Component 1: Block Grant to GPs under the ISGP Project
The expectation of people for delivery of services from the PRIs has been increased
over the years. The roles and functions of PRIs have equally enhanced. In this backdrop,
the Government of West Bengal has developed and approved a vision document called
‘The Roadmap. The Roadmap spells out the evolution of PRIs as an increasingly autonomous
system of local government with expanded service-delivery, governance functions
and the powers and resources to deliver these in a locally accountable manner.
Within the overall PRI structure, Gram Panchayats has the key institutional functions
to deliver for the development of local infrastructure and services. GPs currently
account for about 69 percent of total PRI expenditures.
Funding needs and fiscal framework : PRIs, and specifically GPS, run
with the lack of sufficient funding to execute their service delivery functions.
In particular, the funding that they require is that of a discretionary nature which
they can use to fund service delivery and infrastructure investments in line with
local demand. Approximately 74% of their current funding is consumed by fixed expenditures
or devoted to centrally sponsored, earmarked programmes over which they have little
control. The PRI fiscal challenge has two inter-related dimensions:
a) To provide GPs with funding of a quantum and character which will to allow them
to plan predictably and deliver reliably on their functional mandates in line with
b) To strengthen the PRI fiscal framework in the State by introducing a more rational
The main objective is to provide GPs with significant additional untied resources
to establish the foundation for strengthening their institutional capacity. In turn
this will allow them to improve their performance in local public service delivery.
Relevance of Block Grant
The ISGP Project Development Objective is to develop institutionally strengthening
GPs. Within this broad objective and in the context of the key challenges, the Block
Grant is meant for providing GPs with significant additional untied resources to
establish the foundation for strengthening their institutional capacity. This, in
turn, will allow them to improve their performance in local public service delivery.
Brief on Block Grant
One of the key components of the ISGP Project is the Block Grant. The Grant to GPs
is comprised of two sub-components:
a) The Block Grants : This sub-component supports an annual, performance based Block
Grant to the 1000 GPs participating in the project for the expenditure on local
public goods and services. GPs will be required to meet minimum conditions initially
to receive an allocation, and thereafter achieve a progressively higher set of performance
b) State-funded Untied Grants: The project will be partly financed by the Government
of West Bengal to the extent of 15% of the total project cost. The total counterpart
financing of equivalent of US$ 35 million will be in the form of annual State Finance
Commission (SFC) untied grant releases to Gram Panchayats by the Government of West
Bengal in one or more installments each year. These funds will be budgeted by GoWB
and allocated and disbursed to GPs using existing GoWB arrangements.
- Universe and Selection
Block Grants to Gram Panchayats
(US$ 162.4 million - from IDA)