Technical Note

1. Key Components

The key components of the project are:

·        Strengthened systems and capacities for more efficient management of public expenditure in a medium-term frame work of the state Fiscal Responsibility and Budget Management Act (FRBMA).

·        Improved management of Public Sector Enterprises (PSEs) in the state.

·        Strengthened systems for procurement in government.

·        Support for setting up institutional mechanisms for poverty monitoring and policy analysis.

·        Support for strengthening of systems for Monitoring and Evaluation of programmes in planning board and in selected line departments.

The technical appraisal broadly examines the problems / technical issues relating to the current status of Public Expenditure Management (PEM), Poverty Monitoring, working of PSEs, and management of government procurement functions in the state and the support project will provide in these areas.


3. Poverty Monitoring and Policy Analysis

3.1     Poverty and Human Development Status of MP

MP is one of the poorest states of the country with an estimated 37% of the population living in poverty (1999-2000). Incidence of poverty is highest among Scheduled tribes (57%) who constitute approximately 20% of the state population. Poverty has `a regional dimension also with poverty levels being 49.3% in south and 24.8% in the north of the state. While high dependence on agriculture, which has a low productivity due to poor irrigation facilities, and slow growth in tertiary sectors are the proximate causes of poverty and inequities, there is an inadequate analysis of the reasons for growth not translating into equivalent reduction inn poverty. State has also been lagging behind others states in attainment of key MDGs, although some improvement has been made in the area of literacy and school enrolments. Gender inequalities are another major concern with women faring much worse than men on key MDGs. Highlights of the poverty and human development status of the state are given in the following Table 13.






Table 13: Key Poverty and Human Development Indicators for MP




National Average


(Highest / Lowest)


Poverty (% below BPL)





South 49.3%

Northern 24.8%


Per capita income

Rs 8284


Income Index of 0.632 for Raisen and 0.133 for Jhabua





Health Index 0.74 for Indore and 0.41 for Satna.






% children malnourished (0-3 years age)




Literacy – Male

 - Female





Education index o.833 for Narsinghpur and 0.471 for Jhabua.


School Enrolment (6-13 years) – Male

 - Female



 (Source: Various, including State HDR Report, 2002)


While, inadequate expenditure on poverty reduction programmes is a key reason for persistent poverty and inequality, insufficient analysis of the data on poverty and inequality and weak linkages between data analysis and policy /programme design also contribute to this.

3.2     Poverty Assessments

Presently, poverty assessments are made on the basis of head count estimates of population living below the official income poverty line that is estimated on the basis of a normative calorie consumption to which an estimated sum is added to take care of non-food expenditure. Of late, human development indices are also being used for assessment of development status. However, even here the poverty dimension is captured on the basis of income estimates. It is now widely accepted that poverty is multi-dimensional with income, social exclusion, opportunities and safety/security being equally important to assess the status of human deprivation and vulnerability (see Appendix 1). At the same time, policy makers have to remain sensitised to the prevailing inequalities in human development outcomes to ensure proper targeting of programmes.

Poverty estimates for MP are based on the NSSO data on consumption expenditure (central schedules) that is collected every 4-5 years. The Directorate of Economics and Statistics within the planning department conducts these surveys. A noteworthy feature is that no analysis is made of the state schedules due to paucity of resources. This data may provide the basis for deriving district level poverty and human development ratios. Several states including Maharashtra and Karnataka have set up systems for analysing state schedules and produced rich analytical reports that are useful guides for the policy makers. The Directorate of Economics & Statistics (DES) is a repository of large volumes of other data that can be of immense use if these are analysed timely and findings disseminated.

As yet there are no measures to institutionalize systems for measurement of dimensions of poverty other than income, although sporadic attempts have been made to conduct participatory wealth rankings in two projects (District Poverty Initiatives Project supported by World Bank and MP Rural Livelihoods project supported by DFID). More recently, participatory poverty assessments have been done in 4 municipal corporations by UN-HABITAT. The CSOs in the state are also active in assessment of poverty and vulnerability (for example, Rights to Food Campaign has assessed issues relating to food security in the state) but there are no institutional mechanisms for integrating this knowledge into the government system.

In addition to the surveys conducted by DES, various departments have their own data sets that are vertically aligned and rarely shared. The recently concluded BPL survey for identifying families living below the poverty and human development line has generated yet another set of rich information, which has tried to look at issues of social attainments in addition to income. However, there have been concerns on the process and accuracy of the surevey. Sound systems for identification of the poor are required for targeting of various poverty alleviation programmes to improve their effectiveness. While there are technical hitches to be resolved, there is significant scope to identify the poorest among the BPL families, on the basis of the survey data relating to BPL families.

3.3     Policy Analysis

In the absence of sound systems for monitoring of poverty and of assessment of the vulnerability across regions, socio-economic groups and also for analysing intra-district variations in achievement of human development outcomes, the policy makers are insufficiently informed and this leads to policy changes being made on the basis of anecdotal evidence and personal experiences. The quality of decision making would improve if the policy makers were to be supported with good data on the multi-dimensional nature of poverty and ex-ante analysis of likely poverty and social impacts of policies. Such an analysis will also generate more political buy-in and would encourage higher resource allocations for social sectors.

3.4     Monitoring and Evaluation

A further limitation is the lack of comprehensive monitoring of the implementation of these programmes and / or feedback coming from the field being incorporated into subsequent planning processes. The planning board is weakly staffed and does not have capacity for independent review and evaluation of programmes and policies. Departmental M&E systems are primarily focused on inputs and lack capacities for measurement of impacts or outcomes of policies and programmes. In the absence of such systems, it is not possible to ensure that scarce public resources are utilised effectively and efficiently.

3.5     Project Activities

The programme aims to develop a comprehensive poverty and human development monitoring framework, strengthen the role and capacity of the State Planning Board, build institutional linkages with civil society, disseminate information on these subjects and strengthen capacity for monitoring and evaluation of policies and programmes within planning board and selected line departments.

3.5.1  Poverty Monitoring and Policy Analysis support

This will be achieved by setting up of a Poverty Monitoring and Policy Support Unit (PMPSU) in the planning board with the objective to:

·        Measure and monitor progress in key areas related to poverty and living standards of the people of the state;

·        Improve monitoring and evaluation (M&E) of policies and programmes both within (selected) line departments[1] and the planning board with greater focus on outputs / outcomes and impacts. The unit would also pilot new / participatory techniques.

·        Identify institutional and organisational constraints to programme implementation that may have adverse impact on the poor and other vulnerable groups and recommend changes;

·        Aid the departments in making better informed policy and programme decisions.

·        Keep the public better informed about the progress in achieving key development objectives in the state as well as the constraints to achievements.

·        Build capacities in planning and selected line departments in monitoring and evaluation of policies and programmes.

Developing partnerships with CSOs and key research / academic institutions engaged in similar activities in the state will be a key feature of this unit.

3.5.2  Organisation of PMPSU

The PMPSU will be set up as a registered society anchored within the planning board. The unit will be headed by Secretary, Planning and it is planned to staff the unit with four experts in the field of Development Economics, Monitoring and Evaluation, Gender and Statistics and survey methods. These experts will be recruited on a contract basis excepting that the expert on Statistics and Survey methods may be taken on deputation from the DES. Support will also be provided to hire consultants for research, analysis and capacity building needs.

A Governing Board headed by the Vice Chairman, Planning Board will provide policy guidance to the unit and ensure that the unit is enabled to coordinate the work relating to data collection, analysis and monitoring and evaluation of the programmes and policies across government. Other members of the Governing Board will be:

·        Principal Secretaries / Secretaries of Finance and line departments that are selected for performance budgeting and M&E improvement.

·        Two experts from CSO background, two experts associated with reputed academic / research institutions and two chairpersons, Zila Parishad to be nominated by the government.

·        If sufficient representation of women is not there, one women member will also be nominated.

·        One representative of DFID.

·        Secretary, Planning, in-charge of PMPSU, will be the member-secretary of the board.

The board will have full administrative and financial powers over the affairs of the unit which may be delegated to Secretary, Planning or an Executive Committee, chaired by Secretary, Planning with a few members selected from amongst the members on the governing board. Details of the institutional / organisation arrangements for the unit will be finalised during the inception phase and included in the Memorandum of Association / Articles of the Society.

3.5.3  Key Activities of PMPSU

The unit will undertake various activities to fulfil the objectives set out above. The governing board will finalise the work plan keeping in view the priorities of the state and especially those articulated by the departments, and need to dovetailing work of the unit with the work relating to preparation of performance budgets. Given below is an illustrative list of the kind of work that could be taken up by the unit.

·        Poverty and Social Monitoring Report: This could be linked to the survey done by NSSO. A baseline report on key indicators may be prepared in 2007 and progress measured against this in later reports. In addition, the unit may build up detailed picture of poverty and social exclusion on the state from available data sources: For example, a great deal has been collected and analysed in large projects like the DPIP. The baseline and later surveys reveal a picture of poverty and human development and the manner it has changed in several districts. The data in the gram sampark website could be analysed in different ways to deepen our understanding of local level poverty and human development and its correlates, especially in gender and environmental terms. The unit could be a repository of such studies, which would need to be updated at regular intervals—say each year, at different levels of disaggregation and on various themes.

·        Analysis of state samples collected during NSSO survey: An effort could be made to estimate district level poverty and human development ratios, by pooling the state and central samples of the NSSO surveys. States like Karnataka have done this, and it has been shown that such estimates are robust. This would provide a disaggregated picture of the poverty and human development situation in the state and begin to provide a base for specifically tailored interventions. This could also be done in limited time as the data are readily available. As explained above, the state sample has not been computerised—this may mean a small delay while the task is completed. But it could be done within a year.

·        Deriving district level poverty and human development estimates: The Planning Commission, in consultation with the Central Statistical Organisation, has prepared a methodology for the estimation of income at the district level. In the first instance, this could be limited to district product—that is, the commodity producing sectors alone. Information on value added at this level of details will be a useful input into local planning. A software called Indical has been developed in Bangalore, and this has been tried out in Kerala and Chhattisgarh. MP could begin this task by using this software in the DES. District officers could collect the data that has been detailed, while computation could be done by the software, eliminating delays. Once district level preliminary estimates are ready, they could feed into the district level planning process. The DES could vet these estimates and then release them as final estimates. If needed, a workshop on the use of the software could be arranged.

·        Further analysis of the BPL survey data: The BPL surveys of the union Department of Rural Development meant to identify the poor have been conducted in MP by the State’s Rural Development Department. A significant feature of the BPL Survey 2003 was the wide consultation with a group of civil society organisations, represented by an alliance of CSOs that worked with the state government. All concerned have talked of the value of this exercise that brought so many stakeholders in civil society together with the state government in a positive manner. It would be important to analyse this huge database urgently to inform the various poverty and poverty alleviation programmes of the union and state governments. It is an exercise that could be used to bring together the different stakeholders once again. Details are discussed below.

·        Sectoral studies on matters that impact on poverty and human development: The functioning of the PDS, an analysis of NHFS data for the state, nutrition levels across different social groups and so on could be taken up. Qualitative studies, participatory exercises, focus group discussions etc. must be encouraged and facilitated by civil society organisation and the fruits of their work disseminated. These would deepen understanding of the multiple dimensions and complexities of the poverty and human development situation in the state.

·        Studies of work and wages in local markets of the state: NSS data on employment are far too aggregated for use in local planning. Study of the structure of wages, gender differentials in wages, number of days of employment available to unskilled people, the kinds of work they do etc. will be most useful for providing indicators of the kind of inputs needed to enhance people's skills, provide local work and thus reduce poverty and human development over time. While poverty and human development has many dimensions, it is worse in cases where people have no work. The link between work, wages and nutrition would be most useful at local levels in framing specific interventions.

·        Development of key indicators that measure progress on various dimensions of poverty, vulnerability and human development. These should be disaggregated by gender, socio-economic groups and geography and should be robust enough for tracking progress of government policies regarding poverty reduction. Also, they should combine both qualitative and quantitative measures. These performance indicators should link up with the performance budgeting framework.

·        Review and strengthening of Monitoring and Evaluation systems in the Planning and selected line departments. The unit will also pilot use of qualitative and participatory methods for supplementing the quantitative analysis.

·        Impact assessment of government’s poverty and poverty alleviation programmes: Assessment of impact of various schemes implemented by different departments from the poverty and poverty reduction point of view could be a regular feature of PMPAU’s work. This could be taken up based on carefully selected small samples in 6 monthly cycles so that there is regular feedback on impact of schemes.

·        Collaborating with other institutions and initiatives: Work done elsewhere, such as the DFID supported work on chronic poverty and human development with the Indian Institute of Public Administration (IIPA), could be used in improving both knowledge and management of different programmes in MP. Links with academic institutions such as the IIFM Bhopal and IIM Indore, and colleges across the state should be built up so that informed debate on these issues becomes widespread in the state.

·        Review and learning: A system of peer feedback and professional review should be built into the work in an institutionalised manner.

·        Capacity building events such as trainings, seminars and workshops may be organised for staff of line departments.

6.0     Project Management Arrangements

The project will operate under the broad oversight of a Project Steering Committee (PSC), chaired by the Chief Secretary. Members will include Principal Secretaries of Finance, Planning, PSE and departments that are included for preparation of performance budgets / M&E improvements. It is anticipated that the PSC will meet six-monthly and give overall steer to the project.

The PSC will be supported by a Project Management Committee (PMC), chaired by Principal Secretary, Finance and include:

·        PS / Secretary, Planning

·        Secretary, Finance

·        Economic Adviser

·        Director, DES

·        Director Budget

·        Representatives of selected line departments

·        A representative of DFID

·        Commissioner Institutional Finance (convener)


The PMC will be responsible for the overall implementation of the project. It will approve the six-monthly work plans[2] and will review the project progress on a quarterly basis.

There are four key sub-components of the project

·        MTEFs

·        PSE restructuring

·        Poverty Monitoring and Policy Analysis, and

·        Other activities relating to improvement in PEM.

These will be implemented / coordinated by following organisational structures:

(a) Task Force on Performance Management: This task Force will coordinate all activities relating to development of Medium-Term Fiscal Framework (MTFF) for GoMP and Performance budgets in selected departments, and capacity building. Secretary, Finance will chair the task force with equivalent representation from departments selected for preparation of performance budgets. Secretary, Finance, CIF and Director, Budgets will also be members of the task force. The long term consultant selected for supporting the project will service the task force.

(b) Task force on PSEs: The Inter-Departmental Task Force on PSEs will have the task of overseeing: the legal closure of five non-operational PSEs; a strategic diagnostic review of existing PSEs; and the development of a framework for improving the corporate performance of PSEs. The task force will be chaired by Principal Secretary, PSE and GoMP will nominate other departmental representatives (including from Finance) as required.

(c) Poverty Monitoring and Policy Support Unit (PMPSU): This unit will be organised as a registered society under the administrative control of he the Planning Board. Its structure and other details have been provided in para. 3.5.2.

(d) Task force on Procurement and other PEM activities: This task force will be headed by a Secretary level officer in finance department and will have representation of other officers of finance department as required. Representatives of Industries and PwD department will also be included for deliberating on issues relating to procurement of goods and works.

GOMP may set up additional task forces, as required, and may delegate appropriate financial and administrative powers to the PMC and to the task forces to facilitate project implementation.


The Secretary and Commissioner, Institutional Finance will be the nodal officer for the project and will be responsible for day-to-day management and coordination.

Appendix 1


[1] The selection will include 6 departments selected for piloting of performance budgeting and departments of Rural and Urban Development.

[2] In the case of PMPSU, its work plan will be approved by the Governing board and PMC willl primarily review the financial progress and ensure that the work of PMPSU is linked with the PEM reforms.