Transcript World Bank Presentation to MoPR on August 10, 2009

The First Independent Review of
Backward Region Grant Fund
1
1.
2.
Objective and methodology of review
Synthesis of findings from the 8-state review
• Overall assessment
• Thematic findings
• Development Grants
• Planning
• Capacity Building Support
• Programme Management and M&E
3.
Options for improving impact of BRGF
2
Mitigate regional imbalances, contribute
towards poverty alleviation in backward
districts and promote accountable and
responsive panchayats and municipalities
3
1. Bridge critical gaps in local infrastructure and other
development requirements that are not being
adequately met through existing inflows.
2. Strengthen, to this end, panchayat and municipality
level governance with more appropriate capacity
building, to facilitate participatory planning, decision
making, implementation and monitoring, to reflect
local felt needs.
4
3. Provide professional support to local bodies
for planning, implementation and monitoring
their plans.
4. Improve the performance and delivery of
critical functions assigned to panchayats, and
counter possible efficiency and equity losses
on account of inadequate local capacity
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Assess progress in the implementation of the
programme with respect to objectives;
Highlight what has worked; and
Recommend what needs improvement.
Focus on:
 Development fund management
 Decentralized participatory planning
 PRI and ULB capacity building
 Program management and M&E
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
Preparatory activities:
 Reviewed guidelines and secondary data
 Prepared the data collection checklist/
questionnaire and report format for 8 state teams
 Agreed on the scope and outputs of the
assignment with MoPR
 Primary data collection in each of the 8 states
 Typical state team: World Bank, UNDP, MoPR
consultant, state focal points from DoPR and SIRD
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 Interview stakeholders and collect data in min. 2 districts, 2
Intermediate Panchayats, 2 ULBs and 2 GPs
 Reviewed more than 55 projects financed by BRGF
 Debriefing and validation of findings with Dept of Panchayati
Raj, SIRD, and reps from PRIs/ULBs

Debriefing with MoPR on preliminary findings

Analysis and synthesis
 8 state reports and a national report
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(1) Bridge critical infrastructure gap
 BRGF financed many small scale investments in
public infrastructure of benefits to local
communities
 The discretional nature of the BRGF development
funds to PRIs and small ULBs was the most
appreciated feature of BRGF
 BRGF provides 5-40 % of the discretionary
development funding in ULBs and 50-90% in
PRIs
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Types of works financed by BRGF in Rajasthan (2007-8 funding)
Aganbari bhawan
Bridge/culvert
Construction of pacca drainage
Construction of Class room and Latrine
Helth Sub /Centre/A.N.M Residene
Community Meeting Bhawan
Courtyyard School. panchayat Bhawan ground
Construction of Roads and Bridge
Plantation and Management of park
Panachaytat Bhawn
Other
Patwar Ghar
Animal Health Sub Centre
Rain wate Harvesting/Tanka/Anikat
Energy and Street Light
Handpump
Sports Ground
Siverage and Sanitation
Residence of Gram Sevak
Farmer Service centre and distribution hatt
Irrigation Dranages
Construction of irrigation dranage
Quality improve Anmal and collection of grass centre
Passengers Facilities
Shop of fare value
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 BRGF allocation is too small to make a dent at local
level or address regional imbalance
 0.4% of total GoI budget; less than 10% of NREGS Budget
 BRGF per capita annual allocation is meagre: Rs 103
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nationally; q1=81, q2=111, q3=176; q4=3,162
Most GPs get 2 - 6 lakhs per annum (in all states)
Blocks get: 0 lakhs in Rajasthan; 16 lakhs in AP; 55 lakhs in
Assam
ZP: 0 lakhs in Rajasthan; 2.5 crore in Assam; 3.9 crore in
Bankura in West Bengal; 5 crore in AP;
An average PRI undertakes a very small number of micro
projects of Rs 1-4 lakh size; an average ULB undertakes a
few projects of Rs 2-6 lakh size
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 In most states, BRGF stimulated grassroots participation in
Gram Sabha and bottom-up planning
 In other states “petitioning” is a more accurate description of
current role of PRIs, with DPC/HPC holding ultimate
discretion and line departments absent in local planning
 District Planning Cell (technical secretariat) very weak or
non-existent
 Current convergence examples are mostly PRIs using BRGF
as bandages to fix other schemes’ deficiencies
 PRIs/ULBs unlikely to play a leading role in integrated
planning when its discretionary budget is dwarfed by other
players
12
 BRGF stimulated capacity building (esp. top-down
orientation and training) activities targeted at PRI officials
and functionaries; some states are doing much more (e.g.,
West Bengal, AP); reaching a large number of LG officials
through cascading model and satellite
 Little progress in filling staffing gaps in PRIs and ULBs
 Confusion about using 5% development grant for filling staffing gap
 Reluctance to use Plan budget for recurrent costs
 ULBs are neglected in capacity building program
 PRIs/ULBs do not have much control over capacity building
content or intensity
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 Major bottlenecks in planning and budgeting processes and
flow of funds impede utilization of BRGF budget allocation
 There is one financial year release back log from GoI to the
States (some places 2 years) due to
▪layers of “approval or review/veto” of development plan
▪Further delay in state release to PRIs/ULBs (more than 15 days stipulated by
Guideline), sometimes related to Model Code of Conduct or Interim Budget for first
4 months
▪ In Rajasthan it took up to 4 months in the first year and 2 months in the
second year to release to GP (more than stipulated 15 days)
▪ Subsequent disbursement further delayed by current requirement of submission
of UC (100% for Year T-2 and 75% for Year T-1)
 Implication of the current fund flow system: PRI/ULB that
spends fast and accounts fast will have to wait for slower
peers; requiring 100% UC for any year is risky (even one
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State
From GoI to State
State to PRIs and ULBs
AP
•Jan 7, 2008
•March 2008 (1st release)
•March 2009 (2nd release)
Assam
•Release only for one district
(Morigaon) during 2009/10
•No release yet
Bihar
•January 2008
•March and May 2008 for Madhubani and
Samastipur respectively (1st instalments)
Chhattisgarh
•Dec 12, 2008
•Feb 16, 2009 & Mar7, 2009
MP
•31-10-07
• 7-12-07
Orissa
•Ganjam – Dec 27, 2007
•Dhenkanal – May 8, 2009
• Jan 29, 2008
•July 3, 2009
Rajasthan
•March 08 (90%) + 10% March
2009
•May 27, 2008 (90%)
•July 2009 (10%)
West Bengal
•Feb 2008 (90%)
•Bankura Feb 21, 2008
•Pururia Feb 28, 2008
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Despite staffing gaps, considerable absorption
capacity was noted at both PRI and ULBs, when
funds were released
Time lag between receipt of funds and initiation of
project is often less than a month
Implementation often between 3-6 months
The quality of investments observed was generally
satisfactory in the states visited or at least
comparable with other projects in the area
Supervision and control by various levels of
engineers
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Planning and budgeting for O&M is weak in all
states
 Community based O&M was not emphasized in all
local bodies; community members perceived O&M
to be the responsibility of the PRIs and ULBs
 Some ULBs attempted to budget for O&M but their
budgets are meagre
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No regular learning and adjustment mechanism in
program management
 No baseline or updated measurement to inform whether BRGF
is achieving objectives of building PRI/ULB capacity or
addressing regional imbalance
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Insufficient staffing for program management at MoPR,
state, district levels, particularly in the areas of financial
management, planning, M&E, capacity building,
communications
State HPC should focus on strategic management of
BRGF rather than rubber-stamping or vetoing district
plans; ditto for DPC
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Given existing funding for BRGF, what’s a
feasible goal?
 Can current BRGF funding address regional imbalance?
 Is integrated planning at local level feasible when
PRIs/ULBs have so little discretionary resource?
 Is BRGF the best instrument for financing local investment
and capacity building for ULB?
▪ Current BRGF contribution to poverty reduction and capacity
building in ULBs is superficial
▪ MoPR and Dept RD&PR have no mandate for ULBs
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Addressing regional imbalance within current
resource envelope is unrealistic;
 As the only gesture by GoI to “empower”
PRIs/ULBs, BRGF should focus on the PRI/ULB
empowerment goal and do it well
 Suggest reframing the goal as:

Strengthening LGs so they can proactively
deal with local development challenges
21
Simplify planning process:
Give PRIs/ULBs exclusive decision-making power within their mandate and let
them be accountable for their decisions
 Delete DPC/HPC approvals that add little value: they should not intervene in
PRI/ULB priorities; should focus on technical support not control
 Clarify planning roles of stakeholders in guidelines
 Clarify guidelines for use of funds within the spirit of the BRGF
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Clarify a List of non-eligible expenditures (Negative List) prior to the start of planning
(and allow PRIs/ULBs full discretion to allocate the BRGF within the provided menu –
positive list)
 Clarify the use of the 5 % for functionaries (and how the increased staffing costs should
be addressed beyond BRGF)
 Allow a percentage of the BRGF development grant to be used for O&M
 Ex post spot check of compliance and audit rather than ex ante approval
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Start the planning process much earlier with announced budget envelope and
planning calendar
22
Improve disbursement system:

Change the current disbursement system based on UC submission to
e.g., a replenishment system
 Front loading of funds with regular replenishments
 Allow a higher level of unspent funds
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Direct transfer of funds from state to PRIs/ULBs where possible
Consider moving away from ex ante control to ex post audit and
monitoring
Better communications
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A much more focused CB approach is needed
Every state needs to systematically monitor level of PRI/ULB
governance practice capacity in core areas (esp. planning,
accounting, engineering, record keeping, asset O&M) and
adjust CB interventions accordingly
 Create basic staffing strength in core areas
 Target training and hands-on support to weak areas
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Every state requires a LG CB Coordinator; similarly at district
level
Supplement the current supply-driven approach with a
demand-driven approach in capacity building program
 Give LGs some discretion to manage their own capacity development
 State can consider establishing a competitive market for capacity
building and focus on stimulating supply and ensuring quality
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CB delivery system is weak in many states;
funding for CB is NOT the binding constraint
States with weak SIRD need to outsource
training providers
MoPR establishes a PRI CB Cell to monitor
progress, facilitate experience sharing, peer
to peer reviews
25
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Keep the link between development grant and
capacity building, but need some gradual
introduction of performance incentive to stimulate
improvement, e.g.,
 Link disbursement of development grant to improvement
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in governance practice and capacity
Lapse all unspent allocation of each FY
Potentially link allocation of development grant to
performance
Reallocate unspent balance of slow PRIs/ULBs to fast ones
within FY, or
Allocate a performance bonus based on previous year
performance (e.g., absorption and accountability)
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
Need to establish regular learning and adjustment
mechanism in program management
 Annual field review of 1/3 of states
 Regular desk review of core indicators of PRI/ULB capacity (and
backwardness, if it’s a BRGF goal)
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Strengthen program management at MoPR, state,
district levels, particularly in the areas of financial
management, planning, M&E, capacity building,
communications
State HPC should focus on strategic management of
BRGF rather than rubber-stamping or vetoing district
plans; ditto for DPC

BRGF funding should be increased significantly
 to make PRIs/ULBs relevant players in local planning process
 to enable PRIs/ULBs to make significant investment in local
infrastructure
 to possibly expand geographic coverage

BRGF allocation formula needs to be improved to make it an
equalization grant
 Transparent formula with readily available and widely accepted
predictors of poverty as indicators, e.g., agric labor as share of active
labor force, % ST/SC population
 Current allocation has no poverty targeting
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per capita BRGF & district population
3500
3000
2500
2000
1500
1000
500
0
0
1000000
2000000
3000000
4000000
5000000
6000000
7000000
8000000
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Per capita BRGF & backwardness ranking
3500
3000
2500
2000
1500
1000
500
0
0
100
200
300
400
500
600
700
30
Per capita BRGF & backwardness ranking (for districts with
backwardness ranking of 1-250)
1500
1300
1100
900
700
500
300
100
-100
0
50
100
150
200
250
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Per capita BRGF & share of agric labor
3500
3000
2500
2000
1500
1000
500
0
0
10
20
30
40
50
60
70
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BRGF has started a process of PRI/ULB strengthening
through providing discretionary resource and capacity
building support to PRI/ULB
PRIs/ULBs are using discretionary resource to address
local needs identified through participatory process
Bottlenecks in BRGF development grant
disbursement need to be addressed
BRGF development grant is very small, compared to
other schemes, hence slow progress in improving
integrated planning
Capacity building component needs major
improvement
BRGF objective needs to be clarified
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Support a national framework aiming at
promoting strong LGs
 Support states that are willing to provide LGs
with autonomy and capacity building support
 Help a few states pilot a LG capacity and
performance monitoring system
 Help introduce in a few states links between LG
capacity/performance and development grant
disbursement and/or allocation
 Help revise BRGF district allocation formula, if
there will be significant increase in Development
Grant
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