15th Finance Commission holds meeting with ULBs representatives of Punjab

Punjab Municipal Act, 1911 and the Punjab Municipal Corporation Act, 1976 are the acts providing for local self-governance for ULB’s

The 15th Finance Commission had a detailed meeting with representatives of the Urban Local Bodies of the State of Punjab along with senior officials of the state. While the Commission raises many queries, the ULB representatives raised a number of issues.

Status as provided by Punjab on 3Fs:

Punjab Municipal Act, 1911 and the Punjab Municipal Corporation Act, 1976 are the acts providing for local self-governance for ULB's

All 18 functions envisaged in the Twelfth Schedule of the Constitution have been devolved to ULB's

Elections to ULB were held in parts in Feb 2015, Dec 2017 and Feb 2018.

The state is currently following the recommendations of 5th SFC Report: The Commission recommended 4% of the Net total tax revenue of the state (less cost of collection) to be devolved to local bodies.

Revenue Sources of ULB's

The main source of income of the ULBs is own revenues which include tax and non-tax revenue.

The percentage share of tax revenue in total revenue of ULBs increased from 58% in 2011-12 to 68.77% in 2016-17, and the proportion of non-tax revenue slid from 16.84% in 2011-12 to 14.46% during 2016-17.

According to Pr. AG Punjab, following are the issues pertaining to an accounting of ULB

Accounts from the year 2011-12 to 2017-18 are in arrears.

No provision for accounts consolidation exists in the accounting manual prescribed for ULBs.

National Municipal Accounting Manual (NMAM) for ULBs are yet to be followed.

Examiner, Local Fund and Accounts (ELFA) being a statutory auditor is responsible to certify the accounts of PRIs and ULBs, but this is yet to be initiated.

Only 17 ULBs out of 167 ULBs could become eligible for performance grant in 2017-18.

Observations of 5th State Finance Commission:

5th SFC observed that although the staff of the municipalities was given the required training, most of the municipalities were not able to provide reliable data primarily due to the scarcity of staff. A large number of them had to get the services of the staff of other municipalities for getting their data compiled, which resulted in poor quality of data being made available to the Commission.

(With Inputs from PIB)