Puri seeks higher devolution to urban bodies from 15th Finance Commission

Housing and Urban Affairs Minister Hardeep Puri and officials of his ministry, in a meeting with the Fifteenth Finance Commission, sought a four-fold increase in the devolution to urban local bodies to improve health infrastructure in light of the Covid-19 pandemic.

In a presentation to the commission, the MoHUA said, “Devolution to municipalities may be increased by at least four times (to Rs 3.49 trillion) or 9.4 per cent of central taxes.” The presentation was made by MoHUA Secretary Durga Shanker Mishra.

Along with Puri and Mishra, the videoconference meeting was attended by 15th FC Chairman NK Singh and members of the Commission. The Commission is expected to submit its second report, for 2021-22 to 2025-26, by October 31.

In its first report for 2020-21, the 15th FC had recommended that states notify floor rates of property tax and thereafter show consistent improvement in property tax collection in tandem with the growth rate of their own GSDP.

“In view of the fiscal importance of this matter and especially in the current context of the Covid-19 pandemic, the Commission had intense deliberations on this matter to help the States and ULBs in having an efficient property tax administration, and to address the rampant undervaluation, scarce information, incomplete property registers, policy inadequacy and ineffective administration, and rectify by appropriate fiscal cadastral with objective tax assessment systems that are progressive, buoyant and equitable to all,” said an official statement after the meeting.

The focus was on making the ULBs responsible for collection of relevant data, valuation or assessment, setting tax rates, collecting tax and requisite oversight on all these aspects, it said.

Some of the recommendations made by MoHUA include change in mandatory conditions of property tax, ambient air quality grant for cities to curb the sources of air pollution, tied grants for cities to take up work as per their requirement, including solid waste management, water supply, etc and measures against Covid-19, including separate grants to ULBs for public health infrastructure.

Some other recommendations, financial in nature, included establishing a programme management unit at MoHUA for better management of accounts at a cost of Rs 213 crore and building of institutional capacities at a cost of Rs 450 crore.