The First Independent Review of Backward Region Grant Fund

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1. Objective and methodology of review2. 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 BRGF2

Mitigate regional imbalances,

contribute towards poverty

alleviation in backward districts and

promote accountable and responsive

panchayats and municipalities

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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

capacity5

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 report8

(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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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 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 13

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 laggard can affect entire district)

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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

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

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

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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

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

Start the planning process much earlier with announced budget envelope and planning calendar

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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

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

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

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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 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) 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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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 clarified33

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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