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Documentation of Best Practice PROOF Public Records of Operations and Finance

September 2010 Researched and Documented By:

OneWorld Foundation India

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Table of Contents

EXECUTIVE SUMMARY ....................................................................................................................................... 3

OBJECTIVE ............................................................................................................................................................ 4

KEY STAKEHOLDERS & ROLES ......................................................................................................................... 4

SALIENT FEATURES ............................................................................................................................................ 4

WORKING DESIGN ............................................................................................................................................... 4

Box 1: Service Level Benchmarks ................................................................................................................. 5

ACHIEVEMENTS ................................................................................................................................................. 10

METHODOLOGY ................................................................................................................................................. 10

LESSONS LEARNED ............................................................................................................................................ 11

References ................................................................................................................... 14

Appendix A – Interview Questionnaire .................................................................... 15

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Executive Summary In 2002 the Bangalore-based NGO, Janaagraha, launched PROOF (Public Records of Operations and Finance). The organization teamed up with four others – Public Affairs Centre, Centre for Budget and Policy Studies, VOICES and Akshara Foundation – to campaign for the quarterly public disclosure of Bangalore city corporation’s financial records. The leaders of the campaign believed that government emulation of the private sector with financial transparency would enhance accountability to the citizens. Within six months of the PROOF campaign, the Bangalore Mahanagara Palike (BMP) – the institution responsible for effective public service delivery to city residents – concluded on adhering to the demands of public disclosure. Campaigners quickly became aware that the demand for transparency would not be possible without the accurate supply of records. Fortunately, the campaign coincided with a change in the city’s financial accounts from a single entry model to a fully digitised, fund based, double-entry accounting system; as a result of the newly improved aggregation of data, dissemination of accurate and comprehensive information could be easily and meaningfully disclosed. PROOF implementers outlined three rules for disclosure: predictability, immediacy and standardization. From 2003 to 2006/7, the campaign grew in strength and size. One of the major developments during this time was the creation of a benchmarking system. In order to create a uniform way of evaluating urban public service delivery, PROOF campaigners designed Standardised Service Level Benchmarks (SSLBs). With the help of partner, Akshara Foundation, SSLBs were

extensively used for the education sector; specifically, primary schools throughout Bangalore adopted the SSLB model to determine the extent to which students were being supplied with the proper tools for learning. In 2007, PROOF achieved its ultimate goal – a concrete translation of their grassroots campaign into formalised policy. The Jawaharlal Nehru National Urban Renewal Mission (JNNURM) incorporated a disclosure law, whereby all municipal bodies are required to disclose financial records. Furthermore, in that same year, the Ministry of Urban Development (MoUD) launched an initiative to define SSLBs for four key municipal services using the same concepts pioneered by PROOF. This exercise was led by PROOF and included several other well known organizations such as GTZ, JICA, CEPT, ASCI, and the Water and Sanitation Program (WSP) of the World Bank. Once developed, the SSLBs were piloted in 28 cities across India to confirm their usefulness. The culmination of this effort was that in 2010, the Thirteenth Finance Commission included a service level benchmark (SLB) framework as one of the nine conditions by which State performance would be judged. The report highlighted benchmarking as a key medium through which measurement of financial accountability should be conducted throughout the country. Today, PROOF is encompassed in JNNURM and the Thirteenth Finance Commission at the policy level, and it operates in practice in 28 cities through the SSLB model. PROOF has also earned a great deal of credit for its successes including haven been chosen as a World Bank best practice in the Asia-Pacific, a UNDP-named successful accountability idea, and a recognized effort by CRISIL

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(Credit Rating Information Services of India Ltd) for the award of innovative excellence in public institutional accountability.

Objective

At the broadest level, PROOF aims to ensure social justice. Three goals are stepping stones to this outcome: first, PROOF aims to empower citizens through public finance education and engagement in government financial disclosure processes. Second, PROOF looks to improve urban governance through financial transparency paired with first-hand citizen participation. Third, it attempts to enhance government accountability through the assessment of public service delivery with standardised benchmarking.

Key Stakeholders & Roles Janaagraha Centre for Citizenship and Democracy – Visionary/Owner Akshara Foundation – SSLBs in BMP’s primary schools Centre for Budget and Policy Studies - Analysis of financial statements Public Affairs Centre – Governance research VOICES - Community communications through electronic and print media Trustee Group of PROOF – Facilitated partnerships with Institute of Chartered Accountants and GOI

Salient Features 1. Obtain, analyse and discuss city

municipal corporation’s quarterly financial statements for increased transparency and improved accountability

2. Assess public service delivery in urban areas through service level benchmarks

3. Public finance education and training for citizens - to equip

beneficiaries with the tools necessary to hold the city government accountable to their needs

Working Design Since its inception in 2002, the PROOF programme has involved four major activities. The first is the release of financial records – namely, revenue and expenditure statements referenced against city budgets. This process not only required the BMP to utilize their FBAS digital accounting system for public disclosure, it brought together interested parties – citizens and practitioners (total of 200-300 persons) – to analyse and discuss statements through integrated review meetings. In an attempt to educate the citizens how to properly analyse financial records, PROOF facilitated training sessions for interested parties on financial auditing and urban governance accountability. Review meetings continued until 2006, when the coalition of community organisations leading the campaign changed along with their priorities. Moreover, by 2006, Janaagraha felt it had invested a sufficient amount of time in developing a strong organizational understanding of the city’s financial system. Largely influenced by the change in city leadership and hence the realization that another round of campaign efforts would be required, leaders felt it was both necessary and the appropriate time to channel all efforts into transforming campaign activities into sustainable policy. From 2002 to 2003/4 PROOF worked with VOICES, a community media organization, to spread awareness about the campaign. This was done through a community radio programme called PROOF Puttanna, a platform that

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generated continual community-based discussion of the BMP’s financial records. Additionally, a PROOF Energy Centre (PEC) was formed for alternative but related discussions involving students and other interested parties. The PEC revealed a need to target beneficiaries at the most local of levels; as such, the programme expanded into mini-discussions at the ward level. The PEC also visited college campuses to motivate young adult participation. Lastly, a newsletter entitled, ‘Talk about PROOF’, was designed and later distributed throughout the city. In conjunction with their community-outreach strategy, PROOF leaders invested in broad based, high level

advertising. Much of the PROOF communication materials were translated from English into Kannada in hopes of reaching a larger segment of the local population. The final major element of PROOF was borne out of the desire to deepen the programme for the creation of a sustainable impact. With this, thematically organized performance indicators were designed. Grounded in the argument that effective transparency and improved public service delivery is dependent on the utilization of information, service level benchmarks were designed to strengthen accountability.

Box 1: Service Level Benchmarks

In 2009, the service level benchmark (SLBs) framework was endorsed by the Thirteenth Finance Commission. Following this, the SLB model was piloted by the Ministry of Urban Development, Government of India, in 28 cities (14 states and 1 UT) in the areas of water supply, sewerage, solid waste management and storm water drainage. To date, benchmarking has been conducted for services under the command of the Ministry of Urban Development, however the aim is to include services under the Department of Urban Transport and E-governance as well. At present, benchmarks have been designed for services that these departments are responsible for, but have not yet been utilized. Simultaneously, the government plans to expand the pilot to all 1756 municipal corporations/municipalities across the country. In addition to expanding its scope in terms of services and geography, the SLB programme is becoming a fully transparent system through the digital display of its outcomes in the public domain. At present, the first set of results is being prepared for government publication. Below are the major outcomes. It is important to note that the government works with non-governmental partners who carry out the benchmarking process on the ground. During this process, a grade (A through D) for reliability is given to each SLB outcome. Data presented in this document is a sample of total data collected. Reliability grades of less than ‘B’ were not included. Furthermore, some cities did not report figures for certain measures. For these reasons, data for fewer than 28 cities are presented here. As unreliable or missing data was dropped, some measures were left with only a few cities’ data. The indicators presented are those that were left with the most data.

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Benchmarking revealed that the average coverage for water supply across 24 cities is 64 percent. This is the total number of households in the service area that are connected to the water supply network as a percentage of total households in the service area.

Water Supply (Coverage)

0

10

20

30

40

50

60

70

80

90

100

City

Co

vera

ge

Ahmedabad

Bangalore

Bhopal

Bhubaneswar

Chandigarh

Chas

Delhi

Dharamshala

Guntur

Hyderabad

Imphal

Indore

Jalandhar

Kolhapur

Kozhikode

Nashik

Palampur

Pimpri-Chichwad

Shimla

Surat

Tiruchirapalli

Trivandrum

UdhagamandalamUjjain

The cost recovery in water supply services, or total operating revenues as a percentage of total operating expenses incurred, ranges dramatically – with a low of 16.1 percent in Palampur and a high of 223 percent in Trivandrum. It averages to 79 percent across 22 cities.

Water Supply (Cost Recovery)

0

50

100

150

200

250

City

Co

st

reco

very

Ahmedabad

Amritsar

Bangalore

Berhampur

Bhopal

Bhubaneswar

Chandigarh

Delhi

Guntur

Hyderabad

Indore

Jalandhar

Kolhapur

Kozhikode

Nashik

Palampur

Pimpri-Chichwad

Shimla

Surat

Tiruchirapalli

Trivandrum

Ujjain

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The efficiency in collection of water-supply related charges, as measured by current year revenues as a percentage of total operating revenues, came to an average of 72 percent across 23 cities.

Water Supply (Collection Efficiency)

0

10

20

30

40

50

60

70

80

90

100

City

Co

llecti

on

Eff

icie

ncy

Ahmedabad

Amritsar

Bangalore

Berhampur

Bhopal

Bhubaneswar

Chandigarh

Delhi

Dharamshala

Guntur

Hyderabad

Indore

Jalandhar

Kolhapur

Kozhikode

Nashik

Pimpri-Chichwad

Shimla

Surat

Tiruchirapalli

Trivandrum

UdhagamandalamUjjain

Citizen access to toilets remains above 61 percent, however submissions of reliable data only came half of the pilot cities.

Toilet Coverage

50

55

60

65

70

75

80

85

90

95

100

City

Ahmedabad

Bhopal

Bokaro

Chandigarh

Dharamshala

Guntur

Kolhapur

Kozhikode

Nashik

Palampur

Pimpri-Chichwad

Surat

Tiruchirapalli

Trivandrum

The extent to which underground sewage networks reach individual properties is as low as 13.1 percent in Guntur, but achieves 100 percent in Chandigarh and Bokaro. The extent to which wastewater is reused or recycled showed the poorest results out of all sewerage management indicators with a mere 36 percent in Bangalore, but more significantly, only four cities submitted reliable data for this indicator.

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Sewerage Coverage

0

10

20

30

40

50

60

70

80

90

100

City

Ahmedabad

Amritsar

Bangalore

Bokaro

Chandigarh

Guntur

Hyderabad

Jalandhar

Kolhapur

Palampur

Pimpri-Chichwad

Shimla

Surat

Tiruchirapalli

Trivandrum

UdhagamandalamUjjain

Huge variations in water logging exists – only four incidences in Udhagamandalam, but 239 in Surat. Water logging is measured in flood prone areas within the city.

Incidence of Water Logging

0

25

50

75

100

125

150

175

200

225

250

City

Ahmedabad

Bangalore

Berhampur

Bhopal

Bhubaneswar

Delhi

Guntur

Hyderabad

Jalandhar

Kolhapur

Kozhikode

Nashik

Palampur

Pimpri-Chichwad

Surat

Tiruchirapalli

Trivandrum

Udhagamandalam

Ujjain

The percentage of road length covered by storm water drainage network averaged to a mere 43 percent across 16 cities.

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Storm Water Drainage (Coverage)

0

10

20

30

40

50

60

70

80

90

100

110

120

130

Ahmed

abad

Amrit

sar

Berha

mpu

r

Bhopa

l

Bhuba

nesw

ar

Cha

ndigar

h

Dha

ram

shala

Gun

tur

Kolha

pur

Kozhiko

de

Nas

hik

Palam

pur

Pimpr

i-Chich

wad

Surat

Tiruch

irapa

lli

Trivan

drum

City

Out of the four areas of measurement, solid waste management, although measured through eight indicators, resulted in the least amount of data. Percentage of housheholds that are covered by a daily doorstep collection system was collected from 12 cities and indicated extremely poor coverage in Berhampur and Delhi, but full coverage in Bokaro.

Solid Waste Management (Household Coverage)

0

10

20

30

40

50

60

70

80

90

100

Ahmed

abad

Berha

mpu

r

Bhuba

nesw

ar

Bokar

o

Delhi

Imph

al

Indo

re

Kozhiko

de

Shim

la

Surat

Tiruch

irapa

lli

Udh

agam

anda

lam

XXX – Reliability Grade A

XXX – Reliability Grade B

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Achievements 1. Convinced BMP to release

financial records within six months of campaign kick-off

2. Obtained key government and influential policy advocators, including Nandan Nilekani, who helped to ‘socialize the PROOF message’

3. Educated and trained citizens in public financial processes

4. Created transparency in BMP finances through demanding of quarterly public financial disclosure

5. Increased public ownership through engagement of citizenry in city financial disclosure processes

6. Strengthened accountability of the BMP to the citizens through disclosure requirements

7. Led the design and definition of standardised benchmarks/metrics to determine the quantity and quality of municipal services being delivered to citizens and value of expenditure in terms of actual impact; benchmark framework has already been used for impact assessment in 28 cities and will soon be rolled out nationwide

8. Encouraged a cooperative approach to improving public service delivery as benchmarks are designed in a participatory manner (with all key stakeholders involved)

9. Formalised requirement to disclose records for evaluating expenditure impact through inclusion in JNNURM framework

10. Helped institutionalise service level benchmarking through the Thirteenth Finance Commission

performance condition framework

Methodology 1. Identification as a best practice Researchers accomplished the initial task of identifying PROOF as a best practice through online research. Pertinent existing documentation was gathered through the internet. The majority of sources found were web publications written by key stakeholders. While gathering secondary sources it became quickly apparent that PROOF had been recognized by a number of third party institutions; as such, online publications were also found from the libraries of these organisations. During this research period, a number of key documents were found online; however, researchers determined that nearly all had been written in the first years of PROOF. Eight years had passed since earlier comprehensive documentation, thus researchers were motivated to generate up-to-date documentation, with the expectation that new and holistic knowledge would be valuable. 2. Verification through secondary

sources Secondary sources were thoroughly scanned to understand PROOF’s background, objective and early achievements. Key stakeholders were identified and their roles documented. 3. Validation through field research Researchers travelled to Bangalore to interview stakeholders in regards to their involvement in PROOF. Semi-structured interviews were

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carried out with the intention of learning: one, the history of PROOF; two, the features that make PROOF a unique initiative; three, the programme’s achievements/impact thus far and reasons for its outcomes; and lastly, PROOF’s current status and future trajectory. The ultimate goal of documentation, as accomplished through secondary and primary research, was to understand the evolution of and reasons for PROOF’s success. Furthermore, analysis of all information gathered was carried out to determine lessons for future replication.

Lessons Learned PROOF has achieved a great deal of success in influencing policy in India. This is best illustrated in the inclusion of a disclosure law in JNNURM and the replication of the SSLB system in close to thirty cities. At this point, it is important to ask why PROOF has been such a success and what lessons it has to offer future efforts of its kind. The following is a summary of key reasons for success and hence, also to be used as pointers for future replication. Conducive environment PROOF was conceived at a time when the political, economic and social environment in Bangalore was ready for a movement that could positively affect governance. In the years that directly preceded PROOF, the Right to Information was central to policymaker discussions. At the same time, the S.M. Krishna government was emphasizing the potential of public-private partnerships (including the Bangalore Agenda Task Force (BATF)) and the use of information technology, both to be utilised for increased transparency in government. Additionally, the BATF had

managed to convince the BMP to switch from simplistic accounting to a double-entry and fund based accounting system. The change to double entry made for more comprehensive and granular recordkeeping, while channelling funds to specific activities and categorizing them as such created clear and easily interpretable accounts. The accounting system was also digitised at this time which allowed for easy extraction of information. Additionally, it enabled the BMP to monitor accounts in real time. The outcome of this reform was a fully enabled supply-side of financial disclosure. Effective utilization of resources In taking advantage of the individualized expertise of a number of organisational partners, the PROOF campaign quickly gained strength and also maintained its momentum over time. Janaagraha conceived PROOF and continues to manage its operations. The organisation has used its expertise in urban governance to formulate a vision and a means to fulfilling it. Public Affairs Centre, with many years of experience in governance research, contributed to instilling a fundamental governance knowledge base in key players. Akshara Foundation joined the campaign as an expert in education, thus becoming an ideal actor for SSLB implementation in primary schools. VOICES used their expertise in community media to publicize the campaign and facilitate educational discussions between beneficiaries, advocates, and other interested stakeholders. Centre for Budget and Policy Studies joined as a key member in the interpretation of financial records and financial disclosure processes.

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Engaging key stakeholders and influential citizens Initially, PROOF faced resistance from the BMP. Campaigners understood that the success of their efforts was dependent on not only the BMP’s approval, but its wholehearted advocacy of the programme. Hence, campaigners directly confronted the BMP’s fears by explaining that its new state of openness would be celebrated and its processes not simply critiqued. Equally important to winning the BMP’s support was the involvement of key citizens who managed to stimulate the rapid spreading of the PROOF message by introducing it to influential and interested citizenry. The relationship between the BMP and PROOF has not always been smooth, however, with the help of influential citizens (including Janaagraha’s co-founder, Ramesh Ramanathan, who is a member of BATF) the campaign continued to move forward. The BMP commissioner’s decision to comply with PROOF was substantiated through the positive attention that the initiative immediately drew. More than the BMP and key citizens, PROOF campaigners involved government officials at all stages of development. This proved to be beneficial in the integration of the programme into formalised policymaking. Support from elected officials was sought out a number of times, however was never achieved. PROOF leaders hoped that elected officials would aid in the disclosure processes. It was also understood that many of the elected officials did not have backgrounds in public finance and the coalition of PROOF campaigners hoped to provide

this training to those who desired it. There are two major reasons why this goal was not achieved. One is that campaigners did not spend enough time communicating the potential benefits of PROOF to this group of stakeholders. Two is the strong opposition of the campaign by the former mayor of the city council, who sent out a note expressing his views to the council members at the time. Taking a holistic approach PROOF has evolved over its lifespan a tremendous deal. The understanding of holistic measures to ensure financial accountability was central to its success. For example, efforts were not halted after public disclosure laws were mandateded through JNNURM because key visionaries at Janaagraha knew that disclosed information needed to be analysed and utilized to effectively improve urban governance. Building on its own experience with service level benchmarks in the education sector in Bangalore , PROOF conceived, catalyzed and helped lead a national SSLB effort under the stewardship of the Ministry of Urban Development. These were eventually institutionalized as national policy by being incorporated into the recommendation of the Thirteenth Finance Commission. It is important to note that Janaagraha continues to strengthen PROOF through development of supporting programmes. Their newest initiative is WISA - Ward Infrastructure Service Assessment – a programme designed to assess governance at the ward level through a SSLB- based scoring system. The uniform data gathered from all 198 wards in Bangalore will provide for a comprehensive understanding of the impact of expenditure in service delivery at the grassroots level.

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Additionally, Ramesh Ramanathan has expressed satisfaction in institutionalising the supply side of the PROOF model, but also an understanding that the demand side requires renewed attention. In other words, city financial records are being disclosed and benchmarks are being utilised for effective financing, but the new information is not yet being significantly used by citizens for their own empowerment. As such, community outreach will be necessary to fill this gap. Generating an ‘identity’ Many development efforts begin with a programme – design, implementation and maintenance. Little effort is put into advertising the programme; often, the expectation is that if it is impactful, the attention necessary for its expansion will grow organically. PROOF used an entirely different methodology. Its identity was

generated through campaigning, after which the design of the programme evolved over time. Leaders rightly assumed that the universal desire to monitor finances in an effort to directly impact the welfare of the people would drive the campaign forward. Implementers created an identity for the programme with community outreach through different mediums including radio, paper and word-of-mouth. It was only after influential actors took notice of PROOF that visionaries calculated all the necessary components of the programme to make it effective; for instance, SSLBs were designed after disclosure meetings had begun. The ability of PROOF to be included in the Urban Renewal Mission is due in large part to the momentum that the programme gathered and transformed into making the programme a ‘household name’.

Research was carried out by the OneWorld Foundation, Governance Knowledge Centre (GKC) team.

Documentation was created by Knowledge and Research Coordinator, OWFI, Nicole Anand.

For further information, please contact Mr. Naimur Rahman, Director, OWFI.

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References

Dargar, Seema. 2003. City Government, Budget Analysis and People’s Participation in India. Centre for Budget and Policy Studies. Bangalore.

Ministry of Urban Development. 2009. Handbook of Service Level Benchmarking. New Delhi.

Thirteenth Finance Commission. 2009. Thirteenth Finance Commission Report. New Delhi.

Vijaylakshmi, V. Financial Performance Audit: Public Record of Operations and Finance (PROOF) and Citizen’s Participation. Written for ReCitE IDS, University of Sussex.

Vysalulu, Vinod. 2003. Budget Transparency, Accountability and Citizen Participation – The PROOF Campaign in Bangalore. 2003. Centre for Budget and Policy Studies. Bangalore: CBPS Monographs.

World Bank. Social Accountability Stocktaking Exercise for South and South East Asia.

Interviews were conducted with representatives from stakeholder organizations: Ramesh and Swati Ramanathan, Co-founders, Janaagraha; Asok Kamath, Chairman, Akshara Foundation; Vinod Vyasulu, Director, Centre for Budget and Policy Studies; Ashish Sen, Director, VOICES; and Sanjeev Ranjan, National Coordinator – Service Level Benchmarking, Ministry of Urban Development – Government of India.

*Note- researchers attempted but did not succeed in conducting interviews with former BMP members

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Appendix A – Interview Questionnaire

Janaagraha Ramesh Ramanathan Swati Ramanathan

1. Why was the PROOF campaign started? What did it set out to do? 2. As we understand it, PROOF has four major components:

Obtaining quarterly financial statements from the BMP (city municipal corporation) Developing and utilising Service Level Benchmarks/Performance Indicators (PIs) Involving citizens in public disclosure processes Training for citizens on public finance issues

Is this correct? Can you explain the working design of PROOF in detail?

3. How are financial statements obtained from the BMP? Who obtains them? For instance, does the BMP make these documents public online? Do citizens call officials to obtain the financials?

4. How were Standardised Service Level Benchmarks initially developed? Who was involved in this process?

5. How did your organization involve citizens in public disclosure processes? For example, did your organization approach citizens? If so, how and whom? Were citizens interested from the start? How did your organization engage with the citizens?

6. How were citizen trainings conducted? At what intervals are they offered? Who conducts them and where?

7. How was the PROOF message spread? Were elected officials sought out? If not, why not?

8. What was the biggest challenge in designing PROOF? It has been 8 years since its inception, what has been the biggest challenge in maintaining PROOF?

9. Did citizen-oriented review meetings end in 2006/7? Why? 10. Has PROOF had an impact on city’s financial processes? Has it impacted the involved

citizens? 11. What do you think makes PROOF unique? 12. Do you think PROOF achieved its major goals? If so, how and in what way? 13. What do you feel is important to understand when attempting to replicate the PROOF

model?

National Coordinator – Service Level Benchmarking Sanjeev Ranjan

1. What was your role in the PROOF campaign? 2. How were SSLBs / performance indicators were initially developed? What sort of

measures do they include? 3. Who was involved in this process? 4. The benchmark process started in Bangalore in 2002, but has since been taken up by 30

cities, is this correct? How did this expansion proceed? 5. What has been the greatest challenge to designing and implementing these indicators? 6. What is the greatest advantage to having these benchmarks? 7. Is the performance data measured against benchmarks being analysed? If so, by whom

and through what methods? Can you provide us with aggregated data of city/cities performance?

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VOICES Ashish Sen, Director

1. How does your organization reach out the community to get them involved in PROOF? What strategies are used- direct and indirect?

Akshara Foundation Ashok Kamath, Chairman

1. How are performance measurements determined? 2. How are they utilized in the education sector? What was Akshara’s role in this?

Center for Budget and Policy Studies Vinod Vyasulu, Director

1. What was the role of CBPS in PROOF? 2. How was the financial analysis process undertaken? 3. Who and how were the volunteers trained?