As a part of its endeavour to devolve resources to the administrative bodies operating at the grassroots level, the Orissa government has decided to provide Rs 1209.95 crore to the Panchayati Raj Institutions (PRIs) and Urban Local Bodies (ULBs) in the ratio of 75:25 from 2010-11 to 2014-15.
This is over and above the entitlement of Rs 3270.90 crore for these local bodies recommended by the 13th Finance Commission.
Out of Rs 1209.95 crore to be provided by the state government, Rs 907.45 crore is earmarked for PRIs at the rate of Rs 181.49 crore every year while ULBs will receive Rs 302.50 crore (Rs 60.50 crore per annum).
The Third State Finance Commission had recommended that 15 per cent of the average own gross tax revenue of the state government, estimated at Rs 4480.85 crore for the five year period 2010-15, may be devolved in favour of PRIs and ULBs for providing public services and undertaking local development. The amount will be distributed among the PRIs and ULBs in the ratio of 75:25.
Accordingly, the state commission had requested the 13th Finance Commission to reimburse Rs 4480.85 crore to augment the Consolidated Fund of the state to improve the finances of the local bodies. The 13th Finance Commission, however, has recommended a provision of Rs 3270.90 crore over the award period, 2010-11 to 2014-15.
The State Finance Commission had observed that devolution to ULBs will not affect the accrual of entry tax which they have been receiving before. The commission has not specified any amount for the purpose. The present level of transfer to ULBs towards collection from entry tax at 2009-10 level comes to Rs 254 crore per annum.
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It has been decided that till the state government continues to levy and collect entry tax, annual assignment shall be made in favour of the ULBs taking the amount of Rs 254 crore as the base and increase the same by 10 per cent in the subsequent years.
It has also been decided by the government that in addition to this, a sum of Rs 20 crore shall be annually provided from the proceeds of the entry tax for the purpose of creating a dedicated 'Performance Incentive Fund' for the ULBs.
Incentive Grants shall be provided to the ULBs from this fund for exceptional performance in areas like additional revenue mobilization, improvement in service delivery and implementation of innovative urban development projects.