World Bank loan to improve West Bengal panchayats

The World Bank on Tuesday approved the West Bengal Institutional Strengthening of Gram Panchayats Project, designed to bolster the institutional capacity of Gram Panchayats 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.

The loan from the International Development Association (IDA), a lending arm of the Bank, has a 35-year maturity, including a 10-year grace period.

Over the past decade the West Bengal government has moved to decentralise service delivery and governance responsibilities and resources to Panchayat Raj Institutions (PRIs), the bank said.

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.

To access the grant, Gram Panchayats will be required to meet a set of minimum mandatory conditions and performance criteria. The 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 incentivises local governance and service-delivery performance throughout the state," said Roland White, senior institutional development Specialist at the Bank 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 Bank said.