City’s financial management haywire: report

  • Vinod Kumar, Hindustan Times, CHANDIGARH:
  • Updated: Oct 16, 2014 13:39 IST

The Fourth Delhi Finance Commission Report for Chandigarh has raised questions on the method adopted by the municipal corporation (MC) for calculation of property tax and also pointed out that its financial management was marred by red-tapism.

Last year, property tax was levied for the first time by the corporation on the basis of unit area method. The report stated that neither proper assessment was done by the department nor any record was being maintained to compare as to how many properties were left on which the tax had not been paid.
“At present, there is no way to know if the assessee has paid the correct property tax,” the report reads.

After analysing the financial statements and records, the report also maintained that under the current scenario, MC worked under the influence of red-tapism, as a result, most of the times, there were cost overruns and it took much longer time to complete the projects against the anticipated period.
The commission also pointed out decrease in the internal revenue vis-à-vis the revenue expenditure over a period of time.

Terming decrease in internal resource mobilisation by the corporation a matter of serious concern, the commission recommended that stress needed to be laid on mobilising the internal resources, such as property tax to meet the expenditure for providing better quality of civic services to city residents.
For proper financial management, it was recommended that the shortfalls be properly assessed and be made a part of financial planning.

Pitfalls in UT administration

The report stated that the administration lacked transparency with regards to devolution of funds to MC and panchayats. As there is no transparency regarding calculations on the basis of which the distribution of funds is made to the local bodies, there is no way to ascertain whether administration has released right amount of funds.

The report also pointed out that in the absence of any transparency with regards to release of funds to the local bodies, it cannot be ascertained whether all recommendations of the finance commission had been followed.

Stressing upon transparency with regards to release of funds, the commission advised the administration to allow local bodies to raise taxes, duties, etc., directly from the citizens to motivate them to raise their finances and perform their constitutional functions and duties.

Recommendations for MC

Use of latest techniques in all their functions
All possible steps should be introduced to compress expenditure
Minimise duplication in functionality
Collection efficiency should be reviewed from time to time
Clear revenue projection of future policy initiatives

Recommendations for UT admn

There should be full transparency pertaining to devolution of funds.

UT should transfer all functions to local bodies which were either not transferred or were taken away
While apportioning its revenue to local bodies, UT should assess the actual rate of growth of urban area
UT should constitute state urban development fund as consolidated kitty for local bodies

UT should monitor reforms in the local bodies

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