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Government of KeralaLocal Self Government Department

Kerala Sustainable Urban

Development Project

(PPTA 4106 IND)

FINAL REPORT

VOLUME 7

URBAN MANAGEMENT & INSTITUTIONAL DEVELOPMENT

MAY 2005

COPYRIGHT: The concepts and information contained in this document are the property of ADB &Government of Kerala. Use or copying of this document in whole or in part without the writtenpermission of either ADB or Government of Kerala constitutes an infringement of copyright.

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TA 4106 IND: Kerala Sustainable Urban Development ProjectProject Preparation

FR Volume 7 - Urban Management & Institutional Development PAGE i

FINAL REPORT

VOLUME 7 URBAN MANAGEMENT AND

INSTITUTIONAL DEVELOPMENT

Contents

1. Overview 1

1.1 Policy Context 1

1.2 Legislative and Administrative Framework 3

1.3 Institutional Arrangements and Service Delivery 4

1.3.1 Local Self Government Department 61.3.2 Service Provision in Project Cities 61.3.3 Inter Agency Coordination and Project Implementation 8

2. Urban Management 10

2.1 State Level Initiatives 10

2.1.1 Improving Service Delivery 102.1.2 Streamlining Systems and Procedures 102.1.3 Training 11

2.2 Municipal Initiatives 12

2.3 Community Development and Poverty Alleviation 12

3. Framework for Institutional Development 14

3.1 Infrastructure Planning 14

3.2 Core Service Delivery and Asset Management 15

3.3 Institutional Development 153.4 Financial Management 16

3.5 Community Development and Poverty Alleviation 16

3.6 KSUDP and MGP 17

4. Institutional Development Components 18

4.1 UMID Components 18

4.1.1 Capacity Building LSGD and DUA 184.1.2 Capacity Building Municipal Corporations 194.1.3 Training on Basic Service Delivery 204.1.4 Community Development and Poverty Alleviation 214.1.5 Community Awareness and Participation Program 22

4.2

Project Sustainability KSUDP and GoK Actions 23

5. Institutional Responsibilities 26

5.1 Overview 26

5.2 Road Map for Decentralization 27

5.3 Institutional Responsibilities for KSUDP Sustainability 30

5.4 Decentralization of Water and Sewerage Services 38

5.5 Institutional Strengthening of KWA 39

5.5.1 MIS and System Development 40

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FR Volume 7 - Urban Management & Institutional Development PAGE ii

5.5.2 Customer Service 405.5.3 Organization Arrangements and Human Resources 415.5.4 Procurement and Inventory Management 415.5.5 Support to IS Master Plan 42

6. KSUDP Implementation Arrangements 43

6.1 Project Management and Administration 43

6.2 Executing and Implementing Agencies 436.2.1 Executing Agency 436.2.2 Implementing Agencies 44

6.3 Project Implementation Management 44

6.3.1 Project Management Office (PMO) 446.3.2 Project Implementation Units (PIU) 456.3.3 Project Implementation Support Services 46

6.4 Project Performance Monitoring System 49

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FR Volume 7 - Urban Management & Institutional Development PAGE iii

Annexes

Annex A Kerala Development Program 1

Annex B Legislative and Administrative Framework 4

Annex C Institutional Arrangements 10

Annex D MC Organization Structure and Inter Department Coordination 13

Annex E MGP Initiatives 23

Annex F E-governance Status in Five Municipal Corporations (IKM) 26

Annex G Prospective Training Curriculum (KILA) 28

Annex H Capacity Building for Poverty Alleviation Initiatives 29

Annex I Policy and Institutional Reform Agenda 30

Annex J Project Performance Management System 36

Annex K Proforma of the Project Progress Report 42

Annex L Framework and Guidelines In Calculating Project Progress 44

Annex MProject Administration & Institutional Development Costing 46

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FR Volume 7 - Urban Management & Institutional Development PAGE iv

List of Tables

Table 1-1: Legislations, Regulations and Rules 3

Table 1-2: Utilization of Centrally Sponsored Poverty Alleviation Scheme Funds 8

Table 4-1: Project Sustainability KSUDP and GoK Actions 24

Table 5-1: Road Map for Decentralized Service Provision Water and Sanitation 28

Table 5-2: Sub-Projects - Thiruvananthapuram 31

Table 5-3: Sub-Projects - Kollam 32

Table 5-4: Sub-Projects - Kochi 33

Table 5-5: Sub-Projects - Thrissur 34

Table 5-6: Sub-Projects - Kozhikode 36

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FR Volume 7 - Urban Management & Institutional Development PAGE v

List of Figures

Figure 1-1: Institutional Arrangement at the State Level 5

Figure 6-1: KSUDP Proposed Implementation Arrangement 47

Figure 6-2: KSUDP Proposed Project Management Structure 48

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FR Volume 7 - Urban Management & Institutional Development PAGE vi

List of Abbreviations and Acronyms

ADB Asian Development Bank

ADS Area Development Society

BOT Build Operate Transfer

BOO Build Own Operate

BOOT Build Own Operate and Transfer

CBO Community Based Organisation

CDS Community Development Society

DFID Department for International Development

DPC District Planning Committee

DWCUA Development of Women and Children in Urban Areas

EIA Environmental Impact Assessment

EDII Entrepreneurship Development Institute of India

GDP Gross Domestic Product

GIS Geographical Information System

GoI Government of India

HRD Human Resources Development

HUDCO Housing and Urban Development Corporation

IEE Initial Environmental Examination

IKM Information Kerala Mission

IMA Indian Medical Association

IMR Infant Mortality Rate

INRM India Resident Mission

IT Information Technology

JBIC Japan Bank for International Cooperation

KocMC Kochi Municipal Corporation

KolMC Kollam Municipal Corporation

KozMC Kozhikode Municipal Corporation

KSEB Kerala State Electricity Board

KSPCB Kerala State Pollution Control Board

KSRTC Kerala State Road Transport Corporation

KSUDP Kerala Sustainable Urban Development Project

KUDFC Kerala Urban Development Finance Corporation

KUDP Kerala Urban Development Project

KWA Kerala Water Authority

LFS Land Fill Site

Lpcd Litre Per Capita Per Day

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FR Volume 7 - Urban Management & Institutional Development PAGE vii

LSGD Local Self Government Department

MFI Micro Finance Institutions

MGP Modernizing Government Program

MIS Management Information System

MLD Million Litre Per day

MSL Mean Sea Level

NABARD National Agricultural Bank for Rural Development

NATPAC National Transportation Planning and Research Centre

NGO Non Government Organization

NH National Highways

NHG Neighborhood Group

NRY Nehru Rojgar Yojna

NSDP National Slum Development Program

O&M Operation and Maintenance

PIU Project Implementation Unit

PMO Project Management Office

PPP Public Private Partnership

PPTA Project Preparation Technical Assistance

PWD Public Works Department

RIS Repayment Information System

SC/ST Schedule Caste and Schedule Tribe

SHG Self Help Groups

SJSRY Swarna Jayanti Shahari Rozgar Yojna

STP Sewage Treatment Plant

SWM Solid Waste Management

TCPO Town and Country Planning Organization

ThMC Thiruvananthapuram Municipal Corporation

TMC Thrissur Municipal Corporation

TRIDA Thiruvananthapuram Development Authority

TUDP Trivandrum Urban Development Project

UFW Unaccounted Water

USEP Urban Self Employment Program

UBSP Urban Services for the Poor

VAMBAY Valmiki Ambedkar Awaz Yojna

WTP Willingness to Pay

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FR Volume 7 - Urban Management & Institutional Development PAGE 1

1. Overview

1.1 Policy Context

Subsequent to the 74th Constitution Amendment Act (CAA), 1992 the Government of Kerala (GoK)

embarked on a policy of decentralization of powers to local governments. The Kerala MunicipalitiesAct, 1994, was drafted based on decentralization principles laid down in the 74 th CAA. In September

1995, GoK transferred powers and functions to local governments; along with institutions, offices and

functionaries. GoK chose to operationalize the decentralization process through participatory local-

level planning and initiated it through the Peoples Plan Campaign or the Kerala Development

Program (refer Annex A).

Key features of the decentralization initiative comprised (i) transferring health related institutions

(except medical colleges and regional speciality hospitals) to local governments; (ii) transferring all

schools to Urban Local Bodies (ULBs); (iii) planning and implementing centrally sponsored poverty

alleviation schemes through ULBs; (iv) planning social welfare schemes, implementing Integrated

Child Development Scheme (ICDS), payment of various social security pensions, and creating centres

for disabled care are ULB responsibilities; and (v) planning and providing urban basic services,

including water supply, sanitation, storm water drainage and urban roads (excluding those provided /

maintained by the State Public Works Department).

The 9th Five-Year Plan (FYP) between 1998-2002 witnessed a fiscal crisis, with growing revenue

deficits arising out of (i) debt servicing on high borrowings; (ii) increase in salary and pension

payments following the 5th Pay Commission and University Grant Commission (UGC) revisions; and

(iii) sluggish growth in revenues and Central Government transfers. However, despite the moderate

growth key achievements during the plan period comprised (i) decentralization of development

through local governments; (ii) institutionalization of e-governance and computerization of

departments; (iii) development of the tourism sector and the consequent impact on employment

opportunities; (iv) reduction of poverty through synergies between local governments and

Kudumbashree/SPEM (State Poverty Eradication Mission); (v) development of Scheduled Castes

(SC) and Scheduled Tribes (ST); (vi) launch of a participatory rural water supply project in six

districts of the State; (vii) commissioning 13 power projects and completion of irrigation projects; and

(viii) improvement of the States education system.

10th

FYP Focus and Decentralization. Based on the lessons learnt through the 9th FYP, the 10th FYP

(2002-07) for Kerala is based upon local governments development plan and focuses on (i) reforms

and improving organization efficiencies; (ii) increasing allocation in information technology, tourism

infrastructure, poverty reduction and health; (iii) planning programs to facilitate employmentgeneration; (iv) promoting private sector investment in economic development; (v) preparing sub-

plans for poverty reduction with participation of women groups and focus on vulnerable sections of

the society; (vi) evolving a plan for the disabled and women beneficiaries; (vii) strengthening

decentralization and improving the planning process; (viii) continuing support to increased use of

information technology in all facets of development; (ix) continuing support to tourism infrastructure

development; (x) promoting the development of village and small industries; (xi) promoting the

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participation of private sector in providing education; and (xii) improving service delivery in key

areas like health, revenue, education, etc.

Fiscal Decentralization. Fiscal decentralization in Kerala requires the Municipal Corporation to

generate own sources of revenue income and is assigned own taxes comprising property tax,

profession tax, advertisement tax, entertainment tax and service tax. Based on the recommendations

of the First State Finance Commission, in addition to devolving surcharge on stamp duty and 20% of

the net collection of motor vehicle tax, and basic tax was also devolved to the MCs. For functions and

schemes transferred after the 74th CAA, Plan and Non-plan grants are provided in a tied form; GoK

also devolves untied plan grants equivalent to an amount greater than one-third the approved plan size

of the State. Key features identified for fiscal decentralization include:

Devolution of State funds Plan (untied and not less than 33% annual size of State Plan of the

total allocation to a local self government institution, 30% is allocated for SC/ST development

and 70% is allocated for general purposes and comprises 10% in productive sectors, 10% for

slum infrastructure, not more than 50% on infrastructure, and 30% for service sector); Asset

Maintenance (Non-plan tied/5.5% of annual own-tax revenue of GoK); and General Purpose(Non-plan untied/3.5% of the annual own-tax revenue of GoK);

Entitlements to individual local governments based on a formulae and stipulating that no part of

the devolved funds should be used for staff salaries and establishment expenditure;

Implementation of the plinth area based system of property taxation and increase in tax base

through property mapping; affecting a four-yearly revision to property tax;

Asset survey of ULB own property and transferred properties to be carried out for devolution of

asset maintenance fund;

Service tax to be made compulsory and linked to the cost of performing obligatory functions;

Carrying out two-yearly revision to non-tax license items and advertisement tax;

Releasing funds in fourteen instalments during a fiscal year; any shortfalls in fund usage would

result in allocation lapsing.

Of importance is the feature regarding planning and implementing projects prepared by local self

governments 30-40% of the plan size of the States budget was set apart for local self governments

with 15% of the said amount earmarked for ULBs.

The KM Act, recommendations of the State Finance Commission, the Decentralization of Powers Act

and the Urban Policy and Action Plan govern urban management by the municipal corporations. The

Urban Policy and Action Plan, 2002 was formulated to address the urbanization trends in the State

and key elements comprise:

Preparation of a development vision;

Promotion of private sector participation;

Identification of growth centres for economic development;

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Preparation of a database to assist urban land consolidation;

Conservation of heritage structure and open space;

Urban road planning;

Provision of primary health care services;

Provision of urban drainage services;

Preparation and implementation of solid waste management and sewerage services;

Administration of accounting reforms in LSGIs;

Transition to the plinth area system of property taxation;

Restructuring the Kerala Urban Development Finance Company; and

Introduction of IT enabled services.

1.2 Legislative and Administrative Framework

The legislative and administrative framework governing urban infrastructure development and urban

management is based on Acts, Rules and Regulations formulated by the Central and State

Government. The legislations considered under KSUDP is detailed in Table 1-1 below and described

in Annex B.

Table 1-1: Legislations, Regulations and Rules

Legislations, Rules and Regulations Infrastructure / Management

A. Central Acts and Rules

a. Constitutional Provisions (Article 48 and 51) Infrastructure and Environment

b. Constitutional Provisions (Project Affected Persons) Infrastructure and Social

c. Land Acquisition Act, 1894 and as amended 1984 Infrastructure and Social

d. Wildlife Protection Act, 1972 Infrastructure and Environment

e. Water (Prevention and Control of Pollution) Act, 1974 and asamended in 1978 and 1988

Infrastructure and Environment

f. Water (Prevention and Control of Pollution) Cess Act, 1974 Infrastructure and Environment

g. Environment Protection Act and Rules, 1986 Infrastructure and Environment

h. Forest (Conservation) Act, 1980 and as amended In 1988 Infrastructure and Environment

i. Environmental Guidelines for Rail / Road / Highway Projects,MoEF, 1989

Infrastructure, Environment andSocial

j. Hazardous Waste (Management & Handling) Rules, 1989 Infrastructure and Environment

k. Biomedical Waste (Management and Handling) Rules, 1998 Infrastructure and Environment

l. Coastal Regulation Zone (CRZ) Notification, 1990 Infrastructure and Environment

m. 74th

Constitutional Amendment Act (CAA), 1992 Infrastructure and Management

n. Environmental Impact Assessment Notification, 1994 Infrastructure, Environment andSocial

o. Municipal Solid Waste (Management & Handling) Rules, 2000 Infrastructure and Environment

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Legislations, Rules and Regulations Infrastructure / Management

p. Municipal Solid Waste (Management and Handling) Rules,Notification, Sept 2000

Infrastructure and Environment

q. National Policy on Resettlement and Rehabilitation for Projectaffected Persons, 2003

Infrastructure and Social

r. Labour Welfare Laws Infrastructure and Social

B. State Acts, Rules and Policies

a. Local Authorities Loans Act, 1963 Management

b. Kerala Water and Sewerage Act, 1986 Infrastructure and Environment

c. Kerala Municipalities Act, 1994 Infrastructure and Management

d. First State Finance Commission, 1996 and Second StateFinance Commission, 2001

Management

e. Kerala Decentralization of Powers Act, 2000 Management

f. Kerala State Transport Project (KSTP), R&R Policy, 2000 Infrastructure and Social

g. Kerala Ground Water Control and Regulation Act, 2002 Infrastructure and Environment

h. Urban Policy and Action Plan, 2002 Infrastructure and Management

i. Kerala Infrastructure Development Bill, 2001 Infrastructure and Management

j. Kerala Fiscal Responsibility Act, 2003 Management

1.3 Institutional Arrangements and Service Delivery

In addition to the Municipal Corporations/local self-governments, State-level Departments, Programs

and Missions, and Institutions govern urban development and basic service delivery in the States

ULBs (refer Annex C for details on institutions involved in urban development).

State Level Departments of Local Self Government, Water Resources, Public Works, Revenue

and Housing, General Administration, Power, Health, and Science, Technology and Environment

provide policy and administrative directions to various State and local-level agencies for effective

urban basic service delivery. Departments overseeing transferred functions like education, health,

etc. also play a key role in urban service delivery.

Missions constituted by GoK effectively administer the process of good governance, facilitate

urban environmental management, improve financial management in ULBs and assist in poverty

alleviation; these include the Modernizing Government Program (MGP), Clean Kerala Mission

(CKM), Information Kerala Mission (IKM), and State Poverty Eradication Mission

(Kudumbashree).

Institutions supporting activities in urban management include Kerala Water Authority (KWA),

Kerala Urban Development Finance Corporation (KUDFC), Kerala Institute of Local

Administration (KILA), and Development Authorities.

Institutional arrangements for urban development are indicated in Figure 1-1.

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1.3.1 Local Self Government Department

The State Governments Local Self Government Department (LSGD) is in charge of urban

development in the State. Through the Secretary, Urban, the LSGD oversees the functioning of the

States ULBs. The Secretary Urban, LSG is assisted by a Deputy Secretary and Under Secretary in

overseeing functions of the Department.

The Directorate of Urban Affairs under the Secretary, Urbans office issues policy directives, staff

sanctioning, postings and transfers, and ensures release of plan funds to respective ULBs. Secretaries

of the ULBs report to the Secretary, LSG (U) through the Director, DUA. The Director, DUA is

supported by three Regional Directors having offices at Kollam, Kochi and Kozhikode; at the central

office, the Director is supported by a Joint Director.

Key responsibilities of the Director, DUA include (i) functioning as the appointing authority for staff

in ULBs and undertaking necessary disciplinary actions required; (ii) undertaking transfer of State

funds to ULBs and affecting budgetary control; (iii) administering pension and provident funds of

municipal staff; (iv) providing the LSGD with policy matters and reform agenda support; (v)

according sanction to ULBs for borrowing from the Kerala Urban Development and Finance

Corporation (KUDFC); (vi) undertaking overall supervision and control of activities in the ULBs; and

(vii) playing an important role in the functions and decisions of the three missions the Information

Kerala Mission (IKM), Clean Kerala Mission (CKM) and the State Poverty Eradication Mission

(SPEM)/Kudumbashree.

Key responsibilities of the Regional Directors include (i) conducting inspections of ULBs; (ii)

carrying out performance audits of ULBs every three months, on behalf of the State Performance

Audit; (iii) undertaking grievance redressal; (iv) undertaking performance appraisal of ULBs

regarding resource mobilization activities; (v) reviewing no-confidence motions against municipal

chairpersons; (vi) undertaking preparation of reports on plan fund utilization, for submission to theMinister, LSGD; and (vii) reviewing compliance of ULBs with Local Fund Audit Report and

submitting the same to the Director, DUA.

Missions and Programs constituted by LSGD facilitate ULB functioning, ensure basic service

delivery, prepare policy papers, provide training to municipal staff, and build staff capacity to manage

municipal functions. Urban management, waste management and poverty alleviation are facilitated by

IKM, CKM and Kudumbashree, respectively. All three Missions report to the LSGD and play a key

role in urban development. The Kerala Institute of Local Administration (KILA) undertakes training

programs for both municipal and panchayat organizations; KILA also reports to the LSGD.

1.3.2 Service Provision in Project CitiesService provision type, institutions involved and the legal context for the provision define MC

performance and coordination with other agencies/State Line Departments. The following are key

issues associated with the aforesaid services:

1) Water and Sewerage.Currently, KWA creates water and sewerage infrastructure assets and

maintains the same. While the KM Act, 1994 and amendments therein require the MCs to

maintain and arrange water and sewerage services, KWA continues to provide water services in

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all municipal corporations except Thrissur. Sewerage is limited to ~ 40% area coverage in

Thiruvananthapuram and 5% area coverage in Kochi both systems are maintained by the KWA.

KWA directly collects water charges from the consumers and the Municipal Corporation.

New/additional lines within the MC area are constructed as deposit works, with the MC making a

deposit with KWA for the identified work. KWA carries out major repairs (like pipe bursts /

leakage) on distribution systems but the MC carries out road rectification. Water qualityassurance is by KWA and any contamination of water is reported to KWA (and at certain

instances an intimation is sent to the MCs Health Department). Key concern areas regarding

water supply and wastewater disposal comprise:

Non-remittance of the water tax component in the property tax, apportioned towards capital

contribution, to the KWA affects repayment of funds towards capital creation to improve

water supply.

Reduction in State transfers to the MC from duty on transfer of property. Through a 1994

Government Order, GoK ensures that KWA receives payment towards demand raised on the

MC towards operational cost on headworks and street taps (25% of the duty on transfer of

property, transferred by GoK to the MC, is deducted and apportioned to KWA).

Improvement in coordination with KWA regarding operation and maintenance. GoK through

a Government Order has created a system of coordination on the aforesaid aspect; the same

may be further refined to facilitate large-scale/citywide projects.

2) Solid Waste Management.Municipal solid waste management collection, handling, treatment

and disposal is a mandatory function of the ULB. Conservancy staff appointed by the MC

carries out waste management activities. Regarding waste treatment and disposal, the KSPCBs

mandate includes monitoring the methods of waste collection and transportation, and the

treatment and disposal technology. Bio-medical waste handling and treatment is the responsibility

of the waste generators/hospitals. The MC is expected to ensure that bio-medical/hazardous waste

generators dispose waste generated in an environmentally sound manner. The Clean Kerala

Mission (CKM) conducts training programs for MC staff associated with waste management, in

addition to identifying waste management and disposal strategies for ULBs in the State.

3) Roads and Drainage. Municipal Corporations and the State PWD are responsible for creation and

maintenance of roads and roadside drains in the cities; services offered by an agency is limited to

the assets created by it and there is overlap in jurisdictions. While the PWD caters to main road

links and highways/district roads and drains along these links, the MC undertakes works and

maintenance on other roads and roadside drains. The State PWD creates new roads and roadside

drains based on the Master Plan prepared by the TCPD and processed by the Development

Authority; funding is either sourced directly from the State or identified State Line Departments.

The MC creates new roads and roadside drains based upon the Annual Plan approved by the

District Planning Committee the funds for new works is sourced from the plan allocations of

the State for developmental works. The Project Engineer from the MCs Engineering Department

oversees construction of all new works.

4) Waterways/Canals. The presence of waterways/canals affects connectivity between different

parts of the city and between the city and the hinterland. The Irrigation Department under the

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State Water Resources Department maintains waterways/canals in urban and rural areas of the

State. Storm water flows into the natural drains/canals through a reticulation of roadside and

secondary drains. Dredging activities along main drainage channels are carried out by the

Irrigation Department based on the gravity of the problem.

5) Poverty Alleviation.The MC provides infrastructure in low-income settlements, primarily

housing Below Poverty Line (BPL) households. Funds drawn from the MCs capital budget and

those available from centrally sponsored schemes are utilized for infrastructure creation in BPL

settlements. Kudumbashree channels funds of centrally sponsored schemes to the MC and

monitors fund utilization through its District Mission Coordinator (DMC). Infrastructure

requirement is identified through the neighbourhood groups/area development

societies/community development societies and indicated to both the MC and Kudumbashree.

Based on the funds available through Centrally Sponsored Schemes and projects/schemes

approved by the MC, Kudumbashree transfers the requisite amount to the MC for utilization in

BPL settlements 2% of the Municipal Corporations own revenue is earmarked for poverty

alleviation schemes. The Urban Poverty Alleviation (UPA) Cell within the MC handles urban

poverty related functions. Table 1-2 indicates the fund utilization/project progress in the fiveMCs related to poverty alleviation schemes.

Table 1-2: Utilization of Centrally Sponsored Poverty Alleviation Scheme Funds

MunicipalCorporation

SJSRY (IncomeGeneration Scheme)

NSDP (InfrastructureDevelopment scheme)

VAMBAY (HousingDevelopment Scheme)

Allocation Expenditure Allocation Expenditure Sanctioned Completed

Thiruvananthapuram Rs.26 mn 79.5% Rs.44 mn 54.0% 1,160 nos. 338 nos.

Kochi Rs.22 mn 81.6% Rs.43 mn 66.0% 2,610 nos. 1,140 nos.

Kozhikode Rs.24 mn 124.0% Rs.45 mn 81.4% 1,116 nos. 160 nos.

Thrissur Rs.7 mn 65.7% Rs.19 mn 67.0% 16 nos. 2 nos.

Kollam Rs.15 mn 95.7% Rs.26 mn 58.0% 536 nos. 29 nos.

Source: Kudumbashree, Aug 2004.

6) Town Planning. The Development Authority (DA) is a coordinating agency responsible for

Master Plan implementation, which is prepared by the Town and Country Planning Department.

The DA is expected to coordinate with State Line Agencies and the MC regarding plan

implementation. The MC currently oversees land use zoning originally the responsibility of the

DA. Under Section 30 of the KM Act, 1994, the MC is required to carry out spatial planning; this

function is currently carried out by the TCPD at the MCs request.

1.3.3 Inter Agency Coordination and Project ImplementationImprovement in inter-agency coordination is contingent on the MC staffs capacity to handle large-

scale works, the MCs financial soundness and ability to leverage funds for works and a clear

distinction regarding the operational jurisdiction of the MC and State Line Departments. For sub-

projects proposed under KSUDP, coordination of activities between the MC and State Line

Departments is important with regards approvals and clearances, land acquisition, and resettlement

and rehabilitation of affected persons. Further, post construction, sub-projects will require

incorporating adequate operation and maintenance controls/measures to sustain investments in

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addition to defining responsibilities of each agency. Improvements in inter-agency coordination are

dependent on the project implementation arrangement with a focus on sustainability during the

operation and maintenance period.

Regarding project implementation capabilities, the MC currently undertakes new projects through the

Engineering Department (through the Project Engineer in larger municipal corporations). However,

these projects are limited to construction of shopping complexes, marriage halls, etc. and are largely

limited to buildings. Major urban infrastructure projects are generally outsourced to State Line

Departments on a deposit work basis, wherein the entire cost of the project is deposited with the State

Department for undertaking the project; the State Department is responsible for designs, contract

award and project management. The Municipal Corporation has no control on the progress and quality

of the work carried out. Staff in the Municipal Corporations Departments attend to operation and

maintenance or basic service delivery and are not equipped to handle project design, detailed

engineering or construction supervision of urban infrastructure projects. It is therefore imperative to

build staff capacity to handle the aforesaid functions in order to manage sub-project components

under KSUDP. Refer Annex D for organization structure of the municipal corporations and inter-

department coordination within the MC. Review of the staffing in each municipal corporation is

provided in Volume 2 City Reports.

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2. Urban Management

2.1 State Level Initiatives

State-level initiatives in improving urban management and capacity building are fostered through the

Modernizing Government Program, the Information Kerala Mission and the Kerala Institute of LocalAdministration.

2.1.1 Improving Service Delivery

GoK through the Modernizing Government Program (MGP), initiated in 2002, conceptualised a

development approach for Kerala to (i) ensure an assured level of basic services to the poor and

marginalized through a Minimum Needs Program (28 initiatives); (ii) build an enabling economic

growth environment (15 initiatives); (iii) achieve fiscal sustainability at the State and Local Self

Governments (7 initiatives); (iv) enhance effectiveness and efficiency of core Government functions

(17 initiatives); and (v) build on decentralization for efficient, effective and accessible Local Self

Governments (33 initiatives). The MGP Steering Committee identified 100 initiatives and currently

60 are operational (refer Annex E for MGP initiatives). MGP support is to 2,605 institutions with

funds amounting to Rs.12,000 million sourced from the ADB in two tranches.

With specific reference to local governments, MGP aims to (i) provide a framework for preparing

five-year plans; (ii) design systems to ensure performance focused basic service delivery; (iii) identify

local economic development potentials; (iv) institute systems to strengthen accountability; (v) institute

management, budgeting and accounting, and resource mobilization systems to strengthen local self

governance; (vi) identify training needs for local government personnel; and (vii) facilitate policy

decisions for effective governance.

The Steering Committee has recommended a Service Delivery Project (SDP), which focuses on (i)

direct service delivery areas comprising core civic services, public amenities and social security; and

(ii) support service delivery (physical infrastructure, human resources and administrative support).

Municipal Corporations are currently preparing plans to access MGP support under the support

service delivery component, which comprises (i) infrastructure (construction and procurement); (ii)

human resource development (institution, customer/citizen service and staff/manpower requirement);

and (iii) administrative support (improved systems and procedures and consumables/recurring

expenses).

2.1.2 Streamlining Systems and Procedures

The Government of Kerala through the Local Self Government (LSG) Department and the State

Planning Board conducted a systems and process study1 in the States local self-governments; variousexperts supported the State departments in this exercise. The Information Kerala Mission (IKM),

established in June 1999, has an e-governance mandate/program to implement the recommendations

1 The systems and processes covered: (i) plan formulation, monitoring and implementation; (ii) citizen services comprisingpension disbursement, welfare schemes, etc.; (iii) revenue transactions; (iv) finance and accounts; (v) public works and

purchase management; (vi) administration and establishment; and (viii) local body institutions covering Panchayat

Committee, Standing Committees, Gram Sabhas, etc.

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of the aforesaid study, which primarily aims at prudent financial management, accountability and

transparent government-citizen interface in local self-government institutions (LSGIs). The mandate

covers software development, training, support and handholding, and database management (refer

Annex F for e-governance initiatives in the five municipal corporations).

In order to undertake immediate deployment and testing of its applications, IKM entered into a

memorandum of understanding (MoU) with a few of the States LSGs. The MoU also identified

beneficiary contribution/support to facilitate the initiative. IKM is currently working at two levels:

Creating a database at the local-level; and

Developing the identified software at the State-level (at IKM headquarters).

GoKs LSG Department now proposes to implement its comprehensive computerization program

through public-private partnership on a Build-Transfer-Maintain (BTM) model. The BTM Operator

shall (i) supply, deliver, install, commission and maintain hardware in the 1,249 LSGIs and related

institutions; (ii) maintain the applications developed by IKM; (iii) provide training and support

services; and (iv) carry out relevant data entry. The Kerala State Industrial Development CorporationLtd. (KSIDC) currently manages the bid and an Operator(s) would be appointed by Dec 2004; the bid

would be evaluated on a Quality-Cost Based Selection (QCBS) basis. The BTM Operator fees would

be borne out of State Plan funds over a five-year period. The Operator fees would be paid every half-

year for the first two operating years and every quarter for the remaining three operating years. The

assets would be transferred to the LSGI on completion of hardware installation, which is expected to

occur within the first year of contract award. On completion of the contract, the BTM Operator would

have handheld LSGI staff in managing the e-governance applications and improved the LSGIs

financial management capability.

On appointment of the BTM Operator, IKM will provide technical guidance to the Operator and limit

its role to being an application service provider (ASP). IKM will oversee BTM operations on behalf

of the LSG Department and through the assistance of stakeholders groups at the local-level it will

oversee and certify database creation and analysis. IKMs term would expire along with the

completion of the BTM Operators contract, by when it is envisaged that the LSGI would be self-

sufficient and will effectively manage computerized operations.

2.1.3 Training

The Kerala Institute of Local Administration (KILA) conducts training programs on various activities

comprising decentralized planning, poverty alleviation, financing urban infrastructure, good

governance, resource mobilization, planning for urban infrastructure, and women development. KILA

conducts sessions for elected councillors, municipal staff and non-governmental organizations(NGOs). Training on decentralized planning is conducted at the district level through resource persons

trained by KILA; all other training is conducted at the KILA premises in Thrissur. The Institute of

Management in Government (IMG), Thiruvananthapuram also conducts training sessions in urban

management but is limited to senior-level functionaries.

The courses conducted by KILA provide ample exposure to participants on urban management issues

and innovative initiatives in other parts of the country but are not oriented towards applying urban

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management techniques. KILAs main course is on decentralized planning, which is held at the

District Headquarters and aims at training LSGI staff, elected councillors and NGOs on working

group functions. Guest faculty train 150 resource persons, who in turn impart training to the aforesaid

stakeholders 50,000 stakeholders are trained annually. KILA has limited internal staff to conduct

programs and depends largely on resource persons. KILA is currently identifying a resource group

(25-30 persons) of elected representatives to conduct trainings in Urban Local Bodies (ULBs).

KILA receives funds from GoK, CapDeck2, Housing and Urban Development Corporation

(HUDCO), National Institute of Urban Affairs (NIUA) and the UN HABITAT for implementing

training programs. The aforesaid training finance support organizations have pre-defined areas of

training, for example, NIUA supports training on financing urban infrastructure and resource

mobilization. The training programs are generally scheduled for three days and are conducted at

KILA as residential programs. KILA facilities require upgradation and the organization is currently in

discussion with Central and Donor Agencies for additional funding to build KILAs capacity.

Training through KILA and IMG are oriented towards exposing staff to LSGI management issues;

there is no course related to application wherein handholding through project implementation/physicaland financial monitoring and financial management is dealt with. KILA also lacks a comprehensive

Training Impact Assessment (TIA), which would have helped determine the outcome of the training

programs conducted and the actual demand for training. IKM, however, has a comprehensive training

program built into the missions activity schedule, which focuses on implementation and

management.

2.2 Municipal Initiatives

Municipal Corporations of Thiruvananthapuram, Kochi and Kozhikode have made efforts to improve

service delivery and urban management in their respective jurisdictions. Of specific importance is the

DFID aided Poverty Alleviation Project in Kochi and the Capital Region Development Program in

Thiruvananthapuram, where infrastructure projects were undertaken; the City Development Strategy

(Cities without Slums) for Kozhikode laid down areas of urban management and basic service

delivery for the Municipal Corporation to adopt. The MCs of Kollam and Thrissur are recent

formations; the MCs are gradually undertaking initiatives to improve urban management and service

delivery within their respective regions.

The aforesaid initiatives were supported through some form of external assistance and were not

internally generated initiatives. Municipal Corporations are continuously faced with issues related to

insufficient staff, inadequate staff qualification, lack of streamlined systems and procedures and

overall inability to handle large-scale projects. Currently, MGP and IKM initiatives are the only

mediums of improving urban management in the Municipal Corporations.

2.3 Community Development and Poverty Alleviation

The State Poverty Eradication Mission (SPEM) of Kerala, also known as Kudumbashree (means

prosperity of the family), is a holistic, participatory, women-oriented poverty reduction programme.

2 CapDeck is Capacity Development for Decentralization in Kerala, a program sponsored by the Swiss Agency for

Development and Cooperation.

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GoK implements it with the active support from GoI and NABARD. SPEM was constituted as an

independent society, registered under the Travancore Cochin Literary Scientific and Charitable

Societies Registration Act, of 1995, on November 18, 1998. Unlike in other Indian states, in Kerala

the roles and functions of the State Urban Development Agency (SUDA) to monitor and facilitate

GoIs state-level poverty reduction programme is performed by Kudumbashree. The society has a

time bound mission statement to eradicate absolute poverty in 10 years through convened communityaction and facilitating community organisation of the poor.

The Governing Body of SPEM has 24 members, chaired by the Minister for Local Self Government

and the Secretary to Government, Local Self Government assisting the Chairman in the capacity of

the Vice Chairman. Six GoK Departments represented by their respective secretaries, Directors of

Panchayats and Urban Affairs, other nominated representatives from the District, Collector, one Lady

Mayor, one Lady Panchayat President and other nominees from the State Government constitute the

committee. While SPEM is a unit of GoKs Local Self Government Department, it is autonomous in

its operations as it is registered under the Societies Act.

SPEM/Kudumbashree operates in the States three regions of south, central and north; a Directormanages each region. Each District is managed by a mission co-ordinator functioning as the District

Head supported by an Assistant District Mission Co-ordinator. The roles of these officers are strategic

and facilitative to ensure that time bound activities are carried out. They monitor the programme and

provide technical backup support to the corporations, poverty reduction teams and women groups.

The project officer in the corporations or local bodies carries out the actual implementation of poverty

eradication programs with support from the municipal staff in the Health Department. The project

officers are designated as community officers who oversee field level works.

Kudumbashree programs are designed on a participatory approach, which has enabled women groups

to design self-managed groups, driven by spirit within and not from outside. The women members at

the grass root level are encouraged to take up leadership through functional activities like Community

Health Volunteers, Income Generation Activities Volunteers, Infrastructure Volunteers, Secretary and

President. These groups prepare periodical micro plans, which become the base for the Community

Development Society (CDS) plan or antipoverty sub-plan of the local body. Based on the local bodys

approval, the CDS societies take up the sanctioned work. These groups also act as Thrift and Credit

Societies and play a pivotal role in assisting Development of Women and Children in Urban Areas

(DWCUA) groups under SJSRY.

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3. Framework for Institutional Development

As a service organization, institutional strengthening and capacity building of the MC is dependent on

the following functions: infrastructure/urban planning, service provision, institutional development

and financial management. The following sub-sections detail issues related to the MCs ability to

provide municipal service and provide a framework for enhancing urban management in the State.

The current section lays the background for identifying urban management and institutional

development components and based on the identified issues, a comprehensive urban management and

institutional development component was identified for the Project.

3.1 Infrastructure Planning

According to the States Tenth Five Year Plan and the KM Act, the MC requires:

Undertaking responsibility of urban planning, where the MC requires building staff capacity to

undertake preparation of the Municipal Development Plan including urban planning to reduce

State agency involvement in urban planning and implementation;

Undertaking preparation of Development Vision and Citywide Development Plans, which the

MC is currently undertaking but the planning mechanism does not provide for a holistic

approach; MC staff capacity should be built to ensure integration of plan works and adoption of a

holistic approach to citywide infrastructure provision; and

Establishing a Planning Department within the MC, which should undertake all planning

responsibilities for the preparation of the Municipal Development Plan including spatial planning

and land use management for the identification of land for specific projects such as solid waste

treatment/disposal plants. The MCs Planning Department will ensure works implementation, and

monitoring and asset management by the Engineering and Health Department. Immediate focus

is required to address requirements under the Kerala Development Program, where no specific

post was sanctioned or department created within the Municipal Corporation to carry out

decentralized planning3.

In formulating local-level plans, Ward Committees4 play an active role supported by the MCs

Engineering Department. However, procurement is carried out based on the Stores Purchase

Manual and PWD Manual; the MC lacks access to a comprehensive Works Manual comprising

procedure from planning through implementation. Besides proving to be a pressure on the MCs

resources, works are disjointed and do not adopt a holistic view to planning.

3 Technically qualified staff was absent in panchayats; hence, they were allowed to procure external assistance forplan/estimate preparation.

4 Ward Committees are constituted in LSGIs with population exceeding 100,000 persons. A Ward Sabha is constituted in all

LSGIs with population less than 100,000 persons.

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3.2 Core Service Delivery and Asset Management

GoKs Tenth Five-Year Plan and KM Act focuses on core service delivery with specific emphasis on:

Improving urban drainage, where it is imperative for the MC to develop Storm Water Master

Plans that should be part of integrated planning within the Municipal Development Plan;

Undertaking solid waste management and sewerage provision, where GoI guidelines suggest

waste disposal should be under the direction of a Municipal Environmental Engineering

Department instead of the present Health Department (as a recommendation under KSUDP, it is

suggested that the Project Implementation Unit created for KSUDP implementation will

subsequently form a part of the Municipal Corporations Engineering and Planning Department 5);

Undertaking water and sewerage services, where Section 315 of the KM Act, 1994, provides the

Municipal Corporation with a mandate to construct and maintain water supply and sewerage

assets within its jurisdiction and outside KWAs control, and provide services to the city6;

Preparing annual maintenance plans;

Promoting public-private partnerships is dependent on the a policy of the LSGD, though certain

municipal corporations have taken initiatives to undertake projects on a public-private partnership

mode; e.g. Thiruvananthapuram Municipal Corporation proposes to construct a scientific landfill

on a Build-Operate-Transfer mode; and

Implementing urban poverty alleviation programs, where the MC is undertaking steps to ensure

increase in centrally sponsored scheme fund utilization with assistance from Kudumbashree.

3.3 Institutional Development

Institutional development in the MC is governed primarily by the State Finance Commission

recommendations and the KM Act, which focus on:

Reorganizing decentralized operations based on magnitude of works/revenue

collection/municipal functions to satisfy the requirement for preparing Municipal Development

Plans;

Introducing information technology (IT) enabled services and streamlining municipal systems

and procedures; the Information Kerala Mission oversees property mapping and introducing

computerized accounting and management information systems (MIS); and

Addressing human resource development, through appointment of additional and appropriately

qualified staff for Municipal Development Plan preparation and implementation.

5 It is recommended that the Engineering Department of the city is reconstituted to undertake the following activities (i)

spatial planning, (ii) urban infrastructure design, construction and maintenance; and (iii) solid waste management. A

Superintending Engineer shall head the department and an Executive Engineer in each of the aforementioned wings/groups

shall oversee functions assigned therein.6 While GoK has constituted a committee to review staff transfer from State Line Departments to Local Self-Government

Institutions, staff transfer has not yet been affected. KWA continues to maintain water services in all cities except Thrissur.

Future service provision in water and sewerage is contingent on GoK policy regarding staff and asset transfer to LSGIs.

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3.4 Financial Management

Financial management in the MC is governed primarily by the State Finance Commission

recommendations and the KM Act, which focus on:

Legislations for implementing the plinth area based system of property taxation are pending,

which critically effects the MCs ability to increase its revenues the implementation of the

aforesaid property taxation system is a commitment made to access Government of Indias Urban

Reforms Incentive Fund (URIF); and

While accounting reforms have been accepted by GoK in-principle, new Rules are yet to be

framed to make the transition from cash-based accounting system to double-entry accounting

system.

3.5 Community Development and Poverty Alleviation

Dovetailing Kudumbashree programmes in KSUDP will substantially improve the impact of the

Project. The baseline survey revealed the need for sustainable project support to poor settlements by

way of infrastructure provision. Hence, it is proposed that community development and poverty

alleviation is undertaken through a Community Infrastructure Fund (CIF) and Poverty Social Fund

(PSF). The MCs will utilize the CIF for (i) infrastructure provision in BPL settlements; (ii) assistance

to women and children; and (iii) provision of health and education facilities. The MCs will utilize the

PSF for (i) providing facilities to vulnerable groups; (ii) undertaking income and employment

generation activities; and (iii) capacity building of staff and institutions to undertake poverty

alleviation initiatives. Kudumbashree will play a key role in activity identification for CIF and PSF

utilization.

Infrastructure in BPL Settlements. Provision of basic services comprising water, sanitation, roads,

streetlights, drainage, community hall, day care centres for children, health facilities, and

rainwater harvesting facilities.

Women and Children. Creation of Gender Resource Centre, Child Development Centre, legal aid

support, nutritional support, support to street children/child labourers, and scaling-up Balasabha

programs.

Public Health and Education. Support to Kudumbashree groups to clear garbage from the

communities, mosquito spraying, mini health centre, health kits to volunteers, and health campus.

Income Generation Program. Establishing marketing centres, skill development, micro enterprise

units, Enterprise Development Program training, quality support unit for Kudumbashree

products, and setting-up Livelihood Oriented Business Schools (LOBS).

Vulnerable Groups. Proposals for destitute rehabilitation, street children rehabilitation, centres for

old age people, widows, women in distress, physically and mentally challenged persons, beggars

and migrants, orphans and sex workers rehabilitation.

Capacity Building and Institutional support. Capacity building initiatives for CDS, ADS, NHG

members, CSOs, MC, Kudumbashree team, intervention partners, computer network support to

Kudumbashree DMC, and quality control unit in Kudumbashree.

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The CIF will be available to Corporations on an annual basis for the implementation of programs

within the framework of GoKs Peoples Planning process through city-level Poverty Alleviation

workshops. The workshops will be organised by the Project Implementation Unit (PIU) and the plan

prepared on behalf of the Corporation. In support of GoKs decentralization policy, annual allocations

of the CIF will permit the implementation by the Corporation of a prioritised program of slum

improvement and poverty alleviation based on designs developed by the Corporation in partnershipwith local communities.

Subsequent annual allocations will be performance-based (based on an appraisal of scheme

implementation and operational performance) and may include incentives for additional elements

such as matching funding (e.g., from own-revenue or by fund convergence of GOI schemes such as

SJSRY and NSDP), or other targets such as cost recovery and wider revenue mobilisation. Proposals

will be generated by a participatory planning process led by the women-based Community

Development Society (CDS) structure set up under the existing SJSRY framework. Outline proposals

from the Neighbourhood Associations will be submitted to the City-level Steering Committee for

prioritisation and approval based on defined criteria.

The Poverty Social Fund (PSF) will also be available on an annual basis based on plans discussed by

the Civil Society Organization (CSO) and approved by the City-level Steering Committee. The

proposals, to meet the priority needs of the community, will be identified by Kudumbashree in

coordination with the Municipal Corporation and CSOs with assistance from CDS representatives.

3.6 KSUDP and MGP

From the urban management perspective, KSUDP will complement the activities envisaged under the

ADB aided Modernizing Government Program (MGP). The MGP activities related to urban local

bodies is limited to (i) preparation of holistic waste management systems through incentive

mechanisms (Theme I.7.1); (ii) regulation for management of institutional waste change (Theme

I.7.3); and (iii) Town and Country Planning Legislation (Theme V.1.5). Urban Management and

Poverty Alleviation activities under KSUDP would address select initiatives in MGPs Theme V on

Effective, Efficient and Accessible Local Self Government and shall include:

Five-Year Planning Framework. Asset management plans, community rehabilitation plans for the

physically and mentally challenged, and spatial plan with focus on connectivity.

Local Economic Development. Identification of micro-enterprise opportunities for the poor.

Strengthen Local Self Governments. New office management systems, procurement manuals,

public works manual, IT plan, budgeting, accounting and resource mobilization.

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4. Institutional Development Components

While KSUDP will ensure infrastructure provision in the five municipal corporations, for long-term

sustainability of the assets created and for effective management of urban basic services, it is

imperative to address key urban management issues. Infrastructure creation under KSUDP will be

implemented by the Project Management Office (PMO) at the state-level in association with Project

Implementation Units (PIUs) at each corporation; Kudumbashree will advise and monitor poverty

alleviation components in the city corporations. The urban management component under KSUDP is

related to institutionalizing a system to address the municipal corporations ability to sustain service

provision and the Local-Self Government Departments ability to oversee service delivery by LSGIs.

In summary, the urban management and institutional development under KSUDP will address:

Capacity building of the Local Self Government Department, the Directorate of Urban Affairs

and the Town and Country Planning Department regarding internal systems and procedures and

ULB performance monitoring at the DUA;

Capacity building of Project municipal corporations comprising urban planning, asset

inventorization, accounting and financial management;

Municipal staff training on project development, design and implementation this shall apply to

the five municipal corporations and 53 municipalities; and

Community development and participation for poverty alleviation.

4.1 UMID Components

4.1.1 Capacity Building LSGD and DUA

The current role of the LSGD is primarily related to policy formulation and administrative control of

all agencies within its purview; the DUA shares this responsibility and facilitates in tracking Plan fund

flows/devolution and human resource/personnel management. However, in order to enhance the role

of the LSGD and DUA in urban management, the capacity building assistance activities comprise:

Facilitating creation of a database on municipal services and finances across all corporations

and municipalities which is expected to facilitate performance monitoring of ULBs, facilitating

future State Finance Commission recommendations and providing a basis for Plan fund

devolution;

Facilitating creation of a database on human resources/personnel in each of the States ULBs and

associated attributes including payroll and pension details and to facilitate performance based

promotions, transfers and consideration for training;

Preparing a Budgeting Manual to allow departments to provide accurate and planned financial

requirement to the Accounts Department, which will complement the proposed double-entry

accounting system;

Analysing cost of providing municipal services and identifying the base and basis for taxes and

tariffs establishing guidelines for property taxation and a basis for fixing user charges for at

least water, sewerage and solid waste management; and

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Facilitating creation of a database on municipal assets and asset valuation as a leveraging option

for infrastructure financing in the States ULBs.

Key outputs comprise:

Comparative Performance Assessment/Municipal Database institutionalised at the DUA and

maintained by the DUA for ready reckoning by the State in policy matters;

Database on the ULBs human resources/personnel;

Budgeting Manual for ULBs;

State Policy on environmental sanitation infrastructure cost recovery; and

State Policy/Guideline on financing patterns for infrastructure projects.

4.1.2 Capacity Building Municipal Corporations

The capacity building assistance to the five municipal corporations is aimed at addressing the

planning, core service delivery, institutional development and financial management improvements.

The capacity building assistance activities and outputs comprise:

Preparing Geographical Information System (GIS) based maps through use of satellite (Quick

Bird) imagery (it is envisaged that IKM or the Centre for Earth Sciences will undertake this

conversion) and making base maps available to Design and Supervision Consultants for

topographical surveys and detailed design of infrastructure systems;

Providing GIS based maps for asset management activities that consist of enumerating and

plotting property tax assessments and existing service utility lines the maps will form a key

component of the Project Implementation Unit (PIU) and will be updated through the Project

period and eventually rest with the MCs Planning Department and thereby provide a base for

future spatial planning;

Facilitating financial management reforms through property tax rationalization and accounting

reforms by (i) transiting to a double-entry accounting system7 from the existing cash-based

accounting system (this exercise will also involve valuation of municipal assets and preparing an

inventory of municipal liabilities) this activity shall consist of integration of IKM developed

modules on plan monitoring (Sulekha), accounting and finance functions (Sankhya), and revenue

collection (Sanchaya); and (ii) providing on-job training to municipal staff on accounting

functions and the usage of IKM developed software;

Undertaking other e-governance initiatives including (i) municipal-citizen interface through

citizen charters and provision of information kiosks, etc.; and (ii) networking zonal offices andhead office for information access and work flow; and

7 Under the ADB aided Modernizing Government Program (MGP), GoK has prepared a Detailed Implementation Plan to (i)

finalize the accounting systems in local government; (ii) design a system of accounts and issue new accounts rules and an

Accounts Manual; (iii) develop an accounting software for local governments (developed by IKM); and (iv) conduct acapacity building program for local government staff. The plans focus is limited to rural LSGIs currently. It is therefore

recommended that the activities for the five Municipal Corporations should be undertaken as a part of KSUDP to ensure

effective financial management.

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Developing performance based contracts for procurement, infrastructure creation and service

provision; thereby overcoming the constraints arising from the current format based on the Stores

Purchase Manual.

In order to undertake accounting reforms, its imperative to ascertain the completeness of the

accounting and Management Information Systems (MIS) software proposed for usage by the ULBs,

prepare a methodology for asset valuation, and based on the aforesaid activities, prepare an accounts

and audit manual for usage by ULBs. The indicated activities are proposed as a separate Technical

Assistance (TA) by the ADB, to the five corporations and two municipalities. The TA will provide the

requisite manual for rolling-out the transition activities in the municipalities.

Key components in the process of conversion is:

Ensuring compliance of the accounting system with the guidelines stated in the Accounting and

Auditing Manual currently being prepared by the Government of India;

Verifying assets and liabilities in the records of urban local bodies;

Conducting a valuation of assets and liabilities for entry into the urban local bodies accounting

records; and

Soliciting a chartered accountants certification on the financial records of urban local bodies

upon conversion to accrual/double-entry accounting.

4.1.3 Training on Basic Service Delivery

Under KSUDP, the objective of the training support is to address three key elements comprising

effective planning and infrastructure provision, core service delivery and asset management, and

prudent financial management. The training assistance shall address the following aspects (i)

sensitisation/orientation training; (ii) conceptual training; and (iii) implementation training. It is

envisaged that this training and capacity building program will target the five Municipal Corporations

and 53 Municipalities. In order to clearly define the training curriculum, KSUDP will conduct a

Training Needs Assessment (TNA) in ULBs targeting elected councillors, LSGI staff, NGOs and

members of the Working Groups formed for Decentralized Plan preparation. The TNA will identify

the requirement of stakeholders/participants with respect to the three key elements; it will also

comprise a TIA of past training programs that will provide insights into structuring the curriculum,

based on ULB demand.

Training programs will essentially focus on the three elements and shall include:

Sensitisation/orientation training on planning, financial management, solid waste management

and practices, etc. to expose participants to functions and best practices across the country the

training shall apply to elected councillors, ULB staff, select State Line Department and NGOs;

Conceptual training on project identification, structuring and feasibility assessment for

participants to comprehend project selection for implementation and on goods, works and

services procurement to participate and evaluate bids the conceptual training shall apply to

participants involved during the sensitisation stage and shall comprise select ULB staff from the

Engineering, Health, Accounts and Town Planning Departments, and staff of State Line

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Departments such as Public Works Department, Irrigation Department, and Kerala Water

Authority; and

Implementation training on project (infrastructure investment and institutional strengthening)

physical and financial monitoring, and infrastructure maintenance/asset management the

training will once again apply to staff involved at the conceptual level and field staff involved in

project implementation, with an aim to ensure adequate reporting on project progress and quality

control; specifically for field staff, KSUDP will structure and administer a course on asset

maintenance.

KILA will impart training to guide staff in appreciating project structuring and feasibility analysis;

this activity will run parallel with the works of the Design and Supervision Consultant (DSC) in the

five Corporations to help staff contribute in the works of the DSC. Preliminary sessions of the

implementation training will commence before construction contracts are awarded; main sessions on

physical and financial monitoring will commence once the contractor is appointed for project

implementation. Prospective training sessions are indicated in Annex G.

4.1.4 Community Development and Poverty Alleviation

Under KSUDP, the objective of capacity building for poverty alleviation initiatives is to ensure that

the Project benefits reach the poorest of poor and that all stakeholders involved in the Project are well

informed regarding the activities and process to achieve Project activities. A key component for

successful implementation of poverty alleviation initiatives is the constitution of a Civil Society

Organization (CSO), which is a support system that will assist identify requirement of the poor and

vulnerable, and facilitate Project implementation. The CSO will essentially comprise city-level

stakeholders including but not limited to the Municipal Corporation, business groups, resident welfare

associations, NGOs, CBOs, CDS and Kudumbashree. The CSO will strengthen the activities of the

Urban Poverty Alleviation (UPA) cell in the Municipal Corporation for utilizing the CIF and the PSF

with appropriate facilitation by Kudumbashree. Kudumbashree will play a key role in arriving at a

uniform strategy at the state-level for the Poverty Social Fund component.

Training of CSO members, UPA staff at MC, Kudumbashree and CDS members is therefore

imperative and may be carried out through identified training institutes (refer Annex H for an

indicative list of courses; costs for capacity building is indicated in the Poverty Alleviation Investment

Plan detailed in Volume 3 Social and Poverty Analysis). While a training needs assessment is a

requisite for identifying areas of capacity building, the following is an indicative list:

Community Infrastructure Fund. Activities may include (i) planning and identification of

community infrastructure needs; (ii) operational and maintenance issues relating to infrastructure

provision; and (iii) awareness regarding women empowerment, health and diseases, and

education.

Poverty Social Fund. Activities may include (i) conceptual clarity for scaling-up livelihood

initiatives through livelihood development strategies; (ii) facilitating confederation of Self Help

Groups to graduate into Micro Finance Institutions (MFI); and (iii) focus on business

development initiatives for micro enterprises.

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Strategic Programs. Activities may include (i) project development programs with specific

reference to CIF and PSF utilization; (ii) CSO networking and resource convergence; and (iii)

creating strategy mechanism for CSO to run programs under health, sanitation and income

generation.

4.1.5 Community Awareness and Participation Program

KSUDP success is contingent on appropriate and adequate public awareness generation. A domestic

Community Awareness and Participation Program (CAPP) firm will be recruited to facilitate public

awareness / social mobilization programs on project related issues. Approaches for stakeholder

awareness and participation will involve preparation of information materials and media campaigns.

The Information, Education and Communication (IEC) materials will be developed using mass-media

techniques. Amongst other things, the CAPP will undertake the following specific tasks:

Inventory and review recent and current community-based development initiatives in Kerala;

organizations involved, mechanisms used, successes achieved;

Plan and deliver initial briefing, training and orientation of Design and Supervision Consultants

(DSCs) and Project Implementation Units (PIUs) in community awareness and participation

programs;

Plan and organize regular training events, including workshops and seminars for the duration of

the Project;

Prepare IEC materials, advertisement clippings, project Web pages, etc.;

Promote Project Policy Agenda;

Conduct awareness campaign on scope of project, including the poverty alleviation components,

water optimization and conservation program, environmental and social issues, such as,

resettlement entitlements through various media means;

Transfer information about the Project to the target groups, especially women;

Create awareness among stakeholders regarding long-term benefits and short-term inconvenience

of the Project in order to gain full support of the beneficiaries for the Project;

Create awareness regarding preventive care to avoid any health related hazards;

Create awareness among beneficiaries regarding their responsibilities, including issues such as

user charges and property tax reform etc for achieving the goal of the Project; and

Create awareness among beneficiaries regarding the existing health care facilities and optimal use

of the same.

The CAPP will closely consult PMO, PIU, PMC, DSCs and work with NGOs under the Project, while

preparing materials for public awareness campaign, and provide feedback to PMO with a view to

adjusting work program based on the impact of campaign and concerns raised by the beneficiaries.

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4.2 Project Sustainability KSUDP and GoK Actions

Asset creation through KSUDP requires an institutional mechanism for long-term sustainability. In

addition, the institutional mechanism established for asset creation should undertake asset

management and maintenance in the long-term besides undertaking future urban infrastructure

planning with a holistic perspective. Currently, Municipal Corporations do not plan for large-scale

urban infrastructure projects as the activity is undertaken by State Line Departments like the KWAand PWD. In addition, solid waste management rests with the MCs Health Department, which is ill

equipped to handle the responsibility being oriented towards public health functions. The Peoples

Plan Campaign/Kerala Development Program is currently overseen by the MCs Engineering

Department but should ideally be the responsibility of a Planning Department to ensure holistic

approach to infrastructure creation.

The Project Implementation Units (PIU) proposed for KSUDP implementation will draw staff from

various State Line Departments. Through the Project period and with adequate training/capacity

building initiatives, it is envisaged that the PIU staff would be well equipped to oversee long-term

asset creation and service provision in the sectors of water supply, sewerage, urban drainage, solid

waste management, and urban roads and traffic management. Staff requirement for infrastructure

operation and maintenance is detailed in Volume 6 Technical Analysis; costs for system O&M

takes into consideration staffing.

The KM Act, 1994, provides the legislative framework for ULBs to undertake urban planning and

undertake water supply and sewerage services within its jurisdiction. Hence, from a long-term

perspective and based on the KM Act and State Finance Commissions recommendations, it is

recommended to merge the PIU with the Corporations Engineering Department to form a City

Planning and Engineering Department. The reorganised department will then be well equipped to

carry out future project development, implementation and asset management and will oversee spatial

planning, infrastructure development and construction, and solid waste management. Thisarrangement will ensure long-term sustainability of KSUDP and provide for complete decentralization

of infrastructure provision and urban basic service delivery.

The Project component Part B: Urban Management and Institutional Development (UMID) is

designed for long-term sustainability of infrastructure investments undertaken as a part of KSUDP

and in line with GoKs approach to urban basic service delivery and urban management. Table 4-1

maps GoK and KSUDP actions required to address items identified under the institutional

development framework (refer Section 3). The actions indicated in the table are from a viewpoint of

achieving sustainable urban development to address GoKs principles on urban development; it is not

contingent on KSUDP implementation (refer Annex I for a detailed review of GoKs policy and

institutional reform agenda).

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Table 4-1: Project Sustainability KSUDP and GoK Actions

Objectives GoK Actions KSUDP Actions ResponsibleAgencies / Time

frames

A. Planning

MCs to assume

responsibility for urbanplanning, undertakepreparation ofDevelopment Vision andCitywide DevelopmentPlans, and undertake urbanroad planning.

Establishment of a new Town

and Country Planning Act andRules to meet the objectivesof the Project.

KSUDP capacity

building for PIU/MCstaff will providetechnical principles andactual exposure projectdevelopment, planningand implementationactivities.

LSG Dept., Town and

Country PlanningDept. (TCPD),DevelopmentAuthority (DA) andMCs

FY 2008-2009

B. Core Service Deliveryand Asset Management

Provision of improvedwater supply serviceswithin MC area.

KWA to formulate a NonRevenue Water (NRW)Reduction Plan and aProgram for increasing itscollection efficiency.

KWA to enforce itsdisconnection policy forcustomers who do not pay.

GoK to formulate andimplement a policy onconversion of standposts toindividual metered houseservice connections.

KWA enhancement of watertariffs to ensure cost recoveryof O&M by 2010.

- Water ResourcesDepartment, KWA

FY2006-2007

FY2006-2007

FY2006-2007

FY2006-2007

Provision of improvedsewerage and solid wastemanagement serviceswithin MC area.

Viability gap funding forsewerage services throughlevy of service tax on ProjectBeneficiaries as a service taxfor O&M (determined as asurcharge on property tax) Council Resolution and GovtOrder required.

Introduction of a Solid Waste

Collection charge in MCs.

LSG Department, andMCs

FY2007-2008

FY2006-2007

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Objectives GoK Actions KSUDP Actions ResponsibleAgencies / Time

frames

C. InstitutionalDevelopment

MC accountability inservice provision andgreater citizen participationin infrastructure planning,introduction of IT enabledservices and streamlinemunicipal systems andprocedures, and humanresource development inproject MCs.

Changes and reforms inaccounting, MIS, and taxmapping.

Human Resources Policy forurban local bodies.

Conduct awarenesscampaigns to educatecitizens on MC functions.

KSUDP capacitybuilding for PIU/MCstaff on city wideplanning.

KSUDP will supportbase map preparation,property mapping, andimplementation ofaccounting and auditingreforms.

KSUDP capacitybuilding of DUA throughtrainings and creationand maintenance ofdatabase of LSGD staff.

LSG Dept., MCs,IKM, KILA, DUA

On-going; to becompleted by fiscalyear FY 2009-10

D. Financial Management

Implementation of the plintharea based Property Taxand increase in tax base asrecommended by theSecond FinanceCommission.

Implement law to amend theproperty taxation system andto enhance the MC revenuetax base.

KSUDP will undertakebase map preparationand property taxmapping.

GoK

FY 2006-07

Asset survey of ULB ownedproperty and transferredproperties (e.g., water,sewerage, transferredinstitutions such aseducation and health).Asset register maintained

as suggested by theSecond FinanceCommission in 1999.

Establishment of a mandatoryprocess complying with assetinventory management.

KSUDP will undertakemapping of municipalproperties and creationof database at DUA.

LSG Dept., MCs andIKM.

FY 2006-07

Biannual revision to non-tax license items andAdvertisement Tax;recommended by theSecond FinanceCommission.

Implement law to effectrequired revisions.

- GoK, LSG Dept. andMC

FY 2006-07

Accounting reforms inULBs entered into a MoUwith GoK.

Acceptance of double-entryaccounting and establishmentof rules at State-level.

KSUDP will baseimplementation ofaccounting reforms onthe accounting andauditing manuals, asset

valuation procedures,and softwareverification forcompliance withcommercial accountingprinciples preparedunder ADBs TA forCapacity Building forMunicipal ServiceDelivery in Kerala.

GoK and LSG Dept.

FY 2006-07

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5. Institutional Responsibilities

5.1 Overview

Government of Kerala (GoK) has undertaken a process of decentralization, which is manifest in

various planning processes and service delivery initiatives in the State. From the Kerala DevelopmentProgram (Peoples Planning Process) to works proposed under the Jalanidhi Project (decentralization

of water and sanitation services at the rural-level), the State has adopted a stand of equipping the

grass-root levels with a planning and implementation mandate. This approach emerges predominantly

from Indias 73rd and 74th Constitution Amendment Act.

Various other states in the country have also gradually progressed towards decentralization of

services, with specific emphasis on water and sanitation services being undertaken by local self-

governments. Two of Indias most progressive states Tamil Nadu and Karnataka have facilitated

local self-governments (LSGs

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