The 14th Finance Commission’s inter se distribution of funds among States using population as a criterion with 90 per cent weightage is reported to have cost the State dear.
Even as Finance Minister K.M. Mani and the government hailed the allocation of performance grant of Rs.401.76 crore to rural and Rs.732.87 crore to urban local bodies and the basic Central assistance of Rs.3,615.85 crore to rural and Rs.2,903.48 crore to urban local bodies, respectively, as a windfall, the fact that it was fixed on the basis of 2011 population figures and was much below the 13th Finance Commission’s award went unnoticed.
The commission’s terms of reference had clearly spelt out that the “population figures of 1971 should be used in all cases where population is a tool for determining devolution of taxes, duties, and grants.” This yardstick was laid down by the National Development Council to conserve the benefits of birth control measures adopted by the State in line with the Union government policy.
While the 13th Finance Commission gave 50 per cent weightage to population, it devolved 3.14 per cent of performance grant to urban and 3.09 per cent to rural local bodies in the State, but the latest award was restricted to 2.61 per cent. The commission should have allocated at least 3 per cent, sources said.
The remarkable strides made by the State in democratic decentralisation following the 73rd and 74th amendments to the Constitution by delegating more financial and administrative autonomy to local bodies were not reckoned with. The gains accrued on higher devolution of untied funds to the grassroots-level and implementation of accrual-based double-entry accounting system too were not considered while fixing the allocation.
Fourth State Finance Commission chairman M.A. Oommen told The Hindu here that the award to local self-government institutions was prosaic and pedestrian, and sending wrong signals to the democratic decentralisation process. This was a retrograde step and considerably below what the State could have got. Going by the rate of inflation, the real value of the award was not spectacular as projected.
The choice of population as a criterion with 90 per cent weightage was unprecedented in the annals of transfer of resources to the State. The Finance Commission should not have shirked the onus of accelerating democratic decentralisation, and it should have given due importance to the decentralisation criterion, he said.
Allocation much below 13th Finance Commission’s award
Wrong signal to decentralisation process: M.A. Oommen
