The report noted that around 95% of the PRI revenues are in the form of grants from the Centre and states, restricting their spending ability that is already hampered by delays in the constitution of State Finance Commissions (SFCs).
With the finances of Panchayati Raj Institutions (PRIs) facing constraints due to their limited own revenues, a Reserve Bank of India report on Thursday said the PRIs need to intensify efforts to augment their own tax and non-tax revenue resources and improve governance.
The report noted that around 95% of the PRI revenues are in the form of grants from the Centre and states, restricting their spending ability that is already hampered by delays in the constitution of State Finance Commissions (SFCs).
“Nevertheless, the prompt establishment of SFCs, eschewing the sizeable delays that occur currently, assumes importance. SFCs, with roles identical to those of the Central Finance Commission (CFC), and with the obligation of tabling their action-taken reports in State legislatures, can fortify the financial position of PRIs and help them in better delivery of their responsibilities for upliftment of the rural economy,” it said.
Drawing upon data on 2,58,000 Panchayats, the RBI report found that the average revenue per Panchayat from all sources – taxes, non-taxes and grants – was Rs 2.12 million in 2020-21, Rs 2.32 million in 2021- 22 and Rs 2.12 million in 2022-23. The decline in 2022-23 was owing to lesser devolution of grants.
The own revenues of the Panchayats – generated by imposing local taxes, fees, and charges on various activities, including land revenue, professional and trade taxes, and miscellaneous fees – were only 1.1% of their total revenue during the study period.
Non-tax revenue – primarily from Panchayati Raj programmes and interest earnings – is also modest, with a share of only 3.3% of their total revenue receipts. Panchayats in Tamil Nadu, Himachal Pradesh, Maharashtra, and Telangana reported higher non-tax revenue than other states.
Source:financialexpress.com