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					                          PROJECT INFORMATION DOCUMENT (PID)
                                     CONCEPT STAGE
                                                                                          Report No.: AB3096
    Project Name                    North East Livelihoods Project
    Region                          SOUTH ASIA
    Sector                          General agriculture, fishing and forestry sector (70%);
                                    Agricultural marketing and trade (30%)
    Project ID                      P102330
    Borrower(s)                     GOVERNMENT OF INDIA
    Implementing Agency
                                    Government of India

                                    Ministry of Development of North-Eastern Region

    Environment Category            [ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined)
    Date PID Prepared               April 27, 2007
    Estimated Date of               April 24, 2008
    Appraisal Authorization
    Estimated Date of Board         July 29, 2008

Key development issues and rationale for Bank involvement

1.       India‟s North-Eastern (NE) Region comprises eight states, including Arunachal Pradesh, Assam,
Manipur, Meghalaya, Mizoram, Nagaland, Tripura and Sikkim. With a total population of 39 million
(2001), the Region accounts for about 4% of India‟s total population; it covers about 8% of its total
geographical area. The economy of the NE Region is still pre-dominantly agrarian with the share of
agriculture in total SDP above the national average1, except in Mizoram, and the share of agriculture in
total SDP being larger than manufacturing in all NE States. The vast majority of the Region‟s population
lives in rural areas, accounting for 85% of the total population as against the national average of 72%

2.       The Region is known for its rich and abundant natural resources with recognized global
importance and is part of the Indo-Burma Hotspot, which ranks 6th among the 25 biodiversity hotspots of
the world. It has 60,000 megawatts of potentially economically viable hydro-power. The Region is also
known for its rich cultural heritage and ethnic diversity by being the home of 145 tribal groups (out of
which 78 with populations exceeding 5,000 people)2, representing about 12% of the total tribal population
of India. In fact, tribal populations represent the majority of the total population in four States, including
Arunachal Pradesh, Manipur, Nagaland and Mizoram, while representing a significant minority in the
other States.

  Arunachal Pradesh: 31.2%; Assam: 37.5%; Manipur: 27.1%; Meghalaya: 32.0%; Mizoram: 18.9%; Nagaland:
32.5%; Sikkim: 40.2%; Tripura: 22.5%
  Irshad Ali and Indranoshee Das (2003). “Tribal Situation in North-East India.” Studies of Tribes and Tribals,
1(2): 141-148.
3.       Human development indicators of the Region‟s population are relatively favorable. The Region
has a relatively well-educated population with state-wise literacy rates and gross enrollment ratios for
grades 1 to 8 above the national average in respectively five and six out of eight NE States. The female
literacy rate of the Region is significantly above the national average. State-wise infant mortality rates for
all NE States, except Assam, are well below the national average (2005).

4.      Unfortunately, the Region has not yet been able to build on these strengths and capture its
potential. Average per capita income in the Region is less than 70% of the national average (2001-02),
while 35% of its population live below the poverty line as compared to the national average of about 26%
(2000-01). With growth below the national average, and no apparent signs of picking up, the Region and
its people seem to be increasingly excluded from India‟s current economic success. The most dynamic
segment of the Region‟s economy appears to be mainly associated with the growth in the government
sector and ancillary trade and service sectors, while leaving the vast majority of the rural population

5.       Widely recognized impediments for development of the Region include: (i) its high degree of
isolation caused by its separation from the rest of India and severe limitations on cross-border trade; (ii)
poor internal infrastructure and services that hamper access to markets and credit; and (iii) low level of
business confidence and difficult investment climate caused by the impact of armed violence; currently
there are 72 insurgent groups in the North East Region (2004)3. Insurgency in the Region has strong roots
in the quest for self-governance, large-scale unemployment of (educated) youth, and concerns over
identity and culture.

6.       In order to deal with and overcome these constraints, GoI is and has been providing massive
support to the Region for infrastructure development as well as substantive incentives for private sector
investment. As part of the Special Development Package for the North-East Region, specific schemes
and programs for various sectors earmark 10% of their total outlay to the Region. All NE States are
classified as “special category states” and receive assistance from the Planning Commission in the form
of 90% grants and 10% loans. Besides these resource transfers, GoI has attempted to strengthen the
institutional framework for development in the Region by creating the Ministry of Development for the
Northern Region (Min DONER) in 2004 as well as upgrading the role and responsibilities of the North-
Eastern Council (NEC), based in Shillong, Meghalaya.

7.       Despite these efforts, NE States continue to rank at the bottom of state-wise rankings as far as
infrastructure development is concerned4. Similarly, the notion that support has not generated expected
impacts on the ground is reflected in the very low, and in fact worsening, index of fiscal self-reliance for
the respective States which are far below the national average. The reasons for failing to achieve positive
change on a substantive scale are numerous. Allegations of widespread corruption, as regularly reported
in the media, is one of them. The challenging law and order situation in the Region is another. Last, but
not least, it is recognized that one of the root causes of this failure has been the prescriptive approach that
has been followed and which is generally believed to have ignored the social-cultural complexity of the
Region‟s peoples and the reality on the ground.

8.      Since agriculture and allied activities are the backbone of peoples‟ livelihoods in the Region, it is
evident that initiatives towards setting the stage for broad-based growth and reducing poverty need to

   Turner, M. and B. Nepram, (2004). The impact of armed violence in Northeast India. Centre for International
Cooperation and Security.
  Infrastructure Index (Ranking)Tripura: 54.60 (19); Assam: 53.84 (20); Sikkim: 52.88 (21); Nagaland: 51.02 (23);
Meghalaya: 46.88 (25); Mizoram: 46.75 (26); Manipur: 37.29 (27); Arunachal Pradesh 32.08 (28).
have a strong focus on increasing productivity and income-generating potential of the sector, while
carefully taking into account the diverse agro-ecological conditions in the Region as well as the complex
social fabric of its people.

9.      In line with this notion and in attempt to move away from commonly top-down and prescriptive
approaches, the GoI through the Ministry of DONER and NEC with support from the International Fund
for Agricultural Development (IFAD) has been implementing the North Eastern Region Community
Resource Management Project for Upland Areas (NERCORMP). The basic thrust of this pilot project has
been to demonstrate a new approach to development by adopting a genuine partnership approach with all
relevant stakeholders under which interventions are truly demand-driven and client-oriented; in line with
indigenous knowledge and capabilities of the people; and implemented with clear transparency and

10.      Results of a recently conducted evaluation indicate that this project has been a notably successful
development intervention5, despite the very difficult environment in which it is being implemented, with a
marked positive change in the predicament of both direct and indirect beneficiaries. The success story of
this pilot project comes at a time when both the Central Government and State Governments are
reinforcing efforts under the Look East Policy to provide economic opportunities to the numerous
families still living under the poverty line.

11.      More specifically, the North Eastern Council is actively engaged in developing a Vision
Document known as NER Vision 2020, which will be finalized in 2007. NER Vision 2020 is sharply
focusing on the aspirations of the people of the North Eastern Region to find improved livelihood
opportunities, seek local empowerment, and aim for sustainable management of the natural resource base.
These elements form the launching pad of an approach championed under the NER Vision 2020 which
aims at putting communities and the needs of the poor at the center of development. In line with this
emerging Vision and in view of the positive achievements of NERCORMP, GoI has approached the Bank
to support scaling-up of its livelihoods program in the Region, while at the same time addressing some of
its recognized weak spots related to enabling access of the poor to financial services and input/output

12.      Rationale for Bank Involvement. The proposed project is well aligned with the Country Strategy
(2004-2008) which seeks to scale-up improvement of rural livelihoods using a community empowerment
approach. It also fits well with the general notion adopted under the Country Strategy to seek a stronger
alignment between the geographical distribution of poverty in India and the Bank‟s presence on the
ground by gradually moving the portfolio to India‟s Northern and North-Eastern Regions. Given its large
portfolio of livelihoods projects in India and elsewhere, the Bank is well positioned to provide the value-
added that GoI is looking for to scale-up its livelihoods program in the NE Region. In this context, the
recently completed Note on “Supporting the „People Sector‟ – South Asia‟s Experience in Rural
Livelihoods Development”, prepared by the Bank‟s South-Asia Agriculture and Rural Development
Team would be a useful reference for incorporating lessons learned and best practice into the design of
the project. Following the recently completed study on “Development and Growth in Northeast India”,
the project also reflects the Bank‟s commitment to widen and deepen its engagement with the Region
through proposed local level activities as identified in the Study. The Bank‟s global expertise in working
with indigenous communities, particularly in Latin America, adds to this. Besides the strong interest
from Min DONER and NEC in the project, the Bank‟s identification mission, conducted in March 2007,
was impressed by the enthusiasm with which the various State Governments engaged themselves in the

 IFAD (2006). North-Eastern Region Community Resource Management Project for Upland Areas – Interim
discussions and their commitment to appoint state focal points to facilitate immediate launching of the
project preparation process.

Proposed objective(s)

13.     To achieve an upward trend in livelihood productivity among participating local community
groups located in various ecological zones in the NE Region6 through participatory and demand driven
investment choices and collective action, with support from value-adding partnerships.

14.     In line with this objective, key outcome indicators of the project, to be further detailed during
preparation, would include:

         Evidence of an upward trend in livelihood productivity among participating economic groups;
         Evidence of the emergence of viable new market and employment opportunities and new
          livelihood practices among the residents of the NE Region.

Preliminary description


15.      The proposed project will build on the strengths of the IFAD supported NERCOM Project as well
as relevant similar experiences in the NE Region. Accordingly, the basic thrust of the project would be
aimed at empowering poor households in rural areas to directly deal with the wide and diverse range of
problems and constraints that hamper livelihoods development in the Region, as well as better position
them to capture opportunities for livelihoods improvement. These problems express themselves at the
household level in factors like food insecurity; at the production systems level in terms of low
productivity; at the community level in terms poor infrastructure and service delivery; and at the supply
chain level in terms of inadequate access to both input and output markets. Lack of access to finance is a
universal issue i.e., both at the household level and across the livelihood value chain. These problems are
interrelated, commonly leading to vicious circles and resulting poverty traps; often exacerbated by natural
resource degradation, as is happening in the NE Region, with declining jhum (shifting cultivation) cycles
being a case point.

16.      In order to break out of these poverty traps, there is a need for a holistic approach that allows for
dealing with these interrelated problems in a simultaneous fashion. To make this happen, the Project
would adopt a programmatic approach consisting of: (i) social mobilization wherein appropriate targeting
mechanism such as Participatory Involvement of the Poor (PIP)/ Wealth Ranking process will be used to
identify the poorest of the poor and the most vulnerable groups; (ii) capacity and institution building i.e.,
direct support aimed at strengthening/building organizations of the poor in a manner that takes into
account the diverse reality on the ground; (iii) facilitating investments in livelihood activities, leveraging
both internal (i.e., member savings, and community investment funds) and external funding (i.e., funds
from commercial banks, MFIs, and regional rural banks); (iv) assetization at the household and
community level i.e., putting assets in the hands of the poor and their institutions; and (v) improving
community-based infrastructure, including e.g. access to markets .

17.     Social mobilization followed by institution building will form the building blocks for improved
voice and increased scale that would allow the poor to help themselves in dealing with both government
and market failures. Doing so would entail building on existing traditional institutions, while at the same

    Central and Eastern Hills (Phase I of the Program), Greater Himalayas (Phase II) and Lowland Plains (Phase III)
time modifying them to ensure broader participation of all sectors of the community, including women,
youth and marginalized groups. Project support would be demand-driven and provided as an integrated
package that, while recognizing local conditions, would be considered most effective by local
stakeholders in breaking out of prevailing poverty traps. At the same time, the Project would facilitate the
establishment of critical partnerships between respective line departments, regional agencies, financial
institutions and private sector with the organizations of the poor to provide value-added in technology
transfer, market access and credit linkages.


18.      Social empowerment: investments under this component will be geared towards intensive and
long-term training efforts to strengthen/ build institutions of the poor (e.g. self-help groups, economic
activity-based groups, and/or natural resource management-based groups), establish leadership, protect
vulnerable sections of communities, strengthen cultural heritage and identities, and conduct participatory
planning processes. In addition, support will be provided to federate community-based groups into
higher-level associative tiers.

19.      Economic empowerment: investments under this component will be aimed at enhancing
productivity, employment and incomes in a sustainable manner by providing an integrated package on a
demand-driven basis consisting of: (i) support for improving access to finance/investments and formation
of capital assets at the household level; (ii) vocational skills training to facilitate employment generation,
with special emphasis on youth; (iii) community-based infrastructure and service delivery, with emphasis
on upgrading of small agricultural linkage roads and micro hydro-power schemes; (iii) natural resources
management, with special emphasis on community-based forestry management, NTFP and mobilization
of carbon financing; and (iv) technical assistance and seed capital for value-addition activities in the
downstream segments of relevant supply-chains. Project support under this component will include cost-
recovery modalities.

20.       Partnerships development and management: support under this component will be aimed at
establishing and managing effective linkages with: (i) line departments in each of the participating States
to facilitate technology transfer of productivity enhancing innovations as well as quality assurance of
community-owned and managed productive infrastructure; (ii) specialized institutions (e.g. NERAMAC7,
NEHHDC8, Cane and Bamboo Technology Center) and private sector (e.g. FINER9) to improve market
access and employment generation; (iii) financial institutions (including NEDFi10) to increase access to
finance for both long term and short term needs; (iv) IFC – SEDF to improve both access to finance and
access to markets; and (v) NGOs/service providers to upgrade skills and capacity that would allow them
to work more effectively with participating communities.

21.     Project management: under this component: (i) required incremental staff, training, facilities,
office equipment, transportation modalities and operating expenses would be made available; (ii) a
comprehensive monitoring, evaluation and learning system would be deployed and operated; (iii)
effective communications with all relevant stakeholders would be maintained; and (iv) an easily
accessible complaints mechanisms would be set-up and made fully functional.

   North Eastern Regional Agricultural Marketing Corporation Limited
   North Eastern Handicrafts &Handlooms Development Corporation
   Federation of Industries of North Eastern Region
    North Eastern Development Finance Corporation
Safeguard policies that might apply

22.      Applicable safeguards policies include: (i) Environmental Assessment; (ii) Natural Habitats; (iii)
Forests; (iv) Physical cultural resources; (v) Indigenous peoples; and (vi) Projects in disputed areas. The
project is supporting a range of different investments, some but not all of which will be identified in detail
by appraisal. The Environment Assessment required for appraisal will therefore be a Framework and
Management Plan, setting out the approach, a detailed assessment of the identified investments, and the
process for assessing and reviewing subsequent investments. The detailed EA will also outline
implementation arrangement to mainstream various mitigation and monitoring requirements for expected
investment activities. The participating communities in the project are largely tribal/indigenous and the
provisions of OP 4.10 on Indigenous Peoples will be used to develop a systematic process to ensure free,
prior, informed consent of all sections of the tribal community towards the design and preparation of
development plan for the project.

Tentative financing
Source:                                                                                     ($m.)
BORROWER/RECIPIENT                                                                            26
International Development Association (IDA)                                                  260
Local Communities                                                                             39
                                                                               Total         325

1. Contact point
Contact: Martien Van Nieuwkoop
Title: Lead Rural Development Specialist
Tel: (91-11) 2461-7241
Fax: (91-11) 2463-2275
Location: New Delhi, India (IBRD)

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