Funds Flow (Finance Management)

Funds flow to GoI
The World Bank shall provide funds to the Project by depositing money into the 'Special Account' at the GoI level. Funds from the World Bank will be made available to the Government of Maharashtra through the GoI under the standard terms of on-lending between GoI and the States.

Special Account
The Special Account is a revolving account in which the World Bank deposits funds. These funds are used exclusively to cover the Bank's share of the eligible expenditure of the project. GoI opens the Special Account with the Reserve Bank of India. This account is maintained separately for each World Bank funded project in convertible foreign exchange.

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Funds flow to GoI
The World Bank shall provide funds to the Project by depositing money into the 'Special Account' at the GoI level. Funds from the World Bank will be made available to the Government of Maharashtra through the GoI under the standard terms of on-lending between GoI and the States.

Special Account
The Special Account is a revolving account in which the World Bank deposits funds. These funds are used exclusively to cover the Bank's share of the eligible expenditure of the project. GoI opens the Special Account with the Reserve Bank of India. This account is maintained separately for each World Bank funded project in convertible foreign exchange.

Disbursements and Operation of the Special Account
The Special Account is operated by the Controller of Aid, Accounts and Audit (CAAA), Department of Economic Affairs, Ministry of Finance, GoI. The Bank will provide an initial advance, which will be transferred to GoM. The advance will initially be US$ 5 million, however, the project may draw less initial advance as may be required, and every quarter this balance will be replenished to the extent of amount spent out of this advance as evidenced by the consolidated quarterly Interim Unaudited Financial Reports (IUFRs) furnished by the PCU to the Bank in pre-agreed formats. The basis of preparation of these quarterly statements will be the state AG’s accounting system / monthly DDO’s accounts with the exception of the autonomous bodies which maintain their own accounts outside the State Consolidated Funds. The disbursement would be based on quarterly Interim Unaudited Financial Reports in formats agreed with IDA (Please refer Annexure 16 to 20 ). Based on quarterly consolidated IUFRs furnished by the PCU, , funds would be released on quarterly basis. IDA will finance 90 % of the Project expenditures including taxes and excluding beneficiary contribution wherever applicable, under a single disbursement category “ Goods, works, consultants’ services, training and operating costs under parts A, B and C of the Project.” The GoM will pass on the funds (both Bank finance and own contribution) to project implementing agencies through budgetary grants.
 
Funds flow at the GoM level
The Government of Maharashtra will pass on the funds (both Bank finance and own contribution) to project implementing agencies through budgetary grants. The Maharashtra Agricultural Competitiveness Project involves the fund flow to three line departments and autonomous bodies. The three line departments involved are Agriculture, Co-operation & Marketing and Animal Husbandry. The Co-operation and Marketing Department is the Nodal Department. The autonomous bodies involved are

  • MSAMB – Maharashtra State Agricultural Marketing Board – Nodal Agency for the project. (under Co-operation and Marketing Department)
  • MSWC – Maharashtra State Warehousing Corporation (under Co-operation and Marketing Department)
  • 33 ATMAs in the 33 Districts(under Agriculture Department)
  • Other training institutions (i)VANAMATI (under Agriculture Department) (ii)NIPHT (under MSAMB)
The project funds will be budgeted in GoM’s budget, as an identifiable budget head, under Major Head “2435 Other Agricultural Programs ( under Marketing and Cooperation Department)” and, under subhead “World Bank Aided Maharashtra Agricultural Competitiveness Project” with appropriate break-up. The Finance Department of the GoM will provide the funds to Dept. of Co-operation and Marketing based on approved annual budget, which will further reallocate the funds based on the annual work plan and budget to Dept. of Agriculture and Dept. of Animal Husbandry through the BDS system.

Funds Flow to Agriculture Department:
The Dept. of Agriculture will further allocate budgetary grants through BDS to Commissioner Agriculture. PIU Agriculture will be part of the office of Commissioner of Agriculture. The budget allocation order for Agriculture Department will specify the funds provided for activities to be implemented by the Dept. of Agriculture under MACP, viz. (i) Line department wise training / demonstration programs and activities under ATMA (Allocation to Agriculture Dept. programmes and Animal Husbandry Dept. programmes under ATMA), (ii) Training under VANAMATI and Horticulture Processing Training Institute, (iii) Foreign Training, (iv) PIU Agriculture Expenses.
 
Activities of PIU - Agriculture (in the office of Commissioner of Agriculture):
The DDO in the office of Commissioner Agriculture will incur expenditure through treasury for the following expenses, viz. (i) PIU Expenses, (ii) Service Provider expenses, (iii) Foreign tours of Officers, (iv) Buyers Sellers meet (State level)
 
Funds to ATMA       
ATMA is a district level autonomous body (registered Society), which is a convergence of line departments like Agriculture, Animal Husbandry, Dairy, Fisheries, and Sericulture etc. For the MACP project, funds to ATMA for training and demonstration programs will be released for two line departments, viz. Dept. of Agriculture and Dept. of Animal Husbandry. So the budgetary grants which are received by the Commissioner Agriculture through BDS will explicitly mention in the budget release order the grants under Agriculture and Animal Husbandry departments. After the Dept. of Agriculture in Mantralaya releases grants through BDS to the Commissioner Agriculture, the DDO in the office of Commissioner Agriculture will access the BDS and submit bill to the treasury. After passing of the bill, the treasury will deposit the amount of bill through a system of Electronic Funds Transfer (EFT) or directly to the accounts of the concerned ATMA. The ATMA account for MACP Project would be operated by the DSAO who is the ex-officio Project Director of ATMA and the Drawing and Disbursing Officer in his office. The ATMAs in the phase II and Phase III districts will not be eligible for fund releases unless a dedicated project accountant is recruited for each ATMA.
 
Activities of ATMA under Agriculture Department
For the activities of ATMA under Agriculture Department, the Project Director, ATMA (DSAO) would release the cheques to the contractors for the following activities, viz. (i) Preparation of Marketing Strategy Supplements, (ii) Mobilization of farmers into CIGS / FIGS, (iii) Training of officers, (iv) Training of farmers / field extension functionaries /Agriculture Service Providers, (v) Demonstrations, (vi) Exposure visits, (vii) Innovative pilots, (viii) Buyers sellers meet (district level), (ix) Strengthening of growers’ association, (x) Procurement of computers x)Payments for staff on contractual basis for the project
 
Activities of ATMA under Animal Husbandry Department (AHD)
For the activities of ATMA under Dept. of Animal Husbandry, the Project Director, ATMA (DSAO) will issue funds through core banking / issue a cheque to DDO bank accounts of Deputy Commissioner AHD for the activities of training and demonstrations under AHD. This grant allotment will be based on the budget release order as mentioned above to carry out the activities of AHD scheduled for that year as per the Annual Work Plan. The Deputy Commissioner AHD will use the same for activities as and when required. The activities of AHD under ATMA are as follows, viz. (i) Mobilization of farmers and SR farmers into CIGs, (ii) Training of farmers from the area of LSM & SR markets, (iii) Demonstrations for animal management techniques and fodder production technology, (iv) Exposure visits to goat demonstration units / LSM markets.
 
Funds flow to VANAMATI
As far as the grants for the training institution VANAMATI is concerned, the DDO in the office of Commissioner Agriculture will draw funds through the BDS and submit bill to Treasury. After passing the bill, the treasury will transfer the funds through a system of Electronic Funds Transfer to VANAMATI’s bank account opened for the project purpose.
 
Grants to Horticulture Processing Training Institute, Aurangabad (HPTI):
HPTI is the institute of Agriculture Department which works under the control of Regional Joint Director Agriculture (RJDA), Aurangabad. Funds will be disbursed by the Commissioner, Agriculture under BDS to Regional Joint Director Agriculture, Aurangabad. RJDA, Aurangabad will pay contractors of HPTI, Aurangabad through treasury. HPTI will submit accounts to RJDA, Aurangabad, who in turn will submit accounts to PIU Agriculture.    
 
Release of Funds to Training Institutions and Demonstrations based on standard rates prescribed
The release of funds for Training Institutions and demonstrations of ATMA will be based on standard unit costs prescribed for these activities as per the rates prescribed in PIP. Disbursement of funds to ATMA will be in the form of advances and in tranches on the basis of the work program to be undertaken. Each ATMA will have to submit quarterly Interim Un-audited Financial Reports (IUFR)in agreed formats to PIU- Agriculture within 15 days of the end of quarter . The quarterly reports will have to be submitted for the earlier tranche for the release of the next tranche of funds. The monitoring of this training program will be robust and will be carried out by M & E Specialist from VANAMATI with the help of field staff of line departments concerned.
 
Funds Flow to Co-operation & Marketing Department
The DDO in the office of Co-operation and Marketing Department in Mantralaya will release grants in the form of cheque by submitting bill to Pay and Accounts Office to (i) PIU – Agri. Mktg, (ii) PCU – MACP, and (iii) MSWC. The “PCU-MACP Account” will be jointly operated by two signatories from either of the three : - the Project Director, Chief Finance Controller and Accounts Officer of PCU. From this account the following expenses of PCU will be incurred, viz. (i) expenses for ABPF, (ii) expenses for internal and external audit, (iii) expenses for consultancies, and, (iv) PCU expenses. The PIU account will be jointly operated by the MD, MSAMB/ Nodal Officer – PIU Agri Mktg and Senior Accounts Officer / Accounts Officer of PIU Agri Mktg. From this account the following expenses of PIU will be incurred, viz. (i) expenses for market intelligence, (ii) expenses for training at NIPHT, (iii) expenses for various service providers (iii) PIU–MSAMB expenses. iv) Workshop in preparation of HMIP uner Rural Haat Markets v) Workshop on preparation on MMIP under Modernising Wholesale Markets
 
Funds Flow to District Deputy Registrar C. S.:
The Director of Marketing gives funds through BDS to DDRCS for components of APMC Markets, RH, and FCSC. The office of the District Deputy Registrar Cooperative Societies (DDRCS) will be the major spending unit for activities under Subcomponents “Promoting Farmer Common Service Centres”, “Modernisation of wholesale markets” and “Upgrading Rural Haats” Expenditures on all these three subcomponents will be shared by the Government of Maharashtra and the Beneficiary concerned in pre-determined ratios.
 

SrNo
Component & Subcomponent
Project and GoM Contribution%
Beneficiary Contribution%
Promoting Alternative Markets
 
 
1
Product aggregation through Farmers Groups/Farmers Service Centers
 
-- Stage-I Investments
75.0
25.0
-- Stage-II Investments
50.0
50.0
2
Rural Haats Markets
 
 
 
-- Basic Infrastructure (Stage I)
90.0
10.0
-- Productive Infrastructure (Stage II)
75.0
25.0
Modernizing Existing Markets
3
Modernizing of Wholesale Markets(APMCs)
 
 
 
-- Basic Infrastructure
50.0
50.0
-- Productive Infrastructure
25.0
75.0
Project’s / GoM’s share for above activities will be redistribute by the Director of Marketing through BDS to the district level DDRCS office for payment of contractors / suppliers.
No project funds will flow to the DDRCS in the Phase II and Phase III districts unless a dedicated project accountant is deputed/recruited for each DDRCS
 
Grants release to APMC
Project’s/GoM’s share for the above activities will be redistributed by the Director of Marketing through BDS to the district level DDRCS office for payment of contractors / suppliers. On submission of the contractors’ invoice, the DDRCS will release a pre-numbered receipt or give a sequential inward number after registering the invoice in the Inward Register of the DDRCS office, to the supplier / contractor. The payments for the Government share towards expenditures incurred on the above-mentioned activities will be released from the treasury, once treasury bills are raised by the DDRC office. This would be done within seven working days after submission of contractor’s/supplier’s invoices which have been approved by the respective APMC chairperson, designated Service Provider and Market Field Engineer of MSAMB based on terms of contract and physical progress.. The DDRCS would send the bills, in ‘grants in aid’ format as per prevalent practice in Government, to the treasury. After the treasury deposits the funds in DDRCS bank account, the DDRCS will transfer the payments to the contractors’ bank account by electronic transfer/issuance of cheque.
 
Separate Bank Account for Beneficiary Contribution from APMC:
The beneficiary share will be secured from the APMC, by way of the APMC depositing upfront, before issue of the work order, atleast 1/3 amount of their own contribution and raising the rest of 2/3 amount by means of loans secured either through MSAMB or through a Nationalised Bank. For the purpose of safeguarding the interests of APMCs , the 1/3 money contributed upfront would be deposited in seperate bank account with nationlised bank of DDRcs which will be preferably kept in Fixed Deposits which could be liquidated as and when required while making payments to contractors. The loan agreement with MSAMB / Nationalised Bank would serve as a guarantee to the World Bank for the beneficiary contribution to be contributed. The loan tranche would be availed by APMC as and when required while making payments to contractors.

Grants release to FCSCs and Rural Haats
As community participation in procurement has been envisaged in the project, the FCSC and Rural Haat will have the powers to procure goods and services under the project .

  • For this procurement purposes, the budgetary funds would be released by the office of DDRCS by DDRCS by submitting the bill to treasury and the treasury issuing the cheque in favor of concerned FCSC or Rural Haat.
  • The beneficiary contribution at the FCSC / Rural Haat would be deposited in a separate bank account opened for the project purpose.
  • Initially for making payments to contractors/ suppliers , the beneficiary contribution would be spent and a certificate to that effect should be signed by the Chairman of that organisation and counter signed by the SP. Based on this certificate, the DDRCS would release the part of State Govt/ World Bank funds.
  • The basis of release of funds by the DDRCS to these beneficiary organisations would be as mentioned below. The project funds would be released in three tranches of 30% each of total amount of funds for RH and 25% each of total amount of funds for FCSCs .
  • For first tranche
1) Documentary evidence that a separate bank account has been opened by the organisation for the project purpose.
2) Bank statement showing that beneficiary contribution has been deposited in the bank account.
 
3) Certified copy for the utilisation of initial 10% beneficiary contribution and counter signed by SP.
4) Photograph of the work done
  • The second and subsequent tranches - To avoid a time gap between request and availability of funds, a request for release of further tranches can be made when 50% of the funds of earlier tranche have been spent. This request should be accompanied by the following documents
1) Utilisation Certificate of earlier tranche signed by the Chairman of the organisation and counter signed by SP.
2) Vouchers and bills of the spent amount
3) In case of forced account type of procurement (for civil works,) muster roll
4) Photograph of the work done
5) On the completion of work, a completion certificate signed by the Chairman and counter signed by the SP should be submitted by the beneficiary organisation to the DDRCS
 
Funds Flow to NIPHT
Funds required for training will be provided by cheque by PIU - AGRI. MKTG to NIPHT for the following activities.
i) Training and capacity building under Rural Haat Markets
 ii) Training and Capacity Building under Upgrading Livestock Yards
iii) Training and Capacity Building under Upgradation & Modernisation of Wholesale Markets
 
Funds flow to MSWC
MSWC, being an autonomous body and being outside the BDS system, the Drawing and Disbursing Officer in the DOCM will draw funds from the Treasury and issue cheques to MSWC. MSWC will also have a separate bank account named MSWC-MACP which will be operated by MSWC. The expenses to be incurred from this account will be for (i) Repairs of MSWC godowns, (ii) Providing lab equipments in MSWC godowns, (iii) Connectivity with Commodity exchanges.
 
Funds flow to Animal Husbandry
The Animal Husbandry Department in Mantralaya will reallocate budgetary grants through the BDS to the office of Commissioner, Animal Husbandry. The budget allocation order will specify the funds provided for activities to be implemented by the AHD under MACP. DDO from Commissioner AHD will draw funds as per BDS from treasury and expend for the following at PIU level. (i) Market Development Cell, (ii) Grants to training centre of AHD, (iii) Providing vaccination kits to lady link workers and (vi) PIU AHD Expenses.
 
However for two activities, the Commissioner AHD will further reallocate the budgetary grants through BDS to the district level functionaries of AHD of 6 districts namely Sangli, Satara, Pune, and Ahmednagar. These activities are i) Supply of bucks and rotary chaff cutters to farmers in goat demonstration units (Goat as high value enterprise: (for 4 districts Sangli, Satara, Pune, Ahmednagar ) and (ii) Supply of bucks to SR farmers (Support to SR federation: for 2 districts Beed, Yewatmal). (iv) Supply of bucks and rotary chaff cutters to farmers in goat demonstration units (Goat as high value enterprise), (v) Supply of bucks to SR farmers (Support to SR federation) The Deputy Commissioner of AHD who is the district level functionary of that department would access the BDS and submit the bill to treasury for payment for the above mentioned activities.
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