Report No: ICR00208 IMPLEMENTATION COMPLETION AND RESULTS REPORT Loan No 8765-IN ON A LOAN IN THE AMOUNT OF US$ 31.5 MILLION TO INDIA FOR Assam State Public Finance Institutional Reforms (ASPIRe) Project November 22, 2024 Governance South Asia i CURRENCY EQUIVALENTS (Exchange Rate Effective {October 31, 2024}) Currency Unit = India Rupees INR 84.08= US$1 FISCAL YEAR July 1- June 30 Regional Vice President: Martin Raiser Country Director: Auguste Tano Kouame Regional Director: Mathew A. Verghis Practice Manager: Hisham Ahmed Waly Task Team Leader (s): Mohan Gopalakrishnan, Puneet Kapoor ICR Main Contributor: Puneet Kapoor ii ABBREVIATIONS AND ACRONYMS AERMS Assam Excise Revenue Management System AG Accountant General AoC Award of Contract AS-CFMS Assam Society for Comprehensive Financial Management System ASPIRe Assam State Public Finance Institutional Reforms CAGR Compound Annual Growth Rate CoT Commissionerate of Taxes CTD Commercial Tax Department DBT Direct Benefit Transfer DDOs Drawing and Disbursement Officers DeMPA Debt Management Performance Assessment DIDS Digital Infrastructure for Direct Benefit Transfer Schemes e-GP Electronic Government Procurement e-GRAS Electronic Government Receipt Accounting System FMIS Financial Management Information System FRBM Fiscal Responsibility and Budget Management Act GeM Government e-Marketplace GoA Government of Assam GST Goods and Services Tax ICT Information and Communications Technologies IT Information Technology M&E Monitoring and Evaluation MIS Management Information System NIC National Informatics Center O&M Operation and Maintenance PBC Performance-Based Conditions PDO Project Development Objectives PFM Public Financial Management PMU Project Management Unit PPP Public-Private Partnership ReSTART Restructuring Systems and Technology for Augmentation of Resources for Transformed Assam SBD Standard Bidding Document SDG Sustainable Development Goal SPPP State Public Procurement Portal SPV Special Purpose Vehicle VAT Value Added Tax iii TABLE OF CONTENTS DATA SHEET ................................................................................................................................................ v I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ..................................................................................1 II. OUTCOME .................................................................................................................................................4 Improvement in predictability in budget execution ..................................................................................................... 5 Improvement in transparency in budget execution ..................................................................................................... 7 Improvement in efficiency in tax administration .......................................................................................................... 7 III. KEY FACTORS AFFECTED IMPLEMENTATION AND OUTCOME ..................................................................... 10 IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME .............................. 11 V. LESSONS AND RECOMMENDATIONS ......................................................................................................... 14 ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ........................................................................................ 16 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ....................................................... 30 ANNEX 3. PROJECT COST BY COMPONENT ......................................................................................................... 32 ANNEX 4. EFFICIENCY ANALYSIS ........................................................................................................................ 33 ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS ................................. 38 ANNEX 6. SUPPORTING DOCUMENTS (IF ANY) ................................................................................................... 44 iv DATA SHEET @#&OPS~Doctype~OPS^dynamics@icrbasicdata#doctemplate BASIC DATA Product Information Operation ID Operation Name Assam State Public Finance Institutional Reforms P157198 (ASPIRe) Project Product Operation Short Name Investment Project Financing (IPF) ASPIRe Project Operation Status Approval Fiscal Year Closed 2017 Original EA Category Current EA Category Partial Assessment (B) (Restructuring Data Sheet - 14 Sep Not Required (C) (Approval package - 15 Jun 2017) 2023) CLIENTS Borrower/Recipient Implementing Agency Assam Society for Comprehensive Financial Management India System (AS-CFMS) DEVELOPMENT OBJECTIVE Original Development Objective (Approved as part of Approval Package on 14-Jun-2017) 13. The Project Development Objective (PDO) is: "to contribute to improvement in predictability and transparency in budget execution and efficiency in tax administration in Assam." The key beneficiaries of the project will include: the Finance Department, Office of Commissioner of Taxes, Department of Excise and Department of Information Technology; procuring agencies in select line departments and government officials. All line departments, directorates and field level units will benefit from having information of budget execution rates and status of payment of bills. The project will also benefit the citizens of Assam through efficient processes and better service delivery provided by public institutions (such as electronic payments and collections for services, better public procurement and enhanced tax payer services) and enhanced transparency. v s s s s s s s s s s s s s s s s @#&OPS~Doctype~OPS^dynamics@icrfinancing#doctemplate FINANCING Financing Source Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing 35,000,000.00 31,500,000.00 31,500,000.00 IBRD-87650 35,000,000.00 31,500,000.00 31,500,000.00 Non-World Bank Financing 9,000,000.00 8,000,000.00 8,000,000.00 Borrower/Recipient 9,000,000.00 8,000,000.00 8,000,000.00 Total 44,000,000.00 39,500,000.00 39,500,000.00 RESTRUCTURING AND/OR ADDITIONAL FINANCING Amount Disbursed Date(s) Type Key Revisions (US$M) • Components • Results • Risks • Safeguard Policies Triggered 08-Mar-2021 Portal 9.00 • Legal Covenants • Disbursement Estimates • Loan Cancellations • Reallocations • Components • Results • Disbursement Estimates 04-Oct-2022 Portal 20.69 • Loan Closing Date Extension • Reallocations • Implementation Schedule • Results 14-Sep-2023 Portal 25.41 • Loan Closing Date Extension • Implementation Schedule @#&OPS~Doctype~OPS^dynamics@icrkeydates#doctemplate KEY DATES Key Events Planned Date Actual Date Concept Review 16-Nov-2015 16-Nov-2015 Authorize Negotiations 21-Feb-2017 28-Feb-2017 vi Approval 15-Jun-2017 15-Jun-2017 Signing 27-Jun-2017 27-Jun-2017 Effectiveness 01-Aug-2017 25-Sep-2017 ICR/NCO 29-Nov-2024 -- Restructuring Sequence.01 Not Applicable 08-Mar-2021 Restructuring Sequence.02 Not Applicable 04-Oct-2022 Restructuring Sequence.03 Not Applicable 14-Sep-2023 Mid-Term Review No. 01 30-Sep-2020 16-Dec-2020 Operation Closing/Cancellation 31-Mar-2024 31-Mar-2024 @#&OPS~Doctype~OPS^dynamics@icrratings#doctemplate RATINGS SUMMARY Outcome Bank Performance M&E Quality Highly Satisfactory Satisfactory Modest ISR RATINGS Actual Disbursements No. Date ISR Archived DO Rating IP Rating (US$M) 01 04-Jan-2018 Satisfactory Satisfactory 0.00 02 29-Jun-2018 Satisfactory Moderately Satisfactory 1.89 03 17-Jan-2019 Moderately Satisfactory Moderately Satisfactory 2.23 04 06-Sep-2019 Moderately Satisfactory Moderately Satisfactory 5.05 05 15-May-2020 Moderately Satisfactory Moderately Satisfactory 7.55 06 09-Sep-2020 Moderately Satisfactory Moderately Satisfactory 8.21 07 19-Mar-2021 Moderately Satisfactory Moderately Satisfactory 9.46 08 07-Oct-2021 Moderately Satisfactory Moderately Satisfactory 12.58 09 16-May-2022 Moderately Satisfactory Moderately Satisfactory 19.60 10 12-Jul-2022 Moderately Satisfactory Moderately Satisfactory 20.69 11 01-Feb-2023 Moderately Satisfactory Moderately Satisfactory 22.23 vii 12 21-Jun-2023 Satisfactory Moderately Satisfactory 25.17 13 18-Dec-2023 Satisfactory Moderately Satisfactory 27.50 @#&OPS~Doctype~OPS^dynamics@icrsectortheme#doctemplate SECTORS AND THEMES Sectors Adaptation Mitigation Major Sector Sector % Co-benefits Co-benefits (%) (%) Public Administration Sub-National Government 100 0 0 Themes Major Theme Theme (Level 2) Theme (Level 3) % Institutional Data Development and Capacity strengthening and 50 Building capacity building E-Government, incl. e- 100 services Public Administration Transparency, Public Sector Accountability and Good 50 Management Governance Debt Management 10 Domestic Revenue Public Finance Management 92 Administration Public Expenditure 50 Management viii ADM STAFF Role At Approval At ICR Practice Manager Fily Sissoko Hisham Ahmed Waly Regional Director - Mathew A. Verghis Global Director Deborah L. Wetzel Arturo Herrera Gutierrez Practice Group Vice President - Pablo Saavedra Country Director Junaid Kamal Ahmad Auguste Tano Kouame Regional Vice President Annette Dixon Martin Raiser ADM Responsible Team Leader Mohan Gopalakrishnan Mohan Gopalakrishnan Co-Team Leader(s) Puneet Kapoor Puneet Kapoor ICR Main Contributor Puneet Kapoor I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES A. CONTEXT AT APPRAISAL Context 1. The State of Assam in the northeastern region of India is rich in natural resources; however, it remains, one of India’s low-income states in relative terms. Though compliant with the fiscal responsibility targets mandated by the Assam Fiscal Responsibility and Budget Management Act (FRBM), the Government of Assam (GoA) faced several challenges in budget execution. In July 2016, the high-level Reform Committee on Planning and Budgeting in Assam identified the following critical issues: (a) an ambitious and unrealistic budget without adequate resources, forcing the GoA to apply excessive controls; (b) a need for resource mobilization, either through increased taxes, new avenues or savings through prudent allocations; and (c) the necessity for program convergence to avoid duplication of schemes across departments. 2. Efficiency in public financial management (PFM) was seriously constrained due to outdated and fragmented information systems, as well as a reliance on manual processes for budget and expenditure management and tax administration. There were gaps in the public procurement framework, including low coverage, and multiple e- Procurement systems in use in the State. These resulted in a lack of an effective decision support system to inform budget planning and execution as manifested in the concentration of discretionary expenditures in the last quarter of the financial year, a lack of transparency in procurement and a low budget execution rate, thereby impacting budget credibility. The GoA identified PFM strengthening and modernization as a reform priority using Information Technology (IT) as a key driver. Under an initiative called the Restructuring Systems and Technology for Augmentation of Resources for Transformed Assam (ReSTART Assam), the GoA focused its efforts on revenue augmentation, strengthening PFM and implementing large scale IT-enabled systems with the objective of transitioning to a “near- zero” human interface. The World Bank was well-placed to support the GoA in achieving its PFM reform initiatives by leveraging its significant global and local analytical knowledge of PFM reforms. Theory of Change (Results Chain) 3. The theory of change (figure 1) 1 considers the key challenges prioritized by GoA and the corresponding activities identified to address them. The operation relied on technology as a key enabler and leveraged GovTech. 1 A Theory of Change was not provided in the Project Appraisal Document. Page 1 Project Development Objective (PDO) 4. The PDO of the ASPIRe Project was “to contribute to improvement in predictability and transparency in budget execution and efficiency in tax administration in Assam.” Key Expected Outcomes and Outcome Indicators 5. The key outcomes and outcome indicators at the time of project appraisal are detailed in table 1. TABLE 1: PDO INDICATORS UNDER THE ASPIRE PROJECT PDO Indicators by Objectives / Outcomes Unit of Baseline End Target Measure Objective 1: To contribute to improvement in predictability and transparency in budget execution Reduction in share of discretionary expenditures reported in the last Percentage 55.00 48.00 quarter of the financial year Public access to key budget execution reports Yes/No No Yes Public access to procurement contracts awarded Percentage 0.00 90.00 Objective 2: To contribute to efficiency in tax administration in Assam Reduction in cost of collection in the Excise Department Percentage 4.01 3.00 Reduction in cost of collection of taxes in the Commissioner of Taxes Percentage 1.27 0.80 Page 2 Components 6. The project was an Investment Project Financing operation of US$44 million (Bank financing US$35 million; GoA counterpart financing US$9 million), with a combination of technical assistance (20% of the project) and results- based financing (80% of the project). It supported reform initiatives to strengthen PFM capabilities within GoA by modernizing information systems for enhanced/ informed decision making, as well as policy measures to create an ecosystem for efficient management of public resources and service delivery. Component 1 (US$3.7 million) focused on strengthening cash and debt management, procurement reforms, including e-Procurement and capacity building. Component 2 (US$39 million) focused on developing/modernizing Financial Management Information Systems (FMIS) for expenditure management; revenue management (Excise and Commissioner of Taxes); and e-services for citizens and taxpayers. It also included policy measures, and strengthening institutional capacities for improving efficiency of tax administration in key revenue-generating departments. Component 3 (US$1.2 million) was to support project management. B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) Revised PDO and Outcome Targets 7. There was no change in the PDO during the project life. Some intermediate indicators and end targets of two PDO indicators were revised due to a reassessment of the end targets based on additional analytical studies and information during the project implementation. Revised PDO Indicators 8. There was no change in the PDO indicators, although the end targets were revised for two (of the five) PDO indicators to reflect the actual implementation experience, as summarized in Table 2 below. TABLE 2: CHANGES IN PDO OUTCOME TARGETS Indicator Date of Change Baseline Original Revised End Target End Target Public access to procurement contracts awarded January 22, 2021 0.00 90.00 60.002 (percentage) Reduction in cost of collection of taxes in the Office of the September 8, 1.27 0.80 0.90 Commissioner of Taxes (percentage) 2022 Revised Components 9. Through the first project restructuring in January 2021, a new sub-component for design, development, and implementation of Digital Infrastructure for Direct Benefit Transfer Schemes (DIDS) to citizens was included. The COVID-19 pandemic revealed fault lines in social protection-related cash transfers, and investment in such a platform was consistent with the reforms being pursued at the national level. Under Component 1, two sub-components were dropped as part of the restructuring: (i) an institutional review of the finance department functions, considering the delay in the roll out of the FMIS; and (ii) institutional reforms for promoting Public-Private Partnerships (PPPs) as the government assessed that the economic environment was not conducive for PPPs. 2 The PDO indicator concerning transparency related to information about the contract award in the public domain, which was reduced to 60 percent as the GoA focused on: (i) major procuring departments, which constituted about 70 percent of the tenders issued; and (ii) aligning the end target with the performance of selected states in India based on a World Bank study “to understand the Government of India's e-Procurement intervention and its impact on procurement performance using data analytics” Page 3 Other Changes 10. The project was restructured three times during implementation. Other than those discussed above, changes included: (i) a project extension for a total of 18 months due to implementation delays, primarily on account of the COVID-19 pandemic, which delayed the development of key IT applications and a global chip shortage affecting delivery of IT hardware and peripherals; (ii) adjustments to the results/ PBC targets and achievement dates; (iii) a change in project size through the cancellation of US$3.5 million on account of exchange rate gains; (iv) a reallocation between disbursement categories; and (v) a change in environmental risk safeguards from category C to category B due to the inclusion of an activity relating to the establishment of a new excise chemical testing lab. Rationale for Changes and Implications on the Original Theory of Change 11. The changes from the three project restructurings did not alter its results chain. Instead, it provided an opportunity to reflect the changing priorities of GoA and its implementation experience by rescoping the project results chain and sequencing of project activities for speedier implementation to achieve the intended results. Time extensions helped institutionalize the reforms supported by the project, as well as to take over the operation and maintenance of the various e-governance applications developed under the Project. II. OUTCOME A. RELEVANCE OF PDO Assessment of Relevance of PDO and Rating 12. The PDO remains consistent with World Bank’s priorities in India, as reflected in the World Bank Country Partnership Framework FY18-22 discussed by the Board of Executive Directors on September 20, 2018 (Report # 126667-IN) and extended to FY25 by the corresponding Performance and Learning Review dated October 23, 2023. One of the four catalytic ‘Hows’ of engagement identified by the CPF is ‘strengthening public sector institutions,’ which is central to the achievement of the PDO. The World Bank support enabled GoA to strengthen systems and institutions and policy reforms towards more efficient management of public funds through: (i) improving public expenditure management practices; (ii) enhancing the efficiency of tax administration; and (iii) ushering in reforms in public procurement. With effective state engagement, the Project also demonstrated effective realization of the ‘state at the center’ focus of the CPF. The Project’s facilitation of cross-learning from PFM reforms in other Indian states, as well as global experiences, were consistent with the Lighthouse India approaches envisaged in the CPF. 13. The PDO remained relevant and consistent with the reform priorities of the Government of India (GoI) and GoA throughout the life of the project. In its report for the period of 2021-2026, the 15th Finance Commission identified the need to address the PFM framework at the central and state levels for a future fiscal architecture guided by the principles of equity, efficiency and transparency3. GoA continued its efforts in strengthening PFM, as reflected in the annual budget speeches of the finance minister for multiple years, demonstrating political support for the reforms. 14. Based on this narrative, the overall relevance of the PDO is rated High. 3Main report of the XV Finance Commission for 2021-26, https://fincomindia.nic.in/ShowContentOne.aspx?id=9&Section=1. Page 4 B. ACHIEVEMENT OF PDO (EFFICACY) Assessment of Achievement of Each Objective/Outcome 15. The project met the objectives outlined in the PDO statement, that is, improvement in the: (a) predictability in budget execution; (b) transparency in budget execution; and (c) efficiency in tax administration. The complementary approach of technical assistance and results-based financing worked well to: (a) strengthen the PFM institutional framework, policies and systems; and (b) incentivize the development, roll out, and actual effective use of core government work-flow-based IT applications The PBCs were well defined and provided an appropriate incentive to trigger action and performance. Improvement in predictability in budget execution 16. The implementation of the modernized workflow-based FMIS (FinAssam),4 including 14 modules,5 enabled GoA to transition from a core treasury system to a more comprehensive FMIS, which now serves as a single source of truth for GoA’s financial reporting. The processes of budget preparation and its distribution to line departments and over 10,000 drawing and disbursement officers (DDOs); the submission of bills for payment by the DDOs to treasuries; and controls on budget execution have been digitalized. In parallel, the integration of the FMIS with key internal and external applications, notably with the Reserve Bank of India’s e-payment system (e-kuber) and the state Accountant General’s (AG) accounting systems enabled the transition to electronic payments and online submission of bills and accounts to the state AG. The above reforms in FMIS enabled distribution of the budget within a week of its approval by the legislature 6 was accompanied by key business processes reforms including (i) relaxation of transaction level payment approval by the Finance Department; (ii) phased transition to use of global budget heads for selected budget heads, which reduced the need for virements at the DDO level; (iii) automation of the administrative and financial sanctions; and (iv) enhanced delegation of powers. Another significant reform was the streamlining of the process of the submission of monthly accounts by public works and forest departments using the FMIS enabling a reduction in the number of ‘Accounts Rendering Units’ from approximately 480 to 87. This significantly addressed the delays in submission of monthly accounts to the AG for compilation and reporting. 17. The electronic-Government Receipt Accounting System (e-GRAS), common e-collection portal for government tax and non-tax revenues, has been rolled out; as of project close, it covered 684 services across 60 departments. An overwhelming 98 percent of government receipts, by volume, were deposited online through e- GRAS during FY2023-24 (as against only 37 percent in FY2017-18), including 98 percent of commercial taxes and 100 percent of excise revenues. A disaggregated analysis of e-GRAS receipt data indicates a healthy adoption of the e- GRAS channel by common citizens and business entities, as the electronic payment option alleviated the inconvenient process of payment using physical treasury challans and multiple visits to the treasury, banks and the concerned departmental offices. Similarly, the integration with the e-kuber payment system of the Reserve Bank of India (RBI) has streamlined the electronic payments by the treasuries, resulting in a transition to a near 100 percent electronic payments, thereby eliminating the dependency on commercial banks and the need for efforts in reconciliation. 18. The project strengthened the GoA’s cash and debt management practices translating into discernible results. Building on the Debt Management Performance Assessment (DeMPA) recommendations, a Cash and Debt Management Unit was established in the Finance Department. Developing a basic debt policy and a medium-term 4 See: https://fin.assam.gov.in 5 Important modules include budget planning and preparation, budget allocation and distribution, administrative approvals, technical and financial sanctions, payroll, bill creation, expenditure processing and reporting, receipt management, and accounting and reconciliation. 6 Prior to digitization it used to take 2-3 months for the budget to be distributed to the DDOs Page 5 debt management strategy, along with annual and rolling monthly cash flow statements, enabled proactive debt management and better-informed decisions on State Development Loans (SDLs). Consequently, the average cost of fresh borrowings for GoA’s SDLs was consistently lower than the all-India average by 1-28 basis points over the last five years, resulting in estimated interest savings of Rs 5.465 billion (US$ 65 million) over the SDLs' tenure. Public debt statistics and performance are now reported to the legislature under Assam’s FRBM Act. 19. Strengthening the framework for public procurement and enhancing the coverage of e-Procurement reduced the procurement time cycle, thereby bringing greater efficiencies to this vital function. The project supported two key reforms in public procurement: a) Strengthening the enabling framework7 and Procurement Capacity Building. Seven Standard Bidding Documents (SBDs) have been notified and model templates for the terms of reference and request for proposals have been developed for use by the procuring entities. Due to the COVID pandemic-related constraints, and to supplement face- to-face training, capacity building in public procurement transitioned to using Massive Open Online Course on procurement from 2023, which included 16 modules with interactive case studies 8 . To stimulate demand for procurement training, GoA is gradually mandating certifications in procurement. b) Scaling up the use of e-Procurement and State Public Procurement Portal. The project supported the GoA in effectively transitioning to the use of one e-Procurement system in the state. It was facilitated by a gradual lowering of the threshold for e-Procurement from Rs 10 million (US$ 125,000) to Rs 2 million (US$ 25,000). It also incentivized the use of the full cycle of e-Procurement until the notification of the award of contract (AoC) in the system9. The outcomes of these e-enabled procurement reforms are gradually being observed in select key performance indicators, for example: (i) a 480 percent increase in online tenders from 1,626 (FY2016) to 9,726 (FY2024); (ii) value of e- Procurement rising at a compound annual growth rate (CAGR) of 26 percent during this period. The enhanced use of e-Procurement has resulted in reduction in the number of days taken from tender issuance to financial evaluation for open tenders from 196 days (FY2020) to 127 days (FY2024). Similarly, the percentage of open tenders finalized within the bid evaluation period has increased from 47 percent (FY2020) to 76 percent (FY2024). 20. The Digital Infrastructure for DBT Schemes (DIDS) initiated in 2021 has brought greater efficiency in the transfer of payments to beneficiaries. Using the DIDS platform, GoA envisions bringing all the beneficiary-oriented welfare schemes into a single platform for efficient, direct delivery of social welfare payments, with enhanced efficiency beneficiary targeting. The DIDS platform has enabled a centralized, configurable, scalable, and multilingual platform to register an applicant, check eligibility, and disburse applicable benefits to eligible beneficiaries electronically. The above features, together with the de-duplication functionality in the platform and the policy framework for DIDS10, have created the foundational building blocks for the creation of an integrated beneficiary registry. With the onboarding of three schemes11, direct benefit transfers aggregating to US$ 35 million to 2.4 million beneficiaries are now being processed monthly through the DIDS platform. 21. The above GovTech-oriented reforms – FMIS, DIDS and complementary process reforms, together with scale up of e-Procurement and better cash management - contributed to enhanced predictability in budget execution from 65% to 81%. In addition, it led to a reduction in the share of discretionary expenditures reported in 7 in line with the Assam Public Procurement Rules (notified in 2020, effective in 2021), under the 2017 public procurement legislation 8 However, with only 1,555 enrollments, the response has been modest; furthermore, less than 10 percent of registered participants have so far completed the course and received certification. 9Additionally, use of Government e-Marketplace (GeM) grew significantly (after GoA’s mandate), reducing time cycle for low-value procurements. 10 The Cabinet approval of DIDS policy framework progress towards the creation of an integrated Social Registry 11 These include: Orunodoi Scheme, Indira Miri Universal Widow Pension Scheme and Deen Dayal Dibyanjan Pension Schemes. Page 6 the last quarter of the financial year from a baseline of 55 percent to 40 percent against the PDO end target of 48 percent at completion. Key business process changes effected along with the digitization and efficiency gains from e- Procurement are detailed in annex 6A. Improvement in transparency in budget execution 22. The budget transparency practices are now institutionalized, and in-year budget execution reports are in public domain. Transparency has been substantially improved through enhanced public disclosures of budget information; the online dissemination of bilingual budget documents; and the availability of outcome budgets. The Finance Department has a dedicated budget dashboard on its FinAssam Portal, which provides a comprehensive access to the budget information for more than six years. The quality of budget disclosures has also improved, going beyond the constitutional requirements of publishing an Annual Financial Statement and fulfilling, to a significant extent, the international standards for budget disclosure12. A cross-state study by Transparency International in FY 2020 ranked Assam as the best in terms of budget transparency among Indian states. In addition, machine-readable GoA budget data in open formats enabled the development of the state budget data dashboard on the Open Budget India portal, enhancing public access and engagement. 23. Strengthening the framework for public procurement and the increased use of e-Procurement enhanced transparency. The State Public Procurement Portal (SPPP)13 was launched in August 2022 as a one-stop-shop that integrates14 all information related to procurement, including the Procurement Act and rules, relevant notifications and office orders, procurement opportunities (tenders) and contract awards. The SPPP also enables the electronic submission of procurement-related grievances. 24. Key in-year budget execution reports, as well as over 60 percent of procurement contract awards, are now in the public domain. Hence, the PDO targets were fully achieved. Improvement in efficiency in tax administration 25. The development and roll out of a comprehensive e-governance application, coupled with associated policy changes, contributed to enhanced revenue and efficiency in excise administration. The Assam Excise Revenue Management System (AERMS) has alleviated the challenges of administrative inefficiencies of fragmented manual operation. The digital transformation, along with other important measures, 15 enhanced the capacity of the department to enforce regulatory compliance. These measures included: high-security holograms with Quick Response (QR) code on liquor bottles; operationalizing the Track & Trace System for real-time electronic tracking of liquor consignments; and the modernization of the Excise Chemical Laboratory. This resulted in an increase in excise revenues from Rs 8,000 million (US$ 100 million) in FY2015-16 to Rs 31,380 million (US$ 380 million) in FY2023-24, translating into a CAGR of 15 percent. The AEREMS has also contributed to improved delivery of e-Services to licensees,16 with 92 percent of the services being delivered within the established service timelines in FY2022-23. 12 This includes the public availability of essential budget documents: government budget proposals; enacted budgets; in-year reports; and mid- and end-year review reports, as well as the Citizen's Budget. 13 See: https://sppp.assam.gov.in 14 Through automated web-service Application Programming Interfaces (APIs), the SPPP aggregates online tenders published across portals. 15 This includes the amendment of State Excise legislation, bringing into force new Excise Rules, thereby moving the collection of excise revenues to the first point-of-sale, and a restructuring of the excise ad-valorem levy to define new categories for different consumer segments and others. 16 All transport permits are issued online with over half a million permits issued in the last two years. Page 7 26. The Commercial Tax (CoT) Administration was streamlined through the commissioning of an end-to-end integrated technology platform for taxes other than Goods and Services Tax (GST) with related policy actions.17 A new e-governance application replaced an outdated and fragmented tax information system for the value-added tax (VAT) and digitized the workflow processes for residual taxes administered by the CoT, which were previously manual.18 This allowed for a single online interface for taxpayer self-services, including: (i) electronic filing of returns for all non-GST taxes; and (ii) a mechanism for the completion of online assessments of tax returns, which has resulted in a healthy growth in taxpayer compliance19.The use of data analytics and digital forensic tools enabled the CoT to detect inconsistencies between GST forms, which resulted in the unearthing instances of tax evasion (including unaccounted sales and under invoicing, fraudulent claims of GST input tax credits and suppression of turnover ) and recovery, amounting to Rs 2.960 billion (US$ 35 million) until the close of the project. 27. The cost of the collection of taxes in the office of the CoT accordingly reduced to 0.76 percent (against an end target of 0.80 percent) in 2023-24, as compared to the baseline of 1.27 percent. Likewise, the excise revenue was reduced to 2.38 percent in FY 2023-24 (against an end target of 3.00 percent) over the baseline of 4.01 percent, thus fully achieving the PDO targets. 28. The overall efficacy of the achievement of the PDO is rated as High. The Project followed GovTech-oriented reform strategies covering critical elements of the PFM functions, including budget preparation and execution; expenditure management and reporting; public procurement; service delivery; and revenue administration. The Project achieved all the PDO-level indicators and intermediate indicators, and in certain instances the results exceeded the end-of-project targets. C. EFFICIENCY Assessment of Efficiency and Rating 29. The Project Appraisal Document did not estimate efficiency gains, emphasizing instead qualitative gains from improved PFM systems; practices and efficiency through better cash management; enhanced e-collection; and revenue augmentation in the Excise Department and the office of the CoT. 30. Based on information available at the time of project closing, a robust attempt has been made to compute the ex-post efficiency gains from the different activities under the project. The net efficiency gains due to the implementation of the project are estimated at US$ 440 million — attributable to net gains during the tenure of the project. However, the overall impact of the project and some of the efficiency gains are expected to continue well beyond the project period. The detailed efficiency analysis is provided in Annex 4. 31. The efficiency gain accruing from the project are multi-dimensional in nature: (a) including actual gains (i) from increase in excise and related VAT revenues from the sale of alcohol, largely attributable to the digitization of core functions of the Excise administration and strategic changes in excise policies; (ii) savings from the identification and elimination of ineligible beneficiaries based on de-duplication of beneficiaries through the DIDS 20 ; and (iii) increase in revenues attributable to the use of data analytics and forensics tools in commercial tax; and (b) notional savings from (i) savings in interest costs due to a reduction in the average cost of borrowing on SDLs; (ii) digitization 17 For example, the policy of deemed registration expanded the taxpayer base under the Assam Professional, Trades, Callings and Employments Tax (APTCE) Act; more than 1 million new professional tax registrations and enrollments have been achieved in the last three financial years. 18 Associated challenges related to inadequate transparency in tax administration, poor compliance, and deficient realization of tax-revenues. 19 The number of tax returns filed in FY2021-22 and FY 2022-23 have increased by 32 percent and 27 percent respectively over the previous years. 20 This occurred in a scenario where there is no inclusion of new beneficiaries by the government in lieu of the ineligible beneficiaries identified. Page 8 of submission of monthly accounts to the AG; and (c) time and cost savings for citizens due to the introduction of e- GRAS as a common e-collection portal. 32. The project resulted in several environmental and social benefits. The process re-engineering and digitalization of multiple services has led to a reduction in physical documentation, thereby reducing the consumption of paper. A substantial reduction in administrative travel (on account of virtual transmission of documents, instead of hard copies) resulted in a decrease in the carbon footprint. The digitization of the DBT schemes improved targeting of beneficiaries and supported last-mile service delivery. Other benefits, such as increased government productivity and a reduction in the procurement cycle etc. cannot be quantitatively estimated; however, their contribution to overall impact is significant. 33. The efficiency of the project is rated High. The efficiency is measured in terms of gains of US$ 479 million over the project life compared to a project cost of US$ 39 million. D. JUSTIFICATION OF OVERALL OUTCOME RATING 34. The overall outcome is rated as Highly Satisfactory21. This is based on the High rating assessed for relevance, efficacy, and efficiency using the 6-point scale enunciated in the Implementation Completion and Results Report (ICR) Guidance. E. OTHER OUTCOMES AND IMPACTS (IF ANY) Gender 35. Although the Project was not gender tagged, it did support gender-affirmative actions. One of these primary gender action areas entailed the streamlining of the delivery of social welfare benefits to women members of beneficiary households under the Orunodoi Scheme of the GoA. The DIDS platform established under the project ensured DBT to the bank accounts of more than 2.3 million women beneficiaries every month under the Orunodoi Scheme. The process marks a significant step toward more women-centric social welfare endeavors of the GoA. The presentation of the Gender Budget statement involving gender-responsive schemes of 24 departments across sectors is another important milestone of gender-affirmative action. Institutional Strengthening 36. Institutional strengthening, including capacity building, was a critical element of the project. The GoA benefitted from a knowledge exchange visit to Indian states to study their PFM systems, particularly FMIS and excise systems to understand procurement, implementation, and maintenance modalities. The Cash and Debt Management Cell and the DBT Cell were established within the Finance Department. Also, a reorganization in the CoT enabled the creation of an Economic Intelligence Unit. A modern Excise Lab has been established in partnership with the Assam Biotech Park, leveraging shared infrastructure and manpower for sustainability. Recognizing the knowledge gap, the GoA also established linkages with key national research institutes, such as the National Institute of Public Finance and Policy, the Indian Institute of Management, the Shillong and the Indian Institute of Technology Guwahati. Poverty Reduction and Shared Prosperity 37. The project activities relating to PFM reforms that is, expenditure efficiency, enhancing own source revenue and strengthening institutions including systems contributes to enhanced fiscal space to direct resources for targeted 21Despite the implementation progress being consistently rated moderately satisfactory — which was primarily due to the lack of effective coordination across multiple implementing departments, to delays in implementation resulting in deferred achievement of select PBCs the project achieved all the PDO and Intermediate Results, with meaningful impact and substantial efficiency gains. Page 9 spending on poverty reduction initiatives, as well as for citizen-centric services. It also contributed to enhancing the effectiveness of public expenditures, with each of these being an important pathway to accelerate poverty reduction and increase shared prosperity. Other Unintended Outcomes and Impacts 38. The implementation of the FMIS and other e-Governance solutions in the CoT and Excise Department helped the GoA transition to paperless processing, significantly reducing paper consumption. The electronic transmission of monthly accounts and vouchers by 87 Account Rendering Units eliminated the need for physical document delivery, saving an estimated 17,000 reams of A4 paper annually. E-Procurement reduced the need for physical tender documents, and system-generated excise permits and passes using QR codes minimized paper usage. These changes resulted in an overall reduction of over 100 tons of carbon dioxide (CO2) per year. III. KEY FACTORS AFFECTED IMPLEMENTATION AND OUTCOME A. KEY FACTORS DURING PREPARATION 40. The project was aligned with the GoA’s reform priorities. The project was designed and aligned with the issues identified by the GoA (for instance, a 2016 White Paper on State Finances) and reform priorities (ReSTART mission). It was supplemented by preparatory studies jointly conducted by the World Bank and the GoA on select topics, including the DeMPA assessment, a review of the multiple e-Procurement systems in use in the GoA in 2016- 17. The approval by the legislature of the Assam Public Procurement Act of 2017 was also a catalyst for supporting procurement reforms. The project was anchored in the GoA’s Finance Department due to its convening power and the initiatives relating primarily to PFM. However, responsibility for management of the individual activity was vested in the concerned department/agency. 41. Due to the participation of multiple departments and the cross-cutting impact of reforms, coordination and project management were critical. Based on experience in Assam and the absence of a core team in the Finance Department at the time of project preparation, the GoA constituted a special purpose vehicle called the Assam Society for a Comprehensive Financial System (AS-CFMS), which served as the Project Management Unit (PMU). The AS-CFMS has a Governing Body under the Chief Minister, an Executive Committee under the Chief Secretary, with the day-to- day management and monitoring vested with the Project Director (an officer of the Indian Administrative Services). 42. Lessons from the implementation of e-governance systems in India and capacity building in the GoA informed the choice of lending instrument. The choice of lending instrument was informed by the World Bank’s understanding and publicly available reports concerning experiences and challenges of the development and delays in adoption of largescale IT applications in the public sector, including the lack of adequate institutional capacity within the GoA. The technical assistance and project management component adopted the traditional Investment Project Financing approach; however, the development and roll out of various e-governance applications for revenue and expenditure management were incentivized through the PBCs. 43. Risk and mitigation measures. The overall risk during preparation was assessed as moderate. However, the risk of institutional capacity for implementation and sustainability was assessed as substantial due to the low capacity of the finance department, as well as two previous attempts at modernizing the FMIS systems that did not yield the desired outcomes. Accordingly, during project preparation exposure visits to other states were organized and an assessment of existing e-governance systems was carried out. This enhanced the confidence of the GoA officials, and learnings of similar challenges in implementation in other states proved beneficial during project implementation. Page 10 B. KEY FACTORS DURING IMPLEMENTATION 44. There were multiple issues and challenges along the road to reform, including implementation issues. These were exacerbated by the COVID-19 lockdowns and the 2019 public agitations related to the Citizen Amendment Bill. Delays in contract amendments, leadership changes22, and contractual staff resignations also caused delays. The need for consensus on FMIS implementation approach impacted its procurement, development and roll put. Technical staff's familiarity with legacy ICT systems necessitated overcoming some resistance to change. Consultants' reluctance to participate in procurement opportunities in the North-Eastern states posed another challenge. On the governance side, the convening of the meetings of the Governing Body of the AS-CFMS become crucial in facilitating decentralized decision-making and streamlining the time-consuming payment approvals. These resulted in a 12–15-month delay and contributed to the project's closing date extension. 45. The ASPIRe project hinged on building/upgrading GovTech solutions together with associated improvements in other digital infrastructure, such as hardware and connectivity. These required informed choices to be made concerning technological options and the resolution of conflicting views, as capacity to deal with such issues was limited. Limited exposure to holistic digitalization and the use of ICT solutions had created a gap between the skills required and those available in the government. The Bank proactively engaged with the GoA to expeditiously put in place mitigating measures. These included the following: ▪ Exposure visits for GoA officials to other states to study their PFM systems, particularly the FMIS and excise systems, to better understand procurement and maintenance modalities. ▪ GoA senior officials visited the Republic of Korea to learn from their experiences in implementing dBrain, the FMIS in Korea. ▪ Business process reengineering consultants were engaged to identify gaps in the existing systems, and project management consultants were engaged to support the internal teams and oversee the performance and deliverables of the systems integrators. 46. Project implementation was supported with an inclusive Bank team with diverse skills . These included experts in government budgeting and expenditure systems, revenue systems, e-governance systems and social protection. These interactions were not limited to missions, and periodic technical discussions were arranged. This was helped by the continuity of the Task Team Leaders and the domain experts, thus greatly contributing to establishing confidence with the counterparts. One such action was the agility with which the Bank team helped finalize the DBT sub-component post-pandemic to factor in the priority of the GoA. IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME A. QUALITY OF MONITORING AND EVALUATION (M&E) M&E Design 47. The project monitoring and evaluation (M&E) was premised on the data collected through the various core government systems developed under the project. The PMU established a process for collating such data and prepared bi-annual reports highlighting project achievements and implementation constraints. The results framework was developed in consultation with the GoA representatives, thus ensuring that it was well understood by all stakeholders. Individual indicators, while addressing independent elements of the budget cycle, complemented each other and contributed to establishing the building blocks for measuring the achievement of the project objectives. 22 GoA ensured continuity of the Project Director (PD)/Additional PD from mid-2021 to project closure. Page 11 M&E Implementation 48. Implementation monitoring and reporting was undertaken by the project as well as the World Bank team. The bi-annual progress reports were produced in the PMU until March 2022; however, there was scope to improve the regularity and consistency of these reports to facilitate timely corrective actions. Project monitoring by the World Bank was primarily through biannual Implementation Support Missions (ISMs) and a mid-term review, as well as several technical missions in the intervening periods. M&E Utilization 49. The M&E framework provided decision makers with near real-time access to disaggregated/ granular transaction-level data to generate the requisite monitoring reports. Project progress supported by such M&E reports supported deliberations during the meetings of the Governing Body and Executive Committee of AS-CFMS, but the number of meetings and their regularity could have been better. With the core government systems maturing over time, the project progress was reported to the Chief Minister through a dashboard for monitoring of externally aided projects. The M&E findings were also used as a basis for project restructurings and extensions. In addition, the findings deepened the GoA's strategy on improved public finance capabilities, including work on macro-fiscal resilience and second-generation PFM reform. Justification of Overall Rating of Quality of M&E 50. The overall quality of M&E is rated Moderate. There were some difficulties in monitoring progress given the challenges in frequency and consistency in project reporting. An extensive review at the level of the governing institutions of the AS-CFMS would have helped expedite decision making. B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE 51. There was a change in the environmental risk category during the project lifespan. The project was assessed as a category C project in the preparation stage. During the first restructuring, there was a change in the environmental risk safeguards category from C to B due to the implementation of a new excise chemical lab at a new location, with minor civil works limited to renovation and refurbishments of the building. Under O.P. 4.01, an Environmental Assessment was triggered, and an Environmental and Social Management Plan was prepared as part of the bidding documents to ensure that the environmental issues were considered, implemented, and monitored. The excise chemical lab was established adhering to national standards for environment safeguards concerning the disposal of waste. 52. The benefits of the project in strengthening institutions and PFM systems also flowed to the Autonomous Councils. Almost one-fifth of the project area population is from scheduled caste (SC) and scheduled tribe (ST) communities. The high concentration of STs is in the seven districts of the three tribal Autonomous Councils, which are governed by their own administrative system, with a substantial degree of autonomy under 6th Schedule of the Constitution, as well as a separate budgetary allocation in the state budget. Thus, the project did not have any adverse social impact. and no social safeguard policies were triggered. 53. Procurement was delayed due to a combination of factors. External factors included the COVID-19 pandemic lockdowns, citizen agitations due to the Citizen Amendment Bill, and sometimes inadequate market interest/competition. Internal factors included a time lag in taking decisions regarding IT solutions by the project due to an assessment of the technology and the approach of implementation to be adopted. Findings from the procurement post-reviews highlighted delays in contract management, particularly regarding the time taken to award and sign the contracts, the finalizing of the amendments to the contracts based on actual implementation experience, Page 12 as well as some delays in updating the Bank’s system, that is, the Systematic Tracking of Exchanges in Procurement or STEP. The Bank worked with the GoA to mitigate these issues. 54. The financial management (FM) performance rating was moderately satisfactory throughout the project life. Overall, the budget provision and flow of funds was appropriate during the project life. Accounting was done at the AS-CFMS with the support of a financial management support firm. There were minor delays in the submission of the interim unaudited financial reports and audit reports. There were no major audit findings in the project. However, there were instances of delayed payments to vendors due to issues in the delegation of powers. The Bank’s missions emphasized the need for enhancing the delegation of administrative and financial powers at the level of the Project Director (PD)/Additional PD to help expedite residual procurement approvals and project payments. This was done in early 2022. More regular meetings of the Governing Body and Executive Committee of the AS-CFMS could have helped in the expediting of the decisions and improvements in the pace of implementation. C. BANK PERFORMANCE Quality at Entry 55. The quality of World Bank performance at entry was Satisfactory. As it was the first PFM reform project in India using results-based lending, the World Bank team balanced ambition and pragmatism in designing the PBCs. The project interventions were finalized in consultation with the GoA and all stakeholders. They were based on the assessment of PFM maturity at that time and the gaps identified by the GoA. The project design was informed by past reforms and experiences in Assam, as well as PFM reform programs in other states in India and other economies. The project was envisioned as a foundational platform for establishing fundamental PFM systems—primarily the IFMIS, e-Procurement, core revenue management systems, on which more ambitious governance reforms could be built. The task team consulted global FMIS experts and took their inputs into consideration in the design of the project and the diverse task team included specialist World Bank personnel and external consultants which helped in generating new, innovative design ideas. Quality of Supervision 56. The quality of supervision was Satisfactory. The World Bank Task Team Leaders and several team members remained unchanged throughout the project. An additional ‘open agenda’ session during ISM visits facilitated a free exchange of ideas, leading to innovations in design and implementation. These exchanges resulted in leveraging existing infrastructure at the Assam Biotech Park to establish the new Excise chemical lab at a significantly lower cost, ensuring sustainability. The Indian Institute of Technology Guwahati provided UI/UX reviews of various IT applications, and the idea of the SPPP emerged from these discussions. Technical support missions brainstormed about challenging PBCs, particularly the development and roll out of the FMIS, including the transition of works and forest accounts into the treasuries. Several interactions were organized virtually to adapt to COVID-19 disruptions. The World Bank facilitated visits for GoA officials to other states and organized a national workshop on IFMIS in May 2018 in Jaipur and a PFM Round Table in May 2019 in Delhi. These events were part of the Lighthouse agenda and attended by senior GoA officials Justification of Overall Rating of Bank Performance 57. Based on the satisfactory quality of Bank performance at entry and during supervision, the overall Bank performance is rated Satisfactory. Page 13 D. RISK TO DEVELOPMENT OUTCOME 58. The risk to development outcomes is considered marginal. All IT solutions supported under the project are ‘Core applications.’ These have been successfully rolled out, legacy systems retired, and manual processes discontinued. The GoA continues to provide budgetary allocations and extend the operation and maintenance (O&M) contracts of the IT solutions beyond the project period, minimizing the risk of discontinuation. Some residual FMIS stabilization and technical issues are being addressed by GoA. Strengthening the existing IT cadre in the Finance Department and CoT and creating an IT cadre are being pursued. Institutional reforms, particularly in public procurement, are anchored under the state Procurement Act and are likely to be sustained. Other reforms, such as merging works accounts with treasury accounts for electronic submission to the state’s AG, and enhanced transparency through in-year budget reports, are now fully embedded in FMIS and unlikely to be reversed. Strong ownership from political and administrative leadership minimizes the risk of reversal23. However, there is an emerging risk from tightening fiscal V. LESSONS AND RECOMMENDATIONS 59. The project has several important lessons which include the following: a) Political buy-in and support was essential for reforms. Strong political support and buy-in acts as a catalyst that helps unlock bottlenecks and/or address political economy aspects. Reforms in the core government legacy process, which are often well entrenched with deeply rooted practices, are challenging to change. Therefore, political support is both necessary and helpful. The Chief Minister’s endorsement enabled a lowering of the e- Procurement threshold to Rs 2 million (US$ 25,000); the approval of the new procurement rules and the mandating departments to use the common e-collection portal; and the rapid roll out in the use of digital signatures. b) Senior leadership involvement and an empowered executive committee helps in providing strategic direction, but lack of adequate delegation delayed certain procurements. The project was overseen by an Executive Committee chaired by a Chief Secretary. The committee provided strategic direction to the project, especially for those reforms that had cross-cutting implications and helped in inter-departmental coordination. However, due to the lack of clarity in the delegation of powers, certain larger value procurements and their related payments were required to be approved at higher levels of the decision-making hierarchy. This caused avoidable delays, and the benefit of creating a special purpose vehicle (SPV) for speedier project execution was not fully realized. This was more pronounced during the COVID pandemic-induced disruptions, which were mitigated to an extent in the later part of the project by the continuity in project management leadership. For projects relying on SPVs for reforms, the lesson is to pay attention to creating empowered agencies with the necessary convening powers. c) Investments in process automation ensure business continuity in times of crisis. Multiple PBCs under the Project were directed toward the automation (e-Procurement, FMIS, e-GRAS and Excise e-Governance application) of the GoA’s business processes. This helped the Government maintain some business continuity 23 For example, the key achievements under the Project have been acknowledged by the Finance Minister of the GoA in the budget speeches for 2022/23 and 2023/24 (https://fin.assam.gov.in/budget_documents/), enhancing the credibility of the reforms. Page 14 during the COVID-19 period when physical presence in the office became challenging. Information, such as administrative proposals, bills, and payment advice, was available electronically and did not require access to physical files. d) Continuous stakeholder engagement and communication of ‘gains’ generates buy-in for reforms. This is an arduous task, but critical to ensure success. The human behavior dimensions in digitalization influence people’s comfort with legacy processes and first-generation IT applications. Thus, extensive engagements are needed to overcome resistance to change and mitigate aversion to the adoption of new methods. For the GovTech solutions identified, quick wins are critical. They need to be effectively communicated to various stakeholders, including elected representatives to ensure stronger buy-in and sustain the momentum. Continuous two-way engagement with and feedback from employees, licensees, vendors and other stakeholders needs to be embedded and institutionalized to help generate buy-in for the reform actions. e) Creating IT capacities is a fundamental requirement in technology-intensive programs. While the software development, implementation and operations and maintenance can be outsourced to solution providers, there is a need to strengthen the in-house IT personnel/IT cadre with adequate core IT knowledge and project management skills within the institutions. It helps create such capacities at the commencement of the Project to ensure sustainability of the change outcomes. f) Institutional reforms and behavior changes are more challenging and need more time to become ingrained and internalized than IT-driven transformations. The project helped establish units for cash and debt management, and the DBT cell. However, developing the capacity building of officials in these units was challenging due to frequent transfers and postings. In some instances, the lack of internal domain expertise led to a continued reliance on external experts. Similarly, the full recommendations of the study concerning the reorganization of the Commercial Tax Department (CTD) aligned with the new demand pursuant to the introduction of the GST could not be implemented due to administrative reasons. g) Results-based financing was a suitable approach for PFM reform projects. The PBC-linked disbursements acted as a catalyst and enabled the Finance Department to internally drive certain key cross-cutting reforms across departments, such as the publishing of the AoCs; the folding of the works and forest accounts within the treasury; and integration with the AG. The use of results-based financing makes it possible to clearly define expected results and align financing to them, thus improving the probability of achieving the desired results. The outcomes also influenced the State’s decision to propose a follow-on project focusing on governance and service delivery improvements. Page 15 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS @#&OPS~Doctype~OPS^dynamics@icrresultframework#doctemplate A. RESULTS FRAMEWORK PDO Indicators by Outcomes To contribute to improvement in predictablity and transparency in budget execution Indicator Name Baseline Closing Period (Original) Closing Period (Current) Actual Achieved at Completion Result Month/Year Result Month/Year Result Month/Year Result Month/Year Reduction in share of discretionary 55.00 Mar/2015 48.00 Sep/2022 48.00 Mar/2024 40 Mar/2024 expenditure reported in the last Comments on achieving targets The reduction is based on a combination of reforms (i) process reforms in budget preparation, timeliness in quarter of the financial year distribution of the budget and reporting and accounting of expenditures and supported by improvement in (Percentage) cycle time for procurement and timely payments based on improved cash management practices. No Mar/2016 Yes Sep/2022 Yes Mar/2024 Yes Mar/2024 Public access to key budget execution Comments on achieving targets The Finance Department, has from March 31, 2022, started sharing the in-year budget execution reports in reports (Yes/No) (Yes/No) public domain on a near real time basis. Information of procurement award in the public domain has been sustained in FY 2023. Public access to procurement 0.00 Mar/2016 90.00 Sep/2022 60.00 71 contracts awarded (Percentage) To contribute to improvement in efficiency in tax administration in Assam Indicator Name Baseline Closing Period (Original) Closing Period (Current) Actual Achieved at Completion Result Month/Year Result Month/Year Result Month/Year Result Month/Year Reduction in cost of collection of tax 4.01 Mar/2015 3.00 Sep/2022 3.00 Mar/2024 2.38 Mar/2024 revenue in Excise Department Comments on achieving targets Achievement has been enabled based on a combination of policy changes and rollout of a workflow based e- (Percentage) governance application for all excise services and excise tax collection Reduction in cost of collection 1.27 Mar/2015 0.80 Sep/2022 0.90 Mar/2024 0.76 Mar/2024 of taxes in office of the Comments on achieving targets The achievement is based on implementation of a new e-governance application for all non-GST taxes in CoT, Commissioner of Taxes and use of data analytics tools to identify possible tax leakages. (Percentage) Page 16 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT Intermediate Indicators by Components Strengthening Public Finance Institutional Capacity Indicator Name Baseline Closing Period (Original) Closing Period (Current) Actual Achieved at Completion Result Month/Year Result Month/Year Result Month/Year Result Month/Year Outdated Mar/2016 Procurement rules Sep/2022 Procurement Mar/2024 (i) Procurement Mar/2024 procurement rules; and SBD notified framework rules and seven no SBDs; and no and published; strengthened by SBD's have been system for public resolution of approval of notified by the GoA; procurement training procurement procurement rules (ii) Cumulatively grievances disclosed and notification 1613 officials have publically; enhanced SBDs; and capacity been trained in Strengthened public procurement procurement of selected officials procurement of framework and capacity building of capacity of the enhanced (1000 which 306 (19 officials (of which 5% are female) GoA’s officials (1500 officials trained in percent) are female. (Text) officials) public procurement) (iiI) The MOOC for procurement has been launched and 1555 officials have registered for the same Comments on achieving targets Notification of the procurement rules took time to build consensus amongst officials and address concerns of potential delays. GO issued for Mar/2016 Enhanced coverage Sep/2022 Increased coverage Mar/2024 e-procurement in FY Mar/2024 mandatory e- of e-procurement of value of e- 2023-24 was 9726 Procurement for (250% increase over procurement (250% tenders with a value procurement above baseline) increase over of Rs 37,012 crores Increased coverage of e-Procurement INR 20 lacs; e- baseline); enhanced which is a 600 (Text) Procurement tender disclosure and percent increase value in 2015 2016 transparency in over the baseline - INR 5,700 crores. procurement. value. (ii) SPPP is operational Page 17 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT Comments on achieving targets This was enabled by transition to use of one e-GP system by all the procuring entities in the state; creation of a central pool account for EMD and bid security which facilitated a faster refund to unsuccessful bidders and a strong support from the e-GP helpdesk Sporadic training on Mar/2016 Enhanced PFM Sep/2022 Enhanced PFM Mar/2024 Cumulatively 904 Mar/2024 PFM capacity of the capacity of the officials have been GoA’s finance GoA's finance trained of which Training of GoA officials in PFM (of officials (2250 officials in selected 135 (15 percent) are which 10% are female) (Text) officials trained) areas of PFM (500 female. officials trained) Comments on achieving targets Partnerships with national and research institutes focused on PFM/ Fiscal aspects and Local Govt audits facilitated the PFM training. Limited budget Mar/2016 Enhanced budget Sep/2022 Enhanced budget Mar/2024 Disclosures made by Mar/2024 disclosures disclosure to disclosure to Finance Department citizens, including citizens, including further complying compliance with the compliance with the with the disclosure disclosure requirements of the requirements of the requirements of the Assam’s FRBM Act Enhanced public disclosure of budget Assam’s FRBM Actv Assam’s FRBM Act by disclosing the information and Citizen's impact of Engagement (Text) Component supplementary demand for grants on fiscal indicators. Comments on achieving targets GoA collaborated with Center for Budget and Governance Accountability (CBGA) to enhance budget documentation and transparency. GoA budget is available on the Open Budgets India portal in accessible and open format and is now completely available in electronic format (eBudget) since 2018/19. GoA prepares a Citizen Budget, a Child Budget, Gender Budget since 2020-21 and Green Budget since 2023-24. Strengthening Expenditure and Revenue Information Systems Indicator Name Baseline Closing Period (Original) Closing Period (Current) Actual Achieved at Completion Result Month/Year Result Month/Year Result Month/Year Result Month/Year Fragmented Mar/2016 Cash and Debt Sep/2022 Cash and Debt Mar/2024 Public Debt Mar/2024 institutions fordebt Management Unit Management Unit statistics and Enhanced capacity in Cash and Debt management;absence established; annual established;Annual performance has Management (Text) of active cashand borrowing informed borrowing informed been reported in debt management by realistic cash- by cash-flow the statement flow forecasts; Debt forecasts; Enhanced under Assam’s Page 18 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT andcash-flow Statistical Bulletin disclosures on FRBM Act by the forecasting published. public debt Public Finance debt data digitized Department. Complete Public Debt data has been recorded in the Debt Management Module of Fin Assam portal. Comments on achieving targets Technical support from a debt management expert with experience in RBI's debt management office and setting up of a cash and debt management function within the department of finance. Processes for budget Mar/2016 Budget distribution Sep/2022 Controls over Mar/2024 (i) Core FMIS Mar/2024 distribution, budget by HoDs and BCOs, Budget distribution modules relating to control, and bill budget control by and execution and budget preparation submission by the the treasury, and accounting / and distribution, DDOs are manual; No bill submission by reporting payroll, bill decision support for the DDOs strengthened submission and Finance Department automated; decision through a functional expenditure and delays in support system for and integrated FMIS processing and submission of the Finance and decision reporting have been monthly accounts for Department support system for fully rolled out and compilation. operationalized the FD legacy systems Enhanced controls in budget operationalized retired as of March execution and reporting 31, 2024. (Text) Component Integrations completed with four key external systems. (ii) The timely submission of monthly accounts to the AG achieved by all the accounts rendering units, as of March 31, 2024. Comments on achieving targets Cabinet approval and updated treasury rules enabled the transition of rendering of accounts by works and forest divisions through the treasuries was a key enabler. Page 19 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT E-collection for Excise Mar/2016 100% of excise and Sep/2022 At least 90% of Mar/2024 (i) Over 90 percent Mar/2024 NIL;for the CoT 35% non-GST tax excise and 80% of payments by the by volume for VAT (administered by non-GST tax treasuries are digital and nil for other the COT) collected (administered by using RBI's e-kuber taxes; andfragmented electronically and at the COT) collected platform; and (ii) systems and low base least 90% of electronically and at over 95 percent of Increased percentage of e-collection of e-payments payments made least 80% of excise revenue and and e-payments using common e- electronically by the payments made Non GST tax collection and payment systems treasuries electronically by the collection is being (Text) Component treasuries and e- collected collection portal electronically using scaled up to cover e-Gras; which has additional services also been extended to 684 non tax revenue collections Fragmented and Mar/2016 Enhanced taxpayer Sep/2022 Enhanced taxpayer Mar/2024 a new integrated IT Mar/2024 outdatedIT services provided by services provided by application for all applications; e-return CoT for returns, CoT for returns, non-GST tax filing at 15% for VAT; obligations, and obligations, and revenues Enhanced services provided by office e-returns do not have communication communication administered by of the Commissioner of Taxes (CoT) in-built electronic CoT has been rolled using e-Governance scrutiny feature;No e- out and tax payer (Text) Component governance solutions services e-enabled for non GST State reducing interface. taxes Comments on achieving targets Old legacy systems have been retired Inadequate audit Mar/2016 Core tax Sep/2022 Capacity of core tax Mar/2024 The CTD has Mar/2024 systems that is, lack administration administration established an of system based audit functions functions Economic Strengthened institutional capacity in selection and limited strengthened strengthened Intelligence Unit office of the Commissioner of Taxes tax analyticalcapacity (EIU) and enhanced (CoT) (Text) its data analytics capability using data analytics software and forensic tools. Page 20 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT Based on preliminary data analytics, CTD has realized over INR 240 crores in GST revenue in FY 2023- 24. Model Audit Manual as prepared by GST Council adopted by Govt. of Assam Comments on achieving targets Reform was informed by an Institutional study of CoT. All procedures and Mar/2016 E-governance Sep/2022 Enhanced services Mar/2024 The new E-Gov Mar/2024 processes are manual solution provided by the solution rolled out in the Excise operationalized in Excise Department and linked to GoA's Department; Excise the Excise and 80% increase in Ease of Doing revenue INR 807 Department with (a) excise revenue over Business Portal. crore in 2015-2016 e-services to baseline Track and Trace taxpayers and (b) module Enhanced services provided by Excise MIS for monitoring implemented in the Department using e-Governance and regulation; 80% bottling plants in (Text) Component increase in excise the state. Excise revenue over revenue has baseline increased 300 percent from the baseline of FY2016 to FY2024. Comments on achieving targets All tax payer services are online Fragmented scheme- Sep/2020 NIL NIL Centralized IT Mar/2024 The DIDS system is Mar/2024 Digitization and improving efficiency based MIS systems platform for State operational and in payment processes for selected and largely manual DBT schemes three schemes on- State DBT schemes through processes operational with boarded and establishment of a Centralized IT selected schemes monthly payments Platform (Text) Component on-boarded and aggregating to US$ 25 million to 2.4 Page 21 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT using key million beneficiaries functionalities being made through DIDS. Performance-based Conditions (PBC) Period Period Definition Period 1 March 31, 2018 Period 2 March 31, 2019 Period 3 March 31, 2020 Period 4 March 31, 2021 Period 5 March 31, 2022 Period 6 September 30, 2022 Period 7 March 31, 2023 Period 8 March 31, 2024 Baseline Period 1 Period 2 Period 3 Period 4 Period 5 Period 6 Period 7 Period 8 1:Enhanced controls in budget execution Achievement Level: and reporting (Text ) Original/Revised Processes for -- -- (i) Contract At least 90% (a) FinAssam Value budget distribution, awarded by AS- of the DDOs FMIS solution budget control, and CFMS for FMIS have functional bill submission by Systems submitted with core the DDOs are Integrator.(ii) payment modules and manual; No Budget claims to the integrated decision support for Allocation and treasuries with select Finance Distribution using external Department and Module in FinAssam systems. (b) delays in FinAssam for At least 90% submission of HoD/BCOs to of the monthly accounts DDOs Monthly for compilation. operationalized Accounts Page 22 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT with existing have been treasury system rendered to by the Finance AG (A&E) Department. timely by the Accounts Rendering Units. Allocated Amount 0.00 0.00 0.00 0.00 2,500,000.00 2,000,000.00 0.00 0.00 2,000,000.00 Actual Value 0 2,500,000 2,000,000 2,000,000 Actual Amount 2,500,000.00 2,000,000.00 2,000,000.00 2:Enhanced transparency of key budget, Achievement Level: financial and procurement information (Text ) Original/Revised Limited budget Budget (i) Finance The Finance State The Finance Value disclosures; no disclosures Department Department Procurement Department access to budget made by has notified the has provided Portal with has provided execution reports Finance procurement public access enhanced public access and procurement Department rules in the to procurement to in-year contract awards. include at Assam's Official information information Budget least the Gazette; (ii) on at least and analysis execution following: (a) Additional 60% of the publicly made reports in budget at a budget contracts available by user friendly glance; (b) disclosures awarded the Finance formats. Analytical made by the over the e- Department. statement; Finance procurement (c) Transfer Department threshold to local include the during the bodies; and following: (a) previous 12 (d) Action object-head months. Taken wise Report on expenditure; the budget (b) salary of the details of previous government year. department; (c) publication of Child and Page 23 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT Gender Budget statement. Allocated Amount 0.00 500,000.00 0.00 0.00 1,000,000.00 750,000.00 0.00 250,000.00 1,500,000.00 Actual Value 500,000 1,000,000 750,000 250,000 1,500,000 Actual Amount 500,000.00 1,000,000.00 750,000.00 250,000.00 1,500,000.00 3:Increased percentage of e-collection and Achievement Level: e-payments using common e-collection and payment systems (Text ) Original/Revised E-collection for E-collection At least 60% At least 70% (i) At least 80% At least At least 80% Value Excise NIL;for the portal payments payments payments made 70% of non-GST CoT 35% by volume developed made by the made by the by the revenue of tax for VAT and nil for and rolled- treasuries treasuries treasuries have three (administered other taxes; out for have been have been been made additional by the CoT) andfragmented excise and made made electronically services, collected systems and low all non-GST electronically electronically using e-kuber other than through the base of e-payments taxes using e- using e- (ii) At least 90% excise and e-Collection administered kuber. kuber. of excise CoT, have portal. by CoT. revenue been collected collected through the e- through Collection the e- portal Collection portal. Allocated Amount 0.00 1,000,000.00 500,000.00 500,000.00 1,000,000.00 0.00 500,000.00 500,000.00 0.00 Actual Value 1,000,000 500,000 500,000 1,000,000 500,000 500,000 Actual Amount 1,000,000.00 500,000.00 500,000.00 1,000,000.00 500,000.00 500,000.00 4:Enhanced services provided the Achievement Level: Commissioner of Taxes (CoT) using e- Governance (Text ) Original/Revised Fragmented and Contract for -- CoT has Electronic -- -- Data Analytics Value outdatedIT new IT operationalized filing of Non- Capability applications; e- application the utilities for GST tax established, return filing at 15% for CoT e-returns and returns and reports for VAT; e-returns awarded by online scrutiny related to utilized to do not have in-built AS-CFMS of returns for VAT, CST, monitor electronic scrutiny all non-GST Professional taxpayer Page 24 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT feature; No e- State taxes in Tax and compliance. governance the new IT Electricity solutions for non application. Duty Tax GST State taxes have commenced using the new IT application Allocated Amount 0.00 1,000,000.00 0.00 0.00 1,500,000.00 1,000,000.00 0.00 0.00 500,000.00 Actual Value 1,000,000 1,500,000 1,000,000 500,000 Actual Amount 1,000,000.00 1,500,000.00 1,000,000.00 500,000.00 5:Enhanced services provided by Excise Achievement Level: Department using e-Governance (Text ) Original/Revised All procedures and Assam has Contract for Excise The Excise Value processes are notified the e- Department Revenue manual in the Excise Rules, governance has issued at Collection Excise Department; 2016 in the solution for least 80% of all has Excise revenue INR Official Excise transport increased by 807 crore in 2015- Gazette. Department permits at least 80% 2016 has been electronically. over the awarded by revenue in AS-CFMS. financial year 2015- 16. Allocated Amount 0.00 1,000,000.00 0.00 1,000,000.00 2,000,000.00 1,000,000.00 0.00 0.00 0.00 Actual Value 1,000,000 1,000,000 2,000,000 1,000,000 Actual Amount 1,000,000.00 1,000,000.00 2,000,000.00 1,000,000.00 6:Digitization and improving efficiency in Achievement Level: payment processes for selected State DBT schemes through establishment of a Centralized IT Platform (Text ) Original/Revised Fragmented -- - (i) Contract for -- -- -- (a) Core Value scheme- based MIS the functionalities systems and largely development of of IT platform manual processes centralized IT are deployed Platform for in Live Page 25 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT DBT Schemes production has been environment awarded by the and two AS-CFMS. (ii) schemes are DBT Cell has on-boarded. been (b) 80% of institutionalized beneficiaries and is are receiving functional payments through the IT Platform at least for two select schemes. Allocated Amount 0.00 0.00 0.00 0.00 750,000.00 0.00 0.00 0.00 1,250,000.00 Actual Value 750,000 1,250,000 Actual Amount 750,000.00 1,250,000.00 Page 26 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT B. KEY OUTPUTS To contribute to improvement in predictablity and transparency in budget execution PDO Indicators 1. Reduction in share of discretionary expenditure reported in the last quarter of the financial year 2. Public access to key budget execution reports (Yes/No) 3. Information on contract award in the public domain Key Outputs 1. New FMIS with core modules for budget preparation, distribution, bill submission, payroll, expenditure (linked to the achievement of the PDO processing and reporting developed and rolled out in all the treasuries and covering all DDOs. Outcome) 2. Refinements in the budget call circular. 3. Cabinet approval for integrating submission of monthly accounts by the works and forestry accounts through the treasuries 4. Budget transparency practices institutionalized with public access of in-year budget execution reports on budget dashboard of Finance Department. To contribute to improvement in efficiency in tax administration in Assam PDO Indicators 1. Reduction in cost of collection of tax revenue in Excise Department 2. Reduction in cost of collection of taxes in office of the Commissioner of Taxes Key Outputs 1. E-Governance solutions with e-services to tax payers developed and rolled out in CoT. (linked to the achievement of the PDO 2. Establishment of EIU cell in CoT with Data analytics and forensic capability Outcome) 3. Policy reforms mandating collection of excise revenue at the first point of sale. 4. Roll out of a comprehensive e-governance applications in Excise; and operationalizing the Track & Trace System for real-time tracking during movement of consignment 5. Modernization of Assam Excise Chemical Laboratory Page 27 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT Intermediate Results Indicators Strengthening Expenditure and Revenue Information Systems 1. Enhanced capacity in Cash and Debt Management 2. Enhanced controls in budget execution and reporting 3. Increased percentage of e-collection and e-payments using common e- collection and payment systems 4. Enhanced services provided by office of the Commissioner of Taxes (CoT) Intermediate Results Indicators using e-Governance 5. Strengthened institutional capacity in office of the Commissioner of Taxes (CoT) 6. Enhanced services provided by Excise Department using e-Governance 7. Digitization and improving efficiency in payment processes for selected State DBT schemes through establishment of a Centralized IT Platform 1. Modernized Financial Management Information System (FMIS) operationalized and serves as a single source of truth for GoA’s financial data reporting. 2. Government Receipt Accounting System (e-GRAS) for collection of government tax and non-tax revenue rolled out and at the end of project covers 684 services of 60 departments. Key Outputs 3. Digital Infrastructure for DBT Schemes (DIDS) established and facilitates (linked to the achievement of the Component) DBT of financial assistance payment to 2.78 million economically backward households every month 4. Average cost of fresh borrowings of GoA’s SDLs remained consistently lower than the all-India average with an estimated notional saving Rs. 6.627 billion in interest cost. 5. Public disclosure of GOA's Debt statistics and performance by way of reporting to State Legislature under Assam’s FRBM Act.4. Page 28 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT Strengthening Public Finance Institutional Capacity 1. Strengthened public procurement framework and capacity building of officials (of which 5% are female) 2. Increased coverage of e-Procurement Intermediate Results Indicators 3. Training of GoA officials in PFM (of which 10% are female) 4. Enhanced public disclosure of budget information and Citizen's Engagement 1. Notification of Assam Public Procurement Rules (APPR), 2020 under the 2017 public procurement legislation. 2. Lowering of threshold for mandatory e-Procurement to Rs. 2.0 million; successful migration to Assam Tender Portal (https://assamtenders.gov.in) the e-Procurement system of GoA; and Key Outputs enhanced use of Government e-Marketplace (GeM). (linked to the achievement of the Component) 3. Commissioning of the State Public Procurement Portal (SPPP) as an one- stop-shop for all procurement related information, including the Act and Rules, and relevant notifications and office orders. 4. Massive Open Online Course with 16 modules on public procurement domain developed , a first at the state level in India. 5. Prepartion and disclosure of child, gender, Divyang and Green budget. Page 29 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION A. TASK TEAM MEMBERS Name Role Mohan Gopalakrishnan Team Leader Puneet Kapoor Team Leader Tanya Gupta Financial Management Specialist Swayamsiddha Mohanty Procurement Specialist Siddharth Padmanabh Merchant Environmental Specialist Devika Bahadur Social Specialist Peter F. B. A. Lafere Social Specialist Vidya Venugopal Counsel Swati Gamaliel Procurement Team Radha Narayan Procurement Team Subi Roy Team Member Aleksandar Kocevski Team Member Ambrish Shahi Team Member Mohan Nagarajan Team Member @#&OPS~Doctype~OPS^dynamics@icrannexstafftime#doctemplate B. STAFF TIME & COST Staff Time & Cost Stage of Project Cycle No. of Staff Weeks US$ (including travel and consultant costs) Preparation FY16 18.352 122,476.76 FY17 36.612 150,514.66 FY18 12.544 64,440.92 FY19 0.000 100.46 Page 30 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT Total 67.51 337,532.80 Supervision/ICR FY18 12.432 75,583.75 FY19 27.098 131,150.59 FY20 26.030 134,257.83 FY21 42.163 174,893.68 FY22 34.428 168,329.58 FY23 25.541 152,866.99 FY24 27.752 149,963.97 FY25 4.589 33,691.11 Total 200.03 1,020,737.50 Page 31 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT ANNEX 3. PROJECT COST BY COMPONENT Component Amount at Approval (US$M) Actual at Project Closing (US$M) Strengthening Public Finance 3.2 3.0 Institutional Capacity Strengthening Expenditure and 34.8 34.8 Revenue Information Systems Project Management, Monitoring & 1.4 3.6 Evaluation and Coordination Front end fee 0.1 0.1 Page 32 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT ANNEX 4. EFFICIENCY ANALYSIS 1. Total efficiency gains from the project have been estimated at US$ 479 Million, which is substantial in comparison to the project cost of US$ 39 Million. Calculation of efficiency gains was limited to project tenure, though the gains are expected to continue to accrue even beyond the project period. 2. The nature of gains is primarily two-fold — Increase in Tax Revenue and Savings on account of operational and technical efficiencies. A detailed breakdown of the calculation has been provided below: i. Increase in Excise and VAT Revenue: Year on year change in tax revenue is usually attributable to a multitude of reasons, such as macro-economic factors, growth in volume, rate revisions and use of technology for improving taxpayer services and compliance. Enhancement of revenue from Excise and Commercial Tax attributable to the project are in respect of (a) implementation of AERMS (i. e. transition from a completely manual process to digital operations) and operationalization of Track and Trace system, resulting in digitization of core functions of Excise administration; coupled with strategic changes in Excise policies and improved tax administration; (b) upgradation of IT applications in commercial tax to cover all the taxes administered by CTD and enhancing capacity in areas such as services taxation and data analytics; and (c) implementation of e-GRAS that facilitated citizens to deposit tax and non-tax revenue to the government online, thus enhancing timeliness and compliance. Increase in Excise and VAT revenue attributable to Excise during project tenure (FY 17-18 to FY 23-24) (In Rs. Cr.) Particulars Formulae Excise VAT (attributable to sale of Alcohol) Actual Excise Revenue during the project period a 12,668 6,942 Estimated revenue based on historical tax elasticity in b 11,632 5,290 absence of the project24 Gains during the tenure of the project c = (a-b) 1,036 1,652 Less: Gains attributable to rate revisions during the d 103 - tenure of the project Net Gains during the tenure of the project e = (c-d) 933 1,652 ii. Savings in Interest Cost (FY 18-19 to FY 23-24): This reflects savings in interest expenditure to the GoA due to lower cost of borrowings as benchmarked against the average State Government Securities Yield for all states combined. These savings reflect improved Debt management practices such as preparation of cash forecasts and better-informed decisions on the timing and quantum of borrowings, supported under the Cash and Debt Management activity under the project. 24 Tax Elasticity, as calculated for FY 13-14 to FY 17-18 i.e., before implementation of the project is 1.16 for excise and 0.69 for VAT Page 33 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT Particulars Amount (in Rs. Cr.) Total Amount State Development Loans raised by GoA from FY 18-19 to FY 23-24 86,884 Savings due to lower borrowing costs for GoA compared to average State Government 546 Yield Discounting Rate 7.52% Present Value of Savings 397 iii. Citizens' Savings on introduction of e-GRAS: Introduction of e-GRAS in 2018 as a common e-collection portal for non-tax and tax revenue has ensured savings for citizens both in terms of reduced cost of visits and documentation by eliminating the requirement of physical presence of the payees and minimizing use of paper and printed copies. Particulars Formulae No. of transactions in e-GRAS in top Citizen facing services f 6,510,452 Average number of visit(s) for availing services g 2 Average one-way Visit cost (in Rs.) h 300 Total Visit Costs saved (in Rs. Cr) i = (f*g*h) / (10^7) 390 Total No. of transactions as per e-GRAS till date j 14,006,829 Avg. pages required for facilitation of 1 transaction k 3 Documentation cost/ page l 0.75 Documentation cost saved (in Rs. Cr) m= (j*k*l) / (10^7) 3.15 Total Citizens' Savings (in Rs. Cr.) i+m 393 iv. Savings on account of de-duplication of beneficiaries: Introduction of Digital Infrastructure for DBT Schemes (DIDS) in 2021 has resulted in seamless de-duplication of beneficiaries availing benefits under multiple schemes and elimination of ineligible beneficiaries under various scheme(s). Consequently, such exclusion has translated to savings, who would have otherwise continued to avail the monetary benefits despite ineligibility, in absence of DIDS Particulars Formulae Identification and elimination of duplicate and ineligible beneficiaries due n 184,194 to implementation of DIDS (number) Benefits for each Beneficiary per month (in Rs.) o 1,250 25 Savings per month (in Rs. Cr) p = (n*o) / (10^7) 23.02 Average benefit period (months) q 15 Total savings in respect of de-duplication and elimination of ineligible p*q 345 beneficiaries (in Rs. Cr) 25Calculated as absolute savings based on the scenario where there is no inclusion of new beneficiaries by the government. However, the Government has undertaken inclusion initiatives, which has led to enhanced coverage and better overall targeting of beneficiaries. Page 34 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT v. Revenue recovery and collection corresponding to usage of Data Analytics and Forensics tools in GST administration: Enhancement in data analytics capability based on use of analytical and forensic tools by CTD, facilitated detection of instances of tax evasion and eventually resulting in actual recovery of tax revenue. Particulars Revenue recovery (In Rs. Cr.) 1. Use of enhanced Data Analytics Practices in: - 1.1. Economic Intelligence Unit 135 2.1. GST Audit Cell 10 2. Use of Data Analytics to detect potential GST evasion and recovery from defaulters 150 Total Tax Recovery 295 Total Net Gains during the tenure of the project Particulars Formulae Amount Total Gross Gains (in Rs. Cr.) (i)+(ii)+(iii)=(iv)+(v) above 4017 Total Gross Gains (in $ Mn) @ INR 84.08 per USD r 479 Total Project Costs (in $ Mn) s 39 Total Net Gains (in $ Mn) r-s 440 3. The data used for the efficiency analysis is presented in the table below. S.No. Component Particulars Source Discounting Rate (7.52%), for the purposes of Average Annual Cost of Borrowing of State Development 1 General calculation of Net Present Loan for FY 2023-24 to the Government of Assam Value (NPV) 2 Excise Revenue Department of Excise, GoA VAT revenue attributable 3 Department of Excise, GoA to Sale of Liquor According to the Department of Excise, Government of Increase in Assam and the rate revision notifications during the Revenue Rate Revision(s) in excise tenure of the project available to us, the net change in 4 during the tenure of the price(s) of alcohol following excise rate revision is around project 8-12%. Hence, an average net contributory impact of 10% is taken into consideration as increase in revenue attributable to periodic revision of Excise Rate(s). Page 35 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT Calculated as annual percentage change in Excise/ VAT revenue for the period in comparison to the annual percentage change in GSDP for the period. Revenue and Historical Tax Elasticity GSDP values are sourced from the Annual Accounts of the before implementation of 5 GoA. the project (FY 13-14 to FY Historical Tax Elasticity has been adjusted in calculation 17-18) of ‘Expected revenue’ to incorporate marginal increase in elasticity each year owing to macroeconomic conditions and past trends. Amount of SDL raised by the GoA during each FY, average cost of Borrowing 6 Finance Department, GoA by GoA, and weighted Savings in average tenure of the Interest Cost loan(s) availed Weighted average yield of SGSs (per cent) i.e., 7 RBI Study of Budgets: State Finances Average cost of Borrowing amongst the states No. of transactions as per 8 e-GRAS in top low ticket e-GRAS portal Citizen facing services Total No. of transactions as 9 e-GRAS portal Citizens’ per e-GRAS Savings In Consultation with the Finance Deptt, GoA, the Average number of visit(s) applicant had to visit the treasury for issuance of Challan 10 to citizen for availing and the Bank for Payment of Challan, thus averaging 2 services visits to avail the complete service as against 0 visits after the introduction of e-GRAS. 11 Average one-way Visit cost INR 300 is taken as the average travel cost per trip 12 Documentation cost/ page Rs. 0.75/ page Volume of Pages (as Vouchers and Sub- Monthly volume of pages reported as a cumulative value 13 Administrative vouchers) for monthly A/C by all GoA treasuries for the month of April 2023 Savings submissions by treasuries Travelling Allowance of 14 treasuries for Finance Department GoA transportation of bags Page 36 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT Wage Rate (MGNREGA for 15 As per the official website of MGNREGA Assam ₹ per day) Total Elimination of duplicate/non-existent 16 Finance Department Assam beneficiaries attributable to DIDS DIDS Financial Assistance to each beneficiary per 17 State Portal of the Government of Assam month under Orunodoi Scheme As per Government practice, the approved beneficiary list is reviewed at the end of each financial year for errors of inclusion and exclusion under ‘Orunodoi’ Scheme. Therefore, the next inclusion and exclusion review would Average benefit period on have taken place in March 2023. account of de-duplication However, manual survey inclusions/ exclusions do not 18 DIDS and elimination under possess the accuracy achieved through de-duplication DIDS through implementation of DIDS. Hence, it has been assumed that the benefits of de- duplication due to DIDS would accrue for 2 cycles i.e., till March 2024, keeping the total benefit period as 15 months. Revenue Total Tax recovery due to 19 recovery and usage of Data Analytics Commercial Tax Department, Government of Assam collection and Forensics tools Project Cost Total Cost incurred during 20 As per the IUFRs submitted by the Government of Assam the Tenure of the project In accordance with the Contracts entered into with the Total Projected Cost SI(s) for periodic operational and maintenance support 21 (Projected Operation and for the software/applications developed under the Maintenance Cost) purview of the project. Page 37 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS 1. Introduction The Assam State Public Finance Institutional Reforms (ASPIRe) project, initiated with the support of the World Bank, has played a major role in transforming the Public Financial Management systems in Assam. The project was designed to improve several key areas, including public financial management including procurement, revenue administration, and the systems for direct benefit transfer to citizens. The foundations for these reforms were based on an assessment by Government of Assam in 2016-17 and captured in a white paper and the supporting initiative called Restructuring Systems and Technology for Augmentation of Resources for Transformed Assam (ReSTART Assam). The assessment concluded that the most government operations were predominantly manual, processes were archaic and lacked transparency. As a result, various services to stakeholders, internal and external were often delayed, and there were inefficiencies in the use of government resources. The overall aim of ASPIRe Project was intended to ensure that public resources were used efficiently and effectively, benefiting the citizens of Assam. 2. Impact The ASPIRe project has brought several key improvements in the way the Government of Assam manages its resources and delivers public services. These improvements can be seen across areas such as public financial management, procurement, revenue management and administration, and in direct benefit transfers. 2.1 Financial Management through IFMIS One of the biggest changes introduced under ASPIRe is the Integrated Financial Management Information System (IFMIS). Before IFMIS, public financial management in Assam was mostly manual starting with the budget preparation. This led to delays in release of budget, payments, inefficiencies, and errors and finally delayed accounting and financial reporting. With the introduction of IFMIS, the entire process has been digitized in a phased manner, with process of budget preparation, its distribution and allotment to the Drawing & Disbursing Officers (DDOs) and for DDO’s to submit bills (i.e. payment claims) online to the treasuries. This digitization together with other process reforms such as partial relaxation of need for prior approval from finance department of each payment (a process called Fixation of ceiling (FoC)), for various types of payment, phased transition to the concept of ‘global budget heads’ which reduced the need for routine re- allocation of budget between DDOs and use of digital signatures has made the payment process much faster and has eliminated many of the delays that used to occur. This has had a major positive impact on government employees, contractors, and vendors, who now receive their payments without the delays that were common in the past. The integration of IFMIS with RBI’s e-Kuber system has further improved the efficiency of the payment process. Payments to vendors, contractors, and employees can now be made electronically through the e-Kuber system, reducing the risk of errors and ensuring that payments are made quickly and securely. This has also helped reduce issues related to reconciliation, which used to be a common problem when payments were made manually. Another key benefit of IFMIS is that it enables real-time monitoring of the budget execution. This means that department heads and financial officers can now see exactly how much money has been spent, how much remains in the budget, and where funds are being allocated. This kind of visibility was not possible before, and it has allowed for much better decision-making and control over government spending, as well as predictability in budget execution. This has contributed to steady improvements in budget execution rates, from 65.7% in FY 2017-18 to 81% in FY 2023-24, showcasing ASPIRe’s positive impact on budget efficiency. The Cash and Debt Management Unit (CDMU) established within the Finance Department, has enhanced cash flow projections, debt management strategies, and automated debt Page 38 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT data integration with FinAssam. CDMU provides daily and weekly cash updates, prepares fiscal frameworks, and manages a Sinking Fund for NABARD loan repayments. It also advises on market borrowing strategies, conducts capacity-building for officials, and creates key reports for top management, including submissions to the Finance Commission and analyses of Union Budget impacts on Assam’s finances. 2.2 Procurement Reforms: E-Tendering and GeM Before ASPIRe, the government’s procurement processes were slow, lacked transparency, and were often prone to inefficiencies. There were concerns that procurement was not always conducted in a fair, transparent, economic and efficient manner. The introduction of the Assam Public Procurement Act, 2017, and the Assam Public Procurement Rules, 2020, which became mandatory from 1st September 2021, has transformed Assam’s procurement landscape. This legislation has standardized procurement practices across all government departments, ensuring a transparent, fair, and accountable process. The Act and Rules have introduced key elements like Standard Bidding Documents (SBDs) and Standard Contract Conditions, which streamline tendering and contracting by providing clear guidelines for bid evaluation, timelines, payments, and dispute resolution. This structured approach has minimized irregularities, reduced delays, and enhanced trust among vendors, ensuring better use of public funds and increasing the efficiency and integrity of Assam's procurement process. Under ASPIRe, the government has taken steps to reduce the threshold for mandatory e-tendering for all contracts to ₹20 lakhs, which is being gradually reduced further. E-tendering has changed the way the government purchases goods and services. This has eliminated many of the problems associated with manual procurement. Since the introduction of e-tendering, the number of tenders issued by the government has increased significantly. Between FY 2016-17 and FY 2023-24, the number of tenders increased by 470%, while the total tender value grew by 520%. Currently, 71% of contract awards are made public through the e- Procurement portal (www.assamtenders.gov.in), providing full visibility to the public, vendors, and other stakeholders. The State Public Procurement Portal (SPPP) is used to publish tenders, providing contractors with easy visibility into upcoming procurement opportunities. This platform enhances transparency by allowing vendors and public to access tender details publicly, though it does not facilitate the bidding process itself. Another important reform in procurement is the use of the Government e-Marketplace (GeM). GeM allows government departments to purchase goods and services directly from registered vendors. The state of Assam witnessed exceptional growth in procurement through the Government e-Marketplace (GeM) during FY 2023-24, with the total order value increasing by an impressive 1091% over the previous fiscal year. This figure rose from INR 176.04 crore in FY 2021-22 to INR 2,097 crore in FY 2023-24. To ensure that government officers understand the new procurement processes and follow the rules correctly, the government launched the Massive Open Online Course on Public Procurement. This online course provides training to officers involved in procurement, helping them understand the best practices for managing procurement activities. So far, more than 2,200 officers have enrolled in the course, and over 800 have been certified in public procurement. 2.3 Revenue Administration: Tax and Excise Reforms The ASPIRe project has brought significant improvements in Assam’s tax and excise collection systems. Earlier, tax collection faced challenges like delays and tax evasion. To address these issues, the Commissionerate of Taxes introduced an e-Governance platform which enables taxpayers to file returns and make payments online. This has made it easier for individuals and businesses to comply with tax requirements from their homes or offices, without needing to visit government offices. Since introducing this platform, non-GST revenue collection has increased from ₹5,703.65 crores in Page 39 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT FY 2021-22 to ₹7,819.76 crores in FY 2023-24, showing a steady improvement from earlier years. To further strengthen tax compliance, data forensic tools were introduced, enabling tax authorities to analyze electronic devices like mobiles and computers seized during enforcement actions. Over 268 devices have been analyzed, helping the state collect an additional ₹14.95 crores in tax revenue. Additionally, Big Data Analytics has been implemented to identify high -risk taxpayers by cross-checking data from various sources, leading to the recovery of ₹297 crores. The Assam Excise Act, 1910 was replaced by the Assam Excise Act, 2000 and Assam Excise Rules, 2016 on 1st September 2016, which shifted the point of excise duty collection to the first transaction within the state. This ensured that only duty-paid liquor leaves manufactories, and the previous system of bonded warehouses was replaced by wholesale warehouses, eliminating under-bond sales. The Assam Excise Revenue Management System (AERMS) introduced e-Governance across key excise processes, including online license registration, brand registration, and permits, significantly enhancing revenue collection. Excise revenue rose from ₹799.51 crore in FY 2015 -16 to ₹3,138.75 crore in FY 2023-24, while VAT revenues also saw growth, resulting in a total revenue collection of ₹4,798.73 crore in FY 2023-24. Additionally, the system of online transit passes has improved the tracking of inter-state liquor vehicles, while ICT hardware upgrades like laptops and desktops support departmental e-governance. The Excise Chemical Labis set up at Guwahati Biotech Park, reducing the time required for testing alcoholic strength from five hours to six minutes and significantly increasing the number of samples processed daily. Advanced lab equipment, an effluent treatment plant, and an incinerator have ensured high-quality testing standards and safe waste disposal practices. Furthermore, Track & Trace technology now monitors the entire liquor supply chain, helping to prevent spurious liquor and revenue leakage, and GIS- based analytics offer valuable map-based insights from stakeholder data, adding strategic value to excise management. 2.4 Social Welfare Reforms: Direct Benefit Transfers The Digital Infrastructure for DBT Schemes (DIDS) has emerged as a transformative initiative in Assam, significantly improving the delivery of social welfare benefits to millions of citizens. This automated system has addressed key challenges that previously hampered efficient benefit distribution, such as delays, manual processes, and inclusion/exclusion errors, making the process more reliable and effective. One of the primary achievements of DIDS is its enhanced efficiency in beneficiary identification, fund disbursement, and real-time monitoring. Automation has minimized delays in DBT transfers, ensuring that welfare benefits reach the intended beneficiaries more quickly. Additionally, DIDS has expanded its reach, now supporting over 2.5 million beneficiaries across 8 schemes, covering areas like social security, education, and disaster rehabilitation, thereby widening the scope of welfare coverage in the state. DIDS has also reduced errors by incorporating advanced data validation techniques, which lower the risks of inclusion/exclusion mistakes and minimize fraud. This ensures that the right beneficiaries receive their entitlements promptly and accurately. Furthermore, the system’s real-time dashboards and detailed reporting tools have improved monitoring of fund flows and benefit distribution, thereby enhancing transparency and accountability in the administration of welfare schemes. 2.5 Budget Transparency: E-Budgeting and Inclusive Budgeting The transparency of Assam's budget process has improved considerably since FY 2016-17, when only eight technical documents were published, limiting public access and understanding. Now, 17 disclosure documents are published, many providing analytical insights, and all are accessible on a dedicated web page on FinAssam. The state has also introduced in-year budget execution reports to keep the public informed on budget progress. Through e-Budgeting, Assam became one of India’s pioneering states to table the budget electronically, saving costs on paper and printing. Page 40 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT Citizen engagement has also been prioritized by collecting public suggestions to inform budget policies. Assam has introduced Gender, Divyang, and Child Budgeting practices since FY 2018-19, with support from UNICEF, CBGA, and other experts, through workshops and sensitization programs. An Inclusive Budget Cell was established within the Budget Branch to lead these efforts, resulting in an increase in budget share for gender, child, and divyang categories. In FY 2023- 24, Green Budgeting was also launched to promote environmental sustainability. Assam’s efforts in these reforms led to its ranking as the top state in Budget Transparency in a 2018-19 survey by Transparency International. The state now publishes Green and Outcome Budgets, setting a high standard for budget transparency. 3. Lessons Learned The ASPIRe project has provided the Government of Assam with several important lessons that will guide future reforms and help improve the delivery of public services. 3.1 Continuous Training and Capacity Building One of the most important lessons learned from ASPIRe is the importance of continuous training and capacity building. While introducing new technology and systems has improved efficiency, these improvements can only be sustained if government staff are properly trained to use the new systems. The success of e-learning on Public Procurement has shown that structured training programs help ensure that government officers understand the new processes and follow them correctly. 3.2 Importance of Transparency in Procurement The Assam Public Procurement Act, 2017, and Assam Public Procurement Rules, 2020, have reinforced the importance of transparency in procurement by making e-tendering and the use of Government e-Marketplace (GeM) mandatory practices. These measures ensure that procurement processes are open, competitive, and accessible, reducing delays and enabling fair contract awards. The Act and Rules mandate regular monitoring, evaluation, and compliance checks to uphold these standards, with provisions for audits and oversight to prevent irregularities and inefficiencies. This structured approach not only strengthens transparency but also enhances the accountability and reliability of Assam’s procurement system. 3.3 Revenue Administration Needs Strong Enforcement The reforms in revenue administration have shown that automating tax and excise collection processes can lead to better compliance and increased revenue collection. However, it is also clear that these gains must be sustained through strong enforcement of tax laws. The government must continue to monitor tax collection closely and update its tax administration system regularly to stay ahead of potential problems such as tax evasion. 3.4 Digital Systems Improve Welfare Delivery There is a need of strong data governance to ensure accurate and timely beneficiary data, emphasizing the need for ongoing validation and robust mechanisms to prevent errors. Effective change management has been critical, especially for field officers moving from manual processes, with continuous capacity-building driving successful technology adoption. The integration of systems has unified various schemes and data sources, enabling seamless information flow and better decision-making—an approach future projects should follow. Additionally, sustainability planning is essential for long- term impact, requiring regular maintenance, user support, and updates to maintain DIDS’s effectiveness. Page 41 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT 3.4 Inclusive Budgeting Ensures Fair Resource Allocation The introduction of Gender, Child, and Divyang Budgeting has shown that focusing on marginalized groups when planning the government’s budget can lead to more equitable outcomes. By taking into account the needs of women, children, and persons with disabilities, the government can ensure that public resources are allocated fairly and benefit all citizens. These inclusive budgeting practices should be institutionalized and made a permanent part of the government’s budget process to ensure that they continue to deliver positive results. 3.5 Technical Assistance and Knowledge Support were Critical in Achieving Result The World Bank played a major role in making the ASPIRe project successful. The government didn’t have all the technical skills needed, especially to use the best practices from other countries. The World Bank stepped in to help at important times, assisting with planning, refining Scope of Work and ToRs, and setting up better ways to manage the work. This support filled in the gaps where the government didn’t have experience and brought in useful practices from around the world. Without this help, the ASPIRe project might not have achieved its level of success. These technical and knowledge support ensured the project was clear, accountable, and met high standards, greatly improving the government’s ability to deliver effective reforms. 4. Future Initiatives The Government of Assam is committed to building on the successes of the ASPIRe project through several new initiatives that will further improve governance and public service delivery. 4.1 Expanding IFMIS Government of Assam plans to build on the IFMIS with new modules like e-Sanctions and e-invoicing, development of pension database and online payments, and contract management and public investment management to enhance financial processes, while also improving mobile applications to allow stakeholders to raise and process claims directly for easier access. The e-Procurement system will be integrated with Finance and other systems, linking procurement, payment, and accounting processes for commitment management and control, streamlined operations and valuable enforcement data. Additionally, data from Treasury, e-Procurement, Excise & Taxation, and DIDS will be unified for effective analytics and performance tracking. DIDS enhancements will focus on simplifying DBT access, strengthening the Social Registry, using data analytics for policymaking, and exploring AI for predictive analysis and personalized services. 4.2 Enhancing Procurement Systems Future initiatives for Assam’s e-procurement portals include system integration, portal upgrades (e-BG for bid security, auto-fee calculation, e-Agreement tab), and a second development phase aligned with the Assam Public Procurement Act and Rules. Plans to link the Fin-Assam portal with GeM will enable fund blocking and online payments. An e-Governance solution will streamline contract management, while in-house data analytics will enhance procurement quality. SPPP upgrades will add live tracking, dashboards, and public disclosures. Green procurement initiatives will support MSMEs, and Assam Finance Learning Portal will expand to ensure all procurement staff are certified. Strengthening of CEPPA and automated bidding document preparation are also planned, alongside a Research and Learning Centre at Assam Administrative Staff College for capacity building. Page 42 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT 4.3 DIDS 2.0 DIDS 2.0 will build on the current platform’s achievements by making it more convenient for citizens, improving data systems, and using new technologies like Artificial Intelligence (AI). Key plans include making DBT benefits easier to access with a simpler interface, allowing citizens to get real-time updates and raise grievances online. The Social Registry will be strengthened with more data sources and better checks to ensure only eligible people receive benefits. AI-based analytics will help guide policies, predict needs, and catch fraud. More processes, like enrolling beneficiaries and managing schemes, will be automated to speed up services. DIDS 2.0 will also track in-kind benefits, like rations, and use AI to spot irregularities and ensure benefits reach the right people. 4.4 Data Analytics for Revenue The Commissionerate of Taxes in Assam is advancing Information Technology (IT) initiatives to automate routine tasks, supporting capacity building and enhancing scrutiny and audit capabilities. This includes strengthening monitoring of goods vehicles at state borders, deploying mobile squads, and expanding enforcement activities to boost GST and non- GST revenues. A data and analytics platform will enable comprehensive data analysis, helping streamline Government-to- Business (G2B) services and improve departmental operations. This platform will integrate with systems in departments like Transport, PWD, and APDCL to identify revenue leakages and enhance tax compliance. An Enforcement Tracking System will centralize enforcement case data, reducing duplication and improving coordination, while the GST Support Utility will automate GST processes, minimizing manual intervention. The department will implement a Human Resource Management System (HRMS) to maintain employee records electronically, simplifying data management and automating various HR functions. In excise administration, a Data Analytics Unit will help address revenue leakages, while new equipment, such as a Gas Chromatograph for the Excise Chemical Lab, will strengthen alcohol analysis. To combat illegal liquor influx at Assam’s porous borders, the department will increase monitoring vehicles and install scanners, ensuring tighter control on smuggling and enhancing enforcement across border areas. 4. Conclusion The ASPIRe project has contributed majorly in improving the governance systems of Assam. The reforms introduced under the project have made government operations more efficient, transparent, and accountable, benefiting the people of Assam. The lessons learned during the implementation of ASPIRe provide a solid foundation for future reforms, and the new initiatives planned by the government will help sustain and build on the achievements made so far. With these reforms, the Government of Assam is well-positioned to continue improving its governance systems and ensuring that public resources are used wisely for the benefit of all citizens. *********** Page 43 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT ANNEX 6. SUPPORTING DOCUMENTS (IF ANY) 1. Project Appraisal Document, Report No. PAD1852, May 24, 2017 2. Disclosable Restructuring Papers (a) Report No.: RES41927, January 22, 2021 (b) Report No.: RES52490, September 8, 2022 (c) Report No.: RES57572, September 12, 2023 3. Loan Agreement, Loan No. 8765-IN, June 27, 2017, restated January 27, 2021, and amendments to Loan Agreement, September 8, 2022, and September 12, 2023 4. Project Agreement, Loan No. 8765-IN, June 27, 2017, and restated January 27, 2021 5. Implementation Status and Results Report (disclosable) 1. Report No. ISR30337, January 4, 2018 2. Report No. ISR33162, June 29, 2018 3. Report No. ISR35620, January 17, 2019 4. Report No. ISR38108, September 6, 2019 5. Report No. ISR41583, May 15, 2020 6. Report No. ISR43249, September 9, 2020 7. Report No. ISR45866, March 19, 2021 8. Report No. ISR48296, October 7, 2021 9. Report No: ISR51031, May 16, 2022 10. Report No. ISR52045, July 12, 2022 11. Report No. ISR54721, February 1, 2023 12. Report No. ISR56763, June 21, 2023 13. Report No. ISR59349, December 18, 2023 6. Project Implementation Manual (as amended) of the ASPIRe project 7. Government of Assam, White Paper on Assam State Finances, May 24, 2016 (https://finance.assam.gov.in/sites/default/files/A%20White%20Paper%20On%20Assam%20State%20Finances%20% 28English%29.pdf) 8. Assam State Debt and Cash Management Reform Plan, 2016 (based on the World Bank’s Debt Management Performance Assessment or DeMPA tool) 9. Government of Assam, Budget Speeches (https://fin.assam.gov.in/budget_documents/) Page 44 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT Annexure 6A Reforms contributing to predictability in budget execution GoA adopted a comprehensive approach to improving budget management practices and address the issues identified by the high level ‘Reform Committee on Planning and Budgeting i.e (a) ambitious and unrealistic budget without adequate resources, forcing the finance department to often resort to cash rationing; and (b) need for resource mobilization, either by way of increased tax through new avenues or savings through prudent allocations; and embedding the reforms under the initiative called ReSTART Assam, the GoA focused its efforts on rationalizing revenue collection, mobilizing additional resources, strengthening PFM and implementing large scale IT-enabled systems with the objective of transitioning to “near- zero” human interface. Some of the critical process efficiencies in expenditure and budget management (both system and process related) which contributed to smoothening of the spending pattern within the financial year, included the following: Budget Automation and Process Efficiencies a) Automation of the budget Distribution and Allotment Process: Till FY 2017-18, the budget preparation and subsequently the distribution and allotment of the budget (post approval by the legislature) was manual. This resulted in a process delay of 2-3 three months in the distribution of the budget to the approx. 10,000 DDO’s, effectively reducing the month’s available for budget execution i.e procurement (where required), execution of the activities and payments. With automation of the budget preparation and distribution initially piloted in FY 2018-19 and with further process improvements in subsequent years, meant that the budget was allotted to the DDO’s and was available for spending within one week of the start of the financial year. b) Digitization of the Administrative and Financial Sanctions (module in FMIS): initiation of any activity (program) requires an administrative sanction (AS)26 and payments require a financial sanction (FS). These sanctions, AS to initiate any commitment, and the FS for payment approval, are required to be attached to every payment request (bill) submitted by the DDO’s to the Treasuries. The process of approval and issuance of AS and FS and its revalidation, where required, was manual leading to not only delays in sanctions, but also in keeping track of validity and cumulative utilization against individual AS’s, often resulting in delays in procurement and/or payments. The FMIS module for AS and FS, enabled digitization of the issue and tracking of AS and FS and through an internal interface, sharing data as part of the bill creation and expenditure processing and reporting modules. While there is no baseline data on time taken for payments prior to the FMIS since all the upstream processes were manual, the automation of issue of AS/FS contributed to the reduction in cycle time for payment and reduction in bills being returned by the treasuries for want of AS/FS. c) Use of global budget heads: traditionally, once the budget is distributed to DDO’s, the re-allocation/virement of budget from one DDO to another to meet budget shortage in one DDO, even within the same budget head and/or department/scheme and requires administrative processes and paperwork, delaying submission and payment of bills. To address this, GoA has, in a phased manner transitioned to use of global budget head for selected items, where the budget, though allocated to DDO’s, is controlled at a higher level, reducing the need for frequent virements. The concept of global budget head has now been extended to twelve budget lines in FY 2023-24. 26 Administrative Sanction is akin to a soft commitment of the budget and can have an annual or multi-annual validity. Page 45 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT d) Exemption of expenditures requiring Fixation of Ceilings (FoC): GoA has a practice called FoC, essentially a tool for transaction level cash management and rationing, when required. All payments, other than salaries required a FoC to be issued by the Finance Department (with a validity) of 30 days, which was required to be presented by the DDO to the treasuries along with the bill for payment. This too was a manual process. FMIS not only digitized the process of issue of FoC, but with better data sets informing the rolling monthly cash flow forecasting and information on budget execution, the need for FoC has been eliminated for approx. 5800 activities resulting in process efficiencies and reduction on payment cycle time. Impact of efficiencies in procurement process on budget execution The transition to using one system for e-Procurement, coupled with lowering the threshold for e-Procurement and the use of Government e-Marketplace (GeM)27 for low value and commonly used goods and services, has in addition to enhancing transparency and efficiency in the procurement cycle time, has also contributed to efficiency in budget execution. This is illustrated by progress in efficiency parameters: Table 3: Reduction in taken from publishing of tenders to Financial Evaluation28 Similarly, the timely approval of the budget and its distribution to the DDO’s and automation of the Administrative Sanctions has facilitated initiation of procurement in the early part of the financial year and a timely conclusion of the procurement. This is important in Assam given the limited construction season available. The tables below provide a comparative of the increase in number of procurements initiated in the first 9 months of the financial year (2023-24 vs 2022-23) and the improvement in the procurement cycle time demonstrated by increase in the percentage of open procurements concluded within the bid validity period. 27 The procurement under GeM has increased from 940 procurements with a value of Rs 1720 million in FY 2021-22 to 7,847 procurements with a value of Rs 20,945 million. 28 Source: Procurement Dashboard for Assam in the SPPP. Page 46 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT Table 4: Month to month tender publishing (FY 2022-23 verses FY 2023-24) Table 5: Percentage of tenders awarded within the specified bid validity period. e) Efficiencies due to use of electronic payments: the transition to close to 100 percent of payments being made electronically and using the core banking solution of the RBI i.e e-Kuber also contributed to efficiency in budget execution. Prior to the reforms, use of electronic payments was low and was fragmented based on arrangement of bilateral arrangements with 4-5 agency banks. This required approved payment bills sent physically to the banks for effecting electronic transfers and the payment process could take 8-15 days and subsequent reconciliation of scrolls for validation of the payment and accounting. With the transition to e-Kuber, e-payments are encrypted, digitally signed and sent to e-Kuber for electronic transfers and confirmation of the transfer is received near real time. Page 47 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT Annexure 6B ASPIRe Supported GovTech Solutions and Activities The ASPIRe project invested in developing / upgrading GovTech solutions along with improvements in associated digital infrastructure; and the following e-governance and IT applications and related IT infrastructure investments substantially influenced in achieving the project objectives. • Financial Management Information System (FMIS) to consolidate core areas of PFM, improve efficiency in budget and expenditure management. • Comprehensive e-governance solutions for the Commercial Tax and Excise Departments for enhanced efficiency in tax administration and augmenting government revenue. • Unified e-Collection portal (e-GRAS) for collection of tax and non-tax government revenue, and its integration with the FMIS and various revenue applications. • Digital Infrastructure for Direct Benefit Transfer (DIDS), a unified platform for onboarding and full life cycle management of social welfare benefit / payment transfer programs • State Public Procurement Portal (SPPP) to aggregate details of public procurements on existing e-procurement platforms and to serve as one-stop-shop for all details relating to public procurement in the state. Figure 2: GovTech Solutions supported under ASPIRe Page 48 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT The process adopted for all the IT applications was to have the Detailed Project Report -DPR (including functional requirements study) prepared by DPR consultants, who also supported the project in bid preparation and process of procuring and on-boarding the IT vendors and to have project management consultants in supporting the project oversee the implementation by the vendors. While the core principle of GoA was to adopt open-source technology to avoid license fee for proprietary solutions or databases, in case of the excise IT application a small license fee is payable. Financial Management Information System (FMIS) The existing treasury information system which only had expenditure management function (core treasury) was upgraded in terms of functionality and architecture and scaled up with new modules to a full-fledged FMIS (FinAssam) to connect all financial management processes encompassing budget preparation, distribution, execution, accounting, and reporting; and the outdated core treasury system was replaced with expenditure processing and reporting module. GoA engaged a medium-sized software developer as System Integrator to incrementally develop these modules across multiple Releases. These were developed based on a DPR developed by PricewaterhouseCoopers and Deloitte’s were the project management consultants. The entire FMIS application has been built using open-source software including open-source database management system MariaDB; and the total cost involving application development, hosting, implementation and O&M stood at US$ 10.9 million. Approximately half of this (US$5.4 million) is the cost of hardware, hosting environment at data center, peripheral hardware for the 87 treasuries, and network connectivity at the treasuries; and the remaining investments of US$5.5 million was on application development and O&M support which the SI has been providing during the initial years of deployment and commissioning. User support to address technical issues is through integrated Helpdesk module and additionally there are toll-free number to raise service requisition requests. Helpdesk performance is monitored through monthly analysis of helpdesk tickets and calls resolutions; and the feedback of users is elicited on a 5- star rating scale. The various FMIS modules went live in a phased manner over 4 years and is presently being used by approx. 12,000 users; and has ushered-in functional coherence among planning, budgeting, expenditure control, accounting and reporting; and now serves as single window for end-to-end view of public financial management in Assam. Also, the integration of FMIS with key external applications, notably with the core banking solution of India’s Central Bank (e -Kuber) has enabled transition to electronic payments – more than 99% of government payments are made electronically through e-Kuber. Similarly, the integration with Government of India’s Public Financial Management System PFMS has established an efficient system for tracking devolved and tied funds released for Government of India funded programs;, and the integration of FMIS with VLC system of C&AG allows electronic submission of bills and accounts to the Office of State AG within the stipulated submission timeline. In addition to these, integration of FMIS has been accomplished with select external and internal stakeholders29 for seamless data sharing. Comprehensive e-Governance solutions in Excise Department. Assam Excise Revenue Management System (AERMS), the bespoke e-Governance applications digitalized the manual decentralized processes of Excise Departments. The e-Governance application of Excise department is interoperable with e-GRAS and the commercial tax solution for VAT payment and went live in three Releases; and the vendor is also responsible for operation and maintenance support for three years. With the rollout of AERMS, the Excise Department has transitioned from complete manual operations to near full automation: all liquor registration, renewal of licenses, and transport permits have now been issued electronically in line with established service standards. The new e-Governance solutions have 29GSTN, e-GRAS, DIDS, RBI, NSDL (for National Pension System), PFMS (State Treasury and SNA SPARSH), eMudhra (for DSC), CDAC (for e-signing service), PWD, CM Dashboard, Mukhya Mantri Lok Sevak Arogya Yojana, and Krityagata Pension Processing System Page 49 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT helped improve department’s interaction with Excise licensees and decreased time for transactions, boosted Excise revenue for the State by an impressive 15.5% CAGR year-on-year basis with reduced cost of excise revenue collection; and enabled introduction of other efforts such as operationalizing the Track & Trace System to provide enhanced protection against counterfeit liquor and reduce the scope of revenue leakage. The cost of Excise application, including development and O&M was US$2.8 million; C-Tel Infosystems Pvt Ltd, an Indian IT services company is responsible for technical development and providing maintenance support to the client, with Ernst & Young and Price Waterhouse Coopers being the DPR and Project Management Consultants, respectively. Comprehensive e-Governance solutions in Commercial Tax Department. In Commercial Tax Department, the ATReMS replaced the fragmented and outdated tax information management system; and the customized application digitalizes a number of previously manual client services processes covering all the five taxes administered by the department. The development and rollout of ATReMS also involved integrations with five external systems: the AERMS of Excise department for VAT collection; e-GRAS for collecting non-GST tax revenue; FMIS for e-Refund pay out; Ease of Doing Business portal for Professional Tax Registration; and with National Securities Depository Limited for verification of PAN, the foundational identifier for the purpose of income tax. Modernization of hosting environment too was caried out to ensure efficient technical performance of ATReMS Portal and other related IT applications of the department. This comprehensive e-governance application began operating from September 2021 after 15 months of development and customization; and allowed integrated electronic mechanism for completion of tax assessment and GSTN integration, electronic filing of returns for all non-GST taxes with features of online scrutiny and verification and introduced single interface for effective taxpayer services. Additionally, the digital access of tax related datasets facilitated data mining and analytics efforts by the Economic Intelligence Unit and Apex GST Audit Cell of the department, and these have resulted in detection of multiple instances of non-compliance and tax evasion. The e-Governance solution for the Commercial Tax Department was developed by Tata Consultancy Services and the total cost (including software development, hardware, peripheral and maintenance) was around US$ 7.2 million. National Institute of Smart Governance were the DPR and Project Management Consultants. e-GRAS: the Government Receipt Accounting System This common e-collection solution for tax and non-tax tax revenue, was customized from an existing solution developed by NIC, an agency of the Government of India. Developed on Oracle environment, the e-GRAS solution went live in June 2018 with a customization and deployment period of 30 month; and had supported the GoA in revenue collection during COVID-19 pandemic. All IT applications: FMIS, Commercial Tax, Excise are integrated with this common e-collection portal. The Sewa Setu portal for digitalization of citizen services under the World Bank-supported Assam Citizen Centric Services Delivery Project was also integrated with e-GRAS to facilitate payments of user fees by the citizens for services avoiding duplication of efforts; and recently the solution has been integrated with the receipt module of e-Kuber system of India's Central Bank for reconciliation of the revenue. As on date, e-GRAS covers 684 services and schemes of 60 departments across around 2000 entities / nodes including Excise and Commercial Tax, the two largest revenue departments. An overwhelming 98 percent of government receipts are collected through this platform; and it includes 98 percent of commercial tax and 100 percent of excise revenues. Digital Infrastructure for Direct Benefit Transfer (DIDS) The Digital Infrastructure for Direct Benefit Transfer (DIDS) was initiated in 2021 for improved targeting and efficient direct delivery of select social welfare payments. The technology solution has been designed to onboard schemes relating to Page 50 The World Bank Assam State Public Finance Institutional Reforms (ASPIRe) Project (P157198) ICR DOCUMENT transfer of public funds to the beneficiaries; and also enable as centralized, configurable, scalable, multilingual and faceless platform to register a social welfare assistance applicant, validate documents submitted by the applicant, check eligibility of an intending beneficiary for a specific scheme, and disburse applicable benefit to all eligible beneficiaries electronically through seamless integration with the FMIS. The microservice based design and the container-based deployment architecture on MariaDB database management platform and Java Spring framework allow scalability, extensibility and portability of DIDS Platform; and compliance to open standards enhances its interoperability and integration with diverse technologies, as well as future technology adoption. The Data Principles of DIDS solution ensure protection of generated/ used data from unauthorized use and disclosure, as well as encryption and pseudo-anonymization of sensitive personally identifiable information; and is designed to handle all the data hosted/ stored in the application as asset with in-built data archival policy. The DIDS solution was developed by Price Waterhouse Coopers at a cost of US$3.0 million (including two years of post- deployment operations and maintenance); and after the development period of 13 months the solution went live in January 2023. National Institute of Smart Governance was the DPR consultant and Deloitte’s was the Project Management Consultants. Operational Sustainability of Key IT Solutions With the aim of seamless efficient functioning of ASPIRe supported innovative GovTech Solutions, the software developers of all the IT and e-Governance solutions have been mandated for O&M and Helpdesk support over extended period. The GoA strategy is to avail the services of qualified technical vendors to provide the O&M with vendor management & oversight remaining within the department; and this would call for enhancing in-house technical capacities for effective O&M, as well as for future planning of necessary technical upgrade of these key IT solutions. This is being planned, and GoA is studying options to strengthen internal institutional arrangements and technical capacity to ensure effective technical oversight on performance benchmark and SLA of these O&M mandates of contracted service providers. Page 51