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15th Finance Commission meets representatives of Urban Local Bodies of Punjab

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The 15th Finance Commission had a detailed meeting with representatives of the Urban Local Bodies of the State of Punjab along with senior officials of the state. While the Commission raises many queries, the ULB representatives raised a number of  issues.

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Status as provided by Punjab on 3Fs:

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❖Punjab Municipal Act, 1911 and the Punjab Municipal Corporation Act, 1976 are the acts providing for local self-governance for ULB’s

❖All 18 functions envisaged in the Twelfth Schedule of the Constitution have been devolved to ULB’s

❖Elections to ULB were held in parts in Feb 2015, Dec 2017 and Feb 2018.

❖The state is currently following the recommendations of 5th SFC Report: The Commission recommended 4% of the Net total tax revenue of the state (less cost of collection) to be devolved to local bodies.

ULB Number of Local Bodies (as on 17/12/2017) Population as per Census, 2011 Population Served

Per body

Municipal Corporation 10 50,98,695 5,09,870
Municipal Councils 101 41,66,040 41,248
Nagar Panchayats 56 7,16,323 12,791

 

Revenue Sources of ULB’s

❖The main source of income of the ULBs is own revenues which include tax and non-tax revenue.

❖Percentage share of tax revenue in total revenue of ULBs increased from 58% in 2011-12 to 68.77% in 2016-17, and the proportion of non-tax revenue slid from 16.84% in 2011-12 to 14.46% during 2016-17.

 

Particular 2011-12 2016-17 % Increase
Per Capita tax revenue 1,295 1,797 38.76
Per Capita non-tax revenue 376 378 0.53
Per capita own revenue

(excluding capital receipt)

1,671 2,175 30.16

❖The per capita details of ULB’s are as provided below:

According to Pr. AG Punjab, following are the issues pertaining to accounting of ULB

❖Accounts from the year 2011-12 to 2017-18 are in arrears.

❖No provision for accounts consolidation exists in the accounting manual prescribed for ULBs.

❖National Municipal Accounting Manual (NMAM) for ULBs are yet to be followed.

❖Examiner, Local Fund and Accounts (ELFA) being a statutory auditor is responsible to certify the accounts of PRIs and ULBs, but this is yet to be initiated.

❖Only 17 ULBs out of 167 ULBs could become eligible for performance grant in 2017-18.

XIV –FC Devolution to the State

 

Grants All States(cr.) Punjab (cr.) Grants to Punjab as a % to Total Grants
Basic Grant 69715 1962 2.8%
Performance Grant 17429 491 2.8%

Observations of 5th State Finance Commission:

❖5th SFC observed that although the staff of the municipalities was given the required training, most of the municipalities were not able to provide reliable data primarily due to scarcity of staff. A large number of them had to get the services of staff of other municipalities for getting their data compiled, which resulted in poor quality of data being made available to the Commission.

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