State FinanceState FinanceCommission

P t ti BPresentation ByJiban Choudhury, DirectorFinance (Economic Affairs)Finance (Economic Affairs)

Department

State Finance Commission

Historical Background:Local Self-Government Institutions are centuries old and they hadLocal Self Government Institutions are centuries old and they hada fluctuating history with the rise and fall till 19th century. Duringthe Viceroyship of Lord Ripon, the old local bodies had acquiredstatutory status. In India the local bodies were mostly controlledy yby State Governments by virtue of their enactments. Even afterindependence, the local body institutions continued to be a part ofState Acts with no independent functioning till 1992.

Constitutional Status to localConstitutional Status to local bodies:

Th t t f 73 d d 74th C tit ti l A d t A tThe enactment of 73rd and 74th Constitutional Amendment Act,1992 is a landmark event in the Constitutional history of India.For the first time, these amendments have conferred on thelocal bodies the much needed constitutional status andlocal bodies the much needed constitutional status andregarded them truely as the third tier of Government. Itsimultaneously sought to empower the PRIs and ULBs withadequate power, authority, responsibility and resources.q p , y, p y

Accordingly, Article 243 (G) indicated the responsibilitiesentrusted to the panchayats along with 29 subjects allocatedentrusted to the panchayats along with 29 subjects allocatedto them vide the Eleventh Schedule. And Article 243 (H)stipulated their source of revenues Similarly, Article 243 (W)and Article 243 (X) mentioned about the responsibilities and

ti l f M i i liti d th 18 bj tresources respectively of Municipalities and the 18 subjectsallocated to them as per Twelfth Schedule.

Constitution of SFCsConstitution of SFCs

The Constitutional amendments not only sought to empower theThe Constitutional amendments not only sought to empower thePRIs and ULBs but also marked out channel through which fundswill flow to them from the State Government and that is the StateFinance Commission (SFC).Article 243 (I) and Article 243 (Y) provide for constitution of SFCfor PRIs and ULBs respectively after every five year to makerecommendations regarding tax sharing principles between theSt t G t d th l l b di f th C lid t dState Government and the local bodies from the ConsolidatedFund of the State and to recommend measures to improve thefinancial position of the local self-Governments.State Government is required to cause every recommendationState Government is required to cause every recommendationmade by the SFC together with an explanatory memorandum asto the action taken thereon to be laid before the State legislatureof the State.

St t SFC A tState SFC Act :

With th bj ti f i i t t d h tWith the objective of giving a structured shape tothe SFC, The Assam Finance Commission(Miscellaneous Provisions) Act, 1995 was( ) ,passed. It lays down rules regarding qualificationand disqualification of members of theC i i th i i t t t li ibilitCommission, their appointment, term, eligibilityand powers. The Commission consists of oneChairman and four other members.Chairman and four other members.

Q lifi i f h M bQualifications of the Members :The Chairman of the SFC is selected among persons, whoghave wide experience in public affairs, with special referenceto economic and financial matters. The four other membersincluding the Member-Secretary are selected from amongpersons who :

1. Are or have been, or are qualified, as judges of High Court, or2 Have knowledge of Government finances and accounts or2. Have knowledge of Government finances and accounts, or3. Have had wide experience in administration and financial

matters, orH i l k l d f i4. Have special knowledge of economics, or

5. Have had long experience as an administrator at senoir levelswith particular reference to financial and economic matters.

Disqualification from being a member q gof the Commission:

A member may be disqualified if :1. He is mentally unsound;2 He is an undischarged insolvent;2. He is an undischarged insolvent;3. He has been convicted of moral offence;4. His financial and other interest are such that it hinders

th f ti i f th C i ismooth functioning of the Commission.

Procedure and Powers of the Commission :

The Commission has the power to determine theirThe Commission has the power to determine theirown procedure and :

1. Has all powers of the Civil Court as per the Codeof Civil Procedure 1908of Civil Procedure, 1908,

2. Can summon and enforce the attendance of anywitness or ask any person to deliver information

d d t hi h it d l tor produce a document, which it deems relevant,3. Can ask for production of any public record or

document from any Court of Office,4. Shall be deemed to be a Civil Court for the

purpose of Sections 345 and 346 of the Code ofCeiminal Procedure, 1973 (Act IIof 1971)., ( )

Terms of Office of Members and li ibili f ieligibility for re-appointment :

Every member shall hold office for such period as may bespecified in the orders of the Governor, but is eligible for re-appointment provided he has by means of a letterpp p yaddressed to the Governor, resigned his office. TheMembers shall render whole-time or part-time service to theCommission as the Governor may in each case specify.y p ySalaries and Allowances of the Member :Members shall be paid such fees or salaries and suchallowances as the Governor may by orders made in thisallowances as the Governor may, by orders made in thisbehalf, determine.

State Finance Commissions appointed so far :

Government of Assam (GOA) has so far constituted four SFCs as per details indicated below:

SFC Date of Chairman Date of report Date of ATR PeriodSFC Date of constitution

Chairman Date of report of submission

Date of ATR Period covered

1st SFC 23/06/1995 Mr. M.M. Taimur, IAS

29/02/1996 18/03/1996 1996-97 to 2000-01

Retd.

2nd SFC 18/04/2001 Mr. R. K. Bora, IAS, Finance Secretary

18/08/2003 07/02/2006 2001-02 to2005-06

y

3rd SFC 06/02/2006 reconstituted on 03/07/2006

Mr. H.N. Das, Former Chief Secretary, Assam

31/03/2004(Interim Report)27/03/2008

25/09/2009 2006-07 to 2010-11

27/03/2008 (Final Report)

4th SFC 23/04/2010 Mr. P.K. Bora, Former Chief S t

25/03/2011(IR)

Not yet approved by th C bi t

2011-12 to 2015-16

Secretary, Assam

18/02/2012 (Final Report)

the Cabinet

SFC’s Recommendations :1st SFC

1. The Commission recommended continuation of the existingpractice of sharing the proceeds of some selected taxes andp ac ce o s a g e p oceeds o so e se ec ed a es a dduties with local bodies.

2. In addition, 10% of the net proceeds of MV Tax in each yearrecommended for distribution among Rural Local Bodies on thebasis of their population as per latest available censusbasis of their population as per latest available census.

3. The Commission recommended devolution of 2% of the netproceeds of state taxes to local bodies.

4 The Commission recommended plan grant of Rs 1000 per local4. The Commission recommended plan grant of Rs.1000 per localbody for the first year and thereafter @ Rs.500 per year formaintenance of accounts and upkeep of registers in the formatsprescribed by them.

5 I d t d bt li f th C i i d d5. In regard to debt relief, the Commission recommendedconsolidation of different types of outstanding State Governmentloans to ULBs into a single loan with effect from 01/04/1996 andthe terms of repayment extended to 30 annual equal installmentsp y qwith 5% rate of interest.

Contd…6. The outstanding State Government loan against PRIs was

recommended to be written off.

Government of Assam accepted the recommendations of FirstSFC without any modifications and tabled the ATR before theState Legislature in due course. But, the Government did notimplement the recommendations.p

2nd SFC :

1 Th S d SFC f th fi t ti d i t d f th ili1. The Second SFC, for the first time, deviated from the prevailingpractice of sharing the net proceeds of selected taxes and dutiesand favoured its replacement by a global sharing of all taxes andduties collected by the Government.

2. The Commission recommended devolution of 3.5% of theaggregate collection of all state taxes and duties only to bedevolved among local bodies.

Distribution Formula for allocation of devolution funds for local bodies :

1. The 2nd SFC made rural-urban bifurcation of the divisible pool onthe basis of their respective population as per 1991 census. Thep p p prural divisible pool was then allocated among the districts on thebasis of a composite index having three indicators with weightageViz. (i) rural population 50%, (ii) rural area 25% and (iii) per capitaDistrict Domestic Product of primary sector net of mining and

i 25%quarrying 25%.

2. The district-wise rural allocation so arrived at was verticallyapportioned among three tiers of PRIs in the ratio of 10:30:60 topp gZP, AP and GP respectively. The horizontal allocation among theAPs and GPs was made on the basis of their respectivepopulation.

3. The urban divisible pool was sought to be horizontally allocatedamong Guwahati Municipal Corporation (GMC), Municipal Boards(MB) and Town Committees (TC) on the basis of a compositeindex of (i) urban population 50%, (ii) urban area 25%, (iii)index of (i) urban population 50%, (ii) urban area 25%, (iii)infrastructure index 12.5% and (iv) per capita tax collection12.5%.

Contd….4. The infrastructure index was constructed using three parameters

viz. (i) length of surface road, (ii) length of pucca drains and (iii)number of street lights giving equal weightage to each factor.g g g q g gApart from devolution of taxes and duties, the Commissionrecommended grant-in-aid of Rs.10 crore annually to ULBs tocompensate their losses due to abolition of check gate andparking places. Out of this, the share of GMC was Rs.5 croreand that of other ULBs Rs.5 crore per year.In regard to debt relief, the Commission recommended write-offf t t di l i t th PRI d ti ttl t fof outstanding loans against the PRIs and one time settlement of

GMC loans from HUDCO by mutual discussion beween theparties and the Government of Assam. PRIs were precludedfrom fresh borrowing during the transitional period Howeverfrom fresh borrowing during the transitional period. However,ULBs were allowed to borrow against viable projects only and inno case borrowing should be resorted to for meeting currentexpenditure.

Action Taken on the Second SFC :

Government of Assam has selectively accepted theG y precommendations of Second SFC and laid the ActionTaken Report before the State Legislature. Therecommendations relating to devolution of tax sharerecommendations relating to devolution of tax shareand grant-in-aid were not accepted. However, therecommendations relating to augmentation of resourceg gbase of local bodies, debt relief and local financedatabase have been accepted. Apart from one timesettlement of GMC’s loan from HUDCO no othersettlement of GMC s loan from HUDCO, no otheraccepted recommendation of the second SFC havebeen implemented.

d3rd SFC (2006-2011)

The 3rd SFC submitted its report in two parts – the Preliminary andthe Final.The preliminary report covered the first-two fiscal years 2006-07p y p yand 2007-08.The final report covered the remaining three years (2008-09 to2010-11).Since the Commission submitted its preliminary report on31.03.2007,the closing date of financial year 2006-07, it did notmake recommendation of funds for 2006-07.The preliminary report recommended devolution of 10% of netproceeds of state taxes and duties for local bodies for 2007-08.The final report raised the percentage share to 25% for the

i i thremaining three years.

dContd.-Grants amounting to Rs.81.24 crore was recommended during 2007-08and Rs.512.22 crore for the remaining three years. These grants were forliquidation of accumulated arrears and also for creation of capacity interms of human resources and physical infrastructure.Th C i i d d f DRDA ith ZP d Bl k ithThe Commission recommended merger of DRDA with ZP and Block withAP and for this purpose an additional devolution of Rs.258 crore wasrecommended for three years for meeting the salary of DRDA and Blockstaff.staff.The above recommendations were accepted by the Government but theATR for the preliminary and the final reports were laid before the StateLegislature jointly. As a result, the recommendations relating to fiscal yearg j y , g y2007-08 also went by default.The actual implementation of 3rd SFc report started from the financial year2008-09

dContd…Table below shows year-wise quantum of devolution, additionaldevolution and grant-in-aid as recommended by 3rd SFC :

(Rs. in crore)

Year Devolution Addl. devolution

Grant Total

2006-07 Nil Nil Nil Nil

2007-08 363.77 81.24 445.01

2008-09 882.11 79.55 210.98 1172.64

2009-10 933.26 85.92 144.80 1163.78

2010-11 984.96 92.79 156.64 1234.39

Total 3164.10 258.26 593.46 4015.82

Distribution Formula for allocation of ddevolution funds under 3rd SFC :

1. The rural-urban bifurcation of the divisible pool was determinedon the basis of two criteria viz. population 80% and density ofpopulation 20%, both according to 2001 Census.2. In the first stage rural allocation will be horizontally apportionedamong different districts based on a composite index having threeparameters with weighted averages viz. (i) population 50%, (ii0

hi l 25% d (iii) it Di t i t D ti P d tgeographical area 25% and (iii) per capita District Domestic Productof Primary Sector 25%.3. In the second stage, district fund will be vertically distributedamong the three tiers of PRIs at the ratio of 20:30:50 to ZPs APsamong the three tiers of PRIs at the ratio of 20:30:50 to ZPs, APsand GPs respectively.4. In the final stage, the share of each AP and GP shall be on thebasis of their respective population as per 2001 Censusbasis of their respective population as per 2001 Census.

Contd……

5. In respect of ULBs, the urban fund will be allocated horizontally amongthe municipal corporation, municipal boards and town committees onthe basis weighted average of a composite index consisting of fourfactors Viz., (i) population 50%, (ii) geographical area 25%, (iii) percapita tax collection 12 5% and (iv) index of infrastructure 12 5%capita tax collection 12.5% and (iv) index of infrastructure 12.5%.

6. The infrastructure index was based on three parameters Viz., (i) lengthof surface roads, (ii) length of pucca drains and (iiii) number of streetlights giving equal weightage to eachlights giving equal weightage to each.

Action Taken on the Recommendations :

Government of Assam accepted the recommendations of 3rd SFC andlaid the Action Taken Report before the State Legislature.As against the recommended amount of Rs.4015.82 crore, Governmentof Assam transferred Rs.571.37 crore, which was 14.23% of the

d d trecommended amount.The amount recommended by 3rd SFC as grant-in-aid mainly forconstruction works could not be released due to delay in finalization ofDPR and also meanwhile the code of conduct for the Assembly pollDPR and also meanwhile the code of conduct for the Assembly pollwas imposed.Merger of DRDA and Block staff with ZPs and APs respectively thoughaccepted was not implementedaccepted was not implemented.

h4th SFC :

The 4rd SFC also submitted its report in two parts – the Preliminary andthe Final.The preliminary report covered the period of one year 2011-12.The final report covered the remaining four years (2012-13 to 2015-16).The Preliminary Report recommended that 14 per cent of the netproceeds of State taxes, other than Entry Tax, Entertainment Tax andElectricity Duty amounting to Rs.674.60 crore shall be the quantum ofth Di i ibl P l (DP) f di t ib ti b t PRI d ULB d ithe Divisible Pool (DP) for distribution between PRIs and ULBs during2011-12.Out of the DP, an incentive fund with a corpus of Rs.33.73 crore at 5

percent of the DP is created to encourage PRIs/ULBs to improve theirpercent of the DP is created to encourage PRIs/ULBs to improve theirperformance.

Contd…

Apart from devolution and incentive fund, it recommended grant-i id f R 334 28 d i 2011 12 f i din-aid of Rs.334.28 crore during 2011-12 for creation andupgradation of physical infrastructure for PRIs and ULBsApart from the incentive fund, all other recommendations in thepreliminary report of the 4th SFC were accepted and ATR was laidpreliminary report of the 4th SFC were accepted and ATR was laidbefore the Legislature.The Final Report has recommended 15 percent of the netproceeds of State taxes other than Entry Tax Entertainment Taxproceeds of State taxes, other than Entry Tax, Entertainment Taxand Electricity Duty, amounting to Rs.4165.62 crore, which shallform Divisible Pool (DP) covering four years from 2012-13 to2015-16.Out of the DP of Rs.4165.62 crore for four years, an amount ofRs.2173.62 crore is set apart for distribution as specific purposegrant to PRIs and ULBs.

Contd…

The balance amount of Rs.1992.00 crore in the DP shall beapportioned between PRIs and ULBs at the ratio of 80:20between population and density of population respectively as per2001 census.In regard to interse distribution of rural share between each tierand among each individual unit of PRIs, 4th SFC recommendedthat at the first stage it will be horizontally distributed amongg y gdifferent districts on the basis of weighted average of threeparameters viz., (i) population 50 percent, (ii) geographical area25 percent and (iii) per capita district domestic product (DDP) netp ( ) p p p ( )of mining and quarrying 25 percent

Contd…

In the second stage, the district-wise allocation of rural part will beapportioned vertically among three tiers of PRIs viz., ZPs, APs andGPs. In the Preliminary Report the vertical allocation was made at theratio of 20:30:50 respectively during 2011-12. From practicalexperience it appears that the above ratio is disadvantageous to theexperience it appears that the above ratio is disadvantageous to theGPs because salary component is much higher at GP level comparedto ZPs and APs. Hence 4th SFC has in its Final Report, altered verticalallocation at the ratio of 10:25:65.respectively for ZP, AP and GP.p y ,In the final stage of devolution, the shares of each AP and each GP in adistrict shall be determined on the basis of their respective populationas per 2001 census.

Contd…

In respect of ULBs, the urban DP will be allocated horizontallyamong Guwahati Municipal Corporation (GMC) Municipalamong Guwahati Municipal Corporation (GMC), MunicipalBoards and Town Committees on the basis of weighted averageof a composite index of (i) population 50 percent, (ii)geographical area 25 percent, (iii) index of infrastructure 12.5g g p p , ( )percent and (iv) per capita tax collection 12.5 percent. The indexof infrastructure has been constructed by using three indicators,viz, (i) length of surface roads, (ii) length of pucca drains and

b f t t li ht i i l i ht t h i di tnumber of street lights, giving equal weight to each indicator.The Commission has also recommended an untied fund of Rs.3

lakh per GP per year from 2012-13 to 2015-16 to meet individualshortfall of their share because of the larger number of GPs Theshortfall of their share because of the larger number of GPs. Thetotal cost per year is Rs.66.06 crore and this is in addition to 15percent tax devolution

dContd..

The final report of 4th SFC and ATR are yet toThe final report of 4 SFC and ATR are yet tobe approved by the Cabinet.The draft Cabinet Memorandum on the finalThe draft Cabinet Memorandum on the finalreport has been submitted to the C.M. officeand it is awaiting the approval of C.M. forand it is awaiting the approval of C.M. forplacing before the Cabinet

hSupplementary Report of the 4th SFC :

Government of Assam vide Notification No.FEA (SFC)Government of Assam vide Notification No.FEA (SFC)110/2009/119 dated May 14, 2010 inserted two additional items inthe ToR of 4th SFC. First, the Commission was asked torecommend appropriate staffing pattern of the employees forPRIs and ULBs based on the Study Reports of the concernedDepartments and also recommend revised structure of pay andallowances for their employees corresponding to the staffingpattern Second the Commission was asked to make appropriatepattern. Second, the Commission was asked to make appropriaterecommendation with regard to provincialisation of the services ofthe Local Bodies having reference to the provisions of 73rd and74th Amendments of the Constitution of India.

The Commission submitted its additional Report to theGovernment on 03.05.2012, although the tenure of theCommission expired on 30th April, 2012.

Staffing Pattern of PRIsConsequent upon 73rd Constitutional Amendment, the AssamPanchayat Act was passed in 1994 followed by the Assam Panchayat(Administrative) Rules, 2002. The Administrative Rules laid downstaffing pattern for Grade III and Grade IV staff of PRIs at each tier.Th i ti t t l b f t i h ti i 21 9 d 3 f ZP APThe existing total number of posts in each tier is 21, 9 and 3 for ZP, APand GP respectively. But the approved staffing pattern is far below theactual need.The 4th SFC recommended 31 posts for ZP 18 posts for AP and 9The 4th SFC recommended 31 posts for ZP, 18 posts for AP and 9posts for GP including contractual sweeper for each tier of PRIs.The 4th SFC also worked out revised pay scales and grade pay as perRoP Rules 2010 against the staffing patternRoP Rules 2010 against the staffing pattern.

Staffing Pattern of ULBs :

Unlike the PRIs, the ULBs do not have any prescribed staffingpattern. As a result, the existing staff strength is not alwayscommensurate with the minimum level of services and amenitiesthat they are expected to provide. Moreover, there is no uniformityin staff strength across municipalities within the State.Although, there is no prescribed staffing pattern for the ULBs,S ti 53 f th A M i i l (A d t) A t 2011 hSection 53 of the Assam Municipal (Amendment) Act, 2011 hasprovided for an Executive Officer (EO) for each and everyMunicipal Board (MB) and Town Committee (TC) and bear theexpenditure in respect of pay and allowances of such EOsexpenditure in respect of pay and allowances of such EOs.As per population recorded in 2001 Census Report, there arethree MBs in the State having a population of more than one lakh.In consonance with the statutory provision, the 4th SFCy p ,

dContd…

the 4th SFC recommended that a Senior Grade-II Officer of ACScadre which is equivalent to ADC may be posted as EO in theabove three MBs in the scale of pay of Rs.12000-40000 plusgrade pay of Rs.6600. In all other cases an officer of ACS cadre,Junior Grade be posted as EO in the scale of pay of Rs.12000-40000 plus grade pay of Rs.5400.Th C i i h d t d fThe Commission has adopted a norm of one sweeper perthousand population as worked out by UDD and also brought themunder regular scale of pay.The organizational set up of a municipal office is currently splitThe organizational set up of a municipal office is currently split

into 8 branches Viz, (1) General, (2) Accounts, (3) Revenue, (4)Works, (5) Sanitation, (6) Miscellaneous services, (7) TownPlanning and (8) Urban poverty Alleviation.g ( ) p y

dContd….The Commission has restructured the organizational set up of amunicipal office into five branches viz, (1) General Branch (includingPoverty Alleviation Branch), (2) Accounts Branch, (3) Revenue Branch,(4) Engineering Branch (including Town Planning Cell), (5)Miscellaneous Services Branch (Water Supply Sanitation Solid WasteMiscellaneous Services Branch (Water Supply, Sanitation, Solid WasteDisposal, Street Light and Municipal Markets).The Commission devised a rational staffing pattern for the ULBs basedon population as per 2001 Census Keeping the number of branches inon population as per 2001 Census. Keeping the number of branches inthe organizational set up of a municipal office at five and based on thepopulation-wise categorization of MBs and TCs, total number of staffworked out for different categories of ULBs by the Commission comesto 4877. Finance Department has proposed staff strength at 5170 forfive categories of ULBs,

Staffing Pattern of GMCThe 4th SFC has found several discrepancies in the figures ofemployees of GMC. The ICRA, a Consultancy Firm engaged by GMC,in its final report has put the number of existing employees of GMC at2202. But the department-wise total in the same report comes to 2177.In contrast GMC’s reported figure of the number of employees is 2326In contrast, GMC s reported figure of the number of employees is 2326.GMC has adopted State Government scales of pay for its employeeswith effect from January, 1996 and they have been given the revisedscales of pay and allowances as per the Assam Revision of Pay Rulesscales of pay and allowances as per the Assam Revision of Pay Rules,2010. But the Commission has noticed plethora of divergences from theRoP Rules 2010 in case of certain categories of posts in GMC.

dContd….At present, there are six Zonal Offices, nine departments and a largenumber of branches. Proliferation of branches result in increase ofsupporting staff.The 4th SFC has felt need for rationalization of staff of GMC. TheC i i k d t t ffi tt ith t i th lCommission worked out a staffing pattern with posts in the regularGovernment scale of pay as per RoP Rules, 2010 clubbing togetherbranches and reducing number of departments. The Commission hasadopted the norm of 1 2 sweeper per 1000 population for GMC Asadopted the norm of 1.2 sweeper per 1000 population for GMC. Asagainst GMC’s reported figure of the number of employees is 2326, theCommission has pegged total number of GMC at 1894.But the Finance Department has proposed staff strength of GMC atp p p g2706 as per demand of GMC.

Provincialization of Services of E l f L l B diEmployees of Local Bodies :

Chapter – 5 of the Supplementary Report deals with the issue ofyprovincialisation of services of the employees of Local Bodies.The Assam Panchayat Employees (Provincialisation) Actalthough passed in 1999 it virtually came into force withg p yretrospective effect from 1.10.1991.The services of 4565 panchayat employees of Gaon Panchayatsand erstwhile Mahkuma Parishads were provincialised with effectand erstwhile Mahkuma Parishads were provincialised with effectfrom 02.10.1991 by a Notification dated 16.11.1991 issued by P& RD Department. Since then the aforesaid employees havebeen enjoying the status of provincialised State Governmentbeen enjoying the status of provincialised State Governmentemployees.

dContd….The Third Assam State Finance Commission (TASFC) has observedthat there is no provision for provincialisation in the Constitutionalarrangements as envisaged under Article 243. TASFC has, therefore,recommended that the system of provincialisation should be abolishedcompletely However this recommendation of TASFC was not acceptedcompletely. However, this recommendation of TASFC was not acceptedby the Government.The provincialised panchayat employees are also not in favour ofdeprovincialisation The employees of municipalities have submitteddeprovincialisation. The employees of municipalities have submittedtheir demand for provincialisation of their services before theCommission.The basic purpose of the 73rd and 74th amendment is for empoweringp p p gthe PRIs and ULBs to effectively function as decentralized tier with realautonomy.

dContd….These two Articles conferred the status of third tier of government toPanchayats and Municipalities. Having regard to this aspect, theCommission feel that the concept of provincialisation of services of theemployees of Local Bodies may run counter to the spirit of the 73rd and74th Amendments of the Constitution of India74th Amendments of the Constitution of India.Finance Department has proposed not to provincialise the services ofemployees of PRIs and ULBs, which are themselves Government atlocal levelslocal levels.Finance Department has submitted Cabinet Memorandum on theSupplementary Report to the Political (Cabinet) Department for placingbefore the Cabinet for approval. Now the Report awaiting Cabinetpp p gapproval for implemetation.

State Finance Commission (SFC) Cell:

The successive CFCs had stressed the need for creation of aseparate and permanent SFC Cell in State Finance Department.The 12th Finance Commission had observed that the collectionand collation of data need to be done constantl and that dataand collation of data need to be done constantly and that datawould need to be made available to the SFC as and whenconstituted.The 12th Finance Commission recommended that a permanentThe 12th Finance Commission recommended that a permanentSFC Cell in the Finance Department of each State should be setup. They further observed that this Cell may be headed by aSecretary level officer.yThe successive SFCs of Assam had also reiterated therecommendations of CFCs in the matter of setting up of SFC Cell.

dContd…Despite the recommendations of CFCs and SFCs, a permanentSFC Cell under State Finance Department is yet to be put in place.However, a temporary Cell under State Finance Department hasbeen set up, but it is neither adequately staffed nor properlyequipped to meet the challenge.Maharashtra SFC Cell consists of 32 employees headed by oneDirector and Kerala 25 employees headed by one AdditionalS tSecretary.In contrast, SFC Cell of Assam consist barely of 4 persons headedby one Joint Director.Th 4th SFC h d d th t id l t ff t th f SFCThe 4th SFC has recommended that ideal staff strength for SFCCell of Assam should be 27 headed by Secretary.

dContd….Having regard to the extreme urgency of the situation, theC i i h f R 20 h f R 5Commission has set apart a sum of Rs.20 crore at the rate of Rs.5crore annually for upgradation of SFC Cell with properaccommodation, involving construction of building as per estimatesubmitted by PWD manpower training e-Governance machinerysubmitted by PWD, manpower, training, e-Governance, machineryand software package.SFC Cell is suffering from acute data deficiency, as the PRIs andULBs are unable to furnish data as per requirement due to theirULBs are unable to furnish data as per requirement due to theirlack of proper knowledge and inefficiency.SFC Cell has, therefore, entrusted task of designing a softwarewith respect to ULBs to NIC for having a comprehensive,p g pintegrated analytical based e-Governance model includingmonitoring of data to SFC Cell directly.

C tdContd…SFC Cell is also contemplating to entrust similar task to a Private Firm,So SOFTTHINK Intelligent Solutions Pvt. Ltd., Kolkata for developing asoftware with respect to PRIs for comprehensive and integrated e-Governance including monitoring of data to SFC Cell as perrequirement Of course this will require prior approval of therequirement. Of course, this will require prior approval of theGovernment for implementation of the Programme.

THANKSTHANKS