Allocating a Gram Panchayat Development Grant
Mahilpur village's Gram Panchayat receives a development grant of ₹8,40,000 for 2024–25. The Gram Sabha resolves that 35% goes to link roads, 25% to drinking water, and the remaining amount is split between sanitation and contingency in the ratio 3:1. Two proposals then come up before the Panchayat. A contractor quotes ₹1,150 per running metre for 240 metres of brick paving, with GST at 12% payable over and above the quoted rate. For sanitation, the approved estimate is ₹7,200 per household soak pit, and 45 households have applied. The Block Development Officer warns that no head may be overspent, that contingency may be used only with fresh Gram Sabha approval, and that the grant cannot be topped up from any other scheme this year.
1. Compute the amount available under each of the four heads.
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Step 1 - percentage heads on ₹8,40,000:
- Link roads: 35% of 8,40,000 = 0.35 × 8,40,000 = ₹2,94,000
- Drinking water: 25% of 8,40,000 = 0.25 × 8,40,000 = ₹2,10,000
Step 2 - remainder: 8,40,000 − 2,94,000 − 2,10,000 = ₹3,36,000 (this is the 40% left, a useful cross-check).
Step 3 - 3:1 split of the remainder. Total parts = 3 + 1 = 4; one part = 3,36,000 ÷ 4 = ₹84,000.
- Sanitation: 3 × 84,000 = ₹2,52,000
- Contingency: 1 × 84,000 = ₹84,000
Check: 2,94,000 + 2,10,000 + 2,52,000 + 84,000 = ₹8,40,000. All four heads are now fixed ceilings for the year, so every later proposal must be tested against its own head, not against the total grant.
2. Can the full 240 metres of paving be sanctioned from the roads head? If not, find the maximum whole number of metres that fits.
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Cost of the full scope: 240 m × ₹1,150 = ₹2,76,000 as the base amount. GST at 12% is charged over and above, so the payable amount is 2,76,000 × 1.12 = ₹3,09,120.
Comparison: ₹3,09,120 against the roads head of ₹2,94,000 leaves a shortfall of ₹15,120. The full 240 m cannot be sanctioned, and the head may not be overspent.
Maximum length: the base cost that the head can carry is 2,94,000 ÷ 1.12 = ₹2,62,500. Divide by the rate: 2,62,500 ÷ 1,150 = 228.26…, so the answer is 228 metres.
Verify: 228 × 1,150 = ₹2,62,200; with 12% GST = ₹2,93,664, which is inside the head with ₹336 to spare. Testing 229 m: 229 × 1,150 = ₹2,63,350; with GST = ₹2,94,952, which exceeds ₹2,94,000. So 228 m is the largest whole-metre figure.
Judgement: rounding up to 230 m 'to finish the street' would breach the BDO's condition; the correct output is a revised scope of 228 m with the balance 12 m carried to next year's proposal.
3. The Sarpanch proposes to build all 45 soak pits this year by drawing on the contingency head. Test the proposal arithmetically and state the trade-off.
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Requirement: 45 × ₹7,200 = ₹3,24,000. The sanitation head holds ₹2,52,000, which covers 2,52,000 ÷ 7,200 = 35 pits exactly, leaving 10 households uncovered and a shortfall of 10 × 7,200 = ₹72,000.
Using contingency: ₹84,000 is available, so ₹72,000 can in principle be transferred, but only with fresh Gram Sabha approval as the BDO stated. After the transfer only ₹12,000 - about 1.4% of the grant - remains as contingency.
Trade-off: the proposal is arithmetically possible but financially thin. Contingency exists for rate revisions, unforeseen site problems and measurement variations; cutting it to ₹12,000 means any small overrun in the road or water work will stall. Two cleaner options exist: (i) invite tenders for the 45 pits together and award at any rate up to 3,36,000 ÷ 45 = ₹7,466.67 per pit, keeping the sanitation and contingency heads intact; or (ii) build 35 pits now, record the 10 pending households in the Gram Sabha minutes, and place them first in next year's plan.
Recommendation: option (i), with option (ii) as the fallback if no bid comes within ₹7,466.67.