Syllabus: GS-II
Subject: Polity
Topic: Local government
Issue: Financial empowerment of Panchayats
Panchayat’s dependence on grant and underutilization of own source of revenue:
- State governments’ commitment to decentralization is crucial for effective local governance through panchayati raj institutions.
- Despite constitutional amendments for fiscal devolution, panchayats still rely heavily on grants rather than generating own revenue.
- Major avenues for own source of revenue include property tax, land revenue cess, stamp duty surcharge, and user charges.
- Gram Sabha play a vital role in leveraging local resources for revenue generation and promoting sustainable development.
- Dependency on grants has reduced the inclination of panchayats to generate own revenue.
- Overcoming the dependency on grants requires educating elected representatives and the public on the importance of revenue generation for local development.
| +1 Advantage for mains (Data point)
· Discrepancy in utilization of own source of revenue at different stages Ø While gram panchayats collect 89% of own taxes, the intermediate panchayats collect 7% and the district panchayats a nominal amount of 5%. · “Panchayats earn only 1% of the revenue through taxes”, with the rest being raised as grants from the State and Centre |
