World Bank to Support Bihar Government's Initiative to Rebuild Flood-Affected Areas with $220 million

PATNA, January 12, 2011: The World Bank today signaled its intention to increase support to the Government of Bihar (GoB) over the next few years, with part of the funds dedicated to help reconstruction efforts after devastation caused by the worst flooding in India in 50 years.

The move came after meetings between World Bank Group President, Robert B. Zoellick and Bihar Chief Minister Nitish Kumar and other senior government officials during a visit to the state. As a first step, the two witnessed the signing of the new agreement for the Bihar Kosi Recovery Project, worth $220 million, which aims to support flood recovery efforts, reduce risks from flooding, and boost emergency responses in the event of future disasters.

The Bihar Kosi Recovery Project is the first in a series of proposed new projects for the state, likely to provide about $1 billion in increased support to Bihar over the next few years. Subject to approval from the Bank's Board of Executive Directors, future projects will focus on agriculture, roads as well as flood management and disaster preparedness.

Chief Minister Nitish Kumar said, "An extraordinary momentum has led to significant developments in several key sectors in the state, but a lot remains to be done. A large portion of the state's rural population remains vulnerable to floods each year. The World Bank and the Government of Bihar are keen to build on our strong partnership developed over the past five years. We welcome an expanded engagement with the Bank on disaster management, as well as in other key areas of economic development."

"The floods exacted a terrible toll on the people of Bihar and two years on, despite vigorous relief efforts, many people remain in temporary shelters, unable to earn a living, isolated by the destruction of roads and bridges," said Zoellick.

"With a large proportion of people vulnerable to flooding each year, this project marks the start of a new phase in our relations with Bihar, to help meet the state's longer term need for comprehensive disaster management," he added.

The 2008 floods in the Kosi basin affected about 3.3 million people in five districts of Bihar. About one million people were evacuated and about 460,000 people were given temporary shelter in relief camps. Thousands of families dependant on farming lost land due to siltation, with massive damage to housing and infrastructure. An already vulnerable rural population lost whatever little they owned, falling even deeper into poverty.

The new project aims to help Bihar's flood-affected people by supporting the reconstruction of about 100,000 houses, and the rebuilding of 90 bridges and 290 kilometers of rural roads. Of the total cost of $259 million, Government of Bihar would contribute $39 million for the project. The cost per house will be Rs. 55000 ($1200) with an additional cost of Rs. 2300 ($50) for a toilet and Rs. 5000 ($110) for solar powered lighting. In cases where beneficiaries do not own land, the Government of Bihar will provide additional assistance of Rs. 5000 ($110) for the people to buy the land.

"Natural calamities cause immense economic and human losses. The Government of India has always extended support and help to the affected states in the hour of need. World Bank help was taken for rehabilitation and reconstruction in the areas affected by the Gujarat earthquake and by the Tsunami. The Government of Bihar has been undertaking extensive reconstruction and rehabilitation efforts after the Kosi floods, but the focus is now on mainstreaming disaster risk management into the development strategy of the state," said Venu Rajamony, Joint Secretary, Department of Economic Affairs, Ministry of Finance.

World Bank, IFC and Bihar

The World Bank's support to Bihar began in the mid-2000s and has since expanded with financing infrastructure development and initiatives to generate income for people.

The World Bank is also assisting the Government of Bihar with technical assistance through a grant from DFID, the United Kingdom Department for International Development, for the Bihar Flood Management Implementation Support Project-II, which seeks to strengthen the institutional framework for flood management and to improve flood warning and preparedness for people living in the affected areas of Bihar

Bihar is also a priority state for the World Bank Group's private sector arm, the International Finance Corporation (IFC).

"Our comprehensive interventions to promote inclusive, clean and sustainable growth in the state by supporting private sector companies like Husk Power Systems and Applied Solar have helped promote innovative models to provide affordable and environment-friendly power to reach off-grid villages in Bihar and expand access," said IFC South Asia Director, Thomas Davenport.

IFC's work with the Bihar Government also includes the design and implementation of a tax reform program to save cost, time and enhance ease of paying taxes for small and large businesses and to introduce reforms in the maize and poultry sectors to generate investments.

"Government of India has been encouraging IFC to expand its involvement in Low Income States as well as in the field of renewable energy," said Rajamony. "We hope that innovative models such as Husk Power Systems, can be emulated in different parts of the country. Although IFC normally works with private sector companies, we attach significant importance to the advisory services they are providing the Government of Bihar on various projects with private sector."

At today's ceremony, documents were signed by Venu Rajamony, Joint Secretary, Department of Economic Affairs, Ministry of Finance, Government of India; Vijoy Prakash, Principal Secretary Planning, Government of Bihar; and Roberto Zagha, World Bank Country Director, India.

At the signing, Zagha said, "We are happy to assist the Government of Bihar in its reconstruction efforts, bringing the lessons learned from past experience to our efforts, and helping the state develop a comprehensive disaster management program in the longer term. To reduce future risks, the project aims to strengthen the capacity of this flood-prone state to manage floods and improve its ability to respond effectively in emergency situations."

Project Details:

The project has five key components:

· Owner Driven Housing Reconstruction - To reconstruct the damaged houses of about 100,000 households using an owner driven reconstruction model.

· Reconstruction of Roads and Bridges - To restore connectivity by reconstructing damaged roads and bridges. About 2.2 million people are expected to benefit from the construction of about 90 bridges and culverts on the state highway and major district roads, as well as from the reconstruction of about 290 km of rural roads.

· Strengthening Flood Management Capacity - To strengthen Bihar's capacity for overall flood forecasting and the management of flood-erosion.

· Livelihood Restoration and Enhancement - To help build social and financial capital, and restore and expand the livelihood opportunities of the affected people.

· Improving Emergency Response Capacity - To provide contingency funding for works, goods and services required to respond in case of future calamities.

The credit is from the International Development Association (IDA), the World Bank's fund for the poorest, which is providing an interest-free loan with 35 years maturity and a 10-year grace period.

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