State Finance Commission chairman calls for authority, greater fiscal autonomy for local bodies

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Local bodies should be given authority, greater fiscal autonomy and resources, Chairman of the Tamil Nadu government-constituted Seventh State Finance Commission (SSFC) K. Allaudin said on Thursday.

“If we could achieve this decentralisation, we will cease to be a mere Constitutional promise and we will become a lived reality of Indian democracy,” he said.

In his presidential address in the national seminar on ‘Strengthening Local Body Governance and Finances’ organised by the SSFC and the Madras Institute of Development Studies in Chennai, Mr. Allaudin said that no institution can exercise meaningful autonomy and discharge its functions without adequate and predictable financial resources. Local governments continue to depend substantially on transfers from the Union and State governments, he said.

Gagandeep Singh Bedi, Secretary of the Municipal Administration and Water Supply Department pointed out that the own sources of revenue (OSR) for rural local bodies in many States through property and professional taxes, rentals and charges, among others, ranged between 1% to 8%. While the collection of property tax in OECD countries was about 1.1% of the GDP, it was only 0.2% in India, he said and added: “If we want our cities, villages to be better developed, then we have to do something more. We also have to, perhaps, pay more property tax, etc.”

As for functions of the local bodies, Mr. Bedi also flagged the issue of spouses of elected women representatives in local bodies attempting to take over their role informally, despite 50% reservation of seats for women in local bodies in some States. “Though it is decreasing, I think we should empower the women elected representatives,” he said. Mr. Bedi called for GIS-based tax collection and focus on solid waste management, user charges, parking fees, among others to augment the revenue.

Dharmendra Pratap Yadav, Secretary, Rural Development and Panchayat Raj Department referred to the State government’s initiative for rural empowerment, specifically through Tamil Nadu Village Empowerment, Transformation and Rejuvenation Initiative (TN-VETRI). He also underlined the importance of providing authority to rural local bodies for levy and collection of taxes.

Calling for autonomy to local bodies, Mr. Yadav was critical of the “bureaucratic environment” and pointed out that bureaucracy was not accountable to the people. He was against depending too much on the bureaucracy and called for faith on the self-government models. Mr. Yadav also said that the Rural Development Department has requested for increasing the devolution funds from 10% to 12%.

In his inaugural address, former Director of National Institute of Public Finance and Policy M. Govinda Rao underlined the issues concerning decentralisation and explained how to make systems work successfully. Calling for clarity on the functions of the local bodies, Mr. Rao explained the need for autonomy for local bodies to raise revenue. MIDS Director M. Suresh Babu, Joint Secretary in SSFC V.