Presenting separate budget for Panchayats, Finance Minister Dr Haseeb Drabu announced a provision of Rs 1000 crore in the State budget for the Panchayats and Urban Local Bodies (ULBs) and proposed to set up a ‘Panchayat Bank’.
“We have made a provision of Rs 1000 crore in the State budget for Panchayats and ULBs. In addition to these Central transfers, the State budget will also make two sets of transfers to the Panchayats and ULBs including second order devolution i.e. their share of State taxes and expenditure underwriting of some of the basic public expenditure so as to equalize delivery of public services across and Panchayats and Local Bodies in the State,” he said in his separate Panchayat budget speech.
He said that pending the recommendation of the State Finance Commission, the State Government will transfer 10 per cent of the State taxes to these bodies. The possibilities of raising debt will also be explored for ULBs, he added.
Dr Drabu proposed appointment of Ombudsman for Local Governance to act as a Watchdog as well as a problem resolution platform for better functioning of the Panchayati Raj institutions (PRIs).
He said the Government was looking at creation of a ‘Panchayat Bank’ through restructuring of Cooperative Banks. This will provide rural citizens with improved access to a range of Government schemes as well as financial services, allowing citizens to carry out basic financial transactions.
“The Government will set up a Special Task Force of experts drawn from Banking, Cooperation, Law and Information Technology to prepare a roadmap for formation of the new bank, which will have a professional Board of Directors with an experiences Banker as the Chief Executive Officer,” he added.
Asserting that the Government planned to take Panchayats of Jammu and Kashmir back to heydays of 30s and 50s, Dr Drabu said: “the entire country will look up to emulate us as they did in the past”.
He added: “the State Government is set to hold the Panchayat elections next month. While all of us acknowledge that conducting these elections is going to be a challenge, I believe that an even bigger challenge is to make these elected bodies effective”.
Dr Drabu said it was highly revealing that while 25 of 29 allotted functions have been devolved to Panchayats, only three of them are backed with budget heads. And even those are not allocated any funds. Therefore, he said, he was proposing a new framework for budgetary and financial empowerment of the Panchayats to that they become potent instruments of change and development in the State.
He proposed the constitution of State Finance Commission in the State, whose composition and terms of reference will be notified shortly. The Government is required to constitute a State Finance Commission for Panchayats and Municipalities.
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