The chairman of the State Finance Commission demands authority, greater fiscal autonomy for local authorities

Local bodies should be given power, greater fiscal autonomy and resources, Tamil Nadu government-set up Seventh State Finance Commission (SSFC) chairman K. Allaudin said on Thursday.

“If we could achieve this decentralization, we will cease to be a mere constitutional promise and become a lived reality of Indian democracy,” he said.

Mr. Allaudin, in his presidential address at a national seminar on “Strengthening Governance and Finance of Local Bodies” organized by SSFC and Madras Institute of Development Studies in Chennai, said that no institution can exercise meaningful autonomy and perform its functions without adequate and predictable financial resources. Local governments continue to be heavily dependent on transfers from the Union and state governments, he said.

Gagandeep Singh Bedi, secretary, urban administration and water supply department, pointed out that the own sources of revenue (OSR) for rural local bodies in many states, through property and occupation taxes, rents and charges, among others, ranged between 1% to 8%. While property tax collection was about 1.1% of GDP in OECD countries, it was only 0.2% in India, he said, adding, “If we want our cities, villages to develop better, then we have to do something more. We also have to maybe pay more property tax, etc.”

On local body functions, Mr. Bedi also raised the issue of wives of elected women representatives in local bodies trying to informally take over their role despite 50% reservation of seats for women in local bodies in some states. “Although it is decreasing, I think we should strengthen the position of women elected representatives,” he said. Mr. Bedi called for GIS-based tax collection and focus on solid waste management, user charges, parking charges, among others, to increase revenue.

Dharmendra Pratap Yadav, Secretary Rural Development and Panchayat Raj Department referred to the state government’s initiative for rural empowerment, specifically through the Tamil Nadu Village Empowerment, Transformation and Rejuvenation Initiative (TN-VETRI). He also emphasized the importance of empowering rural local bodies to levy and collect taxes.

Calling for the autonomy of local bodies, Mr Yadav criticized the “bureaucratic environment”, pointing out that the bureaucracy is not accountable to the people. He was against over-reliance on bureaucracy and called for faith in models of self-government. Mr. Yadav also said that the rural development department has asked for an increase in devolution funds from 10% to 12%.

In his inaugural address, former Director of the National Institute of Public Finance and Policy M. Govinda Rao highlighted the issues surrounding decentralization and explained how to make the systems work successfully. Demanding clarification on the functions of local bodies, Mr. Rao explained the need for autonomy for local bodies in revenue generation. MIDS Director M. Suresh Babu, Joint Secretary in SSFC V. Anbazhagan also spoke.

Published – 18 Sep 2026 0:34 IST