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GGaannddhhii NNaattiioonnaall RRuurraall EEmmppllooyymmeenntt GGuuaarraanntteeee SScchheemmee

((MMNNRREEGGSS))

I. Background:

The National Rural Employment Guarantee Act, 2005 (NREGA) was enacted in September 2005 and brought into force with effect from February

2006 in the 200 most backward districts of India and aimed at covering all the notified districts of the country in the ensuing five years. It was the first time

that the Panchayats were provided with such freedom to plan and execute works and granted substantial resources at their disposal to do so.

The rationale of the Act is based on combining the productive capacity of villagers to build and nurture assets, along with alleviating the problems of

chronic unemployment and poverty. The Act provides opportunities to develop rural infrastructure through watershed development, restoration of

water bodies, activities aimed at forestry, land development, and soil erosion and flood control, and construction of roads and institutional facilities.

The Act was notified in 200 districts in the first phase with effect from

2nd February 2006 and then extended to additional 130 districts in the financial year 2007-2008 (113 districts were notified with effect from 1st April

2007, and 17 districts in UP were notified with effect from 15th May 2007). The remaining districts have been notified under the NREGA with effect from

1st April 2008. Thus, now the Act covers the entire country with the exception of districts having a hundred percent urban population.

The name of the Act was changed to Mahatma Gandhi National Rural

Employment Guarantee Act (MGNREGA) in October 2009.

(Source: MGNREG Act, 2005 and MGNREGS Guidelines-2008)

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II. Objectives of the Act: The objectives of MGNREGA are:

i) Primary Objective:

Enhancement of livelihood security of rural household by

providing at least 100 days of guaranteed wage employment in every financial year to every household whose adult

members volunteer to do unskilled manual work.

ii) Auxiliary Objectives:

Generating productive assets. Protecting the environment.

Empowering rural women. Reducing rural-urban migration.

Fostering social equity. Strengthening rural governance through decentralisation and

processes of transparency and accountability. (Source: MGNREGS Guidelines-2008 and MGNREGS Vision Statement 2010-11)

III. MGNREGA Goals: MGNREGA stipulates the following goals:

a) To provide for strong social safety net for the vulnerable groups by

providing a fall-back employment source, when other employment alternatives are scarce or inadequate.

b) To serve as a growth engine for sustainable development of rural

agricultural economy by providing employment on works that address causes of chronic poverty such as drought, deforestation and soil

erosion. The Act seeks to strengthen the natural resource base of rural livelihood and create durable assets in rural areas.

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c) To facilitate empowerment of rural poor through a rights-based Law and serve as a model of governance reform anchored on the principles

of transparency and grassroot democracy.

Thus, MGNREGA fosters conditions for inclusive growth ranging from basic wage security and recharging rural economy to a transformative

empowerment process of democracy. (Source: MGNREGS Guidelines-2008 and MGNREGS Vision Statement 2010-11)

IV. Salient Features of the Act:

i) The adult members of a rural household, willing to do unskilled manual work, may apply for registration in writing or orally to

the local Gram Panchayat.

ii) The Gram Panchayat after due verification will issue a Job Card.

The Job Card will bear the photograph of all adult members of the household willing to work under MGNREGA and is free of

cost.

iii) The Job Card should be issued within 15 days of application.

iv) A Job Card holder may submit a written or oral application for employment to the Gram Panchayat, stating the time and

duration for which work is sought. The minimum days of employment have to be at least fourteen.

v) The Gram Panchayat will issue a dated receipt of the written

application for employment, against which the guarantee of providing employment within 15 days operates.

vi) The employment will be given within 15 days of application for work. If not given within 15 days of application, then daily

unemployment allowance as per the Act, has to be paid to the applicant and the liability of payment of the unemployment

allowance is of the state governments.

vii) Work should ordinarily be provided within 5 kms radius of the

village. In case work is provided beyond 5 kms, extra wages of 10% are payable to meet additional transportation and living

expenses.

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viii) Wages are to be paid according to the piece-rate or daily rate. Disbursement of wages has to be done on weekly basis and not

beyond a fortnight in any case.

ix) The shelf of projects for a village will be recommended by the

Gram Sabha and approved by the Zilla Panchayat.

x) A 60:40 Wage and Material ratio has to be maintained. No

contractors and machinery are allowed.

xi) The Central Government bears the 100 percent wage cost of

unskilled manual labour and 75 percent of the material cost and 75% wages of skilled and semi-skilled workers. The expenses on

Unemployment Allowance and routine administrative expenses in implementing the Scheme are to be borne by the state

governments.

xii) Social Audit has to be done by the Gram Sabha. For this

purpose, MGNREGA Audit of Scheme Rules, 2011 have been notified.

xiii) Grievance redressal mechanisms have to be put in place for ensuring a responsive implementation process.

xiv) All accounts and records relating to the Scheme should be made available for public scrutiny. (Source: MGNREGS Guidelines-2008)

V. Basic Implementation Principles

Collaborative Partnership and Public Accountability: The Act

envisages a collaborative partnership between the Central Government, the State Governments, the Panchayats and the local community. At

each level, the concerned authorities are accountable to the community.

Community Participation: The Gram Sabha is the statutorily

mandated institutional mechanism for community participation. In addition, other methods of community participation could be evolved.

Active community participation is particularly important for ensuring transparency and public accountability.

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Role of Panchayats: The Panchayats at each level are the principal authorities for planning and implementation of the Scheme under the

Act. District Programme Coordinator and Programme Officer: The

overall responsibility for ensuring that the Scheme is implemented according to the Act lies on the District Programme Coordinator (DPC)

at the District level, and on the Programme Officer (PO) at the Block level.

Coordination among Agencies: The Panchayats at different levels will need to coordinate with each other for the effective implementation of

the Act. Similarly, the Panchayats and the District/Block administration will have to work together.

VI. Organizational Arrangements A. Central Level

A Central Employment Guarantee Council (CEGC) set up under the

chairmanship of the Union Minister of Rural Development, is responsible for

advising the Central Government on MGNREGA-related matters, and for monitoring and evaluating the implementation of the Act. [Section 10 of MNREGA 2005]

The Ministry of Rural Development, the Nodal Ministry is responsible

for ensuring timely and adequate resource support to the States and to the Central Council. It has to undertake regular review, monitoring and evaluation of processes and outcomes, maintain and operate the MIS to capture and

track data on critical aspects of implementation, and assess the utilization of resources through a set of performance indicators.

B. State Level

The State Employment Guarantee Council (SEGC) is to be set up by

every State Government under Section 12 of MGNREGA. The SEGC shall advise the State Government on the implementation of the Scheme, and evaluate

and monitor it. Other roles of the State Council include deciding on the ‘preferred works’ to be implemented under MGNREGS, and recommending

the proposals of works to be submitted to the Central Government under Schedule I, Section 1 (ix) of the Act.

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C. District Level

The District Panchayats will be responsible for finalizing the District

Plans and the Labour Budget and for monitoring and supervising the Employment Guarantee Scheme in the District.

The State Government will designate a District Programme

Coordinator, who can be either the Chief Executive Officer of the District Panchayat, or the District Collector, or any other District-level officer of

appropriate rank. The overall responsibility for ensuring that the Scheme is implemented according to the Act lies on the District Programme Coordinator

(DPC) at the District level.

D. Block Level

The Intermediate Panchayat will be responsible for the consolidation of the GP plans at the Block level into a Block Plan and for monitoring and

supervision.

The Programme Officer essentially acts as a coordinator for MGNREGS at the Block level. The chief responsibility of the Programme Officer is to ensure that anyone who applies for work gets employment within 15 days.

E. Village level

The provisions of the Act identifies the Panchayati Raj Institutions as

the key implementing agencies for the programme providing a significant opportunity for demonstrating the role of village level institutions in

transforming their village infrastructure and addressing abject poverty. The Gram Panchayat is the pivotal body for implementation at the village level

and wherever Part IX of the Constitution does not apply, local councils/ authorities as mandated by the State concerned will be invested with

corresponding responsibilities.

The Gram Sabha will recommend works to be taken up under MGNREGS, conduct social audits on implementation of the Scheme and to be

used extensively as a forum for sharing information about the Scheme.

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F. Detailed Functions and Responsibilities at various levels:

Evaluation Cycle

Level

Authority responsible for implementation of the Scheme

Functions and Responsibilities

Central level

Central Employment Guarantee Council (CEGS)

Advising the Central Government on MGNREGA-related matters, and for monitoring and evaluating the implementation of the Act.

Preparing the Annual Reports on the implementation of NREGA for submission to the Parliament.

Ministry of Rural Development

Ensuring timely and adequate resource support to the States and to the Central

MoRD (Ministry of Rural

Development)

NEGC (National

Employment

Guarantee Council) Policy Maker,

Monitoring &

Evaluation

State Government

Advisory, Monitoring

& Evaluation

SEGC (State

Employment Guarantee

Council)

Implementation

District

Panchayat

District Planning

Committee

Intermediate

Panchayat PO

Gram Sabha Gram Panchayat

Planning,

Supervising &

Monitoring Line Dept/IA

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(MoRD) Council. Undertaking regular review, monitoring

and evaluation of processes and outcomes. Maintaining and operating MIS to capture

and track data on critical aspects of implementation, and assessing the utilization of resources through a set of performance indicators.

Encouraging the usage of IT to increase the efficiency and transparency of the processes as well as to improve interface with the public.

Ensuring that the implementation of NREGA at all levels is transparent and accountable to the public.

State level

State Employment Guarantee Council (SEGC)

Advising the State Government regarding implementation of the Scheme, determining the preferred works, reviewing the monitoring and redressal mechanism from time to time and preparation of annual report to be laid before the State Legislature.

State Rural Employment Guarantee Commissioner/ Director

Overall supervision and monitoring of the implementation of the Scheme in the State and, to empanel reputed agencies to carry out impact assessment of the Scheme.

District level

District Panchayat

Principal authority for planning and review of implementation of the Scheme, approving District/Block Rural Employment Guarantee Scheme plans.

Finalising and approving block-wise shelf of projects.

Executing its own proposals and proposals received from the other line departments.

Overall supervision and monitoring of implementation of the Act.

District Programme Coordinator

Assist the District Panchayat in discharging its functions.

Consolidation of plans prepared by Block Panchayats for inclusion in shelf of projects.

According approval and coordinating with and supervising the performance of Programme Officers

Conducting periodic inspection of works in progress.

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Block level

Block Panchayat Planning at the Block level and prioritising

the works and monitoring the implementation.

Programme Officer

Scrutinising the proposals submitted by Grama Panchayats for technical feasibility. Matching employment opportunities with the demand for work at the Block level.

Ensuring (i) execution of works as scheduled, (ii) payment of wages to labourers engaged and (iii) social audits.

Village level

Gram Panchayat

Planning of works. Registering households. Issuing job cards. Allocating employment. Implementation of the Scheme. Conducting social audits.

G. Implementing Agencies

The Gram Panchayat is the single most important agency for executing works as the Act mandates earmarking a minimum of 50 per cent of the works in

terms of costs to be executed by the Gram Panchayat. This statutory minimum, upto hundred percent of the works may be allotted to the Gram

Panchayat (GP) in the annual Shelf of Projects (SoP).

The other Implementing Agencies can be Intermediate and District Panchayats, Line Departments of the Government, Public Sector Undertakings

of the Central and State Governments, Cooperative Societies with a majority shareholding by the Central and State Governments, and reputed NGOs

having a proven track record of performance. Self-Help Groups may also be considered as possible Implementing Agencies.

H. Role of the Line Departments

The role of the Line Departments is to give technical support for preparing the

estimates, measurement, supervision of works executed etc. Works will be executed by Job Card holders. Muster Rolls will be maintained. No overhead

charge will be given to any Line Department for this. The selection of the Implementing Agency, other than the Gram Panchayat

that has a mandatory responsibility for work execution, will be based on technical expertise resources, capacity to handle work within the given time

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frame, and proven track record for work, and the overall interests of beneficiaries. The selection of the Implementing Agency will have to be

indicated in the Development Plan. A panel of agencies approved in order of priority may be considered to ensure that alternative options are available in

the event where an agency fails to execute the work. This will ensure that works do not suffer because of individual agency failure, and that work

seekers get employment on time. (Source: MGNREG Act, 2005 and MGNREGS Guidelines-2008)

VII. Funding of the Scheme

During the years 2007-08 to 2011-12, the Scheme funds were transferred by

the Government of India (GoI) directly to the implementing agencies. Outlay of such direct transfers was Rs. 1,48,205 Crore, which works out to 34 per cent

of the total outlays (Rs. 4,35,115 Crore) of direct transfers by GoI under the Society/Mission mode.

Funding under the Scheme is regulated by 'The National Employment

Guarantee Fund Rules 2006’ and 'The National Rural Employment Guarantee Financial Rules, 2009' (notified in 2010) respectively. The Act is implemented

as a Centrally Sponsored Scheme (CSS) on a cost-sharing basis between the Centre and the States.

The financing pattern is as follows:

A. The Central Government will bear the following costs:

i) The entire cost of wages for unskilled manual workers.

ii) Seventy-five percent of the cost of material and wages for skilled and

semi-skilled workers.

iii) Administrative expenses as may be determined by the Central

Government. These will include, inter alia, the salary and allowances of Programme Officers and their support staff and work site facilities.

iv) Administrative expenses of the Central Employment Guarantee Council (CEGC).

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B. The State Government will bear the following costs:

i) Twenty-five percent of the cost of material and wages for skilled and semi-skilled workers.

ii) Unemployment Allowance payable in case the State Government cannot provide wage employment within 15 days of application.

iii) Administrative expenses of the State Employment Guarantee Council (SEGC).

C. Fund Flow:

Illustrative fund flow mechanisms in few states are depicted below. All States

may include similar charts in their Reports:

Andhra Pradesh

Fund Management

(up to 15 February 2010)

Fund Management

(from 15 February 2010)

Through CFMS

SEGC

AD Hort.

APD SERP

DFOBlock PO

EE PR

Dist Prog Coordn

District

Fund

Block Fund

Wages Seekers

(Postal/Bank A/cs)

Material Suppliers

(Bank A/cs)

Contingency (A/cs)

Government India Releases(90)

State

Employment

Guarantee Fund

State Government Releases (10)

Government

India Releases (90)

State

Employment

Guarantee

Fund

State

Government

Releases (10)

State Employment Guarantee

Commissioner/ Director

District Programme

Coordinator

Block PO

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Rajasthan

Uttar Pradesh

(Source: MGNREG Act, 2005 and MGNREGS Guidelines-2008, Field Audit of states)

GoI (90) State Govt (10)

State Employment

Guarantee Fund

District Fund

Block Fund

Wage Material Contingency

State Employment

Guarantee Commissioner

District Programme

Co-ordinator

Block PO

GoI (90) State Govt (10)

State Employment

Guarantee Fund

District Fund

GPs Block

Panchayat

District

Panchayat

State Employment

Guarantee Commissioner

District Rural Development

Agency (CDO/PD)

Other IA

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VIII. State-wise Initiatives in Implementation of MGNREGA

Initiatives taken by few States are given below. Similar or other initiatives taken and implemented by other States may be included as Best Practices in

the respective Performance Audit Reports of State.

A. Andhra Pradesh:

Real-time MIS: Unlike the case of the All India MIS (where the data entry into the MIS of Muster Rolls etc. takes place post facto), the AP MIS is a real-time system, where pay orders for individual beneficiaries are generated from the system. This ensures completeness and correctness of data in the MIS and transparency, unlike the All India MIS.

Central Fund Management System: From February 2010, AP has introduced a Central Fund Management System (CFMS), with a single bank account per nodal bank (with the 22 districts in the State divided among 3-4 nodal banks). Pay orders are issued by all authorities (at different levels) directly against the nodal bank, with online fund transfers from the nodal bank account and transferred to the Head Post Master or Smart Card Banker, as the case may be, for onward credit to beneficiaries.

Social Audit: Through an independent society (SSAAT – Society for Social Audit, Accountability and Transparency), which is completely independent of the Rural Development Department.

Delay in Wage Payment: To minimise this problem, AP has recently introduced (October 2011) a system fixing timelines for each activity. Delays in respect of each activity automatically results in computerised deduction from the concerned negligent official by credit to the beneficiaries’ account (as per laid down scales of penalty).

Special MGNREGA Courts: The State Government has promulgated the Social Audit (Punishment of Corrupt Practices) Ordinance, 2011, which has provisions for setting up special mobile criminal courts with first class judicial magistrates as presiding judges. The special courts will have powers to sentence the erring officials for up to two years for

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fraudulence in record keeping, misappropriation of funds, non-disbursal of payments and abetment of those offences.

B. Gujarat:

Ranking of districts on the basis of Twenty Performance Indicators.

E-muster Tracing facilities.

Geo-ICT tools for planning and monitoring.

MG-NREGS Helpline.

C. Rajasthan:

E-muster Tracing facilities.

Directorate of Social Audit to facilitate social audit processes.

Establishment of Revolving Fund at the level of Gram Panchayat.

Establishment of Ombudsman (Lokpal).

IX. Audit Objectives:

Audit Objectives

1. Whether structural mechanisms have been put in place and adequate capacity building measures taken by the Centre and State

Governments for implementation of the Act?

2. Whether the procedures for preparing perspective and annual plan at different levels for estimating the likely demand for work, and preparing shelf of projects were adequate and effective?

3. Whether funds were released, accounted for and utilised by the

Central and State Governments in compliance with the provisions of Act/Rules?

4. Whether there was an effective process of registration of households, allotment of job cards, and allocation of employment in compliance

with the Act/Rules?

5. Whether the primary objective of ensuring the livelihood security by

providing 100 days of annual employment to the targeted rural

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community at the specified wage rates was effectively achieved and

whether the unemployment allowance for inability to provide job-on-demand paid in accordance with the Act and relevant Rules?

6. Whether MGNREGA works were properly planned and economically, efficiently and effectively executed in a timely manner and in

compliance with the Act and Rules, and whether durable assets were created, maintained and properly accounted for?

7. Whether the auxiliary objectives of protecting the environment, empowering rural women, reducing rural-urban migration, fostering

social equity etc. were effectively achieved in accordance with the Act and the Rules?

8. Whether the Convergence of the Scheme with other Rural Development Programmes as envisaged was effectively achieved in

ensuring sustainable livelihood to the targeted rural community and improving the overall rural economy?

9. Whether all requisite records and data maintained at various levels and whether the MGNREGA data automated completely and provides

reliable and timely MIS?

10. Whether complete transparency was maintained in implementation of the Act by involving all stakeholders in various stages of its

implementation from planning to monitoring and evaluation?

11. Whether there was effective mechanism at Centre and State level to

assess the impact of MGNREGS on individual households, local labour market, migration cycle and efficacy of assets created?

X. Audit Criteria:

The criteria for the Performance Audit would be the following:

NREGA-2005 and amendments thereto.

Guidelines - Operational Guidelines 2006 and 2008 issued by the Ministry of Rural Development, GoI, regarding NREGA and the

circulars issued by MoRD.

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Fund Rules 2006, Financial Rules 2009 and Audit of Scheme Rules 2011.

Reports of the State/District by National Level Monitors, available with MoRD and respective States' NREGS Commissioners.

Muster Roll Watch Guidelines.

Guidelines/Checklist for internal monitoring by states.

Performance indicators framed by Government of India/State Governments

MNREGS Vision, Strategic Framework and Plan of Action (2010-2011) by MoRD.

XI. Audit Methodology:

A. Audit Scope & Methodology:

The Performance Audit shall cover all the 29 States and 5 Union Territories where the Scheme is being implemented. The Audit period shall be from 2007-08 to 2011-12. Additionally, audit will also check the remedial actions taken by the Centre and the State Governments on the audit observations pointed out by the CAG of India in the Union Report (PA-11 of 2008). PrAsG/AsG and PDA (ESM) should frequently monitor the findings in his State/GoI Ministries and any interesting points that he comes across should be intimated to Hqrs so that other States can also look into this aspect.

Wherever non-Governmental records/data (including Social Audit Reports by NGOs, etc) utilised to form audit findings/conclusions, these should also be supplemented/substantiated with our own audit analysis/ evidences

A full-scale IT audit of the MIS System at the Centre level as well as at the State is essential and should be conducted as part of the PA Review.

The scrutiny of records in audit will take place at the following levels:

Planning Commission.

MoRD, Government of India.

Plan Finance Division of Ministry of Finance, Government of India.

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State Government.

Districts.

Blocks.

Gram Panchayats, including individual works.

Line departments and other NGOs.

Directorate of Social Audit/Social Audit Organisation of the State.

B. Impact Assessment

The following specific methodologies shall also be adopted in audit for doing

an impact assessment of the Scheme:

Household Beneficiary Survey.

Attending the Social Audit meetings.

Physical Verification of works executed under the Scheme.

C. Audit Sampling

Sampling to be adopted by State Principal Accountants General/Accountants General for selection of districts, blocks, Gram Panchayats, works and

beneficiaries.

The sample size is indicative and may be increased at State level (based on

local conditions, risk perception, etc. The final sample selection may be forwarded to Hqrs.

Sampling methodology

A Stratified Multi Stage Sampling plan

is suggested for sampling of auditee

units for the Performance Audit.

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Sampling plan for each State 1st stage : All the districts within the State may be stratified into 4

to 5 strata (2 to 3 strata in smaller states) geographically and based on Number of Household registered/demanded . From each of the stratum, 25

per cent1 of the districts (subject to a minimum of 2 districts2) may be selected by Simple Random Sampling without Replacement (SRSWOR) using

Random Number Table (enclosed).

2nd Stage : Within each selected district in the 1st stage, 25 per

cent Blocks (subject to a minimum of 2 blocks2) may be selected by SRSWOR

3rd Stage : Within each selected blocks in the 2nd stage, 25 per

cent Gram Panchayats (GPs) (subject to a minimum of 3 GPs2) may be selected by SRSWOR

4th Stage: Within each selected GP in the 3rd stage, 25 per cent Works (subject to a minimum of 10 works2 equally distributed among the review

period) may be selected by SRSWOR method for detailed check/physical verification.

5th Stage: Within each selected GP in the 3rd stage, 20 beneficiaries may be

selected by systemic random sampling method for beneficiary survey.

Selection procedure:

In each sampled District, the blocks may be arranged in

alphabetical order and serial number may be allotted to the

1 Due to rounding off and stratification, it is possible that the total number of districts selected could be more than 25 per cent. 2 In case the number of districts/blocks/GPs/works is less than the minimum specified, then all the districts/blocks/ GPs/works should be selected

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blocks. Using the serial numbers, 25 per cent blocks may be selected using SRSWOR as per the enclosed Random Number Table.

In each sampled Block, the Gram Panchayats may be arranged alphabetically and serially numbered. 25 per cent Gram Panchayats

from each block may be selected using SRSWOR method using the aforesaid Random Number Table.

Within each sampled Gram Panchayat, 25 per cent of works sanctioned during each year may be selected for detailed examination using Simple Random Sample (SRS) method. Care may be taken to include

different types of work like rural connectivity, afforestation, canal works, wasteland development etc. are selected in the sample. Physical

verification would be conducted in respect of all selected works.

Within each sampled Gram Panchayat, randomly select 2 villages (1

village in case a GP consist of 1 village only). From the selected village(s), 10 registered households may be selected for interview

based on systemic random sampling. Another 10 households may be selected based on systemic random sampling from the list of Job Card

issued for verification and further information.

Summary

Total expected sample size: The audit sample would approximately work out to a total of 176 districts, 529 blocks, 5129 Gram Panchayats , 25 per cent

works and 1,02,580 beneficiaries.

In addition to the above sample size, audit of line departments, NGOs, etc may also be test checked, as required.

The field audit parties may also attend 1 or 2 Social Audits proceedings in

each selected block.

D. Time Schedule

The proposed time schedule for various phases of the Performance Audit may be as follows:

Conducting Pilot Study and circulation of PA 31st January 2012

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Guidelines to the field offices

Mid-term Review Last week of April 2012

Draft Audit Report – Central level including electronic data to be sent to DG (LB), Hqrs office by PDA (ESM)

15 June 2012

Draft Audit Reports including electronic data to be sent to DG (LB), Hqrs office

31st July 2012

Co-ordination meeting(s) between DAI (LB) and ADAIs (RS-I, II, III, IV)

August 2012

Vetting by the ADAIs (RS-I, II, III, IV)/DG (LB), and transmission to the field offices

30th September 2012

Draft Audit Reports (2nd journey) to the DG (LB), Headquarters Office

31st October 2012

Bond Copy 30th November 2012

E. Audit Checklist (Detailed checklist to be finalised after Pilot Study at Central and State levels under the guidance of DAI-LB and Committee to be formed for this purpose):

Checklist Remarks Annexure

Central Level For audit of Central Ministries and Planning Commission

II

State Level , PRIs Level and IA Level

Issues to be seen at the State Government or Department level/District Level/ Block level/ Gram Panchayat and Gram Sabha including execution of work and other IAs

III

Beneficiaries' Survey Questionnaire

For collection of information to assess the outcome of the Scheme

IV

Data Formats For all levels V

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Respective field offices may translate the checklists/data formats/beneficiaries' survey questionnaire to local language as required. However, the information from the field offices to DG (LB) may please be furnished only in English.

While the field audit offices will collect the responses from the field audit teams in paper format, the information/database may also be sent to DG (LB) in CD/electronic format. This will enable drawing of audit conclusions on detailed specific procedural issues.

Apart from the electronic database, field offices are required to forward the Introduction, Sampling Criteria, Sample Database, Analytical analysis, Fund Flow Chart, State Specific Initiatives, etc. in paper and electronic version.

The Introduction should contain the Back Ground Information viz. Nodal Department, Organisation Structure/Implementing Areas/chart etc.

Draft guidelines

Performance audit on Implementation of Indira Awaas Yojana (IAY) at Central Level

Domain Information

1 Introduction

Indira Awaas Yojana (IAY), the flagship scheme of the Ministry of Rural Development

for fulfillment of housing needs of the rural poor population, was launched in May 1985 as a

sub-scheme of Jawahar Rozgar Yojana. It is being implemented as an independent scheme

since 1 January 1996. The Indira Awaas Yojana aims at helping rural people below the

poverty-line (BPL) belonging to SCs/STs, freed bonded labourers and non-SC/ST categories

in construction of dwelling units and upgradation of existing unserviceable kutcha houses by

providing assistance in the form of full grant. From 1995-96, the IAY benefits have been

extended to widows or next-of-kin of defense personnel killed in action. Benefits have also

been extended to ex-servicemen and retired members of the paramilitary forces as long as

they fulfil the normal eligibility conditions of Indira Awaas Yojana. Three per cent of funds are

reserved for the disabled BPL persons in rural areas. Since 2006-07, IAY funds are also

being earmarked for minorities.

1.1 National Housing Policy

The Global Shelter Strategy adopted by the United Nations in November 1988 called upon

all Governments to formulate national housing policies. A Draft National Housing Policy

prepared by the Ministry of Urban Development and tabled in Parliament in 1988 recognised

the importance of rural housing in the overall development of rural people. This was further

elaborated and restated in 1994.

With the formulation of the Ninth Five-Year Plan (1997-2002), the National Housing Policy

was once again articulated recognizing and placing special emphasis on the need for forging

partnerships with the private sector, community, voluntary sector and co-operative societies

encouraging cost sharing. Keeping in view the growing recognition and sensitivity of the

expanded needs and meaning of

shelter to include the habitat, provision of adequate sites and services, local sources of

energy needs and a wholesome and healthy environment, the National Housing and Habitat

Policy was adopted in 1998

As per 11th five year plan, the role of state Government in implementation of IAY is

confined to facilitating use of local, low cost, environment-friendly and disaster resistant

technology. The state Governments may also arrange to make available information on cost

effective environment friendly technologies, materials, designs etc at District/ Block level.

1.2 Objective of the scheme

The objective of the Indira Awaas Yojana is primarily to help in

construction/upgradation of dwelling units of rural BPL householders belonging to

members of Scheduled Castes/Scheduled Tribes, freed bonded labourers, minorities

and other non-SC/ST rural poor living BPL by providing them a lump sum financial

assistance.

1.3 Coverage

IAY was brought into force as an independent scheme with effect from 1st January, 1996.

Government aimed to cover all districts of the country with rural areas under this scheme

(except Delhi and Chandigarh).

1.4 Salient Features of the Scheme

The salient features of the IAY are:

i) Indira Awaas Yojana is a Centrally Sponsored Scheme funded on cost-

sharing basis between the Government of India and the State Governments in

the ratio of 75:25. However, in the case of North-Eastern States and Sikkim,

funding is shared between the Government of India and these States in the

ratio of 90:10 respectively. In the case of Union Territories, the entire funding under

this scheme are provided by the GOI;

ii) at least 60% of the total lAY funds and physical targets should be utilized

for construction/upgradation of dwelling units for SC/ST BPL households. A

maximum 40% for non-SC/ST BPL rural households. IAY funds and physical

targets will be earmarked for BPL minorities in each State as indicated by the

Ministry.( 3% of the above categories are for physically and mentally challenged

persons):

iii) The Programme will be implemented through the Zilla Parishads/DRDAs and

houses will be constructed by the beneficiaries themselves;

iv) The beneficiaries will have complete freedom as the manner of construction of the

house. Zila Parishads/ DRDAs can help the beneficiaries in acquiring raw materials

on economic/ low cost basis;

v) The responsibility for the proper construction of the house will thus be on the

beneficiaries themselves;

vi) Allotment of dwelling units should be in the name of female member of the

beneficiary household. Alternatively, it can be allotted in the name of both

husband and wife. However, if there is no eligible female member in the family

available / alive, house can also be allotted to the male member of a deserving

BPL family;

vii) The ceiling on grant of assistance per unit cost under the Indira Awaas

Yojana for construction of a new house and upgradation of an unserviceable

kutcha house is (a) Construction of house Rs. 45,000/- in plain areas and Rs.

48,500 in hilly/difficult areas (b) Upgradation of un-serviceable households Rs.

15,000/- in both the areas;

viii) In addition to the assistance provided under the IAY, an IAY beneficiary can avail

a loan of upto Rs.20,000/- per housing unit under Differential rate of interest

(DRI) scheme at an interest rate of 4% per annum;

ix) Construction of sanitary latrine and smokeless Chulha should be taken up with

each IAY house. The latrine could be constructed separate from the IAY house on

the site of the beneficiary. There should be convergence with activities and

funds provided under the Total Sanitation Campaign (TSC), for providing

sanitary latrines in the IAY houses;

x) Similarly, with a view to provide comprehensive benefits to the rural BPL families,

Indira Awaas Yojana has been dovetailed with Rajiv Gandhi Grameen

Vidyutikaran Yojana being implemented by the Ministry of Power. Hence, the

DRDAs shall give the list of IAY beneficiaries to the implementing authorities of

RGGVY and co-ordinate with them to ensure free electricity connections to

IAY houses. The State/District Administration and PRIs are expected to facilitate

provision of all basic amenities for an IAY house;

xi) Upto 20% of the total funds can be utilized for upgradation of existing kutcha

houses and toward subsidy for construction of houses with credit from

Banks/Financial Institutions. Credit cum-Subsidy will be provided subject to Rural

households having an annual income upto Rs. 32,000/- only with ceiling of

subsidy under the Scheme Rs. 12,500 per household. The upper limit of

construction loan under this scheme will be Rs. 50,000/- only;

xii) The Indira Awaas Yojana funds are operated by the Zilla Parishads/DRDAs at the

district level. Central assistance will be released every year to the Zilla

Parishads/DRDAs, in two installments;

xiii) No contractor shall be involved in the construction of dwelling units;

xiv) System of social auditing of the scheme will be followed.

Though salient features of the implementation of the Scheme remain same all over

the country, many States have local issues in respect of Scheme. Therefore, it has been

decided that every State may prepare its own Annual Plan for the year 2012-13 in respect of

Indira Awaas Yojana. In this regard, the Hon’ble Minister for Rural Development has also

written to the Hon’ble chief Minister in this regard. The action Plan has to touch upon issue

like budget, State Action Plan on removal of shelterlessness in a time-bound manner ,

access to appropriate technological solutions and skills, convergence, monitoring of houses

constructed by the beneficiaries and complaints redressal.

1.5 Identification of beneficiaries

The District Panchayat/Zilla Panchayat/District Rural Development Agencies

(DRDAs) on the basis of allocations made and targets fixed shall decide the number of

houses to be constructed / upgraded Panchayat-wise under IAY, during a particular financial

year. As far as possible, the States should follow the cluster approach to facilitate better

supervision, convergence of schemes and economies in purchases. For this purpose, all the

villages in a district/block may be divided into three groups and each group of villages may

be provided funds every year.

The targets fixed shall be intimated to the Gram Panchayat concerned. Thereafter,

the beneficiaries, restricting to this number, will be selected from the Permanent IAY

Waitlists prepared on the basis of BPL lists in order of seniority in the list. The Gram

Panchayats may draw out the shelterless families from the BPL List strictly in the order of

ranking in the list. A separate list of SC/ST families in the order of their ranks may be derived

from the larger IAY list so that the process of allotment of 60% of houses under the scheme

is facilitated. Thus, at any given time, there would be two IAY Waitlists for reference, one for

SC/ST families and the other for non-SC/ST families. Once the lists are prepared, they need

to be approved by the Gram Sabha to be attended by a government servant who would be a

nominee of the Collector. Selection by the Gram Sabha is final. No approval by a higher

body is required. Zilla Parishads/DRDAs and Block Development Offices should, however,

be sent a list of selected beneficiaries for their information. The Permanent IAY Waitlists so

prepared will be displayed at a prominent place either in the Gram Panchayat office or any

other suitable place in the village. The lists will also be put on the website by the concerned

DRDAs. The following flowchart depicts process of selection of beneficiaries:

1.6 Funding Pattern

Criteria for Allocation of Resources: Central assistance under the Indira Awaas Yojana

will be allocated among the States/UTs giving 75% weightage to rural housing shortage as

per Census data and 25% weightage to poverty ratio. Similarly, inter-district’s allocation

within a State/UT will be made by giving 75% weightage to housing shortage and 25%

weightage to rural SC/ST population of the concerned districts. The targets for the Blocks

within a District and Village Panchayats within the Blocks will be decided on the same

principles. Diversion of resources from one district to another is strictly prohibited.

Release of Central Assistance to DRDAs: IAY funds are operated by the DRDAs /ZPs at

the district level. Central assistance will be released every year to the DRDAs, in two

instalments, subject to the fulfillment of the following conditions:

(a) The first instalment is released in the beginning of the financial year. This is subject to

condition that the IInd Instalment during previous year was claimed and released. However,

GP

Fixing of physical targets

& sanction of houses

Release Of Fund

Block

District

District

BPL census

2002

Permanent IAY

List Consolidate

Beneficiaries

Block

Consolidate

Beneficiaries

District

Identification of

Beneficiaries

if any specific conditions had been imposed at the time of release of the last instalment of

the previous year, its compliance will be ensured before release of the first instalment.

(b) The second instalment for the districts will be released on the request of the DRDAs in

the prescribed proforma on fulfillment of the following conditions:

(i) The quantum of second instalment will be dependent on the time of reporting of utilisation.

Depending on the receipt of complete proposal for second instalment, the quantum will be

governed as follows:

Proposal received in:-

December - 50% of allocated funds

January - 40% of allocated funds

February - 30% of allocated funds

March - 20% of allocated funds

(ii) 60% of total available funds, that is, opening balance of the year plus the amount

received including the State share should have been utilised at the time of applying for the

second instalment.

(iii) The opening balance in the district i.e. the aggregate of balance with DRDA should not

exceed 10% of the district allocation during the previous year. In case the opening balance

exceeds this limit, the Central share of the excess will be deducted at the time of release of

second instalment.

(iv) The State provision for the current year will have to be indicated by the DRDAs. The

Central release will be restricted in proportion to the provision made to the DRDAs.

(v) The State Government should have released all its contribution (including those of

previous year) due upto the date of the application for the second instalment. In the event of

shortfall in State share, corresponding amount of Central share ( i.e., three times the State

share) will be deducted from the second installment.

(vi) Submission of Audit Reports of the DRDA for the previous year.

(vii) Submission of Utilisation Certificates from the DRDA for the previous year in the

prescribed proforma.

(viii) Annual Plan should have been approved by the Governing Body of the DRDA.

(ix) All progress/Monitoring Reports have been sent.

(x) Non-embezzlement certificate will be submitted.

(xi) Certificate to the effect that there has been no diversion of resources from one district to

another will have to be submitted.

(xii) Any other condition imposed from time to time will also have to be complied with.

(c) In case of districts/UTs such as Kinnaur, Lahaul and Spiti, Leh, Kargil, Andaman and

Nicobar Islands and Lakshadweep and any other areas as decided, which have a limited

working season, the entire Central assistance may be released in one instalment. The State

shall also release its share in one instalment. In the case of these districts, to which funds

are released in one instalment, funds will be released on fulfilment of the conditions laid

down.

Release of State share to DRDAs: The State Government shall release its share to the

DRDAs within one month after the release of Central assistance and copy of the same

should be endorsed to Ministry of Rural Development.

Separate Bank Account for Indira Awaas Yojana: The IAY funds (Central share as well

as State share) shall be kept in a nationalised/scheduled or cooperative bank or a Post

Office in an exclusive and separate savings bank account by the DRDAs.

Utilisation of Interest Earned on Deposits: The interest amount accrued on the deposits of

the IAY funds shall be treated as part of the IAY resources.

Drawal of funds by the DRDAs: Drawal of funds from the accounts shall only be made for

incurring expenditure under IAY.

Payment to beneficiaries: Payment should be made to the beneficiary on a staggered basis

depending on the progress of the work. The entire money should not be paid to the

beneficiary in lump-sum. Instalments of payments can be laid down by the State Government

or at the district level to be linked to the progress of work.

1.7 Scheme for Homestead Sites

A Scheme for providing homestead sites to those rural BPL households who have

neither agricultural land nor a housesite, was launched, as part of IAY, w.e.f. 24th august,

2009. For the purpose of allotting homestead sites, the beneficiaries are selected only from

the Permanent IAY Waitlists as per their priority in the list. Only those BPL households who

have neither land nor housesite, are eligible. Financial assistance of Rs. 10,000/- per

beneficiary or actual, whichever is less, will be provided for purchase/acquisition of a

homestead site of an area around 100-250 sq.mt. The land is required to be either in the

name of the woman or jointly owned by the wife and the husband (in that order). Funding is

shared by Centre and States in the ratio of 50:50 while in the case of UTs Central

Government funds 100%.

1.8 Special Package

Funds provided for Rural Housing during the year are allocated to the States for

release under Indira Awaas Yojana in accordance with pre-determined criteria assigning due

weightage to housing shortage and poverty ratio. There is no provision for sanctioning

special packages under IAY except for release of small amount out of 5% IAY funds meant

for natural calamity to meet the exigencies of certain natural calamities like heavy rains,

floods, cyclones, earthquakes, fire, etc. However, during the year 2008-09, an additional

amount of Rs. 3050 crore was provided for Rural Housing out of Stimulus Economic

Package for revival of economy, in the month of January, 2009. As this amount was

provided in addition to the funds already allocated to the States in the beginning of the year,

a portion of this amount was allocated and released as special packages for the following

purposes:

• Rs. 412.91 crore allocated to 31 naxal affected districts as first instalment for construction

of 3.15 lakh houses.

• Rs. 5.04 crore allocated to Border districts of NE States as first instalment for construction

of 2908 houses in Manipur, Arunachal Pradesh and Assam.

• Rs. 15.72 crore allocated to Border districts of J & K and Himachal Pradesh as first

instalment for construction/up-gradation of 19912 houses. The full amount was released.

• Rs. 96.00 crore allocated to Bihar for Kala-Azar affected districts for construction of 73140

houses.

• Rs. 35.25 crore were allocated and released for Primitive Tribal Groups for construction of

26860 houses in Andhra Pradesh, Jharkhand, Rajasthan and West Bengal

Allocation and targets in tabular form, for the funds released as special packages, are as

under:

Allocation made Total release(Rs. in lakh)

Number of houses in lakh

For Kala-azar affected districts of Bihar

9600 0.73

For Naxal Affected Districts 41291 3.15

For border districts of NE states 504 0.03

For other border districts 1572 0.20

For Primitive Tribal Groups 3525 0.27

Total 56492 4.38

The DRDAs are required to upload the monthly financial and physical performance of these

special packages separately

1.9 Convergence with other schemes

The District Rural Development Agencies (DRDAs) will make concerted efforts to

identify the programmes/schemes being implemented by various Ministries/ Departments of

the Central Govt., which could be dovetailed with Indira Awaas Yojana so as to ensure that

IAY beneficiaries also derive the benefits of these schemes intended for rural BPL

households.

(i)To ensure convergence between Indira Awaas Yojana and Total Sanitation Campaign:

a. All IAY beneficiaries who are sanctioned a house will be sanctioned a toilet each

under TSC if eligible, simultaneously and admissible incentives will be provided to the

beneficiary from TSC for construction of same. The authority sanctioning of the house under

IAY will be responsible for ensuring that in cases where there is no toilet, incentives on

construction of a toilet by the IAY beneficiary under TSC are simultaneously sanctioned.

b. The layout, location and technology of the sanitary latrines in IAY houses must be

appropriately designed to ensure safe disposal of faecal waste preferably in leach pit toilet

and as per the geophysical conditions of the region.

c. IEC material on TSC be included in IAY publicity material.

d. Joint Training programme must be organised for functionaries under TSC and IAY

at State level, District, Block and Gram Panchayat level on provision of both schemes.

e. The clause for deduction of Rs. 600 from the IAY unit assistance in case a

beneficiary fails to construct a toilet has been deleted from the IAY guidelines w.e.f Feb.

2006. Accordingly, it is reiterated that no deduction is to be made from the unit assistance for

constriction of houses. However, concentrated efforts should be made for awareness

generation of the beneficiaries to ensure that they construct and use toilet while availing of

the incentives amount provided under TSC.

(ii) IAY Scheme will be converged with Rajiv Gandhi Grameen Vidyutikaran Yojana

(RGGVY) being implemented by the Ministry of Power for providing free electricity

connections to BPL households in rural areas so that each IAY beneficiary could get a free

electricity connection to his house.

(iii) The availability of drinking water supply to an IAY household should be ensured

by the agencies responsible for the implementation of the Indira Awaas Yojana. This can be

ensured through convergence of the activities under National Rural Water Supply

Programme (NRWSP) which is being implemented by the Department of Drinking Water

Supply of this Ministry to provide every rural person with adequate water for drinking,

cooking and other domestic basic needs on a sustainable basis.

(iv) The Reserve Bank of India has issued instructions to all the Nationalized Banks

to disburse loans to IAY beneficiaries under Differential Rate of Interest (DRI) scheme. An

IAY beneficiary can borrow up to Rs. 20,000/- from any Nationalized Bank at 4% interest per

annum to top up the unit assistance under IAY. Through liaisoning with Nationalized Banks

in the district, DRDA should render all possible assistance to IAY beneficiaries in procuring

the top-up loans under DRI.

(v) Life Insurance Corporation (LIC) of India has Insurance Policies called Janshree

Bima for rural BPL families and Aam Aadmi Bima for the benefit of rural landless families.

The DRDAs will furnish the particulars of all the willing IAY beneficiaries every month to the

respective Nodal Agency which is implementing the Janshree Bima and Aam Aadmi Bima in

the district so that all willing IAY beneficiaries derive the benefits available under these

insurance policies.

(vi) In addition to the above convergence of schemes, efforts may also be made to

ensure that a jobless IAY beneficiary gets a job card under National Rural Employment

Guarantee Act 2005 (NREGA) and Self Help Group (SHG) membership under SGSY

(vii) For effective monitoring of the convergence of the above programmes/schemes

a Monthly Progress Report–3 (MPR-3) has been devised. The DRDAs will spare no effort in

liaisoning with all the nodal agencies implementing the aforesaid schemes in the district in

order to bring about the actual convergence of these programmes at the field level, will

capture the data and furnish the same to this Ministry online every month in prescribed

format.

(viii) IAY being a convergence of other schemes, auditing of records of these

departments/ DDOs may be taken up simultaneously in order to check the convergent

issues.

1.10 Monitoring and evaluation

Officers dealing with the IAY at the State, district, sub-division and block

levels must closely monitor all aspects of the IAY through visits to work sites. A schedule of

inspection which prescribes a minimum number of field visits for each supervisory level

functionary from the State level to the block level should be drawn up and strictly adhered to.

The State Government should prescribe the periodical reports/ returns through which it

should monitor the performance of IAY in the districts and also get appropriate reports and

returns prescribed, to be collected by the Zilla Parishads/DRDAs. The monitoring of the

programme at the State Level will be the responsibility of State Level Vigilance and

Monitoring Committee for Rural Development Programmes. A representative or nominee of

the Ministry of Rural Development, Government of India should invariably be invited to

participate in the meetings of the Committee.

The Central Government may conduct evaluation studies on the implementation of

the scheme

1.11 Grievance Redressal

The scheme has online system of Redressal of public grievances, detailed in the

software developed for IAY (Awaassoft), which outlines the flow of grievance/ complaint as

below.

The system allows every stakeholder to lodge Grievance and to trace the

subsequent response. Complaints will escalate automatically to next higher level after every

30 days, if not attended.

The effectiveness of the system of grievance redressal will be studied in detail during

the performance audit.

Grievance Redressal

Citizen

Beneficiary

Gram Panchayat

Block Panchayat

DRDA

Gram Panchayat

Block Panchayat

DRDA

Block Panchayat

DRDA

State RD department

Lodge Complaint Complaint Against Receive Complaint

And Action

Resolved

No Escalate

Yes

Resolved

No Escalate

Ye

s

2 Organisational arrangements

2.1 Organisational Structure at Central level

Rural Housing Division under the Department of Rural Development, Ministry of

Rural Development (MORD) is responsible for the implementation of the Indira Awaas

Yojana (IAY). Organisational chart of Rural Housing Division is as under:

2.2 Detailed functions and responsibilities at various levels

A Central level

MORD, the nodal Ministry is responsible for ensuring timely resource supports to the

districts. It has to undertake periodic evaluation studies on the implementation of the IAY.

These evaluation studies may be got conducted by institutions and organizations of repute

on the implementation as well as the issues thrown up by the concurrent evaluation,

conducted by the Government of India(GOI). The GOI shall develop website alongwith

computerized information system which will enable monitoring of the scheme beneficiary.

Target setting by MoRD is depicted by way of the following flow chart:

B State level

Joint Secretary

Deputy Secretary (Policy)

Under Secretary (Policy)

Research Officer (Policy)

Section Officer (Policy)

Statistical Officer

Director (Release &Monitoring)

Under Secretary (Release

&Monitoring)

Accounts Officer (Release)

Economic Officer (Monitoring)

The state government shall release its share to the Zila Parishads/ DRDAs within one month

after the release of Central assistance and copy of the same should be endorsed to MORD.

The state government should prescribe the periodical reports/ returns through which it

should monitor the performance of IAY in the districts and also get appropriate reports and

returns prescribed, to be collected by the Zila Parishads/ DRDAs.

C District level

IAY funds are operated by the Zila Parishads/ DRDAs, Zila Parishads/ DRDAs will follow the

accounting procedures prescribed by the MORD. The finalized accounts of the previous year

shall be got approved by the General Body of the concerned DRDA on or before 30th June

and got audited on or before 31st August of the same year. Copies of the Audit Report as

accepted by the Governing Body of the concerned DRDA shall be sent to the State

Government and Central Government on or before 30th September of the year. Distribution

of IAY funds block-wise/ village-wise for the scheme.

C Block level

Monitoring and preparation of lists depicting details of homes taken up at Block level with

cost, source of funds and implementary agency is decided at block level, distribution of

funds, village-wise for the scheme and allocation/ availability of funds and progress in

implementation of the IAY.

C Village level

Preparation of lists of BPL people, Permanent IAY lists, both for SC/ST and others.

3 Physical and financial outcomes of the scheme

3.1.1 Financial outcomes

The financial outcome of the scheme for the period 2008-09 to 2012-13 is as under:

(Rs. in lakh)

Year Allocation, including

state matching

share

Funds released to

DRDAs including

State matching

share

Total available

funds with states

(including OB&

miscellaneous receipts)

Utilisation of funds by the

states

% of utilisation

1 2 3 4 5 6

2008-09 752384.72 1172703.94 1446035.28 834834.33 57.73

2009-10 1113158.93 1131690.46 1585234.89 1329246.40 83.85

2010-11 1318131.57 1329522.44 1795654.10 1346572.75 74.99

2011-12 1243646.89 1292035.54 1915929.99 1292632.74 67.47

2012-13 (as on November 2012)

1377621.58 630030.60 1214953.25 640351.59 52.71

The state wise and year wise financial performance of the IAY scheme for the period

2008-09 to 2012-13 are also given in annexure-I.

3.1.2 Physical Outcome

The physical outcome of the scheme for the period 2008-09 to 2012-13 is as under:

Year Annual target for the year

Houses sanctioned

during the year

Houses under

construction

Houses completed

% achievement

1 2 3 8 9 10

2008-09 2127165 3013693 1790563 2134061 100.32

2009-10 4052243 4227000 2273030 3385619 83.55

2010-11 2908697 3347747 2371865 2715453 93.36

2011-12 2726702 3265985 2696461 2471421 90.64

2012-13(as on November

2012) 3009700 2230136 3188561 1017314

33.80

The state wise and year wise physical achievement for the year 2008-09 to 2012-13

are also given in annexure-II.

Audit Technical Issues

4 Audit Scope and Methodology

4.1 Audit Objectives

The objectives of the Performance audit shall be to ascertain whether:

The systems and procedures in place for identification and selection of the target

groups and the processes for allotment, construction and up-gradation of dwelling

units were adequate and conformed to the scheme provisions;

The physical performance under IAY in terms of number of units constructed and

upgraded was as planned and targeted and that the constructions corresponded to

the quality and financial parameters set out in the scheme guidelines;

The allocation and release of funds under IAY were made in an adequate and timely

manner and that these were utilized economically and efficiently in accordance with

the scheme provisions;

The convergence of the IAY activities with other programmes as envisaged was

effectively achieved and ensured availability of a complete functional dwelling unit;

The mechanism in place for monitoring and evaluation of the outcomes of the

programme were adequate and effective.

4.2 Scope and Coverage of Performance audit

The proposed performance audit would entail scrutiny of records for the period from

2008-09 to 2012-13, spanning across 33 States/Union Territories where the scheme is being

implemented.

In addition to specified period for auditing, audit will also check the remedial actions

taken by the Centre and the State Governments on the audit observations pointed out by the

CAG of India in the Union Report (PA Report no.-3 of 2003), while analyzing and reporting

audit findings.

The scrutiny of records in audit will take place at the following levels:

MoRD, Government of India.

State Government.

Districts.

Blocks.

Gram Panchayats, including individual works.

4.3 Performance indicators and audit criteria

The main sources of audit criteria would be the following:

Guidelines of Indira Awaas Yojana issued by the Ministry of Rural Development,

Department of Rural Development;

Outcome budget of the Ministry of Rural Development;

Periodical reports/ returns prescribed by State Governments;

Circulars/instructions issued by the Department of Rural Development, GOI;

Reports of National Level Monitors available with the Ministry;

Studies conducted by the Planning Commission and various agencies at Central level.

The performance of the IAY is proposed to be assessed on the basis of achievement of

main objective of providing housing to BPL rural households. Performance indicators for the

IAY would be:

Decrease in number of rural houseless BPL persons;

Focus on weaker section in provision of houses and homestead sites;

Achievement of physical and financial targets ;

Whether beneficiary lists was comprehensive and regularly updated;

All houses constructed or upgraded under the scheme fulfil criteria of pucca houses;

Provision of all basic amenities for each of the house constructed under the scheme;

Existence of a transparent grievance redressal mechanism;

Number of times evaluation of the scheme has been done.

4.4 Identification of risk areas

The activity wise risk areas that would be examined in the course of conducting the

performance audit of IAY are indicated in Annexure III.

4.5 Issue analysis

An audit objective wise issue analysis for the performance audit is given as Annexure

IV to facilitate planning of various audit steps.

The issue analysis has been drafted to include major points to be covered in the

audit. If the Pr. AsG/ AsG (Audit) are of the opinion that some issues need to be added to,

the new questions may be included and kindly immediately be brought to the DGACR’s

notice for sharing them with all Pr. AsG (Audit).

4.6 Study design matrix

A study design matrix for the performance audit by field offices providing adequately

planned steps for maintaining uniformity in approach is given in Annexure V.

4.7 Audit evidence

The primary audit evidence shall be information gathered through questionnaire at

implementing department level, replies, copies of documents furnished with replies from the

auditee at village/district/State and Central level. These will be supported by the copies of

the related papers, reports, correspondence gathered during audit, as are relevant and

necessary.

Further, the following techniques may be adopted by the State Audit offices for

evidence gathering:

i Joint Inspection teams alongwith State Government officers may be formed to

physically inspect existence and quality of IAY houses. A sample Joint Inspection proforma

for the purpose is being enclosed. It may be ensured that at least 10 per cent (subject to a

minimum 5 houses) of total beneficiaries including those enrolled in the Permanent IAY

waitlist are covered for each selected GP in the Joint Physical Inspection.

ii Photographs should be included as part of audit evidence in cases where

objections are noticed during physical verifications.

4.8 Causes of under performance

Causes of under performance (or factors contributing to unsatisfactory performance)

will be identified along-with the audit testing during performance audit and recorded in the

audit working papers as the audit progresses. This alone can lead us to develop constructive

recommendations.

4.9 Sample selection

Sampling methodology

A Stratified Multi stage sampling plan is

recommended.

Each State is a stratum at the All India Level.

Sampling plan to be followed in each State

1st stage: The districts may be stratified by the criterion as followed in the PA of MGNERGA

last year. From each stratum 25 per cent of the districts (subject to a minimum of two)

may be selected by Probability proportional to size with replacement (PPSWR) method

with size measure as total IAY expenditure during the last three years. The tentative

sample size for the different States may be ascertained from the table as under:

State No. of Districts Expected Sample size

ANDHRA PRADESH 23 6

ARUNACHAL PRADESH 16 4

ASSAM 27 7

BIHAR 38 10

CHATTISGARH 18 5

GOA 2 2

GUJARAT 26 7

HARYANA 21 5

HIMACHAL PRADESH 12 3

JAMMU AND KASHMIR 22 6

JHARKHAND 24 6

KARNATAKA 30 8

KERALA 14 4

MADHYA PRADESH 50 13

MAHARASHTRA 35 9

MANIPUR 9 2

MEGHALAYA 7 2

MIZORAM 8 2

NAGALAND 11 3

ODISSA 30 8

PUNJAB 20 5

RAJASTHAN 33 8

SIKKIM 4 2

TAMIL NADU 32 8

TRIPURA 4 2

UTTAR PRADESH 72 18

UTTARAKHAND 13 3

WEST BENGAL 19 5

ANDAMAN AND

NICOBAR

3 2

DADRA & NAGAR

HAVELI

1 1

DAMAN & DIU 2 2

LAKSHADWEEP 1 1

PUDUCHERRY 4 2

2nd Stage: Within each selected districts in the 1st stage, select randomly 20% rural

blocks (subject to minimum 2)

3rd Stage: Within each selected blocks in the 2nd stage, 30% number of GPs (subject

to maximum 10) may be selected by SRSWOR method.

4th Stage: Within each selected GPs two villages may be selected by SRSWOR

method.

5th Stage: Within each selected Villages

1. 4 (Four) IAY beneficiaries may be selected from the beneficiary list by

systematic random sampling method for physical verification

etc.

2. 6 (Six) BPL Households may be selected from the BPL household list by

Systematic random sampling method. Care should be given to select

homeless SC/ST and OBC category households in the sample.

Selection procedure:

The IAY expenditure wise list of districts

may be prepared and districts may be

selected with cumulative total method of

PPS selection independently from each

stratum.

In each sampled District, the rural blocks

may be arranged in alphabetical order and

serial number may be allotted to the

blocks. Using the serial numbers, blocks

may be selected using SRSWOR method.

In each sampled District, the GPs may be

arranged in alphabetical order and serial

number may be allotted to the GPs. Using

the serial numbers, 10 GPs may be

selected using SRSWOR method.

Within each sampled GP, two Villages

may be selected randomly for village level

audit.

Within each sampled village, 4 IAY

beneficiaries may be selected randomly

from the beneficiary list by systematic

random sampling method.

Within each sampled village, 6 BPL

households may be selected randomly

from the appropriate list by systematic

random sampling method.

Total expected sample size: 170 districts, 400 blocks, 3200 Gram Panchayats,

6400 villages 25000 IAY beneficiaries and 38000 BPL household.

5 Audit management issues

5.1 Audit jurisdiction and responsibilities

Director General of Audit, Central Expenditure, New Delhi shall audit the role

and responsibilities of the Ministry of Rural Development in the light of the stated objectives

of the scheme, including monitoring by the Ministry of Rural Development.

The state Principal Accountants General/ Accountants General (Audit) shall

look into the state’s role in implementing the scheme. They may add separate state specific

audit objectives and study design to the extent required.

5.2 Time Schedule

Sl.

No.

Schedule Date

1. Submission of guidelines to

Headquarters for approval

End of March 2013

2. Guidelines to be issued to field

offices Feedback from Headquarters

on the Ist journey

Within one week of receipt of HQs

approval on the guidelines

3. Mid term workshops First week of July 2013 at Headquarters

4. Receipt of material in DGACE from

field offices

06 September 2013

5. Draft Audit Report Ist journey to

Headquarters by DGACE and to the

Ministry for confirmation of facts

Within three months of receipt of

complete material from all field offices

6. Bond copy to headquarters by

DGACE

Within one month of receipt of feedback

from HQs

7 Placing in Parliament Budget session 2014

5.3 Procedural issues methodology

Audit Report

Audit Management Issues

The (Pr) Accountants General (Audit) are requested to send a draft performance

audit report, as prescribed in para 6.29 of the Performance Auditing Guidelines, with

the audit objectives clearly linked with the audit conclusions and recommendations

along with complete evidence.

Key documents

The draft audit reports may be clearly referenced and supported by the copies of

actual evidence/Key documents. Half margins or audit memos issued should not be treated

as Key documents/evidence.

Entry and Exit conference

(Pr) AsG (Audit) may hold entry and exit conferences with the Principal

Secretary/Secretary of the nodal departments and indicate holding of such conferences in

their draft report.

5.4 Documentation and reporting

The arrangement of the material should be with reference to the audit objectives.

The report should be forwarded to the concerned (Pr) Secretary to the state government for

his comments. The Accountants General should also discuss the draft performance audit

report with the Secretary of the Ministry and his senior officers.

The States Accountants General will send the draft report (soft copy and hard copy

both) containing the findings, conclusions and recommendations including statistical data in

the form of a report to the DGACE, New Delhi.

Annexure III ACTIVITY WISE RISK AREAS IN ‘IAY’

S.

no.

Areas of risk High Medium Low

1 Planning and

selection of

beneficiaries

Identification of target group and long term bottom up planning

Transparency in preparation of permanent waiting list

Selection of beneficiaries from the waiting list

Undue influence in selection of beneficiaries

Reliance on BPL

survey 2002 data

on housing

shortage for

planning

Exclusion of BPL household while unapproved name by GP/ APL getting the benefit

Assessment of target based on housing shortage and poverty ratio

Involvement of beneficiaries in construction of houses

Distribution of inter-district target based on housing shortage and SC/ST population

Reliance on Census 2001 or 2011, as the case may be

Displaying waiting list in web-site and public place

2 Targets and

achievement

s and

technology of

constructions

Inflated reporting of achievement

Sub standard houses constructed

Projects left abandoned /incomplete after part execution

Sanitary latrine, smokeless chulha etc not provided

Adoption of low cost technology and local materials

Non-display of IAY board and logo in houses

Existence of middlemen and contractors in execution

Prolonged delay

in completion of

houses

3 Funds

management

Cut in central assistance

Non-release or short release of funds

Diversion of funds

Advance treated as final expenditure

Mis-utilisation of funds and interest

Rush of expenditure

Delay in payment to beneficiaries and cash payment

Delay in receipt of funds

Submission of inflated UC

Release of funds as per requirement

Delay in submission of UC

Payment to beneficiaries through bank/postal accounts

4 Convergence

with other

schemes

Lack of electricity, water and sanitation due to non-availing of benefits available to beneficiary under connected schemes

5 Monitoring

and

evaluation

Financial and physical performance not reviewed periodically at DRDA/ Government level

Absence of community monitoring

Regular physical inspection of works

Inspection by higher authorities

Grievances redressal

No decreasing trend in terms of number of rural houseless

Not displaying permanent waiting list in AWAS SOFT.

No evaluation conducted

Not meeting the primary objective of the scheme as envisaged in National Housing and Habitat Policy 1998 for creating shelter for all, efficiently and effectively

Annexure-VI

Sample selection

S. no. State No. of districts

Number of houses to

be

constructed

for 2012-12

Central

allocation for

2012-13 (Amount in lakhs)

State allocation

for 2012-

13 (Amount in lakhs)

Total Allocation

(Amount in lakhs)

1 BIHAR 38 816305 277216.043 92405.33

369621.373

2 UTTAR PRADESH 72 368322 124514.06 40315.76

164829.82

3 ANDHRA PRADESH 22 270399 93916.18 31305.39

125221.57

4 WEST BENGAL 19 219553 75128.55 26154.32

101282.87

5 ASSAM 27 184408 80494.43 8943.81

89438.24

6 MAHARASHTRA 33 174276 58965.93 19655.3

78621.23

7 ORISSA 30 155363 54464 17794.66

72258.66

8 GUJARAT 26 136470 46058.62 15352.09

61410.71

9 TAMIL NADU 31 111410 37601.9 12533.97

50135.87

10 KARNATAKA 30 107210 36183.34 12061.12

48244.46

11 MADHYA PRADESH 50 84358 28884.31 9628.12

38512.43

12 JHARKHAND 24 69503 24726.46 8732.69

33459.15

13 RAJASTHAN 33 68578 23145.13 7715.06

30860.19

14 KERALA 14 59620 20121.29 6707.12

26828.41

15 CHATTISGARH 18 41511 14523.36 4841.11

19364.47

16 PUNJAB 20 23696 7997.36 2665.79

10663.15

17

JAMMU AND KASHMIR

22

19476 7084.38 2361.44

9445.82

18 HARYANA 21 19163 6466.67 3155.56

9622.23

19 UTTARAKHAND 13 17162 6242.38 2080.8

8323.18

20 TRIPURA 4 16245 7090.9 787.88

7878.78

21 MEGHALAYA 7 12608 5503.42 611.5

6114.92

22 NAGALAND 11 8343 3641.79 404.63

4046.42

23

ARUNACHAL PRADESH

16

8339 3640.22 404.46

4044.68

24 MANIPUR 9 7238 3159.9 351.1

3511

25

HIMACHAL PRADESH

12

6271 2280.82 760.27

3041.09

26 MIZORAM 8 2687 1172.84 130.31

1303.15

27

ANDAMAN AND NICOBAR

3

2646 1191.15 0

1191.15

28 GOA 2 1714 578.46 192.82

771.28

29 SIKKIM 1 1596 696.5 77.39

773.89

30 PUDUCHERRY 1 1318 593.28 0

593.28

31

DADRA & NAGAR HAVELI

1

441 198.46 0

198.46

32 DAMAN & DIU 2 197 88.79 0

88.79

33 LAKSHADWEEP 1 171 76.98 0

76.98

TOTAL 621 3016597 1053647.903 328129.8

1381777.703

Annex VII

For state Pr.AsG/AsG

Checklist for Performance Audit report in respect of

‘IAY’

Issues Quality Parameters Remarks

A-General quality

features

i. Confirm that the structure of the

draft report is consistent with that

prescribed in paragraph 6.29 of

Performance Auditing Guidelines

issued by the C&AG

ii. Confirm that testing of evidences

(para 5.22 of PA Guidelines) and

recommendations (para 4.43 of PA

Guidelines) were carried out in the

files of the concerned (Pr) AsG

(Audit) and

(Note: since the recommendations

are addressed to the authority

which is competent to take

remedial action, the

recommendation shall be in two

sections one for state specific

issues and the other for central

specific issues and common issues)

Note: The testing for audit objectives is

carried out by DGACE. If any audit

objectives are added for state reports,

transparent testing that the audit

objectives are stated with affirmative

hypothesis and related to one or more

of the economy, efficiency and

effectiveness issues may be carried out

by (Pr) AsG (Audit).

iii. List the expected value addition

to the programme/organization

through the performance audit by

your office.

1 B- Evidence

i. State/confirm the method(s) of

sampling used for evidence

gathering

ii. Confirm that the size of the

sample used for forming the basis

of the conclusions is uniform

throughout the report (for each

type/stage of data)

iii. Confirm that the reporting is on

the test results on the entire

sample, including positive

achievements which have been

analysed/evaluated for conclusions

rather than reporting only the

cases of adverse findings of

individual transactions

For example:

Cases where the scheme is working satisfactorily in

particular schools should be pointed out.

C-Audit conclusions/

highlights

i. Identify the paragraphs

containing conclusions on

performance with each audit

objective

Audit Objectives Conclusion No.

Paragraph No.

1

2

3

ii. Do the highlights consist of self-

contained audit conclusions on

performance stated as complete

sentences and are stated back-to-

back in the context of the audit

objective.

iii. Do the self-contained

highlights and the paragraphs

dealing with each audit objective

contain:

conclusions

impact and/ or future risk of underperformance

the cause of underperformance

Factors leading to satisfactory or good performance

iv. Additionally confirm that in

all cases of under-performance,

its impact on the intended output

and outcome, particularly the

beneficiary or the public is

clearly brought out in the

conclusions.

v. Confirm that conclusions are

balanced and comparative

information ‘in time’ or ‘among

different units’ etc is used to

highlight the underperformance

and good performance cases.

vi. Confirm that conclusions are

specific and are not left to the

reader to infer, besides being

objective and convincing.

2 Recommendations i. State the number of

recommendations and correlate

them to the audit conclusions

Recommendation

Paragraph no.

Conclusion/

Paragraph no.

Expl. 6.3.7 6.3.4 etc.

ii. Relate each recommendation to

the causes of underperformance

and factors for satisfactory

performance

Recommendation

Paragraph no.

Address the

causes of under

performance

under paras no.

iii. Confirm that acceptance or

other wise of the

recommendations by the entity are

stated with in the body of the

report.

(Relevant only for state specific issues)

iv. Confirm that in cases of specific

non-acceptance of any

recommendation by the entity

which are retained in the report,

the reasons are clearly stated

persuasively.

(Limited to State specific

recommendations)

E. Language and

presentation

i. Confirm adherence to the style

guide

ii. Attest that all technical/special/

uncommon terms or processes

have been explained by way of

footnote/glossary/box for the

convenience of a common reader.

iii. Confirm that report has been

presented in ‘active voice’ as far as

possible.

F. Scope and

transparency of

methodology

i. Confirm that offices and other

sources where audit is conducted

or from where data is obtained are

specified along with the audit

universe.

ii. Confirm that use of criteria for

audit testing to arrive at audit

findings is stated.

iii. Confirm that types and sources

of documents/data/information

converted into evidence in support

of findings is stated in clear terms.

G. Entity response/

Acknowledgement

i. Confirm that the status of auditee

responses (acceptance,

disagreement or non-response with

reference to the audit findings &

conclusions and recommendations)

are included at appropriate places

within the report

Limited to State specific

recommendations

ii. State the number of each of

them (audit findings, conclusions

and recommendations) not

accepted

iii. Confirm that in case of

disagreement, the response of the

entity has been suitably rebutted, if

the point is retained despite

disagreement.

iv. Indicate the dates and the level

at which meetings were held with

the auditee on presentation of

audit plan, for discussing the draft

performance audit report (exit

conference at the apex level) etc.

H. Assurance for

adherence to the

guidelines

The field offices will include a

report indicating adherence to

some of the more important

provisions of the performance

auditing guidelines where

applicable.

D:\website\Course on Statistical Sampling\Shri Kumar Abhay\iCED Jaipur Lecture August 2014\Stratification of District of Punjab.doc

In all there are 22 districts in the Punjab State and the State has been stratified into

3 strata geographically and based on number of household registered/demanded (as

per guidelines & taking the Punjab state as a Small State). Of these 22 districts, 6

districts have been selected as per guidelines (25% of the districts subject to a

minimum of 2 districts in each strata). The detail of which is as follows:

Sr. No. of Strata Geographical

base of Distts.

Sr.

No.

Name of District No. of Household

demanded job

2007-08 to 2011-12

I

Districts with

hill/foothill

area

1. Hoshiarpur 162831

2. Gurdaspur 53657

3. Nawanshahr/SBS

Nagar

24243

4. Fatehgarh Sahib 14833

5. SAS Nagar 14626

6. Roopnagar/Ropar 13040

7. Pathankot * 3796

Sr. No. of Strata Geographical

base of Distts.

Sr.

No.

Name of District No. of Household

demanded job

2007-08 to 2011-12

II

Districts with

fertile area

1. Amritsar 108644

2. Sangrur 72157

3. Jalandhar 42442

4. Ludhiana 38825

5. Patiala 34281

6. Tarantaran 26860

7. Barnala 22168

8. Kapurthala 17116

Sr. No. of Strata Geographical

base of Distts.

Sr.

No.

Name of District No. of Household

demanded job

2007-08 to 2011-12

III

Districts with

sandy/semi-

sandy area

1. Mukatsar 76083

2. Ferozepur 66340

3. Bathinda 64276

4. Mansa 28883

5. Moga 26311

6. Faridkot 23033

7. Fazilka * 14609

* Note: The Districts i) Pathankot at Sr. No. 7of Strata I and ii).Fazilka at Sr. No.

7. of Strata III were formed in the year 2011 please.