Fourth Manipur State Finance Commission (2021–2026)
1. Background
The 4th Manipur State Finance Commission (4th MSFC), chaired by Shri R.R. Rashmi, IAS (Retd.), was constituted under the Manipur State Finance Commission Act, 1996 to recommend the sharing of state revenues between the Government of Manipur and Local Bodies (LBs) — namely:
Panchayati Raj Institutions (PRIs)
Urban Local Bodies (ULBs)
Autonomous District Councils (ADCs)
Mandate:
Recommend distribution of net tax proceeds between the State and Local Bodies.
Suggest tax assignments, grant-in-aid norms, and measures to strengthen local finances.
Ensure equity in devolution and promote transparency, efficiency, and performance.
2. Rationale for Recommendations
Severe Resource Constraints: Local bodies are heavily dependent on state grants for core services, including pension payments.
Infrastructure Gaps: Deficiencies in office buildings, waste management facilities, and public amenities.
Weak Revenue Mobilization: Limited capacity to collect taxes and user charges effectively.
Uneven Service Delivery: Disparities between urban and rural areas and among districts.
Need for Performance Incentives: Encourage better financial management and service outcomes.
3. Key Recommendations
A. Vertical Devolution
10% of the State’s own net tax revenue to be devolved to Local Bodies annually:
50% to PRIs
30% to ULBs
20% to ADCs
B. Horizontal Distribution (Within Each Category)
PRIs: 70% population, 15% area, 15% performance.
ULBs: 60% population, 20% area, 20% performance.
ADCs: 70% population, 20% area, 10% backwardness index.
C. Performance-Based Grants
Linked to:
Timely audited accounts submission
Growth in own-source revenue
Maintenance of public assets
Improved service delivery indicators
D. Assignment of Taxes
Full assignment to LBs: trade license fees, parking fees, markets/fairs fees, advertisement & hoarding fees.
Part assignment: property tax, profession tax.
E. Grants-in-Aid
Pension Grants: Earmarked funds for municipal pension liabilities.
Infrastructure Grants: Targeting sanitation, street lighting, water supply, waste management.
Special Purpose Grants: For eco-tourism, skill development, disaster preparedness.
F. Institutional Strengthening
Recruitment of essential staff in LBs.
Computerization of accounts, tax systems, and citizen services.
Maintenance of asset registers.
Enforcement of audit compliance and transparency norms.
G. Additional Measures
Promote Public-Private Partnerships (PPP) for solid waste and infrastructure.
Foster inter-local body cooperation for shared services.
Encourage eco-friendly initiatives: solar street lighting, rainwater harvesting, waste-to-energy projects.
4. Expected Outcomes
Enhanced Financial Autonomy: LBs will have predictable and adequate resources.
Improved Service Delivery: Better infrastructure, sanitation, and civic amenities.
Greater Accountability: Performance-linked grants and audit compliance.
Balanced Development: Addressing disparities across rural, urban, and hill areas.
Sustainable Revenue Growth: Strengthened capacity for own-source revenue collection.
5. Implementation Considerations
Annual review of devolution performance.
Strict timelines for accounting and audit compliance.
Capacity-building programs for LB staff.
Transparent public disclosure of grants received and utilised.