Odisha to transfer Rs 12,792 cr to local bodies in 5 years

The state government has budgeted to transfer Rs 12,792.77 crore from its own resources to the local bodies during 2015-20.

"The state government is committed to transfer adequate resources to the panchayati raj institutions (PRIs) and urban local bodies (ULBs) in order to strengthen the process of democratic decentralisation of governance through fiscal empowerment of the local self-governments. We have accepted the recommendations of the Fourth State Finance Commission (SFC)," said Pradip Amat, state finance minister, who presented the budget for 2015-16 in the state assembly on Monday.

The SFC had pegged the total transfer of funds to ULBs and PRIs for the five year period at Rs 25,325.03 crore. Out of this, it had recommended transfer of Rs 12,740.08 crore from the state's own taxes and consolidated fund.

"This leaves a gap of Rs 12,584.95 crore which is required to be met in the next five years period. The SFC therefore, recommends that the 14th Finance Commission may consider to augment the state's consolidated fund by Rs 12,584.95 crore, to supplement the resources of the local bodies over and above the fund recommended for transfer from the state's resources", read the action taken report on the recommendations of fourth Odisha SFC.

The state government, meanwhile, has projected transfer of Rs 12,792.77 crore from its own resources over the next five years in the budget document. This would be over and above the grants recommended by the 14th Finance Commission.

As per the Constitution, the Central finance commission has to supplement the resources of the rural and urban local bodies in addition to transfer recommended by the SFC from the state's own resources.

The breakup of Rs 25,325.03 crore recommended by SFC for transfer to local bodies include devolution of Rs 3,291.85 crore, assignment of taxes Rs 6,530.50 crore and sector specific needs (grant in aid) of Rs 15,502.68 crore for the five year period.

"We propose to transfer Rs 1,222.13 crore to PRIs and Rs 864.21 crore to ULBs totalling to Rs 2,086.34 crore in 2015-16," said Amat in his budget speech. The SFC has recommended allocation of Rs 1,986.34 crore to the local bodies in the next financial year.

Similarly, the SFC has recommended transfer of Rs 2,290.88 crore to local bodies in 2016-17, Rs 2,620.15 crore in 2017-18, Rs 2,830.59 crore in 2018-19 and Rs 3,012.12 crore in 2019-20. The state government's proposed allocations for these years are Rs 2,293.42 crore, Rs 2,596.35 crore , Rs 2,813.74 crore and Rs 3,002.92 crore respectively.

The SFC has recommended to limit the total transfer to local bodies within 10 per cent of next divisible pool of state taxes projected for the award period of 2015-20. The commission's recommendations include devolution and distribution of three per cent of net tax revenue during 2015-20 between the PRIs and ULBs in the ratio of 75:25.