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Kerala
By P. Venugopal
The Finance Department's order issued on July 9, in fact, had come as a bolt from the blue for the local bodies. Even the State Planning Board, which monitors the decentralised planning exercise, was kept in the dark. Nor was the State-Level Coordination Committee for Decentralised Planning (CCDP) informed of the move in advance. According to highly placed Government sources, the CCDP came to know about the move only at its meeting on July 8, when the order was read out by the Finance Department's representative. "This is not how the system should work. What is the purpose of such a committee when a decision that has the potential to cripple the functioning of the local bodies is taken without its concurrence?'' a top Government official asked. The CCDP, chaired by the Minister for Local Administration, includes the Minister for Rural Development, a Planning Board member, and top officials from various departments like Finance, Planning, Local Administration, and Urban Development. This is supposed to be the final authority for taking all decisions pertaining to decentralised planning. The bulk of last year's Plan allocation to the local bodies was disbursed by the Government during the months of November and December, 2002 and March, 2003. And the treasury ban, which was in force on many days during this period, made it impossible for the local bodies to withdraw the amounts. The Plan allocation for the local bodies for 2002-03 was initially fixed at the level of Rs. 1,342 crores. Towards the last quarter of the year, due to financial difficulties, the Government announced a 25 per cent cut in the Plan size. Following this cut, the local bodies ultimately got only Rs. 1,006 crores. The amount being withdrawn through the July 9 order will come to over Rs. 600 crores. Thus, in effect, the local bodies received in their hands only around Rs. 400 crores last financial year. This is less than 30 per cent of the original Plan allocation for them. The 25 per cent cut in Plan size was, in fact, applicable to all departments. The State Plan for 2002-03 was originally fixed at the level of Rs. 4,034 crores and later lowered to Rs. 3,425 crores following the cut announced by the Government. However, notwithstanding the decision to cut the Plan size, a sum of more than Rs. 3,900 crores was released to various departments during the year by the Finance Department. What this actually means is that almost all other departments received funds far in excess of the allocations fixed for them as per the revised Plan size of Rs. 3,425 crores. It appears that this generosity, or indiscipline, on the part of the Finance Department had put an unexpected strain on the State finances compelling it to search for a way out. The local bodies, which had unspent Plan allocations worth more than Rs. 600 crores, became a sitting duck. To correct its own fiscal indiscipline, the Finance Department has targeted the local bodies, which happened to be the most vulnerable of the lot because of their own fiscal indiscipline.
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