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Assam Governance Public Resources Management Programme (AGPRMP):

AGPRMP consists of (i) two back-to-back subprograms to be implemented over 5 years, (ii) a loan of $125,000,000 for subprogram 1 to be implemented within 2.5 years of loan effectiveness, and (iii) a loan of $25,000,000 for the AGPRM Project to build institutional capacity of the public financial management institutions and support program implementation.

The objective of the ongoing AGPRMP is to support the stabilization and consolidation of the State Govt.’s finances to enhance growth and reduce poverty by strengthening public finances; fiscal governance and core governance through policy, legal, regulatory and institutional reforms. To achieve these, certain conditionalities have been incorporated under 3(three) tranches viz. Ist Tranche, Incentive Tranche & 2nd Tranche of Subprogram I, which are to be fulfilled by the State Government.

The Program seeks to support reform measures under three components:

The following outcomes are expected under
(1)

(2)

(3)

The State Government is currently in the process of fulfilling the 2nd tranche conditionalities pursuant to the fulfillment of the 1st tranche and the incentive tranche conditionalities. The milestones achieved under the 1st two tranches may be summarized as below:

a) Medium Term Fiscal Plan(MTFP) and Fiscal Responsibility & Budgetary Management (FRBM) Bill:
The FRMBA has been enacted vide Assam Gazette Notification No.LGL.59/2005/13 dated 17th May, 2005 under which the State Govt. is to reduce fiscal deficit to 3% and eliminate revenue deficit by 2008-09.Further, pursuant to reviews of MTFP quarterly review and remedial action reports on targets, the MTFP has been updated by the Government of Assam (GoA). The FRBMA has been amended as the targeted year for realizing the objectives enshrined in the Act has been reduced to 2008-09.

b) Cash Management:
A policy guideline on Cash Management was issued by GoA on 20/10/2005 wherein GoA has adopted an operational guideline which links the ceiling system for cash management with the overall objectives of the FRBM Act.

b) Fiscal Management Unit:
The FMU has been established in the Finance Department consisting of five cells viz. revenue reform cell, debt management cell, budget reform cell, expenditure reform cell and pension reform cell, in order to undertake management of fiscal responsibility, debt and central transfers and be responsible for daily implementation of the Program. 

c) Revenue Administration: entails reforms in the following areas:

Sales Tax policy:
VAT regime has been given effect to from 1st May, 2005.
Composite checkposts at Srirampur in Kokrajhar district & Boxirhat in Dhubri district have been notified.

Excise Policy:
The system of specific duties on Indian Made Foreign Liquor has been converted into a system of Advalorem levy.

Agriculture Income Tax:
The Assam Agriculture Income Tax has been amended vide The Assam Agricultural Income Tax (Amendment) Act, 2004.

Stamp Duties and Registration Fees Policy:
Amendment of Stamp duties has been done.
The Policy on Objective Valuation of Properties has been issued.

d) User Fees:
High level committees viz. a committee on “health user charges, a committee on education fees””, a committee on “”water user charges”, a committee on “transport user charges” have been setup by the ASG for strategic review of user fees.

e) Restructure State Debt:
ASG has already undertaken (i) one time settlement of debts for PSEs of Rs.72.22 crores during FY2004/2005 including PSEs which have been identified for closure under the program such as Assam Spun Silk Mills Ltd.& (ii)debt swaps/one time settlement of debts of Rs.88.68 crores during FY 2005/06 with a number of PSEs and financial institutions including the Mines & Minerals/IDBI,ATC Ltd/UBI,AFC/Indian Overseas Bank, UDD/HUDCO.

f) Contain State pension liabilities:
GoA has introduced new pension rules for State Government employees, who will join State Govt. service after 1st February, 2005 in line with the contributory pension scheme of GoI.
Creation of a Pension Database has been undertaken alongwith treasury computerization programme under Comprehensive Treasury Management Information System (CTMIS).As regards to estimation of pension liabilities, information will be available as soon as the CTMIS is fully operationalised.

g) Improve State Budgeting under Fiscal Governance Reforms:
The operating guidelines on state budget planning have been initiated on 27th October,2005.In addition, a guidance memorandum has been issued by GoA to the concerned Finance Department officials on the need to prepare the state budget for FY 2006/2007 in accordance with the updated MTFP.

h) Reform of Public Sector Enterprises:

SSN Program:
The Social Safety Net (SSN) program designs for PSE employees have been issued. Also, a State Renewal Fund (SRF) has been earmarked by the State Government for implementation of PSE reforms.

Closure of PSEs:
The closure of 3(Three) PSEs [viz. Assam Spun Silk Mills (of which OTS has been concluded), Fertichem Ltd., Assam State Minor Irrigation Development Corp.Ltd.] out of the 7 (seven) PSEs slated for closure under the project have been approved & adjustment costs already incurred by GoA. Apart from these 7(seven) identified PSEs, the closure of the following PSEs viz. Match Splint Factory, Cachar Textile Industries & Assam Govt. Construction Corporation Ltd. have also been approved and it was agreed in the last ADB Mission visit that these 3(Three) PSEs would substitute 2 (Two) PSEs viz. Assam Cooperative Sugar Mills Ltd and Assam Conductors and Tubes Ltd. on the original list of 7 identified PSEs . 

ASEB Terminal Benefits:
The necessary budget provision for ASEB terminal benefit liabilities has been made. A total of Rs.44.10 crore has till date been disbursed.

i) Business Incubation Unit and Skills Development and Placement Unit for    strengthening of Public Private Partnership:
The establishment of a Business Incubation unit & a skills development and placement unit both in the DPE to facilitate PSE employment training and PSE outsourcing services (under Public-Private partnership) has been merged in the SSN Notification.

j) Public Administration Review:
The Assam Administrative Reforms Commission has been mandated to build on its functional reviews for selected ASG departments and its review of the functioning of the Vigilance Commissioner, Directorate of Anti corruption and other existing vigilance mechanisms to enhance their effectiveness for prevention and investigation of corruption. Further, it is also taking steps on Public Administration rationalization policy. The Expenditure Reform Cell (ERC) has been mandated to undertake public expenditure tracking surveys of selected ASG departments.

Under the 2nd tranche, the key milestones to be achieved by the State Government are as follows:
a) Complete implementation of the FMU revenue reform cell action plan on verification   and validation of individual tax administration information through the composite checkposts and approve and notify composite checkposts at Digarkhal.

b) Introduce a bill in the state’s legislative assembly amending the Excise Act to replace the fixed fee based licenses with an alternative method of collection of excise for country spirits.

c) Establish Valuation Committees, chaired by deputy commissioners, and commence the use of objective valuation methods.

d) Computerize State register data for motor vehicles and prepare an action plan for regular updating of data; and apply penalties at composite checkposts (Srirampur, Boxirhat and Digarkhal) through introduction of weighbridge facilities.

e) Issue and notify Government order to amend property tax rules on the property tax structure and collection mechanism to implement a unit area method of property taxation.
     
f) Approve a user fee policy committing to increased total non-tax revenues from user fees in health, transport, water supply and education.
 
g) Complete automated inventory of debt managed by the FMU.

h) Complete (i) estimation of pension liabilities; (ii) preparation of a comprehensive pension database (iii) approve a pension policy for new ASG employee contributory pension scheme (iv) notify an appropriate pension fund in line with the GOI rules and procedures for the duly approved pension scheme for new ASG employees.
        
i) Publish a semi-annual report on achievement of FRB targets on remedial action on key fiscal information including contingent liabilities, off-budget borrowings, arrears, PSE losses and subsidy payments.

j) Complete the inventory of all major central transfer schemes and recording all related funding and reporting requirements.

k) Approve a core investment program in accordance with prioritization procedures for FY2008 onward; and approve operation and maintenance expenditure targets consistent with the updated MTFP for FY2008 onward.

l) Implement elements of an integrated financial management system required to support monitoring of FRB targets.
        
m) Complete implementation of a Treasury information technology action plan, including agreed service standards of management information system reporting, required to support cash management and budgetary controls.
        
n) Adopt a procurement manual for all public procurement.

o) Publish memoranda of understanding on the DPE (Dept. of Public Enterprise) website; and publishing DPE’s annual reports of PSEs to enable performance measurements of PSEs against plan and budget parameters.

p) Approve, issue and notify rules and regulations governing relationships between Assam State Government (ASG), line departments, DPE and PSE Board of Directors; and approve and issue MOU between ASG and 8 PSEs on financial and operating performance and corporate conduct.

q) Begin the process of closure of identified inoperative PSEs for containing ASGs further fiscal exposure, and initiate VRS and SSN activities.

r) Public-private task force to submit to the State Government (i) a review of labor, environmental business establishment related laws, inspection procedures, licensing and regulations or purposes of rationalization; and (ii) a review of single window agency clearance facilities in Assam for purposes of promoting private investment into Assam.

s) The relevant units of DPE to submit to ASG a report on PSE employment training and outsourcing services for PSEs.

t)ASG mandated agencies to submit to the State-Level Empowered Committee (i) public expenditure tracking surveys of selected departments, and (ii) review of anticorruption mechanisms within the State.

u) Complete an automated employee database.

The State Government is already taking steps to achieve the above conditionalities by September’06.

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