India: Khadi Reform and Development Program

Sovereign Project | 42151-013

Summary

Khadi and Village Industries Development Program aims at increasing employment and income in the Khadi and Village Industries (KVI) subsector of rural nonfarm sector. It supports ADB's core strategy of inclusive social development, as it will benefit rural poor and small producer organizations, who/which are dependent on the KVIs for their income. The Program aims at:

(i) establishing a policy reform and implementation framework to carry out the intended reforms;

(ii) promoting and marketing khadi by establishing a khadi mark and a majority privately owned marketing organization (MO);

(iii) enhancing raw material production and procurement efficiencies, introducing market-linked pricing, shift to production incentives in lieu of sales rebate, assessing working capital for khadi institutions and facilitating access to working capital, encouraging entrepreneurs, and empowering artisans; and

Latest Project Documents

Consulting Notices

See also: CMS

No notices are currently available for this project.

Procurement Notices

See also: Operational Procurement

No notices are currently available for this project.

Procurement Documents

No documents of this type are currently available for this project.


Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Public Communications Policy (PCP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

Project Name Khadi Reform and Development Program
Project Number 42151-013
Country India
Project Status Approved
Project Type / Modality of Assistance Loan
Technical Assistance
Source of Funding / Amount
Loan 2452-IND: Khadi Reform and Development Program
Ordinary capital resources US$ 150.00 million
TA 7142-IND: Capacity Buidling for Reforming the Khadi & Village Industry Subsector
Japan Special Fund US$ 2.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change
Sector / Subsector Finance - Small and medium enterprise finance and leasing
Gender Equity and Mainstreaming Gender equity
Description

Khadi and Village Industries Development Program aims at increasing employment and income in the Khadi and Village Industries (KVI) subsector of rural nonfarm sector. It supports ADB's core strategy of inclusive social development, as it will benefit rural poor and small producer organizations, who/which are dependent on the KVIs for their income. The Program aims at:

(i) establishing a policy reform and implementation framework to carry out the intended reforms;

(ii) promoting and marketing khadi by establishing a khadi mark and a majority privately owned marketing organization (MO);

(iii) enhancing raw material production and procurement efficiencies, introducing market-linked pricing, shift to production incentives in lieu of sales rebate, assessing working capital for khadi institutions and facilitating access to working capital, encouraging entrepreneurs, and empowering artisans; and

(iv) implementing institutional reforms in Khadi and Village Industries Commission (KVIC), revitalizing khadi institutions, building capacity and synergizing with village industries.

Project Rationale and Linkage to Country/Regional Strategy

While over 70% of the Indian population resides in rural India and 56% draw their sustenance from agriculture, agricultural productivity has been decelerating. As a result, the agriculture sector is unable to absorb the large rural work force even at subsistence levels. This has resulted in widespread rural poverty. Also this has shifted the focus to rural non-farm sector (RNFS).

The RNFS has immense potential to generate new jobs with relatively low direct investments, by utilizing local skills and resources or by meeting local demands by adopting simple technology. Khadi and village industries (KVI), originally promoted by Mahatma Gandhi in 1920s for rural self employment, are integral to the RNFS and identified by the 11th Five Year Plan as one of the subsectors with significant prospects for employment. At the time of project processing, KVI subsector employed nearly 9 million people. Therefore, KVI subsector of RNFS sector is considered particularly important for rural landless, women and marginalized group as it can have a significant impact in reducing rural poverty.

Impact Enhancement of income and employment growth for the rural nonfarm sector.
Project Outcome
Description of Outcome Revitalized KVI subsector provides sustainable employment to artisans with higher earnings.
Progress Toward Outcome The program is at an institutional level of implementation and yet to reach the artisan level.
Implementation Progress
Description of Project Outputs

1. Policy reform and implementation framework is estabilished to carry out the proposed reforms.

2. Khadi is effectively promoted and marketed to ensure commercial viability as well as generate market demand for khadi.

3. Procurement and production efficiencies are realized to remove major constraints in the khadi production value chain.

4. Institutional reforms are implemented to restructure KVIC, revitalize khadi institutions and develop synergies between Khadi and traditional village industries.

Status of Implementation Progress (Outputs, Activities, and Issues)

The loan became effective on 2 February 2010 and the first tranche of $20 million was disbursed on 17 February 2010. The second tranche ($40 million) release requires compliance of 31 conditions, which require significant capacity building of implementing agency (KVIC) and consultant support. The loan was scheduled to close in September 2011. The loan has run its course through the first extension until September 2013. Subsequently, the loan has been extended for another two years till September 2015.

The loan is still in its second tranche because of the complexities involved and the sensitive nature of the tranche conditions. One of the more challenging issues being faced right now is attracting private parties towards marketing organization which is central to the program and has received no response to the bidding process so far. Another difficult tranche condition has been PPPs in central sliver plants for which limited response has been received from the bidders. Also, a few other conditions from second tranche relating to Khadi Mark are yet to be fully complied with. In a high-level meeting held in February 2015, milestones and timelines in respect of salient conditions for the second tranche have been shared. Going forward, these timelines would be the basis for monitoring of progress under the loan.

Geographical Location India
Safeguard Categories
Environment C
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects Likely to have minimal or no adverse environmental impacts.
Involuntary Resettlement Has no involuntary resettlement impacts. No further action is required.
Indigenous Peoples Not expected to have impacts on Indigenous Peoples. No further action is required.
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation

KVIC conducted two national level program dissemination workshops with 300 KIs in Delhi and Mumbai. The workshops were about key objectives and work streams under the program. Subsequently, there were state and division level workshops across the country.The KIs participated in their respective state and divisional workshops, where the work streams were discussed in detail. KVIC also conducted workshops with KIs earlier to factor in their views about MO and their readiness to associate with it. During the workshop, the KIs were briefed about Khadi Mark, public private partnership (PPP) in central sliver plants (CSPs) and in MO. KVIC has also organized workshops to get the inputs from KIs and prospective private parties towards structuring the PPP model for CSPs and MO.

KVIC has already initiated the process of organising KRDP implementation workshops in each of the six zones with participation from Khadi Institutions, KVIC state/divisional/zonal officials and KVIB officials. The purpose of these workshops is to disseminate the implementation process of various interventions under KRDP and to build the capacity of concerned Khadi Institutions and KVIC officials, to effectively guide the Khadi Institutions on implementation of KRDP interventions like Direct Reforms Assistance, Khadi Mark Implementation, Sliver Capacity Augmentation, Implementation of New Ventures amongst others. Training material is being developed to raise awareness on environmental aspects through dissemination programs. Regarding gender elements, a curriculum is being developed by KVIC for gender mainstreaming and trainings promoting financial literacy for the Khadi women artisans are being finalized. A workshop was held in January 2015 with participation from KVIC officials and KI staff from the states to build awareness on the gender mainstreaming aspects.

Business Opportunities
Consulting Services Not applicable. Consulting services support is captured under an associated TA (TA 7142-IND, Capacity Buidling for Reforming the Khadi & Village Industry Subsector).
Procurement Not applicable. Procurement towards consultant support to EA and IA is under a associated TA (TA 7142-IND, Capacity Buidling for Reforming the Khadi & Village Industry Subsector).
Responsible ADB Officer Ashis Bhadra
Responsible ADB Department South Asia Department
Responsible ADB Division India Resident Mission
Executing Agencies
Ministry of Micro, Small and Medium EnterprisesMr. Sesh Kumar Pulipaka171, Udyog Bhawan, New Delhi-11011
Timetable
Concept Clearance 09 Jun 2008
Fact Finding 17 Jun 2008 to 23 Jun 2008
MRM 30 Jul 2008
Approval 02 Oct 2008
Last Review Mission -
PDS Creation Date 07 Jul 2008
Last PDS Update 26 Mar 2015

Loan 2452-IND

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
02 Oct 2008 22 Dec 2009 02 Feb 2010 30 Sep 2011 30 Sep 2015 -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 150.50 Cumulative Contract Awards
ADB 150.00 02 Oct 2008 20.00 0.00 13%
Counterpart 0.50 Cumulative Disbursements
Cofinancing 0.00 02 Oct 2008 20.00 0.00 13%

TA 7142-IND

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
02 Oct 2008 22 Dec 2009 22 Dec 2009 30 Sep 2011 30 Sep 2015 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
2,000,000.00 0.00 0.00 0.00 0.00 0.00 2,000,000.00 02 Oct 2008 1,306,273.77
Title Document Type Document Date
Khadi Reform and Development Program Progress Reports on Tranche Releases Jan 2010
Loan Agreement for Khadi Reform and Development Program between India and ADB dated 22 Dec 2009 Loan Agreement (Ordinary Resources) Dec 2009
Program Agreement for Khadi Reform and Development Program between ADB and Khadi and Village Industries Commission dated 22 Dec 2009 Project/Program Agreement Dec 2009
Khadi Reform and Development Program Reports and Recommendations of the President Sep 2008
Khadi Reform and Development Program Design and Monitoring Frameworks Jul 2008

Safeguard Documents

See also: Safeguards

No documents found.

Evaluation Documents

See also: Independent Evaluation

No documents found.


The Public Communications Policy (PCP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.