Finance Panel Plans Bring Cheer to State

Report of 14th Finance Commission placed in Lok Sabha on Tuesday

Published: 25th February 2015 06:01 AM  |   Last Updated: 25th February 2015 06:01 AM   |  A+A-

BHUBANESWAR: BHUBANESWAR: The recommendations of 14th Finance Commission has come as a good news for the State Government at a time when Odisha is passing through a period of recession due to dip in its own tax and non-tax revenue.

While Odisha’s share in Central taxes has been fixed at 4.64 per cent, the share in service taxes will be 4.74 per cent. Official sources said the recommendations are likely to help the State Government tide over the financial crisis.

The report of the Finance Commission along with the action taken report was placed in Lok Sabha on Tuesday. The Commission has recommended a basic grant of Rs 7965.28 crore for elected panchayat bodies and Rs 1417.98 crore for urban local bodies (ULBs) for the period from 2015 to 2020. Besides, it has recommended a performance grant of Rs 885.03 crore for rural bodies and Rs 354.5 crore for ULBs.

The grant has been recommended on the basis of urban and rural population of the State using data of 2011 census. Stating that own resources of panchayats and municipalities are meagre, the Commission maintained that purpose of the basic grant is to provide a measure of unconditional support to gram panchayats and municipalities for delivering basic functions assigned to them under their respective statutes.

The Commission maintained that the earmarked basic grants for gram panchayats will be distributed among them using the formula prescribed by respective State Finance Commissions (SFCs) for distribution of resources. Similarly, the basic grant for ULBs will be divided into tier-wise shares and distributed across

each tier, namely the municipal corporations, municipalities (tier II urban local bodies) and nagar panchayats (tier III local bodies) using the formula given by respective SFCs. The State Governments should apply the distribution formula of the most recent SFC whose recommendations have been accepted.

The grants will be released in two instalments each year in June and October. The Commission has recommended that 50 per cent of the basic grant for the year should be released to the State as first instalment of the year. The remaining basic grant and the full performance grant for the year will be released as second instalment. The States should release the grants to gram panchayats and  municipalities within 15 days of it being credited to their account by the Centre, it said.

The corpus of the State Disaster Relief Fund (SDRF) has increased to Rs 4130 crore for the five-year period. Out of this, the share of Centre will be Rs 3717 crore and the State’s share will be Rs 413 crore. The commission has also recommended grant-in-aid of Rs 405.67 crore for opening courts at different levels in the State.


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