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

By Parveen Kumar on January 30, 2019 • ( Leave a comment )

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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.

Status as provided by Punjab on 3Fs:

❖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 5^th 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 5^th 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.