Fourth State Finance Commission Report
The fourth State Finance Commission chaired by Dr M A Oommen with S M Vijayanand and Ms Ishita Roy as members, submitted its repor t on 22 January 2011 as the second Indian State ( Bihar submitted in September 2010 as the first) to submit the fourth report, with a recommendation that 25-30 per cent or more of state plan funds need to be devolved to local governments.The general purpose grant had been fixed at 3.5 per cent and the maintenance grant at 4.5 per cent. These components would be enhanced in the coming years. This amounted to a five-fold increase from that recommended by the first State Finance Commission. The second commission, headed by Prabhat Patnaik, economist, institutionalised devolution of funds and fixed it at 25 per cent. The third commission upset the entire system. Much more than the commission's recommendations, it was due to the intervention of the Finance Ministry and a reflection on the then United Democratic Front government's stance.
The deplorable condition of rural roads could be attributed to the cut in grants recommended by the third commission. The Oommen commission had set things in the right course and ratified the recommendations of the third commission by asserting that the allocation should not dip beyond 25 per cent, While launching the People's Plan Campaign, the then government had taken an ad hoc decision to devolve 30 per cent funds to the civic bodies.
The Local self-government institutions in the State will get Rs.4,160 crore in 2011-12, a one-third increase from the allocation for 2010-11, following the recommendations of the Fourth State Finance Commission.The recommendations had come as a major boost to decentralised governance. While launching the People's Plan Campaign, the then government had taken an ad hoc decision to devolve 30 per cent funds to the civic bodies. This amounted to a five-fold increase from that recommended by the first State Finance Commission. The second commission, headed by Prabhat Patnaik, economist, institutionalised devolution of funds and fixed it at 25 per cent.The third commission upset the entire system. Much more than the commission's recommendations, it was due to the intervention of the Finance Ministry and a reflection on the then United Democratic Front government's stance.
The Fourth State Finance Commission has recommended the government to allocate the special grant worth Rs.12.07 crore to the panchayats from the development fund for 2011-12 depending on their backwardness. Instead of gauging backwardness merely on the basis of SC/ST population in each panchayat, the commission has worked out a deprivation index for providing the special grant to the rural civic bodies which are lagging much behind others in terms of development.
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