The Fifth State Finance Commission (SFC) will compulsorily be frugal in fixing the devolution of funds to Local Self-Government Institutions (LSGIs) for the next five years and its recommendations will mirror the precarious financial position of the State, commission chairman B.A. Prakash has said.
Prof. Prakash, who has initiated the functioning of the commission, told The Hindu here on Saturday that the State again could ill-afford to liberally fund local governments as in previous years. The local bodies would have to widen their tax base, identify new domains for increasing own tax and non-tax revenues, and reduce the dependence on government funds. The Fourth State Finance Commission had the advantage of functioning in a financially healthy milieu and could be generous to recommend a quantum increase in funds due to the local governments. “We will evaluate the current financial position, make projections for the next five years and then prepare realistic estimates for devolving funds to the grassroots-level,” Prof. Prakash said.
Since the share from property tax to local governments had almost reached stagnation and another main source, entertainment tax, was virtually drying up, a thorough revision of professional tax and restructuring of other taxes and fees levied for various services had become imperative. Officials would essentially have to go into an overdrive for mopping up revenue from all available sources to consolidate the financial position of the local bodies, he said.
Local governments were increasingly shying away from its core functions such as solid waste disposal, prevention of communicable diseases, food adulteration, construction of parking bays and such others and instead were placing more thrust on farming and construction of roads, bridges and buildings. This called for a thorough reorientation. The commission would make recommendations for expending more funds on such core functions, he said.
