Govt. sorting out urban-rural mismatch in fund allocation: Satheesan
The Kerala government is challenging the 16th Union Finance Commission's fund allocation, citing a mismatch caused by the misclassification of rural panchayats as urban census towns. This error has significantly reduced the share of funds available for rural local bodies.
Why it matters
Fiscal federalism and accurate demographic classification are vital for ensuring equitable distribution of resources between urban and rural sectors.
The Kerala government is in the process of sorting out an urban-rural mismatch in fund allocation recommended by the 16th Union Finance Commission (UFC) which has left rural local governments in Kerala with disproportionately lesser funds, Chief Minister V.D. Satheesan has said.
The State government has contacted the Centre to point out a flaw in the 16th Finance Commission’s definition of rural and urban areas in Kerala which has led to this issue, Mr. Satheesan said on Wednesday after the weekly Cabinet meeting. The 16th Union Finance Commission, headed by Arvind Panagariya, had assessed the Census Towns in the State as urban areas, whereas, in reality, many of them were panchayats.
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