A recent study by Participatory Research In Asia reveals that in Jharkhand panchayats are lagging behind in generating their own funds. The comparative study with adjoining states shows that the potential of the panchayats for revenue generation has remained unused in Jharkhand.
“PRIA’s study finds that panchayats in Jharkhand are dis-enabled to generate their own resources. The average gram panchayat does not collect any tax, and does not utilize the economic value of common public resources to generate revenues.
Most elected panchayat are aware of the importance of own revenue generation, but do not have the powers and capacities to collect funds. Often the State does not support panchayats to develop these resources, and revenue options remain unexplored. This needs to be addressed on a priority basis,” said Manoj Rai, Director of PRIA.
The study also analyzes data from states adjoining Jharkhand. It finds that panchayats in the southern states perform better in generating own resources. Kerala, Tamil Nadu and Andhra Pradesh generate more than Rs200 to 300 per capita, even though their own resource potential continues to be underutilized. The gap in own resource generation by local governments in northern India compared to those in southern India perhaps also explains the disparity in development between north and south India.
Based on comparative national and international data on resource generation by local governments, panchayats in Jharkhand could generate Rs500 per capita per year. This means Jharkhand, with over 4000 gram panchayats and a total rural population of about 3 crore, could generate Rs1,500 crore of own resources annually for investment in public goods.
The PRIA study calls out State Governments for not devolving actual power and authority to local governments. Devolution has not been actualized as operational rule books and enabling structures are not provided to support devolution.
Insufficient devolution of funds, functions and functionaries to local Government has been highlighted by PRIA in several reports over the past 20 years. The capacity and strengthening of local Governments to generate own resources can no longer be ignored. Reducing dependence of local Governments on devolved resources, as highlighted by the 2018 Economic Survey, is imperative if the growth impetus is to be sustained for the benefit of all citizens of India.
The 2018-19 national Budget presented in Parliament on 1st February allocates huge resources to improve local facilities – among other provisions, Rs14.34 lakh crore expenditure on rural infrastructure, Rs10,000 crore to roll out 5 lakh WiFi hotspots to increase internet access, and Rs6,000 crore for providing improved water supply to 500 cities. However, where development is a relay race between three levels of Government in India, the last lap of local level Governments has no financial capacity to contribute significantly to development investments.
“This is not just a failure in cooperative federalism; it also significantly slows down the pace of development.
This was also perhaps one of the biggest problems with the Nehruvian development model which relied heavily on downward percolation of benefits to citizens in villages and cities,” added Rai.
