Report No. 36437-IN
India
Jharkhand: Addressing the Challenges of Inclusive Development
March, 2007
Poverty Reduction and Economic Management
India Country Management Unit
South Asia
Document of the World Bank
CURRENCY EQUIVALENTS
(Exchange Rate Effective [28 February, 2007])
Currency Unit = Rupees (Rs.)
Rs. 1.00 = US$ 0.022568
US$ 1.00 = Rs. 44.31
FISCAL YEAR
April 1 – March 31
ABBREVIATIONS AND ACRONYMS
ACR / Annual Confidential Report / NCL / National Colliers LimitedAIES / All India Education Survey / NDA / National Democratic Alliance
ALS / Alternative Learning Centers / NEP / National Education Policy
ANC / Ante-Natal Care / NFE / Non-Formal Education
ANM / Auxiliary Nurse Midwife / NFFW / National Food for Work
APL / Above Poverty Line / NFHS / National Family Health Survey
APP / Anti-Poverty Program / NGO / Non-Government Organization
ASER / Annual Survey of Education Report / NHAI / National Highway Authority of India
BCC / Behavior Change Communication / NREG / National Rural Employment Guarantee
BCCL / Bhartiya Coking Coal Limited / NRM / National Resource Management
BEP / Bihar Education Project / NSS / National Sample Survey
BIFR / Board for Industrial and Financial Reconstruction / OBB / Operations Black Board
BJP / Bhartiya Janata Party / OBC / Other Backward Class
BPL / Below Poverty Line / PDS / Public Distribution System
CAS / Compensatory Afforestation Scheme / PEO / Program Evaluation Organization
CBR / Crude Birth Rate Survey / PESA / Panchayat Extension to Scheduled Areas
CIL / Coal India Limited / PFC / Power Financial Corporation
CNT / Chhottanagpur Tenancy / PHC / Primary Health Centers
CPI / Communist Party of India / PHS / Primary Health Services
CSS / Centrally Sponsored Schemes / PIP / Program Implementation Plan
DES / Department of Economics and Statistics / PMGSY / Pradhan Mantri Gram Sadak Yojana
DISE / District Information System for Education / PRI / Panchayati Raj Institution
PTR / Parent Teacher Ratio
DPAP / Drought Prone Area Program / RJD / Rashtriya Janata Dal
DPEP / District Primary Education Program / RCD / Rural Construction Department
DRDA / District Rural Development Agency / RCH / Reproductive and Child Health
DSS / Decision Support System / RD / Rural Development
DWS / Drinking Water Supply / REC / Rural Electrification Corporation
REO / Rural Engineering Organization
ECL / Eastern Coalfields Limited / RJBS / Rural Jharkhand Baseline Survey
RJUSS / Rural Jharkhand User Satisfaction Survey
EGS / Education Guarantee Scheme / RNF / Rural Non-Farm
EITI / Extractive Industries Transparency Initiative / RNTCP / Revised National TB Control Program
FRBMA / Fiscal Responsibility and Budget Management Act / SC/ST / Scheduled Caste/ Scheduled Tribe
FCI / Food Corporation of India / SGRY / Sampoorna Grameen Rozgar Yojana
FDI / Foreign Direct Investment / SGSY / Swarnjayanti Gram Swarozgar Yojana
FoI / Freedom of Information / SHG / Self Help Group
FPS / Fair Price Shop / SIEMAT / State Institute of Educational Management and Training
GDP / Gross Domestic Product / SIERT / State Institute for Educational Research and Training
GER / Gross Enrolment Ratio / SME / Small and Medium Enterprise
GFATM / Global Fund for AIDS, TB and Malaria / SPR / Slide Positive Rate
GoI / Government of India / SPT / Santhal Paraganas Tenancy
GoJ / Government of Jharkhand / SRRDA / State Rural Road Development Agencies
GP / Gram Panchayat / SRS / Sample Registration System
GPI / Gender Parity Index / SSA / Sarva Shikshya Abhiyan
GSDP / Gross State Domestic Product / SSI / Small-Scale Industries
HMIS / Health Management Information System / SPCB / State Pollution Control Board
HoD / Head of Department / STC / State Transport Corporation
HRDM / Human Resource Development and Management / TB / Tuberculosis
IAY / Indira Aawas Yojana / TFC / Twelfth Finance Commission
TFR / Total Fertility Rate
IC / Investment Climate / TLMs / Teaching Learning Materials
ICD / Inland Container Depot / TPDS / Targeted Public Distribution System
ICDS / Integrated Child Development Scheme / TSP / Tribal Sub-Plan
ICS / Investment Climate Survey / T&D / Transmission and Distribution
IIDB / Industrial Infrastructure Development Board / TTD / Transformation, Transmission and Distribution
IMR / Infant Mortality Rate / VAT / Value Added Tax
IRDP / Integrated Rural Development Program / VEC / Village Education Committee
IRR / Internal Rate of Return / VHC / Village Health Committee
IWDP / Integrated Watershed Development Program / VHSE / Vocational Higher Secondary Education
JEPC / Jharkhand Education Project Council / WMI / Whitehorse Mining Initiative
JHS / Jharkhand Health Society / XISS / Xavier Institute for Social Sciences
JIIDC / Jharkhand Industrial Infrastructure Development Corporation / XLRI / Xavier Labor Relations Institute
JMM / Jharkhand Mukti Morcha
JSEB / Jharkhand State Electricity Board
LAA / Land Acquisition Act
MDG / Millennium Development Goal
MHRD / Ministry of Human Resource Development
MIS / Management Information System
MKSS / Mazdoor Kisan Shakti Sangathan
MLA / Member of Legislative Assembly
MMR / Maternal Mortality Rate
MoU / Memorandum of Understanding
MP / Member of Parliament
MTFRP / Medium-Term Fiscal Reforms Program
Report Team and Acknowledgements
This study was prepared by a team led by Binayak Sen and Rajni Khanna (SASPR) under the guidance of Kapil Kapoor, Sector Manager, who provided many helpful comments and guidance at various stages in the team’s work. Sadiq Ahmed, Michael Carter and Fayez Omar provided overall guidance.
Other team members were: Asya Akhlaque and Inderbir S. Dhingra (SASFP, Investment Climate), Ananya Basu (SASPR, Analysis of User Satisfaction Survey), Papia Bhattacharya (SARFM, Financial Management), Debabrata Chakraborti, Joel A.Turkewitz (SARPS, Procurement), Vikram Chand (SASPR, Governance), Charles Husband (COCPO, Mining), Kseniya Lvovsky and Richard Damania (SASES, Mineral and Environmental Governance), Peter Jipp and Barbara Verardo (SASAR, Forestry and Tribal Inclusion), Jagmohan S. Kang and Priti Dave Sen (SASHD, Health), Philip B. O’Keefe (SASHD, Social Protection), Srinivasan Rajagopal (SASAR, Irrigation), Deepa Sankar (SASHD, Education), J. Wright (SASEI, Power), Piers Vickers (SASEI, Roads), Ramgopal Agarwala (Consultant, Mineral Governance), Gopal Naik (Consultant, Agriculture), Aditi Nayar (SASPR, Data Analysis), Sergiy Biletsky (Consultant, Data Analysis), Tilahun Temesgen (SASFP, Consultant), Jayshree Balachander (EASHD), Vidya Kamath (SASPR, Document Production), and Rita Soni (SASPR, Document Production Support).
The team thanks peer reviewers Dipak Dasgupta, Deepak Mishra (SASPR), and Mark Sundberg (DECVP) for their comments on this study. Special thanks are due to Stephen Howes for his helpful suggestions in the early phase of this work and to Ijaz Nabi, Jeffrey Hammer, and Ahmad Ahsan for useful discussions.
The team thanks the Government of Jharkhand for its cooperation and guidance during World Bank missions and consultations at other times. In particular, the team thanks Mr. M.K. Mandal and Mr. P. P. Sharma, the current and former Chief Secretaries, Government of Jharkhand; Mr. Mukhtyar Singh and Mr. Rahul Sarin, current and former Principal Secretary, Finance; Mr. R.S. Sharma, Principal Secretary, Information Technology; Mr. Arun K. Singh, Secretary, Mines and Geology; Mr.S.K.Satpathy, Principal Secretary, Industries; Ms. Alka Tiwari, Commissioner, Commercial Taxes; Mr. K. Vidyasagar, Secretary, Power; Mr. J.S. Burjia, Secretary, Planning; and Mr. Mukhopadhyay, Officer on Special Duty, Finance Department. The team also thanks officials from Rural Development, Agriculture, Power, Industries, and other departments for their cooperation and guidance. Finally, the team thanks the Confederation of Indian Industry, USAID, and academic think-tanks such as XLRI and XISS, and other private sector and civil society representatives for very helpful discussions.
Vice President: / Praful C. Patel, SARVPCountry Director: / Isabel M. Guerrero, SACIN
Sector Director: / Sadiq Ahmed, SASPR
Sector Manager: / Kapil Kapoor, SASPR
Task Managers: / Binayak Sen and Rajni Khanna, SASPR
Table of Contents
Executive Summary i
A. Emergence of a New State: Adverse Initial Conditions i
B. Signs of Hope: A Balance Sheet of Change in Recent Years i
C. Key Strategic Challenges for Inclusive and Sustainable Growth ii
D. Addressing the Institutional Gap and Improving Performance iii
E. Improving Access to Infrastructure Services v
F. Expanding Rural Opportunities vi
G. Alternative Development Paths: Defining a Middle Way viii
H. Social Inclusiveness for Effective Citizenship x
Chapter 1: A New State: Emergence, Features and Challenges 1
A. Poverty and Social Indicators 2
B. Growth and Employment 5
C. Prioritizing Development Challenges 7
D. How to Make Growth Pro-Poor: Need for Rural Focus 16
E. Structure of the Report 17
Chapter 2: Building Institutions and Improving Performance 18
A. Fiscal and Financial Governance 18
B. Administrative and Local Governance 26
C. Mineral and Environmental Governance 32
Chapter 3: Improving Rural Opportunities for Shared Growth 35
A. Access to Assets 35
B. Access to Labor Market 37
C. Access to Infrastructure 39
D. Access to Credit Markets 42
E. Risks and Risk-Mitigating Institutions 43
F. Livelihood Outcomes and their Determinants 44
Chapter 4: Strategies for Growth: Assessment of Options 47
A. Alternative Development Paths: Issues and Concerns 47
B. Low Risk-Low Return: Can Subsistence Agriculture Lead the Way? 47
C. Medium to Long-Term Potential of the Mining Sector 51
D. The Middle Option: Sustainable and Inclusive Growth 57
Chapter 5: Promoting Social Inclusiveness for Effective Citizenship 66
A. Reach of Priority Health Services 66
B. Achieving Health MDGs 72
C. Health Sector: The Way Forward 73
D. Expanding Access to Primary and Secondary Education 75
E. Medium-Term Sector Strategy in Education 80
F. Access to Anti-Poverty Programs 81
G. Tribal Inclusion through Civic Empowerment 90
Tables
Table 1. 1: Trends in Poverty as per NSS Thick and Thin Rounds 2
Table 1. 2: Summary Statistics on Consumption Growth and Consumption Inequality 3
Table 1. 3: Decomposition of Changes in Poverty Measures into Growth and Inequality Components 3
Table 1. 4: Key MDG and Social Indicators 4
Table 1. 5: Growth of Real GSDP 5
Table 1. 6: Comparison of Per Capita Growth Rates 5
Table 1. 7: Productivity Growth in Jharkhand by Sector 6
Table 1. 8: Efficiency and Transparency of Governance 15
Table 1. 9: Average Nominal Wage Earnings for Salaries Workers (15-59) by Level of Education 15
Table 2. 1: Fiscal Summary of Jharkhand 19
Table 2. 2: Public Debt of Jharkhand: Stock and Composition 22
Table 2. 3: Grants-in-Aid on the Recommendation of the Twelfth Finance Commission 23
Table 2. 4: Fiscal Correction Path Required to Meet the Targets set by Twelfth Finance Commission 24
Table 3. 1: Distribution of Land and Non-Land Assets 35
Table 3. 2: Selected State Comparison of Agricultural Wage Rate 37
Table 3. 3: Relative Return to Farm and Non-farm Activities by Modes of Employment 38
Table 4. 1: Annual Growth Rate in Area, Production and Yield of Principal Crops 48
Table 4. 2: Mineral Resources of Jharkhand 51
Table 4. 3: Impact of Selective Mineral Sector Reforms 52
Table 4. 4: Infrastructure Indicators 59
Table 4. 5: Infrastructure Index: Ranking of Indian States 60
Table 4. 6: Business Entry Regulation Compliance 62
Table 5. 1: Social Protection Expenditures by Program Type 82
Table 5. 2: Familiarity with Social Protection Programs by Program Type 83
Table 5. 3: Estimated Coverage by Program, Administrative and NSS data 83
Table 5. 4: Share of Households Benefiting from Schemes in the Past Three Years 84
Table 5. 5: Average Per Capita Expenditure of Beneficiary and Non-Beneficiary Households by Program 85
Table 5. 6: Median and Mean Benefits in Past 12 Months for Beneficiary Households for Various Programs 86
Table 5. 7: Median and Mean Benefits in Past 12 Months in Beneficiary households for PDS 86
Table 5. 8: Regularity of Benefits by Program 87
Table 5. 9: Comparing List of Poor Families from the ORG-MARG and BPL Surveys 88
Figures
Figure 1. 1: Poverty Headcount – Jharkhand & All-India 2
Figure 1. 2: Sectoral Shares in GSDP 5
Figure 1. 3: Growth Gap between Jharkhand and Rest of India 6
Figure 1. 4: Productivity Levels: Jharkhand and India 7
Figure 1. 5: Employment by Sector: Jharkhand and India 7
Figure 1. 6: Road Density 8
Figure 1. 7: Percentage of Surface Roads 8
Figure 1. 8: Overall State-wise Teledensity 9
Figure 1. 9: Household Access to Power 9
Figure 1. 10: Utilization Rate for Major Anti-Poverty Schemes 11
Figure 1. 11: Beneficiary Satisfaction with Key Services 12
Figure 1. 12: Left-Wing Extremist Violence in State 13
Figure 1. 13: Share of Households Benefiting from Social Protection Schemes 13
Figure 2. 1: Deficits as Percentage of GSDP 18
Figure 2. 2: Revenue Deficit/Revenue Receipts 20
Figure 2. 3: Main Components of Revenue Expenditure 20
Figure 2. 4: Composition of Capital Expenditure 21
Figure 3. 1: Main Occupation of Rural Working Population 37
Figure 3. 2: Household with Migration –Income 38
Figure 3. 3: Incidence of improvement due to migration 38
Figure 3. 4: Share of Irrigated Land 40
Figure 3. 5: Rural Access to Electricity 41
Figure 3. 6: Percentage Respondents Rating Road/Transport Attributes as “Good” on 3-point Scale 41
Figure 3. 7: Impact of Community Assets on Income 42
Figure 3. 8: Incidence of Crisis in Past Three Years 43
Figure 3. 9: Types of Shocks 43
Figure 4. 1: Proposed and Actual Investments in Various States 58
Figure 4. 2: State-wise Foreign Investment Approved 58
Figure 4. 3: Managers in Jharkhand Identifying Factor as Major or Severe Bottlenecks 58
Figure 4. 4: Burden Imposed by Inadequate and Unreliable Power Supply 60
Figure 4. 5: Inter-state Comparison of Road Networks 60
Figure 4. 6: Percent of Jharkhand Firms Identifying Regulations as Severe or Very Severe 61
Figure 4. 7: Access to Credit in Jharkhand 63
Figure 5. 1: Initial Comparison of Key Health Outcome 66
Figure 5. 2: Initial Comparison of Health Service Indicators 67
Figure 5. 3: Changes in Key RCH Service Indicators 68
Figure 5. 4: Share of Health in Revenue Budget 69
Figure 5. 5: Health Indicators 71
Figure 5. 6: Social Disparity in Health 71
Figure 5. 7: Education Indicators 75
Figure 5. 8: Class I to Exit Class of Primary 76
Figure 5. 9: Habitations without Primary School and Eligible to get Primary School 77