The 5th State Finance Commission (SFC) has recommended to the State government that all electrical installations of gram panchayats (GPs) should be metered and the present arrears of power consumption charges be settled with electricity supply companies (ESCOMs) through the intervention of the government.
The 5th SFC headed by former MP C. Narayanaswamy prepared its report for the year 2024-25 and submitted it to Governor Thawaarchand Gehlot and it said that “unreasonable” power consumption billing by ESCOMs for street lighting, drinking water supply systems, and panchayat buildings in the absence of metered units, by levying flat rates for defunct borewells and unmetered streetlights, had resulted in huge arrears of ₹8,323.25 crore as on December 2023.
“This is happening despite payment through Escrow accounts out of SFC grants of the GPs,” it said. During 2015, the arrears of GPs of ₹2,960.23 crore as principal and ₹806.59 crore as penalty/interest, totalling ₹3,766.82 crore, were settled through securitisation by the government.
Through the intervention of the government, the SFC report said the huge amount of interest/penalty could be avoided and the same could be used for development works. “Whatever there are conflicting claims between the ESCOMs and the GPs, the GPs could be advised to avoid such mounting bills by reconciliation through joint verification of bills by EO of TP, AEE of ESCOM, and president and PDO of GP periodically,” the report suggested.
The report, which was tabled in the Legislative Assembly on Friday, recommended sharing of resources at the ratio of 51:49 between State and local bodies for the year 2024-25.
The SFC’s role is to examine the financial situation of the PRIs and framing a formula for division of tax revenues such as taxes, duties, fines and toll fees between a state and its PRIs and ULBs. The commission noted a large number of vacant posts in PRIs and recommended that “there is urgent need to fill up essential vacancies at the earliest.”
The own source revenue of GPs from 2016-17 to 2022-23 has increased from ₹306 crore to ₹771 crore and the collection was 90%. However, the outstanding dues was ₹1696 crore in 2022-23. The collection of arrears was poor, it said, and recommended that GP should maintain the same tempo in the collection of arrears too.
Noting the ineffective functioning of District Planning Committees, it said that DPCs be made functional and effective to consolidate the plans prepared by panchayats and the municipalities in the district and to prepare a draft development plan for the district as a whole as mandated in the constitution.
