The report of the Fourth Delhi Finance Commission on financial health of the city’s municipal corporations has clearly stated that the Delhi government appeared to be standing in between the Centre and the civic bodies in the matter of release of Central grants. It said that the Central grants, instead of being passed on to the municipalities, were being subsumed as a part of the general revenue of the city government.
The commission, constituted on October 14, 2009, was scheduled to file report in 2010. It submitted the report in March 2013 and its recommendations were to be implemented from 2010 to 2015.
Expressing serious concern over the way recommendations of the successive finance panels were being modified or rejected, the report said the recommendations of the First Finance Commission to transfer 9.5 per cent of the basic annual fiscal of the city government’s tax revenue had been modified to 5.5 per cent and the annual grant had been limited to 60 per cent of the actual expenses with a ceiling of 4 per cent of the tax revenue.
The 246-page report, a copy of which was accessed by this newspaper, said: “We have not been able to understand the logic for making these changes while implementing the recommendations of the First Delhi Finance Commission, particularly when the Central government guidelines on the subject require the state governments to develop a convention of accepting the recommendations of the State Finance Commission just in the case of the recommendations of the Central Finance Commissions.”
In an annexure, the commission said it seems that increase in tax revenue was more than the increase in the share of municipalities as suggested by the earlier commissions. “In this case, what is required is that the system of devolution of funds from GNCTD should be more transparent and all the details should be provided to municipalities regarding how the amount has been arrived at by the accounts, before releasing the amount to the municipalities.”
Quoting estimates given for 2012-13, the report said that it seemed that the financial position of the government could very well support the requirements of the municipalities. It said that in the absence of transparency regarding grants received by the Delhi government from the Centre, duly assigned for MCD/ NDMC under Right to Education, Sarvsiksha Abhiyan, Mid-Day meal etc., it has been assumed that 100 per cent of the eligible expenditure for providing education by MCD/ NDMC should be met by grants in aid from GNCTD.”
The fourth financial report said the government while giving loans to the municipalities should follow the statutory provisions regulating the powers of the municipalities to borrow funds from the Consolidated Fund of the capital. It said transfer payments should not be allowed to be used for making payment of salaries and wages of any kind. “The municipalities should be encouraged to establish special funds to ensure that the municipal activities for which are proposed get fair provisions and the amounts credited therein are not used for other purposes.”
The report emphasised that the director of local bodies instead of taking control of fixed and movable assets and acting as per principles recommended by the panel in its interim report on March 31, 2012, appeared to have acquiesced with a situation where the municipal officers of the MCD continued to deal with the assets of the corporation in a manner as decided by the committee of demised corporation.
It said: “This is rather unfortunate because of lack of judicial persona despite above caveat from our end. Till this date, we have not been supplied details of assets and liabilities of the Municipal Corporation of Delhi. We are equally amazed to learn the newly-established corporations, without understanding full implications of the government dispensed freebies in the nature of granting loans to each of them in utter disregard to the provisions of Section 185 of the Delhi Municipal Corporation Act, 1957, have jumped to borrow funds from the government and unwittingly accepted a dangerous worm in their internal sources of income which will spread its tentacles in years to come.”
The report said the commission did not get cooperation from the government in its effort to collect reliable information. “This commission notices that the government officials continue to resist commission’s efforts to open doors for discussions for obtaining information/ data. Although the Delhi Finance Commission is clothed with the powers of a civil court for summoning anyone as a witness, whenever these powers have attempted to be invoked, official reaction at the highest bureaucratic level was heavily tilted in favour of the officials.”
