Manual for Development Projects - Planning Commission

Chapter 4
be referred for approval to the Planning and Development Division. However, the Planning and Finance
Divisions may be informed when such extensions are involved, giving reasons for the delay in the
execution of the projects. In case of aided projects, the extension, if necessary be obtained from the
Economic Affairs Division and the Planning and Development and Finance Divisions be informed. The
Economic Affairs Division, for such extension, would consult the aid-giving agency/agencies and the
Planning and Development Division and Finance Division (Annexure-XIV).
(j) While preparing the cost estimates, the formula regarding the provision for future price escalation given
by the Planning Commission should be kept in view (Annexure-XVII). This provides for 6.5% increase in
the second year, 13% in the third and 20% in the fourth year.
(k) Cost estimates should also be based on present market survey or/and pre-tender quotation. The schedule
of rates used in estimating the project cost should be regularly updated by taking into account the market
rates, instead of allowing across-the-board premium on the schedule of rates (Annexure-XVIII, para 7).
Revised Cost Estimates
4.15 The ECNEC in its meeting held on 29th November, 1978 (Annexure-XXXI) decided that all the
authorities concerned should keep an effective check on the increase in the approved cost. The main
effective role in this regard can be that of Audit. The Ministry of Finance should look into this problem
more thoroughly and request Audit not to make any payment if the cost of the project is found to be
exceeding 15% over the approved cost.
Financial Plan
4.16 The sponsoring agency has to indicate the financial plan of the project in the appropriate column of
the PC-I. The position in this regard has to be indicated in specific terms so that there remains no ambiguity
or confusion in getting the necessary funds from the sources indicated. In case, a foreign agency is
committed to finance the project either partly or fully, the name of the agency with the amount of foreign
exchange and local currency committed, is to be mentioned in the PC-I. Similarly, the source and amount
of the rupee component, which may be as under, should be indicated.
Source Amount
(a) Government Sources
i) Grant
ii) Loan
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