NATIONAL RURAL ROADS
DEVELOPMENT AGENCY
(NRRDA)
Pradhan Mantri Gram Sadak Yojana
Supplemental Operations Manual
August 06, 2004
i
SUPPLEMENTAL OPERATIONAL MANUAL
FOR WORLD BANK AIDED STATES
UNDER PMGSY
Table of Contents
1.
2.
3.
4.
5.
6.
INTRODUCTION............................................................................................................1
Background ......................................................................................................................1
Purpose of this Document ...............................................................................................1
Description of the Bank funded project .........................................................................1
NEW CONSTRUCTION AND UPGRADING COMPONENT
2
Criteria for allocation of Bank funds .............................................................................2
Core network ....................................................................................................................3
Selection of works ............................................................................................................3
Preparation and Review of Detailed Project Reports (DPRs) .....................................4
Procurement of works .....................................................................................................5
Implementation and quality monitoring of the works..................................................5
Monitoring and Reporting Arrangements.....................................................................7
MAINTENANCE COMPONENT
7
Planning of Maintenance .................................................................................................7
Budget requirements for maintenance...........................................................................8
INSTITUTIONAL DEVELOPMENT COMPONENT
9
Technical Assistance to Participating States .................................................................9
Quality Control Equipment, IT Hardware and Software ..........................................10
Technical Assistance to Centre .....................................................................................10
Training of project staff in Bank policies ....................................................................10
FINANCIAL MANAGEMENT
11
Budget at the State and National Levels ......................................................................11
Staffing Requirements for Financial Management ....................................................11
Eligible Expenses for the Project ..................................................................................12
On Line Monitoring and Management System ...........................................................12
Reporting requirements ................................................................................................13
Financial Monitoring Reports (FMR) ..........................................................................14
External Audit ................................................................................................................14
Internal Audit cum financial review ............................................................................14
Disbursement Arrangements ........................................................................................15
PROJECT IMPLEMENTATION ARRANGEMENTS
15
Procurement Plan ..........................................................................................................15
National Level Arrangements .......................................................................................15
State-level Arrangements ..............................................................................................15
List of Annexes
Annex 1
Annex 2
Annex 3
Annex 4
Format for PIU Certificate of Application of ESMF
Financial Monitoring Reports
Maintenance Component Report Format
Terms of Reference for External Auditors
Abbreviations and Acronyms
CAAA
CAO
DS
ECOP
EE
ESMF
FM
FMR
FMS
GOI
HP
HQ
IRC
IT
M&E
MORD
NBF
NCB
NRRDA
NQM
OM
OMMS
PRI
PWD
RDD
REO
RES
RMS
SBD
SE
SRRDA
UP
Controller of Aid, Accounts and Audit
Chief Accounts Officer
Deputy Secretary
Environment Codes of Practice
Executive Engineer
Environment and Social Management Framework
Financial Management
Financial Monitoring Report
Financial Management System
Government of India
Himachal Pradesh
Headquarters
Indian Road Congress
Information Technology
Monitoring & Evaluation
Ministry of Rural Development
Non Bank Financed
National Competitive Bidding
National Rural Road Development Agency
National Quality Monitor
Operational Manual
On-line Monitoring & Management System
Panchayat Raj Institution
Public Works Department
Rural Development Departments
Rural Engineering Organization of Jharkhand
Rural Engineering Services of Uttar Pradesh
Road Management System
Standard Bidding Document
Superintending Engineer
State Road Rural Road Development Agencies
Uttar Pradesh
1.
INTRODUCTION
Background
1.1
About 300,000 out of 825,000 habitations in India remain without any all-weather
road access. In 2000, the Government of India (GOI) initiated a program to address this
backlog. The Prime Minister’s Rural Road Program (Pradhan Mantri Gram Sadak Yojana,
PMGSY) aims at providing all-weather road access to all habitations of greater than 500
people (250 in the case of hill states tribal and desert areas) by the year 2007, the end of the
Tenth Plan. The Ministry of Rural Development (MORD), and an associated technical arm,
the National Rural Road Development Agency (NRRDA), have been assigned responsibility
to oversee implementation of the program by state and local governments.
1.2
There is currently a substantial financing gap between the resources available from
the GOI and the funds required to complete the program. The GOI is accordingly seeking
external funding from a variety of sources, including the World Bank, to help bridge this gap.
1.3
The PMGSY has been under implementation for the last three years and has so far
connected about 35,000 habitations across the country. Guidelines have been issued by the
MORD/NRRDA on various aspects of the program that are being applied by state
implementing agencies. A list of key guidelines, manuals and instructions is shown on the
program website at www.pmgsy.nic.in. The MORD has prepared an Operations Manual
(OM) to serve the needs of implementing agencies. The OM is applicable to all works
implemented under the PMGSY, be they funded by the GOI’s own resources or from funds
borrowed from lending agencies including the World Bank.
Purpose of this Document
1.4
The provisions of this Supplemental Operations Manual (SOM) are in addition to the
provisions of the OM as well as any other MORD/NRRDA guidelines or instructions and are
applicable to the additional activities envisaged under World Bank funded projects. The
provisions of the SOM, as amended from time to time as agreed between the MORD and
Bank, are to be applied by the MORD, NRRDA and the State and concerned district
implementing body, hereafter referred to as “participating states” or “participating districts”,
that will receive Bank financing under the program. These States are Himachal Pradesh,
Jharkhand, Rajasthan and Uttar Pradesh. The SOM introduces additional requirements above
and beyond the normal PMGSY requirements necessary to:
(i)
meet the provisions of the Bank’s fiduciary and safeguard policies; and
(ii)
introduce the concept of a total management approach to the core rural road
network in project areas.
Description of the Bank funded project
1.5
The project development objective is to achieve broader and more sustainable access
to markets and social services by the rural population in project areas. The indicators that
will be used to measure performance in achieving the development objective are:
(i)
% of eligible habitations in project areas with all weather access to social
services and markets;
(ii)
% of through routes of the core rural road network in project areas in fair or
better condition; and
(iii)
level of user satisfaction with rural road network in project areas.
1.6
The project has three components:
(i)
new construction and upgradation of rural roads, including independent
technical review services of design and supervision;
(ii)
periodic and routine maintenance of the core rural road network in any district
that is receiving funds from the Bank to be financed entirely by participating
states; and
(iii)
technical assistance services and goods to (a) state and local government to
enhance the management and financing of rural roads and (b) MORD/NRRDA
to enhance program management and monitoring and evaluation of the
PMGSY.
1.7
To focus resources, Bank funding is to be limited to four states that are amongst the
worst ten connected states in the country and to some or all of the least connected 60% of
districts within those states. The conditions for a state to be eligible for Bank funding are
given in Annex 1 of the Project Appraisal Document. The Bank will initially provide $400
million and may, at the request of the GOI and subject to satisfactory performance under the
first loan/credit, provide further funding to the program.
Changes to the Operations Manual and the Supplemental Operations Manual
1.8 The MORD shall inform the Bank of any changes made to the Operational Manual, (i) at
least 15 days before issuing the change for any revision that has a substantive impact on the
running of the program and (ii) within 15 days of issuing the change for any other revision.
Either the MORD, one or more participating states or Bank may propose in writing any
change to the provisions of the SOM, providing in their written proposal as necessary any
revised language for the SOM. Such change shall only take effect on written endorsement of
both the MORD and Bank and after all the participating states have been given at least 15
days to respond to the proposal.
2.
NEW CONSTRUCTION AND UPGRADING COMPONENT
Criteria for allocation of Bank funds
2.1
Once the Core Network is prepared, participating states shall allocate funds between
districts on the basis of investment need in accordance with prescribed guidelines under the
PMGSY or as otherwise agreed between the State and MORD.
2.2
Bank financing will be divided between states in two phases, a fixed phase and a
performance based phase. The fixed phase shall be 70 per cent of the total credit/loan
amount, and will be allocated among the participating states in the same proportion as made
available in any year by the MORD in respect of GOI funds. The fixed phase allocated to
each state will be divided into 2 or 3 tranches of procurement based on the state’s
implementing capacity.
2.3
The performance based phase shall represent 30% of the loan/credit amount available
for participating states and shall be divided between the states according to the achievement
of states against the following indicator:

Actual maintenance expenditure in the previous fiscal year as % of requirement of
core network in the participating state.
During negotiations, each state shall agree with the Bank and MORD, the target level to be
achieved for this indicator and this shall be recorded in the Minutes of Negotiations.
Performance against the indicator can take three values:

under par

par

above par
2.4
Those states achieving a score at par or above par during the fixed phase will be
entitled to (i) at least their full allocation as if it were a fixed phase and (ii) a portion of funds
not made available to states who fail to deliver performance at par. Any state achieving a
score below par will receive only a portion of the funds it would have otherwise received
under the fixed phase allocation criteria. The performance based phase shall be procured in
one or two tranches as appropriate.
Core network
2.5
A Core Network is the network of roads that is essential to provide basic access to
each habitation in any district. Basic access is defined as single all-weather road connectivity
to each habitation. The identification of the Core Network shall be done after examining the
suggestions/proposals received from elected representatives, Panchayats and local
beneficiaries. The Core Network shall be prepared after data is collected on all the
habitations and an inventory of rural roads is prepared (as per forms prescribed by the
NRRDA).
2.6
The data on the Core Network shall be computerized in the format prescribed by the
NRRDA. The computerization should be complete by December 31, 2005. The Core
Network shall be updated as and when any of the data changes, and shall incorporate the road
condition data which shall include a Pavement Condition Index (PCI) as defined under the
program guidelines. The Core Network shall be reviewed by the Technical Examiner
consultant.
Selection of works
2.7
The annual selection of works for Bank funding is to be undertaken simultaneously
with the selection of works for GOI funding and is to follow the same procedure, including
application of the Core Network and Comprehensive New Connectivity Priority List
(CNCPL) approach, laid down in applicable guidelines and instructions for the PMGSY as
amended from time to time. Implementing agencies are required by program guidelines to
seek approval of the proposed list of sub-projects to be taken up in the following year from
the State-level Standing Committee as well as the MoRD. For those projects proposed for
Bank funding, the implementing agency shall, simultaneously to the submission to the Statelevel Standing Committee, submit the list of proposed projects to the Bank. The list shall
indicate if any statutory clearance is required on a particular road and, if so, the status of the
clearance process. Along with this list, the implementing agency shall inform the Bank of the
total amount per district of non Bank funded projects being sought from GoI. The state
implementing agency shall thereafter inform the Bank of the total amount of proposals
cleared by the State-level Standing Committee.
Preparation and Review of Detailed Project Reports (DPRs)
2.8
The Detailed Project Reports (DPRs) for new construction and upgradation works to
be financed by the Bank shall be prepared on the basis of existing or future guidelines that
have or may be issued by the NRRDA for defining the procedures for reconnaissance
surveys, soil and material investigations, traffic surveys, detailed engineering surveys,
preparation of drawings and formats for DPRs. The DPRs shall incorporate a set of
specifications for Rural Road and Bridge Works, and Analysis of Rates based on Standard
Data Book. The designs shall be prepared on the basis of IRC Special Publication 20, as
revised from time to time. In particular, implementing agencies shall be responsible to ensure
that designs are cost effective and promote the use of local materials/ gravels wherever most
suitable.
2.9
State implementing agencies shall apply the provisions of the Environmental and
Social Management Framework (ESMF) and Consultation Framework, dated July 2004, and
shall ensure that such provisions are properly integrated into the planning and design of each
sub-project to help mitigate adverse impacts, enhance positive impacts and comply with the
Bank’s policies and GOI regulatory requirements. Provisions of the Environmental Code of
Practice (ECOP) relevant to the sub-project planning and design stages shall be adhered to by
the implementing agencies. Participating states shall be responsible for making adequate
budgetary provision for any necessary remedial social or environmental measures identified
in the planning/design process. When forwarding the DPRs to the State Technical Agencies
for review, the concerned head of the PIU shall give an undertaking in writing, using the
format attached in Annex 1, that all sub-projects submitted for approval, conform with the
provisions of the ESMF. A copy of such undertaking shall be furnished to the Bank.
2.10 These DPRs shall be scrutinized by either the State Technical Agencies (STAs) and/or
Technical Examiner. These agencies shall ensure that the relevant design guidelines and
provisions of the ESMF have been properly applied by the implementing agencies. In
particular, implementing agencies shall be responsible to ensure that designs are costeffective and promote the use of local materials/gravels wherever most suitable. Once
satisfied, the STAs shall make the necessary certification on the DPRs based on which the
State shall make its proposals to the NRRDA on the prescribed formats. The NRRDA shall
scrutinise the proposals for the adherence to the guidelines and cause them to be placed
before MoRD’s Empowered Committee who may recommend clearance of the proposals.
2.11 If private firms are to be used to undertake any element of DPR preparation, the
participating state will provide the Bank an opportunity to advise them on the content of the
terms of reference of that service. The Bank may consider a reasonable request made by a
participating state through the NRRDA for the Bank to finance such survey and design
services on pattern approved under the PMGSY. If such services are to reimbursed by the
Bank, the relevant procurement procedures are to be applied dependant on the value of the
proposed service.
2.12 For those projects proposed for Bank funding, the implementing agency shall, along
with submission to the NRRDA simultaneously submit the list of proposed projects to the
Bank for its no objection. The list shall indicate if any statutory clearance is required on a
particular road and, if so, the status of the clearance process. Along with this list, the
implementing agency shall inform the Bank of the total amount per district of non Bank
funded projects being sought from GOI. The state implementing agency shall thereafter
inform the Bank of the total amount of proposals cleared by the Empowered Committee.
Procurement of works
2.13 All NCB contracts shall be procured in accordance with the provisions of Paragraphs
3.3 and 3.4 of the Guidelines for Procurement under IBRD Loans and IDA Credits published
by the Bank as revised [the Guidelines]. Works will be procured in packages ranging from
US$200,000 to US$1 million. All NCB works contracts to be financed from the proceeds of
the Credit/Loan shall follow the following procedures:
(i)
Only the model bidding documents for NCB agreed with the GOI Task Force,
and as amended for this project only, shall be used for bidding;
(ii)
Invitations to bid shall be advertised in at least one widely circulated national
daily newspaper, at least 30 days prior to the deadline for the submission of bids;
(iii)
No special preference will be accorded to any bidder either for price or for other
terms and conditions when competing with foreign bidders, state-owned
enterprises, small-scale enterprises or enterprises from any given State;
(iv)
Except with the prior concurrence of the Bank, there shall be no negotiation of
price with the bidders, even with the lowest evaluated bidder;
(v)
Extension of bid validity shall not be allowed without the prior concurrence of
the Bank (i) for the first request for extension if it is longer than eight weeks; and
(ii) for all subsequent requests for extension irrespective of the period (such
concurrence will be considered by Bank only in cases of Force Majeure and
circumstances beyond the control of the Purchaser/Employer);
(vi)
Re-bidding shall not be carried out without the prior concurrence of the Bank and
the system of rejecting bids outside a pre-determined margin or bracket of prices
shall not be used in the project;
(vii)
Rate contracts entered into by Directorate General of Supplies & Disposals, will
not be acceptable as a substitute for NCB procedures. Such contracts will be
acceptable, however, for any procurement under National Shopping procedures;
and
(viii) Two or three envelope system will not be used.
2.14 The Bank shall review up to 15%, randomly chosen by the Bank, of the drafting Bid
Documents from each participating state in any particular tranche of works. Bids for the
whole tranche of Bank financed works shall not be invited until the Bank’s no objection is
given.
2.15 Tender Evaluation Committees consisting of at least 3 qualified persons shall be
formed to technically evaluate the bids received. At least one of the members of the
Committee shall be from outside the Zone/ Circle concerned with the project.
Implementation and quality monitoring of the works
2.16 The State-level Agency designated as the Executing Agency for the program shall
have a Program Implementation Unit (PIU) in the District, which shall have an officer of the
rank of at least Executive Engineer as its head. In areas other than Hill States, the road works
shall be completed within a period of 12 months, or lesser time if stipulated under the
program. In the Hill States, works shall be completed within two working seasons (up to 24
months), or lesser time if stipulated under the program. In respect of Himachal Pradesh, if
works are planned to be executed in two stages, the time period of two working seasons shall
apply separately in respect of each stage. During execution, the Engineer shall maintain all
contractual and technical records in the forms prescribed by the NRRDA/MoRD.
2.17 The head of the PIU shall ensure that the relevant provisions of the ESMF are
properly applied during construction of the works.
2.18 For all Bank funded works, the participating states must commission, in a timely
manner and to terms of reference agreed with the MORD and Bank, a Technical Examiner to
oversee implementation of the works, covering two or more tranches of works procurement.
The objectives of the Technical Examiner services are - for Bank funded rural road sub
projects in the State - to verify:
i)
proper application of environmental, social and techno-economic screening
procedures for the selection of rural road sub-projects;
ii)
detailed design is in compliance with agreed technical standards as well as
stipulated environmental and social management measures;
iii)
the quality of bidding documents is satisfactory and that procurement was
undertaken in conformity with agreed procedures;
iv)
compliance of actual works with contract conditions and quality assurance
procedures as well as agreed environmental and social management measures;
and
v)
expenditures under the credit/loan have been made for the purpose intended.
2.19 The implementing agency shall ensure that the provisions of the Quality Control
Handbook are applied to Bank funded works. The implementation of the provisions of the
Quality Control Handbook shall be recorded in the Quality Control Registers maintained at
the work sites. Payment shall not be made to the Contractor unless the test results have been
found to be satisfactory. The Chief Engineer or Superintending Engineer in charge of
PMGSY in the state shall be responsible for putting in place a system to ensure that the
findings of the Technical Examiner are corrected in a timely manner.
2.20 There shall be a State Quality Coordinator (SQC) of the rank of an Superintending
Engineer or above to oversee and supervise the quality control arrangement for the State, and
coordinate all quality control and assurance activities. A three-tier set up is to be put in place
by participating states for Quality Assurance for bank funded works.

The first tier shall be the State PIU/Executive Engineer (EE) in charge of the
work. The Contractor shall establish Quality Control laboratories and get the
contractually stipulated tests conducted. The test results shall be recorded in the
prescribed Quality Control Registers. Representatives of the implementing agency
shall witness the carrying out of a portion of tests as prescribed in the Quality
Control Manual. All the concerned officers shall record their observations in the
Quality Control Registers.

The second tier shall comprise of periodic inspection by officers/agencies engaged
by the State Government, independent of the PIUs. This tier must include a
Technical Examiner (TE) as detailed in para. 2.18 above for Bank funded works.

The third tier shall comprise of National Quality Monitors (NQMs) appointed by
the NRRDA for the purpose, who shall be retired Senior Engineers with
State/Central organizations,.
2.21 The quarterly reports of the TE shall be disseminated to the NRRDA and Bank,
within 45 days of the end of the quarter. The NRRDA shall analyze the reports of the
Technical Examiners (TEs) and NQMs and request the States to take appropriate action.
2.22 Changes in design during execution shall be avoided to the extent feasible. No
fundamental change in the design of the pavement or structures shall be permitted. However,
in unavoidable circumstances, the Engineer may order minor changes in the design during
execution, after obtaining necessary approval from the Employer. The Employer shall
consider any design changes recommended by the TE.
2.23 All variations involving changes in the character or quality or kind of work, increase
or decrease in the quantity of the work included in the contract, omission of any work,
additional work, changes in drawings and designs and changes in the specified sequence or
timing of construction of any part of the work, shall be ordered in writing after obtaining
approval from the Employer. The variations shall be valued as per the relevant clause of the
Contract.
2.24 Under the PMGSY program, no excess over the sanctioned project cost shall be borne
by MORD. Any increase shall be borne by States. In line with Bank procurement guidelines,
any increase over 15% of the original cost is to be subject to the Bank’s no objection.
Monitoring and Reporting Arrangements
2.25 Effective monitoring of the project shall be carried out through the On-line
Management and Monitoring System (OMMS). To this end, the PIUs, shall furnish “on line”
all the data and information, as may be prescribed by the NRRDA from time to time, in the
relevant module of the OMMS.
2.26 The PIUs shall monitor the progress of the works by maintaining full information on
Contractors, Contractor-wise status report of cost of work done and payments made, list of
completed works and value of work done in the prescribed forms.
2.27 At the NRRDA level, the progress reports received from the States shall be monitored
and analyzed in the prescribed forms. The NRRDA shall submit to the Bank a summary of
the progress achieved in each State every quarter, providing the financial and physical
progress as indicated in the Financial Monitoring Report given in Annex 2.
3.
MAINTENANCE COMPONENT
3.1
Under the project, two kinds of maintenance of rural roads are envisaged both of
which are to be financed by participating states, namely:

maintenance of newly constructed or upgraded project roads taken up under the
Bank’s assistance for a period of five years after completion as per the Conditions
of Contract; and

maintenance of other existing rural roads prioritized from the core network as per
budget availability at District level.
Planning of Maintenance
3.2
Each participating State shall establish a rural road database, covering details such as
terrain, rainfall, roadway width, carriageway width, shoulder width, pavement
thickness/composition, year of construction, year and type of last renewal, cross-drainage
structure, road drainage, problematic conditions (like water-logging, salt-infested soils,
landslides, etc), and condition rating of the road. The database shall be computerized and
shall allow for efficient querying and reporting. The data shall cover the entire Core Network
as a minimum.
3.3
The rural road database shall be updated periodically, incorporating changes in the
condition rating using the PCI rating system provided under the program, renewal
intervention and upgrading carried out. The condition rating shall be determined every two
years after the rainy season. The database will give the condition rating of each km of the
network. Each participating district shall prepare and make public by February 28 of each
year, an annual core network condition report that provides information on:
i)
the condition of each link in the network using the program’s PCI system or other
suitable and consistently applied condition classification system;
ii)
a summary sheet that shows aggregate condition in comparison with the previous
year’s aggregate condition; and
iii)
the value and nature of maintenance works that have been executed during the
year.
3.4
An annual maintenance plan shall be drafted for each participating district by
December 31 of each year covering as many maintainable roads within the core network as
feasible. The aggregate funding requirement based on these plans shall be submitted for
budgetary provision by January 31 of each year, and a copy of this request shall be provided
to the MORD and Bank. The district maintenance plans shall be revised in the light of funds
made available by state governments in the States’ Budget and distributed among the
Districts and a summary of the final plan shall thereafter be made public in suitable local
places and the PMGSY website by June 30 of each year.
3.5
3.6
Maintenance of Rural Roads shall comprise of the following:

routine maintenance such as pot-hole repairs and patching, maintenance of
shoulders, drainage, road furniture and markings, restoration of rain cuts, snow
clearance, etc;

periodic renewal such as renewal of gravel/water bound macadam/black-topped
surface at specified intervals to restore the riding quality;

special repairs such as flood damage repairs and clearance of slips.
The finalized District Annual Maintenance Plan shall contain:

length of roads to be routinely and periodically maintained in the budgeted year;

implementation responsibilities and timetable for tendering or work instruction for
gang labour as applicable; and

budgetary requirements and actual allocations.
Budget requirements for maintenance
3.7
The Norms as per the Rural Roads Manual, published by the Indian Roads Congress,
or any other agreed Norms shall be used for determining the budgetary requirements for
maintenance works, or as otherwise amended after agreement between the MORD,
participating states and Bank. The norms shall be used after applying suitable cost escalation
factors to reflect current cost of materials, and other inputs. The maintenance component
shall be funded by the States from their budgetary allocations and other sources of funding.
For this purposes, the States shall create and maintain a separate budget line item or line
items where more than one agency is responsible, for rural road maintenance that allows for
the monitoring of the rural road maintenance component. The States shall strive to ensure
that adequate budgetary allocations are available to implementing agencies to execute the
maintenance component promptly after the start of the financial year.
3.8
Preparation of detailed designs and execution of maintenance works

For the works identified in the final District Annual Maintenance Plans, detailed
designs shall be prepared.

The execution of the maintenance shall comply with the specifications for Rural
Roads issued by the NRRDA and IRC SP: 20. Participating states shall assign one
or more agency, preferably the PIU, with adequate staff for maintenance works.

Quality control tests as specified in the Quality Control Handbook, where
applicable, shall be carried out.

The physical and financial progress achieved shall be reported at the end of the
every quarter in the form given in Annex 3.
3.9
Participating states shall assign one or more agency with adequate staff and powers, in
each district, to undertake data collection, maintenance planning, bid preparation and
tendering, supervision and reporting for maintenance works.
4.
INSTITUTIONAL DEVELOPMENT COMPONENT
4.1
The project will assist the MORD/NRRDA and key agencies in participating states to
build capacity within the rural roads sector to construct new roads, upgrade existing ones and
maintain the core rural road network.
Technical Assistance to Participating States
4.2
Each participating state shall, inter alia, prepare and endorse a state level rural road
maintenance action plan. This plan is to be prepared through the commissioning of a
consultant, under terms of reference acceptable to the MORD and Bank, who shall:
i)
Assess the strengths and weaknesses of the rural road maintenance management
and financing policies and practices in the proposed state; and
ii)
Recommend a strategic management and financing framework and associated
strengthening measures for implementation over five years designed to improve
rural road maintenance outcomes in the state.
4.3
Thereafter, each participating state shall commission technical assistance under terms
of reference acceptable to the NRRDA and Bank, to help during the implementation of the
agreed state level maintenance action plan. The executing agency shall provide adequate
staff, to act as a counterpart in HQ for maintenance planning purposes. The technical
assistance consultant shall:
i)
ii)
iii)
establish in use a simple Road Management System (RMS) in HQ and field
offices in participating districts;
prepare annual maintenance programs and support the implementation by the
concerned implementing agencies of these programs, including through the use of
performance based contracting, on the core road network;
recommend and help implement on a pilot basis a framework for transferring
ownership of non core rural roads to Panchayat Raj Institutions (PRIs); and
iv)
transfer skills and procedures to an adequate number of staff in the implementing
agency to sustain the use of the RMS and continuing implementation of
maintenance after the end of the services.
4.4
Any participating state may request additional relevant technical assistance or training
services be financed by the Bank. The request shall make the case for the expenditure,
indicate the scope of service/training being sought as well as the schedule and anticipated
cost. The NRRDA shall vet such proposals and then submit them to the Bank for its approval
prior to incurring any cost in this regard. Any services commissioned to meet this need shall
be procured in accordance with the Bank’s procurement guidelines.
Quality Control Equipment, IT Hardware and Software
4.5
Participating states may request the Bank through NRRDA to finance necessary field
or laboratory equipment, IT hardware and software to help implement the project. The
request shall make the case for the expenditure, indicate the type and number of goods being
sought as well as the procurement schedule and anticipated cost. The NRRDA may also
make proposals for goods procurement at the central level. The NRRDA shall vet such
proposals and then submit them to the Bank for its approval prior to incurring any cost in this
regard. Any goods obtained to meet this need shall be procured in accordance with the
Bank’s procurement guidelines.
Technical Assistance to Centre
4.6. The NRRDA/ MoRD shall be responsible for commissioning consultants to develop
and implement a poverty monitoring and user satisfaction system in participating states. The
NRRDA/ MoRD shall commission a suitably qualified consultant, to terms of reference to be
agreed with the Bank, to prepare a detailed method statement to evaluate the PMGSY’s
impact on poverty and users’ perceptions and to help oversee the collection by data collection
consultants of an adequate sample of data from all participating states. Data shall be
collected and analyzed at least three times prior to March 2010, the first such data set to be
collected by the end of 2005. The costs incurred in preparing the method statement plus in
collecting data shall be reimbursable by the Bank.
4.7
The NRRDA/ MoRD may request that the Bank finance any other necessary technical
assistance that is relevant to improving the overall performance of the PMGSY. The request
shall make the case for the expenditure, indicate the scope of service/training being sought as
well as the schedule and anticipated cost. The NRRDA/ MoRD shall submit the proposal to
the Bank for its approval prior to incurring any cost in this regard. Any services
commissioned to meet this need shall be procured in accordance with the Bank’s
procurement guidelines.
Training of project staff in Bank policies
4.8
To accommodate the expected turnover of project implementing agencies’ staff, the
NRRDA shall ensure that, each year, an adequate number of staff from each participating
state as well as the NRRDA itself attend formal training, the cost of which will be
reimbursable from the Bank, in at least the following disciplines:

procurement under Bank funded projects;

disbursement and FM arrangements under Bank funded projects; and

environmental and social management in the rural roads sector.
5.
FINANCIAL MANAGEMENT
5.1
The financial management arrangements of the PMGSY programme incorporate the
provisions of the accounting system, flow of funds and arrangements for audit (internal and
external) of the PMGSY scheme as detailed in Chapter 12 of the OM. This section gives
additional operational procedures in respect of the Bank financed states.
5.2
At the central level, technical inputs for the scheme are provided by the NRRDA and
budgets and funds flow are handled by the MORD. FM arrangements under the Bank project
are fully mainstreamed and rely on the PMGSY’s existing arrangements where State Rural
Road Development Agencies (SRRDAs) shall receive project funds, incur project
expenditures, account for them and provide financial reports to stakeholders. SRRDAs, will
be technically supported by the respective implementing agencies in the state: such as the
PWD in Himachal Pradesh and Rajasthan, the Rural Engineering Organization in Jharkhand
and the Rural Engineering Services Department and PWD in Uttar Pradesh. The Bank
project will finance the program in up to 60% of the districts in any participating state, to be
implemented through project implementing units (PIUs). These PIUs, though staffed by
PWDs or equivalent, serve as an extension of an SRRDA in implementing the program.
They shall be fully accountable and responsible to respective SRRDAs for book-keeping,
accounting and reporting purposes.
Budget at the State and National Levels
5.3
The project shall be budgeted on the expenditure side at the Union (Central) level as
PMGSY works under an identifiable budget head item of the MORD. Sub heads are to be
provided in sufficient detail to capture the various types of activities proposed under the
centrally sponsored scheme. A budget item will also be established on the receipts side at the
Union (centre) for Bank loan/credit(s). Budget provisions have been made from FY 2004-05
on both sides At the State level, adequate budgets shall be provided for (i) any necessary
remedial safeguard measures (ii) the five year maintenance period of PMGSY roads (not
Bank or MoRD financed) and (iii) the periodic and routine maintenance component on the
core rural roads (not Bank or MoRD financed) under their regular budget heads (Major Head
– “3054” and other appropriate heads) through the authorized agencies. The annual budget of
PMGSY will be based on the annual work program of the participating states and will follow
the usual budgetary preparation process for a centrally sponsored scheme.
Staffing Requirements for Financial Management
5.4
The project financing set-up for the project, at the central level, shall be with the
MoRD, through an officer not below the rank of Deputy Secretary who will ensure the
budgetary provisions and smooth and timely flow of funds . A qualified officer of NRRDA
shall be responsible for over seeing day-to-day operation of the financial management system
and will be responsible for establishment of the agreed financial management arrangements,
providing timely financial reports to the stakeholders including the Bank, and providing
overall guidance in respect of the financial management issues for the project. The finance
team at the State level (SRRDA) is to be headed by a Financial Controller who shall
preferably be a professional accountant or an officer from State accounts services of a
minimum rank of a senior Accounts Officer supported by at-least 1 Accountant and 2
Accounts Clerks. At the PIU level (district), the accounts and finance team will comprise
generally of one divisional accountant, and 1 clerk. They will be responsible for maintaining
the cash book, other registers/documents, as required under the OM, and making the
necessary data entries in the FM module of the OMMS.
Eligible Expenses for the Project
5.5
The GOI currently provides funds in advance for PMGSY on a 100% grant basis.
GOI usually funds the costs of project survey/design, civil works, goods and limited
incremental operating costs for new roads and upgradation of existing roads. It also partially
funds the costs of (i) survey and design by providing Rs. 10,000 per km to be reimbursed
through the GOI to States for expenditure incurred on works contracts and (ii) field
supervision by providing Rs. 45,000 per district per month to pay for travel and other
miscellaneous expenses incurred by executing agency staff during sub-project planning,
survey, design and supervision. The Bank shall fund, at rate determined in the legal
agreements, the cost of the civil works, goods and services to implement the new construction
and institutional development components. The Bank shall not finance any incremental
operating expenses of PIUs or NRRDA. All actual expenses shall be recorded and reported
by the participating SRRDAs and NRRDA.
On Line Monitoring and Management System
5.6
The State Government shall ensure that the concerned officials are prompt in sending
the requisite reports/information to the State level Agency as well as the NRRDA. The Online Management and Monitoring System (OMMS) will be the chief mechanism for
monitoring the program. To this end, the officials are required to furnish “on line”, or
otherwise on a regular basis not less than every two weeks, all the data and information as
may be prescribed by the NRRDA from time to time in the relevant module of the OMMS.
Districts which, because of poor connectivity are unable to feed data on-line, may enter data
off-line and upload it to the main data base They shall be responsible for uninterrupted
maintenance of the computer hardware and software as well as internet connectivity. The
software for the OMMS shall be supplied by the NRRDA and it shall not be modified at any
level in the state; any requirement or suggestion for change shall be proposed to the NRRDA
for consideration. In the case of continued failure to update data on the OMMS, further
releases by the Bank for that State may be affected.
5.7
The State Government shall ensure the provision of necessary manpower, space and
facilities to set up the computer hardware at the district and state level apart from ensuring
regular and timely feeding of data. Bank funding is available on request to the NRRDA for
computer hardware. Since data may also reside on state servers, the State level agency must
ensure that the State server functions continuously.
5.8
Each State Government shall identify one officer of sufficient seniority and having
adequate knowledge of Information Technology to function as State IT Nodal Officer. His/
her function will be to oversee the regularity and accuracy of the data being furnished by the
Districts. The IT Nodal Officer, who shall form part of the State-level Agency, shall also be
responsible to oversee the upkeep of the hardware and software as well as the training
requirements of the personnel dealing with PMGSY. He shall maintain close liaison with CDAC (the software developers), NIC State Unit/ District Units and the IT Division of
NRRDA.
5.9
It shall be the responsibility of the IT Nodal Officer of the State to ensure effective
functioning of the hardware/internet connectivity between the State Server, the Central Server
and the client machines at the PIU level. The Head of the PIU shall be responsible for the
constant updating and accuracy of data relating to the progress of road works, as well as the
payments made. The data shall be updated as warranted but at least once every two weeks.
5.10 Since the OMMS is an on-line decentralized system to monitor progress, uploading
and regular updating of data by District PIUs is essential. In particular, availability of data is
a pre-requisite in respect of the following:
SI
1.
2.
Item
Clearance of
Annual Proposal
Release of
Installments of
funds
Data Required
(a)
Full details of road works, habitations to be
linked, cost of each work, packaging
(b)
Up-to-date progress in respect of PMGSY
works of previous years.
(c)
SQM Inspection Data
(a)
Financial Progress showing requisite
expenditure
(b)
Physical Progress showing requisite
completion (for 2nd installment).
5.11 PMGSY guidelines envisage rollout of an on-line computerized financial
management and accounting module as a part of the OMMS. The proposed system will
include a Financial Management (Receipts & Payments) module. A gradual transition is to
be made with the FM System being established first at the SRRDA. The books of accounts
of the PIUs will be maintained on a manual basis initially, on the basis of formats as
prescribed in the OM and guidelines. The monthly reports from the PIUs will be
consolidated at the SRRDA level by entering the data into the FM system to generate the
books of accounts and the required financial statements. This system will thereafter be
upgraded by implementing the computerized system at PIUs and integrating it with respective
SRRDAs in all participating districts and states by September 30, 2005. The MORD shall
ensure that adequate and timely maintenance support to the OMMS is available.
5.12 Separate accounts for the administrative expenses will be maintained by the district
PIUs and monthly reports (including cash flow and balance sheet in the prescribed format)
will be provided to the SRRDA for consolidation.
Reporting requirements
5.13 Since the Bank meets only a part of the expenditure, with the MORD meeting the
balance expenditure on construction and the State meeting maintenance and administration
expenditure, the accounting system shall have a sub-head for annual expenditure on
externally funded schemes. It is not necessary for the receiving agency in the State to open a
separate bank account for this. From the balance sheet of the State Agency and the PIU, the
total expenditure for the externally aided projects shall be computed from the following
items, with reimbursement assessed on serial number (vi):
i)
Total expenditure
ii)
Share of GOI in the Total expenditure
iii)
Share of the external funding agency
iv)
Funds received by GOI from the external funding agency
v)
Expenditure on works as per the last monthly account
vi)
Proportionate share of the external funding agency in the expenditure
Financial Monitoring Reports (FMR)
5.14 The NRRDA/ MORD is responsible for obtaining from participating districts and
states the necessary data to complete the project Financial Monitoring Reports (FMRs). The
FMRs will include information on the maintenance component, funds for which shall be
made available through the State budget. Information in this respect will be collated in the
agreed format by the concerned SRRDAs from various sources and consolidated on a
quarterly basis. The format for FMRs is attached at Annex 2.
External Audit
5.15 The funds received by the State level Rural Roads Development Agency will fall
under CAG audit jurisdiction. The State Government may request the CAG to audit the
PMGSY accounts under Section 20 of the CAG’s (Duties, Powers and Conditions of Service)
Act, 1971 (section 20 permits audit by consent). SRRDAs have been set up as societies
under the Societies Registration Act, which will require mandatory statutory audit by a firm
of chartered accountants, selected from the panel maintained by CAG. Under the Bank
project, this entity audit will provide the fiduciary assurance to the World Bank “on usage of
funds for the intended purposes”. For this purpose, the audit reports will be accompanied by
project financial statements for the State level PMGSY program, in the format agreed for
each implementing agency (NRRDA and participating states). The audit shall be conducted
by an independent firm of private chartered accountants under terms of reference acceptable
to the Bank. The standard Terms of Reference for the auditors is given in Annex 4. The
PIUs function as ex-officio officers of the State Level Agency. Therefore, their accounts will
form part of its accounts, and thus be subject to audit by the selected Chartered Accountants.
5.16 For the maintenance component (non-bank financed), which is funded by the State
budget, the participating states are also required to submit, within 6 months of the end of the
fiscal year, a copy of their “Annual Finance Accounts”, which is certified by the CAG for
correctness and accuracy. The Finance Accounts identifies expenditures under the Major
Head “3054” for maintenance expenditures under roads with further details on the relevant
expenditures for the rural roads with a “Minor Head” and other appropriate heads.
5.17 In summary, the following audit reports will be submitted to the Bank within 6
months of the end of the fiscal year:
Implementing Agency
4 participating States (SRRDA)
and NRRDA*
4 participating states
DEA/ GOI
Audit
Entity /Project Audit
Auditors
Private CA firm
State “Annual Finance Accounts” certified by
CAG
Special Account
C. & A.G.
C. & A.G.
Internal Audit cum financial review
5.18 As a part of the internal control framework for the Bank financed project, the
technical examiner team, to be employed to monitor all Bank funded works on the project,
will include a chartered accountant, under terms of reference, as approved by the World
Bank. This accountant will conduct periodic financial review of the project to assess the
operation of the project financial management system, including review of internal control
mechanisms, books of accounts, registers and other records as well as effectiveness of the
procurement process.
*
for project funds flowing through NRRDA only
Disbursement Arrangements
5.19 Disbursements from the loan/credit will be sought from the Bank in the traditional
system which includes seeking replenishment and reimbursement with full documentation
and against statement of expenditure, as agreed during negotiations. The claims/ SOEs will
be prepared at SRRDA for each of the State and forwarded to NRRDA for consolidation on a
monthly basis. The consolidated claim will be forwarded to the office of the Controller of
Aid, Accounts & Audit (CAAA) in MOF. The CAAA will validate the claims, draw down
the special account if required and forward it to Bank for further processing. Disbursement
will be made from the loan/credit on the basis of statement of expenditure for (a) civil works
for contracts not exceeding US $ 1,500,000; (b) Goods for contracts not exceeding US
$500,000; (c) consultants for contracts not exceeding US $ 100,000 for firms and US$ 50,000
for individuals and (d) training.
6.
PROJECT IMPLEMENTATION ARRANGEMENTS
Procurement Plan
6.1
The MORD has prepared a procurement plan, dated July 2004, that (i) outlines the
methods and procedures to be used for all procurement of works, goods and services to be
reimbursed by the Bank and (ii) lists the proposed works, goods and service packages for the
following eighteen months. The MORD/NRRDA shall be responsible for updating this plan
in consultation with the Bank at least once every year, the first revision due by August 31,
2005, and then disseminating the plan to participating states. All procurement for works,
goods and services for which Bank reimbursement is being sought shall be conducted in
accordance with the plan.
National Level Arrangements
6.2
At the central level, the MORD shall be responsible for overall oversight and
coordination of the PMGSY and all components of this project. The NRRDA shall be the
agency of the MORD for technical guidance and operational management for the Program.
6.3
The MORD has constituted an Empowered Committee, chaired by the Secretary
MORD, to sanction state sub-project proposals. The representatives of the State
Government, whose projects are being considered by the Empowered Committee, shall be
invited to attend relevant meetings. The Ministry will communicate the clearance of the
proposals to the State Government. Clearance by the Ministry does not imply Administrative
or Technical sanction of the proposals, nor the no objection of the Bank. Well established
procedures of the Executing Agencies in this regard shall continue to be followed. Works for
which participating states are seeking Bank reimbursement shall only be tendered after the no
objection of the Bank is obtained, as given in para. 2.14 above.
State-level Arrangements
6.4
Participating states have established and shall maintain with adequate number of
qualified staff a State Rural Road Development Agency (SRRDA) with a distinct legal status
under its control for receiving the funds from the MORD.
6.5
The executing agency may be the Public Works Department/Rural Engineering
Service/Rural Engineering Organization/Rural Works Department/Zilla Parishad/Panchayati
Raj Department or similar organizations with well established competence in executing timebound road construction works. At the HQ level, the executing agency shall have an
adequate number of financial and safeguard management staff as well as those competent to
procure larger consulting contracts.
The executing agency will have a Program
Implementation Unit (PIU) in each district, which shall have an officer of the rank of at least
Executive Engineer as its head. The PIU shall be dedicated to the PMGSY. All PIUs shall
be properly manned by competent technical personnel, including for financial management.
The Executive Engineer as well as the heads of PIUs shall be designated as officers of the
SRRDA so as to enable them to access funds for the program. Participating states shall
ensure to the extent possible, that vacancy rates in PIUs are kept as low as possible and that
the quantum of work to be executed per division in any one year is commensurate with
established state norms. Participating states shall, as necessary, create and maintain
additional divisions where the quantum of work in a district exceeds state norms.
6.7
Each State shall maintain a State-level Standing Committee, preferably headed by the
Chief Secretary. The Standing Committee shall include as members the Secretary of the
Nodal Department, Heads of the executing agencies, representatives of the State Transport,
Police, Panchayat Raj and Public Works Departments, State Informatics Officer as well as
STAs for the State. The State Forest Department will send a representative to the Committee
where necessary. The functions of this committee shall be to:

vet the Core Network;

clear sub-project proposals, ensuring that they have been formulated in
accordance with all relevant PMGSY and Bank project related guidelines; and

effectively monitor and coordinate the program and oversee the timely and proper
execution of road works.
6.8. The NRRDA shall nominate for each participating State, State Technical Agencies
with adequate staff and resources to carry out the following tasks effectively:

Verification of the Core Networks, District Rural Roads Plan and Comprehensive
Priority Lists prepared by the PIUs;

Scrutiny of Detailed Project Reports for road works prepared by the PIUs,
including those DPRs for which Bank funding is sought; and

Provision of technical support to implementing units, and in all cases of cross
drainage design works where the proposed structure involves a span exceeding 25
meters.
6.9
The scrutiny by STAs of project reports shall be thorough and detailed and thereby
ensure that design is appropriate and economic, that the specifications are adequate and based
on site conditions, that the estimation of quantities is accurate and reasonable, and that
sufficient care has been taken to provide for cross drainage works. In addition, STAs shall
ensure that the provisions of the ESMF have been properly applied by the PIUs.
Annexure 1
FORMAT OF CERTIFICATE TO BE GIVEN BY
PROJECT IMPLEMENTING UNIT/STATE TECHNICAL AGENCY
REGARDING APPLICATION OF ESMF
Annex 1
Certificate for Application of ESMF for 1st Year Projects
This is to certify that relevant provisions of the Environmental and Social Management
Framework have been applied during the preparation of Detailed Project Report for the road
from ___________________ to ____________________(name of habitations being
connected) in District _____________________of _______________ (State).
The provisions of the following ESOPs are applicable to the sub-project:
1.0
PROJECT PLANNING & DESIGN
Are provisions made for enhancements
Yes  No 
Yes  No 
2.0
SITE PREPARATION
Yes  No  NR1 
3.0
CONSTRUCTION CAMPS
Are likely locations identified in the DPR
Yes  No  NR


4.0
ALTERNATE MATERIALS FOR
CONSTRUCTION
Specify Material:__________________________
Yes  No  NR
5.0
BORROW AREAS
Yes  No 
6.0
TOPSOIL SALVAGE, STORAGE AND
REPLACEMENT
Is provision made in the BoQ
Yes  No 
7.0
QUARRY MANAGEMENT
Yes  No  NR

8.0
WATER FOR CONSTRUCTION
Are water sources identified in case of water scarce
areas
Yes  No  NR
Yes  No  NR


9.0
SLOPE STABILITY AND EROSION CONTROL
Yes  No 
10.0 WASTE MANAGEMENT
Are locations for waste disposal identified
Yes  No 
Yes  No 
11.0 WATER BODIES
Specify Location:__________________________
Yes  No  NR
NR refers to the ECoPs that are “Not Relevant” during the DPR Preparation (or) in case some of the sitespecific conditions that arise the need for application of the relevant ECoP do not exist.
1

Yes  No 
12.0 DRAINAGE
13.0 CONSTRUCTION
MANAGEMENT
PLANTS
&
EQUIPMENT Yes  No  NR

14.0 PUBLIC AND WORKER’S HEALTH AND
SAFETY
Yes  No  NR

15.0 CULTURAL PROPERTIES
Specify Location:_____________________
Yes  No  NR

16.0 TREE PLANTATION
Is roadside tree plantation plan attached
17.0 MANAGING INDUCED DEVELOPMENT
Is location map for area identified for induced
development been attached
18.0 ENVIRONMENTAL AUDIT
Is checklist-1 for DPR Preparation attached
Yes  No 
Yes  No 
Yes  No 
19.0 NATURAL HABITATS
Specify Location:______________________
Yes  No  NR
20.0 CONSULTATIONS FOR ENVIRONMENTAL
ASPECTS
Yes  No 
21.0 PAF’s identified
Yes  No 
22.0 Additional Land required
Yes  No 
23.0 PAP’s compensated and assistance provided
according to ESMF
Yes  No 
24.0 Documentation for voluntary land donation
completed
Yes  No  NR
25.0 Is the assistance under RD/ Livelihood Programs to
the eligible PAP’s being delivered
Yes  No 
26.0 Are there any outstanding issues or grievances in
regard to losses and proposed measures
Yes  No 


------------------------(Executive Engineer,
____________Division, ______________Department)
Date:
Place:
Verified:
---------------------------(STA/Technical Examiner, ______________ State)
Date:
Place:
Office of the Executive Engineer, ___________________________
(State Engineering Organization)
(Government of __________)
Ref. No. ____________________________
Date:__________________
CERTIFICATE
This is to certify that the proposed road(s) being proposed to be funded under the Pradhan
Mantri Gram Sadak Yojana does/do not require any regulatory clearance from the Forest
Department.
Provide list roads connecting:
(Name of Village) to (Name of Village/Road)
-----------------------------------(Name of the Executive Engineer)
(Stamp)
Place:__________________
Signed Verification by District/Division Forest Officer
---------------------------------(Name of the DFO)
(Stamp)
Place:__________________
Date:___________________
Annexure 2
FINANCIAL MONITORING REPORT FORMS FOR
WORLD BANK FUNDED PROJECTS
Financial Monitoring Report (FMR)
Financial Monitoring Reports
Cash - INR
Rural Roads Project
Implementing Entity ___________SRRDA at ____ State
for Project expenditure incurred in relation to WB financed project (*)
OUTPUT MONITORING REPORTS - Consolidated (FORM 2-A)
For the quarter ending ______________
Physical output achieved at the end of the quarter
PAD / SAR
ACTUAL
PLANNED
DIFFERENCE (VARIANCE)
ITEMS
Current
Quarter
Year to
Date
Cumulative
to Date
Current
Quarter
Year to
Date
Cumulative
to Date
Current
Quarter
Year to
Date
Cumulative
to Date
LIFE OF
PROJECT
1
2
3
5
6
7
8
9
10
11
12
1
New Roads
District wise no. of Villages
connected and Km of Roads
completed
2
Up gradation of Roads
District wise km of roads upgraded
in ----- no. of Villages
3
Periodic Maintenance of Roads
(*)
District wise
4
(*)
(**)
Institutional strengthening
component
Outputs, milestones and
deliverables as per contract
A separate report will be furnished in respect of this component for funds not flowing through the SRRDA. E.g PWD budget on routine maintenance
The physical outputs achieved by the project at the end of quarter will be expressed in financial terms, as a percentage of planned work, on the basis of actual work
achieved.
This may also include amounts in construction contracts which have not yet accrued and due as per the contractual terms)
Rural Roads Project
Implementing Entity - NRRDA (MoRD)
Reconciliation Statement in respect of WB projects
For the quarter ended --------------------Civil Works
Amounts spent by State 1
Amounts spent by State 2
Amounts spent by State 3
Amounts spent by State 4
Amounts spent by NRRDA (Institutional
Strengthening)
as per FMRs of the quarter ended - (Form 1-B)
Total (A)
Less - Ineligible items & items not reimbursed by
World Bank
Eliglible % (B)
Reimbursement Claimable
from Bank in respect of above
(A * B)
Less Claims received from WB
Claim No. 1
Claim NO.2
Claim No. 3
Less Claims in pipeline
1. At States
2. At MoRD/ NRRDA
3. At DEA / CAAA level
4. At WB level
Total amount Claimable from Bank as on the end
of quarter (1)
Special Account Balance at the end of the quarter
Goods
Consultancy
others
Amount (in
Rs.)
Total
Financial Monitoring Report (FMR)
Cash - INR
Financial Monitoring Reports
Rural Roads Project
Implementing Entity _____SRRDA at ____ State
for entire financing done at the State level
SOURCES AND USES OF FUNDS (Report 1-A) for the entire SRRDA
For the quarter ending ______________
Local Currency Unit (LCU) in INR
ACTUAL
Year to
Date
Cummulative
to Date
Current
Quarter
Year
to
Date
Cummulative
to Date
Current
Quarter
Year
to
Date
Cummulative
to Date
LIFE OF
PROJECT
1
2
3
4
5
6
7
8
9
10
11
Total
Add : Source of Funds
Transfers received from MoRD (incl WB funds)
Amounts received from State Govt.
Security Deposits collected from contractoirs
Income from interest, sale of forms etc.
Others
Total (I + II)
III
1
2
PAD / SAR
Current
Quarter
Balance in the Project Bank account
II
1
2
3
4
5
DIFFERENCE (VARIANCE)
ITEMS
Opening Cash Balance
I
PLANNED
A
Less : Uses of Funds by Components
New Roads & upgradation of existing Roads
WB Financed works
Financed by MoRD / Others
Technical review services for design and supervision
Other costs
Technical Assistance & Institutional Strengthening
Component
3
Financed under the WB project as per project
agreement
Others (NON- Bank financed)
Periodic Maintenance of Rural Roads (core
netwtwok) from all sources (**)
5
in districts funded by the Bank
in districts not funded by the Bank
Incremental operational Costs (Non- Bank financed)
6
7
8
Admninistrative expenses
Travel expenses
Others
Depsosits with authorities
Advances
Other items
Total (III)
IV
B
Closing Cash Balance
in bank account ( A - B )
(*) - Separate List of Bills / invoices which are accrued and due and not paid as on end of qurter would be provided in respect of each of the
component
(**) - If Maintainance component does not flow through SRRDA, then this may be excluded from this statement and a separate detailed be attached (in the format attached)
Rural Roads Project
Implementing Entity ___________ SRRDA at _________ State
for Project expenditure incurred in relation to WB financed project (*)
CASH WITHDRAWAL (DISBURSEMENT)
For the quarter ending ______________ (in Indian Rupees)
ACTUAL-CURRENT QUARTER
in LCU 000's
Indian Rupees 000's
1
Civil Works
2
Goods (*)
3
Services
DISBURSEMENT CATEGORY
ELIGIBLE %
Project
Expenditures Paid
During the Quarter
Reimbursement admissible
with WB for the quarter
1
2
3
4
TOTAL
(*)
Goods will be reimbursed at 80% of total gross costs (as agreed during pre-appraisal mission and to be finalized at appraisal)
Incremantal operational costs are not being funded under the project
Financial Monitoring Report (FMR)
Cash - INR
Financial Monitoring Reports
Rural Roads Project
Implementing Entity ________ SRRDA at _________ State for new roads including upgradation
Maintenance component (on Rural roads - core road network) implemented by PWD,
RES…………. At the State level
SOURCES AND USES OF FUNDS (Report 1-C) for the maintenance component
For the quarter ending ______________
Local Currency Unit (LCU) in INR
ACTUAL
Current
Quarter
Year to Date
Cummulative
to Date
Current
Quarter
Year to
Date
1
2
3
4
5
6
Show all the sources of funds for this component across the
I
State
1 Funds spent by PWD through the State budget
2 Funds spent by RES through…………………
3 Funds spent through …. Fund created under …….
4 Other sources
Total
II
-
Uses of Funds at district level
Bank funded Districts
District 1
District 2
District 3
District 4
District 5
District 6
District 7
District 8
Non-Bank funded districts
-
District 1
District 2
District 3
District 4
District 5
District 6
Total
PLANNED
ITEMS
Cummulative to Date
7
Financial Monitoring Report (FMR)
Cash - INR
I
II
1
3
III
1
2
3
ITEMS
Current
Quarter
Year to
Date
Cummulativ
e to Date
Current
Quarter
Year to
Date
Cummulative
to Date
Current
Quarter
Year
to
Date
Cumm
ulative
to
Date
1
2
3
4
5
6
7
8
9
10
Opening Cash Balance
Balance in the Bank account
Total
Add : Source of Funds
Transfers received from MoRD (incl WB funds)
Amounts received from other sources
Total (I + II)
A
Less : Uses of Funds by Components
Technical Assistance & Institutional Strengthening Component
Financed under the WB project as per project agreement
Others (NON- Bank financed)
Incremental operational Costs (Non- Bank financed)
Administrative expenses
Travel expenses
Others
Other items
Total (III)
B
IV Closing Balance
in bank account ( A - B )
Financial Monitoring Reports
Rural Roads Project
Implementing Entity - NRRDA
for financing done at the
NRRDA
SOURCES AND USES OF FUNDS (Report 1-A) for the entire NRRDA
For the quarter ending ______________
Local Currency Unit (LCU)
in INR
DIFFERENCE
ACTUAL
PLANNED
(VARIANCE)
PAD /
SAR
LIFE
OF
PROJ
ECT
11
Annexure 3
Maintenance Component Report Format
Annex 3
Form for quarterly reporting on progress of maintenance work at PIU level
Name of State :
Name of District :
Reporting as on ………………
Block name and
Length of Rural
Roads in Core
Network (Km)
Total
Cumulative % Physical Progress on Routine
Maintenance
Patch
Repairs
(Km)
Shoulders and
Earthwork in
Embankment
(Km)
Drainage
(Km)
Others
(Km)
Physical Progress on Periodic
Renewals (P.R)
Length of
Length of
Rural Roads
Rural Roads
with P.R.
selected for
Completed
P.R. (Km)
(Km)
Financial Progress
% of
Completion
of P.R
Amount
Sanctioned
(Rs-Lakhs)
Cumulative
Expenditure
(Rs-Lakhs)
% Progress
Annexure 4
Terms of Reference for External Auditors
Annex 4
TERMS OF REFERENCE FOR THE PMGSY PROJECT IMPLEMENTED BY
____ SRRDA/ NRRDA
Objective
The objective of the audit of the Financial Statements of the Project – BMP
Component (Balance Sheet and Sources & Uses of Funds) is to enable the auditor to
express a professional opinion on the financial position of the (PMGSY project ) carried
out by ---SRRDA/ NRRDA , at the end of each fiscal year and of the funds received and
expenditures for the accounting period ended March 31, 200…, as reported by the
Financial Statements.
The SRRDA’s accounts (books of account) and the accounts maintained at
various PIUs across the State, provide the basis for preparation of the Financial
Statements (which consists of a Balance sheet and a sources and Uses statement in the
format as requird under the PMGSY accounting guidelines & operational manual) and
are established to reflect the financial transactions in respect of the project.
Scope
The audit will be carried out in accordance with the relevant national standards
of auditing, and will include such tests and controls as the auditor considers necessary
under the circumstances. In conducting the audit, special attention should be paid to the
following:







All funds spent by SRRDA , received from GoI under the said project ) have been
used in accordance with the conditions as laid down in the PMGSY guidelines /
operational manual / Financial management manual , and only for the purposes for
which the funds were provided.
All funds have been used in accordance with the relevant financing agreements, with
due attention to economy and efficiency, and only for the purposes for which they
were provided.
All expenditure, including procurement of goods and services, have the necessary
supporting documentation and have been incurred in accordance with the
Government rules and relevant financing agreement.
All the goods procured and issues are supported by valid receipt and issue documents
and are recorded in the stock/ inventory registers and the closing balances worked out
correctly. Physical verification of the assets and other inventories would be taken up,
as deemed necessary by the auditor.
Funds transferred to PIUs for incurring expenditure under the project are used for the
purposes intended. To establish this, the auditor should visit PIUs and conduct such
audit / tests as may be deemed appropriate and necessary for the purposes of the
audit.
The statement of expenditure’s (SOE – Claim Form 1C) rendered under the project
are verified for their eligibility within the legal agreements wherein such tests and
controls as the auditor considers necessary under the circumstances are applied.
The project accounts have been prepared in accordance with consistently applied
relevant Accounting Standards/ Rules and give a true and fair view of the financial
situation of the Project for the financial year ending March 31, 200.. and of receipts
and payments for the year ended as on that date.
Financial Statements
The financial statements shall include:
 A summary of funds received, showing the grant in aid/ loan ( World Bank
financed project ) and funds received from other sources, donors, if any
separately;
 A summary of expenditures shown under the main project categories of
expenditures, both for the current fiscal year and accumulated to date;
and
 A Balance Sheet showing accumulated funds of the project, bank balances,
other assets of the project.
Statement of Expenditures
In addition to the audit of Financial Statements, the auditor is required to audit
SOEs used as the basis for the submission of withdrawal applications by the Project .
Most of the documentation in respect of these SOEs would be maintained at the PIU
level. The auditor should apply such tests and controls as the auditor considers necessary
under the circumstances. These should be carefully compared for project eligibility with
the relevant financing agreements and the Project Appraisal Document for guidance
when considered necessary. The following are required to be annexed to the Project
financial statements
When ineligible expenditure are identified as having been included in the
withdrawal applications, these should be noted separately by the auditor in an annex.
Annexed to the Project Financial Statement should be a schedule listing individual
SOE/PMR withdrawal application by specific reference number and amount.
The amount of expenditure claimed in the SOE (submitted for the eligible expenses
incurred during the financial year under audit) should be reconciled with the amount
appearing under the summary of expenditures of the receipts and payments statement.
Audit Opinion
Besides a primary opinion on the Financial Statements, the audit report of the
Project Accounts should include a separate paragraph commenting on the accuracy and
propriety of expenditures shown in the Statements of expenditure and the extent to which
the Bank can rely on SOEs as a basis for reimbursement.
Time Period for Submission
The audited financial statements including the audit report should be sent to
World Bank within 6 months of closing of the financial year
Management Letter
In addition to the audit reports, the auditor should prepare a “management letter”
in which the auditor should:

Give comments and observations, if any, on the accounting records, systems and
controls that were examined during the course of the audit;




Identify specific deficiencies and areas of weakness (if any) in systems and controls
and make recommendations for their improvement;
Report on the degree of compliance with the financial/ internal control procedures as
documented in the financial manual of the project.
Communicate matters that have come to attention during the audit which might have
a significant impact on the implementation of the society; and
Bring to attention any other matter that the auditor considers pertinent.
The Observations in the Management Letter must be accompanied by a suggested
recommendation from the auditors and Management Comments on the Observations/
Recommendations from the Management.
General
The auditor should be given access to all legal documents, correspondence,
financial manual, notices from the Project Management/ State Implementing Units and
any other information associated with the project and deemed necessary by the auditor.
It is highly desirable that the auditor become familiar with a copy of the Bank’s
Guidelines on Financial Reporting and Auditing of Projects Financed by the World
Bank’, which summarizes the Bank’s financial reporting and auditing requirements. The
auditor should also be familiar with the Bank’s ‘Disbursement Manual’.
AUDIT REPORT FORMAT
Unqualified Opinion
(for Project Financial Statement including SOE)
To: (Addressee)
Introduction
We have audited the accompanying expenditure statements/financial statements
of the ---------------------------- Project implemented through the ---------------------- under
the ------- Project financed under World Bank Credit/Loan No. _____-IN as of March 31,
20XX [indicate any other additional years necessary] for the year(s) then ended. Our
responsibility is to express an opinion on these financial statements based on our audit.
Scope
We conducted our audit in accordance with established Standards on Auditing [or
relevant national standards or practices, and/or World Bank guidelines]- delete as
considered necessary . Those Standards and/or World Bank guidelines require that we
plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
Opinion
In our opinion, the financial statements give a true and fair view of the Sources and
Application of Funds and the financial position of ------------------------------- SRRDA /
Project for the year ended March 31, 20XX, in accordance with [indicate International
Accounting Standards or relevant national standards ].
In addition, (a) with respect to Statement of Expenditures (SOEs), adequate supporting
documentation has been maintained to support claims to the World Bank for
reimbursements of expenditures incurred; and (b) which expenditures are eligible for
financing under the Loan/Credit Agreement
[Ln/Cr. __________].
[Name and Address of Audit Firm]
[Date – Completion Date of Audit]
Notes:
1.
A “Source and Application of Funds” statement is always required for each project. A
balance sheet is also required where the project has assets and liabilities.
2.In case a qualified opinion or disclaimer is given by the auditor, the audit report should
state in a clear and informative manner all the reasons for such an opinion.
3. Audit report to be accompanied by




Management Letter
Listing of SOE withdrawal applications sent to the World Bank for reimbursement .
Listing on ineligible claims, if any.
Reconciliation of SOE claims with the actual expenditure as reported in the audited
financial statements.