The Hindu   27.08.2012

Crisis grips municipalities

The financial crisis gripping urban civic bodies has derailed the disbursal of salary, pension, and other benefits due to employees (and retired employees) in a majority of the 60 municipalities in the State.

If the financial position of the civic bodies continued to remain precarious, it would eventually lead to an administrative impasse, sources said.

Official sources told The Hindu here that salary for August and Onam advance had not been disbursed in the Vaikom, Thalassery, Shoranur, Thripunithura, North Paravur, Chanaganassery, Alappuzha, and Kayamkulam municipalities. Funds apportioned for other purposes had to be diverted in other places.

Employees of Aluva municipality could draw their salary only on Saturday evening, but their Onam advance had been held back.

The funds sanctioned from the Suchitwa Mission had to be diverted to meet the salary bills in Mavelikara. Payment of pension and DA and remittance of provident fund and other benefits recovered from employees had reportedly come to a halt in about 90 per cent of the 60 municipalities in the State.

Financial management

Sources said shoddy financial management had been taking a toll on the salary payment in municipalities for a year now. There had been no government intervention to stabilise revenue sources and streamline financial management, they added. The lackadaisical attitude of the civic bodies in garnering own funds had been cited as the main reason for the crisis. The ‘untied funds’ worth Rs.50 lakh, provided to each municipality, was being used to take up civil works.

Under assessment and non assessment of residential and commercial buildings, cut in entertainment tax, and laxity in revising licence fees, had resulted in a shrinking tax base for civic bodies. The government’s delay in contributing to the pension fund had worsened the situation, sources said.

The Fourth State Finance Commission, headed by M.A. Oommen, which analysed the financial condition of civic bodies, had recommended a series of measures to augment revenue sources. It had recommended constitutional amendments to raise the professional tax limit from the current Rs.2,500 to Rs.10,000 and also mooted a 50 per cent revision once in five years. The commission said building tax limit should outdistance the professional tax limit, but it continued to be the other way even now. Building tax revenue, a potential source, continued to remain untapped.

The chairman of the finance standing should monitor tax collection and make an earnest effort to bring more services and other areas under the tax cover.

Though the government had accepted the recommendations and brought out an action-taken report, the real spirit of the recommendations had not percolated to the grassroots level, sources said.

• State intervention sought to stabilise situation
• Concern over shrinking tax base of local bodies