Discussion on SSA-III agreement with World Bank

41st Quarterly Review Meeting of Finance Controllers on 29th May 2014 & 30th May 2014

New Delhi

1. Sarva Shiksha Abhiyan, SSA is India main programme for universalizing elementary education. Its over all goals include universal access and retention, bridging of gender and social gaps in education and enhancement of learning levels of children.

2. External development partners (IDA) /DFID/European Commission) have supported this GOI programme in the past DPs have been engaged with SSA programme since 2004:

SSA-I(Rs. in crore)

Year Expenditure IDA DFID EC Total %

2003-2004 3057.76 -  162.25  - 162.25 5.31

2004-2005 6309.19 621.71 425.94  - 1047.65 16.61

2005-2006 9006.14 1133.71 504.21 704.15 2342.07 26.01

2006-2007 13468.62 477.76 434.8 179.35 1091.91 8.11

2007-2008 15133.74 -  189.89  - 189.89 1.25

2008-2009 16385.53 -   - 59.44 59.44 0.36

SSA-II(Rs. in crore)

Year Expenditure IDA DFID EC Total %

2007-2008 15133.74  - 243.81 - 243.81 1.61

2008-2009 16385.53 1033.17 346.22 136.54 1515.93 9.25

2009-2010 19471.89 1702.99 372.44 178.25 2253.68 11.57

2010-2011 26879.80 1141.19 330.55 119.84 1591.58 5.92

2011-2012 37836.73 2420.65 584.95  - 3005.6 7.94

Year Expenditure IDA DFID EC Total %

2012-2013 34589.03  - 316.76  - 316.76

0.92

2013-2014 0.00 0.00 250.00 250.00

3. And now IDA have extended the support from FY-2014-2015 to FY-2017-18 to the extent of US$1006.20 million through SSA-III.

2014-2015 : USD 200 million

2015-2016 : USD 330.00 million

2016-2017 : USD 246.20 million

2017-2018(June) : USD 180.00 million

2017-2018 (December)

: USD 50.00 million

IDA and GOI/MHRD have signed the financial agreement in April 2014 to extend support (reimbursement) to the SSA programme as under :

4. The applicable disbursement method will be ‘Reimbursement’. Programme expenditures under SSA-III will be defined as expenditures on all the activities under SSA programme. Eligible expenditure for IDA financing will be defined as eligible program expenditure by GOI, project States/UTs minus mis-procurement / ineligible expenditure as reported through IuFRs.

5. Disbursement will be made once per year around June for eligible expenditure incurred in the prior fiscal year as reported in IuFRs. The reported programme expenditures will be subject to subsequent confirmation/certification by the annual audit reports of all the state implementing agencies.

6. External Partners have been engaged with SSA programme by way of conducting regular review of existing programme through JRMs.

• Field visits• Desk Review of Audit Report• JRM documents• Concurrent Financial Review

Mis-procurement:1. IDA shall not finance expenditures for goods,

works & services which have not been procured in accordance with agreed provisions in this agreement and in accordance with Para-127 of chapter-IX of FMP.

2. In all such cases, IDA shall declare mis-procurement and it is the policy of the IDA to cancel that portion of the Financing allotted to goods/services that have been so mis-procured.

Guiding principles in the determination of financial management arrangements:

i. Use of existing systems to meet the accounting and financial reporting

ii. Work with MHRD/Societies to strengthen the systems and address the weaknesses to significantly enhance the levels of fiduciary assurance in the use of funds for the purpose intended.

Years of SSA programme implementation have resulted in constant strengthening of system and procedures. However considering the multiplicity of spending/executing agencies and diverse capacities across these agencies there are persistent implementation challenges.

(a) The major learning and areas for development identified for SSA-III are:

1. Staffing – adequacies at various level2. Variation in capacity:• Training of accounts staff• Introduction of standard training modules• Rigorous implementation of Project FM guidelines /

FM maual• SMC manuals in local languages• Monitoring of status of training

3. Funds remaining un-utilized grants treated as expenditure

4. Weak Internal Controls and Internal Audit5. In-adequate Audit coverage and un-addressed statutory

Audit observations

Compliance of mitigation of abovementioned weaknesses measures will be monitored through the semi-annual joint review-missions (JRMs).

b. Internal Control continue to be on area of concern. Audit Reports time and again highlighted. Mercantile system of accounting Funds released to sub-districts, SMCs treated as expenditure Refund of unspent balance at block level treated as receipts Un-reconciled / un-explained ledger balances Non maintenance / non production of statutory records

especially by KGBVs In-adequate internal controls over assets In sufficient monitoring of funds spent at schools and sub-

district levels Non reconciliation of remittances in transit.

(c). Internal Audit Review and Report on

Adequacy of internal controls Accounting for an safeguard of assets Accuracy and propriety of transactions Bank reconciliation Level of compliance with SSA financial norms/FMP

manual Procurement guidelines implementation

Internal Audit Reports are submitted to SPD for necessary action. However follow up action continues to be weak areas in many states across the programme due to insufficient attention/resources.

14

THANK YOU