Rural Infrastructure Development Fund-An Evaluation Study Major findings of the study Report
A study had been assigned to IIM, Bangalore to carry out a Macro Level Policy, Programme and Performance Evaluation Study of RIDF. The major findings of the study is as presented below.
• RIDF has made significant contribution in terms of rural infrastructure development. So far irrigation potential to the tune of 117.84 lakh ha. has been created at all India level. Recurring employment to the tune of about 64,16,010 man days has been created in rural areas. Non-recurring employment in irrigation sector to the tune of about 1,736 million man-days has also been generated by the end of March 2007. The value of incremental production from investment in irrigation has been estimated at about 13,539 crores during 1995-2007 period.
• In terms of sectoral allocations, Irrigation and Road Sector got the major share of the fund. Classification of investments into assets based/sector based showed that in all classifications, these sectors got fair share. The sectoral and projects thrust have been more or less sticking to the broad objectives and guidelines of the fund.
• NABARD’s role in project financing and management was considered as contributory for the better condition of the roads. In both road and irrigation projects the officials as well as the local representatives mentioned that NABARD projects are completed faster than other projects as the NABARD’s systems are streamlined.
• The norms on quality and cost were at a higher level, and regular inspection at work sites has led to better compliance by contractors and others. These roads resulted in overall development in terms of agricultural, non-farm sector, and commercial activities. One significant finding which might be of interest to planners is that it has lead to better access to services provided by states and also better delivery of services as functionaries find is easy to visit these places. In the irrigation sectors similar observations were made. Streamlined fund flow come out as a significant factor in ensuring timely completion of projects. Land value has gone up tremendously due to these projects.
• It was observed from the study that the agricultural and other credits significantly went up after the implementation of the projects. It emerges that building of rural infrastructure helps in making the local area credit worthy and so also the borrowers by reducing the risk of income generation and increasing the collateral land value.
• NABARD charges a management fee of 0.5% of the fund to meet its expenses towards managing RIDF. It has been trying to efficiently manage within this limit. It allocates the surplus from spread between the borrowing and lending rates plus the management fees, to Tribal Development Fund (TDF). This is quite commendable. It can be allowed to be transferred to Financial Inclusion Fund (FIF) or Financial Inclusion Technology Fund (FITF) which NABARD has set up to improve financial inclusion which is also a priority for the Government and RBI.
• RIDF Corpus is announced every year through the budget and there is an uncertainty about the quantum. It will help if the Central Government can commit a fund for three years at a time. This will be the minimum commitment and if in any year the shortfall in agricultural lending is more, the Finance Ministry can allocate more. Giving stability to the fund will help in taking a longer time perspective and in improving the overall direction and efficiency of the fund.
• NABARD has created organizational capital for managing RIDF, like the intangibles that have been created in terms of organizational processes, structures like Project Sanctioning Committee (PSC) and other high power Committee (HPC) at state level, rural infrastructure project appraisal and management skills, etc. This needs to be leveraged.
• The PSC is the Apex Committee with high level representations from NABARD, RBI, States and central government. PSC is one of the strengths of RIDF implementation. This is a Policy Making Body and is also the Project Sanctioning Body. The Committee being high level, it takes an objective view and attempts a just and fair allocation system both across states and across sectors. The norms that it has set for the Fund, reflects its concern for equitable distribution. It ensures that Governance of the Overall Programme is impeccable.
• NABARD has designed structured and detailed formats for proposal submission for major sectors It takes care of the special characteristics of these sectors The technical appraisal is carried out by the consultants and financial by NABARD officers. This process is fairly well streamlined. The disbursal process works seamlessly. This is one observation made universally by the officers of all the government departments about NABARD processes which itself can explain most of efficiency in the process.
• This process rests fully with the user departments. However, they do not follow latest techniques of CPM/PERT. This methodology may be insisted even for smaller projects of less than 2 crores. The agency may be asked to identify at least three stages and report accordingly to NABARD. This should be made compulsory for medium and large projects and all critical activities identified in the DPR.
• The Finance Ministry can explore more avenues for NABARD for resources mobilization on lines of Rural Infrastructure Bonds (RIBs) and tapping the foreign exchange reserves (FERs) for this purpose. NABARD can be allowed to approach the market for RIBs. It is suggested that the funding should be scaled up to about 25,000 crores to 30,000 crores annually in two to three years time. The Corpus through RIDF can be scaled up to 20,000 crores per annum and NABARD should be allowed to raise its own finance to the tune of another 10,000 crores. As mentioned earlier, the fund commitment should be made for three years at least as this will reduce the uncertainty associated with the fund. If this is known the PSC can meet immediately after the budget and start the process.
• On the whole, it should be emphasized that NABARD should focus on improving the processes at state government level, as it is this, which can ensure the effectiveness of the process and fund. It is for this reason that international funding agencies prefer to deal with SPVs. NABARD should seek to usher in the systems that these SPVs adopt in their operations. It is recommended that NABARD should commission a study to compare the processes of existing government departments and the SPVs, and come up with suitable system intervention.
• One observation that we can make cutting across sectors and states is the poor provisioning for maintenance. States make poor provisioning for maintenance of the assets created. One way out is levy of user charges, which is receiving only lukewarm response form states. Presently, the projects funded through NABARD form huge asset base in the country. NABARD should revisit some of the projects funded through their earlier Tranches. Asset management and maintenance is as important as creating these assets. There is a need to create a Rural Asset Management Fund (RAMF) on the lines of RIDF. There is a need for at least 10,000 crores per annum for maintenance but the states need to be incentivised to provide for it. This can be funded one-third by Central Government as grant, one third by state government from its budget, and one third as borrowings through RIDF or any other additional lending mechanism. This Fund can also be managed by NABARD.
• NABARD has a comprehensive system for monitoring and it uses various methods. It has categorized projects into three groups for deciding the monitoring method: Category I: Projects less than 2 crores, Category II: Projects between 2 crores and 20 crores & Category III: Projects above 20 crores. The regular monitoring is quite routine and traditional. There can be a case of information overload. NABARD should design innovatively reporting formats for different purposes and levels.
• NABARD should undertake process study of the clients’ department and suggest improvements for their systems and reporting. It can even give automated systems to its client organizations for its own monitoring and tracking. By improving own system NABARD can bring in only incremental addition to the Value Chain. The main activity lies with client organizations. For drastic improvement in Value Chain it is important to upgrade client systems also. This is what international agencies attempt when they do the lending.
• People’s participation may help overcome their apathy towards the projects and maintenance and help their upkeep. For this their involvement is required at project initiation and formulation. The second aspect of people’s participation is their involvement during implementation. Social monitoring and beneficiary participation will definitely help in better maintenance and usage of resources. In all projects a name board depicting the features of the projects and deliverables are set up. It includes financial details also. It is in local languages. The boards can also mention warranty period. It should also mention persons responsible for the project and for warranty maintenance. It should also give contact details of next level of officers.
• It was observed that Water User Associations (WUAs) are rarely established and even where they operate they are ineffective. NABARD has to do further analysis and come up with areas where it can be of help and suggest methods for ensuring this. Presently we observed that there is no clarity on what it can achieve. User charges are rarely levied. It emerges that it is more due to lack of political will than farmers’ unwillingness.
Social Audit of RIDF supported Gokul Gram Yojana by ORG-MARG
Social Audit refers to a process of measuring and improving the social performance of a project. It attempts to assess the people's interest, priorities and perceptions to make the implementation process open and accountable to the people. The benefits of certain rural infrastructure projects had to be necessarily viewed from society's angle and for that matter RIDF supported Gokul Gram Yojana projects implemented in Gujarat was subjected to social audit by an external agency, viz., ORG-MARG. Gokul Gram Yojana (GGY) providing 16 basic amenities, within a time period of five years (1995-2000) was conceptualised to seek people's participation right from its planning to monitoring and maintenance of the assets created under the scheme. NABARD sanctioned a loan of Rs.70 crores in March 2000 under RIDF-V for implementation of GGY where state government proposed construction of rural roads and primary schools.
2. The main components of Gokul Gram Yojana being rural roads and primary schools, these infrastructure facilities supported under RIDF were selected for the study. The Agency covered six rural roads (3 each from Banaskantha and Rajkot districts) and eight primary schools (2 from Amreli, 3 from Banaskantha and 3 from Rajkot districts).
3. The major findings and suggestions/recommendations of the report submitted by ORG-MARG are as follows:
A major proportion of the total expenditure was met through budgeted provision of Rural Development Department (including NABARD's share) and the rest through funds of other ongoing schemes in Banaskantha and Amreli districts.
Most of the sample projects were completed within the proposed time. However, a few projects, which got delayed, late receipt of funds and internal conflicts at the village level emerged out as the main reasons for the time overrun. Also for a few of the projects, cost overrun due to additional number of works undertaken was observed.
People in the project area appreciated the quality of roads by and large. Majority of people were satisfied with the present condition of the schoolrooms and with the quality of construction.
Impact
Perceived benefits from schoolroom projects
New schoolrooms provided sitting space to children and protection from heat, rains and cold.The attendance of children during hot and rainy seasons increased by 20-25 per cent.
Schoolroom also helped children to concentrate on studies without disturbance and distraction, thereby improving the environment of education.
Necessary books, equipments, maps, etc. could now be safely stored in schoolrooms.
Perceived benefits from road projects
The new roads provided clean look to the village, facilitated movements of commuters/vehicles during rainy season, facilitated frequent visits of vendors supplying vegetables, crockery, cloth, newspaper, milk, etc.
Road has improved accessibility of people to the village resources like, dairy, co-operatives, post office, health centre, shops, etc.
Internal road also saved time and efforts during rainy season by improving the portion of internal roads which was not usable earlier.
Suggestions/Action Points
DRDA as nodal agency may fix some standards for prioritising the project sites for the various phases of scheme implementation as to make the selection procedures more efficient and transparent.
There is a need to involve women in the process of need identification to make the selection procedures participatory to greater extent and free from gender bias.
Voluntary groups/women groups at the village level may bring awareness among the people to sustain the assets on long-term basis. Gram Panchayat may collect revenue from the community for maintaining the assets.
Implementing agencies may maintain separate financial accounts by activities and sources of funding.
A common platform to facilitate the different departments in converging all the programmes of the Government related to Rural Infrastructure is warranted to make the villages really 'Gokul Grams'.
NABARD may continue to monitor these programmes at field level regarding physical progress of the schemes on quarterly basis and entrust the evaluation of the programme to a national level organisation to get an outsider's view.
13,539 crores during 1995-2007 period.