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Project Signing: World Bank Provides $200 Million to Strengthen Gram Panchayats in West Bengal

July 15, 2010

KOLKATA,  July 15, 2010:  A Credit Agreement of $200 million equivalent for the West Bengal Institutional Strengthening of Gram Panchayats Project was signed today by the representatives from the Government of India, the Government of West Bengal and the World Bank. The signatories to the Agreement were Mr Anup K. Pujari, Joint Secretary, on behalf of the Government of India; Mr Trilochan Singh, Principal Secretary, Panchayats & Rural Development Department, Government of West Bengal, and Mr N. Roberto Zagha, World Bank Country Director in India.

This Project is designed to support the Government of West Bengal’s efforts to increasingly devolve functions and funds to Panchayati Raj Institutions with the aim of improving the effectiveness of basic services in rural and peri-urban areas, where most of the poor in the state reside.

Aggregate funding flows to these entities have increased significantly and Gram Panchayats now have the authority to directly employ workers in certain sectors.

“Over the past decade the state government has moved incrementally to decentralize service delivery and governance responsibilities and resources to PRIs. In fact, West Bengal is one of the few states in India where all Gram Panchayats are subject to an effective annual financial audit under the auspices of the Auditor-General,” said Roberto Zagha, World Bank Country Director in India. “We hope this Project will help strengthen ongoing efforts in improving service delivery and governance at the local level,” Zagha said.

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 in nine districts*.  These grants will help fund expenditure on local infrastructure and service delivery. In order to access the grant, Gram Panchayats will be required to meet a set of minimum conditions and performance criteria. Key performance areas include planning and budgeting, project execution and service delivery, accounting, financial reporting and audit, as well as community participation, transparency and accountability.

“The overall strategic vision is to institute a block grant system which strengthens Gram Panchayats 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 help strengthen the institutional capacity of Gram Panchayats to deliver basic services. 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 credit is from the International Development Association (IDA) – the World Bank’s concessionary lending arm – which provides interest-free loans with 35 years to maturity and a 10-year grace period.

* Burdwan, Howrah, Nadia, Cooch Behar, Birbhum, Paschim Medinipur, Purba Medinipur, Bankura, Dakhsin Dinajpur

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