Without financial powers, Finance Commission's Rs 4,600-cr bonanza doesn't help: Experts

BENGALURU: Urban local bodies, including the Bruhat Bengaluru Mahanagara Palike (BBMP), are anticipating good days, with the 14th Finance Commission (FC) promising Rs 4,600 crore to their kitty by 2020. Experts, however, are not cheering yet as chief minister Siddaramaiah's government, they believe, has not shown any signs of parting with greater financial powers to local bodies, especially Bengaluru's.
The 14th FC, whose recommendation of devolving 42 per cent of central funds was accepted by Prime Minister Narendra Modi, has put the onus of distributing grants to urban local bodies on the state government.

Bengaluru and the cash-strapped BBMP have much to gain from the 14th FC recommendations. "Whether it actually capitalises on this opportunity depends on two key factors ­ Karnataka government's willingness to give more financial powers to the BBMP , and the BBMP's ability and intent to significantly increase own revenues and professionally man age its finances," says Srikanth Viswanathan from Janaagraha Centre for Citizenship and Democracy .

BBMP , which is responsible for the upkeep of Bengaluru's civic infrastruc ture, manages to generate revenues of about Rs 3,000 crore, of which about Rs 2,300 crore comes from property tax, its only major source of rev enue. "Most of our revenue goes towards sala ries. We have to find other avenues of revenue through gover nment support," BBMP Commissioner M Lakshminarayana said.

While acknowledging the importance of de volving these funds to the BBMP for Bengaluru's development, city in-charge minister Ramalinga Reddy came up with a rider. "It really depends," he said, "On how we can make a clear demarcation of who gets how much. It has to benefit all corporations."

TR Raghunandan, an advisor with New Delhi-based Centre for Policy Research, pointed out that the state government is yet to appoint the 4th Kar nataka Finance Commission, which has to come out with a formula to distribute grants to urban local bodies. "The BBMP's expectation by way of devolution has not been met for years," he said.

"Karnataka's population will soon be 50 per cent urban, of which 76 per cent will be concentrated in Hosur to Hassan, Mysore to Davanagere with Bengaluru in the centre, and Mangaluru to Karwar. Fast urbanisation needs a lot of investments," Raghunandan, a former IAS officer, said.

Karnataka's projected revenue between 2015-2020 is Rs 4,60,267 crore against an expenditure of Rs 7,87,781 crore. "The Centre gets about Rs 1.75 lakh crore from Karnataka and 60 per cent of this comes from Bengaluru. The devolution of funds could also mean that states may be asked to implement Centrally-funded schemes on their own," said Reddy, who is also the transport minister.

Even if Bengaluru stands to get Rs 2,000 crore as a result of devolution, the BBMP should not be given these funds directly, says Siddaiah, a retired bureaucrat who headed the BBMP and the Bangalore Development Authority . "In the backdrop of our experience of leakage, I don't recommend trickle down of funds to local bodies directly . A special purpose vehicle (SPV) comprising experts should execute infrastructure projects," he said.