Document of The World Bank Public Disclosure Authorized Report No. 59845-IN INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT PROGRAM DOCUMENT FOR A PROPOSED E-DELIVERY OF PUBLIC SERVICES DEVELOPMENT POLICY LOAN Public Disclosure Authorized IN THE AMOUNT OF US $150 MILLION TO THE REPUBLIC OF INDIA MARCH 2, 2011 Public Disclosure Authorized Poverty Reduction Economic Management Finance and Private Sector Development South Asia Region and Information and Communication Technology Sector Unit, Public Disclosure Authorized Transport, Water and ICT Department, Sustainable Development Network. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. INDIA GOVERNMENT FISCAL YEAR 1 April to 31 March CURRENCY EQUIVALENTS (Exchange Rate Effective as of March 1, 2011) Currency Unit = Indian Rupees Rs. 44.94 = US $1 ABBREVIATIONS AND ACRONYMS ARC Administrative Reforms ICT4D Information and Communication Commission CAAA Controller of Aid, Accounts, and IT Technology for Development Audit MCA 21 Ministry of Company Affairs CAS Country Strategy MMPs Mission Mode Projects CSCs Common Services Centers NeGP National e-Governance Plan DFID Department for International NIPFP National Institute of Public Finance Development NISG National Institute for Smart Government DIT Department of Information OP Operation Policy Technology PEFA Public Expenditure and Financial DPL Development Policy Loan Accountability DPR Detailed Project Report PFM Public Financial Management ESD Electronic Service Delivery PMIS Personal Management Information System FDI Foreign Direct Investment PPP Public Private Partnership FRBM Fiscal Responsibility and Budget REER Real Effective Exchange Rate Management SDCs State Data Centers FY Fiscal Year SIL Specific Investment Loan GoI Government of India SWANs State Wide Area Networks GP Gram Panchayat TRAI Telecommunications Regulatory Authority of India IBRD International Bank for UT Union Territory Reconstruction and Development UNDP United Nations Development Program IMF International Monetary Fund USAID United States Agency for International ICT Information and Communication Development Technology WBG World Bank Group 3G Third Generation Vice President: Isabel Guerrero Country Director: N. Roberto Zagha Sector Director: Ernesto May Sector Manager: Joel Hellman Task Team Leaders: Ranjana Mukherjee and Shashank Ojha i E-DELIVERY OF PUBLIC SERVICES DEVELOPMENT POLICY LOAN CONTENTS I. INTRODUCTION ................................................................................................................................ 1 II. COUNTRY CONTEXT ..................................................................................................................... 3 A. RECENT ECONOMIC DEVELOPMENTS IN INDIA .................................................................... 3 B. MACROECONOMIC OUTLOOK AND DEBT SUSTAINABILITY .............................................. 5 III. THE GOVERNMENT’S PROGRAM AND PARTICIPATORY PROCESSES ................................ 8 IV. BANK SUPPORT TO THE GOVERNMENT’S PROGRAM ......................................................... 14 A. LINK TO COUNTRY STRATEGY ................................................................................................ 14 B. COLLABORATION WITH IMF AND OTHER DONORS ............................................................ 15 C. RELATIONSHIP WITH BANK OPERATIONS ............................................................................ 15 D. LESSONS LEARNED .................................................................................................................... 15 E. ANALYTICAL UNDERPINNINGS ............................................................................................... 16 V. THE PROPOSED OPERATION ....................................................................................................... 17 A. OPERATION DESCRIPTION ........................................................................................................ 17 B. POLICY AREAS ............................................................................................................................. 18 VI. OPERATION IMPLEMENTATION ............................................................................................... 26 A. POVERTY AND SOCIAL IMPACT .............................................................................................. 26 B. ENVIRONMENTAL ASPECTS ..................................................................................................... 27 C. IMPLEMENTATION, MONITORING AND EVALUTION .......................................................... 28 D. FIDUCIARY ASPECTS.................................................................................................................. 28 E. DISBURSEMENT AND MONITORING ....................................................................................... 29 F. RISKS AND MITIGATION ............................................................................................................ 30 ANNEX 1: LETTER OF DEVELOPMENT POLICY ............................................................................. 31 ANNEX 2: SUMMARY OF MISSION MODE PROJECTS ................................................................... 48 ANNEX 3: FUND RELATIONS NOTE .................................................................................................. 55 ANNEX 4: IBRD/IDA PROJECTS IN INDIA WITH SIGNIFICANT E-GOVERNANCE COMPONENTS ....................................................................................................................................... 59 ANNEX 5: OPERATION POLICY MATRIX ......................................................................................... 60 ANNEX 6: GOOD PRACTICE PRINCIPLES FOR CONDITIONALITY .............................................. 63 ANNEX 7: METHODOLOGY FOR SELECTING INDICATORS ......................................................... 64 ANNEX 8: COUNTRY AT A GLANCE ................................................................................................. 67 ANNEX 9: KEY SOCIAL INDICATORS ............................................................................................... 69 ANNEX 10: KEY ECONOMIC INDICATORS ...................................................................................... 70 ii Boxes, Tables and Figures in text Box 1. Income Tax MMP ........................................................................................................................... 8 Box 2. Common Services Centers (CSCs) ................................................................................................ 10 Box 3. E-Governance on Wheels .............................................................................................................. 12 Box 4. Transport MMP: variation across states ........................................................................................ 13 Box 5. The National Broadband Plan ....................................................................................................... 22 Table 1. Key Macroeconomic Indicators 1/ ................................................................................................ 5 Table 2. NeGP finance by component ........................................................................................................ 9 Table 3. NeGP impediments ..................................................................................................................... 14 Figure 1. NeGP's implementation structure .............................................................................................. 11 The E-Delivery of Public Services Development Policy Loan was prepared by an IBRD team consisting of Preeti Arora, Ulrich Bartsch, Ananya Basu, Mohan Gopalakrishnan, Sapna John, Muthukumara Mani, Ranjana Mukherjee, Tenzin Norbhu, Shashank Ojha, Vikram Raghavan, and Muhammad Shafiq; and consultants Guy Janssen and Eduardo Talero. Peer reviewers were: Rakesh Asthana and Guenter Heidenhof, and Shri J. Satyanarayana, formerly head of National Institute for Smart Government, India and Principal Secretary, IT, Government of Andhra Pradesh, India. iii LOAN AND PROGRAM SUMMARY INDIA E-DELIVERY OF PUBLIC SERVICES Borrower Government of India Implementing Department of Information Technology, Ministry of Communications and Agency Information Technology, Government of India IBRD Loan Front end fee: 0.25% of the loan amount Financing Data Loan terms : IBRD Flexible Loan with Variable Spread option and a total maturity of 18 years including a five year grace period and level repayments Amount : US$150 million. Operation Type Development Policy Loan The main policy / institutional areas supported by the proposed operation are derived from the National e-Governance Plan (NeGP), approved by Government of India in 2006. Policy / institutional areas supported within the DPL’s first pillar (Higher emphasis on coordination) are: Strengthen states’ institutions in e- governance; develop technical standards for e-governance; and improve inter-agency coordination and monitoring of e-governance. Main Policy Areas Policy / institutional areas supported within the DPL’s second pillar (Increased outreach to citizens) are: Improve access to services by using the mobile platform while increasing the pace of internet penetration; facilitate increased participation of users in design and evaluation of