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The local-self Government institutions in the State will see annual allocations increase by one third during 2011-12.
The new applicable entitlements for the local bodies have been fixed at Rs 4,160 crore, according to the recommendations made by the Fourth State Finance Commission headed by economist Prof M A. Oommen.
FUNDS BREAK-UP
The new allocations comprise Plan funds to the tune of Rs 2,750 crore, a general purpose fund of Rs 617 crore and a maintenance grant of Rs 793 crore, according to the Minister for Local Administration, Mr Paloli Mohammed Kutty, and the Finance Minister, Dr T. M. Thomas Isaac.
The Commission, which submitted its first report to the Governor here on Saturday, has also revised to 30 per cent the pool of funds that the Government should devolve to the local bodies.
This amounts to five-fold increase over that recommended by the first State Finance Commission.
In fact, devolutions to local bodies in this manner were institutionalised by the second Commission headed Prof Prabhat Patnaik, economist, and now Vice-Chairman of the State Planning Board, which fixed the same at 25 per cent.
BUOYANCY LINKAGE
Giving a new dimension to the developmental funding precept, the Prof Oommen Commission mooted the linking of the devolution to the overall tax buoyancy.
This is expected to help improve the financial health of the local bodies and enable them to meet new development challenges.
The Ministers told newspersons here on Tuesday that the new devolution formula would immediately get reflected in the way funds get allocated in the State's General Budget, now under preparation.
The recommendations will aid the cause of further entrenchment of the decentralised governance model, the Ministers said.
They recalled that while launching the People's Plan Campaign, the then Government had taken a tentative decision to devolve as much as 30 per cent of the funds to the local bodies.
FUNDS SQUEEZE
It was the intervening third Commission that upset the rhythm of the devolution of funds by drastically pruning the size. The Ministers were of the view this had brought forth a fund squeeze leading to the dilapidated conditions of roads in the State as it obtains today.
But this loss in direction has been sought to be set right by the Fourth Commission, the Ministers said. Its insistence that the allocations to local bodies should not go beyond the 25 per cent is as prudent as it is justified, they added.
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