Third State Finance Commission Report Preface Though the Government notification constituting the Third SFC was issued on 22nd February, 2006, due to inadequate arrangements and necessary staff deployment the Third SFC was in reality able to function effectively only from the 8th of September, 2006. The intervening period was, however, utilized for working out the proforma for reports to be collected from the PRIs and ULBs and sending the same to them and also for informal discussions with institutions and persons working with LSG matters. Furthermore, the Third SFC’s functioning was interrupted for almost three months due to the Panchayat elections which were held in two stages in the month of May, 2008. Given that State Finance Commissions are very largely dependent on support and feed back from the different departments of the State Government, for obvious reasons its functioning was interrupted till the completion of PRI elections in the State. In the original notification, the Commission consisted of four Members, one of whom was on a part time basis working also as the Secretary. Another Member and the full time Secretary joined the Commission in January, 2007. The Commission has put in its own views and suggestions on these matters for the consideration of the State Government so as to ensure the smooth functioning of future SFCs The methodology adopted by the Commission included collection of information and particulars from the LSG bodies, inviting suggestions and comments from the Sabhadipatis of Zilla Parishads (ZPs), District Magistrates, Mayors of Corporations and Chairpersons of a few select Municipalities. To facilitate feedback each group was sent a Questionnaire. The Commission also approached Members of Parliament (both Houses) and Members of the State Legislative Assembly for their valuable opinions and suggestions. The responses were, however, not entirely satisfactory. The Commission held meetings with LSG representatives and members of District Planning Committees during district visits. Discussions were also held with the Ministers-in-charge and officials of Panchayat & Rural Development (P&RD) Department, Municipal Affairs (MA) Department and Finance Department from whom memoranda were invited. Meetings were also held with other State Government departments dealing with the subjects / functions included in the Activity Mapping worked out by the P&RD Department. Other interactions included eminent and experienced persons working in the field of Local Self Government. The Commission was also able to discuss issues pertaining to Local Self Government with the Hon’ble Chief Minister. The Commission had faced considerable difficulties in the collection of information from LSG units, but somehow managed to elicit the information from different sources Third State Finance Commission Report and with the help of such information and materials, the Commission has, however, tried to cover the subjects as best as was possible. I am grateful to the Hon’ble Chief Minister, Finance Minister, Minister-in-Charge, P& RD Department and Minister-in-Charge, MA Department for their valuable inputs and guidance. I am extremely thankful to the Members of the Commission – Prof. Nripendra Nath Bandyopadhyaya, Shri Bikash Kanti Majumdar, Shri Bijan Kumar Kundu and Dr. Bed Prakash Syam Roy. Prof. Bandyopadhyaya despite his advanced age, has guided the Commission in its work drawing on his vast experience in the field which included his experience as a Member of the earlier two Commissions. Shri Bikash Kanti Majumdar, a retired IAS Officer, having wide experience of working in the field and also in the Finance Department helped the Commission immensely. Shri Bijan Kumar Kundu, a retired IAS Officer, though with us only for a short period before he resigned on personal grounds, provided considerable help to the Commission’s work. Dr. Bed Prakash Syam Roy, a retired IAS Officer, in spite of his busy assignment in the Development and Planning Department, participated in the important deliberations and provided valuable input with his formidable experience. Shri Asis Kumar Chakraborty, an Officer from the West Bengal Civil Service, functioned as Secretary of the Commission and participated actively in the work of the Commission over and above ensuring a smooth functioning of the office. The office staff including the Personal Assistants helped the Commission by their ungrudging hard work. I am particularly grateful to Shri Rathnadeep De for his continuous and expert assistance in providing valuable inputs and also in preparing the Report. DRS-TEC., a computer organization has helped the Commission in collating the data inputs and generating the required information from the same. It is unfortunate that Dr. Bed Prakash Syam Roy indicated only at the time of signing the recommendations that he had prepared a separate report of his own. He further demanded that his report should be made an enclosure to the main Report of the Commission. After discussion in the Commission it was decided that the Commission could not accede to his request. In fact, all the points raised by him from time to time were duly discussed and in most cases, accommodated after discussions in the Commission. The report prepared by him separately cannot, therefore, be enclosed as a part of the Commission’s Report. I do hope, the Report of the Commission will be helpful in improving the functioning of the LSGs and moving a step forward towards self-governance. (Sukhbilas Barma) Chairman, Third State Finance Commission Third State Finance Commission Report Acknowledgements The Commission is grateful to the following individuals and organisations for the help and co-operation they have extended to the Commission in course of preparation of its report and publication: 1. Sri Buddhadeb Bhattacharjee, Chief Minister, West Bengal. 2. Dr. Asim Kumar Dasgupta, Minister-in-Charge, Finance & Excise, West Bengal 3. Dr. Surya Kanta Mishra, Minister-in-Charge, Panchayats & Rural Development, West Bengal 4. Sri Asok Bhattacharya, Minister-in-Charge, Municipal Affairs and Urban Development, West Bengal 5. Sri Bankim Chandra Ghosh, Minister of State, Panchayats & Rural Development, West Bengal 6. Professor Dhiresh Bhattacharya, Professor Santosh Bhattacharya, Professor Deb Kumar Bose, Professor Nikhilesh Bhattacharya, Shri Debabrata Bandyopadhyay Professor Sachinandan Sau, Professor Ratan Khasnabish, Professor Prabhat Dutta, Professor Goutam Majumdar, Professor Uday Bhanu Bhattacharya, Professor Biswajit Chatterjee, Professor Pranab Das, Dr. Sachchidananda Datta Roy, , Ms. Swati Bhattacharjee, Shri Pallab Kumar Goswami 7. All Zilla Parishads and Siliguri Mahakuma Parishad 8. Darjeeling Gorkha Hill Council 9. Panchayat Samitis and Gram Panchayats 10. Municipal Corporations, Municipalities and Notified Area Authorities 11. District Administration of all Districts 12. State Planning Board, West Bengal 13. Finance Department, P&RD Department, MA Department, Health & FW Department, L&LR Department, ARD Department, Women Development & Social Welfare Department, PHE Department, School Education Department, Mass Education Extension Department, Micro Enterprises Department, I&CA Department, Fisheries Department, BCW Department, WI&D Department, Minorities Affairs Department, Sunderban Affairs Department, Agriculture Department and Food & Supplies Department. 14. State Institute of Panchayat & Rural Development, West Bengal 15. Change Management Unit, ILGUS 16. Directorate of Local Bodies, West Bengal 17. State Urban Development Agency 18. Bureau of Applied Economics and Statistics, West Bengal 19. Examiner Of Local Accounts, West Bengal 20. Institute Of Social Sciences, Kolkata 21. Lok Kalyan Parishad 22. Pratichi Trust 23. Swanirvar Third State Finance Commission Report TABLE OF CONTENTS Page Number CHAPTER I 1 INTRODUCTION ...............................................................................................................1 CHAPTER II 10 REVIEWS .......................................................................................................................10 CHAPTER III 19 PANCHAYATI RAJ INSTITUTIONS ................................................................................19 Devolution of Functions...................................................................................... 19 Financial position of the Panchayats.................................................................. 27 Functionaries ...................................................................................................... 37 CHAPTER IV 51 URBAN LOCAL BODIES .................................................................................................51 Review of First and Second SFC Recommendations for ULBs........................... 51 Devolution of Functions...................................................................................... 54 Municipal Finance .............................................................................................. 55 Staff Position and Pension .................................................................................. 68 Miscellaneous Issues........................................................................................... 69 CHAPTER V 98 STATE GOVERNMENT RESOURCES...............................................................................98 Review ................................................................................................................. 98 Commission’s Assessment................................................................................