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The Fortune for the Bottom of Pyramid : PURA – A Template in PPP for Sustainable and Inclusive Growth of Rural India. By: Dr.D.S.Gangwar IAS Joint Secretary Ministry of Rural Development Government of India.

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slide1

The Fortune for the Bottom of Pyramid :PURA – A Template in PPP for Sustainable and Inclusive Growth of Rural India

By:

Dr.D.S.Gangwar IAS

Joint Secretary

Ministry of Rural Development

Government of India

india lives in its villages
"The true India is to be found not in its few cities, but in its seven hundred thousand villages. If the villages perish, India will perish too." - Mahatma GandhiIndia lives in its villages
outline of the presentation
SECTION 1 : Laying the Foundations for Sustainable and Inclusive growth

SECTION 2: Co-creating Fortune for the Bottom of Pyramid  PURA

Outline of the Presentation
section 1

SECTION 1:

Laying the Foundations for Sustainable and Inclusive Growth

slide5

Mission of Min. of RD

Our Mission

Sustainable and inclusive growth of rural India through a multi-pronged strategy for eradication of poverty and improvement of quality of life in rural India.

our theory of change the multi pronged strategy
Our Theory of Change:The Multi-pronged Strategy

EMPLOYMENT GENERATION :

  • Direct attack on Poverty by providing livelihood opportunities to Below-Poverty Line (BPL) households.
  • Enhancement of livelihood security by guaranteeing 100 days of wage employment to every household in a year

INFRASTRUCTURE DEVELOPMENT:

  • All-weather road connectivity to unconnected rural habitations and up gradation of existing roads.
  • Providing basic needs and amenities like housing, drinking water and sanitation to rural households.

SOCIAL SECURITY:

  • Providing Social assistance to the elderly, widow and disabled persons.

SUSTAINABLE DEVELOPMENT OF NATURAL RESOURCES :

  • Natural resource development for strengthening the livelihood base of the poor
slide7

National Level Implementation of the Programmes

Department of Rural Development

  • Formulates policies and programmes
  • Provide funds

State Governments

  • Implementation through its agencies

- Monitoring of Programmes

District Administration

  • Preparation of district perspective plans
  • Implementation of the programmes

Panchayati Raj Institutions

  • Plan at the grass root level
  • Select works/beneficiaries and implement the projects

INDIA

  • 35 States/UTs
  • 619 Districts
  • 6484 Blocks
  • 2,55,000 Village Panchayats
  • 593731 villages
  • 7,42,490639 Rural Populn (2001)
  • 54.290 million BPL Households
an iillustration of investments in a typical village of 1000 population
An iIllustration of investments in a typical village of 1000 population
  • Guarantee of 100 days manual work in an year to all the households
  • All-weather road connectivity
  • Investments for increasing land productivity:

watershed development, water harvesting ponds, check-dams and field channels, social forestry

  • Organization of BPL persons into Self-Help Groups’ Micro-enterprises:

assistance for finance, technology, skills training and marketing of produce

  • Placement linked skills development project
  • Houses for homeless BPL persons
  • Land/homestead for landless persons
  • Drinking water supply and sanitation latrines
  • Social Safety Net : Pension for elderly, widows and disabled persons
major programmes of other ministries for rural areas
Major programmes of other ministries for rural areas
  • Bharat Nirman for rural infrastruture (US$ 34.84 billion)
  • Agriculture and allied sectors e.g. dairy, poultry, fisheries; Minimum Support Prices for procurement
  • Public Distribution System
  • Promotion of handlooms, handicrafts, food processing and village industries;
  • Education:SarvaShikshaAbhiyan (Education for All), Mid-day Meal scheme in schools;
  • Health: National Rural Health Mission (US$ 3 billion)
  • Rural Electrification
  • Banks: Credit and Debt-waiver for farmers (US$ 13.86 billion ),
  • IT: Common Service Centers -1,00,000
impact analysis1
Impact Analysis

Rural demand - the driver of economic growth in India:

  • Major structural shift taking place in rural economy: Contribution to rural household income:-
    • from agriculture- 43%
    • from services- 36%,
    • from industry- 21%.
  • By 2017, Rural economy is estimated to surpass urban market
need for a paradigm shift financial capitalism inclusive capitalism
Need for a paradigm shift :Financial Capitalism  Inclusive Capitalism

“ Why is it that with all our technology, managerial know-how, and investment capacity, we are unable to make even a minor contribution to the problem of pervasive global poverty and disenfranchisement? Why can’t we create inclusive capitalism?”

- C.K. Prahalad

(The Fortune at the Bottom of The Pyramid)

co creating the fortune for the bottom of pyramid bop
Co-creating the Fortune forthe Bottom of Pyramid (BOP)
  • Rural economy is estimated to increase from $220 billion in 2004-05 to about $425 billion in 2010-11 at a CAGR of 12%.
  • The next stage in economic evolution of Rural India:

Wealth creation for the BOP

  • The challenge is how to design a system for involving the private sector for rural development and enabling dignity and choice through Markets.
co creating the fortune for the bottom of pyramid bop1
Co-creating the Fortune forthe Bottom of Pyramid (BOP)

A. Initiatives in the Private - Private sphere:

Innovations in the business models for BOP

B. Initiatives in the Public- Private sphere:

Public-Private-Partnership (PPP) for infrastructure creation and provision of services in rural areas.

  • Common Services Centres by Min. of IT
  • National Rural Livelihood Mission (MoRD)
  • PURA- (MoRD)
a initiatives in the private private sphere
A. Initiatives in the Private- Private sphere:
  • Case studies abound of innovations in the BOP business models, technology, products and services:
  • Amul business model of co-operatives network as a firm
  • ITC e-Choupal
  • HUL Shakti women village entrepreneur
  • Tata Kisan Kendra
  • DCM Shriram Hariyali Kisaan Bazaar
  • SEWA (Self Employed Women’s Association)
  • BASIX
b initiatives in the public private sphere
B. Initiatives in the Public- Private sphere:

1. Common Services Centres (CSCs)

  • 100,000 Common Services Centers in 600,000 villages.
  • Objective: to develop a platform that can enable Government, private and social sector organizations to align their social and commercial goals for the benefit of the rural population in the remotest corners of the country through a combination of IT-based as well as non-IT-based services.
  • Total cost of Rs 5742 Cr. over 4 years
  • Implementation through a Public Private Partnership (PPP) in a 3-tier structure:-
    • the CSC operator (Village Level Entrepreneur or VLE);
    • Service Centre Agency (SCA), responsible for a division of 500-1000 CSCs;
    • State Designated Agency (SDA) for managing the implementation over the entire State.
  • SREI Sahaj e-Village Ltd.: 15,000 CSCs in 6 states provide G2C & B2C services through village entrepreneurs
b initiatives in the public private sphere1
B. Initiatives in the Public- Private sphere:

2. National Rural Livelihood Mission (NRLM)

  • Universal coverage of BPL families under Self Help Group (SHG) network
  • Formation of Community Based Organisations (CBOs) and their federations
  • Rural Self Employment Training Institute (RSETIs) in every district in partnership with banks
  • Linkages of SHGs’ micro-enterprises with Corporates
  • Placement-linked skills development through partnership with private players
the pura scheme a template in ppp for sustainable and inclusive growth of rural india

The PURA Scheme – A Template in PPP for Sustainable and Inclusive Growth of Rural India

B. Initiatives in the Public- Private sphere:

vision of pura president dr abdul kalam s address on the eve of republic day 2003
VISION OF PURA :President Dr. Abdul Kalam's address on the eve of Republic Day - 2003

“Knowledge Powered PURA

The vision of transformationto a ‘developed’ India can only be realized if we launch a mega mission for empowering the rural people. 

Creation of Physical, electronic and knowledge connectivitiesleading toeconomic connectivity in villages. Such a model of establishing a circular connectivity among the rural village complexes will accelerate rural development process by empowerment.

The PURA has to be a business propositioneconomically viable and managed by entrepreneurs, local people and small scale industrialists.

Government’s supportshould be in the form of empowering such management agencies, providing initial economic support and finding the right type of management structure and leaders to manage and maintain. ”

20

the ecosystem for wealth creation in rural areas
The ecosystem for wealth-creation in rural areas
    • Micro-consumer/Micro-producer/Micro-innovator
  • in 600000 villages

Physical

Connectivity

Physical

Connectivity

Physical

Connectivity

Financial

Connectivity

Financial

Connectivity

Financial

Connectivity

Information / Knowledge

Connectivity

Information / Knowledge

Connectivity

Rural Entrepreneurs

Economic Connectivity with formal economy:

A network of market-based business system

Fortune for the Bottom of Pyramid

slide22
“Holistic and accelerated development of compact areas around a potential growth centre in a Panchayat (or group of Panchayats) through Public Private Partnership (PPP) by providing livelihood opportunities and urban amenities to improve the quality of life in rural areas.”

PURA Mission Statement

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pura strategy
PURA Strategy

Implementation of the scheme through PPP

PPP between Gram Panchayat (GP) and Private Sector partner

Core funding from PURA scheme of MoRD

Additional support through convergence of Central Govt Schemes

Private sector to bring in investment and operational expertise

Project based and risk sharing among stakeholders

Twinning of rural infrastructure development with economic activities generation

23

urban amenities to be provided under pura
Urban Amenities to be provided under PURA

Under MoRD Schemes:-

Water and Sewerage

Village streets

Drainage

Solid Waste Mgt

Skill Development

Development of Economic Activity

Under Non MoRD Schemes:-

Village Street Lighting

Telecom

Electricity distribution, etc.

Add-on Projects i.e. Revenue earning projects (Indicative) :-

Village linked Tourism

Integrated Rural Hub, Rural Market

Agri – Common Services Centre, etc .

Any other rural economy based project

Schemes such as SGSY, NRDWP, TSC, etc will be converged in CAPEX provision of PURA

24

slide25

The Business Model

  • Leveraging public funds with private capital & management for creation & maintenance of rural infrastructure.
  • Due to thin revenue base, most of the CAPEX from Govt schemes.
  • Community Development schemes ordinarily included.
  • O&M of assets and services for 10 years.
  • Private Developer to have flexibility in choosing PURA project area & revenue generating projects as add-ons.
  • Capital Grant upto 35% of project cost for meeting viability gap.
  • Cost of each PURA project upto Rs. 120 crores.
  • Actual Capital Grant to vary from project to project.

25

slide26

Land for the PURA Projects

  • For the public amenities, Gram Panchayat / State Govt to provide land free of cost.
  • For the Add-on activities:
    • Revenue sharing between GP and Private Partner if land provided by GP / State Govt.
    • Such add-on facilities to revert back to GP / State Govt at the end of concession period.
    • In case the private developer has to purchase the land from open market, cost of land not to be included for the estimation of capital grant.

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state support agreement
State Support Agreement

Tripartite Agreement between Central Govt, State Govt and Private Developer.

Support from the State to include:

Co-operation and facilitating the Concessionaire and GP in discharging their obligations under the Concession Agreement

Commitment for core facilities like roads, water and power to the PURA area

Providing access to the site required for project

Assist and facilitate in obtaining approvals and clearances required for implementing the project

To waive its sovereign immunity

concession agreement 1
Concession Agreement … 1

Between GP and Private Developer. Will include minimum service level standards, performance guarantees etc.

Concessionaire to procure, finance, improve and undertake design, engineer, construct, redevelop, operate & maintain project facilities at its cost during concession period

Concession period 13 years (including construction period)

Concessionaire to complete construction within 3 years as per the pre-determined project milestone schedule

Access and license to the land for the urban amenities to be provided by GP and at its discretion may provide land for the add-on facilities.

All urban amenities and those add-on facilities for which the land is provided by GP to be transferred to GP on termination/expiry.

concession agreement 2
Concession Agreement … 2

Concessionaire would have the right to collect user charges from the users of add-on facilities.

Grant to be disbursed to the Concessionaire through an Escrow Account set up for the same at DRDA

Concessionaire would also be eligible to utilize the funds available under other existing MoRD schemes and on tap from other Ministry schemes

Dispute if any to be settled as per alternate dispute resolution mechanism agreed between the parties

monitoring evaluation
Monitoring & Evaluation

Concept Plan & DPR

Screening Committee at MoRD for reviewing the Concept Plan & DPR prepared by the developers

Baseline information provided in the DPR shall be vetted by the Independent Engineer whose cost shall be financed under PURA

Construction and O&M

Independent Engineer shall supervise & monitor activities and performance of developer during project life cycle:

Check for compliance of performance standards set out in the Concession Agreement – delay/ quality

GP would also monitor the performance of the private developer during the Concession Period

the selection process
The Selection Process

Through open competitive bidding process.

Expression of Interest from reputed Infrastructure Companies.

No financial bidding for pilots; evaluation based on technical capability and pre-approved evaluation methodology.

Short listed bidders to be invited to pre-bid conference.

Emphasis on rural development priorities as well as developers perspective on an economically viable project.

DPR to form the basis of determining capital grant admissible. To be vetted by Independent Engineer.

Inter Ministerial approval committee to approve final cost and capital grant.

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implementation framework
Implementation Framework

Issue of Expression of Interest

Preparation of DPRs by private developers and approval by MoRD

Pre-bid Meeting / Bidder’s Conference to obtain suggestions on the draft RfP & CA from those Bidders who meet the qualification criteria.

Execution of contracts between the private developers and participating Gram Panchayats and State Support Agreement

Issue of Request for Proposal document

Project Execution by private developer

Submission of Proposals including a broad Concept Plan from interested Bidders

O&M of Project facilities by private developer

Evaluation of Proposals by MoRD / Technical Committee

Handover of Project facilities to the GramPanchayats at the end of the Concession Period

Issue of “Letter of Award” to first eight private developers for preparation of DPRs

next steps
Next Steps…

Scheme Guidelines have been issued

Notice for Expression of Interest issued.

Commencement of the selection process for private sector partners.

Preparation and approval of DPRs

Signing of SSA and CA

Scaling up after experience of pilot phase

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For further information:

Kindly visit us at : www.rural.nic.in ;

Contact us at : 011- 24363554