THIRUVANANTHAPURAM: The conditions of Centrally sponsored schemes are against the spirit of democratic decentralisation. Such schemes should not be used for micro-managing local self-Government institutions, Finance Minister T.M. Thomas Isaac has said.

Presenting a paper on `Fiscal devolution to local self-Governments and the finance commissions' at a national seminar on `Democracy, decentralisation and participatory development' organised by the Department of Politics of the University of Kerala here on Tuesday, Dr. Isaac said most of the conditions were unacceptable on social and economic grounds.

Such schemes should not encroach upon the fiscal autonomy of the State Governments. "VAT has already taken away most of the discretionary taxation powers. A specification of the Jawaharlal Nehru National Urban Renewable Mission (JNNURM) that stamp duty must be reduced to 5 per cent within seven years would end up with the State incurring a loss of Rs.7,000 crore. That would be higher than the Central assistance under the scheme," Mr. Isaac said.

"The loss can be minimised by introducing a fair value system for various standard types of land. It is inappropriate for the Planning Commission to fix social targets for the States when schemes like JNNURM impose conditions," he added.

One of the weaknesses of decentralisation in the State during the past one decade was the failure to integrate Centrally-sponsored schemes with the local Plans. Their norms and procedures vary from decentralised planning process. Hence, integration was limited to formal inclusion in the Plan document. Such schemes also result in parallel structures and procedures, which undermine the participatory planning process. The horizontal linkages of decentralisation are being disrupted by the vertical interventions of the missions that are being set up, he said.

Fiscal crisis

The fiscal crisis and the Fiscal Responsibility and Budgetary Management Act are constraining the State Governments from devolving greater funds to LSGIs, he said.

The Union Finance Commissions had failed to recommend measures for augmenting the consolidated fund of the State Governments to supplement the resources of LSGIs.

The fiscal devolution to LSGIs cannot be isolated from the restructuring of Centre-State fiscal relations, he said.

Law Minister M. Vijayakumar, who inaugurated the seminar, said the Government plans to strengthen LSGIs and fix the priorities for development. Development of IT and biotechnology should not be at the expense of traditional industries. There should be an attempt to create a new development and work culture, he said.

Kerala University Vice-Chancellor M.K. Ramchandran Nair presided. A book on `A decade of decentralisation in Kerala: Experience and lessons' edited by M.A. Oommen was released at the seminar.

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