JAIPUR: Development works undertaken by panchayat raj institutions (PRIs) and urban local bodies (ULBs) are likely to be pegged back with the Sixth State Finance Commission (SFC) recommending less funds compared to 2015-20 period.
In the interim report, the finance panel has proposed 6.75% of the state government’s net own tax for the PRIs and ULBs against 7.18% during the 2015-20.
The commission has cited the finance department’s concerns over decline in tax revenues due to the Covid pandemic and rising revenue expenditure on account of social security pensions, salaries and wages, increasing interest payout and higher subsidies and grant-in-aid.
The interim report was for 2020-21 and 2021-22 as the commission could not consultations with with ministers of departments like rural development, panchayati raj, local self-government and finance. The government cannot release funds without the recommendations of the commission.
As per the provisional data of 2020-21 and budget estimates for 2021-22, government’s own tax revenue is pegged at Rs 57611. 42 crore and Rs 87703.36 crore respectively. At 6.75% devolution of the taxes, PRIs and ULBs will get Rs 3,888.77 crore in 2020-21 and Rs 5919.98 crore in 2021-22.
The funds are generally used for drinking water, creation of water reservoirs, providing services through e-governance, Indira Rasoi Yojana, LED lights, youth development, Pradhanmantri Awas Yojana-Gramin, carrying out initiatives for Swachh Bharat Abhiyan, school sanitation, and plantation among others. This year, funds will also be used on measures for containing the spread of Covid.
The finance department had communicated to the commission explaining the stress in tax revenue mobilization and fixing the rate of devolution of taxes to the PRIs and ULBs.
The growth of revenue receipts of the state fell from 16.77% in 2017-19 to 1.68% in 2019-20. Due to the change in sharing pattern from 2015-16 of Centrally Sponsored Schemes from 100% or 75:25 to 60:40 or 50:50 between the centre and the state, there is a reduction in receipts to the state
The interest burden of discoms debt liability costs the state Rs 5,000 crore annually. Because of the Covid, additional expenditure on medical and relief to th affected families has caused extra financial burden on the state finances.
Due to the pandemic, the commission could not hold discussions with ministers of departments like Rural development, panchayati raj, local self-government and finance and also undertake assessment at various layers of these departments to present the five year plan.
Since funds of the state government can be released after the recommendations of the commission, an interim report was sought by the government for two years (2020-21 and 2021-22).
