Additional Financial Assistance

Additional Financial Assistance

Extension of the Project

As per the initial agreement the project was supposed to be closed in December 2015.  But due to various reasons the amount allocated to the LGs could not be spent in time and also a savings was anticipated as balance amount, the project was extended till June 15th, 2017.   Based on the calculation of expected expenditure under the project during the project period 2011-2015, it was anticipated that the project would incure a saving around USD 60-65 million due to multiple factors which includes dollar/rupees rate fluctuation also.  The Mid-Term review of the Mission of the World Bank January 18th– February 5th 2014, also arrived at the same conclusion based on the past and expected expenditure pattern and the current exchange rate of dollar/rupees.   Anticipating such a huge saving, the Mission suggested that PMU in consultation with the Bank need to agree on avenues towards utilisation of savings and to submit a proposal for the same to DEA and the Bank.  Keeping this in view, a proposal was submitted to DEA and the Bank by PMU through Government of Kerala.  The proposal included additional one time support to backward Panchayats, revenue deficit Municipalities and Grama Panchayats having tribal clusters.

Ultimately it was decided to spent the whole amount by the extended period and also it was decided that the amount shall be distributed to the local body in two ways-1 another of performance assessment and 2 an additional assistance of special grant to the 60 identified backward local bodies.  As per this decision it was finalised that another round of performance assessment shall be conducted in 2015-16 to identified the local bodies for distributing the fifth round of Performance grant

Identification of LGs for one time financial support under KLGSDP

The World Bank Mission visited during December 2015 discussed the proposal for the additional financial assistance to the backward LGs  in detail and ultimately agreed  to the proposal to provide additional support to 10 revenue deficit Municipalities, 10 Grama Panchayats having tribal clusters and 40 backward Panchayats. It was also decided that the revenue deficit Municipalities would be identified by the Directorate of Urban Affairs and the Panchayats having tribal clusters would be identified by the Scheduled Tribe Development Department.  Accordingly these departments had submitted the lists to PMU.  On verification it was observed that certain Local Bodies figured in the list submitted had not cleared the Minimum Mandatory Conditions (MMC) in the APA 2014-15.  This information was passed on to these Departments. Accordingly these Departments replaced these LGs with eligible Local Bodies and the revised final lists were submitted.

Identification of Backward Panchayats

The backwardness was highlighted two aspects in principle to identify the backward Panchayats.  One is the genuine backwardness of the Panchayats which includes high concentration of SC/ST population, Poverty (BPL families) inaccessibility/remoteness, non-availability of basic amenities like roads, drinking water, health facilities, electricity, crematorium etc. and other aspects like geographical features.  The second aspect under consideration was the low level of revenue income which leads the Panchayats to great difficulties in managing its own committed expenditure.