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1. Objectives of PMGSY

Construction of rural roads brings multifaceted benefits to the hitherto deprived rural areas and is seen as an effective poverty reduction strategy. The economic benefits of rural roads include increase in agricultural production, changes in cropping pattern, better prices for agricultural produce, reduction in transport costs, creation of new employment opportunities in farm and off-farm sectors, lower prices for essential commodities to rural consumers, better climate for setting up cottage and agro-Industries, increase in production of dairy products, etc. The impact of the new links on the social life of the rural population, is reflected in the form of better medical care, more attendance in school/colleges, better availability of public services, higher levels of social interaction etc. Rural roads also change life patterns. Improved connectivity will make daily commutation to urban work places easier, reducing migrations, increasing rural employment and improving family life. Rural connectivity will enable increased penetration of better quality consumer items and durables, thus improving quality of life. All this, in turn, will stimulate not merely the rural sector but the entire economy.

Government’s resolve to provide total Rural Connectivity was indicated in the Address of the President of India to the Joint Sitting of Parliament on 25th October 1999, when a Programme of construction of All-weather roads in the rural areas was announced. Subsequently, in his Address on 15th August 2000, the Prime Minister announced the Pradhan Mantri Gram Sadak Yojana (PMGSY), as a 100% Centrally Sponsored Scheme, with the target of connecting, through good All-weather roads, every habitation that has a population of more than 1000 within the next 3 years and every habitation with a population of more than 500 by the year 2007. The Programme was launched on 25th December 2000 and Rs. 2500 crore was released to the State Governments as additional Central Assistance for the Rural Roads Programme during 2000-01. The Programme seeks to provide connectivity to all Unconnected Habitations in the rural areas with a population of more than 500 persons, through good All-weather roads, by the end of the Tenth Plan Period. In respect of the Hill States (North-East, Sikkim, Himachal Pradesh, Jammu & Kashmir, Uttaranchal) Desert Areas and Tribal (Schedule-V) areas, the objective is to connect Habitations with a population of 250 persons and above. PMGSY as a 100% Centrally Sponsored Scheme commenced from 2001-02 after Cabinet approval on 7th August, 2001.

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2. Cabinet decisions of 7th August, 2001

The main decisions of the Cabinet for the Pradhan Mantri Gram Sadak Yojana (PMGSY) are as follows:

1. PMGSY will be a 100% Centrally Sponsored Scheme executed through State Government Agencies.

2. The primary objective of the Programme will be to provide connectivity by way of an all weather road to all unconnected habitations with a population of 500 persons and above by the end of the 10th Plan Period (250 persons and above in case of Hill States and Desert areas). Upgradation, though not central to the Programme, would be allowed in cases where connectivity is complete.

3. The total requirement of funds for the Programme is of the order of Rs.60,000 crore. The available source of funds, i.e. 50% share of the cess on High Speed Diesel (HSD), as per the Central Road Fund Act, being inadequate to finance a Programme of this magnitude, the Ministry of Rural Development is authorized to take appropriate steps in coordination with the Ministry of Finance to generate additional financial resources including by way of borrowings from,inter alia, the External Funding Agencies such as the World Bank and the Asian Development Bank.

4. Execution of the Programme will be in project mode through setting up of National Rural Road Development Agency (NRRDA) to extend support to the Programme.

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3. National Common Minimum Programme (NCMP)

The Common The National Common Minimum Programme (NCMP) of the UPA states that UPA will pay special attention to augmenting and modernizing rural infrastructure consisting of roads, irrigation, electrification, cold-chain and marketing outlets.

‘Augmentation’ in the context of PMGSY would mean ‘new connectivity’. ‘Modernisation’ in the context of PMGSY would mean ‘upgradation and maintenance’.

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4. Magnitude of the Programme

According to latest figures made available by the State Governments under a survey to identify Core Network as part of the PMGSY programme, about 1.70 lakh Unconnected Habitations (eligible habitations) need to be taken up under the PMGSY, as follows.

Details are at (Annexure-I-A). The State wise length of road for connecting the unconnected eligible habitations is at (Annexure-I-B) and the State wise average lead distance/ habitation is at (Annexure-I-C). The year-wise coverage of unconnected habitations under PMGSY is at (Annexure I-D ).

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5. New Estimate of Programme Fund Required

As a result of the Core Network survey, a better estimate is available of the magnitude of the programme. At the same time, due to the experience of the first 3 years a better estimate is also available of the construction cost. As such the following is the comparison between initial estimates at the time of the Cabinet decision in August 2001 and current estimates:

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6. Allocation of Funds

The year wise allocation of funds from the Diesel Cess is as under:

Criteria for Allocation to States

The current allocation to the States/Union Territories is based on, inter alia, a weightage of 75% for Need (share of unconnected Habitations in the total unconnected Habitations of the country) and 25% on Coverage (share of connected Habitations in the total connected Habitations of the country). The State-wise allocation is given in Annexure-II,including the distribution of the additional cess, which is being targeted to the 10 Core States giving 75% on the basis of new connectivity length and 25% on the basis of upgradation length.

The PMGSY Scheme as approved in the Cabinet also includes approval to meet the requirements of the North East and of Special Problem Areas (including Border Districts/Naxalite affected areas) subject to the preparation of suitable project proposals in accordance with the Guidelines and as per the assessment of need by the Ministry of Rural Development time to time. Accordingly, a special allocation of 5% of the annual allocation under PMGSY to deal with the special requirements of different areas including requirements of North East and of special problem areas (including border districts/ naxalite affected areas), has now been notionally earmarked, keeping also in view communications received from the Ministry of Home Affairs with reference to border/extremist/insurgency affected areas. The special allocation is being administered as follows:

1. 1% for districts sharing borders with Pakistan & China (in coordination with Ministry of Home Affairs)

2. 0.5 % for districts sharing borders with Myanmar, Bangla Desh and Nepal (in coordination with Ministry of Home Affairs)

3. 1.5 % for Left Wing Extremists areas for construction of rural roads in the districts identified by the Ministry of Home Affairs (MHA).

4. 1% for the extremely backward district, which can be categorised as Special Problem Areas

5. 1% for Research and Development Projects and innovations

Ministry of Home Affairs (MHA) has indicated that 53 districts in 9 States are affected by left-wing extremism and it has been decided that Rs.37.5 crore may be earmarked annually to meet the requirements for project proposals from these areas. In addition, about Rs.37.5 crore are earmarked for Border Districts for which Ministry of Home Affairs has been addressed.

MHA has so far recommended the taking up of road works in Madhya Pradesh, Andhra Pradesh, Orissa, Uttar Pradesh and West Bengal in Districts affected by Left Wing Extremism. While proposals for Andhra Pradesh have been cleared along with main proposals, the other State Govts. have been requested to prepare DPRs for the road works and send them for clearance to the Ministry.

As regards proposals in respect of border districts is concerned, proposals of Punjab have been cleared. Proposals of Himachal Pradesh and Mizoram are under consideration. Note- In North East and Bihar where Central Agencies have been inducted, agency charges of 10% are being paid out from the special allocation.

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7. Central Road Fund

The source of funding for the PMGSY is currently the cess on diesel accrued into the Central Road Fund. The Management of the Central Road Fund is governed by the provisions of the Central Road Fund Act 2000, in particular Section 9 and 10 which read as under:

9. (I) The Central Government shall have the power to administer the Fund and shall -

1. take such decisions regarding investment on projects of national highways and expressways as it considers necessary:

2. take such measures as may be necessary to raise funds for the development and maintenance of the national highways:

3. allocate and disburse such sums as are considered necessary, to the concerned departments responsible for the development and maintenance of -

   1. national highways
   2. rural roads
   3. State roads; and

   4. Construction of roads either under or over the Railways by means of a bridge and erect suitable safety works at unmanned rail-road level crossings.'

The pattern of accruals into the Central Road Fund is given in Annexure-III. According to the Central Road Fund Act, 50% of Diesel Cess (at present it is Rs. 1.50 per litre on HSD) is for Rural Roads. An amount of Rs. 2500 crore per annum has accordingly been provided in the Budgets of 2000-01, 2001-02 and 2002-03. In the Budget of 2003-04, the Cess on HSD and Petrol has been hiked by Rs. 0.50(from Re.1 to Rs. 1.50 per litre) and this is likely to contribute another Rs. 2600 crore to the Central Road Fund. In the Budget Speech of 2003-04, the Finance Minister had mentioned that

"Encouraged by the success of the scheme of funding rural roads under the Pradhan Mantri Gram Sadak Yojana by earmarking 50 per cent of the cess on diesel, it is proposed that the resources for rural roads be augmented. Accordingly, apart from allocating the anticipated Rs.2,325 crore from the existing cess on diesel for 2003-04, additional funds will be made available for rural roads from the proposed additional cess on diesel of 50 paise."

Minister of Rural Development has written to Finance Minister on September 2, 2003 requesting for provision of the requisite additional accruals in the Budget. However, no additionality was received. In the Annual Plan 2004-05 meeting with Planning Commission, this issue was raised and Planning Commission has requested Ministry of Finance to indicate the additionality to be provided. Secretary, Rural Development has also raised the issue with Finance Ministry in April, 2004.Minister of Rural Development has again written to Finance Minister on June 9, 2004, which was followed up by a letter from Secretary(RD) to Finance Secretary on 5.10.2004.

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8. Raising of Additional Financial Resources

A. Funding Strategy

The following is the funding strategy proposed to meet the requirements.

• The interest and principal repayment on loans during this period will be from CRF
• The Cess accruals are assumed to grow @ 4% p.a plateauing at Rs7000 crores.
• The repayment of the borrowings would continue till 2060-61.

B. ADB & World Bank Funding

The funding under the World Bank (WB) and ADB’s Rural Road Sector Projects (RRSP) is as follows:

As communicated by Department of Economic Affairs, proposals of Ministry of Rural Development have been accepted in principle for two more loans, and discussions are to start at the appropriate time:

1. World Bank-II : $500 million
2. RRSP-III(ADB) : $350 million (in 2007)

B. Leveraging the resources for accelerated implementation

Keeping in view the requirements of upgradation of Through Routes and Link Routes in States with better connectivity such as Tamil Nadu, Gujarat, Maharashtra, Andhra Pradesh, Karnataka, Kerala, Haryana and Punjab, these States have been addressed to give their views whether they would be willing and able to leverage the necessary resources for the purpose. A draft Document has also been circulated to the States. Copy of the Draft is at Annexure-IV. The Law Ministry however advised that the CRF Act would need to be amended to enable the cess to be used to service the borrowings. A Draft Cabinet Note was accordingly circulated on 21st October,2004. The response of the Ministries concerned are as follows, and action is being taken to suitably revise the Note:

1. Ministry of Finance (Department of Expenditure):
   
   1. The programme should be refocused in two or more phases, as has been done in the case of NHDP, Phase-I, Phase II and Phase III (under consideration). The basis for the estimated cost of Rs.1,33,000 cr., means of finance and cash flow projections need to be considered by PIB before they are placed before CCEA.
   2. There is no alternative to leveraging cess flows to complete PMGSY in a time bound manner, as has been done for the NHDP and the proposal to constitute the NRRDA on the same lines as NHAI is supported.
   3. The proposal to amend the Central Road Fund Act to empower Central Government to raise funds for the development and maintenance of rural roads, with other consequential amendments, is supported.
   4. In view of the ceiling on Government guarantees at the rate of 0.5 per cent of GDP per annum under the Fiscal Responsibility and Budget Management Act, 2003, it is not feasible to provide Central Government Guarantee for borrowings envisaged for PMGSY. NHAI also raises money from the market without GOI guarantee. Securitisation of cess receipts is an adequate safeguard for this purpose.
2. Ministry of Finance (Deptt. of Economic Affairs):
   World Bank
   1. Phase II ($500 million) would be contingent upon the performance of Phase I and absorption of funds by the States.
   2. The capacity of the States and the implementing agencies, in terms of availability of physical infrastructure and trained manpower, to make the quantum jump in executing the proposed additional new construction of roads needs to be initially reviewed, before domestic borrowing is resorted to.
   Asian Development Bank

   The Draft Cabinet Note may be modified to reflect that the ADB has Three Loans ($400 m, $400 m and $350 m) for the programme and that the choice of States is based upon a comprehensive Road Sector Approach for the State where Rural, State and the Central Roads are taken up.

3. Ministry of Panchayati Raj
   
   1. It is being repeatedly brought out by the Parliamentary Standing Committee on Urban and Rural Development that the Pradhan Mantri Gram Sadak Yojana (PMGSY) marginalizes the Panchayats and, while theoretically empowering Members of Parliament to authorize the selection of roads for inclusion in PMGSY, actually makes the process highly bureaucratic and technocratic without making it participatory. It is necessary to thoroughly re-conceive the programme by giving the Panchayati Raj Institutions the central role for proposing, approving and supervising the road building programmes under the Scheme. If the funds are pooled and placed at the disposal of the Panchayati Raj Institutions, that would be a far more effective way of running this crucial Centrally Sponsored Scheme with and through people’s participation.
4. Pilot Project Proposal by Warana Co-operative (Maharashtra) under PMGSY
   

   A proposal was received from Warana Cooperative in October 2002 to construct and maintain rural roads in three districts (Sangli, Sindhudurg and Kolhapur) in Maharashtra. The funding was to be provided from loans obtained by leveraging PMGSY funds. The innovative feature of the proposal was that the maintenance of the constructed roads would be done out of the income generated by plantation activity and this was an essential feature of the project. Accordingly an MoU has been signed on 30.1.2004 between the Cooperative, State Govt. and the Ministry.

   The Warana Cooperative is in the process of getting the Project documents prepared in order to attract a Financial Institution to fund the project. Further steps will be taken after the CRF Act is amended.

5. Mobilisation of internal resources
   

   In a meeting held on 31st December, 2002 under the Chairmanship of Member, Planning Commission, it was suggested that a Special Purpose Vehicle (SPV), may be created specifically to raise financial resources for the PMGSY.

   In a meeting with HUDCO, LIC and NABARD, in which the various possibilities of raising long term financing for PMGSY were examined. It was concluded that LIC was best positioned to offer the requisite financing which was needed for the Programme, since, generally, it is insurance and related sectors which can access such long term funds. LIC agreed for long term funding through instruments in the nature of Secured Non-Convertible Bonds. In its expression of interest dated 28.6.2003, the Corporation has expressed its willingness to extend a funding line of Rs.2500-3000 crore per annum at about 7% per annum rate of interest. The servicing of the loans could take place out of the accruals into the Central Road Fund to the extent of the share of Rural Roads. Since this involves creation of a Special Purpose Vehicle and Government guarantees, the matter is being processed for a Cabinet Decision on the policy and authorization for mobilising internal resources through an SPV. On the advice of the Ministry of Law it is also proposed to amend the CRF Act in order to be able to use the Cess Funds to service the borrowings.

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9. Progress of works

1. In 2000-01, the first year of the programme funds were released to States by Ministry of Finance as Additional Central Assistance (ACA) directly based on Planning Commission allocation and line estimates for works (this includes Rs.672 crores for completion of BMS works). DPRs were prepared subsequently and works tendered around Sept. 2001.

2. In 2001-02, line estimates equal to twice annual allocations were cleared and funds released. DPRs were then prepared and works tendered around Sept. 2002.

3. In 2002-03, releases were made mainly for ongoing works except in case of Bihar, Goa, Jharkhand, Manipur and Uttaranchal who could not claim their instalment and savings were allocated for States who were ready with 2003-04 proposals.

4. In 2003-04, proposals were cleared on the following basis:

   1. DPRs
   2. Core Network
   3. Adoption of Std. Bidding Document
   4. Data to be available on OMMS

   Arunachal Pradesh, Bihar, Goa, Manipur, Meghalaya and Tripura have not yet sent their 2003-04 proposals.

5. 2004-05: Proposals are being cleared as in the case of 2003-04. Additional proposals for World Bank and ADB States are also being cleared. So far proposals of 11 States have been cleared and proposals of 4 States are likely to be considered in December 2004.

   The brief year-wise position of clearance and progress is as follows:

   (Rs. in crore)

   Year	Value of proposals cleared	Amount released	No. of road works	% of expenditure to amount released up to Oct. 04	% of road works completed up to Oct. 04
   2000-01	2502.09	2438.38	13217	96.19	94.80
   2001-03	5111.07	4852.69	11167	81.46	77.19
   2003-04	5077.42	2502.52	8341	51.18	19.94
   2004-05	2174.71	277.92	2713	55.33	1.03
   Total	14865.29	10071.51	35438

   Year-wise, State-wise details are at Annexure V-A,VB,VC,V-D and consolidated State-wise details are at Annexure V-E.

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   10.Review Meetings

   The progress of works is being regularly reviewed. Regional Review Meetings have been organised six monthly since Sept. 2002. Details are at Annexure-VI. The main issues discussed relate to

   1. planning & Core Network
   2. capacity development
   3. progress of works
   4. quality management
   5. maintenance management
   6. OMMS
   7. training

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   11. Prime Minister's Review of the Programme in the Meeting of Chief Ministers held on 29-30th June, 2004.

   The Prime Minister in the meeting of Chief Ministers held on 29thJune, 2004 emphasized that there is a need to view agriculture as the growth engine for rural development complemented by non-farm activities for rural development. He pointed out that strategies had to be effective in increasing the productive potential of Indian agriculture and developing viable non-farm occupations. In this context he referred to the PMGSY, which primarily provides the 'last mile' new connectivity and hoped that it would be implemented in a way that subserved the overall connectivity objective.

   While presenting the progress of PMGSY in their States, Chief Ministers of several States pointed out the need to step up resource allocations in order to be able to complete the connectivity by the end of the 10th Plan and also that they may be allowed to leverage the State allocation so that long term loans could be obtained.

   On the basis of discussions, guidelines have been issued on 25th August 2004 which enables States to take up upgradation of associated Through Routes along with construction of the new links.

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   12. Consolidated Guidelines of 1st Nov. 2004

   Government had last issued the Guidelines of the Pradhan Mantri Gram Sadak Yojana (PMGSY) on 7th January, 2003.

   As a result of close interaction with the State Governments, including Regional Reviews with the State Nodal Departments, Empowered Committee Meetings and Reviews at the Minister’s level, it was felt necessary to further clarify some issues in the Guidelines relating to methodology of selecting roads, implementation through dedicated PIUs, quality assurance and execution of works. Consequently, supplementary guidelines/clarifications were issued on 5.3.04, 30.4.04, 5.7.04, 6.7.04, 16.7.04 and 25.8.04. All these clarifications and detailing have been consolidated along with the decision to allow upgradation of associated through Routes along with New Constructions, and the consolidated Guidelines have been circulated to States on 1st Nov. 2004. The main changes in comparison to the earlier guidelines of 7th Jan 2003 are given in Annexure VII.

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   13. Executing Machinery

   States have been asked to make the following institutional arrangements:

   1. A State Rural Roads Development Agency (SRRDA) or similar body with distinct legal status, to receive PMGSY funds and act as nodal point for rural road sector policy and management.
   2. Executional arrangements overseen at State Level by officers of the SRRDA including State Quality Coordinator (SQC), Financial Controller, Empowered Officer, IT Nodal Officer etc.
   3. Programme Implementation Units (PIUs) at Division/District Level for managing the programme, accountable to the SRRDA.
   4. Arrangements for efficient management including :
      • Online management and Monitoring Systems (OMMS)
      • 3 tier quality control
      • Centralised works accounting system
      • Transparent tendering using Standards Bidding Document
   5. Separate Bank Accounts for ‘Programme’, ‘Administrative’ and ‘Maintenance’ funds, centrally managed by the Agency and operated by the PIUs.
   6. State Level Standing Committee Comprising Secretaries of the Programme Departments (Rural Development and PWD); Secretaries of Transport, Finance, Forests & Environment & IT; SIO, NIC; and State Technical Agencies (STAs) to review:
      1. Progress of ongoing works
      2. Quality Control (2nd tier at State level)
      3. Capacity enhancement & training of executing agency
      4. Progress in computerised online monitoring
      5. Budgeting of maintenance funds as per PMGSY guidelines
      6. Land width availability for roads
      7. Forests and environmental clearance
      8. Provision of public transport on PMGSY roads created, etc
      9. Road safety issues

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   14. Steps taken where State Machinery is inadequate

   - Bihar :- Tie-up with Central Executing Agencies

   In view of the very slow progress of PMGSY in Bihar, the Ministry of Rural Development had suggested in May 2003 that the State may consider involving RITES in the execution of PMGSY works. In Dec 2003, RITES expressed its inability to involve itself in construction activities. Subsequently, NBCC evinced interest in taking up the works in Bihar on the same terms and conditions as were considered for RITES. In a Meeting with the Secretary(RD) on 25th February, 2004, however, the State Secretary intimated that the State does not need any outside agency for executing works.

   The Government of Bihar later requested the Ministry of Rural Development on 28th June 2004 vide State Government’s Resolution that it would like to engage, on its behalf, Central Agencies for implementation of PMGSY in the State. The Ministry, in consultation with the State Government, invited certain Central PSUs, CPWD and State level PSUs for preliminary discussions on 2nd July 2004. NHPC Ltd, NPCC Ltd, NBCC Ltd, IRCON International Ltd, Engineering Projects (India) Ltd, U.P. Road Nirman Nigam Limited and CPWD evinced interest in taking up the work in the State. Tripartite Agreements have been executed by Central PSUs- NHPC, NBCC, NPCC and IRCON -, the State Government and this Ministry on 31st August, 2004 for execution of works. 33 of the 37 districts of the State ( Araria included in Purnea) have been assigned to these Agencies. The remaining 4 districts have been assigned to CPWD. These Agencies have mobilised and have commenced the implementation process.

   - North East/Hill States :- Tie-up with BRO & NBCC

   The issue of slow progress of PMGSY in a few States figured in the Consultative Committee Meeting on 10.4.2003. Visits of a Team of National Quality Monitors (NQMs) also indicated that there were serious problems in North Eastern States including lack of security, inadequate technical expertise, organisational deficiencies etc. and it was decided to explore whether with the concurrence of the State Governments concerned, outside Technical Agencies could be inducted to impart the requisite professionalism to the execution of the Programme. A meeting was accordingly held on 10th April, 2003 to discuss execution of PMGSY in North East, J&K and Uttaranchal through Border Roads Organisation (BRO).

   The Director (Plg.) BRO intimated that their Organization was working only along the National Highways in the North East because of security considerations. The threat perception was particularly high in the case of Manipur and, for this reason, they have not even accepted the offer of the State Government for construction of roads in the State, as the State Government was not in a position to provide adequate security to their personnel. For this reason, and also because their resources were already overstretched, BRO would not be able to take up PMGSY works all over the State. The representative stated that sufficient labour was not available to work in Manipur due to the insurgency problem.

   The representative was requested to intimate the districts in the States of the North East where it would be possible for the BRO to undertake the construction of rural roads under the PMGSY. It was decided that the State Governments would be approached in the matter on receipt of feedback from the BRO. BRO has so far evinced interest in taking up PMGSY works in Dhalai Distt. of Tripura and the modalities are being worked out.

   A meeting was also held with NBCC on 24.6.2003 to explore whether they would be in a position to execute PMGSY works in the North-Eastern States. This was further discussed with the State Governments concerned and NBCC in a Meeting held on 14.7.2003 where it was concluded that NBCC may work out further details for taking up the work in Tripura, who have responded positively. The other States have not responded positively and the matter is being pursued. Govt. of Tripura has signed an MoU with NBCC and the Ministry on 27.4.2004 which envisages execution of PMGSY works in West Tripura Distt. by NBCC in accordance with the PMGSY Guidelines in force. The State Government has been authorised on 29.10.2004 to engage NBCC for execution of works in South Tripura district also, for which NBCC, the State Govt. and the Ministry have already agreed. The NBCC would charge a departmental fee of 10 % which would be borne by the Ministry of Rural Development.

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   15. On-line Management & Monitoring System

   A modern Management and Monitoring System has been set up for the PMGSY. The Ministry of Rural Development have engaged the Centre For Development of Advanced Computing (C-DAC), Pune to develop and manage a web-based On-line Management & Monitoring System (OMMS) for the PMGSY. The main Application Software Modules are:

   • Rural Road Plan & Core Network
   • Proposals
   • Tendering & Contracting
   • Execution & Monitoring
   • Payments & Fund Flow

   The Web site omms.nic.in is hosted on NIC’s server in Delhi. The Payment and Fund Flow module is being operationalised. A User Manual has also been developed and published and copies have been made available to the States. Hardware has been installed and operationalised in the Districts and the States.

   A new Central Website has also been developed by the Rural Connectivity Division containing details of the PMGSY Scheme, Guidelines, Agencies involved, role and responsibilities, progress, etc. and can be accessed at www.pmgsy.nic.in. Entry of all habitations and habitation masters data

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   16. Standard Bidding Document

   A Standard Bidding Document has been developed for the Programme after the study of good procurement systems and best national and international practices. The work of development of Standard Bidding Document was given to the experts of the field. The procurement process and Standard Bidding Documents of various States, MORTH, World Bank and ADB etc. were studied and the development of draft documents were completed. The draft was subjected to the process of thorough review and consultation by experts and the State Governments.

   The document has been prescribed for use by the Executing Agencies of the State Governments with effect from 2003-04. The Standard Bidding Documents has the following main provisions:

   1. The tender will be invited for construction as well as maintenance of the road work for five years.
   2. The technical qualification of the contractor in terms of the bidding capacity, the experience of civil engineering works and in relevant field, possession of requisite machinery and equipments and financial capacity etc. will be evaluated before opening of the financial offer.
   3. The responsibility of establishment of Quality Control laboratory and mandatory testing will be of the contractor and the contractor will be required to employ requisite engineering and technical staff.
   4. The funds for the construction will be provided through the Pradhan Mantri Gram Sadak Yojana and the funds for maintenance of the road work for five years will be provided by the State Governments.

   In order to give the effect to the Standard Bidding Documents, the following procedure has been adopted for execution of works under the Pradhan Mantri Gram Sadak Yojana:

   1. The estimates of each work under PMGSY will be made in two parts. The first part will be estimate for Construction of the Road works and the second part will be the estimate of year wise routine maintenance for 5 years.
   2. The clearance for the estimates for construction of Road  works will be provided by this Ministry of Rural Development but the clearance for the estimate of routine maintenance will be provided by the State Government and the provision for the funds related to the maintenance will be done by the State Government.
   3. Before submitting the proposals for Construction of Roads works for clearance to the Empowered Committee of the Ministry of Rural Development, the State Government will be required to give approval for routine maintenance of every work in the proposal. The State Government will also be required to furnish a certificate to the effect that the provision of funds for maintenance has been made in the State Budget separately for PMGSY Roads.

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   17. Sound Technical Base for PMGSY

   The Rural Roads Manual has been approved and printed by the Indian Roads Congress (IRC) as a Special Publication (IRC:SP-20:2002). This Manual provides a firm technical base for the road works that are being taken up under the PMGSY.

   In order to streamline the process of estimating and standardise contracts, a separate Book of Specification and a Standard Data Book have been published in the IRC at NRRDA’s instance. These replace the publications brought out by the Ministry of Road Transport and Highways, and will be in consonance with the Rural Roads Manual. State Govts. have been asked to prepare the State Schedule of Rates for rural roads in accordance with these publication.

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   18. Quality Control System

   The primary responsibility of maintaining the quality of works is of the State Nodal Department and Executing Agencies. Under the PMGSY, quality is sought to be ensured through a three-tier Quality Control System, in which the Executing Agency is primarily responsible for maintaining the quality through its Executive Engineers, at the District (First) level, as well as through an independent Quality Control Agency (Second Level), whether departmental or otherwise, which is responsible to the officers of the Executing Agency or the Nodal Department independent of the Field Engineers. The quality monitoring personnel at the second level, called State Quality Monitors (SQM) will have their work supervised by the State Quality Coordinator (SQC).

   A Quality Control Handbook has been published for PMGSY. Quality Control Registers have been prescribed for all the works under Pradhan Mantri Gram Sadak Yojana and these Registers will be maintained for each work under the Programme.

   Though the Quality Control Handbook specifies that contractors will maintain field laboratories ( supervised by PIUs as the first level of quality monitoring), it has been noticed that in actual practice this is not being operationalised in many States because the second level of independent quality monitoring under the State Quality Coordinator is not functioning adequately in such States and, in fact, many States are depending mainly on National Quality Monitors who are funded by NRRDA under the PMGSY programme. Many States pointed out that in the absence of the 2nd tier, the 3rd tier of NQMs was bearing the main load and at a higher cost (due to higher travel expenses). State representatives were of the view that it was necessary for the programme to explicitly fund the entire quality control process including the 2nd tier, to ensure Total Quality Management. This aspect has now been taken care of by earmarking 0.50% of funds towards Independent Quality Monitoring (Second tier) and included in the consolidated guidelines.

   All the States have recently been asked not only to ensure quality but also to provide adequate response mechanism for the purpose. To ensure this, the following procedure has been prescribed:

   1. The State Quality Coordinator shall register all complaints and will get them enquired into by the DPIU or if circumstances so require, by deputing a State Quality Monitor.

   2. All complaints shall be acknowledged on receipt and likely date of reply shall be indicated. On receipt of the report, the complainant shall be informed of the outcome and the action taken / proposed.

   3. In case report from an SQM is desired, this shall be furnished within the time specified.

   4. The SQC shall make a monthly report to the State Nodal Department / State Rural Roads Agency.

   In addition, the National Rural Roads Development Agency (NRRDA), as a third-tier, engages National Quality Monitors (NQMs) each month to verify at random the quality of road works. The reports of the NQMs are sent to the State Government for necessary action. A State-wise abstract of inspections carried by National Quality Monitors upto July 2004 is at Annexure VIII-A. Upto July 2004, about 22000 inspections have been done of completed works as well as works in progress. 95 % of completed works and 80 % of works in progress were found satisfactory. The percentage of satisfactory works has been improving as given in the graph at Annexure VIII –B . The reports of NQMs are sent to the State Government to take action and inform NRRDA. An abstract of information regarding Action Taken Reports on NQM observations is at Annexure VIII-C . In case a completed road is found ‘Unsatisfactory’, action is required to be taken to black-list the contractor.

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   19. Principal & State Technical Agencies

   The Ministry have identified 42 State Technical Agencies (STAs), which are the National Institutes of Technology and Government Engineering Colleges of repute, in consultation with the State Governments and the Central Road Research Institute, New Delhi, to advise and assist the Executing Agencies, on behalf of the Ministry, on technical matters relating to PMGSY.

   The STAs are expected to scrutinise the project proposals prepared by the State Governments, provide requisite technical support to the State Governments, undertake Quality Control tests for the State Governments and undertake Training Programmes and Research Projects at NRRDA’s instance.

   The NRRDA has also identified 7 Principal Technical Agencies (PTAs), generally IITs, to act as the Regional Coordinators of the STAs as well as the extended arms of NRRDA in the pursuit of its objectives. The role and responsibilities of the PTAs include overseeing the activities of the STAs in the region, training, R&D, quality audit etc. The list of STAs and PTAs is at Annexure-IX.

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   20. Training and HRD

   World Bank TA loan

   Since PMGSY roads are expected to be of high quality, special training programmes are being organised for project implementing staff in the DPIUs and contractors’ engineers in various aspects of designing, construction and quality control in execution of road works. A World Bank Technical Assistance programme for all States is operational with the following components:

   #	Activity	Total cost		Total cost
   		INR million	US$ Million	US$ Million
   1	Preparation of Manuals, Pilot Projects, Studies	60.00	0.00	1.28
   2	Training activities and workshops	155.00	0.00	3.31
   3	International Exposure	0.00	1.71	1.71
   4	Special equipment	86.50	0.17	2.01
   	Total	301.50	1.88	8.31

   Currency break-up of the technical assistance say US$ 8.5 million
   Indian Rupee – Rs.302 million @ 1 US$ = 47 IR
   Foreign currency – US$ 1.88 million @

   A major proportion of the funding is for training of the Engineers of the Executing Agencies and Contractors Engineers at the State level. It is expected that about 15000 Engineers will be trained in the process. It is also proposed to give some of participants international exposure to study prevailing technologies in construction of modern roads.

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   21. Maintenance of Rural Roads

   PMGSY is a huge central investment in the State sector as part of a poverty reduction strategy. This investment in essentially the ‘last mile’ connectivity is likely to be useful only if the main rural road network, particularly the rural Core Network is maintained in good condition. In the context of a farm-to-market connectivity, proper maintenance is essential if risks of long term investments, on-farm as well as off-farm, are to be taken by the rural entrepreneur. Accordingly, the putting in place of institutional measures to ensure systematic maintenance and providing adequate funding for maintenance of the rural core network, particularly the Through Routes, will be key to the continuance of the PMGSY programme in the State. To this end, State Governments need to take steps to build up capacity in the District Panchayats and endeavour to devolve the funds and functionaries onto these Panchayats in order to be able to manage maintenance contracts for rural roads.

   All PMGSY roads (including associated Main Rural Links / Through Routes of PMGSY link routes) will be covered by 5-year maintenance contracts, to be entered into along with the construction contract, with the same contractor, as per the Standard Bidding Document. Maintenance funds to service the contract will be budgeted by the State Government and placed at the disposal of the SRRDA in a separate Maintenance Account.

   Since rural Through Routes / Main Rural Links carry comparatively larger traffic and keeping them in good condition is particularly important, Through Routes (whether upgraded under PMGSY or subjected to maintenance contract as an associated Through Route of a PMGSY link route) on expiry of 5-year post-construction maintenance shall be placed under Zonal maintenance contracts consisting of 5-year maintenance including renewal as per cycle. The State Government will make the necessary budget provision and place the funds to service the zonal maintenance contracts at the disposal of the SRRDA in the Maintenance Account.

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   22. Consideration of Proposals Made By Members of Parliament

   Following are the main provisions in the PMGSY Guidelines for consultation with Members of Parliament:

   • The Core Network and District Rural Roads Plan is finalized by District Panchayat after giving full consideration to suggestions of MPs (Para 4.6).

   • The Comprehensive New Connectivity Priority List (CNCPL) and Comprehensive Upgradation Priority List (CUPL) will be prepared after consultation with MPs and taking their suggestions. (Para 6.4).

   • Lok Sabha Members will be consulted in respect of their constituencies and Rajya Sabha Members in respect of that district of the State they represent for which they have been nominated as Vice-Chairman of the District Vigilance & Monitoring Committee of the Ministry of Rural Development. (Para 6.10).

   • In preparing Annual proposals for road works, the proposals of MPs will be given full consideration as follows.

     1. the Block or District CNCPL / CUPL should be sent to each MP with the request that their proposals on the selection of works out of the CNCPL / CUPL should be sent to the District Panchayat. It is suggested that at least 15 clear days may be given for the purpose. (Para 6.9 (i)).
     2. In order to ensure that the prioritisation has some reference to the funding available, the size of proposals expected may also be indicated to the Members of Parliament while forwarding them the CNCP / CUPL list. District / Block-wise allocation may be indicated to enable choice with the requisite geographical spread. It is expected that such proposals of Members of Parliament which adhere to the Order of Priority would be invariably accepted subject to considerations of equitable allocation of funds. (Para 6.9 (ii)).
     3. The proposals received from the Members of Parliament by the stipulated date should be given full consideration in the District Panchayat which should record the reason in each case of non-inclusion, and the Members of Parliament should be informed of the inclusion / non-inclusion of their proposals along with the reasons in each case in the event of non-inclusion. It would be preferable if the communication is issued from the Nodal Department at a senior level (Para 6.9 (iii)).

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   23. Recapitulation of New Initiatives

   The Rural Road Programme has taken many new initiatives and established several new standards in its endeavour to construct roads of the highest possible quality. The new initiatives taken as part of the PMGSY programme include the following

   Formulation of District Rural Roads Plan

   For the first time systematic District Rural Roads Plans have been prepared listing out the complete network of all roads in the district i.e., Village Roads, Major District Roads, State Roads and National Highways.

   Implementation of concept of Core Network

   The concept of Core Network has been operationalised for the first time in order to focus on the set of roads which are considered essential to provide connectivity to all habitations of the desired size. The Core Network will be the basic instrumentality for prioritisation of construction and allocation of funds for maintenance. Action has been initiated to develop GIS-based applications to further enhance the utility of the Core Network, and discussion have been held with C-DAC for the purpose.

   Consultation with public representatives

   The PMGSY has an inbuilt mechanism for consultation with public representatives from Panchayat to Parliament at various points of the programme. Consultation with Members of Parliament are held at both the Core Network finalisation and Annual Proposals stages. In addition, at the stage of preparing DPRs, the DPIU conducts a transect walk along the road alignment, involving the local panchayat.

   Rural Roads Manual

   The original Manual, called Manual on Route Location, Design, Construction and Maintenance of Rural Roads was brought out by the Indian Roads Congress as a publication in 1979 (IRC: SP:20-1979).

   Following the launch of the PMGSY, the Ministry of Rural Development constituted 3 Committees in January 2001 to go into various aspects of rural road construction and the manuals on these different aspects brought out by the committees were combined into a separate 'Rural Roads Manual' and published as an IRC publication (IRC:SP 20-2002) in supercession of earlier manual.

   This Manual is now the basis of all works under the PMGSY.

   The revision of the Chapters on Pavement Design and CD Works is being taken up for achieving cost effectiveness.

   Book of Specifications and Standard Data Book

   In order to streamline the process of estimating and standardise contracts, a separate Book of Specification and a Standard Data Book has been prepared for rural roads. This replaces the publication brought out by the Ministry of Road Transport and Highways, and will be in consonance with the Rural Roads Manual.States will prepare the Annual Schedule of Rates (SoR) for rural roads based on these documents.

   Standard Bidding Documents

   To standardise the PMGSY works tendering process in the States, a Standard Bidding Document has been prepared and has been sent to the States for adoption and use in all PMGSY road tenders.

   Computerised Online management of construction

   For the first time a nation-wide programme is being managed and monitored online. Special application software has been developed by C-DAC which envisages that the DPIUs will upload the data regarding the road proposals and construction progress comprising both physical and financial data on to the PMGSY website. The data will be used for decision making, and for transactional decisions, monitoring and analysis. From 2003-04 onwards, updating the website is a pre-requisite for availing funds under the Programme.

   Use of new technology and materials

   Rural Roads have been a neglected sector. The focus given to it through the PMGSY is now enabling the channelisation of R&D efforts to this sector. Use of cement concrete, modified bitumen, fly ash as well as soil stabilisation techniques and other new methodologies, including Waste Plastic are all be pursued.

   Quality consciousness

   The execution of programme has brought to light that the rural roads sector requires enormous emphasis on quality control and management if the effort is to succeed. A 3-tier quality control system has been put in place including 2 level of independent quality monitoring. For the first time a concerted effort is being made to ensure that testing facilities at the contractors level and executing agency level is brought to a high standard that enables measurement of quality at site. A Quality Control Handbook has been published for specific application to rural roads construction.

   Outsourcing of technical inputs

   In order to manage the programme at the national level and yet ensure that adequate technical inputs are locally available for planning and execution of rural roads programme, an elaborate structure consisting of Principal Technical Agencies (national level technical institutions) as well as State Technical Agencies (regional level technical institutions) has been successfully brought into the framework of the programme planning and execution through a Government – academia partnership.

   External funding

   World Bank and ADB have agreed to fund the PMGSY. Funding is commencing in late 2004-2005 for two projects totaling loan/credit of $800 million (Rs 4000 crore). One more World Bank Loan ($ 500 m) and two more ADB loans ($ 850 m) have already been earmarked for subsequent years.

   Rural Road Safety

   The State Governments have been requested that the Head of the DPIUs may be included into the District Rural Road Safety Committee and the State Quality Coordinator for PMGSY may be nominated to the State Roads Safety Council and to issue suitable instructions to ensure that these institutions meet with the requisite frequency.

   A proposal received from CRRI for taking up Roads Safety and Audit is in the process of being approved. It will be implemented in two States to start with, in order to fine tune the methodologies and the implementation process. This project will be taken up under the Technical Assistance Loan of the World Bank and will have a 5 year duration for its completion.

   Maintenance

   The roads are constructed by the State Governments and are to be maintained by them. The State Government are required to furnish a certificate to the effect that the provision of funds for maintenance has been made in the State Budget separately for PMGSY Roads. The State Government will also be required to give approval for routine maintenance of every work in the proposal. The estimates of each work under PMGSY will be made in two parts. The first part will be the estimate for Construction of the Road and the second part will be the estimate of year wise routine maintenance for 5 years.

   In respect of rural Through Routes taken up under PMGSY there will be a second 5-year maintenance contract on Batch basis, in order to cover the design life of 10 years.

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   24. National Rural Roads Development Agency

   The National Rural Roads Development Agency (NRRDA), created as per the Cabinet decision of 7th August, 2001, was registered under the Societies Registration Act, on 14th January, 2002. The NRRDA provides support on the following:

   1. Designs & Specifications and Cost norms.

   2. Principal Technical agencies (PTAs) and State Technical Agencies (STAs)

   3. District Rural Roads Plans and Core Network.

   4. Scrutiny of Project Proposals

   5. National Quality Monitors

   6. On-Line Management & Monitoring System

   7. Training, Workshops, R&D etc.

   The NRRDA is a lean multi-disciplinary body consisting of 7 officers and 3 officials all taken on deputation. All specialised inputs are outsourced through consultants/service providers.

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   25. Impact Assessment

   Impact Assessment of PMGSY was conducted in 9 States. Main findings is at Annexure-X.