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Country Strategy and Program 2003-2006: India
VI. Risks, Performance Monitoring, and Evaluation
55. The CSP for India was developed on the basis of past performance, needs, and assessment of the country's absorptive capacity. Some risks, however, need to be constantly monitored to make midcourse corrections as required. These may also be required in response to changing conditions, including new policy developments. An assessment of the main risks and associated mitigating factors is summarized below:
| Risk and Risk Assessment | Mitigating Factors |
|---|
| External shocks such as war, drought, oil shock (medium risk) | Exogenous risks cannot be fully eliminated. However, large stocks of food and foreign exchange are strong mitigating factors. |
| Macroeconomic instability due to failed fiscal consolidation (high risk) | Addressing this challenge is the highest priority in the CSP. ADB will be actively engaged in helping the Government in fiscal consolidation, in the center and in the states. |
| Reversal of structural reforms (low risk) | All leading political parties are committed to reforms, so risk of reform reversal is low. |
| Inadequate poverty reduction or social development despite high growth (low risk) | The 10th Plan, ADB, and other development partners are all strongly focused on reducing poverty and accelerating social development. |
| Failure to deliver the medium-term program due to staff constraints (low risk) | Efforts are being made to ensure that staff constraints do not impede delivery of the program, by strengthening INRM staff and headquarters staff, internal redeployment within SARD, and other measures (para. 54). |
| Outcomes fail due to poor project quality at entry, and/or poor implementation (medium risk) | Efforts are being made to improve project quality at entry, and to strengthen capacity of implementing/executive agencies through regular training programs and strengthening of the portfolio management system at INRM (Chapter III, Box 5). |
56. Country and portfolio performance will be monitored using four blocks of performance indicators, which will be reflected in the PRPA:
- Block 1 will consist of macroeconomic targets (growth, inflation, fiscal deficit, and/or public debt) and the balance of payments outlook (current account balance and foreign exchange reserves position). The targets will be derived from the 10th Plan, budget documents, and the central bank's policy announcements.
- Block 2 will consist of poverty reduction and other human development targets adopted for the 10th Plan (Box 2) and MDGs (Appendix 1, Table A1.1).
- Block 3 will consist of the reform milestones and other sector performance targets indicated in the sector road maps (Appendix 3).
- Block 4 will consist of the loan and TA pipeline, which will be updated in annual Country Strategy and Program Updates, and portfolio performance indicators (Figure 5 and Appendix A1.6 to A1.9). About 20% of the portfolio is at risk. This figure should be reduced to not more than 10% by 2006. Disbursement and contract award performance should also be maintained consistently above the ADB norm (para 24).
57. Country program and portfolio performance will be evaluated against annual/medium-term targets set for each block, which will be reflected in the PRPA. As per ADB business processes, the regional management team will be primarily responsible for implementing the program, supported by the country team. The teams will closely monitor the performance indicators to ensure successful implementation of the CSP.
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- The gap is around 10-12% (net of assumed overtime) for 2004 and 2005, with a higher gap for 2003 due to intensive resources required to prepare the full CSP document, which will not be prepared every year.
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