The government has cleared the course for introducing a bill system to dispense with the current Plan fund devolution system for local bodies from next financial year.
The new mode, which seeks to do away with the constitutional fund devolution system on the basis of the State Finance Commission award, may have a direct bearing on the fiscal and functional autonomy of the local bodies and they could be reduced to the status of other departments.
Finance Department sources told The Hindu here that a meeting, held at the chamber of the Additional Chief Secretary (Finance) on January 12 to work out the modalities, decided to scrap the direct release of general purpose, maintenance, expansion, and development funds to the account of the local bodies.
The present system will continue in the case of the Finance Commission grant and the World Bank-aided Kerala Local Government Service Delivery Project (KLSGDP).
Three instalments
Total funds apportioned to the local bodies for a year will be released by the Finance Department in three instalments through a government order which will be issued on or before the 25th of March, July, and November every year.
The government order will be deemed as a letter of authority for releasing the funds.
The local bodies can draw funds from the first working day of April, August, and December on the basis of the order by furnishing fully vouched contingent bills and the treasury will clear the bills till the funds allotted by the government are exhausted.
All project implementing officers will be declared as divisional drawing officers for implementing the new system.The sources said the new system was being introduced to contain the revenue deficit of the State.
