Kerala State Finance Commission seeks suggestions to improve governance, finances of local bodies

The 7th State Finance Commission is seeking the public’s views on a range of topics related to the governance and finances of local bodies in Kerala, including the potential of capital market borrowings in funding their development projects, expanding their revenue base and efficient disaster mitigation at the local level.

The 7th commission, constituted last year with former State Planning Board member K.N. Harilal as its chairman, is tasked with studying the fiscal position of rural and urban local bodies in Kerala and recommending measures to strengthen their finances.

Questionnaire

In a detailed questionnaire, the commission has sought suggestions from the public on possible new sources of revenue for panchayats, municipalities and Corporations. The public’s opinion has also been sought on raising capital/loans from the market for funding local-level development projects.

Enhancing the resource raising capacity of local governments through tax and non-tax revenues has an important place in the terms of reference (ToR) of the 7th commission. The panel, among other things, is also required to propose “frameworks for local governments to raise resources from financial institutions and markets and by employing other means such as land pooling and public private participation.”

Budget proposal

The 2025-26 State Budget too contained a proposal to enable local bodies to raise ₹1,000 crore through “municipal bonds, green bonds and pooled municipal bonds.” This money would be used to construct IT parks, commercial centres, roads, and implement waste management and water supply schemes. In May this year, the Greater Chennai Corporation had made news when it listed municipal bonds in the National Stock Exchange to raise funds for projects.

Among other things, the commission has also sought “constructive suggestions” from the public regarding the planning and implementation of disaster-mitigation measures. The commission’s ToR requires it to recommend steps that “enable local governments to contribute effectively to disaster management.”

Improving administration

The commission is taking suggestions regarding measures for improving administration in local bodies, cutting down their expenses, efficient deployment of resources and improving public services. Feedback is also being taken on the current deployment of the general purpose fund and the maintenance funds, the development fund, the Scheduled Castes and Scheduled Tribes subplans, projects that can be undertaken in collaboration with other local bodies and government departments, and the care of the elderly and bedridden patients.

The State Finance Commissions are constituted by the State government under clause 1 of Article 243 (I) and (Y) of the Indian Constitution alongside relevant sections of the Kerala Panchayat Raj Act and the Kerala Municipalities Act to assess the financial position of rural and urban local bodies and make recommendations to the Governor.

The questionnaire can be accessed on the commission’s website https://www.sfc.kerala.gov.in/ and the Finance department’s website https://finance.kerala.gov.in/

Published - June 08, 2025 07:53 pm IST