the progress of the
financial management system of the project.
As the nodal agency for Rain water harvesting and sector development management for
the whole of the state “Rain Cell” was formed in KRWSA for effective implementation
of the scheme. Kollam and Kasargode sector reform projects were supported by KRWSA
by way of coordination, capacity building, and monitoring. An exclusive sector
development cell at PMU was set up to manage various State wide Sector development
activities effectively.
For taking the challenge of completing the project in time, output based payment system
for SO’s performance was introduced. For ensuring Capacity building through various
trainings and other tools to all stake holders a separate cell namely Capcell was formed
under KRWSA. KRWSA has arranged independent Construction quality monitoring of
all schemes and independent Sustainability evaluation studies. KRWSA has taken active
role for the formation of BG federation in all panchayats for looking after the post
operation monitoring. KRWSA had shown specific interest to prepare and issue large
number of booklets on various aspects like water quality, sanitation, KWA rehabilitation ,
accounting procedure, GP strengthening, GWR, Operation and maintenance for the
benefit of the communities. For large comprehensive schemes also KRWSA had
developed an independent accounting and managerial software for the benefit of the
community on O&M and technical cum operational manuals. As an alternate technology
option, KRWSA has successfully developed the model of the Rain water harvesting in
such areas where it was difficult to locate a source. 12percent of the total water supply
schemes of KRWSA are of Rain water harvesting schemes.
The sincere and committed attitude of KRWSA was very much appreciated and
complemented by all stake holders even to the extent that World Bank Jalanidhi team
could win the 1st Runner-up prize for Jalanidhi project from among all World Bank
projects globally.
In the above context, the implementation performance of KRWSA is rated as Exemplary.
(iii) Impact of implementation
The project had a meaningful impact in varying degrees on the rural water supply &
sanitation sector and related institutions in the state at different levels. The project had a
considerable impact on the change in life style of the rural people and their increased
capacity to tackle local issues. Jalanidhi has a purposive gender sensitivity built into it.
Women held at least one of the three major office bearer positions in BGs. This

responsibility has given a rare opportunity to understand about the dynamics of water
supply scheme and women were able to play meaningful roles in BG. There were several
examples across the Jalanidhi schemes where ordinary home maker women, who were
confined to their homes, have taken a responsibility in the Jalanidhi scheme and
subsequently got elected to the local GP. Jalanidhi has tremendously contributed to the
social capital enhancement and increased local awareness on water and sanitation. There
were a lot of behavioral changes in hygiene conduct of community as a whole. Jalanidhi
has given a push to the collective confidence of the community that it can plan and
implement programs that can solve problems, be it in water or sanitation. Also the
capacity of the Government and PRIs has improved and are even trying to replicate this
model in other developmental sectors like health, education etc.

Institutional/Operational/Technical lessons
(a) People can implement and manage community driven project and meet the O&M
needs if properly trained and authorized to do so. The success here in water sector
promotes entrusting such activities in other sectors of health, electricity, social
welfare, tourism, irrigation, law and order (community policing) etc.
(b) Capacitating women in shouldering responsibilities can develop leadership
qualities among rural folks.
(c) The empowered BGs at panchayat level were slowly emerging as units of “ local
body to tackle local issues”. This in turn has triggered the panchayats to act
immediately on social issues since they were accountable to voting public. The
lesson was that joint ownership of BGs and umbrella support by panchayat are
key indicators for success.
(d) Transparency and accountability can be ensured if stake holders are balanced
through well defined powers.
(e) Non Government Organizations-SOs is helpful/useful for project implementation
but to overcome their limitations, Gram panchayat Action Team (GPAT) have
been introduced.
(f) For equitable distribution and prevention of water misuse, metering was helpful to
the BGs and that was made part of the system based on the demand of
(g) Instead of small environmental units like soak pits, compost pits and vermin
compost units a solid/liquid waste management system for the panchayat shall be
a better proposition for future projects.
(h) The method of “Cascading effect” experimented by KRWSA at GP/BG level in
capacity building and information dissemination in the project was very
(i) To tackle water quality problems and to overcome the resistance on chlorine taste
in water, silver ionization plants, iron removal plants, etc were provided as
(j) Though O&M is owned by BGs it was felt necessary to extend GP level

intervention to certain eventualities where BGs become helpless. An apex body
“BG Federation” at GP level with GP President as the Chairman has been
introduced in order to have support both institutional/financial in tackling
intra/inter BG issues also so that the project is fully sustainable.
(k) This project was aimed to cover small schemes on a pilot basis. But the
communities have proved that they can take up very large projects exceeding
1000 families and also run the O&M successfully in LWSS/CWSS.
(l) Joint venture schemes have also been undertaken as in the Chawara-Panmana
Tsunami rehabilitation project where KWA and KRWSA joined together. This
model successfully progressing can also be replicated in other areas of
developmental spectrum where large population was to be addressed together.
(m)To combat the falling level of water table in Kerala massive GP level GWR
activities are to be given utmost importance in future.

10. Hurdles / difficulties/Risks faced:
Frequent change of the Executive Director and other key staffs affected the smooth
functioning of the organization considerably. Majority of the staff members working in
KRWSA were recruited to the project on contract basis and due to uncertainty on the
continuity of the project, the project experienced high staff turnover resulted to
substantial delay in the completion of the project in time. Mild resistance from authorized
persons to exercise the delegated authority in handling and settling issues at times, have
unnecessarily delayed the execution process. Various Elections (Lok Sabha, State
Assembly, PRIs etc) held during the project implementation period has also affected the
project execution progress. Energisation by KSEB, pending arrears of KSEB for
settlement by KWA as well as GPs due to dearth of funds were the few difficulties faced.

11. Looking forward
Since the project has achieved its goals in the pilot phase, Government of Kerala has
decided to extend this project to other panchayats of the state by formulating a follow on
project proposal which targets to cover 400 GPs with an estimated cost of Rs.1200 crores.
The project is expected to be implemented with World Bank assistance.
Post Operational Phase:- All the stake holders mainly GPs and BGs have established
their involvement and efficiency in managing schemes with adequate supply chain
support and are Going to be fully sustainable.
Government was very much impressed in the new paradigm shift demonstrated by the
Jalanidhi Project. The following actions initiated by the Government subsequent to the
closing of the first phase of Jalanidhi Project underline the above fact.
1. Government has made sufficient budgetary provision for completing the
remaining works and to continue the institutional set up even after the World
Bank credit closing period.

2. The Government has also committed to continue the new institutional set up
developed by the Jalanidhi model and Jalanidhi approaches as it is evident from
the recent GO issued by the Government appointing KRWSA as the
implementing agency for the Swajaldhara model ARWSP sub components.
Government has allocated 20percent of the ARWSP fund for implementing the
same through KRWSA in the current financial year.
Thus looking forward Jalanidhi project has prompted GOK to scale up the project in a
significant manner to the whole of the state proving its effective impact in the water and
sanitation sector of Kerala.
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