(a) whether the Thirteenth Finance Commission has earmarked a
certain share of Central Government revenues for untied Non-Plan
financial expenditure by institutions of local self-Government;
(b) if so, the details thereof; and
(c) the mechanisms, which Government proposes to put in place,
to ensure that these funds reach the local self-Government institutions
without diversion or delay?
MINISTER OF STATE IN THE MINISTRY OF FINANCE(SHRI NAMO NARAIN MEENA)
(a) & (b): The Thirteenth Finance Commission (FC-XIII) has recommended that
during its award period (2010-15), a percentage of the net proceeds of Union
taxes and duties of the previous year (over and above the share of the States),
be transferred to local bodies as grant-in-aid. This grant has been recommended
for local bodies in the States as well as in areas covered by the V and VI
Schedules of the Constitution and the areas exempted from the purview of
Parts IX and IXA of the Constitution (termed special areas). The grant to
General Areas and Special Areas has two components - a basic grant component
and a performance based component.
The General Basic Grant, equivalent to 1.5 per cent of the previous year`s
net proceeds of Union taxes and duties is available to all States during
FC-XIII’s award period. The Special Area Basic Grant, amounts to Rs.798 crore,
for the duration of FC-XIII’s award period.
The General Performance Grant, beginning from 2011-12, is available for a
period of four years to States that meet certain performance conditions.
It is computed at 0.50 per cent for 2011-12, and 1 per cent thereafter up
to 2014-15, of the corresponding previous year’s net proceeds of Union taxes
and duties. The Special Area Performance Grant, amounting to Rs. 559 crore,
is available from 2011-12, to States that meet the prescribed performance
conditions. The Special Area Basic and Performance Grants have been carved
out of the General Basic Grant.
The performance conditions relate to financial and accounting disclosure;
audit; the system of independent Ombudsman; timely transfer of funds,
prescription of qualifications of persons eligible for appointment as Members
of State Finance Commissions; enabling for levy of property tax; setting up of
a Property Tax Board; standards for service delivery; fire hazard response and
mitigation plans. The guidelines issued in this regard are available on the
website of Ministry of Finance: http://www.finmin.nic.in/TFC/guidelines.asp
c) Under the guidelines issued by Ministry of Finance, State Governments
must transfer funds to local bodies within the stipulated number of days (five days
of receipt from the Central Government in case of States with easily accessible
banking infrastructure, otherwise ten days). Any delay requires the State Governments
to release the instalment with interest, at the Bank rate of RBI, for the number of
days of delay. State Governments need to provide a certificate regarding compliance
with the above requirement, in respect of the previous instalment released, to be
eligible for the next instalment.