World Bank Provides Support to Rural Poor People in Bihar

WASHINGTON, June 14, 2007 – The World Bank today approved a credit of US$63 million equivalent from the International Development Association (IDA) to the Indian state of Bihar, designed to enhance social and economic empowerment of rural poor people in the state.

The Bihar Rural Livelihoods Project, named “JEEViKA” (or 'livelihood', in Hindi), aims to improve rural livelihoods in Bihar through institutions of the poor in 776 village Panchayats covering 4,000 villages in the districts of Nalanda, Gaya, Muzzafarpur, Madhubani, Khagaria, and Purnea. The project is expected to directly benefit about 2.9 million people belonging to 590,000 households.

Bihar is a predominantly rural state with 89 percent of the population living in rural areas. Around 44 percent of the rural population is poor, one of the highest ratio in India. Poverty is heavily concentrated among the landless or near landless agricultural households, which accounts for 70 percent of the households in the state. Disparities are also evident along gender and caste lines, with Scheduled Castes accounting for one-fourth of Bihar’s landless poor.

“Effective targeting of the poor, especially the most vulnerable groups, is absolutely critical to make growth more inclusive,” said Isabel Guerrero, World Bank Country Director for India. “This project will contribute to empowerment and livelihood enhancement of the rural population, focusing on women and vulnerable groups so that they become active partners in Bihar’s journey out of poverty.”

The project will help organize women from poor and disadvantaged households into vibrant and self-managed institutions of the poor (self-help-groups). These groups will be federated into village organizations, which will receive project investments for various activities through a participatory micro-planning process. The last phase involves forming federations of village organizations as higher-level apex community-based organizations that will take up livelihood enhancement and income-generating activities, and developing linkages with market institutions.

The project will finance Community Investment Funds, designed to transfer financial and technical resources to the community organizations on a demand-driven basis through a participatory micro- planning process. The village organizations are expected to use this resource as a revolving fund to finance various self-help groups in the villages.

“These communities will be provided skills and tools to develop social accountability mechanisms to enable transparency and good governance within the institutions of the poor. This will also help in building effective service delivery partnerships with local governments,” said Parmesh Shah, World BankLead Rural Development Specialist and project team leader.

IDA, the World Bank’s concessionary lending arm, is currently supporting five similar programs in India with an outreach of about a million community groups and 10 million poor households across 60,000 villages in the states of Andhra Pradesh, Madhya Pradesh, Rajasthan, Chhattisgarh, and Tamil Nadu. These projects support the social and economic mobilization of poor households into self-managed community organizations and facilitate development of linkages with the financial sector and the markets to enable the poor to become credit and investment worthy.

The IDA credit has 35 years to maturity and a 10-year grace period.