03 Mar 2024  |   07:59am IST

Bridge financial gap with economic justice

The detailed Third State Finance Commission report, recently accepted by the Cabinet, presents a vision for improving governance not only at the State level but also at the grassroot level. The report, prepared after extensive consultations with local elected bodies, industry bodies, NGOs and other stakeholders, identifies pain points in the system, evaluates why they occur, and issues a host of recommendations to address these issues and scale up Goa’s financial performance. KARSTEN MIRANDA provides a glance at some of the key areas the Commission focused on
Bridge financial gap with economic justice

he third State Finance Commission of Goa began operations in January 2022 with support from various departments. It conducted extensive assessments and consultations with local bodies, stakeholders, and government departments, gathering data and insights through meetings, field visits, and questionnairaes. The commission focused on improving resource utilisation, service delivery, and local body empowerment for sustainable developmaent. The three-member commission was headed by former IAS officer and retired finance secretary Daulat Hawaldar and had the Director of Planning, Statistics, and Evaluation Dr Y Durga Prasad as the Member Secretary and the former Director of Accounts Gurunath Potekar as a member.

Compensating GST loss & increasing revenue

The financial sustainability of local bodies in Goa has been a persistent issue, despite increased funding from the Central Finance Commission and the State Government. The introduction of GST has affected revenue sources, leading to difficulties for even larger municipal authorities like Margao and Mormugao in meeting primary expenditure responsibilities. 

The State Finance Commission recommends additional budget provisions to compensate for revenue loss due to GST implementation. To enhance revenue, the Commission suggests tapping into the potential of property tax reassessment, introducing Professional Tax, and leveraging digital technology for revenue collection. 

Furthermore, there is potential to generate revenue through user charges, such as parking fees, and tapping into resources like one month’s rent from rented premises due to the rising trend of second homes in Goa.

Change in grants strategy

The debate over linking performance criteria to financial resource release has shown that binding characteristics often fail to achieve desired outcomes. In Goa, previous Central Finance Commissions’ performance-based grants were underutilized by local bodies, leading the State Finance Commission to recommend non-tied State grants. 

To streamline Grant-In-Aid (GIA) grants, the focus should shift to need-based projects, such as revenue-generating assets providing public services. Devolution criteria should mirror those of the Central Finance Commission. 

Disbursements should ensure equitable coverage of all weaker local bodies. Funds allocated to local bodies are often kept in fixed deposits, undermining their intended purpose. The major expenses for local bodies in Goa are salaries, wages, and waste management. The Commission also noted that there is a new generation of educated youth in elected positions in local bodies, motivated to deliver public services but emphasized that they require support, orientation, and training.

Do’s & Don’ts list for local bodies

The Commission identified accountability issues in local bodies’ finances, stressing the need for timely finalization and regular auditing of accounts. They emphasized the importance of placing audited reports before elected members and gram sabhas. 

To address this, they proposed state government monitoring, real-time accounting software, and capacity building through training modules, particularly focusing on General Financial Rules, own revenue sources, and Central Finance Commission grants. Strengthening block-level offices and empowering Block Development Offices (BDOs) to support panchayats were also recommended. 

The ‘Atmanirbhar Bharat-Swayampurna Goa’ initiative was praised for its potential to resolve local body service issues, with trained Swayampurna Mitras facilitating scheme implementation. Additionally, exemplary practices from proactive panchayats like Nagoa, Camurlim, Volvoi, and Bogmalo, such as revenue augmentation and waste management, should be showcased and replicated through training programmes.

Tips on Goa’s waste management system

The Commission noted a rise in revenue expenditure for garbage collection and transportation by local bodies and suggested adopting the Corporation of the City of Panaji’s (CCP) model. It recommends the State Government share costs for daily wage employees for solid waste management with village panchayats. 

While local bodies have limited fund utilisation capacity, the State Government effectively handles capital expenditure for infrastructure development. Additionally, major waste treatment plants have been set up by the State, with dry garbage transported by the Goa Waste Management Corporation, constituting about three per cent of State tax revenue.

Balancing staff salaries & savings

The Commission noted that in Goa, local bodies are responsible for paying retirement benefits to their staff and workers, despite the government covering certain allowances and salaries. However, many local bodies haven’t set aside funds for these payments, leading to delays in disbursing retirement dues. This lack of preparation could jeopardize the financial stability of local bodies if they’re suddenly burdened with large pension obligations.

Struggles of Zilla panchayats

The Commission notes a demand from local bodies, especially Zilla Panchayats in Goa, for more powers but observes shortcomings in their current functions like cattle pound and waste management. 

Zilla Panchayats should coordinate and plan in deficient areas. They are tasked with coordinating development works and monitoring through District Planning Committees.

However, they are not active, failing to integrate and monitor local plans and lacking finalized accounts and annual plans. The planning process should align with Sustainable Development Goals, with a focus on women and children.

Working around water woes

The Commission found irregular piped water supply in Goa during field visits, noting that water supply and sanitation are typically handled by local bodies nationally. Goa needs more water treatment plants and replacement of old pipes, especially in panchayat areas, which heavily rely on piped water. 

Despite being a coastal State, Goa has abundant water bodies like lakes and wells, which local bodies should desilt and use for non-drinking purposes. 

The revival of traditional water resources is supported by funds allocated through the 15th Central Finance Commission, with local bodies able to seek assistance from government departments for this purpose.

Continuity of finance commissions  

The Constitution mandates the establishment of State Finance Commissions (SFC) under Article 243(1) and 243(Y), but the formation of these commissions has been slow. Only three out of the expected six SFCs have been established, with Goa experiencing a delay in the awards periods for its first two SFCs. One important role of the SFC is to provide continuous training to officials and elected representatives of local bodies through institutions like the Goa Institute of Public Administration and Rural Development (GIPARD). Ensuring the continuity and effectiveness of the SFC is vital for the stable finances and functioning of local bodies.

Concerns over decline in cultivation

The Commission found a decrease in agriculture cultivation in the foothills of the Sahyadri Mountains, partly due to wild animal issues. Sugarcane cultivation has declined, needing support for agricultural viability. This decline in cultivation of agriculture, the commission warned may pose long-term livelihood challenges in rural areas.

Bats for Comunidade amendments

In Goa, unlike other states, major land is not owned by local bodies but by Communidades, devasthan committees, and church authorities. Grants sanctioned by the State for significant projects have remained unused, causing hardships for local bodies in creating public infrastructure. To address this, the state should consider amending the Code of Comunidades Act to lease land for public purposes and also transfer unused state-owned land to local bodies.

Worried about climate change impact

The effects of climate change are evident in Goa, particularly due to its location in the Western Ghats. The State relies on active involvement from local bodies to address emergent issues. However, weaker panchayats lack resources even for basic tasks like cutting dangerous trees. 

To address this, the Commission recommends allocating a climate change fund of Rs 10 crore per year during the award period for weaker panchayats and Group ‘C’ municipal authorities. These funds can be used for pre-monsoon preparations, tree cutting, weed control, and other 

activities related to climate change mitigation.


Iddhar Udhar