Devolution of powers and finances up to local levels and challenges therein.
Government policies and interventions for development in various sectors
Important aspects of governance, transparency and accountability
The critical role of decentralised responses
Context: The novel coronavirus pandemic has brought home the critical role of local governments and decentralised responses
What are the issues that plague local bodies that needs to be addressed?
Health Delivery: The new normal demands a paradigm shifts in the delivery of health care at the local body level.
Prevalence of Parastatal bodies: The parallel bodies (Ex. District Water and Sanitation Committees) that have come up after the 73rd/74th Constitutional Amendments have considerably undermined authority of local bodies.
Multiple oversight bodies have distorted the functions-fund flow matrix at the lower level of governance.
Administrative Challenges: There is yet no clarity in the assignment of functions, functionaries and financial responsibilities to local governments. Functional mapping and responsibilities continue to be ambiguous in many States.
Lack of Politico-administrative Will: The critical role of local governments will have to be recognised by all
How resources can be mobilized for Local bodies in the wake of COVID pandemic?
1. Local Finance
The Economic Survey 2017-18 points out that urban local governments generate about 44% of their revenue from own sources as against only 5% by rural local governments.
Property tax collection with appropriate exemptions should be a compulsory levy and preferably must cover land.
Land monetisation and betterment levy may be tried in the context of COVID-19
When they are not taxed, people remain indifferent. All States should take steps to enhance and rationalise property tax regime
The share of property tax in GDP has been declining since 2002-03, In India in 2017-18 it is only 0.14% of GDP as against 2.1% in the OECD countries.
Municipalities and even suburban panchayats can issue a corona containment bond for a period of say 10 years, on a coupon rate below market rate to increase its funds
2. MP fund scheme
MPLADS suspended now and appropriated by Centre must be assigned to local governments, preferably to panchayats on the basis of well-defined criteria.
3. Fifteenth Finance Commission (FFC)
The local government grant of ₹90,000 crore for 2020-2021 by the FFC is only 3% higher than that recommended by the 14th FC. For panchayats there is only an increase of ₹63 crore
Untied Grants: The ratio of basic to tied grant is fixed at 50:50 by FFC. In the context of the crisis under way, all grants must be untied for freely evolving proper COVID-19 containment strategies locally.
A special COVID-19 containment grant to the local government by the 15th-FC to be distributed on the basis of State Finance Commission-laid criteria is needed now.
Further the 13th Finance Commission’s recommendation to tie local grants to the union divisible pool of taxes to ensure a good and predictable source of revenue to LGs (accepted by the then Union government) must be restored by the commission.
Conclusion
COVID-19 has woken us up to the reality that local governments must be equipped and empowered. Relevant action is the critical need.
