CHENNAI: The State government has constituted the Fifth State Finance Commission to study the financial position of rural and urban local bodies.
The extraordinary gazette notification issued in this regard on December 1 said the Commission would review the financial position of the rural and urban local bodies as on March 31, 2015 based on their present re-organized status.
All village panchayats, panchayat union councils, district panchayats, town panchayats, municipalities and municipal corporations will be covered.
The Commission has been asked to submit its report by May 31, 2016. The panel will be headed by senior IAS officer S Krishnan, who is now the Secretary to the Planning and Development Department. B Senguttuvan, MP, Vellore will be the non-official member. Directors of Municipal Administration, Town Panchayats and Rural Development & Panchayat Raj departments would the ex-officio members of the Commission.
The Commission will review the financial position of the rural and urban local bodies and make recommendations on various topics, including the distribution of the net proceeds of the tax and fee leviable, between the State and the local bodies. The amount may be divided between them and the allocation between the local bodies of their respective shares of such proceeds.
Besides, it will also suggest possible new avenues for tapping resources in rural and urban local bodies keeping in mind the tax structure in other States.
Determination of taxes, duties, tolls and fees which may be assigned to, or appropriated by the local bodies, the grants-in-aid to the local bodies from the Consolidated Fund of the State and the measures needed to improve the financial position of the local bodies are some of the other areas the Commission will make recommendations.
The first Finance Commission was constituted in April 1994 and it submitted its recommendations to the government on November 29, 1996. The Second Commission, formed on December 1, 1999, submitted its report on May 21, 2001. The report of the Third Commission, formed on December 1, 2004, was given on September 30, 2006. The Action Taken Report of the Third Finance Commission was placed in the Assembly on May 10, 2007.
The First FC recommended eight per cent devolution of funds from the State’s Own Tax Revenue to the local bodies from 1997-1998 with an incremental growth of one per cent per year. The Second Commission, which also recommended eight per cent devolution, suggested a hike of one per cent to be made biannually.
The Third Finance Commission had recommended 10 per cent of State’s Own Tax Revenue for each year from 2007-2008 to 2011-2012.
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.