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REPORT ON STUDY TOUR TO INDIA

COMMISSION ON REVENUE ALLOCATION. REPORT ON STUDY TOUR TO INDIA. COMMISSION ON REVENUE ALLOCATION Promoting an equitable society. 17 TH DECEMBER 2012. COMMISSION ON REVENUE ALLOCATION. Outline . Objectives Programme Lessons learned . 2. COMMISSION ON REVENUE ALLOCATION.

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REPORT ON STUDY TOUR TO INDIA

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  1. COMMISSION ON REVENUE ALLOCATION REPORT ON STUDY TOUR TO INDIA COMMISSION ON REVENUE ALLOCATION Promoting an equitable society 17TH DECEMBER 2012

  2. COMMISSION ON REVENUE ALLOCATION Outline • Objectives • Programme • Lessons learned 2

  3. COMMISSION ON REVENUE ALLOCATION Study Tour Objectives • Sharing of revenues between central government and states in India • Devolution structures for effective service delivery • Revenue generation structures for devolved government units; • Public finance management structures for devolved government; • Revenue collection arrangements for both central and devolved government units in India • Revenue Sharing arrangements from national resource sectors • Other issues 3

  4. COMMISSION ON REVENUE ALLOCATION Structure of Multi-Government in India 4

  5. COMMISSION ON REVENUE ALLOCATION Lessons for Kenya from structure of government • Need for 3rd-level of government because county governments may not create equity at the county-level • It took 43 years for them to introduce the 3rd tier through the 73rd and 74th amendment of the constitution • Sharing resources equitably at the county-level should be one dimension of the “fiscal responsibility” parameter • Future marginalisation policies should use sub-county units in developing criteria for identifying marginalised areas 5

  6. COMMISSION ON REVENUE ALLOCATION Structure of State Government in India 6

  7. COMMISSION ON REVENUE ALLOCATION Lessons for Kenya from structure of government • India is a quasi –federal state just like Kenya-able to take advantage of the virtues of unitary government (reduce centre-state conflict)-President appoints state governors • Role of political parties: numerical power of the political parties matter-In India Chief minister is elected by legislators of the leading political party • Control of police: all police are selected and trained centrally by the union government. They can be posted anywhere in India. When in state they are under the state government • Civil service: Recruited centrally and can be transferred. When in a state that state pays salaries. BUT pensions are centrally administered by the union government 7

  8. COMMISSION ON REVENUE ALLOCATION Revenue Sharing in India • Sharing of revenue is mainly done by the Union Finance Commission (equivalent of CRA) which was formed in 1951 • The commission is appointed every 5 years • The most recent is the 13th Finance Commission established in 2007 its recommendations for the period 2010-2015 • There are also State Finance Commissions (SFC) to make recommendations within each state • There is also a Planning Commission to spearhead national planning and administer planned expenditures • At the state level, there is the State Planning Board to assist the state government in formulating a development plan based on a scientific assessment of resources available to the state 8

  9. COMMISSION ON REVENUE ALLOCATION Lessons on Revenue Sharing for Kenya • CRA should strive to build public confidence • Need to create a maintenance fund/grant in future CRA’s recommendations- to manage all maintenance expenses for running the transferred institutions • Importance of credible data and research in recommendations • Coordination of planning from counties to the national level 9

  10. COMMISSION ON REVENUE ALLOCATION Lessons on Financial Management • India’s financial management experience led to financial indiscipline, high fiscal deficits etc. • In 2003, India enacted the Financial Responsibility and Budget management Act to institutionalise financial discipline and move towards a balanced budget through targets. • CRA could recommend similar targets e.g. fiscal deficit to county GDP of say 3%-provide warning to CRA and other stakeholders • Importance of ICT and need to move to “paperless operations” • BUT think about management of e-waste • Concurrent audits by different institutions • Use of bill system as opposed to cheque system 10

  11. COMMISSION ON REVENUE ALLOCATION Lessons on Revenue Enhancement • Clarity of taxation laws: Conflicting laws need to be harmonised • Data on tax handles is important: Need credible data on properties such as the GIS-based property database • Tax administration at the county-level: Need to reduce compliance and administrative costs, adequate human resources and use of ICT 11

  12. COMMISSION ON REVENUE ALLOCATION Lessons on Management of Mineral Resources • In India minor minerals are for states while major minerals belong to the union government • Inter-county conflict: Prepare for inter-county conflicts regarding water, forests etc. • Need dispute resolution mechanisms • Minerals resources based in poor counties: Local communities and counties should be compensated 12

  13. COMMISSION ON REVENUE ALLOCATION Lessons on Marginalisation • Marginalised groups in India are the scheduled tribes and scheduled castes (Dr Ambedkar) • Should adopt a multi-pronged approach • Provision of resources to bridge the developmental gap-The equalisation Fund • Protective arrangements in terms of laws, commissions • Affirmative action, which provide positive preferential treatment in jobs, education and political positions • There are special hostels for students from scheduled tribes and scheduled castes 13

  14. COMMISSION ON REVENUE ALLOCATION THANK YOU

  15. COMMISSION ON REVENUE ALLOCATION CRA Delegation at the TajMahal on 2nd December 2012

  16. COMMISSION ON REVENUE ALLOCATION Part of the CRA Delegation in Discussion with Prof.AbhijitSen, Member of the Planning Commission of India, on 3rd December 2012

  17. COMMISSION ON REVENUE ALLOCATION CRA Delegation in discussion with Mr.Sumit Bose, Revenue Secretary, Ministry of Finance, on 3rd December 2012

  18. COMMISSION ON REVENUE ALLOCATION CRA Vice Chair in discussion with H.E. Prof.FestusKaberia, Kenya High Commission in India on 4th December 2012

  19. COMMISSION ON REVENUE ALLOCATION CRA delegation in discussion with the Principal Secretary (Finance) of the Kerala State Government on 6th December 2012

  20. COMMISSION ON REVENUE ALLOCATION Dr.ThomasThoomkuzhy(GIFT), Com.Onyango, Vice Chair, Com.Prof.Munavu outside the Vellanad Gram Panchayat (Kerala State) on 6th December 2012

  21. COMMISSION ON REVENUE ALLOCATION Vice Chair, Prof.Masai, Prof.Munavu and Dr.Sichei with a Kudumbashree (women group) in VellanadPanchayat (Kerala State) on 6th December 2012

  22. COMMISSION ON REVENUE ALLOCATION Chair lady of Attingal Municipality S.Kumarsandwitched between Prof. Munavu and the Vice Chair outside the municipality offices, 7th December 2012

  23. COMMISSION ON REVENUE ALLOCATION Section of workers sorting cashew nuts at the CAPEX factory on 7th December 2012

  24. COMMISSION ON REVENUE ALLOCATION Dr.Narayan(Director GIFT), Mr.John(Member State Planning Board in Kerala), Dr.Pinaki(NIPFP) and Vice chair at the last day meeting at the Gulati Institute of Finance and Taxation on 8th December 2012

  25. COMMISSION ON REVENUE ALLOCATION Dr BhimraoRamjiAmbedkar father of Indian Constitution came from one of the untouchable tribes. Earned doctorate degree in economics and law

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