The Vth SFC had done a physical verification of both road and non-road assets of most of the local bodies.
THIRUVANANTHAPURAM: The first part of the Fifth State Finance Commission (Vth SFC) report, which was submitted to Governor P Sathasivam on Saturday, has recommended that 20 percent of the state’s annual tax revenue should be devolved to the local bodies, up from the existing 18 percent. The second part of the report, which deals with audits and institutional strengthening, will be submitted on February 2016.
The proposals are said to be so elaborate that, along with the vertical devolution of 20 percent, the Vth SFC has also recommended a horizontal distribution of the devolved funds among the 1209 local bodies in the state.
Sources said the horizontal distribution of funds has been decided on the basis of parameters like population, area and asset position of each local body.
Both the vertical and horizontal devolutions have been calculated on the basis of an independent assessment of the state finances for the next five years; which means the SFC has not banked on the statistics of the Finance Department as was traditionally the practice. The devolution has been recommended for the next five years.
It was only the IIIrd SFC that had done such a detailed exercise. The Commission, with the intention of taking decentralization to a new level, has also recommended an increase in the general purpose, maintenance and development funds of local bodies.
Asset maintenance fund, for a change, will henceforth be granted on the basis of an asset roster that has been prepared by the Commission, another first.
The Vth SFC had done a physical verification of both road and non-road assets of most of the local bodies.
Normally, asset management funds are disbursed on the basis of arbitrary figures furnished by local bodies. Further, in a potentially controversial move, the SFC has sought a hike in the tax revenue of local bodies.
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