With majority of Gram Panchayats in the country facing financial crisis, the Government is conducting a study in Uttar Pradesh, Chhattisgarh, Odisha, Maharashtra and Bihar to identify reasons for their low level of own sources of revenues (OSRs) as well as analyse funding sources and financial mechanisms available to them.
The Union Panchayati Raj Ministry has issued Request for Proposal (RoP) from the concerned agencies to be conducted within next three months after awarding the contract.
The study follows recommendation of the Fourteenth Finance Commission Coordination Committee which in its first meeting held in November last year identified the need for a comprehensive study to assess the performance of local bodies (lBs) in own revenue generation measures required to achieve improvements in OSRs in a time bound manner.
The FFC’s report observed that there is considerable scope for the local bodies to improve revenues from OSRs (generated locally from levying house taxes, water charges and professional tax) by taking steps as recommended by the SFCs and the Finance Commissions. The States therefore need to take various measures to further augment the resources at the State and local bodies level, it said given that most of the GPs lack basic infrastructure like water, health, road and education facilities.
The present study is proposed to be conducted in Gram Panchayats in the identified five States to provide objective assessment of the status of OSR of the lBs, the best practices and provide guidelines for improving the same which could be adapted by other States. There are about 250,000 gram panchayats in the country.
The study would critically review the performance of the panchayats at various levels in generating various own sources of revenue of the local bodies in quantum and as percentage of expenditure. Besides, it would also estimate the level of income achievable at individual as well at the aggregate State level, arising out of the identified potential sources of revenues for the next five years and suggest required structural as well as and operational changes to achieve the estimated levels of income.
The study will also analyse the reports of the Union Finance Commissions and State Finance Commissions constituted so far by the concerned States related to own revenue generation of the GPs. At least two panchayats (District/Taluk/Gram Panchayats) each in 5 representative districts will be covered in each State assessing the minimum/average/ maximum values of revenues in rupee terms during the last 10 years, as per the Ministry’s document.