Finance Commission urged to allot more funds for local schemes

Chief Minister Oommen Chandy has urged the 14th Finance Commission to take its assignment as an opportunity to correct the growing trend of “centralisation in the absorption and utilisation of resources” in the country.

Addressing a meeting with commission chairman Y.V. Reddy and members Sushma Nath, Govinda Rao, Abhijit Sen and Sudipto Mondal here on Wednesday, Mr. Chandy said there had been a steady decline in devolution of resources from the Centre to the State and a corresponding increase in resources set apart for Central schemes and Centrally sponsored schemes.

“…our responsibilities have increased, our needs have grown, but our share in Central resources has been declining. In a country as large and as diverse as India, an essential prerequisite for good governance is increased decentralisation,” the Chief Minister told the commission visiting the State as part of the consultative process for fixing its award for the State.

Different conditions

He said the Central and Centrally sponsored schemes, by and large, suffered from the problem that they replicated the same pattern all over the country, regardless of differences in conditions, costs and applicability. He expressed the hope that the Finance Commission would adopt a fresh approach in respect of devolution of resources and make more funds than at present for the States for schemes that were locally more relevant.

He said Kerala would propose a new formula for devolution of Central taxes, based mainly on the population factor. “The share of population also needs to be adjusted for other important factors such as urbanisation, effective density and percentage of land under forests,” he said.

He drew the commission’s attention to the issues connected with the management of the ecology of the Western Ghats, brought to the fore in the context of the Gadgil committee report and the subsequent recommendations of a high-level working group headed by K. Kasturirangan.

He requested the commission to give Kerala a special grant of Rs.1,200 crore for “strengthening conservation, biodiversity management and primary environment care to be implemented in consultation with all stakeholders at the grama panchayat level.”

Funds for LSGs

“We plan to improve decentralisation further by strengthening local self-government institutions through training and capacity building,” he said, requesting the commission to enhance the grants to the local self-government institutions to five per cent of the divisible pool of Central taxes.

He also presented before the commission the State’s concern about changing employment policies in the Gulf, where nearly 30 lakh people from Kerala were working.


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