CM Mann seeks stronger finances for Punjab local bodies, asks panel to frame devolution roadmap

Punjab Chief Minister Bhagwant Mann Tuesday called for a stronger financial framework for panchayats and urban local bodies, asking the newly constituted Seventh State Finance Commission to recommend measures for sustainable fiscal devolution and improve the ability of grassroots institutions to fund essential services and infrastructure.

Chairing a meeting with the commission, Mann said it had been tasked with making specific recommendations on the distribution of taxes, duties, road tax and other resources between the state government, panchayats and municipalities. He said strengthening the finances of local governments was necessary to ensure that they could effectively discharge their growing responsibilities.

Focus on fiscal devolution

Describing the State Finance Commission as an important constitutional mechanism for fiscal decentralisation, Mann said Panchayati Raj Institutions and municipalities needed adequate financial capacity to perform the functions assigned to them.

“The State Finance Commission has an important responsibility to examine the financial position of Panchayati Raj Institutions and Municipalities and recommend a framework for strengthening fiscal devolution and financial sustainability of local governments,” Mann said.

He called for a “transparent, equitable and sustainable” mechanism for distributing resources, taking into account the expanding role of rural and urban local bodies in providing civic services and developing local infrastructure.

The commission has been asked to assess the revenue potential, expenditure responsibilities and financial requirements of local bodies and suggest measures to strengthen their fiscal capacity. It will also recommend steps to reduce unproductive revenue expenditure and improve administrative and technical support for the efficient use of capital resources.

The exercise comes at a time when Punjab is seeking to consolidate its finances. The state’s 2026-27 Budget estimated a revenue deficit of Rs 21,955 crore, or 2.2 per cent of Gross State Domestic Product, while proposing a substantial increase in capital outlay. The government has budgeted Rs 18,381 crore in capital outlay for the year, up 76 per cent from the revised estimate for 2025-26.

Panel headed by Siva Prasad

The Seventh State Finance Commission has been constituted under Section 3(1) of the Punjab Finance Commission for Panchayats and Municipalities Act, 1994, and is headed by former Punjab Additional Chief Secretary K Siva Prasad.

Shoikat Roy has been appointed as an expert member, while the administrative secretaries of the Rural Development and Panchayats Department and the Local Government Department will serve as ex-officio members. The Special Secretary, Finance, will be the commission’s ex-officio member-secretary.

Mann said the commission should make practical and forward-looking recommendations that would help local institutions raise and use resources more efficiently while strengthening their ability to provide public services.

The commission will submit its report by September 30, 2027. Its recommendations will cover a five-year period beginning April 1, 2026.