T. Ramakrishnan

Its brief includes the study of financial health of rural and urban local bodies

It will make report available by May 31

Will suggest new avenues for tapping resources

CHENNAl: The State government has constituted the Fourth State Finance Commission (SFC) under the chairmanship of K. Phanindra Reddy to study the finances of local bodies, rural and urban.

The Commission will review the financial health of the local bodies – 12,620 village panchayats, 385 panchayat unions, 29 district panchayats, 561 town panchayats, 148 municipalities and 10 municipal corporations. It will, among others, recommend measures to improve the financial position of the local bodies and suggest possible new avenues for tapping resources, keeping in mind the local body tax structure in other States.

While carrying out the review, the Commission will assess the position of the local bodies as on March 31, 2010. It will make its report available by May 31, 2011, covering the period of five years commencing on April 1, 2012.

Mr. Reddy, an officer of the Indian Administrative Service (IAS) of the 1990 batch, is the Managing Director and Chief Executive Officer of the Tamil Nadu Urban Infrastructure Financial Services and Nodal Coordinating Officer, Cooum Sub-basin Restoration and Management. Commissioner of Rural Development and Panchayat Raj and Directors of Municipal Administration and Town Panchayats are ex-officio members of the Commission.

S. Ramalingam, former Member of Legislative Assembly, is a non-official member and Reeta Harish Thakkar, another IAS officer and now Joint Commissioner of Municipal Administration, is the member-secretary,

The period of office of the Chairman and other members of the Commission will be up to May 31, 2011, according to a notification issued by Governor Surjit Singh Barnala on November 27. The notification was published in the Gazette on Tuesday.


The First SFC was constituted in April 1994 and it gave its report to the government on November 29, 1996. The Second Commission, formed on December 1, 1999, submitted its report on May 21, 2001. The Third Commission, established on December 1, 2004, presented its report on September 30, 2006. The Action Taken Report of the Third SFC was placed in the Assembly on May 10, 2007. The First SFC recommended eight per cent devolution of funds from the State’s Own Tax Revenue (SOTR) to the local bodies from 1997-1998 with an incremental growth of one per cent per year. The Second Commission, which also called for eight per cent devolution, wanted the increase of one per cent to be made biannually. As the State was passing through a fiscal crisis then, the recommendations were accepted with a marginal modification of earmarking eight per cent of net SOTR from 1997-1998.

The Third SFC had recommended 10 per cent of SOTR for each year from 2007-2008 to 2011-2012. Considering the buoyancy of SOTR, the State government had decided to devolve nine per cent each for 2007-2008 and 2008-2009; 9.5 per cent for 2009-2010 and 10 per cent each for 2010-2011 and 2011-2012.