Provision of Urban Amenities in Rural Areas(PURA)

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

2. 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 Gandhi

3. 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

4. SECTION 1:
Laying the Foundations for Sustainable
and Inclusive Growth

5. 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.

6. Our Theory of Change:
The Multi-pronged Strategy
EMPLOYMENT GENERATION :
2.Direct attack on Poverty by providing livelihood opportunities to
Below-Poverty Line (BPL) households.
3.Enhancement of livelihood security by guaranteeing 100 days of
wage employment to every household in a year
INFRASTRUCTURE DEVELOPMENT :
5.All-weather road connectivity to unconnected rural habitations
and up gradation of existing roads.
6.Providing basic needs and amenities like housing, drinking water
and sanitation to rural households.
SOCIAL SECURITY:
8.Providing Social assistance to the elderly, widow and disabled
persons.
SUSTAINABLE DEVELOPMENT OF NATURAL RESOURCES :
10.Natural resource development for strengthening the livelihood
base of the poor

7. 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
National Level Implementation of the Programmes

8. An iIllustration of investments in
a typical village of 1000 population
1.Guarantee of 100 days manual work in an year to all the households
2.All-weather road connectivity
3.Investments for increasing land productivity:
watershed development, water harvesting ponds, check-dams and
field channels, social forestry
5.Organization of BPL persons into Self-Help Groups’ Micro-
enterprises:
assistance for finance, technology, skills training and marketing of
produce
7.Placement linked skills development project
8.Houses for homeless BPL persons
9.Land/homestead for landless persons
10.Drinking water supply and sanitation latrines
11.Social Safety Net : Pension for elderly, widows and disabled persons

9. 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: Sarva Shiksha Abhiyan (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

10. Impact Analysis
Annual investments
Rs.72000 crores
in rural areas
($14 billion)
Increased
Purchasing
Power
in rural areas
Rural
economic
Growth
(Rural economy
$425billion)
Improved
Living condition
Rejuvenation
of natural resource
base
Increased sale of
FMCG, auto,
Pharma, TV, radio,
mobile
Food Inflation!!
Decreased
migration
to urban areas
Stronger linkages
with
Urban economy:

11. 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

12. SECTION 2:
Co-creating the Fortune for the
Bottom of Pyramid (BOP)PURA

13. 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)

14. Co-creating the Fortune for
the 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.

15. Co-creating the Fortune for
the 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)PURA- (MoRD)

16. 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

17. 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

18. 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

19. The PURA Scheme – The PURA Scheme –
A Template in PPP for Sustainable A Template in PPP for Sustainable
and Inclusive Growth of Rural Indiaand Inclusive Growth of Rural India
B. Initiatives in the
Public- Private sphere:

20. 20
VISION OF PURA :
President Dr. Abdul Kalam's address on the eve of Republic Day - 2003
“Knowledge Powered PURA
•The vision of transformation to a ‘developed’ India can only be
realized if we launch a mega mission for empowering the rural
people.
•Creation of Physical, electronic and knowledge connectivities
leading to economic 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 proposition economically viable and
managed by entrepreneurs, local people and small scale
industrialists.
•Government’s support should 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. ”

21. The ecosystem for wealth-creation
in rural areas
Economic Connectivity with formal economy:
A network of market-based business system
Fortune for the Bottom of Pyramid
Micro-consumer/Micro-producer/Micro-innovator
in 600000 villages
Physical
Connectivity
Financial
Connectivity
Information / Knowledge
Connectivity
Rural Entrepreneurs
Physical
Connectivity
Financial
Connectivity
Information / Knowledge
Connectivity
Physical
Connectivity
Financial
Connectivity

22. 2222
“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

23. 23
PURA StrategyPURA 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

24. 2424
Urban Amenities to be provided under
PURA
Under MoRD SchemesUnder MoRD Schemes:-:-
•Water and SewerageWater and Sewerage
•Village streetsVillage streets
•DrainageDrainage
•Solid Waste MgtSolid Waste Mgt
•Skill DevelopmentSkill Development
•Development of Economic Activity Development of Economic Activity
Under Non MoRD SchemesUnder Non MoRD Schemes:-:-
•Village Street Lighting
•Telecom
•Electricity distribution, etc.
Add-on ProjectsAdd-on Projects i.e. Revenue earning projects (Indicative) :- 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

25. 25
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.

26. 26
●
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.
Land for the PURA Projects

27. 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

28. 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.

29. 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

30. 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

31. 313131
An Indicative PURA Project …
Figures in Rupees Million Sources of Funding
A Urban Amenities TargetSize Unit Capex Opex p.a. RD Other PURA PrivateName of Scheme
I MoRD Schemes
1Water and Sewerage 100 lpd 5mlpd 71.45 5.72 80% 14.29 Swajaldhara Scheme
2Road (Village) 16.75 km 23.45 2.35 23.45
3Drainage 16.75 km 13.07 - 13.07
4Solid Waste Mgt 5pits 1.87 0.48 80% 0.37
5Skill Development 5000persons 75.00 - 100% - Special SGSY
6Lead Economic Activity 1000persons 50.00 - 100% - Special SGSY

Sub total 234.84 8.54
II Non MoRD schemes
7Village Street Lighting 840lights 16.38 0.82 16.38 16.39 MNES
8Telecom 5kiosks 0.38 - 0.38 - DIT, CSC Scheme
9Electricity 1MW 80.00 - 10.00 70.00 MNES
Sub total 96.76 0.82
B ADD ON PROJECTS (Revenue Earning People Centric Projects) 12%Return on investment (ROI)expected
25%Deficit % on ROI expected
10Village linked Tourism 100.00 3.00 100.00
11Integrated Rural Hub 100.00 3.00 100.00
12Educational institution 150.00 4.50 150.00
Sub total 350.00 10.50
C Independent Engineer to be appointed for PRI Support 6.00
D Return to Developer
iManagement fee (% of Capex on Projects sub-total E Below) 1% 6.82
iiROI for Category A Infrastructure Total figure in Rs mn)137.57 12% 16.51
(Includes project listed against Categegory A- nos. 1,2,3,4 , 7 and 9)
E Sub-total of Projects 681.59 49.18
F Viability Gap Funding 9% 315.65 - 316 PURA
(This figure is the NPV of the Annual Operating Expenses/Deficit on Returns over a 20 year period.
This amount has been discounted at the rate % shown above)
G Total Project Costs (E + F) Capex + VGF 997.24 167 27 316 488
% of Total Project Costs 32% 17% 3% 32% 49%
SUMMARY OF BLOCK COSTS FOR TYPICAL AMENITIES PROPOSED FOR PURA PROJECT

32. 32
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.

33. Implementation Framework
Issue of Expression of Interest
Pre-bid Meeting / Bidder’s Conference to obtain
suggestions on the draft RfP & CA from those Bidders
who meet the qualification criteria.
Issue of Request for Proposal document
Submission of Proposals including a broad Concept
Plan from interested Bidders
Evaluation of Proposals by MoRD / Technical
Committee
Issue of “Letter of Award” to first eight private
developers for preparation of DPRs
Preparation of DPRs by private developers and
approval by MoRD
Execution of contracts between the private
developers and participating Gram Panchayats
and State Support Agreement
Project Execution by private developer
O&M of Project facilities by private developer
Handover of Project facilities to the Gram
Panchayats at the end of the Concession
Period

34. 34
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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