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Allowing section bodies to research the imaginable successful ‘municipal bonds,’ devolution of 29% of the State Plan to them successful 2026-27 and a hike successful the honorarium of elected representatives of section bodies are among the large recommendations and suggestions made by the State Finance Commission (SFC) successful its archetypal report.
The study was tabled successful the Assembly on with the Budget documents connected Thursday (January 29, 2026). Presenting the Budget, Finance Minister K.N. Balagopal had stated that astir each the SFC recommendations connected devolution of money person been accepted by the government.
In his Budget speech, the Finance Minister had announced that municipalities and Corporations would beryllium permitted to contented municipal bonds for implementing large projects that are “profitable arsenic good arsenic beneficial to the public.” Grama panchayats volition beryllium permitted to avail themselves of loans with the aforesaid nonsubjective taxable to fixed criteria, helium had said.
For assets mobilisation
In its archetypal study which is applicable to the 2026-27 fiscal, the 7th SFC headed by K.N. Harilal has listed municipal bonds arsenic a means for ‘supplementary/external assets mobilisation’ by section bodies. The SFC has recommended the instauration of a Board of Finance for Local Governments, truthful that section bodies are “empowered successful each imaginable ways to realise the gross potential.” Among different things, the committee should besides facilitate contented of municipal bonds and borrowings by eligible section bodies, the study notes.
On the municipal bonds, the committee observed that it does not urge borrowings arsenic a means of financing improvement oregon payment projects successful general, fixed the enhanced availability of improvement funds. “The model of bonds oregon borrowings whitethorn beryllium opened to the section governments connected a project-to-project ground ensuring that the selected projects make tenable instrumentality for gathering the repayment obligations,” it said.
Members' honorarium
The State authorities has besides accepted successful rule the proposal of the SFC to summation the honorarium of elected representatives successful section bodies. The committee had wanted the honorarium of the main office-bearers specified arsenic Mayors and territory panchayat presidents to beryllium doubled; that of lasting committee chairpersons enhanced by 75% and councillors/members enhanced by 50%.
In its archetypal report, the committee has recommended that 29% of the State Plan beryllium devolved to section bodies successful 2026-27. This should beryllium exclusive of the outlay for the Kerala Solid Waste Management Project (KSWMP). The 7th SFC besides endorsed the proposition of the 6th SFC that the allocation beryllium raised by 0.5% of the State Plan each twelvemonth until it reaches 30% of the yearly program of the State government.
