Nagar Panchayat Water Scheme: Jurisdiction, Variation and Unreceived Devolution
A nagar panchayat with a population of about 48,000 has been sanctioned ₹4.20 crore under a state urban water supply programme for a tube-well scheme with an overhead tank and 6.5 km of distribution main; the sanction requires the panchayat to contribute 25% (₹1.05 crore) from its own funds. The estimate was prepared and tendered by the executive engineer of the state public health engineering division, and the work is being executed departmentally. The elected chairperson has written that water supply is a panchayat subject and that supervision must pass to the panchayat's own engineering cell. Separately, a ward councillor has told the junior engineer on site to shift a 300 m reach of the main to serve a colony of 60 households lying outside the sanctioned command area, saying the ₹18 lakh contingency will absorb it and 'the panchayat will regularise it later'. The state finance commission's latest report recommends ₹1.10 crore of untied devolution to this panchayat, but nothing has been credited so far. The JE must reply in writing within three days.
1. State who is constitutionally responsible for urban water supply and whether the chairperson's claim obliges the department to hand over execution at once.
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Constitutional position. The 74th Constitutional Amendment Act, 1992 inserted Part IXA in the Constitution. Article 243-W enables the State Legislature to endow municipalities with the powers and responsibilities needed for them to function as institutions of self-government, and the Twelfth Schedule lists 18 functions - Entry 5 is 'water supply for domestic, industrial and commercial purposes'. So the function belongs to the urban local body, as devolved by state law, and the chairperson is right on the substance.
But the conclusion does not follow. A state department may execute a scheme as an agency of, or on behalf of, the ULB where the state law, the sanction order or a written agreement so provides. Execution by an agency does not transfer the function away from the panchayat; ownership of the assets should vest in the panchayat, and an operation-and-maintenance arrangement should be recorded.
What the JE should write. That water supply is a Twelfth Schedule function of the ULB; that the present mode of execution flows from the state government's sanction order, and a change of executing agency needs an order of the competent authority, not a letter from the chairperson; and that he is placing the panchayat's request, with his remarks, before the executive engineer and the directorate for a decision. He should not stop sanctioned work in the meantime.
2. The ward councillor's instruction to shift 300 m of main using contingency: advise the JE on its legality and on the exact action to take.
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The instruction is not executable.
- No executive authority. A ward councillor is not an executive authority. Directions on a works contract must come through a panchayat resolution and the competent technical authority, not an oral site instruction.
- Contingency is not a variation fund. The ₹18 lakh contingency covers unforeseen items within the sanctioned scope and is operated with the sanctioning authority's approval. Serving 60 households outside the command area is a change of scope, not an unforeseen item.
- Procedure. A change of scope needs a revised estimate, fresh technical sanction and administrative approval, and the funding agency's concurrence where cost or scope alters. The shift also changes the hydraulic design - residual head and pipe sizes for the extended reach must be rechecked, so it is not a drafting decision either.
- Audit. Expenditure outside sanction is an audit objection, and the officer who incurs it carries the loss.
Action. Do not execute the change. Record the oral direction in the site diary the same day, ask for it in writing, inform the executive engineer in writing, and continue only on the sanctioned alignment. If the demand is genuine, route it as a formal proposal for a revised estimate.
3. The chairperson wants to book the ₹1.10 crore recommended by the State Finance Commission against the panchayat's 25% matching share. Evaluate this.
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Status of an SFC recommendation. Article 243-I requires the Governor to constitute a State Finance Commission every fifth year to review the financial position of panchayats and municipalities and to recommend the principles governing distribution of taxes, grants-in-aid and assignment of taxes. Its recommendations are recommendatory; they take effect only through the action the Legislature takes on them, which is reported to the House. A recommendation in a report is therefore not a resource and cannot be certified as available funds.
Why the proposal is unsound. Booking ₹1.10 crore that has not been credited against the ₹1.05 crore matching share would mean certifying availability of money that does not exist, and would expose the scheme to stoppage and the officer to an audit objection. The matching share must rest on a budget provision plus actual receipts - own revenue, assigned taxes, or a credited grant.
What the JE should write. That the 25% share is presently unfunded; that the panchayat should pass a resolution identifying a real source; that the state should be asked to confirm the devolution in writing and to phase the matching requirement so work is not stranded mid-way; and that he will not certify fund availability on the strength of a report recommendation. The request for release should go through the district authorities, not rest on an assurance.