Externally Aided Projects (EAPs)
Externally Aided Projects play an important role in the economy of a Special Category State like Himachal Pradesh to supplement the State’s resources. The Special Category States get 90 % grant and 10 % loan under the Externally Aided Projects on the EAP share in project cost and this pattern of transfer of funds under EAPs shall also be valid for the award period of 14 th Finance Commission as per latest instructions received from Department of External Affairs, GoI. The State Government has given a very high priority to the Externally Aided Projects (EAPs) in the resource mobilization strategy of the State. The implementation of these projects would help in achieving the objectives of increasing productivity and raising the quality of life especially of the rural masses.
The guidelines of GoI lay down that no proposal for external assistance shall be posed directly by any State Government to the bilateral and multilateral funding agencies. The terms and conditions of the external assistance should not be negotiated with external funding agencies except through Department of Economic Affairs (DEA), Ministry of Finance, GoI. The Preliminary Project Report (PPR) is required to be prepared with tentative financial details before the project is submitted to GoI for external assistance. The PPR should be prepared keeping in view the priorities of the Government of India and the State Government (in case of State Projects). The PPR should list the desired developmental objectives and, as far as possible, quantify the objectives. PPR for the State project should be routed to the Department of Economic Affairs (DEA) through the Central Sector Line Ministry. Once the PPR is cleared, the State Government should submit a Detailed Project Report (DPR) for external assistance. The DPR should adequately reflect the strategic elements of techno-economic (economic viability, social cost benefit, value addition, etc.), ecological (land use, ecological sustainability, etc.), socio-cultural (target population and gender matters, participation, social impact, etc.) and institutional (institutional and organizational analysis, capacity building, training, etc.) dimensions in the project design in measurable terms. Fulfillment of debt sustainability criteria is required while recommending project for external assistance. Other procedural requirements as laid down by the Government of India from time to time are also required to be fulfilled for EAPs.
Monitoring and Evaluation/Impact Assessment Study by reputed neutral institutions or organizations to ascertain the actual achievements and retention of project objectives, after two or three years of the completion of the project, is a pre-requisite condition in respect of EAPs. In a recent development, MI Division of Department of Economic Affairs, Ministry of Finance, GoI vide Circular No. 04/01/2011-FB-II dated 1 st December, 2011 has decided that minimum counterpart funding to be provided by the Government/PSUs (in case of Central PSUs) for World Bank and ADB funded projects will be 50%, 30% & 20% of the project size for Central Sector Projects, State Sector Projects & State Sector Projects (Special Category States) respectively.
On the analogy of procedural requirements of GoI and consequent upon the amendment in the Guidelines of Government of India for posing, implementation and monitoring of externally aided projects dated 17th May, 2018, before routing the State Sector proposals to GoI, all such proposals are to be reviewed/approved by a State level screening committee constituted by Finance Department vide letter No. Fin-2-C(12)-4/2011-II dated 12 th June, 2018 before sending to GoI.