After the enactment of the 73rd and 74th Constitutional Amendment Acts, the Governor of Assam in pursuance of the provision of Articles 243 I and 243 Y of the Constitution of India, read with Section 2(1) of the Assam Finance Commission (Miscellaneous Provision) Act, 1995 had constituted three SFCs which had submitted their reports and the fiscal 2010-11 is the terminal year covered by the award of the Third SFC.
The award period of the Fourth SFC is 2011-12 to 2015-16. The Commission has submitted an Preliminary Report covering the first year 2011-12. The preliminary report recommended global sharing of 14 percent of the net proceeds of all taxes and duties collected by the State Government during 2011-12 with the Panchayats and municipalities at all levels. Apart from devolution it recommended grant-in-aid of Rs.334.28 crores during 2011-12 for creation and up gradation of physical infrastructure for PRIs and ULBs. It also recommended 5 percent of the divisible pool to be set aside as incentive fund for the best performing local bodies.
Apart from the incentive fund all other recommendations in the preliminary report of the Fourth SFC are accepted by government and ATR laid before the Legislature. The release of fund against tax devolution started from June 2011. Grant-in-aid is recommended mainly for the purpose of construction of office buildings and staff quarters for PRIs at all levels. An amount of Rs. 120 crore is recommended for this purpose. As per latest information, release of this amount is under process. Once this recommendation is implemented PRIs at all levels will have their own office accommodation. And those having office accommodation less than adequate will be able to make extension to their buildings. Similarly, the ULBs will be in a position to upgrade their physical infrastructure so as to improve the quality of service delivery.
Tax devolution and grants-in-aid recommended by the SFCs and grants under the award of the Central Finance Commissions are transferred direct to the local bodies under the major head of account ‘’3604— Compensation and Assignment to Local Bodies’’ in the State budget.