Decentralization process in Kerala getting scuttled ? Abysmal decline in expenditure by Local Self Governments in Kerala

April 17, 2014 | By | Add a Comment

The expenditure of more than 1000 local self governments (LSGs) in Kerala has touched rock bottom levels. In 2012-13, Out of total allocation of funds to the tune of Rs. 8896.7 crores to the LSGs from different sources including the State Government /Central Government and other agencies, only 47.3 percent (rs.4066.87 crores) was expended. This means that Rs. 4829.87 crores of funds ought to have been expended for implementing development schemes at the grass root level got lapsed in 2012-13.

In 2011-12, the expenditure at the LSGs was 50.5 percent (out of a fund allocation of Rs. 8299.53 crores, Rs. 4190.31 crores was expended). It may be recalled that around a quarter of the state plan outlay is being devolved to the more than thousand LSG s in Kerala. In 2012-13, out of the total state plan outlay of 14,000.10 crores, 27.6 percent (Rs.3870.3 crores) was devolved to the LSGs. It must be noted that proportion of funds being devolved to LSGs have been continuously coming down over the years. It was in 1997-98 that the process of developing a major proportion of funds of the state plan outlay, in the form of grant in aid was initiated. In that year, out of the total state plan outlay of Rs.2855.0 crores, 26.23 percent  (Rs.749.00 crores) was devolved to the LSGs. It increased to 33.33 percent in 2002-03 (Rs.1342 crores out of Rs. 4026.00) and then started declining continuously to reach 21.1 percent (Rs 2325 crores out of Rs. 11.030.00 of state plan outlay) by 2011-12. But in 2012-13, there has been a sharp increase in proportion of funds devolved to the LSGs (Rs.3870.3 crores out of a total plan out lay of Rs 14,010.00 crores) and further declined to 23.5 percent in 2013-14. (Refer table below)


Devolution of plan fund to the LSGs (1997-98 to 2013-14)

                                                                                      (. Crores)

    . Crores
Years State Plan outlay Grant in aid %
1997-98 2855.00 749.00 26.23
1999-00 3250.00 1020.00 31.38
2002-03 4026.00 1342.00 33.33
2005-06 5369.81 1375.00 25.6
2006-07 6680.62 1400.00 20.96
2011-12 11030.00 2325.00 21.1
2012-13 14010.00 3870.3 27.6
2013-14 17000 4000 23.5

Source : Economic Review (various issues)


Out of the different tiers of LSG’s, it is at the level of block panchayats that there has been sharpest decline in expenditure. Across 2011-12 and 2012-13 the expenditure the block panchayaths declined by 17.4 percent (from 58.8 percent to 41.4 percent).The decline at the level of district panchayaths have been 12.9 percent (53.6 percent in 2011-12 to 40.7 percent in 2012-13) and Municipalities have been from 53.6 percents to 40.7 percent to the tune of 8.7 percent (from 51.1 percent to 42.4 percent).

Expenditure was the lowest at the level of the Corporations. Expenditure at the corporations was abysmal. In both years, expenditure at the corporations remained at extremely low levels of 35.7 percent in 2011-12 and 35.8 percent in 2012-13. It may be recalled that funds have been devolved to the LSGs in three categories, viz General, SCP (Special Component Plan) and the TSP (Tribal Sub Plan). A major proportion of funds are devolved in the general category. And it is in this cvategory that there has been a sharp drop in the expenditure of different categories of LSGs. For example, across 2011-12 and 2012-13, at the grama panchayats level, expenditure of funds in the general category declined from 83.53 percent to 67.77 percent, a decline of 15.76 percent. It was at the Municipalities level that the decline in expenditure has been equally sharp. Across the above two years expenditure at the Municipalities declined from 78.38 percent to 62.55 percent, a decline of 15.83 percent. At the District Panchayaths level, the decline has been 10.10 percent (from 75.83 percent to 65.74 percent). On the other hand, expenditure at the Corporations showed a sharp increase from 61.76 percent in 2011-12 to 77.95 percent in 2012-13. Expenditure at the block panchayaths level also increased by 4.53 percent from 80.24 percent to 84.77 percent. . If such a negative trend continues in future years also, the decentralization process of the state plan, which was initiated in the latter half of the nineties, would stand scuttled.

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