LSG and Decentralised Planning

XIIth Plan Unique Features

Major Thrust in Different Plan Periods

The process of decentralization in Kerala was launched during IX plan period as ‘People’s Plan Campaign’ with a view to emphasize the concept of participatory planning that was new to the people, people’s representatives and officials in local governments. Under the X Plan, decentralization programme in Kerala was restructured and named as ‘Kerala Development Plan’ (KDP). During the XI Plan, the entire process was revamped by giving stress to the concept people’s Planning’, focusing on the completion of the process of institutionalization of decentralization. The XII plan approach envisaged some concrete steps to strengthen the planning process with the use of information technology. The XIII Five Year Plan emphasizes debureaucratization of the planning process so that there is enough room for greater and more meaningful participation of the people at grass root level. During the XIII plan there will be efforts to improve the quality of local government projects by ensuring participation of experts, research institutions, educational institutions etc. in the planning process

Plan Allocation to Local Governments

A considerable extent of fiscal decentralisation is the most important element of Kerala’s decentralization process, which has enabled the Local Governments to receive resources from the State’s Plan allocation for implementing own schemes as well as transferred schemes. From 1996 through 2016, roughly 25 per cent of the state’s investible resources have been devolved to local governments. The fund provided from the State plan to Local Governments is in the form of untied plan grant for planning and implementing projects for local development. Local Governments have the freedom in formulating and implementing projects after deciding their priority subject to detailed plan guidelines.

At present, there are 1200 local governments in Kerala, which includes 941 Grama Panchayats, 152 Block Panchayats, 14 District Panchayats, 87 Municipalities and 6 Municipal Corporations. The allocation of development fund to LGs is being done under three categories - General Sector, Scheduled Caste Sub Plan (SCSP) and Tribal Sub Plan (TSP). The outlay for each category during 2015-16 plan period was fixed on the basis of the recommendations of the IV State Finance Commission (SFC). The Commission recommended that at least 25 per cent of the likely plan size of the state should be devolved to LGs for development purpose. The fund would be inclusive of the devolution from the XIIIth Central Finance Commission and the amount flowing to LGs from the proposed World Bank supported project namely, ‘Kerala Local Government Service Delivery Project’. The plan outlay for local self governments during 2016-17 is based on incremental criteria of IV SFC as the approval of V SFC is under consideration of government. The allocation to Local Governments during the last five years is given in Table 8.1

Table 8.1
Award of Development Fund for LGs (2012-17), in crore

 Year Budgetallocation Percentage toTotal Plan Outlay*
2012-13 3228.00 23
2013-14 4000.00 24
2014-15 4700 .00 24
2015-16 4800 .00 24
2016-17 5500.00 23

*Inclusive of KSEB’s contribution
Source: Appendix IV 2015-16 and 2016-17

Unique features of LSGI plan during the XII Five Year Plan

During the beginning of twelfth five year plan period some conscious efforts have been made to give more flexibility and freedom to the local governments in plan formulation. Accordingly, some changes have been made in the plan guidelines, mainly in sectoral ceilings and project appraisal. Up to 2015-16 there was no mandatory minimum or maximum ceiling in productive or service sector. However, in infrastructure sector the mandatory ceiling fixed is not more than 45 per cent to Grama Panchayats and Block Panchayats, 55 per cent to Municipalities and Corporations and 50 per cent to District Panchayats in general sector plan outlay. In addition to this, 10 per cent of the development fund must be earmarked for Women Component Plan and 5 per cent to children, old age, differently abled, palliative care and other vulnerable groups. From 2016-17 onwards 20 per cent allocation for productive sector and 10 per cent allocation for solid waste management is made mandatory .

Technical Advisory Groups (TAG) for clearances of projects were dispensed with. Instead of vetting the projects by the TAG concerned, it is verified and certified by the implementing officer and then furnished to the officer of the same department at the higher level for getting it appraised and approved. A Project Formulation Committee (PFC) can be constituted, if required, for providing technical expertise to prepare and approve the projects.

It is also important to note that now under SCSP/TSP the construction of roads is allowed only within SC/ST habitat and width of the road in tribal colonies has been enhanced to a maximum of 3 meters. Introduction of financial support for SCs/STs in getting employment abroad, assistance to meritorious students seeking admission in national and international institutions are some of the landmarks in the utilization of SCSP/TSP funds. Introduction of online approval of projects through Sulekha software by IKM is considered as a major shift from the traditional approach adopted by the earlier system. The application of Sulekha software includes plan formulation, appraisal, approval, monitoring, revision processes and expenditure tracking of the plan projects of local governments.

Special grama sabhas, Ayal sabhas and Seva grams- grama kendrams are another important change occurred during the review period. In order to strengthen grama/ward sabha, ayal sabhas are constituted in each ward with 50- 100 families. Special grama sabha are convened for the families of differently abled and mentally challenged persons. Ayal Sabhas and Seva Gram-Gramakendram thus aim at getting improved people’s participation in planning and implementation.

Financing of Local Government plans

The plan allocation to LGs during 2015-16 was 4800 crore and total source wise outlay was 12523.37 crore. The total grants in aid including opening balance constitutes 6069.18 crore that is 48.46 per cent. The own contribution of LGs constitutes 8.52 per cent of the total plan size and the balance fund from other sources. The expenditure recorded in 2015-16 was 54.88 per cent, which showed a marginal increase by 3.4 per cent compared to last year’s expenditure of 51.49 per cent. Out of the total expenditure, the plan grant share is 65.01 per cent, own fund share 6.29 per cent, sponsored schemes together with externally aided source constitutes 3.29 per cent and the balance is from other sources. It may be noted that during 2015-16 considerable improvement was seen in plan grant utilization,that is 10.75 per cent over the previous year.

Source wise funding details and the respective percentage to total fund for 2014-15 and 2015-16 are given in Figure 8.1. Source/Sub-sector wise details of 2014-15 and 2015-16 are given inAppendix 8.1a) and Appendix 8.1b.

Figure 8.1
Sources of Financing LGs Plan 2015-16, in per cent

Source: Information Kerala Mission, 2015

Figure 8.2
Expenditure share of different sources of funds in 2015 -16, in per cent

*Others include state sponsored, centrally sponsored, loan from co-operatives, externally aided, voluntary contribution, beneficiary contribution and others (items excluding grant in aid and own fund).