The State government is knocking on the Centre’s door for the release of basic and performance grants of over ₹5,000 crore, allocated by the 14th Finance Commission to the urban and local bodies for the current and previous financial years.
The funds have not been released as the local body elections have not been held in the State. As all urban and rural local bodies are in dire straits, the State has requested the Centre to release the funds.
For the year 2017-18, the 14th Finance Commission had earmarked ₹1,263.96 crore towards basic grant and ₹365.37 crore as performance grant for urban local bodies. For the rural local bodies, it had earmarked ₹1,516. 12 crore towards basic grant and ₹194.78 crore as performance grant.
In both cases, the first instalment was released and the second is pending.
On Wednesday, Minister for Municipal Administration S.P. Velumani met Union Ministers Piyush Goyal (Finance), Hardeep Singh Puri (Housing and Urban Affairs) and Parshottam Rupala (Panchayat Raj) seeking the release of funds for 2017-18 and 2018-19.
He told them that the elections to the local bodies in the State had been delayed due to various litigations and also on account of the delimitation process taken up based on the 2011 Census. Stating that the details had been shared with the Department of Expenditure, he asked Mr. Goyal to release the second instalment for the year 2017-18 and the first instalment for fiscal 2018-19.
What the guidelines say
For 2018-19, the State’s allocation is over ₹1,800 crore as basic and performance grants for urban local bodies and about ₹2,000 crore for rural local bodies.
The guidelines for the release and use of grants recommended by the 14th Finance Commission state that they [the grants] could not be recommended for States that have not enacted laws for establishing duly elected panchayats and municipalities.
Clearly, the intention of the 14th Finance Commission in using the term “duly constituted” was to ensure that local body grants were provided only in cases where laws existed for establishing duly elected panchayats/municipalities, Mr. Velumani told the Union Ministers.
The Commission had not indicated that the funds should be released only if elections had been held and an elected body was in place, he reasoned, and recalled that the first instalment of basic grant for 2017-18 was released, accepting the State’s abovementioned argument.