Centre may urge states to cut delay in formation of finance commissions

Today's meet may focus on facilitating dialogue to enhance efficiency of SFCs

The Centre is likely to urge states to cut down delays in the formation of State Finance Commissions (SFC) and limit their extension to ensure the fund distribution to local bodies like panchayats is aligned with the award period.

 

At a conclave titled ‘Devolution to Development’ to be held tomorrow, the Centre is expected to exhort states to direct SFCs to submit interim reports of its recommendations on fund distribution to avoid any disruptions in local governance, according to the agenda note.

 

Organised by the Ministry of Panchayati  Raj, the conclave will aim to facilitate dialogue among experts, policymakers, and stakeholders from various states on enhancing the efficiency and timeliness of SFCs in fund allocation to local bodies.

 

 

SFC is a constitutional body that reviews and revises the financial position of panchayati raj institutions and urban local governments. It is appointed by the state government every five years.

 

However, several states do not have proper SFCs for fund distribution to urban local bodies and panchayati raj institutions which impairs their functioning. 

 

The Centre might also urge states to have permanent infrastructure for SFCs and a dedicated cell within the State Finance Department which would manage data collection, collation, and updates on local government finances, ensuring data availability when required.

 

The conclave would strive to develop a comprehensive roadmap to professionalise SFC operations and ensure they effectively support urban and rural local bodies, officials said.

 

There will also be a discussion on strategies to enhance the fiscal capacity of Panchayats by aligning SFC functions with the recommendations of the Central Finance Commission.