New Delhi, June 18
Over the next five years, money to
rural local governments (panchayats) will rise nearly three times, from
Rs.63,051 crore to Rs.200,292 crore, on the recommendations of the 14th
Finance Commission - a constitutional body that recommends sharing of
financial resources between the centre and the states.
Panchayat
institutions in Kerala are most effectively decentralised and so best
placed to handle this money. The next best are Karnataka, Maharashtra
and Tamil Nadu.
Gram panchayats, the smallest unit of the
panchayat system, get the largest share of finances, 60 percent, from
the central government.
Block and district-level panchayats, the
second and third tier of the three-tier panchayati raj system, get most
of their money from the states.
While gram panchayats generate
11 percent of revenue, block and district-level panchayats generate 0.4
percent and 1.6 percent respectively.
These are some of the key
findings of a report titled "A Contemporary Analysis of Fiscal Transfers
to Rural Local Governments in India" by Accountability Initiative, a
New Delhi-based think tank.
While India’s urban population
increased 31.8 perent between 2001 and 2011, 69 percent of India is
still rural. This fact has not been lost on Delhi.
A major
transfer of power was a part of local government reforms in the early
1990s when panchayats were duly empowered. The Indian Government became a
three-tiered structure -centre, state and local (rural and urban) - in
1992 under the 73rd and 74th amendments.
Local governments are
divided into two parts, urban and rural. Rural government is further
divided into three tiers: gram (village) panchayats (0.25 million),
block panchayats (6,405) and zila (district-level) panchayats (589).
The
14th Finance Commission stressed more devolution of power to states and
has recommended Rs.287,436 crore for all local governments, rural and
urban, to be distributed across states, based on population and size. It
also suggests that rural local bodies be given more money than urban
bodies - the share for rural local governments increased from 0.5
percent to 2 percent of the total allocations from the 13th to the 14th
Finance Commissions.
The Rs.287,436 crore will be transferred
over five years to both rural and urban local bodies. While allocations
for urban areas rose from Rs.23,111 crore to Rs.87,144 crore, allowances
to rural areas have almost tripled under the 14th Finance Commission.
There
are more than 0.25 million gram panchayats across the country, and they
have likely generated around Rs.3,118 crore as revenue in 2011-12,
according to latest figures. That’s less than the estimated state budget
for Manipur in 2014-15.
Gram panchayats generate more than 11
percent of their total revenue from own collections. This includes local
taxes such as property tax and user charges (taxes on land and houses,
customs duty, the toll tax, license fees on transport and communication
etc.) The remaining 89 percent comes from central funds, central Finance
Commission funds, and devolved funds and grants in aid from state
governments.
We can see a steady increase in gram-panchayat
revenues, an indicator of greater autonomy and accountability, mirrored
in a drop in transfers from Delhi.
From nearly 70 percent in
2009-10, gram-panchayat transfers from the centre have declined to
nearly 61 percent. This may be because more central grants are going to
the states and states are giving more money to block- and district-level
panchayat bodies.
It is a general perception that panchayats are
financially and technically under-equipped to perform core functions,
such as maintenance of water works, drainage and sanitation, upkeep of
school buildings and other public assets, much less welfare and economic
functions, related to agriculture and industries, according to the
report.
The finance dimension in devolution registered a low
national average of 32.05 in the Index Score among the states. Thirteen
states were placed above the average score for devolution-implying fewer
financial powers and resources-at panchayat level in most states of
India
The 0.25 million gram panchayats are the smallest units
of government and the closest to the 833 million people living in
villages in India. With greater devolution of both finances and
functions in these institutions, Indian democracy can be deepened till
the grassroots, T R Raghunandan, advisor to Accountability Initiative
and former joint secretary, Ministry of Panchayati Raj, said in The
Indian Express.
(In arrangement with IndiaSpend.org, a
data-driven, non-profit, public interest journalism platform. can be
contacted at [email protected]. The views expressed are personal)
