Delhi government tables finance panel report

NEW DELHI: After facing relentless pressure from the BJP-led municipal corporations and on the directions of the Delhi high court, the Arvind Kejriwal government tabled the Fourth Delhi Finance Commission (DFC) report in the assembly on Wednesday. However, the cash-strapped corporations are unlikely to benefit from the recommendations for higher tax devolution to them by the state as the government wants the Centre to first implement the recommendations meant for the Government of India. The state government wants a share in central taxes at par with other states in the country. Unless the Centre agrees to accept the recommendations of the DFC, implementing the report will be "impossible" the state government has said.

The report was tabled a day after the North Delhi Municipal Corporation presented its budget for 2016-17. It raised the red flag by projecting a fiscal deficit of Rs 2700 crore for the next financial year. If the state government doesn't change its stand, the civic body and its counterparts in the east and south can give up any hope for some immediate respite.

The report recommends that 12.5% of taxes, duties, fees and toll collected by the Delhi government during financial year 2012-13 onwards shall be kept in the divisible pool of the NCT of Delhi for each financial year. Fifty per cent of funds in the divisible pool shall be distributed amongst all municipalities (including New Delhi Municipal Corporation) with reference to the existing norms based on population and area. The residual 50% is to be distributed keeping in view the comparative financial health of each municipality and infrastructure deficit to be judged on basis of quality of municipal services.

The report also makes it clear that the state must ensure that "transfer payments received by the municipalities are not utilised for inter-changeable activities". The municipalities have been citing these clauses to demand that the report may be tabled in the assembly and implemented to bail them out of the financial crisis.
Though BJP's Leader of the Opposition Vijender Gupta was quick to claim credit for tabling of the report, the real challenge lies ahead. The report will be discussed in the Delhi assembly on Thursday.

At the end of an explanatory memorandum as "to the action taken on the recommendations made by the Fourth Delhi Finance Commission", the state has added its stand with deputy chief minister Manish Sisodia's signature at the end of the memorandum tabled in the House. The report has 12 recommendations for the Centre. The Delhi government also wants the municipalities to deliver on the recommendations which calls for work on improving tax collections and focusing on core municipal functions.

The DFC report also recommends that the Union government must recuse itself from framing building bylaws for construciton in Delhi. "The Government of India must display commitment towards the 73rd & 74th amendment of the Constitution by transferring control over DDA and the competent authority appointed under the Slum Areas Act, 1956 or limiting the authority of municipalities on matters linked to regulation of building activities or undertaking improvement works," it is stated. The report recommends that the Centre must hold DDA responsible for infrastructure deficits in terms of requirements for municipal services befitting the national capital. It must also direct the police to refrain from framing or enforcing regulations that impede implementation of municipal laws.

The report makes it clear that municipal bodies need to focus on core functions to improve financial health and exercise economy in expenditure on non-core issues. The measures include focus on widening the tax base. It is stated in the report that less than 25% of stock of buildings and vacant land are paying property tax on a voluntary basis.