15th FC Recommendations : Local Bodies – UPSC GS2

Positives of 15th FC Recommendations:
  • Grants to local bodies is high compared to the previous Finance Commission. For example, Finance Commission has granted Rs 4,36,361 crore from the central divisive tax pool to local governments.
  • It will strengthen cooperative federalism. Out of the total grants earmarked for Panchayati raj institutions, 60 percent is earmarked for national priorities. (drinking water, rainwater harvesting, sanitation, etc.,).
  • Failed to include Performance linked Grants:
    • 15th FC has failed to provide Performance-based grants for the Panchayati raj. While only 8000 crores (for incubation of new cities) has been allocated to Urban local bodies.
    • The performance-linked grants were thoughtfully introduced by the 13th Finance Commission.
    • It earmarked 35% of local grants specifying six conditions for panchayats and nine for urban local governments. For example, the establishment of an independent ombudsman, notifying standards for service sectors such as drinking water and solid waste management, etc.,
    • Performance-linked conditionality is vital for improving the quality of decentralised governance, especially in underperforming local bodies.
    • By neglecting the Performance-based grants, 15th FC has failed to acknowledge the transformative potential in it.
  • No eligibility criteria:
    • There are no eligibility criteria specified for Gram Panchayats to avail grants.
    • Whereas, the 14th FC, has recommended measures to standardize the accounting system and update the auditing of accounts.
    • Without reliable data on Financial performance, it will be difficult to ensure Good governance.
  • More emphasis on Population:
    • 15th FC has used the criteria of the population (2011 Census) with 90% weightage and area 10% weightage for determining grant to local governments. However, it ignores equity and efficiency criteria.
We need to fiscally empower local governments to deliver territorial equity and to empower local people.

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