WASHINGTON, DC, June 8, 2010 - The rural poor in the Indian state of West Bengal stand to benefit from a US$200 million IDA credit aiming to improve the effectiveness of service delivery by Gram Panchayats, the lowest level of village government in India.
The West Bengal Institutional Strengthening of Gram Panchayats Project, approved today by the World Bank, is designed to strengthen the institutional capacity of Gram Panchayat in the state, enabling them to improve service delivery and governance in rural and peri-urban areas, where most of the poor in the state reside.
Over the past decade the Government of West Bengal has moved to decentralize service delivery and governance responsibilities and resources to Panchayat Raj Institutions (PRIs). Aggregate funding flows to these entities have increased significantly and Gram Panchayats now have the authority to directly employ workers in certain sectors.
The project will add substantially to the resources available to Gram Panchayats through supporting an annual, performance-based block grant to 1,000 Gram Panchayats within 9 districts for expenditure on local infrastructure and service delivery. In order to access the grant, Gram Panchayats will be required to meet a set of minimum mandatory conditions and performance criteria. Key performance areas include planning and budgeting, project execution and service delivery, accounting, financial reporting and audit, and participation, transparency and accountability.
“The overall strategic vision is to institute a block grant system which strengthens Gram Panchayts and incentivizes local governance and service-delivery performance throughout the state,” said Roland White, World Bank Sr. Institutional Development Specialist and project team leader. “It is intended that, over the long term, the grant introduced by the project will become an integral part of the local government fiscal framework throughout West Bengal.”
The project will provide support to strengthen the institutional capacity of Gram Panchayats to deliver basic services. Support will be focused to meet the objectives and performance indicators associated with this project. This will be done within the broader framework for capacity building in the state including the strengthening of planning, financial management and environmental and social protection systems, and audit activities.
The loan from the International Development Association (IDA) has a 35 year maturity including a 10-year grace period.