South Delhi corporation has resources to tide over fund crunch, says finance panel chief
The uptick would be for the north and east municipal corporations, which would receive a higher devolution of GNCTD taxes.Updated: Mar 02, 2019 01:11 IST
With the South Delhi Municipal Corporation (SDMC) coming down hard on the state government’s decision to implement the recommendations of the Fifth Delhi Finance Commission (DFC) and that, too with retrospective effect, its chairperson on Friday said while the body’s funds would indeed be hit, it would still be adequately resourced.
According to the Fifth DFC report, the basic tax assignment (BTA, which is a share of the GNCTD tax revenue) for the SDMC was nearly 44% in fiscal 2015-16. This would drop to 11% in the fiscal 2016-17 and later increase to around 27% by 2020-21.
“We needed to keep in mind equitable distribution of revenue, including that of the north and east civic bodies,” said Sudhir Krishna, the chairperson of the panel and also a former secretary at the ministry of urban development. “However, our projections indicated that the SDMC would have sufficient resources as compared to the others.”
The uptick would be for the north and east municipal corporations, which would receive a higher devolution of GNCTD taxes.
They would, in fact, receive 3% of the BTA to be split solely between themselves. Another 3% would be split among the five municipal boards ( the three municipal bodies, the New Delhi Municipal Council and Delhi Cantonment Board), resulting in a weaker share for the SDMC this year. The commission report pointed out that Fourth DFC had a similar plan, but was never implemented.
While the government accepted most of the recommendations in January this year, it did tweak the devolution formula a bit. Hindustan Times had previously reported that the south Delhi mayor was unhappy about the retrospective implementation. “It is not just about the money that the Delhi government will not give us under the 5th Delhi Finance Commission,” mayor Narendra Kumar Chawla had said. “They are also applying its recommendations with retrospective effect from the year 2016 and demanding we pay them a difference of almost ₹600 crore that they have allegedly given as extra to us.”
However, Krishna pointed out that this was not uncommon with finance commissions across the country. “In fact, the government should start the process of constituting the Sixth DFC right away. It took us 18 months to prepare our recommendations. The next panel would need time to find office space, staff and such like,” he said.
On what the municipalities could do, Krishna said they ought to frame themselves better in the way that the New Delhi Municipal Council (NDMC) taxes assets and executes resources.
“The NDMC is a role model to follow on how to use resources . In the short-term, some municipalities need to be assisted, but there is potential for all civic bodies to do well,” he said.
A senior SDMC officer, however, said the cut will affect their operations. “We don’t have enough resources. Our surplus last year was just ₹50 crore. As per the modified formula, we are getting only ₹379 crore. As per third DFC, we would have gotten ₹1,081 crore,” he said. “As for retrospective implementation, previous finance commission recommendations, too, were delayed and the government had agreed to not implement it retrospectively.”