The 15th Finance Commission headed by Chairman, Shri N.K. Singh alongwith its Members and senior officials met today with the representatives of the Panchayati Raj Institutions (PRIs)  of Karnataka.

The Commission was informed that all 29 functions of PRIs as envisaged in the 11th schedule of the Constitution, have been devolved to PRIs in Karnataka and the State has been releasing funds currently as per the recommendations of the 4th State Finance Commission ( 2018-19 to 2022-23)

Karnataka has a total of 6228 PRIs, of which 30 are Zilla Parishads, 177 Taluk Panchayats and 6021 Gram Panchayats.

As per the recommendations of the 4th SFC,

1. The  devolution to local bodies will be increased from 42% to 48% of the non-loan net own revenue (NLNORR) over the period of 2018-2019 to 2022-23.
2. 1% of the NLNORR may be earmarked to Brihat Bengaluru Municipal Corporation, leaving 47% to be allocated to PRIs and ULBs in 75:25 ratio (i.e., share of PRIs & ULBs at 35% and 12% respectively)
3. Central FC grants not to be included as a part of  State devolution.

The 14th Finance Commission had recommended for the period 2015-20, a devolution of ₹ 8359.79 crores to Karnataka as Basic Grant ( 4.64 per cent of total grants) and a devolution of ₹ 928.87 crores  as Performance grant ( 4.64 per cent of total grants).

The Commission has observed that:

There has been a minor shortfall in the release of basic and performance grants to PRIs in each year from 2015-16 to 2018-19, and 2016-17 to 2017-18, respectively. No performance grants were released to PRIs in 2018-19.

The SFCs have not been constituted in a timely manner – the 4th SFC should have ideally been constituted by now.

Despite the recommendations of the 4th SFC, the state Government has included Central FC grants part of state devolution.

The 15th FC would have to take a call on whether it would recommend grants only for Gram Panchyats out of 3 tiers of PRIs in the State - in view of the fact the 14th Finance Commission had recommended grants for only Gram Panchayats.

The representatives of PRIs present at the meeting were -  Shri. C. Narayanaswamy, Member, Panchayat Raj Parishat; Sh. V.Y. Ghorpade, Vice-Chairman, Karnataka State Decentralised Planning & Development Committee; Sh. Manjunath, President, Chikkaballapura Zilla Panchayat; Ms. Jayamma, President, Bengaluru Rural Zilla Panchayat; Shri Neelakantappa. M. Kusagura, President Ranibennuru Taluk Panchayat;

Ms. Pushpa Rajesh, President, Somavarapete Taluk Panchayat; Shri Satish K. S., Member, Kadaba, Grama Panchayat, Gubbi taluk & President, Karnataka State Grama Panchayat Member Federation;  Shri P.P. Bopanna, President, Palibetta Grama Panchayat Virajapete Taluk and Shri Mahesh Kumar S.K., President, Doddajala Grama Panchayat, Bengaluru (North).

The Commission further noted all the concerns highlighted by the representatives of the PRIs and promised to address them in its recommendations to the Central Government.

Local government finance devolution: Fifteenth Finance Commission reviews PRI fund allocations, SFC constitution delays, and grant inclusion concerns. The Commission engaged Karnataka PRIs on fiscal devolution and grant disbursement: Karnataka reports full devolution of 11th Schedule functions and follows 4th SFC recommendations on non loan net own revenue shares, including earmarking for Brihat Bengaluru; the Commission noted shortfalls in basic and performance grant releases, absence of recent performance grants, delayed constitution of SFCs, and the State's inclusion of Central Finance Commission grants within state devolution, issues it will consider in its recommendations.