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Monday, September 4, 2006


1. Background:

1.1 The North Eastern Region (NER) comprises of eight States viz. Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura. The development concerns of these States are pursued through their respective Five Year and Annual Plans as well as those of the Union Ministries and Central Agencies. In addition, projects of inter-State nature in the Region are funded through by the North-Eastern Council (NEC), which has a separate additional budget for the purpose.

1.2 The North East has essentially depended on Central funding for development works. All the States in the NER are Special Category States whose Development Plans are centrally financed on the basis of 90% Grant and 10% Loan. Further, the Special Category States are allowed to use up to 20% of the Central Assistance for Non-plan expenditure.

1.3 Despite the fact that the per-capita plan outlays of the NE States over a period of time have increased yet States still rank significantly below the national average in so far as the development of infrastructure is concerned. In terms of per-capita, State Domestic Product or other development indices, such as Power, Length of Roads or Hospital Beds, the North-East ranks well below the national average. Though the literacy levels are higher than the national average, vocational training and entrepreneurial skills remain weak areas.

1.4 As the benefits of economic development have yet to steadily accrue to the Region, efforts have been initiated in this direction in the recent past through various supportive measures. In October 1996, the then Prime Minister announced “New Initiatives for North Eastern Region” and stipulated that at least 10% of the Budget(s) of the Central Ministries/Department will be earmarked for the development of North Eastern States. A preliminary exercise undertaken by the Planning Commission in consultation with the various Ministries/Department revealed that the expenditure on the North East by some Union Ministries during 1997-98 fell short of the stipulated 10% of the GBS for that year. Planning Commission thereafter explored the possibility of creating a Central Pool of Resources for the North East out of the unspent amount of stipulated 10% of GBS to support infrastructure development projects in the North East. Certain Departments (e.g. Atomic Energy, Ocean Development) could be exempted, mainly for the reason that they might have little direct involvement in the Region.

1.5 A proposal was mooted by the Planning Commission to the Cabinet for constitution of such a Central Pool of Resources. The Cabinet approved the approach, in principle, on 15th December,1997, observing that the creation of the Central Resources Pool would require Parliamentary approval and would have to await constitution of the Twelfth Lok Sabha. The Central Pool therefore, could not be constituted in 1997-98.

1.6 Following the Lok Sabha elections earlier in the year 1998, the matter relating to creation of the Central Pool of Resources was pursued in consultation with the Ministry of Finance. The Prime Minister convened a Meeting of the Chief Ministers of the North Eastern States on 8th May 1998 when, inter alia, it was indicated that a Non-lapsable Central Pool of Resources for the funding of specific projects in these States would be created. The relevant paragraph from the Prime Minister’s speech reads as under:

“We are examining the feasibility of creating a Central Pool of Resources (CPR) which, in turn, will give critical additional support for an accelerated implementation of projects in the entire region. This pool, created from the unspent balance of the allocated expenditure of 10% of the budgets of the concerned Central Ministries, could well amount to around Rs.1500 crore annually.”

1.7 This commitment of the Government was also reflected in the Speech of the Finance Minister while presenting the Union Budget for the year, 1998-99. The relevant paragraphs from the Budget Speech are reproduced below :

“Furthermore, it has been decided that a non-lapsable Central Resources Pool will be created for deposit of funds from all Ministries where the plan expenditure on the North Eastern Region is less than 10 per cent of the total plan allocation of the Ministry. The difference between 10 per cent of the allocation and the actual expenditure incurred on the North Eastern Region will be transferred to the Central Pool, which will be used for funding specific programmes for economic and social upliftment of the North Eastern States.”

1.8 Further, as part of the budget proposals 1998-99, it was announced that:

“It has been decided that all Central Ministries/Departments should earmark at least 10% of their budget for specific programme of development in the North Eastern Region. To the extent of shortfall in the utilization of this provision by any Ministry/Department (except some exempted ones) according to this norm, the amount would be transferred to a new Reserve Fund in the Public Account titled ‘Central Resource Pool for development of North Eastern Region’. Presently, a token provision of Rs.1 crore is being made for transfer to the fund. In Budget 1997-98, such short provision was assessed to be about Rs.1,600 crore. A similar exercise for analyzing the provisions in Central Plan specific to the North Eastern Region in Budget 1998-99 would be carried out and the Resources Pool would be enhanced at Revised Estimates stage to the extent of shortfall from the 10% norm.”

1.9 The Union Budget 1998-99 was voted and passed by Parliament. With that, the Non-lapsable Central Pool of Resources was constituted with approval of Parliament.

2. Objectives:

2.1 In the conference of Governors and Chief Ministers of the North Eastern States and Sikkim held in January 2000 at Shillong the Prime Minister stated the objectives of the Non-lapsable Central Pool of Resources. The relevant paragraph from Prime Minister’s Speech is:

“My Government has also created a pool of non-lapsable funds for the North-East and Sikkim. This pool, meant for funding development projects in these States, will fill the resource gap in creation of new infrastructure, which is a top priority concern of the Union Government.…”

2.2 The broad objective of the Non-lapsable Central Pool of Resources scheme is to ensure speedy development of infrastructure in the North Eastern Region by increasing the flow of budgetary financing for new infrastructure projects/schemes in the Region. Both physical and social infrastructure sectors such as Irrigation and Flood Control, Power, Roads and Bridges, Education, Health, Water Supply and Sanitation - are considered for providing support under the Central Pool, with projects in physical infrastructure sector receiving priority.

2.3 Funds from the Central Pool can be released for State sector as well as Central sector projects/schemes. However the funds available under the Central Pool are not meant to supplement the normal Plan programmes either of the State Governments or Union Ministries/ Departments/ Agencies.

3. Institutional arrangement to Administer the NLCPR Funds.

3.1 There shall be a committee called ‘NLCPR Committee’ to administer NLCPR Scheme consisting of:

(i) Secretary, Ministry of Development of North Eastern Region - Chairman

(ii) Finance Secretary or his representative not below the rank of Joint Secretary-Member

(iii) Home Secretary or his representative not below the rank of Joint Secretary -Member

(iv) Secretary of the concerned Ministry/Department or his representative not below the rank of Joint Secretary proposing a central sector project - Member

(v) Principal Adviser/ Adviser, In-charge of North Eastern State (and Sikkim) in Planning Commission. - Member

(vi) Financial Advisor, Ministry of DONER -- Member

(vii) Joint Secretary / Joint Secretaries In-charge of Non-lapsable Central Pool of Resources in the Ministry of Development of North Eastern Region – One JS being Member Convener

3.2 The functions of the Committee are:

(a) To ensure equitable distribution of NLCPR resources amongst NE States keeping in mind existing inter-State and intra-State regional disparity, Human Development Indices (HDI) including per capita income, poverty level (BPL), density of infrastructure, population, area and terrain etc. besides performance of the States in implementing NLCPR projects.

(b) To assess projects/schemes proposed by the States of the NE and Sikkim under NLCPR in terms of viability and tangible socio-economic impact.

(c) To prioritize them.

(d)To recommend allocation of funds for such schemes/projects.

(e) To recommend the amount(s) for re-appropriation by the Central Ministries/Departments from the Budget Head created for the Central Pool.

(f) To closely monitor and review the progress of the projects/schemes, including the deputation of appropriate officials of the Central Government, for field inspections on a periodic basis.

(g) To suggest policy changes to obviate procedural and other bottlenecks in the execution of programmes/projects/schemes.

3.3 The Committee would meet as often as necessary (at least once in two months) and would submit periodic recommendations to the Union Minister for Development of North Eastern Region on various aspects of NLCPR projects.

3.4 Committee would be serviced by the NLCPR Division in the Ministry of Development of North Eastern Region.

4. Project formulation under NLCPR

4.1 The following process shall be adopted for project formulation:

(i) Each State would propose through its nodal Department, an Annual Profile of projects under the NLCPR in terms of a shelf of projects (called ‘Shelf’ or ‘priority list’ hereafter) latest by 31st December for the next Financial Year. Annual Profile of Projects should be a comprehensive proposal containing ‘gap analysis’ of all major sectors and justification of the list of projects in fulfilling these gaps. This should be in consonance with the overall planning process within the State covering Annual Plans and Five year Plans. The State should also indicate that these projects have not been taken up or proposed to be taken up with any other funding mechanism. This list will be inclusive of write ups as ‘concept papers’ on all individual projects denoting approximate financial outlay benefits accruing from such projects, identification of beneficiaries etc. (Details of model concept paper at Annexure I). This priority list will not be allowed to be changed in normal circumstances although additional projects may be considered in exceptional circumstances up to 20% of the total outlay of retained projects.

(ii) For deciding the size of the projects on the ‘Shelf’, the State would take the last three years cumulative expenditure that it has utilized under NLCPR as the indicator.

(iii) Following criteria would further guide the project identification exercise by the NLCPR Committee:

a) Projects of less than Rs. 2 Crore would not be generally funded;

b) NLCPR funds will not be used to fund land acquisition costs;

c) Each location specific project would be counted as one; the practice of clubbing many projects into one to increase the size of the project would not be acceptable (like 89 irrigation projects or 25 Flood Control projects as one project);

d) Project acceptance would depend on its soundness. The State priority list will only be a suggestive guide. NLCPR Committee will not be bound by that priority. States may identify certain sectors for focused investments with a long-term vision instead of expending these funds into small, diverse and stand-alone projects;

e) Projects in backward regions of the States like Autonomous District Council Areas would be given weightage;

f) NLCPR funds would be an additionality to ongoing programmes. They would not be used to substitute a budgeted ongoing project or scheme. Emphasis need to be given for employment generation and infrastructure schemes;

g) Normally a project duration should not exceed maximum 3-4 years. Long gestation projects will not be encouraged;

h) All regulatory and statutory clearances like forest & environment, land acquisition etc. should be identified and timeframe for obtaining the same has to be indicated;

i) Funding under NLCPR would be made available to State/Central agencies only. The State however, may decide to get the project implemented through any qualified, reputed, experienced agency to be specified in the proposal.

iv) Detailed Project Reports (as per the broad framework at Annexure II) would be prepared by the concerned State Department.

v) Each project proposal should be accompanied by a socio-economic feasibility report and a DPR after retention. The DPR should, inter-alia, include the basic information and must establish its economic and technical viability such as its rationale, cost, finances available from other domestic and external sources, similar facilities available in and around area of the project site, detailed technical specifications etc. In addition, the DPR should clearly lay down the following:

  • CPM and PERT chart;
  • Year-wise phasing of inputs, viz. expenditure;
  • The project monitoring indicators;
  • Quarterly and yearwise physical outputs to be achieved (as project monitoring indicators);
  • Project Implementation Schedule (Annexure III);
  • An authentication by State Authorities (not below the level of Chief Engineer equivalent) that the costs are based on the latest Schedules in vogue in the State concerned;
  • Intended economic / social benefit and target beneficiaries; and
  • All relevant regulatory and statutory clearances.

vi) The projects with their DPRs would be submitted by the nodal Department of the State to the Ministry of DONER for appraisal.

vii) Central Ministry/Department would submit projects for funding under NLCPR only if they have exhausted the funds (minimum 10 percent of their Budget) provided for NER. Even there, they would be encouraged to take recourse, in the first instance, to supplementary demand for grants for augmentation of their budgets for projects in NER. Further, in case of projects of central ministries/departments, the projects should have all the necessary SFC/EFC clearances. (Proposals related to state sector projects will not require EFC/SFC routing since the assets are not created in the central government, the assistance is on 90% grant and 10% loan basis on which the state plan funds are also transferred). The proposals from the Central Agencies however will require such clearance and should be routed through the concerned Administrative Ministry/ Department. The NLCPR 100% grant will be made available only for that year and the Ministry/Department should take up the remaining part of the project from next year in their annual plan.

viii) Occasionally, proposals may be taken up directly by the NLCPR Committee for strategic or other priority reasons. These proposals would also be treated as being duly submitted, and scrutinized for eligibility/desirability as if State Government/Union Ministries concerned had submitted them. This may also include strategic intervention through Corporations / Organisations under the administrative control of the Ministry of DONER and also for monitoring / evaluation studies etc., of NLCPR projects. These proposals will receive 100% funding from NLCPR.

ix) No staff component – either work charged or regular – shall be created by the project implementing authorities from NLCPR funds. All such requirement should be met from redeployment of surplus manpower in the department.

5. Appraisal of Project Proposals

5.1 The Member Secretary will place the shelf of priority project proposals before the NLCPR Committee.

5.2 The Committee in the first instance would identify the projects out of the shelf, which can be considered for funding based on the soundness of the proposal for further detailed examination.

5.3 All Recommendations of the NLCPR Committee would be placed before Minister, Ministry of Development of North Eastern Region for his approval before being communicated to the States.

5.4 On such preliminary recommendation of the NLCPR Committee and after approval of Ministry of Development of North Eastern Region, the Ministry would refer the project proposals to the Union Ministries/Department dealing with the subject for examination from techno-economic angle.

5.5 The subject matter Ministries / Departments and in appropriate cases Planning Commission will be requested to examine project proposals, particularly, technical and cost components in a defined time frame, i.e., within six weeks failing which it will be put up within ten days to a “Sectoral Technical Committee” constituted by the Ministry of DONER. The Sectored Technical Committee would consist of:

a) Representative of line Ministry as the Chairman of the Committee (not below the rank of Director or equivalent of Chief Engineer)

b) Representative of Planning Commission (not below the rank of Director/Deputy Adviser)

c) Representative of Ministry of DONER (not below the rank of Joint Director/Deputy Secretary/)

The Sectoral Technical Committee will be convened by Ministry of DONER and will examine the DPR in consultation with the subject matter Ministry and finalise its comments within seven days of such meeting. In case there is only minor changes suggested in technical specification and does not involve upward / downward revision in cost, the case will be submitted to NLCPR Committee for consideration and after due approval the State Government will be given sanction for the project subject to necessary changes. The DPRs will be referred back to the State Government for revision only if there is a major change in technical specifications, which also involve revision in the cost of the project. The revised DPR would be examined by the subject matter Ministry / Technical Committee as appropriate.

5.6 The project proposals technically appraised by the concerned Union Ministry with or without modifications would be put up before the NLCPR Committee for final approval.

5.7 Concurrence of the Minister DONER would be obtained before according final approval for the projects to be funded under NLCPR.

5.8 The Projects which are not retained by NLCPR Committee in any financial year can also be considered in the subsequent year only if the concerned State Government feels that the project is of vital importance to economic / social development of the State and thus be included in the subsequent priority list.

6. Cost escalation

The proposal relating to escalation in cost of the sanctioned projects for any reason generally does not qualify for consideration under the Non-lapsable Central Pool of Resources. However, in some deserving cases, if the enhancement of the cost is due to change in scope of the works that was not envisaged at initial stage, the proposal will be submitted to the NLCPR Committee at the appropriate juncture for consideration.

In cases where the increase in cost is not due to change in scope, and felt to be justified due to factors beyond the control of the executing agency, NLCPR Committee will take a view provided that in such cases in overall terms the escalation does not exceed 20% of the originally approved cost. Financing of such increased cost may be permitted on the basis of sharing between the Non-lapsable Central Pool of Resources and the State Government in the ratio of 1:1.

7. Release of funds

(i) Once the proposal is approved for support by the Ministry of DONER, the NLCPR division through the Joint Secretary concerned shall obtain the concurrence of Internal Finance Division (FA) of the Ministry for releasing the first installment.

(ii) First installment would not exceed 35% of the total project cost unless there are special circumstances, which would be clearly brought out in the proposal for release to the FA.

(iii) The Sanctions to the State Government would be released in the form of 90% grant and 10% loan. As regards the disbursements, if any for projects of Union Ministries/Departments, it shall be made from the Central Pool to the department/ministry in form of supplementary demand for grants.

(iv) Release of funds for ongoing projects, i.e., the second and subsequent installments shall depend upon the progress - both in financial and physical terms – of the implementation of the project subject to 75% utilization of funds of last release and full utilisation of all prior releases, if any.

(v) Request for release of subsequent installments of funds submitted by the State must be accompanied with:

  • Utilization Certificates (UCs)
  • Quarterly Progress Reports (QPRs)
  • Photographs of the works completed from earlier releases
  • Work plan for the requisitioned amount with milestones and time frame

(vi) UCs shall be submitted in the prescribed proforma (Annexure IV) only when the expenditure on the project has been incurred by the implementing agency. Planning Secretary on behalf of the State and, in case of a Union Ministry, an officer not below the rank of Joint Secretary, should sign the UCs. Release of further installments shall be recommended only after receipt of UCs and QPRs and other mandatory documents.

(vii) Funds released from the Pool must be transmitted to the executing agency / project authority by the State Government within 30 days from the date of release of funds from Government of India and a certificate to this effect be sent to Ministry of Development of North Eastern Region by the State Planning Department.

(viii) Funds released by the Government of India must be utilized within a period of nine months from the date of release. In case the funds are not utilized within the stipulated time, such cases may be referred to the Ministry of Development of North Eastern Region with sound reasoning for revalidation. Revalidation for a limited period may be granted by Secretary of Ministry of DONER on merit.

(ix) The Pay and Accounts Office would ensure recovery of the 10% loan released to the State Government from the Central Pool.

8. Monitoring & Evaluation

8.1 The project-wise progress of implementation shall be reported on a quarterly basis on the proforma (QPR) prescribed for this purpose at Annexure V. Any additional information may be furnished along with the format. The State and Union Ministries/Departments shall report the progress in respect of each project at the end of the quarter. Such QPRs should reach the Joint Secretary of the Ministry within three weeks of the end of the quarter under report.

8.2 Chief Secretary of the State shall hold quarterly meeting to review the progress of implementation of the ongoing projects under NLCPR and make available summary record of such meetings to the Ministry of DONER.

8.3 To further strengthen the monitoring the Ministry of DONER shall nominate one representative of the Ministry to the quarterly review meetings of the State.

8.4 State will carry out project inspection periodically. The quarterly review report of the State would contain a separate and distinct section on the findings of the project inspection. In case of NLCPR projects implemented by Central Government agencies, such inspections may be conducted by their competent authority and reports will be submitted to the Ministry under intimation to concerned State Government.

8.5 State would nominate a ‘nodal officer’ for each project who would be responsible for project implementation and monitoring.

8.6 Monitoring and evaluation of implementation of the project shall also be undertaken through field inspections by officers of the Ministry of DONER, as well as through impact studies, social audits and evaluations conducted by government or through independent agencies at the request of the Ministry (DONER).

8.7 Each State would ensure that the projects being funded under NLCPR are shown at Major-head to sub-head level in their plan budgets so that withdrawals from those heads as certified by audit can be matched with expenditure figures supplied by State for each project.

8.8 The Ministry (DONER) will send independent supervision mission (six-monthly) on the lines of externally funded projects for all the eight States wherein representatives of State Governments, Ministry of Development of North Eastern Region and independent technical expert/s would be involved. Teams would interact with policy makers, beneficiaries, field officers etc. besides visiting project sites. While such monitoring and evaluation will provide independent insight into implementation of NLCPR projects, it would give opportunity for capacity building in the State. The recommendation of these half-yearly supervision Missions can also be used to make mid-course corrections in the project and its implementation procedure.

9.Transparency and Publicity of Information

In order to ensure that the information about developmental schemes being financed through the Non-lapsable Central Pool of Resources reaches the ultimate beneficiaries, i.e. the targeted beneficiaries, there is a need to ensure greater transparency and publicity of information. For this purpose, the following shall be ensured:

(i) All the schemes/projects being supported from the Central Pool shall be given wide publicity in local media.

(ii) Immediately after project approval is received, the State Government shall display at projectsite a board indicating the date of sanction of the project, likely date of completion, estimated cost of the project, source of funding i.e. Non-lapsable Central Pool of Resources (Government of India), contractor(s) name and the physical Target as at Annexure VI. After completion of projects, State Government will put a permanent display on site like plaque on the wall etc. after asset created displaying details of NLCPR funding as per Annexure VI.

(iii) State Government shall disseminate information through media- print, electronic- through appropriate means on the schemes being implemented from the Central Pool.


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