Signpostt. EY newsletter for Government and the public sector. Inside:

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1 February 2015 Signpostt EY newsletter for Government and the public sector Inside: Designing and implementation of one of the largest skill development programs in the world Enabling improved access to social security for unorganized sector Holistic economic development in Madhya Pradesh PPP transaction in power8 transmission for evacuation of power in MP It gives me great pleasure to present you with our second edition of Signpost, EY s newsletter on the Government, and how we are supporting it in its initiatives. Like in our inaugural edition published in December 2014, we bring you four case studies on our ongoing and completed engagements with the Central and state governments. These will give you an insight into our capabilities and the success we have achieved in managing large projects. This edition aims to bring to you new ideas about and approaches to transmission projects, skilldevelopment programs, and health insurance and business opportunities for the underprivileged through simplified solutions. We hope you appreciate our fresh outlook and approach for some significant government programs in the country. The current Central and state governments are focused on bringing about social and economic reforms. One of the initiatives is skill development, which will ensure employment for youth and combat poverty. Our skill development project in Uttar Pradesh is one such project. It is one of the largest such projects being executed in the world. Social security and health care for all has been the motto of the Government of India. The Ministry of Labour and Employment (MoLE) has introduced the social security scheme, Rashtriya Swathya Beema Yojana, for the welfare of unorganized workers to ensure health insurance cover for the underprivileged. Today, proliferation of technology is viewed as a means to achieve growth, efficiency and a competitive advantage. Therefore, the industry and policy-makers need to work together to accelerate wider use of technology in every aspect of social development. In this newsletter, we have elaborated on two remarkable projects in Madhya Pradesh one covering policy, business and competitive reforms, development of vision, enhancement of economic value, etc., and the other upgrading of power transmission infrastructure through PPP transactions. Do continue to share your feedback and ideas with me at gaurav.taneja@in.ey.com I look forward to hearing from you. Kind regards Gaurav Taneja India Government and Public Sector Leader, Ernst & Young

2 Signpost, EY newsletter for Government and public Sector 2 Designing and implementation of one of the largest skill development programs in the world EY is helping the Uttar Pradesh (UP) Government formulate, initiate and manage its state-wide rollout of a skill development program that targets employment of over two million youths over the next three years. The program has the potential to bring 1.5 million households out of poverty. Overview and challenges: The opportunity cost of losing time in large social development interventions can be huge, manifesting itself in social unrest, spreading unemployment and poverty. The Government of India (GoI) adopted the National Skill Development Policy in 2009 to skill 500 million people. The program is financed through 23 government departments and the National Skill Development Corporation (NSDC). The large number of schemes formulated by the different departments has led to multiple implementation models with too little scale to realize optimum benefits on public money spent on such programs. The Government of UP, being the largest recipient of the funds through beneficiaryoriented skill development schemes, expressed its intent to roll out an integrated skill development program. Support and intervention: EY was selected as the technical consultant for the State Programme Management Unit (SPMU) to conceptualize the integrated skill development program, staffing and operationalization of the UP Skill Development Mission (UPSDM). This is the umbrella body that manages skill development programs in the state, including related interventions such as social mobilization, assessment and certification of youths, and also facilitates placement linkage of skilled youths. Result and impact: EY operationalized UPSDM in a record time of six months, helping in recruitment, selection and induction of an employee base of 200. Clearly specified delegation of power was laid down for the Mission Director. Roles and responsibilities, the HR manual, the performance Management System, etc., have been designed incorporating accepted practices in the private and the public sectors. EY led the Bid Process Management team, facilitating engagement of 96 training providers committed to train 500,000 candidates in an outcomelinked payment model. Commitments were secured with performance Guarantee collections. EY also conducted a district-wide demand gap assessment and identified target sectors and courses for candidates. EY was instrumental in formulating the Annual Action Plan, including the financial model for the organization, and obtaining approvals/ sanctions for finances (US$160 million). EY designed and facilitated rollout of the state-wide Social Mobilization and Communication Campaign, which reached out to 90 million youths and led to 4.6 million registrations for the state s skill development program. EY s Social Infrastructure services group helps government agencies conceptualize and roll out various beneficiary-oriented social development schemes and programs, specifically in areas related to skill development, agriculture, health care and education. This group works closely with our Private Sector & Economic Development group to ensure that benefits are synergistically harnessed for the state s overall socio-economic development. For more details contact: Siddhartha Das Executive Director Advisory Services, EY Tel: siddhartha.das@in.ey.com

3 EY team has provided valuable insights and cross-functional assistance to make UPSDM a successful mission in the state. Vishal Singh Former Joint Mission Director UP Skill Development Mission 3 Signpost, EY newsletter for Government and public Sector

4 Signpost, EY newsletter for Government and public Sector 4 Enabling improved access to social security for unorganized sector Social security and health care for all is the credo of the Government. The Rashtriya Swasthya Bima Yojana (RSBY) is one such flagship scheme that focuses on the social security and welfare of unorganized workers. EY is supporting the Ministry of Labour and Employment (MoLE) in its endeavor to achieve operational and IT effectiveness within RSBY across 26 states. This is expected to benefit around 40 million people. Overview and Challenge The MoLE has introduced a social security scheme, the Rashtriya Swasthya Bima Yojana (RSBY), realizing the need to deliver health insurance to the unorganized sector. The main objective of the RSBY scheme is to provide enrolled beneficiaries from the unorganized sector with health insurance cover to protect them from financial shocks due to emergency medical situations. It aims to reduce the out-of-pocket expenses of the target population for visits to hospitals. The RSBY is a centrally sponsored scheme of the GoI. It is implemented by state governments or their designated agencies. However, large and highimpact projects can pose a significant challenge in terms of operational control and their execution. Support and Intervention EY has been selected technical advisor to revamp the IT architecture and operations of the RSBY. The firm s support has been solicited by the World Bank to improve the RSBY s existing state and also to design web-based architecture. EY has helped in business process re-engineering as well as in designing the entire IT architecture for this marquee project. It has provided support to ensure that MoLE and state departments concerned are able to manage ground-level activities independently and efficiently in the future. Result and Impact EY has supported MoLE in preparing RSBY s operating manuals, IT architecture design, functional requirement specifications (FRS), re-designing MIS, and highlighting improvements required in the existing software. The project enables enhancement of MIS, facilitates faster decision-making and ground-level efficiency for beneficiaries to avail the benefits of the scheme. It has resulted in monitoring of health care exceptions on the ground. EY s e-governance services helps government agencies implement various e-governance solutions including fine-tuning of the vision, mission and objective of such projects. In addition, it enables them to develop strategies to translate their vision into reality, taking into account their key objectives, target groups and services, and prepare detailed e-governance blueprints that clearly depict the requirements and outcomes of their planning processes. For more details contact: T. Koshy Partner Advisory Services, EY Tel: t.koshy@in.ey.com

5 Throughout the period of the engagement, EY deployed resources with the required technical expertise and maintained high standards of service. Arun Kumar Sinha, IAS Additional Secretary, Ministry of Labour & Employment, Government of India 5 Signpost, EY newsletter for Government and public Sector

6 Signpost, EY newsletter for Government and public Sector 6 Holistic economic development in Madhya Pradesh High-impact projects have been designed to bring about reforms for the development of the private sector by the establishment of industrial clusters, focused skill development, enhanced ease of doing business, diagnosis of the state of industrial infrastructure and investment promotion in MP. Overview and challenges The Government of MP (GoMP) has been working proactively to create a conducive investment climate by creating infrastructure, reducing regulations and implementing policy reforms to attract investment in the state. As a result, it witnessed an impressive Gross State Domestic Product (GSDP) growth rate 11.1% in However, the GoMP has been facing several challenges in sustaining the path of its industrial progress. The state s per capita income was half of the national average at around US$318. In India, MP ranks 11th out of 17 states in on the World Bank s Ease of Doing Business Index for Furthermore, 80% of investments in the state are in the traditional sectors. Support and intervention EY, in its role as the Project Management Unit (PMU) for Strengthening Performance Management in Government (SPMG), Directorate of Institutional Finance, and the Knowledge Partner for the Global Investor Summits 2012 and 2014, Trade and Investment Facilitation Corporation Limited (TRIFAC) in the GoMP has worked on the following key areas: 1. Reforms in business climate: EY supported the GoMP in developing legislation for time-bound approvals for 25 critical investor services, simplified 32 enabling processes to improve ease of doing business and helped to simplify the Investment Application Form from 52 to 5 pages. 2. Infrastructure development: EY conceptualized projects and assessed the demand of over 100 infrastructure projects (worth more than US$18 billion) and supported implementation of four nodes in the Delhi-Mumbai Industrial Corridor influence area (covering 772 sq. km). 3. Skill development: EY helped the GoMP develop its policy on technical education and skill development the state is the first in country to develop such a policy. In addition to this, EY supported it in standardizing certifications, industry accreditation and mobilization of candidates. Consequently, the state has received proposals to establish more than 50 technical institutes that will train 192,000 youths to meet industry needs. MSME s development and access to finance: EY institutionalized a convergence platform between the Government, industry and financial institutions to increase penetration of credit disbursement to MSMEs from 10% to 30%, and supported development and implementation of seven MSME clusters in focus sectors, thereby facilitating access to markets and upgrading of technology. Result and impact The benefits of the intervention mentioned above were evident at the Global Investor Summit 2014 held in October 2014 in Indore. The summit was an unprecedented success with the participation of over 500 foreign delegates from 9 partner countries and 32 participating ones, and industry participation of over 6000 business delegates and 200 captains of industry. During the event, US$95 billion worth of intentions to invest were received. In its role as the state s knowledge partner, EY is helping the Government implement investment intentions. EY s Economic Development Advisory (EDA) service has over a decade of experience in successfully delivering holistic programs for government clients, covering interventions across policy-level, business climate and competitiveness reforms; investment promotion lifecycles, development of vision; enhancement of economic value, etc. For more details contact: Sasi Kumar Sundarajan Partner Advisory Services, EY Tel: sasikumar.sundararajan@in.ey.com

7 The EY team in Madhya Pradesh has been continuously supporting us in various activities. The consultants are not only supporting with promoting investment in the manufacturing sector, but also working towards the development of the entire industrial ecosystem in the state. Mohammed Suleman, IAS Principal Secretary, Commerce, Industries and Employment, Government of Madhya Pradesh 7 Signpost, EY newsletter for Government and public Sector

8 Signpost, EY newsletter for Government and public Sector 8 PPP transaction in power transmission for evacuation of power in MP Funding the power transmission line upfront was a challenge for the MP Government. EY s new PPP structure helped it avail the Central Government s Viability Gap Funding (VGF) and leverage the private sector s capabilities in development and operation of power transmission lines. Overview and challenges Development of the power transmission line was critical to up-grade transmission infrastructure that evacuates power with new thermal power units in MP. Typically, such projects are taken up by Power Grids in India, but in order to avail VGF from the Central Government, the MP s transmission company decided to take up this project and appointed EY s Transaction Advisory Services to help it. One of the key challenges in the assignment was that it was the first-of-its kind of project in the country, and consequently, there was no regulatory framework and awareness of the proposed structure in the public sector. The MP Government faced several challenges in coordination with the Ministry of Power and in fixing unitary charges levied by the State Regulatory Commission Support and intervention EY played a vital role in resolving differences between the Ministry of Power and the Planning Commission on the new PPP structure and in laying the foundation of a regulatory framework, based on those for similar PPP power transmission projects in the country. EY s PPP Transaction Advisory Services team advised the GoMP on structuring projects, document of bids, process management in bids and stakeholder coordination in the Central Government, State Government and the private sector. EY helped in formulation of the petition to the State Electricity Regulatory Commission on the tariff to be fixed for transmission of power, prepared a detailed financial appraisal report to establish the requirement of the VGF and obtained approval from the empowered committee. Furthermore, EY undertook widespread marketing activities, leading to the successful closure of this PPP transaction. Result and impact The transaction was successfully closed in June 2013 and its financial closure was achieved according to the schedule in December The selected private partner is expected to complete construction well before the scheduled completion deadline of March The project will evacuate much needed power in central India. The new 400KV transmission line will improve efficiency and reduce transmission losses in the state. The project has attracted private sector investment of nearly INR2 billion. Furthermore, the State Government will receive around INR400 million in VGF from the Central Government, thereby reducing its transmission tariff. EY s Public Private Partnership services focus on development of infrastructure and provisioning of related services through the participation of the private sector. It aims to facilitate development of efficient assets and effective service delivery systems by leveraging the potential of the private sector. As part of our services, we advise government bodies on designing relevant projects, performing technical and financial viability studies, structuring and implementing optimal risk-sharing mechanisms, and putting in place bid process management systems to select private players. We also advise governments on post- award activities including financial closure and project management. For more details contact: Abhaya Krishna Agarwal Partner & Leader PPP Government & Transaction Advisory Services, EY Tel: abhaya.agarwal@in.ey.com

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