Special Correspondent

Irrespective of its size and population

CHENNAI: All village panchayats in the State will get a minimum of Rs.3 lakh as `equalisation fund' to enable them carry out their functions, Local Administration Minister M.K.Stalin informed the Assembly on Wednesday.

At present, 3.48 per cent of the Second State Finance Commission grant is earmarked as `equalisation fund' to weaker village panchayats, he said.

"There is a need to develop a mechanism superior to the equalisation fund. It is therefore proposed to allocate a minimum of Rs.3 lakh to each village panchayat, irrespective of its size and population out of the village panchayat share of the third State Finance Commission grant and allocate the balance according to the population," he said. This way, it would be ensured that even the weaker village panchayats have sufficient money to discharge their functions, he added. Also under the Anaithu Grama Anna Marumalarchi Thittam, financially weak village panchayats get priority in the implementation of the scheme.

Villages' income

According to the Rural Development Department, there are 10 villages with an income of less than Rs.50,000 (average for three years, from 2003-04 to 2005-06); 178 with an income between Rs.50,000 to Rs.1 lakh and a majority 7,422 between Rs.1 lakh to Rs.5 lakh.

Based on the recommendations of the Third State Finance Commission, the Government will release a higher share of the State's Own Tax Revenue for local bodies. In 2007-08, this will be 9 per cent. "The percentage of devolution would be progressively increased to 10 per cent within the period of the Third Finance Commission," the Minister said and added that the ratio of share of rural and urban local bodies would continue to be 58:48.

The Minister proposed a shift in the manner in which the 58 per cent allocation is shared within rural local bodies.

As per the new formula, 60 per cent of the funds will be for village panchayats, 32 per cent for panchayat union councils and 8 per cent for district panchayats. This will be followed from 2007-08. "These policy changes are expected to greatly improve the delivery of services at the grassroots level."

In 2006-07, the Government had allocated Rs.1224.76 crore for rural bodies as State Finance Commission grant.

In 2007-08, this will be up 30 per cent Rs.1585.72 crore.