The Centre disbursed the first two installments of Rs 48 crore in 1996-97 and 1997-98. The money has not reached the panchayats and, in all probability, will go back to the Centre.

The grants followed the 10th Gujarat Finance Commission's recommendations to augment and supplement the resources of the three-tier Panchayati Raj in the districts, talukas and villages as well as the municipalities to help them take up development projects during 1996-2000.

The GFC, headed by Suman Patel, had submitted the report to then Governor Krishna Pal Singh in September, 1997, recommending "the measures needed to improve the financial position of panchayats/municipalities" and the principles of distribution of sharable taxes, duties, tolls and fees among the local bodies.

"The Assembly had passed the report but it is yet to be implemented. The delay will, in all probability, result in the lapse of the grant, for a new State Finance Commission is due, " contends Patel, adding, "the new commission may find it difficult to review the position of the panchayats/municipalities if the report is not implemented."

"The amount has been lying in the treasury. If not disbursed, the Centre will take it back. Under the rules, a State has to send a utilisation certificate to the Centre every year,'' says the former GFC chief, pointing out other States have started disbursing the grants by implementing reports of their finance commissions.

The GFC was constituted for a five-year term under Articles 243 (I) and 243 (Y) of the Constitution in September 1994, and the State Government is constitutionally bound to implement its report. After the first chairman Jashwant Mehta resigned in March, 1995, the GFC remained headless for some 17 months till a retired IAS officer took over as the acting chairman in August, 1996. After the RJP assumed power, Suman Patel was made the chairman in February, 1997, but removed in July, 1998 by the BJP Government. Once again, a retired IAS officer is the acting chairman.

Besides steps to improve the financial position of the panchayats and the municipalities, the GFC also recommended administrative reforms to check political interference and governmentisation of their functioning.

It recommended reintroduction of collection of revenue on the agricultural land and its distribution among the panchayats, and doing away with slicing of 35 per cent of the revenue for salaries to talatis. It also suggested that the power to village panchayats to impose surcharge on land revenue should be transferred to district panchayats.

The GFC favoured powers to the panchayats to levy 5 to 10 per cent surcharge on sales and other local taxes, collect pilgrimage tax besides allocation of half the professional tax to the local bodies.

It also recommended offsetting their losses following exemption to the agriculture produce marketing committees from octroi by sharing the turnover tax collected from the APMCs to ensure about Rs 51 crore to the panchayats a year.

The GFC also favoured empowering the panchayats to collect turnover tax in the industrial notified areas where octroi is not imposed, reimposition of entertainment tax on cable TV and dish antenna in the rural areas and half its allocation (about Rs 35 crore a year) to the village panchayats.