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

India: Khadi Reform and Development Program

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

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
  • Technical Assistance
Sector
  • Finance
 
Project Name Khadi Reform and Development Program
Project Number 42151-013
Country India
Project Status Closed
Project Type / Modality of Assistance Loan
Technical Assistance
Source of Funding / Amount
Loan 2452-IND: Khadi Reform and Development Program
Ordinary capital resources US$ 105.00 million
Ordinary capital resources US$ 105.00 million
TA 7142-IND: Capacity Buidling for Reforming the Khadi & Village Industry Subsector
Japan Special Fund US$ 2.00 million
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. Tranche release conditions for all three tranches have been complied. The program has brought far-reaching changes to the sector, and has positively impacted the lives of about one million artisans and their families employed in khadi, including (i) increased earnings (72% increase from FY2010 to FY2017) resulting from market-linked pricing; (ii) financial inclusion (more than 90% artisans receiving wages through bank account and insurance cover) because of mandatory direct benefit transfers through bank accounts; and (iii) increased production and sales through support of direct reform assistance (DRA).
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)

All policy conditions under the program have been complied with.

Component 1: Policy reform and implementation framework

" Condition 1: Khadi and Village Industries Commission (KVIC) shall have ensured the completion of the audit of remaining 220 eligible khadi institutions by independent auditors

" Condition 2: KVIC shall have (i) undertaken an independent assessment of the Khadi Reform Package, (ii) held a stakeholder consultation on the outcome of the assessment, and (iii) prepared appropriate measures to address the feedback

Component 2: Promoting and Marketing Khadi

" Condition 3: KVIC shall have created the basic testing infrastructure for the Khadi Mark

" Condition 4: KVIC shall have continued to conduct random spot audits of khadi institutions regarding adherence to the licensing requirements for the use of Khadi Mark

" Condition 5: Based on the outcome of the survey, KVIC shall have identified products for both domestic and international markets and develop marketing strategies for all Khadi related institutions and products

" Condition 6: The KVIC shall have prepared a product catalogue and set up the market information system

Component 3: Realizing Procurement and Production Efficiencies

" Condition 7: KVIC shall have monitored and assessed the effectiveness of the implementation of the benefit chart

" Condition 8: KVIC shall have continued the phasing out of production incentives on other product categories and assess the impact on sales as a result of this

Component 4: Implementing Institutional Reforms

" Condition 9: : KVIC shall have implemented the management information system (MIS) in 400 khadi institutions

" Condition 10: KVIC shall have implemented the integrated application system

" Condition 11: KVIC shall have adopted the comprehensive reforms plan to empower and revitalize the 400 eligible khadi institutions

" Condition 12: KVIC shall have re-categorized the remaining khadi institutions using the modified norms

" Condition 13: KVIC shall have signed with 220 eligible khadi institutions the MOUs for comprehensive khadi institutions reforms

" Condition 14: KVIC shall have ensured that three hundred and twenty (320) eligible khadi institutions shall have implemented the comprehensive reforms plan

" Condition 15: KVIC shall have evaluated the performance of the four hundred (400) eligible khadi institutions

" Condition 16: KVIC shall have ensured the establishment of one cluster for each of the identified village industry

" Condition 17: KVIC shall have ensured the implementation of the comprehensive capacity building plan in the identified clusters

" Condition 18: KVIC shall have monitored the performance of the clusters.

Geographical Location Nation-wide
Safeguard Categories
Environment C
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects Minimal or no adverse environmental impacts.
Involuntary Resettlement No involuntary resettlement impacts. No further action is required.
Indigenous Peoples No 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, on key objectives and work streams under the program, followed by 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. KVIC organized a series of workshops with the KIs at state and divisional levels on Khadi Mark implementation protocol and procedures, working modalities of the MO and further facilitate linkages between the MO and KIs, besides dissemination on the implementation of benefit chart.
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 20 Mar 2018

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 09 Jan 2018
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 211.00 Cumulative Contract Awards
ADB 210.00 02 Oct 2008 105.00 0.00 100%
Counterpart 1.00 Cumulative Disbursements
Cofinancing 0.00 02 Oct 2008 105.00 0.00 100%

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
4,000,000.00 0.00 0.00 0.00 0.00 0.00 4,000,000.00 02 Oct 2008 1,819,551.00

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

No contracts awarded for this project were found

Procurement Plan

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