State Finance Panel Bats for Local Bodies

Fourth State Finance Commission recommended that the local bodies should be given complete freedom to raise their own resources

Published: 17th February 2015 06:02 AM  |   Last Updated: 17th February 2015 06:02 AM   |  A+A-

BHUBANESWAR: Taking exception to non-implementation of the proposal to empower local bodies to levy property tax, the Fourth State Finance Commission (FSFC) recommended that the local bodies should be given complete freedom to raise their own resources.

The report of the Commission along with the action taken report (ATR) was tabled in the Assembly on Monday by Finance Minister Pradip Kumar Amat. Recommending introduction of the property tax to be levied by local bodies at the earliest, the Commission said it will improve the financial health of panchayats and urban bodies.

RECOMMENDATIONS.JPGThe Commission headed by retired IAS officer Chinmoy Basu submitted the report to Governor SC Jamir on September 26, 2014. The FSFC recommended that Section 131 of the Municipal Act and Gram Panchayat Act should be amended to empower local bodies to impose advertisement tax at the rates decided at their level without seeking Government approval to earn more revenue.

The Commission recommended transfer of Rs 25325.03 crore to the three tiers of local bodies during 2015-16 to 2019-20. The ATR said out of this, Rs 12740.08 crore will be transferred to the PRIs and ULBs from the consolidated fund of the State. The balance Rs 12584.95 crore has been recommended by FSFC to be met by the 14th Finance Commission to augment the consolidated fund in order to supplement the local bodies during 2015-20.

The Finance Minister said the State Government has decided to transfer Rs 12792.77 crore to local bodies as against the recommendation of the Commission of Rs 12740.08 crore, an increase of 0.41 per cent.

The Commission has further recommended that the municipal bodies should be given freedom to collect annual licence fees within their jurisdiction for trade and business by suitable amendment of the relevant acts.

The rates and maximum collectable amounts from industries and factories carrying on dangerous and offensive trades have been fixed under 290 (7) of the Act decades back. “The Commission feels that restrictions should be removed and amount to be charged should be the discretion of the municipal bodies,” it said.

Under the Odisha Gram Panchayat (Minor Forest Produce Administration) Rules, 2002, the gram panchayats are entrusted with regulation of 69 minor forest produces (MFPs) and collection of registration fees from the dealers. The registration fee of Rs 100 per trader irrespective of the volume of transaction continues for more than a decade, it said.

The Commission recommended modification of the rules to fix a time-frame for panchayat samitis to communicate the minimum procurement price of MFPs, failing which the gram panchayats should be given the freedom to fix the price at their level.

The gram panchayats should be empowered to seize illegally procured MFPs and inform the divisional forest officers (DFOs) for initiation of penal action.

Besides, it also recommended that Entertainment Tax should be entirely assigned to the local bodies for levy and collection by amending the Act.


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