Bhubaneswar, Feb. 17: The fourth State Finance Commission has suggested constitution of a separate directorate of municipal administration.

The commission says that the directorate should set up an institutional framework for regular capacity building and training of officials and elected representatives of urban local bodies within a reasonable time frame and with a concrete action plan.

The commission's report, which was tabled in the Assembly yesterday, also suggested that the directorate might make a time-bound programme for leading urban bodies of the state to adopt "e-governance" system that will go a long way in strengthening urban administration in the state in the manner of the Ahmedabad and greater Hyderabad municipal corporations.

It also suggested that action should be initiated against officials who have illegally recruited employees after 2005 in certain municipal bodies.

A mechanism should also be developed to transfer maintenance of the entire water supply system to urban local bodies in phases.

It also argued that administrative powers of officials, engineers and other technical functionaries in the local bodies should be enhanced to facilitate implementation of routine work at the local level.

The commission has also come out with a number of proposals to make the urban local bodies and panchayat raj institutions financially stronger.

It has recommended for transfer of Rs 25,325.03 crore to the three-tier panchayati raj institutions and urban local bodies during the next five years from 2015-16 to 2019-20.

Of these, Rs 12,740.08 crore will come from the state taxes and the consolidated fund.

The commission has also pointed out that that entry tax should become the legitimate revenue of not only urban local bodies but also for panchayat raj institutions.

It has also recommended that three per cent of the net tax revenue during 2015-20 be devolved and distributed between the panchayat raj institutions and urban local bodies in the ratio of 75:25.

The commission went on to suggest that new panchayats shall be created where population has exceeded 10,000 and the panchayats having a population of more than 7,500 shall be strengthened by placing technical and other functionaries.

The commission also want amendment to the Gram Panchayat Act to enable the gram panchayats to collect advertisement tax at the rate decided by them and to introduce property tax so that they may be empowered to levy property tax.