Guidelines on Farm Value Chain Development through promotion of

Producers Enterprise under NRETP

Table of content

1. Scaling up of Value Chain Initiatives under NRETP (National Rural

Economic Transformation Project): ............................................................................. 2
2. Strategy on Value Chain Development through promotion of Producers
Enterprise .................................................................................................................... 3
3. Objectives of Value Chain development interventions under NRETP .......................... 4
4. Expected Outcomes .................................................................................................... 4
5. Non-negotiables .......................................................................................................... 5
6. Approach ..................................................................................................................... 5
7. Farm Based Value Chain Projects under NRETP ........................................................... 6
8. Funding ....................................................................................................................... 7
9. Convergence ............................................................................................................... 7
10. Processes under NRETP for Value Chain Development through promotion
of Producers Enterprise ............................................................................................... 8
11. Support to SRLM ....................................................................................................... 10
12. Technical Support Agency ......................................................................................... 10
13. Support to Producers’ Enterprise (PE) ....................................................................... 10
14. Fund flow from SRLM to Producer Enterprise (PE) .................................................... 11
15. Release of Funds ....................................................................................................... 13
16. Necessary conditions for project approval ................................................................ 14
17. Project Completion ................................................................................................... 14

Guidance note on promotion of Producers Enterprise under NRETP (2019) 1

1. Scaling up of Value Chain Initiatives under NRETP (National Rural Economic
Transformation Project):
DAY-NRLM has promoted interventions focused more towards increasing productivity in
agriculture, livestock and Non Timber Forest Produce (NTFP) to diversify livelihoods and enhance
incomes with a large number of women farmers (Mahila Kisan). The intervention strategies are
well defined and SRLMs have been able to drive the interventions over last few years. It has also
been recognized within DAY NRLM that there is a need for specific intervention to promote
member owned and member controlled Producers’ Enterprises to ensure better price realization
to Mahila Kisans. Towards that, value chain development initiatives through promotion of
producer collective enterprises have been introduced in few states over last 4 years.
Building on these experiences, National Rural Economic Transformation Project (NRETP) envisages
moving towards higher order livelihoods interventions and aims to promote value chain
interventions for establishing sustainable market linkages for small and marginal producers
focusing on post farm-gate market linked initiative as one its core components. Comprehensive
support architecture is the essential element of NRETP in terms of provisioning technical
assistance, skills building, and investment support to enable such farmer-owned and farmer-led
organizations to improve market access, value addition, quality enhancements and accessing
market information for business decisions.
Under NRETP, 40 large size Producers Enterprises which are registered entities are planned to be
promoted over next three years. This initiative would be taken up in a project mode so that these
enterprises are developed in a time bound manner with clear outcomes in terms of economic
sustainability and business viability. These Produces Enterprises would be supported for all the
necessary investments required to establish such an enterprise without depending on any external
financial support so that projects are executed without any delay caused by external dependence.
This initiative will be taken up on a project financing mode to be implemented on a turnkey basis
where SRLMs have to prepare a comprehensive project proposal including market assessment,
business model, business plan, financial projections, risk assessment, professional management
and sustainability plan for each of the Producers Enterprise.
Keeping the specific program objectives of NRETP, this guideline has been developed for the States
to develop specific funding proposal for promotion of Producers Enterprise under farm livelihoods
component of NRETP.
DAY-NRLM has already issued guidelines on “Promotion of Producers Enterprises”, “MKSP – Value
Chain Development” and “Financing Producers Collectives under DAY-NRLM”. All these guidelines
are developed to enable the SRLMs to design and implement the value chain initiatives so that the
producers-based organizations promoted are sustainable – economically, socially, and
environmentally. As value chain development through promotion of Producers Enterprise is an
important component of World Bank funded NRETP project this is imperative to have a guidance
note regarding this as well.
To ensure a systematic approach in project proposal development, appraisal and approval under
NRETP for financing Producers Enterprises this guidance note is being issued.

Guidance note on promotion of Producers Enterprise under NRETP (2019) 2

2. Strategy on Value Chain Development through promotion of Producers Enterprise
2.1. Promotion of sustainable and economically viable Producers’ Enterprises is a highly
challenging and complex task and DAY-NRLM has identified the critical success factors for
the success of a PE like policy issues, requirement of professional manpower with techno-
managerial skill and financing challenges through various consultative processes.
The strategy envisaged to develop Producers’ Enterprises is centred on the following
aspects:
a. Robust Business model - The focus should be on building member owned PEs. A robust
business model which takes into account supply factors, market and consumer
preferences is essential for success of Producers’ Companies. Post farm-gate to market
interventions would be supported. The business model has to be robust enough to
clearly define value proposition for the farmers, for the consumers and for the PE.
b. Focus on value addition – Interventions centred on post farm gate value addition and
marketing would be the focus. A business model based on aggregation and speculation
on market price will not be encouraged but a business model that is more focused on
taking processing, packaging and marketing would be more robust and more
sustainable.
c. Dedicated human resource - Human Resource with relevant qualifications and
experience as staff of the PE in the PE pay roll to manage the PE operations and
business effectively would be extremely important. There need to be a dedicated team
of experts with business skills at the SRLM level to support and steer the implementation
of value chain interventions in the state.
d. Capacity building - Mentoring and capacity building of small farmers is essential for
the sustainability of PEs.
e. Financing – Procurement infrastructure, processing infrastructure, working capital
and viability gap funding to the PEs would be critical
2.2. Producers Enterprise
a. A Producers’ Enterprise (PE) is defined as registered formal organization of farmers
including co-operatives and Farmer Producer’ Companies.
b. It is a community based organization (CBO) owned and governed by the community
members as shareholders
c. A Producers’ Enterprise is built on Mutual Assistance Principles.
d. The primary objective of these organizations is to ensure better economic return to the
farmer producers by helping them to take up business activities.
e. These enterprises operate as commercial organizations and being economically viable is
of paramount importance for these organizations.

Guidance note on promotion of Producers Enterprise under NRETP (2019) 3

3. Objectives of Value Chain development interventions under NRETP
The objective is to empower women famers and collectors through an integrated approach of
developing Producers’ Enterprises, building market linkage and capacity building programed
together.
The key objectives of value chain project through promotion of Producers Enterprise under
NRETP are:
a. To ensure higher price realization for the agriculture and allied activities, dairying and NTFP
produce for the small and marginal women farmers
b. Increasing influence of women farmers on the commodity value chain
c. To ensure increased bargaining power of small and marginal producers by achieving
economy of scale and therefore negotiate better prices.
d. To develop robust business models at scale for the commodities produced by small and
marginal women farmers
e. To develop scalable and sustainable Producers’ Enterprises to implement the value chain
development interventions
f. To create opportunities for value addition of commodities
g. To take up Capacity building of the community for better post-harvest handling, knowledge
of quality parameters
h. To provide the platform for producers to promote their interests and influence policies in
the local and national environment that affect their business and livelihood
i. To promote the use of ICT for accounting, inventory management, payment to
producers and market information dissemination in a transparent manner
4. Expected Outcomes
The expected outcomes of each project proposal submitted under NRETP will be achieved
through the planned interventions as below:

a. Better price realisation to the small and marginal women farmers

b. Establishment of scalable and sustainable women Producers’ Enterprises with robust
business model and viable business plan having small and marginal women farmers as the
shareholders
c. Establishment of professional management structure for the Producer Enterprise
d. Equitable sharing of profits among the members
e. Access to market information for better marketing of their products
f. Establishing market linkages through a multi-channel approach
g. Development of Standard Operating Procedures for all processes of the Producers’
Enterprises such procurement manuals, HR manuals, accounting processes
h. Development and promotion of sustainable management, quality assurance and storage
practices
i. The overriding principle is that the producer enterprises promoted are sustainable –
financially, environmentally and socially

Guidance note on promotion of Producers Enterprise under NRETP (2019) 4

 The SRLM may develop partnerships with other reputed organizations having demonstrated
experience in value chain development of the selected commodities for achieving the desirable
outcomes. This would be as per the partnerships guidelines of DAY-NRLM.
Convergence with various departments for leveraging the resources would be strongly pursued.

5. Non-negotiables
While designing the proposal the SRLMs has to consider the non-negotiables of DAY-NRLM and
should ensure that these principles are respected and are not violated. These non-negotiables
have been clearly defined to make the project community owned community governed and
sustainable. These principles would guide the project and make the project relevant for the small
and marginal women farmers.
a. The interventions would be focused on small and marginal women farmers. The Producers’
Enterprises proposed to implement the interventions would be women Producers’
Enterprises.
b. The interventions proposed would be implemented through PEs and at scale.
c. The producer Enterprise would be professionally managed having its own professional
managers with requisite qualifications and relevant experience of running a business
enterprise.
d. The interventions would be focused on post farm-gate to market for agriculture produce,
dairying and NTFP.
e. The proposed interventions should be for replicating successful large scale models rather than
taking up pilots.
f. The Producers’ Enterprises would be community owned and must adhere to the principles of
co-operation.
g. Any assets provided under the interventions would be community owned i.e. by a
producers’ enterprise.
h. Any financial support such as working capital support, viability gap funding etc, to
organizations other than PEs would not be permitted.
i. The dedicated team at the SRLM level should be in place for NRETP. The team should
consist of manpower with relevant techno-managerial experience in operations, financial
management, commodity handling etc.
j. No subsidy or grant to be provided to any individual.
k. Core business of the Producers’ Enterprise must be based on agriculture, Dairying or NTFP.
l. Viability of the enterprise is ensured.
6. Approach
The Value Chain projects would be implemented by the Producers’ Enterprise promoted for that
specific purpose. The SRLM is the promoting organization of the PE. Already approved DAY-
NRLM Guideline for the promotion of Producer Enterprises would be followed as a framework
for implementation.

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7. Farm Based Value Chain Projects under NRETP
7.1 About the Project proposal development
a. The project objectives must be explicitly stated and formulated accordingly.
b. The project will focus on geographic area taken under NRETP.
c. While evaluating the proposal the size of the enterprise would be a key determinant
to ascertain the sustainability. An enterprise which is not big enough may not be able
to meet the overhead expenditure like quality manpower and also may not be able to
attain the economy of scale.
d. The Projects should be conceived in a manner so as to provide end to end
solutions. Provision of a complete package of ‘end–to-end’ services through mobilizing
women producers into Producers’ Enterprises, providing access to a complete package
of post- harvest services from procurement, value addition to marketing of produce
should be made in the project in order to make it a holistic project. To the extent
possible, the existing gaps in the marketing eco-system must be identified and
addressed.
e. The project proposal should draw extensively from the existing best practices in
post- harvest practices, value addition and marketing.
f. The project must have a clearly defined business model and business plan at the
time of submission of the proposal. The template at Annexure – I is to be used for
submission of project proposal.
g. Project should lead to substantial tangible and intangible socio-economic benefits.
h. Project should have a well-defined internal monitoring systems to track the progress
i.e., physical and financial achievements. Appropriate Management Information
Systems and accounting software should be essential component for setting up the
PEs.
i. The PEs proposed are to be professionally managed entities; hence the SRLM must
ensure recruitment of professionals with relevant qualifications and experience in the
pay roll of PEs. The Staff of PE must consist of commodity specialists (depending on the
number of commodities handled) and accounts professionals.
j. The project should be developed on the existing implementation experience of the
implementing agency or its partners in implementation of large size value chain
development interventions involving promotion of producer enterprises.
7.2 The components under the project
a. Organization and mobilization of SHG women engaged in agriculture, rearing of milch
animals and NTFP collection into Producer Enterprises should be one of the
components of the project.
b. Project would support the PE for hiring the professional managers for specific period
and beyond that PE should be able to bear those expenses.
c. Processing activities that add value to the agricultural, dairy or NTFP would be taken
up by the Producer Enterprise and necessary infrastructure for the same would be

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 provisioned under the project. This would include agro-processing, food processing,
storage, value addition, preservation, etc.
d. Building market linkages is an essential component of the project.
e. The producers enterprise may need to buy and store the produce for a short period
of time and the project would support working capital towards that.
f. In order to optimize the benefits from the v a l u e c h a i n d e v e l o p m e n t project
under NRETP, a well- defined convergence strategy should be mentioned at state,
district and block levels in order to leverage schemes of various Ministries
/Departments such as MGNREGA, Ministry of Agriculture, Department of Animal
Husbandry, Department of Food processing etc. and similar schemes aimed at
providing support to development of Enterprises or value addition infrastructure.
g. Capacity building of producers in better harvest and post-harvest technology may
also be part of the funding to the producer enterprise. The PE must plan for
knowledge building, management and dissemination relating to markets, post-
harvest practices and village level value addition. Producer enterprise would also take
up the training of members and board of directors in governance of a producer
enterprise
8. Funding
Ministry of Rural Development (MoRD) would provide funding support of up to 60% (90% for
Assam) to the project submitted by the SRLMs under NRETP, balance is to be contributed by the
respective state governments.
Participation of banks in financing the projects would be encouraged. The SRLM would be
expected to define the financing mechanism for the Producers’ Enterprise post the project
period.
The SRLMs will be submitting the project proposals for a period of three (3) years and the
funding will be made through a project route. The project will be approved for a three years
project period.
The investment per household should not exceed INR 15000 over the period. Dairy value chain
development requires higher infrastructure investment, hence in the case of dairy value chain
projects; the investment per household should not exceed INR 18000 over the project period.
The investment per household would be calculated as:
Investment per household = total investment proposed for the project / number of unique
farmers to be covered during the project period.
The total project cost for any single project shall not exceed INR 45 crores.

9. Convergence
DAY-NRLM has issued joint advisories with Ministry of Agriculture, Department of Animal
Husbandry, Dairy and Fisheries and TRIFED. For implementation of the value chain interventions
the SRLMs may explore convergence opportunities with other schemes and departments in
their respective States.

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10.Processes under NRETP for Value Chain Development through promotion of
Producers Enterprise
10.1. Identification of project areas: The project area would primarily be the NRETP blocks.
The non-NRETP/non-intensive blocks adjacent to the NRETP block where the project is
being proposed may also be included with the condition that the SRLM would develop a
plan to cover the non- intensive blocks under its social mobilization and financial
inclusion interventions. The areas taken up under Mission Antyodaya would be given
preference for promotion of value chain interventions under NRETP.
10.2. Project implementing agency (PIA): The State Rural Livelihoods Mission of NRETP
States may propose projects under NRETP who will be henceforth called as Project
Implementing Agency (PIA).
10.3. Proposal submission process and templates: The proposal for value chain development
projects through promotion of Producers Enterprise for agriculture, dairying or NTFP may be
submitted under NRETP in the proposal submission template. The proposal submission
template is provided at Annexure – I. The detailed guidance on proposal development using the
template is also provided in Annexure I-A. SRLMs will be submitting the project proposals for a
period of three (3) years and the funding will be made through a project route.
10.4. Proposal approval Stages –
10.4.1. Desk appraisal: The proposal submitted by the SRLMs would be appraised by a
team of experts having thorough understanding of value chain interventions
including business models and commodity markets. The expert team would
comprise of Farm Livelihoods team of DAY-NRLM handling value chain
development interventions and National Resource Persons empanelled by
NIRD&PR having expertise on value chain development. The appraisal would be
taken up following the scoring template as Annexure II. The detailed guidance on
scoring is also provided in Annexure II-A. Any proposal scoring less than 60%
marks will not be considered.
The Appraisal Team would do the project appraisal based on the following
a) Non-negotiables defined above in this guidance note.
b) Project submission template and financial analysis, business plan, financial
viability, sustainability, profitability.
In case the SRLM has proposed a Technical Support Agency, the mode of
procurement has to be mentioned in the proposal.
In case the proposal is not found to be suitable to be taken to the pre-EC stage,
the SRLM would re-work the proposal based on the comments of the Farm
Livelihoods Team.
The Farm Livelihoods Team may undertake a field appraisal of the project areas
to verify the readiness of the SRLM to implement value chain development
interventions, suitability of the commodity and other factors.

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 10.4.2. Pre-Empowered Committee meeting: The Projects submitted would be
examined and considered by the Pre-EC before it is submitted to the
Empowered committee for its recommendation. The composition of the Pre-EC
would be as under:
i. Additional Secretary (RD) & Mission Director, NRLM – Chairman
ii. Joint Secretary (Rural Livelihoods)
iii. Lead, Farm Livelihoods – Member Convener
iv. Team members - Concerned SRLM

The pre-EC meeting can be held multiple times during the appraisal stage of the
proposal.
10.4.3. Empowered Committee: Once the projects have been examined in the Pre-EC
meeting, the proposal would be put forth for approval by the Empowered
committee. The composition of the Empowered Committee would be as under:
i. Secretary, Department of Rural Development – Chairman
ii. AS & FA, Ministry of Rural Development – Member
iii. Additional Secretary (RD) - member
iv. Representative from Niti Aayog – Member
v. Joint Secretary, Ministry of Environment & Forest / Joint Secretary
(Agriculture Marketing) - Member
vi. Joint Secretary (Cattle & Dairy Division) - Member
vii. Joint Secretary, Ministry of Tribal Affairs - Member
viii. Joint Secretary, Ministry of Development of North East Region (In case of
Projects from Assam) – Member
ix. Joint Secretary, MoFPI. - Member
x. Special Invitee/Expert (Two) - Member
xi. Joint Secretary (Rural Livelihoods) Member-Convener
10.5. Role of the State Rural Livelihoods Mission
The State Rural Livelihoods Missions (SRLM) as Project Implementing agency (PIA) will
place a dedicated team at the State level as provisioned under NRETP for proposal
development and subsequent facilitation of the project roll-out.

Under NRETP, State Rural Livelihoods Mission has to engage dedicated staff as per the
advisory issued under NRETP. Further, to provide technical support in value chain
proposal development one Technical Support Agency need to be engaged from the very
beginning for which budgetary provision has been made under NRETP.
10.6. Project Period: Projects are to be implemented within three years’ time. Funding under
NRETP would be as per the approved timeline of NRETP.
10.7. Eligible Items of Expenditure: Component-wise expenditure likely to be incurred for the
project must be mentioned in the project document. The major cost components
envisaged under the value chain development projects proposed are:
a. Support to SRLM
b. Technical Support Agency
c. Support to Producers’ Enterprise (PE)
Any kind of subsidy to individual members or asset creation for individual members is not
permissible under this project.

Guidance note on promotion of Producers Enterprise under NRETP (2019) 9

11.Support to SRLM
During the initial stages of the project, the SRLM would undertake the activities for the
incorporation of the PE. Therefore, the funds permissible under the Support to SRLM would
include:
10.8. Pre-incorporation and incorporation expenses – which includes expenditure towards
preliminary survey (if required), identification of initial subscribers, facilitation of KYC of
initial subscribers, hiring a Chartered Accountant, registration fees for the PE etc.
10.9. MIS entry and profiling of Mahila Kisans – entry of the Mahila Kisan profiles in the DAY-
NRLM Farm Livelihoods MIS would be taken up by the SRLM.
10.10. Documentation of best practices – SRLM may document the initiative after 3 yrs of
operation of the PE like case studies.
12.Technical Support Agency
The SRLM may take the services of a technical support agency for providing technical and
handholding support to the specific PE(s) to be promoted within the proposal. The mode of
procurement of the Technical Support Agency (TSA) must be specified in the proposal. Therefore,
the TSA is to be taken to provide specific support to the specific PE. The Cost of the TSA should
not be budgeted as a percentage of the total project cost. The cost should be defined as per
clearly specified milestones and deliverables.
13.Support to Producers’ Enterprise (PE)
Producers Enterprise (PE) would be promoted under NRETP where size of operations would be
extremely important for a self-sustained model. A strong business plan should be prepared by
SRLMs for each PE before promoting producer enterprises. A producer enterprise would be
promoted in a project mode with a project life cycle of 3-4 years within which the PE is expected
to become self-sustained and economically viable, member controlled organizations. The sub-
components envisaged under the support to the PE are:
13.1. Infrastructure for Value addition (Plant, machinery, equipment)
13.1.1. One time support for setting-up infrastructure for value addition
13.1.2. Processing facilities for value addition of agriculture, dairying or NTFP produce
which may include facilities for weighing, cleaning, sorting, grading, processing,
packing, testing equipment, ripening chambers, oil extraction, specialized packaging
etc.
13.1.3. Facilities including pack-houses, pre-cooling units, bulk milk coolers may be
proposed which may be essential for taking up proposed processing and value
addition activities
13.1.4. Promotional costs for marketing, certifications costs (such as FSSAI, organic
certifications) which add value or are part of legal compliances would be covered.
13.1.5. Any infrastructure set-up would be owned by the PEs. Asset for a single individual
member will not be permissible under this component.

13.2. Cost towards Strengthening Producer Enterprise (set-up cost) – The following costs would
be covered for a period not exceeding 3-4 years:

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 13.2.1. Includes costs of mobilization of primary producers into PE, training and capacity
building of the Board of Directors, shareholders and PE staff.
13.2.2. Honorarium for Udyog Mitra or any such cadre managing the collection centre
activities.
13.2.3. Remuneration for the block level staff of the PE.
13.2.4. Cost of suitable accounting software, inventory management software.
13.2.5. Support for transportation of goods procured from the members: It is expected that
at the initial stage of the operations, the PE may not able to generate sufficient
volumes to recover the costs for transportation of goods procured in the first leg, i.e.
from primary procurement centers to the aggregation centers. Therefore, the PE
would be provided support for part of the cost of the transportation of the goods
from the primary procurement centers to the aggregation centers for a period not
exceeding 1-2 years. This fund should not be used for buying of vehicles.
13.3 Working Capital: Working capital required for procurement of produce from farmers for a
period not exceeding 3-4 weeks. Elements for working capital estimation may cover Cost of
commodity procured (quantity procured per day, total days procurement, operating cycle -
storage go-down, work in progress, finished goods, goods in transit, logistics cost).Working
capital should be calculated in terms of no. of days equivalent to procurement cost.
13.4 Management Support:
13.4.1 Support for hiring professionals for managing the PE for a period not exceeding 3-4
years. This includes the cost of key manpower of the PE such as CEO, commodity
experts, Procurement Head, Head of Processing Unit, accountant among others. The
PE must have a lean HR structure.
13.4.2 The office rental and ancillary expenditure to set-up the office like electricity cost
would be supported for a period not exceeding 1-2 years.
13.4.3 Office furniture and fixtures and computers.
13.4.4 The human resource and administrative costs should not exceed 6% of the total
funding support to the PE, as per the norms of DAY-NRLM.
14.Fund flow from SRLM to Producer Enterprise (PE)
The fund under the budget head of ‘Support to PE’ would be released by the SRLM directly to the
account of the PE against the annual work plan and the DPR.
14.1. Criteria for fund release to Producer Enterprise (PE)
14.1.1 Fund release to Producer Enterprises will be made through electronic transfer
systems, to the extent feasible.
14.1.2 The fund releases to the PE would be based on the business plan and the fund
requirement projections approved by competent authority.
14.1.3 All releases to the PEs would be accounted for as advances in SRLM books of
accounts except for working capital. Advances should be adjusted against the UC
submitted by the PE to SRLM.
14.1.4 Actual expenditure reported to be booked as expenditures and the unspent
balances are to be refunded to the SRLM.

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 i. The SRLM may periodically request for the audited reports of the PE accounts
within the duration of the project period to verify actual expenditures.
ii. The expenditure reported by PE is to be included in the IUFR submitted by the
SRLM.
iii. SRLM would ensure that the PEs promoted under DAY NRLM are audited as per
the regulatory provisions of the appropriate laws (for example PEs registered
as Producer Company should be audited as per the provisions of Company Act).
14.1.5 The working capital fund provided to a PE is a fund that is rotated multiple times
during the project period as per the operational cycle of the Producer Enterprises.
This is a support from NRLM to the PE to become a viable business entity. The
working capital released to the PE would be treated as expenditure in the SRLM
books of accounts.
14.1.6 The following conditions would be applied for working capital release to the PE:
a) The working capital component releases would be as per the budget for the
project approved by the competent authority (EC).
b) The Producer Enterprise would submit a working capital requirement plan
against the approved working capital budget to the SRLM. SRLM would release
the same to PE after due evaluation.
c) The working capital should not be transferred as a lump-sum to the PE.
d) Necessary care should be taken to avoid idle fund lying in the bank account.
e) The working capital should be placed in the current account of the PC and
should not be placed as a Fixed Deposit. The basic principle is that working
capital support is provided to a PE for running the business and not for earning
interest.
14.2. Procurement of equipment, machineries and services for value addition –
14.2.1. In the Empowered Committee (EC) meeting held on 7th Nov 2017, the EC has
taken a decision that the equipment and machineries required by the Producers’
Enterprises as per the approved proposals should be procured by the PE itself.
(Refer letter K-11060/10/2017/NRLM (Livelihoods)/Part2).
14.2.2. As the PEs, having been promoted recently, may not have the technical and
managerial capacity to undertake the procurement process, the SRLM may
initially support the PE in developing a procurement manual and in taking up
procurement of the equipment and the machineries. The funds budgeted in the
approved proposals may be transferred to the PEs against a procurement plan, so
that the PEs may undertake the procurement of the goods.
14.3. General Conditions for Eligible Items of Expenditure by the PE
The project should incorporate expenditure on various components indicated in this
guidance note to arrive at the project cost. Purchase of vehicles is not admissible in the
projects. No cost escalation shall be borne by the Government of India.
At the end of the project period, the ownership and management rights of the
infrastructure and assets created if any, under the project, shall remain with the PE.
Reallocation of funds not exceeding 5% of the total project cost among major budget

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 heads will be permissible to accommodate any innovation within the project. Within the
main budget heads reallocation of funds is permissible. However, reallocation on account
of administrative expenditure shall not be permitted. Any Additional Information that may
be relevant to the Project Proposal may be mentioned in the Project Document.
15.Release of Funds
The funds will be released directly to the concerned SRLM from the Ministry of Rural
Development.
15.1. 1st Instalment: The first instalment will be released by MoRD to the SRLM on the
approval of the project by the Empowered Committee. Out of the first instalment (i.e.
25% of the central share), 10% of the central share may be released after approval of the
project. The SRLM would submit DPR to the Ministry of Rural Development. Rest of the
15% will be released immediately after submission of DPR to the Ministry of Rural
Development for which a maximum period of 3 months from date of approval of the
project by Empowered Committee will be permitted. In case Technical Support Agency
(TSA) has been proposed, the TSA needs to be on-board before the release of the second
tranche of the 1 st instalment.
15.2. 2nd Instalment: The 2nd instalment of 50 % of central share will be released upon the
following:
a. The PE proposed has been incorporated.
b. The PE Staff proposed has been recruited and positioned in the PE.
c. Release of state share
d. Submission of a Utilization certificate along with an expenditure statement for at least
60% of the released 1st instalment funds and contribution from state Government
/other agencies and achievement of corresponding physical target.
e. Submission of year-wise audit reports of the funds utilized;
f. Quarterly reporting of progress in the prescribed formats.
15.3. 3rd Instalment:
The 3rd and final instalment of 25% of central share will be released upon the following:
a. Utilization of 80% of the total available funds and achievement of corresponding
physical targets.
b. Submission of year-wise audit reports of the funds utilized;
c. Regular reporting of progress in the prescribed format;
d. A certificate from the Implementing/Coordinating Agency that the project is being
implemented as per the approved project proposal.
e. Before the release of the 3rd and final instalment, it will be open to MoRD to have
verification of the progress of the project by a third party / independent agency.

15.4 Utilization of Interest earned on central release: The interest amount accrued on
Government releases, if any, shall be adjusted against the Government share of the
Project cost at the time of release of the third and final instalment.

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 15.5 Releasing of Matching Share: The State Government is required to release its
corresponding matching share within a month of receipt of the respective instalment of
the central share.
15.6 Submission of progress reports: The SRLM shall submit the progress report of the project
by 15th of the month succeeding every quarter in the format prescribed by the Ministry.
Failure to furnish the progress report would make SRLM liable to refund the Central funds
released for the Project along with interest. It shall be open to the Ministry of Rural
Development to prescribe such conditions, as it deems fit, from time to time to ensure
proper execution of the project.
15.7 Monitoring and review of the Project: Monitoring and review of the Projects sanctioned
and implemented will be done as per the NRETP monitoring and review mechanism.
15.8 MIS: The PEs promoted under NRETPs should have strong MIS and they would share
relevant data with NRLM and SRLM on a regular basis to monitor the progress against the
target.
15.9 Audit: Financial audit is to be carried out as per the NRETP audit norms. PE
should have standard audit mechanism as per the regulatory requirements.
The audit report together with action taken on the auditor’s observations and physical
progress under the project shall be furnished at the time of release of 2nd or 3rd
instalment of the Central funds.
16. Necessary conditions for project approval
a. Recommendation by the appraisal Team.
b. Commitment of 40% (in case of Assam it is 10%) of the Project Cost by State Government.
c. Professionals with relevant education and experience to be recruited by the SRLM
under NRETP as per the Human Resource advisory related to NRETP.
d. Exit and Scaling up strategy
e. Predominant focus on vulnerable communities (ST/SC, Minorities and women headed
households).
f. Comprehensive project design – farm gate to market
17. Project Completion
It should cover the details of deliverables as indicated in the project and achievements made
against these deliverables. A project completion report may be submitted by the SRLM
highlighting the performance of the project against the deliverables.

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