42151-013: Khadi Reform and Development Program | Asian Development Bank

India: Khadi Reform and Development Program

Sovereign (Public) Project | 42151-013 Status: Active

ADB is helping India revive the khadi industry and boost employment. The project will support policy and institutional reforms to promote the making of the widely revered handspun and handwoven cloth. It will establish a "khadi mark" to indicate the product is genuine and a marketing organization majority-owned by the private sector, and facilitate the purchase and processing of raw materials.

Project Details

Project Officer
Srivastava, Ashok South Asia Department Request for information
Country
  • India
Modality
  • Loan
Sector
  • Finance
 
Project Name Khadi Reform and Development Program
Project Number 42151-013
Country India
Project Status Active
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 2452-IND: Khadi Reform and Development Program
Ordinary capital resources US$ 105.00 million
TA 7142-IND: Khadi Reform and Development Program
Japan Special Fund US$ 2.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Private sector development
Sector / Subsector

Finance / Small and medium enterprise finance and leasing

Gender Equity and Mainstreaming Some gender elements
Description

Khadi and Village Industries Development Program aims at enhancement of income and employment growth in the Khadi and Village Industries (KVI) sector. It supports ADB's core strategy of inclusive social development, as it will benefit rural poor, especially low-skilled workers, disadvantaged and women. The Program aims at:

(i) establishing a policy reform and implementation framework;

(ii) promoting and marketing khadi;

(iii) realizing procurement and production efficiencies; and

(iv) implementing institutional reforms.

Project Rationale and Linkage to Country/Regional Strategy

While over 70% of the country's population and 80% of its poor reside in rural India and 56% draw their sustenance from agriculture, agricultural productivity has been decelerating.

The rural non-farm sector (RNS) has immense potential to generate new jobs and impact non-income poverty with relatively low direct investments, by utilizing local skills and resources or by meeting local demands by adopting simple technology. Growth of real per capita non-agricultural output through the promotion of RNS can have a significant impact on reducing rural poverty. The 12th Five Year Plan focuses on inclusive growth and seeks to increase employment with a significant increase in RNS. Khadi and village industries (KVI), integral to RNS, is identified as one of the subsectors with significant prospects for rural self-employment. The Project focuses on sustainable employment opportunities at low per capita investments, immediately benefitting women and marginalized groups.

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 Major change in Program was approved for restructuring the Program and revising the DMF. Of the three tranches, the tranche release conditions for two tranches have been complied. Implementation of third tranche conditions is in progress.
Implementation Progress
Description of Project Outputs

1. Policy reform and implementation framework is established 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. Reduce the working capital blocked in the production value chain and enhance capacity utilization of CSPs.

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)

1. 2077 working institutions have been registered for Khadi Mark, with majority of them actually implementing same.

Direct reform assistance (DRA) implementation initiated in 392 Khadi Institutions (KIs) out of the 400 Khadi Institutions. Implementation of reforms is under progress.

2. Khadi Sector Sales as on 2015-16 stood at INR 15.1 billion (increase of 74.2%) over the baseline data of 2009-10.

A policy initiative has been undertaken by KVIC by converging all key marketing initiatives for KVI products under Market Promotion and Development Assistance in 2016 which is under implementation.

Consumer Survey (pan India) for Khadi has been completed, and international market research study is underway.

3. There has been a considerable reduction in debtor days, from 389 days in 2010 days to 282 days in 2017 primarily due to efficiency at KIs level and policy level changes at KVIC.

The capacity utilization of CSPs currently is 92% which was expected to increase by 10% from the prevailing utilization levels of 87%. There has been efforts from KVIC and MMSME, and are exploring an alternate approach for refurbishment of CSPs to ensure improvement in quality and quantity of raw material output.

4. DRA implementation initiated in 392 Khadi Institutions out of the 400 Khadi Institutions.

MIS has been implemented in 110 KIs.

Vendor procurement completed in January 2016 for developing and deploying eGovernance solution, and work is in progress.

Under the village industries (VI) component, out of 5 clusters to be implemented under 5 different VIs, currently, implementation of clusters under Beekeeping, Food Processing, Leather, and Herbal VIs is in progress. Implementation of handmade paper industry cluster to commence by September 2017.

Geographical Location Nation-wide
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 April 2010 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 from May to October, 2010. All the KIs participated in their respective state and divisional workshops, where the work streams were discussed in detail. KVIC conducted a workshop with 30 KIs in September 2010 to factor in their views about MO and their readiness to associate with it. As per policy matrix, management audit were conducted to select 50 KIs. On the basis of audit results, an action planning workshop for release of assistance was conducted with 60 KIs in January 2011. During the workshop, the KIs were briefed about Khadi Mark, public private partnership (PPP) in central sliver plants (CSPs) and in MO.

Going forward, KVIC shall organize series of workshops with the KIs at state and divisional levels on Khadi Mark implementation protocol and procedures. KVIC also plans to organize workshop with the KIs on the working modalities of the MO and further facilitate linkages between the MO and KIs. Zonal workshops under KRDP to attract more KIs to take up DRA and implementation of benefit chart, etc., were organized as below:

East Zone: For attracting KIs to take up DRA, held at Kolkata on 21.12.2016.

West Zone: For attracting KIs to take up DRA, held at Ahmedabad on 28.2.2017.

South Zone: For attracting KIs to take up DRA and implementation of benefit chart, held at Tirupur (Coimbatore) on 21.4.2017.

Central Zone: For attracting KIs to take up DRA and implementation of benefit chart, held at Lucknow on 26.4.2017.

North Zone: For attracting KIs to take up DRA and implementation of benefit chart, held at Delhi on 1.5.2017.

East Zone: For attracting KIs to take up DRA and implementation of benefit chart, held at Kolkata on 12.5.2017.

South Zone: For review of KRDP activities, with gender mainstreaming session, held at Hyderabad on 30.8.2017.

East Zone:For review of KRDP activities, and rolling out of KVIC MIS (KIMIS), held at Kolkata on 8.9.2017.

North-East Zone: For review of KRDP activities, held at Guwahati on 9.9.2017.

North Zone: For review of KRDP activities, held at Chandigarh on 14.9.2017.

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 Srivastava, Ashok
Responsible ADB Department South Asia Department
Responsible ADB Division India Resident Mission
Executing Agencies
Ministry of Micro, Small and Medium Enterprises
Mr. Sesh Kumar Pulipaka
171, 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 29 Sep 2017

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 31 Dec 2017 -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 105.50 Cumulative Contract Awards
ADB 105.00 02 Oct 2008 60.00 0.00 57%
Counterpart 0.50 Cumulative Disbursements
Cofinancing 0.00 02 Oct 2008 60.00 0.00 57%

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 Apr 2018 -
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 1,571,842.97

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.

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Safeguard Documents See also: Safeguards

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Evaluation Documents See also: Independent Evaluation

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Related Publications

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Tenders

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Contracts Awarded

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Procurement Plan

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