India: Government of India and World Bank sign $84 million agreement for Bihar Panchayat Strengthening Project

June 27, 2013

The Project will strengthen Panchayati Raj Institutions across 1,300 gram panchayats in six districts of Bihar

NEW DELHI, June 27, 2013 –The government of India and the World Bank today signed a $84 million credit agreement to support the government of Bihar’s efforts at strengthening local governance at the village level.

The project will finance the state government’s decentralization agenda and improve capacities of gram panchayats to plan and implement development schemes. It will build panchayats’ administrative, planning and financial management capacity; mobilize communities to increase people’s knowledge of their rights and responsibilities in relation to Panchayati Raj Institutions (PRIs); raise awareness among local leaders and communities on the need for local action that can improve health and livelihood outcomes; and also facilitate their access to government program resources to finance the community’s priorities. The project will also finance the building of some 300 Panchayat Sarkar Bhavans.

"The legal framework in India and Bihar provides many opportunities for citizens in rural areas to participate in local governance and demand accountability,” said Nilaya Mitash, joint secretary, department of economic affairs, ministry of finance, government of India. “This project will help strengthen panchayati raj institutions in planning and implementing development schemes, promoting community life and generating employment opportunities.”

The credit agreement for the Bihar Panchayat Strengthening Project was signed by Nilaya Mitash, joint secretary, department of economic affairs, ministry of finance, on behalf of the government of India; K. B. N. Singh, project director cum CEO, Bihar Gram Swaraj Yojana Society on behalf of the project; Amitabh Verma, principal secretary, department of panchayati raj, government of Bihar; and Michael Haney, operations advisor, World Bank, India on behalf of World Bank.

“We hope this project will help in further strengthening the government of Bihar’s vision of creating Panchayat infrastructure, strengthen gram panchayat level institutions and mobilize communities and grassroots leaders to participate in governance, monitor service delivery and demand greater accountability,” said Amitabh Verma, principal secretary, department of panchayati raj, government of Bihar

The Bihar government has institutionalized the strategy of political inclusion for women, scheduled castes (SC), scheduled tribes (ST) and extremely backward castes at the panchayat level. Because of these provisions, the panchayat elections in 2006 and 2011 ensured a much larger role for marginalized sections of the population in local governance – today 55% of the elected panchayat members in Bihar are women, 14% belong to scheduled castes, and 0.66% to scheduled tribes. This reservation policy has created an unprecedented opportunity for poor people to express their views.

The Bihar Panchayat Strengthening Project, signed today, will focus on bringing about visible changes in the project villages of Bihar, particularly in the areas of village sanitation, quality of drinking water, nutrition and management of natural resources. This will be done primarily through helping gram panchayats access and effectively use the funding provided by a few large government schemes like the Mahatma Gandhi National Rural Employment Guarantee Act scheme (MGNREGS), Total Sanitation Campaign (TSC), National Rural Drinking Water Program (NRDWP), Integrated Child Development Services (ICDS), and discretionary grants from the 13th Finance Commission and the Backward Region Grant Fund. The Project will cover six districts (Patna, Nalanda, Bhojpur, Saharsa, Supaul and Madhepura) across 1,304 gram panchayats.

"A strong network of Panchayati Raj Institutions, empowered with the ability to identify and address their, own development priorities, can make a rich contribution to development,” said Michael Haney, operations advisor, World Bank, India. “We hope this project will support the government of Bihar’s long-term vision of inclusive, responsive and accountable local governance,” he added.

A wide range of administrative reforms in the recent past have brought about more citizen-centric governance, better public financial management and improvement in development indicators in Bihar. However, low levels of education, limited human resources, lack of basic infrastructure and social inequalities limit the degree of participation of all social groups in panchayat activities in the state.

The project will also strengthen the public financial management systems at the panchayat level and introduce computerized panchayat accounting system – PRIASOFT – in all project districts beginning with Patna and Nalanda.

The project will be financed by a credit from the International Development Association (IDA) – the World Bank’s concessionary lending arm – which provides interest-free loans with 25-year maturity and a grace period of five years.

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