Manual for Integrated District Planning - National Institute of Rural ...

Manual for Integrated District Planning
department, which in turn, may or may not make specific allocations to the local
governments.
5.4.2 In this scenario, it becomes absolutely essential that some kind of budget
separation is made so that local governments have an idea of the budget which their
plan must match. This can be achieved through a series of steps, commencing with
the creation of a Local Government Sector Budget Window in the budget of state
governments and ending with each local government getting a clear communication
of its budget.
5.4.3 The broad separation of the budget can be met in two ways: (i) each department
could create separate line items in their budgets for local governments, earmarking
allocations pertaining to responsibilities devolved and schemes entrusted to them.
Departments can thus directly send their funds to local governments in accordance
with these earmarked budget line items. Alternatively, (ii) all such earmarked funds
pertaining to different departments could be consolidated by the Finance Departments
and sent to local governments in regular installments. The approach followed in three
states is given in Box 12.
Box 12
Karnataka
All schemes pertaining to Panchayats are transferred to a ‘District Sector’, which is a separate part of
the budget document. Releases from the District Sector to each district are further elaborated in a ‘link
document’, which contains the district-wise break up of each line item (both plan and non plan) in the
District Sector. Thus each Zila Parishad knows what its annual budget is and the basket of schemes
and funding streams that it is supposed to implement, both plan and non-plan. However, there is no
universally adopted mechanism to further break up the allocations in the link book between the Zila
Parishads, Taluk Panchayats and Gram Panchayats, though some districts have come up with the concept
of a ‘district link book’, which breaks up this information further down to the level of each Panchayat.
Kerala
Kerala is the only state where the overall budget is disaggregated to the level of each local government.
Appendix-IV of the State Budget gives details of funds allocated to each local self-government institution,
under different heads of accounts. These are classified under three main categories of funds.
(a) Untied plan allocation, which is about 30 to 40 percent of the state’s plan allocation.
(b) Allocation for different subjects transferred to local self-government institutions, which includes plan
and non-plan funds that are tied to specific schemes.
(c) Maintenance grant and general purpose grant.
Thus at one glance, each Panchayat can easily find out its budget directly from the State Budget.
West Bengal
Work of separation of the budget for Panchayats is in progress in West Bengal. General Orders on Activity
Maps were issued in the state in January 2007, following which 10 departments issued matching internal
orders. Of these, four departments have opened a separate head of account within their individual
budgets to transfer funds to the three levels of Panchayats for execution of the functions and activities
transferred by these departments to the Panchayats through activity mapping.
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