Local Bodies Should Enhance Self-Reliance by Raising Their Own Resources, Says Finance Commission Chairman Arvind Panagariya

The 16th Finance Commission Chairman, Arvind Panagariya, emphasised the need for rural and urban local bodies to generate their own resources. This approach, he noted, would engage citizens by aligning their expectations and demands with the capabilities of these bodies. Speaking at a Finance Commissions Conclave on Devolution to Development, organised by the Ministry of Panchayati Raj, Panagariya highlighted a growing convergence in the demands of urban and rural local bodies.

Panagariya pointed out that financial independence and self-reliance were central themes at the conclave. The event aimed to address systemic challenges to ensure a smooth flow of funds to Panchayati Raj Institutions (PRIs). Key discussions included panchayat finances, devolution of funds, functions, and strategies to boost local revenue sources. He stressed that strengthening Own Source Revenues (OSR) is crucial for sustainable rural development.

Focus on Financial Autonomy

Panagariya explained that raising local resources is vital for service provision. When citizens pay taxes, they become aware of the services they should receive. This understanding can lead to more active demands from locals. He added that efforts should be made by panchayats and urban bodies to generate some revenue from their jurisdictions, which would mobilise citizens regarding their expectations.

Panchayati Raj Secretary Vivek Bharadwaj remarked that the conclave brought stakeholders together for integrated thought and action. The Finance Commission is responsible for resource devolution to 2.5 lakh Panchayats and people. Bharadwaj mentioned efforts to integrate actions between central and state finance commissions through this platform.

Technological Advancements in Governance

Bharadwaj highlighted that 37,000 gram panchayats are being computerised, and Gram Panchayat Bhawans have been constructed in 40,000 villages with populations over 3,000. The government has mandated including OSR details in Gram Panchayat Development Plans (GPDPs) on the eGramswaraj portal, marking a significant step towards fiscal transparency.

The ministry's dedicated OSR Cell is actively reviewing revenue rules across states. It aims to simplify complex procedures to enhance efficiency in local governance and facilitate better resource mobilisation. An official statement noted significant emphasis on strengthening State Finance Commissions at the conclave.

Addressing Unique Challenges

Special attention was given to challenges faced by peri-urban panchayats in managing rapid development. Over 150 participants from 22 states discussed strengthening the fiscal framework of Panchayati Raj Institutions. Chairpersons proposed solutions for more effective resource allocation during these discussions.

The conclave underscored the importance of financial autonomy for local bodies. By focusing on generating their own resources, these bodies can better meet citizen expectations and demands. This approach not only enhances service delivery but also fosters greater civic engagement.