Type of Review: Annual Review
Project Title: Odisha Modernising Economy, Governance and Administration (OMEGA)
Programme
Date started: April 2009
Date review undertaken: 28-29 Oct 2013
Instructions to help complete this template:
Before commencing the annual review you should have to hand:
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Business Case or earlier project documentation.
Log frame
Detailed guidance (How to Note)- Reviewing and Scoring Projects
Most recent annual review (where appropriate) and other related monitoring reports
Key data from ARIES, including the risk rating
Separate project scoring calculation sheet (pending access to ARIES)
You should assess and rate the individual outputs using the following rating scale and description.
ARIES and the separate project scoring calculation sheet will calculate the overall output score taking
account of the weightings and individual outputs scores:
Description
Outputs substantially exceeded expectation
Outputs moderately exceeded expectation
Outputs met expectation
Outputs moderately did not meet expectation
Outputs substantially did not meet expectation
1
Scale
A++
A+
A
B
C
Introduction and Context
What support is the UK providing?
UK Aid is providing up to £19 million (£8m Financial Aid, and £11m Technical Assistance) over five
years, to departments of Finance, Food Supplies and Consumer Welfare, Panchayati Raj Institutions,
Employment Technical Education & Training, Industries, and Micro, Small and Medium Enterprises to
help the Government of Odisha (GoO) enhance resource mobilisation, attract private investments in
infrastructure and industries and improve implementation of major poverty alleviation programmes
through systemic improvements.
What are the expected results?
Impact of the Programme
OMEGA is expected to enhance the capacity of the government to maintain sustainable growth for
poverty reduction through:
1. Attracting increased private investments in the state including public private partnerships for
infrastructure;
2. Increased revenues for increased development expenditure; and
3. Increased capacity for improved pro-poor service delivery.
Purpose: Increased GoO capacity to attract private investments, generate revenue and improve service
delivery
Key Outputs
1. Private investments in industries and infrastructure enhanced with environmental and social
safeguards;
2. Build capacity of the GoO for revenue mobilisation and effective expenditure management; and
3. Poor people’s access to priority poverty alleviation programmes increased strengthened.1
Monitoring and Evaluation
OMEGA’s technical and financial performance is assessed on a six-monthly and annual basis. The Joint
Annual Reviews (comprising of representatives from the Government of Odisha and DFID) monitor
progress against the programme log-frame/ milestones matrix, and agree to the milestones for
subsequent 6 months. Implementation of the programme began in 2010, and as required by the
Department of Economic Affairs (DEA), Government of India (GoI), an independent mid- term evaluation
of the program is proposed in 2014. The programme will end in March 2017.
1
The log frames will be revised next year to rearrange impact and output indicators.
2
What is the context in which UK support is provided?
State Context
1. 37% of 41.94 million population of Odisha is below the poverty line (Andhra Pradesh–21.1%,
Bihar–53.5%2.
2. State’s own tax revenues to Gross State Domestic Product (GSDP) ratio was only 5.9% in
2011-12 (Andhra Pradesh–7.9%, Bihar–5.3%3).
3. Micro, Small & Medium Enterprise (MSME) participation in formal sector is less than 10%.
4. Private participation in social sector is negligible.
5. Odisha accounts for a meagre 3% of the total intake capacity of National Council of Vocational
training compared to a 10% share in the industrial investments in the country.
6. Only 2% farmers have access to organised markets.
7. Participation by genuine poor beneficiaries in pro poor schemes is less than 27%.
What are we trying to address?
The project will improve the investment attractiveness of the state through policy formulation and
implementation in sectors where Odisha has comparative disadvantage and which have some of the
highest employment potential—tourism, food processing and agro-based industries and auto
component industries. DFID support will help establish product market linkages and identify products
that have the potential to be scaled up to improve incomes for the farmers. The objective is to increase
growth and make it more inclusive.
DFID will support a skills strategy at the district-level, based on comparative advantage of each district;
identify trainees and facilitate imparting of skills in identified trades; facilitate linkage of training
providers with the trainees and facilitate post-training placements. OMEGA will build capacity within
government institutions and industries on social and environmental safeguards and facilitate
compliance. OMEGA will also help build a strong long-term sustainable institutional mechanism to
address skills shortage in the state.
OMEGA will also help GoO enhance its potential to generate revenue by at least 17% through IT
enabled administrative and policy improvements in the Department of Commercial Taxes (CTD),
Registration, Excise and Road Transport.
GoI and state governments allocate substantial funds for employment guarantee and public
distribution, the implementation of which is still challenged with administrative loopholes and significant
shortage of adequate monitoring and evaluation. DFID support will address some of the key systemic
bottlenecks in the implementation of the Mahatma Gandhi National Rural Employment Guarantee
Scheme (MGNREGS) and the Public Distribution System (PDS) through use of information technology
(IT) and online data scrutiny and monitoring mechanisms. It will help institutionalise transparency
mechanisms and citizen’s engagement. There is limited accountability towards the people.
Strengthening accountability, including the demand side accountability, is an important OMEGA
objective. District and state level work will ensure civil society and NGO participation.
What will DFID do?
DFID support, both financial aid and technical assistance under OMEGA will be used to:
1. Increase private investments in industries and infrastructure enhanced with environmental and
social safeguards:
o Automate and simplify procedures for availing various incentives by MSME units in the
state as per the Industrial Policy Resolution (IPR) 2007 and MSME Policy and centrally
sponsored schemes.
o Support for Cluster Development by preparing the development plans, formation of Special
Purpose Vehicles (SPVs), preparing the Detailed Project Report (DPR) and getting it
2
3
Source: Planning Commission (http://planningcommission.nic.in/data/datatable/0904/tab_45.pdf)
RBI Study of Fiscal Position of State Governments
3
approved for funding.
Develop an Industrial Investment Tracking System to help build investors’ confidence and
improve Odisha’s image as an investment destination in emerging and non-traditional
sectors.
o Develop a skill strategy and ensure delivery of placement-linked skills to meet the shortage
in line with the demand estimated to be generated due to investments in identified sectors.
o Help build a long- term sustainable institutional mechanism for addressing skills shortage in
the state.
o Support establishment of a Programme Performance and Outcome Monitoring Unit
(PPOMU) in the Finance Department for concurrent monitoring of the state and central
government schemes.
o Create capacity and precedence in line departments and state PPP Cell to identify and
develop infrastructure projects with private participation especially where PPP mode has
not been adopted.
2. Build capacity of the GoO for revenue mobilisation and effective expenditure management:
o Develop Policy, Compliance and Administrative measures for the commercial tax
department for plugging leakages.
3. Increase government capacity for improved pro-poor service delivery:
o Design and develop software for online monitoring of the doorstep delivery mechanism for
food-grain to the fair-price shops to plug leakages.
o Help develop a comprehensive decentralised and online monitoring and evaluation
mechanism for the rural employment guarantee scheme, MGNREGS.
o
Who will implement?
The programme will be implemented by the Departments of Finance, Food Supplies and Consumer
Welfare (DFS&CW), Panchayati Raj (PRD), Employment, Technical Education & Training (DETET),
Industries, MSME and Planning & Coordination. A Project Steering Committee (PSC), chaired by the
Chief Secretary, GoO, has been established to guide the project at a strategic level. A Project
Management Committee (PMC) chaired by the Additional Chief Secretary (ACS) (Finance) has been
established to provide implementation support, better coordination between departments and monitor
overall outcomes.
The OMEGA Technical Assistance Support Team (OTAST) contracted by DFID provides the technical
assistance required to achieve the desired outcomes in identified sectors.
Section A: Detailed Output Scoring
OUTPUT 1:
Private investments in industries and infrastructure enhanced with environmental
and social safeguards
Output 1 Score and Performance Description: [B] Outputs moderately did not meet expectation
Output Indicators
1.1
1.2
Value of investment:
District Industries
Centres in MSME sector
Value of investment:
PPPs (on going and in
pipeline)
Baseline
(2010-11)
Milestone
(2013-14)
200 crores
9169 crores
4
Progress
(2012-13)
Score
264 crores
Moderately did not
meet expectations
237 crores1
B
11,095 crores
Met expectations
Operational – Rs
5,437 Cr, Pipeline Rs 6,751 Cr 2
OMEGA directly
supported projects in
the pipeline valued at
Rs. 2000 cr
A
1.3
Proportion of
implementation to
approved investments
43%
a. Time taken by District
Industries Centre
(DICs) for approval of
MSME projects
90 days5
b. Number of consent to
operate (CTO)/
consent to establish
(CTE) issued after
public hearing)
Orange category:45
days high -Orange
to Red category 612months6
1.4
1.5
Institutional roadmap for
PPPs
No Milestones for
2013-14. Target
(2014-15) is 48%
Not Scored
Not scored4
No Milestones for
2013-14. Target
(2014-15) is 30%
reduction from
baseline Y
Not Scored
For ease of starting
new business or
project, an online
system for filing of
Entrepreneur
Memorandum (EM)
1&2 applications
have been
developed. This has
resulted in 100% in
increase in filling of
EM1 application.
Not scored
10% increase
B
No progress.
Year 1 actions
implemented
Developed and
agreed
Moderately did
not meet
expectation
Moderately did
not meet
expectation
Limited progress /
work In progress
(details in section
below)
B
Substantially
exceeded
expectation
a. Number of MOUs
entered by GoO with
National Skills
Development
Corporation (NSDC)
37
5% increase
1.6
b. Job placements
made
Achieved: 14 MOUs(an increase of 50%
compared to
previous year)
signed by Odisha
State Employment
Mission (OSEMS)
this year with private
skill training
providers for
imparting placement
linked short term
vocational training.
A++
Substantially
exceeded
expectation
11008
10% increase
Achieved: About
3000 people got
trained and placedan increase of 200%
A++
4 Where there is no milestone for the year, no score has been assigned.
5 Under the Odisha Industries Facilitation Act, 2004, DICs act as the DLNA ( District Level Nodal agency) for the District Level
Single Window Clearance Authority (DLSWCA) and are responsible for approving all investments upto INR 50 crore. All MSME
investments are covered under this process. The average time taken by DLSWCA to approve a project is 90 days.
6 Non-Polluting enterprises (Green Category) are exempt from CTE/CTO. Polluting enterprises in the Orange Category and Red
Category need to obtain the CTE/CTO. This data on the number is not publicly available as most cases are subject to litigation
and RTI. It is however understood that the average approval time for a low-moderate Orange category industry is 45 days and
for a high-Orange to Red category is on average more than 6 months and in certain cases can exceed 1 year
7 Government of Odisha
8 Department of Employment, Technical Education and Training
5
Progress against milestones
1.1:
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1.2:
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1.3:
Value of investments—District Industries Centres in MSME sector
To facilitate MSME investment in the state, OTAST has supported the automation of the registration
process. A web enabled application system has been developed for filing of Entrepreneur
Memorandum 1 (EM1) and Entrepreneur Memorandum 2 (EM2) which are necessary for starting of
business. More than 7900 EM1 applications filed online from 1 April till date.
o Online EM2 application launched on 2 September 2013, with more than 100 Online EM2
applications received.
o The automation of the registration process is a positive move, but is not sufficient for
ensuring timely approval. Due attention need to be paid to the simplification of process/rules,
capacity building and incentivising DICs for early approvals
o To promote investments in the Food Processing Sector, OTAST assisted GoO in drafting the
Odisha Food Processing Policy, 2013 which was approved and notified.
o OTAST has supported GoO in carrying out awareness campaigns and devising a
communication strategy for enhanced number of MSME registrations and MSME
development.
Provided support to the MSME department in identifying 5 clusters for Technical Assistance (TA)
support. Limited technical support was being provided for developing Cashew Cluster at Ganjam.
Value of investment—PPPs (On going and in pipeline):
OMEGA has supported 6 PPP projects valued at around Rs. 2000 crores.9
There has been some progress against 6 agreed PPP projects:
o Roads: Technical feasibility report for the Suakati-Dubuna road, Capital Region Ring Road
(CRRR) and Bridge over river Ib. is under progress
o Water Supply: RFP issued to 11 shortlisted bidders, price bidding to be completed in
November 2013.
o Education: In-principle approval of Central Government for Viability Gap Funding (VGF)
obtained. RFP issued to 5 shortlisted bidders, price bidding to be completed in December
2013.
o Health: VGF approval for Bolangir medical college project is pending with GoI.
Apart from these additional support was provided for
o Additional support is being provided for draft project documents including Feasibility Report,
RFP and Concession Agreement for two new medical college projects (Gajapati and
Rayagada.
Under Core Road Network (CRN) Thirty three road projects have been identified and analysed
currently under consideration of the department for implementation.
Proportion of implementation to approved investments
The ratio of projects under implementation (land allotted/production/ partial production started) to the total
number of approved projects stands at 67.3710%. However, the ratio of projects approved/ under
implementation to applied projects is only 25%.11
 Investment facilitation
o OTAST has helped Industrial Promotion & Investment Corporation of Orissa Limited
(IPICOL) in carrying out verification of M0Us signed by GoO across sectors and assisted
IPICOL on desk and physical MoU verification.
 Policy Advocacy and Support
o Odisha’s IPR has been benchmarked against 11 states.
o OTAST has provided support (benchmarking of incentives with other states) to Industries and
IT department for draft Special Economic Zone & Information Communication Technology
policy.
1.4:
9
MSME Development: Time taken by DICs for approval of MSME projects and Number of consent to
The PPP Cell was established under the previous phase of OMEGA (IPR
Source: IPICOL, Department of Industries, Government of Odisha
10
11
These are indicative numbers, and validated figures will be available at the end of the financial year. In addition,
poor data quality remains a concern, and OTAST is helping improve the fidelity of transaction records.
6
operate (CTO)/ consent to establish (CTE) issued after public hearing
No substantial progress has been made on this issue. OTAST has prepared the Business Requirement
Specification for online application of Entrepreneur Memorandum (EM1) and facilitated in commissioning of
an online EM1 and EM2 registration portal.
1.5:
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1.6:
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Institutional roadmap for PPPs
Strengthening of PPP Cell
o Manpower requirement of PPP Cell identified by OTAST and draft Terms of Reference
submitted to state PPP Cell.
Assistance to PPP Cell and Line Departments in identifying PPP projects
o Carried out consultations with Scheduled Caste-Scheduled Tribe (SC-ST) Development
department, Housing &Urban Development Department, and Cooperation Department to
identify new PPP projects.
Skill Development
Empaneled training providers with DETET. DETET has as a result signed MoUs with 23 NSDC
partners for imparting short term placement linked vocational training in the state. Thus far, 3000
students have been trained and placed with OTAST support.
Supported GoO in restructured/re-orientated six district employment offices through PPP, the
bidding for which is underway.
Carried out skills gap studies for manufacturing, food processing and healthcare and three districts.
Supported DETET in design of a monitoring & evaluation framework for all modules of the MIS.
Recommendations
Output 1 (Private Sector Development)
Industries/IPICOL
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Carry out a detailed regulatory reforms study and ease of doing business study, and include
amending or drafting of rules, acts, policies necessary for simplification of process and business
activity by February 2014; (Action: OTAST) and
Support IPICOL in tracking all projects—Common Application Form (CAF) or MOU—by liaising with
other departments, to expedite grounding of projects (Action: OTAST).
MSME Development
 Focus on cluster development under the MSME intervention, and assist the Directorate of Industries
in identifying clusters with potential for speedy implementation, and carrying out preparatory
activities such as forming SPVs, preparing DSR/DPRs and obtaining approval under existing GoI
schemes by June 2014 (Action: OTAST and GoO).
 Support MSME Department in the automation of applications under National Mission on Food
Processing (NMFP) & for Disbursal of Incentives under IPR, 2007 & MSME Development Policy,
2009 by February 2014 (Action: OTAST).
 Carry out a study on non-operational policy provisions under IPR, 2007 & MSME Development,
2009 Policy by January 2014 (Action OTAST).
 Complete restructuring plans for two identified agencies under MSME Department by January 2014
(Action: OTAST).
PPP
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Operationalize PPP cell with the requisite manpower, and identify capacity building needs in the Cell
and in line departments (Action: GoO with OTAST support).
Close on-going PPP transactions in water supply, education, roads, and health sector by June 2014
(Action: GoO with OTAST support).
Provide project preparatory support for prioritised projects under Core Road Network (Action:
OTAST).
Skills Development
7
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Bring non-NSDC empanelled industrial training providers within OSEMS by March 2014 (Action:
OTAST to bring industry players/companies with large captive requirements and facilitate their
engagement with GoO to undertake skill development activities in the state).
Carry out a performance audit of the Placement-linked Skill Development Program in the state to
help improve the programme by December 2014 (Action: OTAST and GoO).
Provide technical support and bring interested training partners to help operationalise ITIs in PPP
mode (Action: OTAST).
Support DETET in establishing PMU structures at the district level for effective implementation and
monitoring & evaluation by April 2014 (Action OTAST).
Impact Weighting (%):35%
Revised since last Annual Review? N
Risk: Medium
Revised since last Annual Review? N
OUTPUT 2:
Build capacity of the GoO for revenue mobilisation and effective expenditure
management
Output 2 Score and Performance Description: [A] Output met expectation
Output Indicators
2.1
2.2
Laws, rules and systems
for GST
Baseline
(2010-11)
Policy, capacity
and processes
in line with VAT
Training of staff for GST
Milestone
(2013-14)
Progress
(2012-13)
Score
Met Expectation
Roll out of GST has been
postponed by GOI because
consensus hasn’t been
reached. GST not expected to
be introduced in FY14.
However, excellent progress
has been made on
rationalising tax structure and
improving administrative
effectiveness, which will
facilitate rollout of GST when
implemented.
A
100% staff trained
Not Scored
Since the roll out of GST has
been postponed, the training
of staff on GST has also been
postponed and will be
conducted in FY14 when the
broad principles on GST are
agreed upon. However,
OTAST has conducted
workshops and trainings on
changes in CTD required for
GST roll out.
NA
A
A+
GST fully
operational
2.3
Computerised monitoring
system established
Invalidated data
Software and
system piloted
Met Expectations
Several aspects of the tax
administration systems have
been upgraded or
implemented.
2.4
Pending audit objections
(Inspection Report) for
2006-07 to 2010-11*
19,477
15,500
(-20%)
Moderately exceeded
expectation
8
 Reduction of pending audit
observations from 19,477 to
12,018 paragraphs i.e. 38%
reduction12
 Professional Chartered
Accountant firms have been
appointed to clear Local
Fund Audit backlog of 2,000
years for 453 government
aided colleges in the state.
About 700 years of pending
audit cleared.
 Piloting underway of online
web-based Audit Tracking
System—Odisha
Centralised Audit
Management Portal
(OCAMP).
Not Scored
Efficiency gains in
procurement in target
departments
2.5
Not undertaken since the
delegation of financial rules
has been recently revised. Will
be reviewed on enactment of
the Procurement Law by GoI.
Weak or nonexistent
benchmarking
NA
Commercial Tax: GoO capacity for revenue mobilisation
Key achievements
2. 1:
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
Tax Policy
The roll out of the GST has been delayed at the national level. The GST Constitution Amendment
Bill is under discussion in the Empowered Committee of State Finance Ministers.
The Tax-GSDP ratio in Odisha increased from 5.73% in FY11-12 to 6.23% in FY12-13. Some of this
growth can be attributed to OMEGA’s efforts in streamlining tax structures and facilitating business
process reengineering to improve tax administration effectiveness.
1Source:
Directorate of Industries (http://as.ori.nic.in/diOdisha/) 2 Source: PPP Cell, Planning & Coordination Department 3
Source: IPICOL, Department of Industries, for CAF received till 31 March 2013 where project is under construction/partial
production/full production
12 Under the Odisha Industries Facilitation Act, 2004, DICs act as the DLNA ( District Level Nodal agency) for the District Level
Single Window Clearance Authority (DLSWCA) and are responsible for approving all investments upto INR 50 crore. All MSME
investments are covered under this process. The average time taken by DLSWCA to approve a project is 90 days.
12 Non-Polluting enterprises (Green Category) are exempt from CTE/CTO. Polluting enterprises in the Orange Category and
Red Category need to obtain the CTE/CTO. This data on the number is not publicly available as most cases are subject to
litigation and RTI. It is however understood that the average approval time for a low-moderate Orange category industry is 45
days and for a high-Orange to Red category is on average more than 6 months and in certain cases can exceed 1 year
12 Government of Odisha
12 Department of Employment, Technical Education and Training
12 Source: IPICOL, Department of Industries, Government of Odisha
12 The method of reporting audit paras has changed in the CAG report which results in total paras reported till 2012 increasing
from the figures 2011. However, we have worked out a simple way of deducing the comparative figures for the log frame in the
following manner. The baseline of pending audit was based on Audit Report (civil) for the year ended in March 2011 (Year 2006
to 2011). According to this, the pending observations were 19,477 audit paras. The 2012 Audit Report (GESSO), shows 62,258
audit paragraphs as pending (for the same years 2006 to 2011 i.e. an addition of 50,240 paragraphs, which apparently pertain
to PRIs - to be transferred to Local Fund Audit). So the additional paras can be deducted from the total pending paragraphs
shows in 2012 report. (62,258-50,240 = 12,0118 audit paragraphs). Therefore, there seems to be a reduction of pending audit
observations from 19,477 to 12,018 paragraphs i.e. 38.2% reduction. Please note that this calculation is based on certain
assumptions about year-wise breakup details of which are not directly available in the CAG report.
9
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2. 2:
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2. 3:
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A detailed analysis of Tax Administration Effectiveness has been carried out. The team analysed
four broad areas—registration, return filing, tax declaration and payment—to formulate strategy and
action plans for compliance improvement:
The team completed studies on revenue potential and gaps, and made recommendations to GoO
including:
o Subsuming entry tax into VAT in line with GST principles in a revenue neutral manner
o Revising structure of taxation for the Petroleum and Construction sectors in line with GST
principles and in a revenue neutral manner
o The revenue implication of the proposed recommendations is Rs. 3,028 crores (£ 302.8
million), which is 34% of the VAT revenue of FY13. However, in the short-term, revenues of
Rs.980 crores (£98 million) could accrue.
Identified new sectors like road transport, excise (liquor) and registration (stamp duty) for potential
revenue enhancement based on DFID’s experience in Bihar.
Process & technology
Process gap study completed. The report identifies the gaps within the various existing processes at
Commercial Taxes Department (CTD) including registration, returns, audit and assessment, refund,
appeals etc.
Value added tax Information systems (VATIS) assessment was undertaken. Online Scrutiny of
returns and new registration/amendment process has been implemented in the CTD. IT software
support is currently being provided to link each module within the VATIS to make it a work flow
based system
Business Process Reengineering is being carried out. New processes have been identified and
implemented including:
o Revamped dealer registration system;
o Framework for electronic scrutiny of returns including e-Refunds and TDS; and
o Online data validation checks for e-services.
People & Change Management
An Economic Intelligence Unit (EIU) for compliance monitoring has been set up.
A preliminary discussion with CTD has provided the department with an outlook to get functionally
reorganized. A detailed study is being conducted based on which departmental reorganization will
be proposed. This will help in improving the efficiency and effectiveness of the employees within the
CTD.
Training programmes were organised to facilitate change management necessary for smooth roll
out of GST including:
o Workshop on Revenue Gap analysis and policy related issues for the CTD Policy Unit
o Training on business process reengineering to the CTD process design unit
o Study and workshops on restructuring to a functional organization in line with GST.
Recommendations
 Government needs to take decision on the recommendations of the various taxation study report.
These are under consideration of the finance department GoO by early 2014 (Action: DFID Task
Team to follow up).
 In light of postponement of GST, the log frame indicators needs to be revised by early next year to
measure the impact and results of tax reforms and increased compliance (Action: DFID Task
Team).
 Recommendations from the Business Process Reengineering study need to be implemented for
increasing compliance and making it more user-friendly (Action: DFID Task Team to follow).
 A revenue gap analysis and recommendations for the following taxes should be conducted in
addition to the current program for commercial taxes (Action: DFID Task Team to agree the tasks
with OTAST).
o Stamp duty and registration fees
o Motor vehicle taxes and
o State excise duties. Local Fund Audit (LFA): GoO capacity for effective expenditure
management
Local Fund Audit (LFA): GoO capacity for effective expenditure management
10
Key achievements
2. 4:

Pending audit clearance
Finance Department formalised the process of Accounts Review of Aided Colleges by CA Firms
based on the recommendations of OTAST.
 Completed years of pending audits of government aided colleges.
 Designed and developed the Internal Audit Manual, and submitted a review report on the internal
audit system in the GoO to the Finance Department.
 A High Level Monitoring Committee has been formed with the Secretaries of the piloting
Departments (H&FW, PRD, CTD), and Accountant Generals for implementation of OCAMP.
 Conducted an organizational review of the Common Cadre Audit and Local Fund Audit. A
comprehensive note of the job descriptions of the Common Cadre Auditors has been shared with
the Department.
 Based on the suggestion of ACS (Finance), OTAST is presently conducting an organizational
review of the Common Cadre Audit and LFA in consultation with Department officials. A
comprehensive note of the job descriptions of the Common Cadre Auditors has been shared with
the Department.
In addition to the planned interventions and outputs, OTAST supported General Administration Department
in developing and implementing a strategy to recruit, manage and monitor the Young Professional
Programme for GoO.
Recommendations



Complete pending audits of allocated aided colleges within the next year in line with log frame
(Action: OTAST).
Conduct accounts management training for aided colleges to build its capacity by mid-2014 (Action:
OTAST).
Based on the interest and request of LFA, increase the scope of OTAST support beyond clearing
the audit pendency of aided colleges (Action: DFID Task Team and LFA).
Impact Weighting (%): 30%
Revised since last Annual Review?: N
Risk: Medium
Revised since last Annual Review?:N
OUTPUT 3:
Pro-poor people’s access to priority poverty alleviation programs increased
Output 3 Score and Performance Description: [A+] Output Moderately exceeded expectation13
Increase in uptake and efficiency of MGNREGS
Output Indicators
Baseline
(2010-11)
Milestone
(2013-14)
Progress
(2012-13)
Score
Met expectation
3.1
Average number of wage
work days generated per
household under MGNREGS
3214
3815
3.2
No. of person days
generated under
453 Lakh
550 Lakh
13
In 2012-13, average wagedays were 34. In 2013-14 (till
Oct 2013), the average wagedays is already 27. Current
trend shows that we should be
able to achieve our target by
end of financial year.
Met expectation
A
A
Revisions were made to the milestones and indicators compared to the previous log frame. See annex for revised indicators.
Baseline Indicator value revised since last log frame as per figure available from MGNREGS website.
15 Consequent to change in baseline indicator value, the milestone targets have also been revised since last log frame.
14
11
MGNREGS16
mandays
Percentage increase in
climate resilient works
completed through
MGNREGS
3.3
mandays
12%
545 lakh mandays achieved in
2012-13 and 302 lakh
mandays from Apr–Sep 2013.
In half the financial year, the
project has achieved more
than half its target, and is on
track to reach the milestone
by end of financial year.
Moderately exceeded
expectation
22%
Status until the end of Sep
2013 was 26%.
A+
Key achievements
There has been a significant increase in uptake of MGNREGS since 2011-12. In 2012-13, there was an
increase of 12% in total expenditure while average workdays increased by almost 8% and scheme
coverage by 16% ((from 13.78 Lakh families to 15.99 Lakh). In 2013-14, there have been several initiatives
(summarised later) which have led to significant increase in performance from April–September 2013 (from
22.2 to 26.6 days, an increase of 19.8%).
Indicator
Apr’12-Sep’12
Total person days generated in lakh17
Climate resilient works taken up18
Apr’13-Sep’13
275.15
Apr’12-Sep’12
Land development
Micro irrigation works
Drought proofing
Flood control and protection works
Overall
15,961
2,478
17,057
1,077
36,573
% Increase/ Decrease
9.99%
302.63
Apr’13-Sep’13
21,402
2,880
20,577
1,125
45,984
% Increase/
Decrease
+34.09%
+16.22%
+20.64%
+4.46%
+25.73%
Addressing systemic issues

Developed a strategic document for PRD—MGNREGS in Odisha: The Path—outlining practical
strategies to address the systemic issues to improve the efficiency and effectiveness of the scheme.

Supported PRD to set a mechanism to work out a precise labour budget by undertaking a baseline
survey covering the job card holders and non-job card holders. This is essential in identifying the
quantum of demand and the timing of demand to ensure that the labour budget for 2014-15
onwards could be a true budget.

Conceptualising “barefoot engineers” to address the issues of delay in measurement of works which
the government is planning to institutionalise it across the state.

Assisted PRD in introducing robust monitoring systems for effective monitoring of MGNREGS
through an online dashboard and grievance response tool called Panchayat Helpline across the
state.

Studying the impact on ecological restoration by the assets created by MGNREGS, reduction of
distress migration, and identifying a basket of activities for different agro ecological zones.
New Indicator – replaces indicator used in last log frame.
MGNREGS website
18 MGNREGS website
16
17
12

Piloting a mobile phone-based payment model across 2 blocks in two districts for disbursement of
wages to address the issue of last mile delay (Bank to MGNREGS Worker) in wage payment, a
central issue in the operation of MGNREGS in the state. OTAST helped PRD float a public tender
inviting mobile banking suppliers to partner on MGNREGS. OTAST and the department are
currently evaluating bids received.
Increasing scheme effectiveness

Assisted PRD in setting up umbrella institutions to augment performance of MGNREGS. These are:
MGNREGS Odisha Society set up to deal with planning, execution and monitoring the scheme in
the state, and Odisha Society for Social Audit, Accountability and Transparency (OSSAAT) set up to
undertake independent social audits under MGNREGS.

Introduced Integrated Rural Asset Development Programme (IRADP) to streamline the planning
process under MGNREGS. The programme is working with Civil Society Organisations (CSOs) to
develop area specific plans for asset development and employment generation with a focus on
convergence with different government agencies and schemes.

Introduced the concept of “Rozgar Diwas” (employment day) to help increase demand for
employment under the scheme. After a successful pilot, this initiative has been institutionalized
across the state. As a result, Rozgar Diwas is being organized in all GPs on the 1st and 3rd
Wednesdays of each month.

Piloted a strategy for addressing the issue of distress migration in Western Odisha. To ensure
productive engagement of Primitive Tribal Groups in MGNREGS, specific works are being
implemented in a saturation mode. To curb distress migration in these parts, OTAST advocated for
and successfully increased the number of guaranteed employment days to 150, and is creating
awareness on benefits and intensively monitoring up-take through social audits.
Increasing efficiency

Initiated the development of workflow based automation called MGNREGS++. The vision of
MGNREGS++ is to capture the entire process of scheme implementation, including demand
generation, works planning, and social audit in a structured and methodical way. This initiative is
expected to improve the efficiency of scheme implementation in the State, and increase
transparency and accountability.
Ensuring transparency

Developed a social audit model after analysing best practices around the country. This is a village
based social audit model, which ensures enhanced participation and independence of audit. The
model has introduced graffiti and wall paintings as a tool to fight corruption, and was piloted
successfully in 12 GPs 6 districts last year. However, we have not been able to scale this on
account of disagreement with GoO on methodology.

Organized the first ever State-wide workshop in Odisha addressing role of NGOs and CSOs in
MGNREGS. The workshop facilitated a dialogue between NGOs and government officials in
implementation of MGNREGS.
Facilitating Monitoring

Set up monitoring of MGNREGS using a Dashboard, which covers a set of priority indicators like
scheme governance, financial management, implementation progress with a focus on climate
resilient works, person days of employment, wage payment duration, etc.

Assisted PRD to establish a state-level centralised grievance management mechanism called
“Panchayat Helpline (1800 34567 68)” to address complaints and receive suggestions on
implementation of schemes including MGNREGS.

Implemented MASTERS, a web application to track fund transfer, receipts, and expenditure for
select schemes across the offices in state, district, block, and panchayat levels of the PRD. The
software has been implemented state wide and helped track the idle and parked funds.
Addressing inclusivity issues
13

Took up specific initiatives for inclusion of most vulnerable households in the scheme. OTAST has
helped PRD in developing guidelines for the differently abled. Specific works are being undertaken
in Keonjhar district to engage primitive tribal groups. To increase participation of women under
MGNREGS, formation of women groups has also been encouraged.

Undertook specific initiatives to increase financial inclusion at Bolangir and Nuapada districts to
open accounts of the migrant families. At Keonjhar, accounts of all the workers were opened
through an enrolment campaign.
Recommendations

Implement Distress Migration Reduction Project in Bolangir and Nuapada districts in coordination
with Labour Department and document impact systematically (Action: OTAST).

Operationalize OSSAAT and agree on social audit methodology for MGNREGS (Action: PRD with
support from OTAST).
Speed up process automation through MGNREGS++ and identify appropriate counterpart staff to
work with the agency in the design and software development process by early next year, to ensure
roll out by the end of the project period (Action: PRD, GoO).
Conduct performance audit of MGNREGS in Odisha and assess the impact of distress migration
intervention and document lessons learnt (Action: OTAST).


Increase in efficiency and transparency of Public Distribution System (PDS)
Output Indicators
Automation of the
Departmental Storage
Centres across the statei
3.4
PDS Implementation
Improvement Action Plan
(IIAP)
3.5
Baseline
(2010-11)
Milestone
(2013-14)
Progress
(2012-13)
Moderately exceeded
expectations
100 DSCs
automated
0
Implementation
Improvement
Action Plan
prepared and
agreed
Implementation
as per plan
Score
A+
88 DSCs already
automated till Sept 2013,
and on track to meet and
exceed the milestone.
Moderately exceeded
expectations
A+
Pilots of DSC Automation,
Paddy Procurement, and
digitisation of Beneficiary
database have been
undertaken to increase
people’s access to PDS
Key achievements


Implementation of Departmental Storage System (DSS) for Food grains: GoO abolished private
storage agencies for food grains and introduced DSS to deliver commodities at the door step of Fair
Price Shops (FPS) in 4 districts, namely Boudh, Nuapada, Subarnapur and Deogarh on 1
November 2011 on pilot basis. DSS has been combined with Door Step Delivery of food items to
the FPS dealers to ensure reach of these items in remote locations.
Implementing automation through Supply Chain Management Software & Up scaling: To
bring efficiency, effectiveness and transparency in DSS, computerization of the Depots have been
initiated.
o Developed an internet based Supply Chain Management System, and successfully
implemented the system in Sonepur District on pilot basis and subsequently in Khurdha,
Cuttack, Bargarh, Rayagada and Kalahandi districts.
o Presently, the system is being implemented across the state covering all 30 districts. Thus
far, 88 Department Storage Centres (DSC) across 30 districts have been computerized. The
remaining DSCs will be automated by 31 December 2013.
14

Instituted SMS Alert to Citizens on Dispatch of Commodity: PDS beneficiary or PRI members
are now able to register their mobile number along with the FPS of their interest using official
website of DFS&CW. SMS alerts are sent automatically from the Depot with the date and time of
dispatch, dispatched quantity of food grain and the number of the vehicle carrying the commodities.
o Digitization of PDS Beneficiary Database: The objective of this database is to eliminate
Exclusion and Inclusion errors and to bring transparency in the system. A pilot on digitising
of ration card was completed in all 23 GPs of Bolangir block covering 123 villages (about
25,500 households) with the objective of eliminating ghost card holders. After successful
completion of the Bolangir pilot by OMEGA, GoO has taken an in-principle decision to
replicate the model in all the 314 Blocks of the state after obtaining NPR data of remaining
29 districts.

Initiated Ration Card Registration with FPS owners: To increase the robustness of beneficiary
data, FPS owners were requested to register the list of beneficiaries who accessed their shop on
the website of DFS&CW. Online registration of Ration Cards will bring in transparency and
accountability in PDS and help in addressing inclusion and exclusion errors.
o Registration of 90 lakh consumers has been completed in the state out of about 92 lakhs
Ration Cards.

Implementing Paddy Procurement System Automation (PPSA): OMEGA has designed and
developed, and is currently implementing PPSA software to automate transactions occurring in a
paddy procurement centre, bring transparency on information relating to the quantity of paddy
handed over to the millers, and ensure timely payment to the farmers.
o
After a successful pilot at Godbhaga Market Yard of Bargarh district, GoO committed to
replicating the model in 4 blocks of 3 districts namely Bargarh, Bhadrak and Sonepur.

Conducting Social Audit in PDS: OMEGA has developed and piloted a social audit methodology
for PDS: So far 7 social audits have been conducted in 3 selected districts of the state.

Human Resource Management System: To improve the planning, implementation and delivery of
PDS at the state and district levels, DFS&CW has set out to implement a human resource
management system for their field functionaries across the state. This has been implemented in
3500 offices out of a total of 6500 government offices till date.
Recommendations

Scale up automation of DSCs to cover the entire state (Action: OTAST to support DFS&CW).

Speed up process of end-to-end computerisation (under NeGP) and increase focus on citizeninterface transactions such as at FPS (Action: GoO to give go ahead, and OTAST to support
DFS&CW).

Roll out the Paddy Procurement System to entire state ensuring integration of farmer information as
in Sonepur (Action: GoO to give go ahead, and OTAST to support DFS&CW with implementation
guidelines and higher level support).

Document the process and wins of PDS automation to share nationally and through DFID by mid2014 (Action: DFID Task Team).

Develop a plan and implementation strategy for compliance with the National Food Security Act,
2013 provisions by March 2013 (Action: GoO, with support from OTAST)
Impact Weighting (%):35%
Revised since last Annual Review?: N
Risk: Medium
Revised since last Annual Review?: N
15
Section B: Results and Value for Money.
1.
1.7:
Progress and results
Has the log frame been updated since last review?
No. However, given the delay in the roll out of GST, we recommend that the log frame be revised to
reflect the changed revenue mobilisation priorities of the government. We will aim to do this by March
2014.
1.8:
Overall Output Score and Description
A
Output #
Impact weighting
Score
Output 1
35%
B
Output 2
30%
A
Output 3
35%
A+
1.9:
Direct feedback from beneficiaries and stakeholders
OMEGA has received mixed feedback from highest level of bureaucracy in Odisha and from other
stakeholders. The support on tax reforms and compliance, automation of PDS, MGNREGS support for
reducing distress migration has been highly acknowledged by beneficiaries and officials. On Output 1,
some of the officials have requested for higher quality of technical input and placement of qualified
technical expertise in their department.
A few testimonials from beneficiaries and stakeholders are included below.
PVTG (Juang Community Members) of Bayakumutia GP of Bansapal Block: “Two years earlier, we
were not involved in MGNREGS. But ever since the land records started getting regularized under
FRA, and with mobilization efforts of OMEGA and Block Administration, we started applying for jobs
under MGNREGS that was instrumental for wide scale land development works and subsequently,
convergence with WIDI Model”.
Lingaraj Nayak, ARCS, Bargarh: “Computerisation of Paddy Procurement Process by OMEGA has
immensely helped the District Administration replacing Manual Record Keeping. It also facilitates timely
payment to the Farmers and advocate transparency and Accountability in the System.”
Community Members of Sargiguda: “Previously we used to go to distant places for wage employment
opportunities , but now nobody is going for migration as the work under MGNREGS is readily available
in the village.”
Tribal Communities of Balabhadrapur Village, Ghatagaon Block: “MGNREGS in convergence with
WIDI Model has created a Livelihood base for us. We do not go outside to search for wage
employment now a day.”
Pandav Munda, PMRDF, Keonjhar: “The participatory planning initiatives of OMEGA have enhanced
the efficiency of MGNREGS in Bansapal, creating durable assets & livelihood options for the PVTG.”
16
1.10:
Summary of overall progress
The Odisha Modernising Economy, Government and Administration Programme is broadly on track to
achieve the impact and outcome indicators. Overall progress is satisfactory and in some areas
moderately exceeded expectations.
Overall, Output 1 has progressed more slowly than anticipated, and this requires increasing the quality
and engagement of OTAST resources, ensuring a mix of strategic and implementation advice, and
delivering on schedule. Inputs on Output 2 (Tax and Non-tax) and Output 3 (MGNREGS and PDS
reforms) have been well-received by GoO, and in many cases the government has issued in-principle
agreement for scaling these up across the state. Under Output 2 (Tax reforms), GoO has expressed
interest in expanding the scope of interventions to taxation on key sectors and areas such as transport,
excise and registration. Under Output 2 (non-tax reforms), the process of empanelling CA firms has led
to quick results. Under Output 3, our engagement at the district level is helping feed into systemic
process reforms under MGNREGS.
Some notable achievements are listed below:






1.11:
Automation of EM1 and EM2 processes have been appreciated. GoI has asked for this system
to be replicated country-wide.
Reform and strengthening of tax systems has led to increased coverage and compliance and
resulted in increase in tax collection. The tax-GSDP ratio has increased from 6.23% in 2012-13
as against a target of 6%.
Food processing policy has been approved and notified by Govt. This has potential for bringing
in fresh investments in the state.
OMEGA has supported GoO in creation of PPPs in five sectors and tracking of approved
investment proposals. OMEGA support has also ensured creation of a large pipeline of PPP
projects, especially in road sector and the state will get the benefits in ensuing years.
OTAST has completed the automation of 88 DSCs and piloted PPSA in 3 districts, a measure
that will help bring down the leakages in the system by a large measure in years to come.
Substantial progress is noted in development of climate resilient projects in MGNREGS and its
implementation and improving service delivery quality through e-governance and automation.
Key challenges
Governance Programmes evolve over time to adapt to changing priorities. Although the programme is
designed for flexibility to incorporate emerging priorities, coordinating and engaging with diverse
departments and keeping the focus of the programme on key deliverables amidst increasing demands
of the departments and maintaining the pace is a challenge. Some particular challenges are:





1.12:
Lack of coordination between departments, cumbersome process and rules and weak
capacities at ground level is delaying approval and implementation of new projects.
Weak overall business environment and improper structuring/financial modelling of PPP
projects leading to delays in receiving VGF funding from GoI and financial closure of PPP
projects. Political, legal and bureaucratic bottlenecks/indecision is creating hurdles for
implementing some of the tax recommendations like-abolition of entry tax, raising duties of
petroleum products, e-auction of liquor licenses etc.
Delays in decision making on automation of MGNREGS++ and repeated revisions of approach
may mean that this important initiative does not fructify by the end of the programme.
Lack of agreement on QP/NOS framework at the state level poses challenges in rolling out and
scaling skill development activities. In addition, lack of alignment of GoO’s expectations and
OTAST’s recommendations on skills strategy is delaying implementation.
Quality of TA support for Output1 need to improve significantly to help GoO to achieve log
frame targets.
Annual Outcome Assessment
OMEGA is contributing towards strengthened governance at state and helping address some of the
17
systemic bottlenecks in the administrative systems of the state. OMEGA has helped in identification
and creation of PPP projects. 14 new PIAs have entered into MOU with DETET, a 50% increase
against baseline. System improvements in the Commercial Tax Department have lowered the
turnaround time for issuing new registration certificates significantly, and the taxpayers are now able to
get registration certificates within 7 days of application. Compliance of return filers and percentage of
on-time tax filers has increased from 23% in FY12 to 70% in August 2013. Improved IT systems, online
scrutiny of returns and dealer ledger has improved the tax revenue by the taxpayers. The revenue
growth from VAT (excluding POL products) in FY13 was 21.5% in comparison to FY12. The VAT
revenue (incl. POL products) grew from Rs. 7,480 cr in FY12 to Rs. 8,889 cr in FY13 indicating a
growth rate of 19%. OMEGA has helped Local Fund Audit clear of backlog of 700 years for 453
government aided colleges in the state, and piloted an online web-based Audit Tracking System
OCAMP. The average number of wage work days generated per household under MGNREGS: In
2013-14 (till Oct 2013), the average wage-days is already 27, and by the end of the financial year is
likely to exceed the milestone of 38, compared to previous year’s average of 34. PDS Implementation
Improvement Action Plan Automation of supply chain management in the public distribution system has
helped reduce leakage from the system from 25% in 2009-10 to 15% in 2011-12.
2.
2. 1:
Costs and timescale
Is the project on-track against financial forecasts:
Yes. The project is on track to achieve the milestones for 2013-14. The overall budget of the
programme is £19.00 million (£8.00 million FA and £11.00 million TA) over a period of 6 years. By 31
October 2013, the programme had spent FA of £1.9 million and TA of £6.9 million. Considering the
current trend of low spend from FA, increase in the number of deliverables through TA support and the
need for sustaining the TA support beyond 2015 we have proposed for transferring £3.0 million from
FA to TA. The proposal is being considered by ACS (Finance) of GoO.
2. 2:
Key cost drivers
Key cost drivers of the project come from two separate mechanisms: Financial Aid (FA) and Technical
Assistance (TA). DFID is providing up to £19 million, of which up to £8 million will be FA and £11
million will be TA. Thus far we have spent £1.9 million out of allocated FA budget, typically supporting
purchasing of automation software (e.g. Panchayat helpline, MGNREGS++, MIS for investment
tracking, and EM1 and EM2 automation) and knowledge transfer and capacity building (e.g.
Collaboration with IFC on PPP activities and training for DFS&CW).
TA funds are used to support implementation of studies, evaluations, quality improvements, monitoring,
capacity building, and piloting innovations. Cost drivers under TA are the remuneration and
travel/logistics costs of expert professionals to support implementation of reform initiatives and pilot
projects, develop capacity of government departments, and strengthen human resources, financial
management and MIS systems.
2. 3:
Is the project on-track against original timescale:
Yes. The project is broadly on-track against original timescale for most of the indicators. Progress on
Output 1 has been slower than anticipated. However, many of the systemic reforms introduced will
allow for rapid scale over the remaining course of the project (for example automation of EM1 and EM2
and framework for PPP deals). Progress on Output 2 concerning the roll out of GST is stalled since the
government has put the process on hold. However, the tax policy framework assistance being
extended to GoO has been conducted at exceptional pace, allowing us to prepare the ground for
increased revenue mobilisation even in a slow-growth environment. Progress on Output 3 has been
faster than anticipated on most indicators and commitments, thanks to the ownership and decision
making of GoO.
18
3.
3. 1:
Evidence and Evaluation
Assess any changes in evidence and implications for the project
No changes in evidence are noted and thus, no implications are qualified. The assumptions used in the
project design still hold, however internal capacities of government are found to be limited. Speedier
procurement processes and government approvals can further improve project progress. Staff
shortage and short tenure of key officials continues to be a challenge. Hand holding support through
the OTAST and implementation of pilots at district levels therefore continues to be significantly large
and needs to be extended in the current year.
3. 2:
Where is an evaluation is planned what progress has been made?
The programme envisages an independent assessment to the different elements in mid-2014. This will
also take stock of emerging priorities of the Government of Odisha.
4.
4. 1:
Risk
Output Risk Rating: Low/Medium/High
The programme is judged to be of medium risk with the potential of high return.
4. 2:
Assessment of the risk level (Retained from 2012 Review)
Key risk
factors
Status
Risk rating
Weak
Implementing
capacity
Weak institutional structures and insufficient capacity to coordinate efforts across Departments could undermine effective
project delivery. Prior assessment of institutional structures at
State and District level, and sustained consultancy and technical
expert support, with a strong focus on capacity building have
been designed to address this issue. A Project Steering
Committee headed by the Chief Secretary and the pivotal role of
the Principal Secretary, Finance has helped improve coordination.
Medium
Procurement
Management - Weak planning, poor contracting and supervision
by line Departments leading to low impact on ground. In the
initial stage hand holding support by the management
consultants and greater supervision by DFID is required, while
building the capacities within the Departments. The programme
is helping strengthen accountability mechanisms in the
departments. The risk is assessed as Low as the FA funds can
only be used for procuring software in agreement with DFID and
also with the approval of the PSC.
Low
Interventions not environmentally sustainable. Environmental
Environmental sustainability framework will be developed for the programme.
Interventions, especially output one and two, to mainstream
environmental impacts.
Fiduciary risk
The detailed fiduciary risk assessment for the programme is not
required as per the guidance available as there is limited DFID
19
Medium
Low
Political
Social
accountability
4. 3:
FA support (£8m) to specified budgeted line items. The fiduciary
risk is low as the programme is designed to address systemic
deficiencies and improve and strengthen GoO system.
Our earlier experience of similar programme in the state
indicates that there is risk of limited acceptability and ownership
by the line Departments of reforms being supported. The
milestone matrix and work plan are agreed in the Steering
Committee under the guidance of the Chief Secretary and the
Programme is monitored by the Project Monitoring
committee(PMC) chaired by the finance Secretary. Further,
monitoring and implementation responsibilities are also attached
to the Principal Secretary/Secretary of each Department. This
will increase the sustainability and ownership of the programme
There is limited accountability towards the people. Strengthening
accountability, including the demand side accountability, is an
important OMEGA objective. District and State level work will
ensure the participation of CSOs. TA support and collaboration
with other DFID programmes such as PACS in the State District
will further enhance accountability.
Low
Medium
Risk of funds not being used as intended
At the state level, there is no risk of diversion of UK AID grants for other programmes. The state
proposes to allocate UK AID funds through a separate budget line. At the department level, the risk of
funds not being used as intended under the programme is rated to be low. Each implementing
department is required to spend funds as per its plan of activities duly approved by the Project
Management Committee and the Project Steering Committee of OMEGA.
4. 4:
Climate and Environment Risk
The programme interventions are not likely to create any adverse impacts on either the climate or the
environment.
5.
Value for Money
5.1:
Performance on VfM measures
VfM is assessed in terms of improvement in efficiency and effectiveness by UK Treasury’s ‘3 Es’,
namely ‘economy’ (efficient procurement of inputs), ‘efficiency’ (efficient delivery of outputs), and
‘effectiveness’ (achieving the intended impact).
Cost efficiency and effectiveness of the programme has mostly come from the support provided on tax
reforms, tax compliance and our support to the PDS reforms. Some of the illustrative VfM measures
include:
TA support of £0.25m has provided suitable policy and compliance measures to increased efficiency in
coverage, transparency and collection in Commercial Tax.



TA support has helped the Commercial tax department to identify revenue gaps in
Construction, Mining and Petroleum sectors and develop suitable policy framework to mitigate
the revenue gap.
Improved IT systems, online scrutiny of returns and dealer ledger has improved the tax revenue
by the taxpayers. The VAT revenue (incl. POL products) grew from Rs. 7,480 cr in FY12 to Rs.
8,889 cr in FY13 indicating a growth rate of 19%.
The new registration process has lowered the turnaround time for issuing new registration
20





certificate significantly. Taxpayers are now able to get registration certificate (RC) within 7 days
of application compared to the previous average of more than 30 days.
Similarly the amendment process has also been streamlined and the turnaround time has been
reduced.
Regular monitoring and follow-up action (SMS and emails) on return defaulters has significantly
improved compliance of return filers. Percentage of on-time tax filers has increased from 23% in
FY12 to 70% in August 2013.
The dealer ledger has provided taxpayers with the information relating to the sales, purchase
and input tax credit information, thereby improving compliance
OTAST provided insights into the structure of Entry tax in Odisha and made suitable
recommendations for easing compliance and making the tax fair and equitable.
TA has helped build a framework for an Economic Intelligence Unit, which can be effectively
used for collecting and analysing data from external third party agencies to identify compliance
gaps and exceptions. The structure has been created at CTD and EIU has started analysing
various reports, which are being generated through the VATIS. In-depth analysis will be
possible once Business Intelligence and Data Warehousing tools are procured in FY14.
VFM measures in Mobilisation of Private Sector:



TA support of approximately £0.5 m for PPP support has created investment potential of around
£80mn. These PPP projects are at various stages of project development. Even a mere 1%
attribution shows a positive benefit-cost ratio. OTAST has also assisted the state in prioritising
the core road network of the state comprising of over 9000 Kms of road and identified 33 road
projects for implementation in PPP.
OTAST has worked closely with the Department of Employment, Technical Education &
Training (DETET) in contracting 14 private skill training providers.
TA support of £0.3 m has helped to train and placed 3000 people resulting in an annual income
of £1.8 m for poor families (assuming annual income of £600 for a skilled worker).
VFM measures in PDS:

5.2:
The consumption expenditure survey found that in Odisha, leakage reduced from 25% in 200910 to 15% in 2011-12. While there is considerable difficulty in attributing this change directly to
OMEGA interventions, we nevertheless believe that OMEGA’s efforts in automating paddy
procurement and storage centres have played an important role in plugging leakages. In
addition, we are confident that as these processes are scaled up to the entire state and
extended to the last mile (i.e. Fair Price Shops) we will be able to quantify very clearly a high
value for our investment.
Commercial Improvement and Value for Money
TA procurement under the programme was through open competitive bidding. The TA contract follows
an Output-based Payment Deliverable system thereby ensuring maximum value for money. In 201213, approximately £2.2 million of TA support was provided to the twelve departments of Government of
Odisha. Excellent knowledge and experience transfer was ensured as the OTAST worked in tandem
with the focal department officials operating out of the premises of their line departments.
The sub-contracting by OTAST has followed good procurement procedures complying with UK AID
guidelines as given under:



The Terms of Reference (TOR) for the subcontract activity is approved by both GoO and DFID.
Contracting of TA inputs is subject to UK AID approved procurement procedures.
Regular reviews of TA work is conducted by GoO and DFID linked to Monthly Progress Reports
The value for money was maximized through procurement of subcontracts in the open market. Further
cost savings were achieved by using government facilities for trainings, conferences and working
space for OTAST personnel.
21
5.3:
Role of project partners
There has been a strong commitment from the political leadership and higher level bureaucracy of the
state. OMEGA is assisting Government of Odisha in areas such as public distribution system,
implementation of the flagship employment generation program MGNREGS, skill development, PPP
etc. which the political and senior bureaucratic leadership on many occasions have presented as the
State’s priorities. This is evident through the quarterly project steering committee meeting chaired by
the Chief Secretary and the project monitoring committee chaired by the Principal Secretary, Finance
who is also the Nodal Officer of the Government of Odisha for the program. The PSC meets regularly
to discuss pending decisions, and also nudge various departments towards speedy implementation.
In addition, DFID task team meets with partner departments to ensure that project priorities are aligned
with government deliverables, and to facilitate discussion on challenging issues.
5.4:
Does the project still represent Value for Money?
Yes. A set of new output-based deliverables and milestones under all three goals are agreed with focal
departments and TA team.
5.5:
If not, what action will you take?
Not Applicable
6.
Conditionality
6.1:
Update on specific conditions
There are no specific policy conditions placed by DFID on the Government of Odisha for the OMEGA
program. DFID has been and will continue to be an active partner, maintaining close contact to ensure
that the programme is implemented as planned. Annual plans are prepared in consultation with senior
GoO officers from the beneficiary departments and are duly approved by the project monitoring
committee.
7.
Conclusions and actions
In its third year of implementation, OMEGA has continued to stay on track on most of the agreed
milestones. GoO has reiterated their appreciation for the programme, and the efforts of OTAST in
supporting partner departments not just on agreed outputs but also going beyond their brief.
With a year and a half remaining, the programme needs to continue to maintain pace, initiate roll out
and scale up of initiatives such as automation of MGNREGS and PDS, ensure systemic adoption of
new models such as our revised social audit methodology and empanelment of CA firms to assist with
local fund audit, and streamline EM1 and EM2 and revise the policy framework for investments,
Key actions for the year ahead are:
1. Speed up skill development activities.
2. Scale up and roll out of automation processes in MGNREGS and PDS. While support for and
government ownership of PDS reforms has been high, decisions on MGNREGS automation are
pending. This is an area where we could create strong and lasting impact, and GoO action to
speed up the process should be solicited
3. Revise log frame especially on tax related deliverables.
4. Complete independent evaluation (planned for mid-2014), and document wins and to ensure
effective knowledge sharing and learning, in short and concise formats.
5. Ensure that departments draw on FA funds as per agreed plans, and spend these effectively to
bolster their reform efforts.
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8.
Review Process
The Joint Annual Review was undertaken during 28-29 October 2013. The review included field visits
and state level presentations and discussions.
The review participants included DFID team, officials of Government of Odisha including Chief
Secretary; Principal Secretary, Finance; Principal Secretary, DETET; Principal Secretary, MSME;
Secretary, Industries; Commissioner, Employment Mission; Commissioner, Commercial taxes; CMD,
IPICOL, and members of OTAST
The Annual Review Report is further informed by independent sources. Presentations by GoO
Departments on programme progress, a steering committee meeting with all participating Departments
under the chairmanship of the Chief Secretary and reports from the technical assistance team, OTAST,
were reviewed to support the conclusions in this review.
i
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