The measures proposed by the state’s finance minister Haseeb Drabu (left) aim to make public spending and implementation of schemes more democratic while raising the stature of panchayats and urban local bodies in fiscal terms. Photo: PTI
The measures proposed by the state’s finance minister Haseeb Drabu (left) aim to make public spending and implementation of schemes more democratic while raising the stature of panchayats and urban local bodies in fiscal terms. Photo: PTI

J&K govt redefines role of local bodies in governance

The J&K government has announced a panchayat budget and a host of steps that will make local bodies financially robust and more credit worthy

New Delhi: In an unprecedented move, the Jammu and Kashmir government last week announced a panchayat budget and a host of steps that will make local bodies financially robust and more credit worthy.

Not only does this put the spotlight on the role of the third tier of government in public spending, it also comes a month ahead of panchayat election in the state.

The measures proposed by the state’s finance minister Haseeb Drabu aim to make public spending and implementation of schemes more democratic while raising the stature of panchayats and urban local bodies in fiscal terms.

“With this objective of ensuring that these institutions of local governance become fully functional both in terms of functions and finances, I am taking this unprecedented initiative of a Panchayat budget," Drabu said in his speech.

“I propose a new framework for budgetary and financial empowerment of the Panchayats so that they become potent instruments of change and development in the State. The basic idea of this framework is the democratisation of public expenditure and not just devolution of funds and provision of grants," he added.

The proposals include accounting reforms that will help these entities in raising capital from bond market, empowering them to collect more local taxes to shore up revenue and devolving 10% of state revenue to panchayats till the time a proposed state finance commission suggests a formula for fiscal transfer to them. For better functioning of panchayats, an ombudsman for local governance will also be appointed.

“It is a welcome approach and it is a good initiative that the government has taken but one has to see how ready Panchayats in the country, particularly J&K are, to effectively carry out these proposals. The fiscal suggestions have to be backed by more staff for the Panchayats, taxation powers and support for tax collection," said Manoj Rai, director at New Delhi-based Society for Participatory Research in Asia (PRIA) which works in the field of capacity building.

“Panchayats in J&K need more capacity building and intervention from the government. If these things are done effectively, they have the potential to accelerate progress and bring peace in the state by taking a lead in local developmental issues," Rai added.

The move by the Peoples Democratic Party (PDP)-Bharatiya Janata Party (BJP) alliance comes at a time experts are advocating greater role for local bodies in raising the quality of public services and in creation of smart cities.

Chief economic advisor in the finance ministry Arvind Subramanian had in his economic survey of 2016-17 argued that India should add to competitive federalism with what he called competitive sub-federalism, as competition among administrative units steer progress.

Experts said accounting reforms at the lowest level of administration is vital for bringing prosperity. “Good financial management which is crucial for successful project implementation can only follow from proper accounting practices," said Ved Jain, former president of accounting rule maker Institute of Chartered Accountants of India. Jain said the J&K government’s move was a step forward in that direction.

Jammu and Kashmir has been taking the lead in fiscal reforms. In 2015, it did away with the distinction between plan and non-plan spending after the 14th Finance Commission recommended the same. The union government followed suit in its 2017-18 budget. In 2017, Jammu and Kashmir started presenting annual budget in January, leaving enough time to complete the budget process before the financial year starts in March. The union government too advanced budget presentation by a month to 1 February for its 2017-18 budget last year.

J&K is also working on a proposal to cut down layers of administration by replacing the state treasury with pay and accounts sections in each department, a person familiar with the development said on condition of anonymity. That will make life easier for service providers and contractors.

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