LOAN AGREEMENT FOR STRENGTHENING OF GRAM PANCHAYATS
Press-release Published On: 15/07/2010
Government of India, Government of West Bengal today, i.e. (15/07/10) signed a Loan Agreement of US $ 200 million (amounting to Rs. 920 crore) with the world Bank for a project on Institutional Strengthening of Gram Panchayats (ISGP) in West Bengal. The project is designed to support the State Government's efforts to increasingly devolve functions and funds to the 3 tiers of Panchayati Raj Institutions with the aim of improving the effectiveness of basic services to the rural people. The World Bank will provide Rs. 920 crore credit over Five years through International Development Association (IDA) for this project, which will be implemented by the Department. of Panchayats and Rural Development, Government of West Bengal. In presence of the Panchayat and Rural Development Minister Anisur Rahaman, the chief secretary to the Government of West Bengal, Ardhendu Sen and the Principal Secretary, Finance, C.M. Bachhawat, the signatories to the agreement were Dr. Anup K. Pujari, Joint Secretary, Deptt. of Economic Affairs (DEA) of Ministry of Finance, Govt. of India, Trilochan Singh, Principal Secretary, Panchayats and Rural Development Department, of West Bengal, and N. Roberto Zagha, World Bank Country Director in India. It is expected that the project will start on 31.08.2010 and will be continued till 31.12.2015. In view of the World Bank, West Bengal is one of the few states in India, where all Gram Panchayats are subject to an effective annual financial audit under the scrutiny of Auditor-General. The project will add substantially to the resources available to Gram Panchayats through supporting an annual, performance-based block grant to 1000 Gram Panchyats in nine districts. These are Burdwan, Howrah, Nadia, Cooch Behar, Birbhum, Paschim Medinipur, Purba Medinipur, Bankura and Dakshin Dinajpur. In order to access the grant, Gram Panchayats will be required to meet a set of minimum conditions and performance criteria like planning and budgeting, project execution and service delivery, accounting, Financial reporting and audit, as well as community participation, transparency and accountability. The total cost of ISGP project is US$ 235 million (at the conversion rate of Rs. 46 per US$ it amounts to Rs. 1081 crore only) over five years. Out of this, US$ 200 million (equivalent to Rs. 920 crore) will be funded from the World Bank (IDA) credit and US$ 35 million (equivalent to Rs. 161 crore) will be state's contribution as part of the counterpart financing arrangements. This IDA credit is soft in nature as it does not have any interest charges, but there will be a service charge @0.75% only. The credit has a moratorium of 10 years the credit is to be repaid by the state government over a period of 25 years starting from 2020.