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IIPA
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Measures to Augment the Resources of Panchayats
Empirical Assessment 2018-19



Report







Sponsored by

Government of India







Conducted by

Indian Institute of Public Administration
New Delhi

February 2020 IIPA

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Measures to Augment the Resources of Panchayats
Empirical Assessment 2018-19



Report



by
V. N. Alok


With inputs from

Damini Singh
NishuVerma
Shrawan Pandey
ShonitNayan
Yumna Jamal



February 2020



Indian Institute of Public Administration
New Delhi-110002 IIPA

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Acknowledgments
This report is the outcome of the study entrusted to the Indian Institute of Public Administration
by the NITI Aayog on August 2018 on ‘Measures to Augment the Resources of PRIs’ in ten select
States for the year 2018-19.
As the coordinator of this research project, I’d like, first of all, thank authorities of NITI Aayog
particularly Dr Rajiv Kumar, Vice Chairman; Shri Amitabh Kant, CEO; Shri YaduvendraMathur,
Special Secretary; Dr Yogesh Suri, Senior Advisor, Shri Avinash Mishra, Advisor; Dr R P Singh,
Deputy Advisor and Dr B Bishoi, Deputy Advisor for extending cooperation and support. The work has
benefitted from the support of a number of people and institutions whom I’d like to thank here. The
project could never have been implemented without the co-operation of state governments. I wish to
record my sincere thanks to the Principal Secretaries/Secretaries in charge of Panchayats and their
colleagues in the state governments or SIRD for their continuous support, assistance in making the data
available to us and advice at various stages of the study. Officials dealing with the local finance in the
Office of the Comptroller and Auditor General and Office of the Accountant General in states were also
consulted. I’m grateful to elected representatives and officials at various Panchayats for their valuable
inputs.
The very empirical nature of this research also means that a number of young researchers have
helped in the investigations, literature survey and data analysis. I want to express my gratitude to all of
them particularly to Kritika Singh, ShrawanKumar Pandey, ShonitNayan, NishuVerma, Damini Singh,
Yumna Jamal, and Ashish Kumar helped in the analysis of data, literature survey etc. Other units of the
Institute including the library, computer centre, account section and administration headed by Registrar
Shri Amitabh Ranjan provided critical inputs at various stages of the study. I’m thankful to all of them.
None of them is however responsible for the remaining errors.
Finally, heartfelt thanks are due to Shri S N Tripathi, IAS Director, IIPA for his encouragement
and guidance.

V.N. Alok
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List of Abbreviations
AAO Assistant Accounts Officer
ACA Additional Central Assistance
ADC Additional Deputy Commissioner
ADC Assistant Development Commissioner
AEO Agriculture Extension Officer
AEO* Additional Executive Officer
AEW Agriculture Extension Worker
ANERT Agency of Non-Conventional Energy and Rural Technology
APD Additional Project Director
ARWS Accelerated Rural Water Supply Programme
ASHA Accredited Social Health Activist
ATR Action Taken Report
AWW Anganwadi Worker
BDO Block Development Officer
BDPO Block Development Panchayat Officer
BPL Below Poverty Line
BP Block Panchayat
BPS Block Panchayat Secretary
BRGF Backward Regions Grant Fund
CAA Constitution Amendment Act
CSS Centrally Sponsored Scheme
C&AG Comptroller and Auditor General
CBO Community Based Organizations IIPA

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CDO Chief Development Officer
CEO Chief Executive Officer
CIC Chief Information Commissioner
CRSP Central Rural Sanitation Programme
CHC Community Health Centre
CO Chief Officer
CPI Consumer Price Index
CB-PSA Capacity Building-Panchayat Sashaktikaran Abhiyan
CSS Centrally Sponsored Scheme
DC District Collector
DD Deputy Director
DDC District Development Commissioner
DDPO District Development Panchayat Officer
DI Devolution Index
DM District Magistrate
DP District Panchayat
DPAP Drought Prone Area Programme
DPC District Planning Committee
DPIP District Poverty Initiatives Project
DRDA District Rural Development Agency
DPO District Planning Office
DPRO District Panchayat Returning Officer
EA Executive Assistant
EO Extension Officer IIPA

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EO* Executive Officer
EVM Electronic Voting Machine
FFC Fourteenth Finance Commission
GDP Gross Domestic Product
GPDP Gram Panchayat Development Plan
GO Government Order
GIS Geographical Information System
GoI Government of India
GP Gram Panchayat
GPEO Gram Panchayat Extension Officer
GS Gram Sabha
GST Goods and Service Tax
JBMV Janmabhoomi-Maa Vooru Programme
MGNREGP Mahatma Gandhi National Rural Employment Guarantee Programme
MoPR Ministry of Panchayati Raj
MMD Mission Mode Project
NRHM National rural Health Mission
PFMS Public Finance Management System
SDG Sustainable Development Goal
SFC State Finance Commission
UFC Union Finance Commission
VP Village Panchayat
ZP Zilla Panchayat IIPA

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Contents
Preface 3
List of Abbreviations 4

Chapter 1: Introduction 10
1.1 Background 10
1.2 Objectives 15
1.3 Research Methodology 16
1.4 The Parameters 19

Chapter 2: Fiscal Decentralization to Panchayats 20
2.1 Decentralization 20
2.2 Decentralization: Global and Regional Trend 21
2.3 Forms of Decentralization 21
2.4 Genesis 23
2.5 Dimensions of Devolution 24
2.6 Finances 26
2.7 Functionaries 27

Chapter 3: Scope of the Study-Parameters 28
3.1 Basic Details of Panchayats including Constitutional Provisions 29
3.2 Constitutions and Functioning of District Planning Committee (DPC) 34
3.3 Role of Panchayats in Parallel Bodies 37
3.4 Autonomy to Panchayats 41
3.5 Functions Assigned and Actual Involvement of Panchayats 44
3.6 Involvement in Important Schemes 54
3.7 14
th
Finance Commission Grants (Basic and Performance Grants) 57
3.8 State Finance Commission (SFC) 60
3.9 Money Transferred on Account of State Finance Commission 69
3.10 Empowerment of Panchayats to impose/collect revenue 74
3.11 GST Implication on Panchayats 92
3.12 Expenditure by Panchayats 104
3.13 Gram Sabha 106
3.14 Gram Panchayat Development Plan 108
3.15 Transparency and Anti-Corruption 110
3.16 Infrastructure of Panchayats (Physical & Digital) 113
3.17 Training Institutions/Activities 115
3.18 E-Connectivity and ICT Measures 117

Chapter 4: Summary and Recommendations 121

References 153
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List of Tables

Table 1.1: Numbers of Panchayats in each State/UT as on 1
st
November 2019 11
Table 1.2: Constitutions of State Finance Commissions- An Status 14
Table 1.3: List of Selected Districts, Blocks and Gram Panchayats for Field
visits
18

Table 3.1: Reservations for Women, SCs and STs in Panchayats 33
Table 3.2: Constitutions and Functioning of District Planning Committee in
Ten Select States
35
Table 3.3: Nature of Control of Panchayats on Parallel Bodies 38
Table 3.4: De facto Assignment of Functions of Different tiers of Panchayats in Ten
Selected States
49
Table 3.5: Allocation and Release of Basic and Performance Grants to select
States for Panchayats recommended by the 14th FC(2015-2020)
58
Table 3.6: Formula adopted by State Government for distribution of Basic
Grant under 14th FC Award
59
Table 3.7: SFC Recommendations for Share of Panchayats in State Resources 61
Table 3.8: Constitution and Submission of SFC Reports and Action Taken
thereon
63
Table 3.9: Assignment of Revenues by various SFCs 68
Table 3.10: Types of Grants Recommended by SFCs 69
Table 3.11: Revenue Handles Assigned to Panchayats 75
Table 3.12: Important/major changes in tax handles of Panchayats in State Pre
and Post-GST
92
Table 3.13: Revenue of Panchayats (Average of 2012-13 to 2017-18) of ten
select states
104
Table 3.14: Expenditure by Panchayats (Average of 2012-13 to 2017-18) of ten
select states
105
Table 3.15: Status of Gram Sabha in Panchayats of select States 107
Table 3.16: Status of Gram Panchayat Development Plans (GPDPs) prepared
in States
108
Table 3.17: Transparency and Anti-Corruption in Panchayats of select States 110
Table 3.18: Availability of Physical Infrastructure among three tiers of
Panchayats in ten select States
113
Table 3.19: States wise Funds released under RGPSA/CB-PSA/RGSA schemes 115
Table 3.20: Number of Trained Elected Representatives, Panchayat
Functionaries and other Stake holders in State
116
Table 3.21: Panchayat Enterprise Suite (PES) Applications in Select States 118
Table 3.22: State-wise Adoption status for Application – PRIA Soft 119
Table 3.23: State-wise Adoption Status for Application –National Asset
Directory
119
Table 3.24: State-wise Adoption Status for Application – ActionSoft 120
Table 3.25: State-wise Adoption Status for Application –National Asset 120
Table 3.26: State-wise Adoption Status for Application – Area Profiler 121 IIPA

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Table 1: Numbers of Panchayats in each State/UT as on 1
st
November 2019 122
Table 2: Resource Gap for Panchayats(Average of 2012-13 to 2017-18) of
ten select states
125
Table 3: Expenditure by Panchayats (Average of 2012-13 to 2017-18) of ten
select states
139

Exhibit 3.1: Classifications of Functions Listed in Eleventh Schedule 45

Annex A: Panchayat Devolution Survey Questionnaire-2018-19 164 IIPA

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CHAPTER 1
Introduction
1

1.1 Background
Like many other federations, local governments in India are supposedly responsible for
rendering essential services, including sanitation, drinking water, primary health, street lighting
and roads. They are also empowered to collect certain tax and non-tax revenues. However, in
most cases, considerable gap between own resources and requirements can easily be seen. The
gap is more noticeable in the case of rural local governments (Panchayats) than their
counterparts in urban areas due to their narrow resources base. Both these local governments
largely depend upon the financial support from their respective State Governments.
With the passage of the 73rd Constitution Amendment Act (CAA) Panchayats got
recognition in the statute book as institutions of self-government in India. This accelerated the
process of decentralization with greater devolution and delegation of powers to rural local
governments. Consequently, Part IX has been inserted in the Constitution (73rd Amendment)
Act, 1991 w.e.f. 24 April 1993 for Panchayats and Part IXA was inserted by the Constitution
(74th Amendment) Act, 1992 w.e.f. 1 June 1993 for municipalities
2
. The State legislature has
been made responsible to assign responsibilities toPanchayatsin the matters listed in the
Eleventh Schedule to the Constitution.
Under the CAA, the state legislature is expected to devolve responsibilities, powers and
authorities to the Panchayats to enable them to function as institutions of self-government. The
legislature of a State may authorize the Panchayats to levy, collect and appropriate certain
taxes, duties, tolls, fees, etc, and also assign to them the revenues of certain state level taxes
subject to such conditions as are imposed by the state government. Further, grants-in-aid may
also be provided to the Panchayats. Resulting from the CAA, the number of Panchayats in
India stands at 2, 60,623 of which 2, 53,380 are village Panchayats, 6,613 are intermediate
Panchayats, and 630 are district Panchayats. (Please see Table 1.1).

1
The section is drawn upon Alok (2013).
2
Earlier, in the original text, Part IX with Article 243 dealing with territories in Part D of the First Schedule was repealed by the
Seventh Amendment 1956 for reorganization of the States. That is the reason all articles in Part IX and Part IXA are numbered
with 243. IIPA

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Table 1.1: Numbers of Panchayats in each States as on 1
st
November 2019
Sl.
No.
State/UT


Levels of Panchayats (Numbers) Rural
Population per
VP
District
3

Block
2

Village
1

Total

1 Andhra Pradesh 13 660 13042 13715 2824
2 Arunachal Pradesh 23 177 1785 1985 695
3 Assam 26 191 2199 2416 13472
4 Bihar 38 534 8386 8958 11857
5 Chhattisgarh 27 146 10978 11151 1804
6 Goa 2 n.a. 191 193 3827
7 Gujarat 33 248 14292 14573 2588
8 Haryana 21 126 6197 6344 2986
9 Himachal Pradesh 12 78 3226 3316 2100
10 Jammu & Kashmir 22 306 4482 4810 2259
11 Jharkhand 24 263 4370 4657 6255
12 Karnataka 30 176 6021 6227 6563
13 Kerala 14 152 941 1107 49385
14 Madhya Pradesh 51 313 22817 23181 2311
15 Maharashtra 34 351 27869 27869 2272
16 Manipur 6 -na- 161 167 14668
17 Meghalaya(d) -na- -na- -na- 0 -na-
18 Mizoram(d) -na- -na- -na- 0 -na-
19 Nagaland(d) -na- -na- -na- 0 -na-
20 Odisha 30 314 6798 7142 5264
21 Punjab 22 147 13271 13440 1335
22 Rajasthan 33 295 9892 10220 5127
23 Sikkim 4 -na- 185 189 2672
24 Tamilnadu 31 385 12523 12939 3159
25 Telangana 9 438 13057 13504 1726
26 Tripura 8 35 591 634 7600
27 Uttar Pradesh 75 822 58791 59688 2847
28 Uttarakhand 13 95 7762 7870 927
29 West Bengal 22 342 3340 3704 22498
Union Territories
1 Andaman & Nicobar 3 9 70 82 3784
2 Chandigarh -na- -na- n.a. 0 -na-
3 Dadra & Nagar Haveli 1 n.a. 20 21 -na-
4 Daman & Diu 2 n.a. 15 17 -na-
5 NCT of Delhi(e) n.a. n.a. n.a. 0 -na-
6 Lakshadweep 1 n.a. 10 11 -na-
7 Puducherry n.a. 10 98 108 4470
India 630 6613 253380 260623 3624
Note: 1. VPs-Village Panchayats or Gram Panchayats in almost all States.
2. The nomenclature of intermediate rung differs from one State to another. It is known as Mandal Parishad
in Andhra Pradesh, Anchal Samiti in Arunachal Pradesh, Anchalic Panchayat in Assam, Janpad Panchayat
in Chhattisgarh and Madhya Pradesh, Taluka Panchayat in Gujarat, Taluk Panchayat in Karnataka, IIPA

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Panchayat Union in Tamilnadu, Kshetra Panchayat in Uttar Pradesh and Uttarakhand and Panchayat
Samiti in many States i.e. Bihar, Haryana, Himachal Pradesh, Jharkhand, Maharashtra, Orissa, Punjab
and Rajasthan.
3. It is also known as Zilla Panchayat/Parishad in many States.
d The State is outside the purview of Part IX of the Constitution under its Article 243 M.
e Panchayat has yet to be revived
This accelerated the process of decentralization with greater devolution and delegation
of powers to local governments and the recognition of Panchayats in the book of statute as
institutions of self-government.
Notwithstanding, local governments both Panchayats and Municipalities, are not
completely autonomous of the state, like they used to be once upon a time in recorded history—
for which they have been praised by the scholars and thinkers. The present Panchayats are part
of state governance structure. A fresh lease of life is breathed into them by the respective states,
of course under the general direction in the Constitution. They are actually organised under the
Dillon’s principle, enunciated in late nineteenth century, which holds that local governments are
derivative of the state. They are created by the state and they can be decimated by it. It is true
that the march of history cannot be reversed easily, yet we cannot turn a blind eye to the fact
that the whole structure has been evolved by the state. The local governments in India carry out
the functions and responsibilities assigned to them with devolution of power and authority for
the purpose. The same was the case before 73rd and 74th Amendments. The difference is that
states have now constitutional obligation to keep them alive and not to relegate them to
abeyance for indefinite period. Yet, it is for the states to create an enabling environment in
which they can function like self-governing units.
The Constitution of India has clearly demarcated legislative areas between the Union
and the states. It is within the provision of state list of the Schedule VII, under Article 246 (3)
x`, that local governments have to function. Despite Constitutional status being accorded to
Panchayats, it is the state legislature which empowers Panchayats in any real sense. It is under
the Conformity Acts
3
of the states that Panchayats are governed in the respective states and in
turn they govern public affairs in their jurisdictions.

3
The 73
rd
Constitutional Amendment Act is the Union Act to establish the third tier of governments and the conformity Acts are
state legislations. IIPA

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Under the Constitution Amendment Act (CAA), the state legislature is supposed to
devolve responsibilities, powers and authorities to Panchayats to enable them to function as
institutions of self–government. The legislature of a State may authorize the Panchayats to
levy, collect and appropriate certain taxes, duties, tolls and fees, etc, and also assign to them the
revenues of certain state level taxes subject to such conditions as are imposed by the State
government. Further, grants–in–aid may also be provided to these bodies.
New fiscal arrangements necessitates every state under Article 243 I to constitute, at a
regular interval of five years, a State Finance Commission (SFC), and assign it the task of
reviewing the financial position of Panchayats and making recommendations on the sharing
and assignment of various taxes, duties, tolls, fees, etc and grants–in–aid to be given to the
Panchayats from the consolidated fund of the state. The Conformity Acts of the CAA are
required to provide for the composition of the commission, the qualifications for its members
and the manner of their selection. Every recommendation of the commission is to be laid
before the legislature of the respective state.
It is 27 years now since Part IX was incorporated into the Constitution. During the last
two and half plus decades, one could find enough reasons to cheer. Conformity Acts have been
enacted in all the states. Regular elections for Panchayats have been conducted in all states
4
.
All states have constituted State Finance Commission. Many states have constituted even their
fifth generation SFC (see Table 1.2). Notwithstanding these positive developments, Panchayats
in almost all states continue to be starved of finances causing major impediment in their growth
and effective functioning. Seen with the expanding role and responsibilities of the Panchayats,
the problem is getting compounded with the growing effectiveness of the CAA.






4
Jammu and Kashmir is the last state to conduct its first election for panchayats. IIPA

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Table 1.2: Constitutions of State Finance Commissions- An Status
5th SFC 4th SFC 3rd SFC 2nd SFC 1st SFC
Assam, Bihar, Haryana,
Himachal Pradesh,
Kerala, Madhya Pradesh,
Maharashtra, Odisha,
Punjab, Rajasthan,
Sikkim, Tamil Nadu,
Uttar Pradesh
Andhra Pradesh,
Karnataka,
Tripura,
Uttarakhand,
West Bengal
Chhattisgarh,
Goa, Gujarat,
Manipur
Arunachal
Pradesh,
Jharkhand,
Nagaland
Jammu &
Kashmir,
Mizoram,
Telangana
Source: Author’s computation
Generally, the functional responsibilities are closely linked with the financial powers
delegated to the local government, however, in practice there is a mismatch between the two,
leading to a severe fiscal stress at the local level. Sufficient Panchayats’ own revenues are not
enough even to meet their O&M requirements; therefore, they are dependent on the higher tiers
of government to finance their activities. The role of SFCs in this context becomes critical in
examining not only the revenue sharing arrangements between the state governments and their
Panchayats, but also the entire range of subjects concerning assignment of taxes, transfers of
power and such other subjects for improving the financial health of the Panchayats.
Several schemes have since started assigning a range of responsibilities to the
Panchayats and depend upon them for grassroots implementations. In addition, there are several
important flagship programmes of the Union, which aim at provisioning basic essential services
across the country through the Panchayats. Institutional mechanism is expected to provide
centrality to the Panchayats in their planning and implementation.
It is pertinent to mention here that substantial funds are being transferred to the
Panchayats through the centrally sponsored schemes (CSSs) and additional Central assistances
(ACAs). For long, these CSS transfers were administered and utilized mainly by line
departments. In recent years, the Panchayats are being increasingly recognized as implementing
institutions for the Plan schemes of line ministries. The most important among these is the
Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), where the
Panchayats at the district, intermediate and village levels have been given specific roles and
responsibilities as principal authorities for planning and implementation and 50 per cent of the IIPA

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works in terms of funds are to be executed through Panchayats. For other works also they have
been entrusted with some responsibilities.
Against this backdrop, the NITI Aayogentrusted a study on ‘Measures to Augment the
Resources of the PRIs” to the Indian Institute of Public Administration vide letter of approval
No. O-15012/22/18- Research dated 14 August 2018 from Governance and Research Vertical
of which the first installment was sanctioned vide sanction Order No. 14 dated 31 August 2018.
The subsequent section deals with objectives, methodology and scope of study.
A preliminary report was submitted on 14 December 2018. We received comments from
the NITI Aayog (SC&DP) vide letter No. O-15012/22/18 – Research dated 14 January 2019.
Based on those comments, the report was revised, and submitted on 21 January 2019. A
questionnaire was also submitted on 20 March 2019 for the approval of the NITI Aayog. We
received comments/observations on the questionnaire on 1 May 2019. Accordingly, the
questionnaire was curtailed and modified with lesser number of indicators. The same was
submitted to NITI Aayog on 13 May 2019 for approval. The questionnaire was examined in the
NITI Aayog and final approval was received on 1 July 2019 containing 18 parameters and ten
States. Eight parameters proposed in our questionnaire had not been approved by the NITI
Aayog. The details of the approved parameters and states are given below in this chapter. Draft
letters for ten states with questionnaire were submitted to NITI Aayog on 18 July 2019 so that
information from States could be elicited. Finally, the NITI Aayog elicited information from ten
states vide letter dated 29 July 2019. It was followed up by the Director, IIPA vide his letter
dated 6 August 2019 to Chief Secretary and Principal Secretary/Secretary in-charge of
Panchayati Raj in ten States. This has been followed up through written reminders and phone
calls.
1.2 Objectives
The study intends to examine the following:
1. Power devolved to PRIs by the States including the power for own revenue generation;
2. The existing scope and mechanisms with the PRIs for augmenting resources /revenue
generation; IIPA

16 | P a g e
3. The status of devolution to Panchayati Raj Institutions;
4. Plans/ mechanisms at village and Panchayat level for utilization of available resources
across various programmes; and
5. To find the issues and suggest measures thereof.

1.3 Research Methodology
The study proposes a robust methodology to undertake qualitative assessment of the
Panchayats, their performances under the current regulatory environment by States and the
factors that affect their performance. The methodology would encompass a democratic process
of seeking inputs through discussions, & consultations involving stake holders and field work.
The Orissa methodology for the study is based on the ToRs of the study under reference
and previous studies on Panchayat devolution conducted by the IIPA. The questionnaire has
been developed based on the comments from NITI Aayog. The comments and feedbacks on
previous works received from the state governments and academics were handy in developing
the questionnaire. The process was taken forward through continuous consultations with States
and the NITI Aayogalong with the review of the government reports on various issues, review
of other national and international literature on decentralization and local governance. Related
State Acts, manuals, state reports, government orders etc. were also sought to make better
judgments. This process culminated in the form of a structured questionnaire with few open
ended questions. The same is presented in the present report.
1.3.1 Approach
The proposed approach for this study is to assess the status of devolution of finances
(including the power for own revenue generations by Panchayats), functions, and functionaries
to Panchayats in the spirit of Article 243G. The assessment has been done first at the level of
States with reference to the themes specified in scope of the study. Then an overall thematic
synthesis has been done to arrive at the status of devolution in ten states. The thrust has been on
highlighting practices related to augmenting own resources/revenue generation by various rungs IIPA

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of Panchayats, identifying gaps in the process of financial devolution, analyzing reasons
thereof and providing practical recommendations to address these gaps.
1.3.2 Selection of Data (Primary and Secondary)
The data and information were, therefore, required from the state level. The data
collected from local level intend to ensure accuracy of the information collected from various
official sources of the states. This involves the following steps for analyzing quantitative
information:
i. Questionnaire
ii. During the course of the study, the questionnaire has been redrafted based on the
responses received from NITI Aayog.
iii. Collection of data from States
The following ten States were requested vide letter from NITI Aayog dated 29 July
2019 to provide information as per the questionnaire presented in the report.
1. Andhra Pradesh
2. Bihar
3. Gujarat
4. Karnataka
5. Madhya Pradesh
6. Maharashtra
7. Odisha
8. Tamil Nadu
9. Uttar Pradesh
10. West Bengal
The following is the chart of samples of District Panchayats, Intermediate Panchayats
and Village Panchayatsfor the study.
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Table 1.3: List of Selected Districts, Blocks and Gram Panchayats for Field visits
Sl.
No
.
States

District Panchayats Intermediate Panchayats Village Panchayats
1. Andhra Pradesh 1. West Godavari
2. Vizianagram

1. Eluru
2. Gantyada

1. Jalipudi,
2. Kotarubelli

2. Bihar 1. Patna
2. Bhojpur
1. Danapur
2. Badahara
1. Jamsaut,
JamaludinChak
2. Saraiyan, Barahara
3. Gujarat 1. Ahmedabad
2. Kheda
1. Daskroi
2. Nadiad
1. Bhat ,Vahelal
2. Yoginagar, Piplag
4. Karnataka 1. Bangalore Rural
2. Ramanagara

1. AraluVallige
2. Bashettyhalli
5. Madhya Pradesh 1. Bhopal
2. Sehore
1. Phandajanpad

1. EtkheriSadak
2. Mehetwara
6. Maharashtra 1. Raigad
2. Thane
1. Pen
2. Rampur

1. Savessai
2. Tarankshop
7. Odisha 1. Khurda
2. Puri

1. Bhubaneswar

1. Kalarahanga
2. Chandanpur
8. Tamil Nadu 1. Veeraganellur
2. Kancheepuram
1. Tiruttani
2. Walajabad
1. Agoor
2. Uthukkadu
9. Uttar Pradesh 1. Ghaziabad
2. Lucknow
1. Loni
2. Lucknow ZP
1. Jawli
2. Dilwasi

10 West Bengal 1. Barasat,
2. 24 Parganas(N)

1. Rajarhat 1. Kadamagachi
2. Kamrabad

1.3.3 Desk review: Verification and Qualitative Aspects through Survey
Data of states have been collected/ verified from various official documents such as SFC
reports, annual reports, finance accounts, audit reports, State Acts etc. The information provided
by States have been verified/collected on the basis of ground verification through sample
surveys. Many States including Gujarat, Karnataka, Odisha and West Bengal responded
adequately for the request of data made by NITI Aayog and IIPA. IIPA

19 | P a g e
The common research tools are used to elicit information, analyze data to arrive at the
desired results of the study under reference.
1.4 The Parameters
In the study, the following parameters have been looked upon.
1. Basic Details of Panchayats including Constitutional Provisions
2. Constitution and Functioning of District Planning Committee
3. Role of Panchayats in Parallel Bodies
4. Autonomy to Panchayats
5. Functions Assigned and actual involvement
6. Involvement in Important Schemes
7. 14
th
FC Grants (basic grants and performance grants)
8. State Finance Committee (SFC)
9. Money transferred on account of SFC
10. Empowerment of Panchayats to impose/collect revenue
11. GST implication
12. Expenditure
13. Gram Sabha
14. Gram Panchayat Development Plan
15. Transparency & Anti-Corruption
16. Infrastructure (Physical and Digital)
17. Training Institutions/Activities
18. E-Connectivity ICT measures. IIPA

20 | P a g e
CHAPTER 2
Fiscal Decentralization to Panchayats
2.1 Decentralization
The theory of State pre-eminence over local governments was pronounced by John
Forrest Dillon in a judgment inIowa Supreme Court as early as 1868 that, to quote, Municipal
corporations owe their origin to, and derive their power and rights wholly from, thelegislature.
It breathes into them the breath of life; without which they cannot exist. As it creates, so it may
destroy. If it may destroy, it may abridge and control.
Dillon’s rule contrasts the powers of states, which are unlimited but for restrictions
imposed by the constitution, local governments have only those powers which have expressly
been granted to them by their state. This strong opinion did not go unchallenged. Thomas
Cooley did not agree with Dillon and in a judgment in Michigan Supreme Court in 1871 argued
that ‘local government is matter of absolute right’ (of the people) and ‘State cannot take it
away’.
But the fact of the matter is that local governments are being established and treated
according to Dillon’s principle. Much we may talk of Gandhi and ancient Panchayats in India
our local governments, Panchayats and municipalities, continue to derive not only their powers
but also functions from their respective States.
More recently, economists have begun to see devolution as a way of tightening the
political agency between constituents and incumbents to enhance the mechanisms of the so-
called ‘political agency’. It is different from formal (or legal) federalism, in that the former is a
constitutional decision whilst the latter is the result of the political bargaining that takes place
both before and after the constitution of a country is determined (Joan Costa Font, 2010).
Appleby (1962), made the distinction between the two phrases, i.e. ‘decentralized
democracy’ and ‘democratic decentralization’. Peter R. de Souza (1999, 2000) also made this
distinction and clarified that the former is concerned with democratic practices that exist at the
base whereas the latter denotes democratic practices which promote the base. IIPA

21 | P a g e
2.2 Decentralization: Global and Regional Trend
Suri (2005) studied the trend of decentralization in recent years and suggested that there
has been a tremendous revival of interest in decentralised government in both developed and
developing countries around the globe. This was partly motivated by the new paradigms of
governance, democracy and development that came to dominate much social science research
in the wake of the collapse of the socialist and welfare states in Europe (Suri 2005). According
to World Bank estimate in 1998, all but 12 of the 75 developing and transitional countries with
populations greater than 5 million had embarked on a process of political devolution. Dellinger
in 1995 conducted a survey showed that all but 12 of 75 developing countries studied had
commenced decentralization (Dellinger 1994).
Bahl (1999) and Bird (1991) studied the importance of decentralization in people
participation, improving service delivery and increase in the revenue mobilization. The reasons
put forward for this increasing attention on decentralisation are varied. United Nations' Forum
suggested "the emphasis which has been placed upon the strengthening of local level
government is undoubtedly a reaction to years of frustrating experience with highly centralized
national government (UN 1996). The World Bank argues that decentralisation is a means to an
end, often imposed by political stability and is in response to demands for increased self-
government (World Bank 2000). In contrast, arguments against decentralisation have focused
on the reduced ability of central governments to implement macro-economic stabilization
programs; efficiency losses due to the poor capacity of local governments to undertake the
functions assigned to them; and the potential for increased corruption (Prudhomme 1995, Tanzi
1996, 2001).
2.3 Forms of Decentralization
It is essential to define decentralisation before proceeding with discussion on different
forms and its merits and demerits. Writers on the subjects and major international donors have
defined the term differently. In fact, different authors working on decentralisation are taking
about a broadly similar idea, but they use different labels in quite different ways, which do
result in different interpretations of the conclusions drawn from the empirical studies (Sharma IIPA

22 | P a g e
2006). Given the varied terms used in defining. The decentralisation, Bird observed,
"Decentralisation seems often to mean whatever the person using the terms wants it to mean
(Bird 1993). Similarly, authors like Ostrom, Schroeder and Wynne also emphasize that a
precise meaning for decentralisation does not exist (Ostrom, Schroeder & Wynne 1993).
Thus, different schools of thought understand decentralisation in different perspectives.
Jean-Paul Faguet defines decentralization as the devolution by Central (i.e. national)
government of specific functions, with all of the administrative, political and economic
attributes that these entail, to democratic local (i.e. municipal) government which are
independent of the centre within a legally delimited geographic and functional domain (Faguet
2005). According to Crook and Manor decentralisation is a general term for "transfer of powers
and resources from higher to lower levels in a political system" (Crook and Manor 2000).
Burki et al define the decentralisation" as the extent to which power in held by
autonomous elected sub national government capable of taking binding decisions on at least
some policy areas (Burki et al 1999). 'Decentralisation' according to Rondinelli et al, 'is a
transfer of responsibilities for planning, management, and resource raising and allocation from
central government and its agencies to: (a) field units of central government ministers or
agencies; (b) sub-ordinate units or levels of government; (c) semi-autonomous public
authorities or co-operation; (d) area circle, regional or functional authorities, or (e) non-
governmental private or voluntary organisations' (Rondinelli et all984). As there is no
consensus in the definition of decentralisation, there is also no consensus among the scholars on
different forms of decentralisation.
Rondinelli and Cheema (1983) have identified four different forms of decentralization-
deconcentration, delegation, devolution and privatization. Deconcentration involves the
redistribution of administrative responsibilities only within the central government. This does
not involve any transfer of authority to lower levels of governments. Delegation is the transfer
of service responsibility from central government agencies to specialized organisation with
some degree of operating autonomy. Devolution is a situation where central government
transfers authority to semi-autonomous local government bodies for decision-making, IIPA

23 | P a g e
resourcing, administration and delivery. Privatization is the transfer of responsibilities to non-
governmental organisation (NGOs) or private enterprises independent of government.
Richard Scott-Herridge (2002) have identified three forms of decentralisation viz.,
deconcentration, delegation and devolution. He considers deconcentration as a weakest form of
decentralisation and devolution as a strong and more radical form of decentralisation.
Decentralisation, to Crook and Manor (2000), has three forms: deconcentration or
administrative decentralisation, fiscal decentralisation and devolution or democratic
decentralisation. Uphoff (1986) has categorized decentralisation into two forms:
deconcentration and devolution. Delegation, he thinks is an additional mode of deconcentration.
Besides, he further formulated three other forms of decentralisation which he described to be
the "less conventional modes of devolution." These include; intermediation, philanthropization
and marketization.
Smith (1985) however viewed the forms of decentralisation from different perspective.
He classified decentralisation into two dimensions: territorial and functional. By the former he
meant deconcentration and devolving government authority from the center to the local level.
The latter includes delegation and privatization. Parker (1995) also classified decentralisation
into three types: deconcentration, delegation and devolution. It thus becomes clear from the
above definition and different forms, that the concept of decentralisation is broad and covers
many different phenomena.
2.4 Genesis
Before the advent of the British rule in India, there was no advanced tradition of local
self-government in the modem sense. However, a rudimentary local government system did
exist in the rural areas. This was a system of village Panchayat(literally council of five) which
performed administrative, judicial and sometimesdevelopmental functions (Majumdar 1960,
Basham 1954). In ancient India, Panchayatswere usually elected councils with executive and
judicial power (Malaviya 1956).
However, in term of representation, the Panchayat was only rarely representative of
thevillage as a whole, often representing the founding-families, upper caste and largefarmers IIPA

24 | P a g e
(Siddique 1992, Drummand 1931, Sand 1976). Within the feudal set-up theywere functioning
as instruments of domination by upper castes. Decentralisation ofpower was thus limited to the
remote past when there was little social differentiation inthe village and in the recent past to
areas where the heterogeneity in social structurewas weakly developed (Pathy 1980).
In Discovery of India, Pandit Nehru provided afairly exhaustive idea about the working
of the village Panchayat in ancient India.Panchayats had vast powers, both executive and
judicial. Its members were treated withgreat respect by the King's courtiers and the public. Land
was allotted by thePanchayats. They also collected taxes out of agricultural produce and paid
theshare ofthe village to the Kings (Nehru, l964).
Kautilya'sArthasastra, stress on the importance of village in the governance of
thecountry. He advised the King to constitute the units of village having 100-500 families.There
could be centres of 10 villages, 200 villages, 400 villages and 800 villages. Thesecentres would
be respectively known as 'Sangrahan', 'Karvatik', 'Drona Mukh' and'Sthaneeya' (Josh &Narwani
2002).
2.5 Dimensions of Devolution
Devolution is a multi-dimensional approach that organises governance and manages
state power along multiple lines. It defines, distributes and constrains the use of state power
along multiple lines by combining both vertical and horizontal dimensions. In essence,
devolution is founded upon the concept of decentralisation and devolution of power (Javas
Bigambo, 2012).
The raison de etre for federalism and decentralisation lies in the fact of diversity and
plurality of cultures, tastes and preferences on the one hand and geography, topography and
resources on the other. Yet there are reasons, history apart, that people choose to be governed
by one political dispensation as distinguished from others.
Some scholars working in the area of devolution have often considered political, fiscal
and administrative matters (Kearney, 1999); whereas, others have thought it fit to consider
funds, functions and enabling institutions. Then there are scholars to suggest dimensions of IIPA

25 | P a g e
political, functional and financial devolutions in Indian context (Chaudhuri, 2007). Within the
political dimension, Chaudhuri (2007) points to the issues of voice, autonomy and
accountability and discusses representation of weaker sections, regularity of elections, etc.
Chaudhuri (2007) rates Indian States on political devolution, functional devolution and
financial devolution. He accorded positive and negative marks for their achievements in various
sub-dimensions within these dimensions. Four indicators included in political devolution were:
regular elections, women’s representations, Dalit/Adivasi representation and political
autonomy. Within functional autonomy were included: transfer of functions, transfer of
functionaries, district planning committee and expenditure autonomy. Within financial
devolution were considered: transfer of funds, flow of funds and share of funds. The scores
across States varied from (-) 10 for Bihar to (+) 8 for Kerala while indicators received score in
integers.
World Bank (2000) tried to assess the status of rural decentralisation in seven selected
States of India in which three dimensions of devolution, viz., political, administrative and fiscal
were considered. There were 17 broad indicators and 34 specific indicators. The Eleventh
FinanceCommission also used an index of decentralisation, based on 10 parameters, as a
criterion with 20 per cent weight for devolving its grants to states for onward transfer to
Panchayats.
A Working Group constituted by the Government of India (2001) has compiled
information in terms of number of items from Schedule XI transferred on functions,
functionaries and funds along with the status of District Planning Committee. They have put
emphasis on the aspects of regularity and conditionality in the devolution of powers and funds.
John and Chatukulum (2003) made an attempt to measure the level of attempt of
decentralisation made in Kerala by six indicators through around 20 variables. The indicators
they considered were: scope, intensity, commitment, and demand for decentralisation, effects in
society and theory-practice congruity. Based on qualitative assessment and knowledge of
experts they rate Kerala at 2.0 out of a maximum of 4.0. One may note that some are demand
side factors and others are supply side ones.Still others look from the perspective of local IIPA

26 | P a g e
autonomy. Wolman (1990) and Wolman et al(2008) summarised the arguments for local
autonomy as resting upon values of economic efficiency, political responsiveness and
accountability, policy diversity and consequent innovation and learning opportunities. From the
citizens’ viewpoint, they indicate a political participation, civic education and leadership
development.
For the sake of operationalising and measuring local autonomy, Wolman et al (2008)
have considered three dimensions viz., local government importance, local government
discretion, and local government capacity. For determining the level of local government
importance, they have considered five variables—two within fiscal, one within economic and
two related with personnel, detailing the extent to which local governments share the space of
the State of which they are derivative organ. For determining the level of second dimensions
(discretion) as many as eleven variables are considered. Some of them are structural home rule,
functional home rule, range of municipal authority for handling key governmental services
(public health, public works, public school management), legal limits on fiscal activities of
localgovernments (property assessment limits, property tax limits, revenue/expenditure limits,
state imposition on debt limits). For the third dimension of local government capacity, the
factors taken into account were personnel capacity (per thousand citizens), revenue stability
(proxy through measures of revenue diversity).
2.6 Finances
The intermediate and district Panchayats are endowed with powers to collect very few
taxes, whereas village Panchayats are given substantial taxing powers. In a number of cases,
under the tax rental arrangement, the village Panchayats collect taxes and pass them on to the
higher level of Panchayats (Jha 2004).
Property tax, cess on land revenue, surcharge on additional stamp duty, tolls, tax on
professions, tax on advertisements, non-motor vehicle tax, octroi, user charges, and the like
contribute the maximum to the small kitty of own-source revenue, which contributes only 6 to 7
per cent of the total expenditure of Panchayats (Alok 2006).
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27 | P a g e
2.7 Functionaries
Another challenge before the state government has been the allocation of activities to
the appropriate tier of the Panchayat system. Traditionally, the lowest-level Panchayat—the
village Panchayat—has been the most active in almost all states. Generally, the village
Panchayats carry out major functions, including core functions, whereas intermediate and
district Panchayats in most states are “allotted supervisory functions or act mainly as executing
agents for the state government” (Jha 2004, 3).
Mukharji and Datta, 1996 studied the deputation of state government officials to assist
elected authorities of Panchayats, creation of positions at Panchayats and appointment through
state-wide local government board.
Bratton and Rothchild 1992 associategood governance primarily with capacity building
and the exercise of political powerneeded for efficient and effective management of concrete
national programmes,whether the political system is democratic or not. IIPA

28 | P a g e
CHAPTER 3
Scope of the Study-Parameters
The study on ‘measures to augment the resources of Panchayats’ attempts to assess the
status of devolution of finances (including the power for own revenue generations by
Panchayats), functions, and functionaries to Panchayatsas per the provisions contained in73
rd

Constitutional Amendment Actor Part IX of the Constitution. The assessment has been carried
out at the level of States with reference to the terms specified in the scope of the study. The
thrust has been on augmenting own resources/revenue generation by various rungs of
Panchayats, identifying gaps in the process of financial devolution.
Hence the study assesses the enabling environment created by States for the
Panchayats to function under. This study has analyzed the extent to which ten select states have
devolved their powers and resources to Panchayatsmandated to promote economic
development and social justice in their respective jurisdictions. The study has focused on 18
parameters i.e, Basic details of Panchayats, Constitution and Functioning ofDistrict Planning
Committee, Role of Panchayats in Parallel Bodies, Autonomy to Panchayats, Functions
Assigned to Panchayats and Actual Involvement,Panchayats involvement in important
schemes, Fourteenth Finance Commission Grants (basic grants and performance grants), Status
of State Finance Commissions (SFCs), Money Transferred on account of SFCs to Panchayats,
Empowerment of Panchayats to impose/collect revenue, GST Implications in
Panchayats,Expenditure, Role of Gram Sabha, Number of Plans prepared under Gram
Panchayat Development Plan, Transparency and Anti-Corruption, Infrastructure (Physical and
Digital), Training Institutions/Activities and E-Connectivity & ICT Measures. The findings
against each parameter are outline below:- IIPA

29 | P a g e
3.1 Basic Details of Panchayats Including Constitutional Provisions
The Panchayats in India carry out the functions and responsibilities assigned to them
with devolution of power and authority for the purpose. With the passage of the 73rd
Constitution Amendment Act (CAA) Panchayats got recognition in the statute book as
institutions of self-government in India. This accelerated the process of decentralization with
greater devolution and delegation of powers to rural local governments. Consequently, Part IX
has been inserted in the Constitution (73rd Amendment) Act, 1991 w.e.f. 24 April 1993 for
Panchayats.
Notwithstanding, local governments both Panchayats and municipalities, are not
completely autonomous of the state, like they used to be once upon a time in recorded history—
for which they have been praised by the scholars and thinkers. The present Panchayats are part
of state governance structure. A fresh lease of life is breathed into them by the respective states,
of course under the general direction in the Constitution. They are actually organized under the
Dillon’s principle, enunciated in late nineteenth century, which holds that local governments are
derivative of the state. They are created by the state and they can be decimated by it. It is true
that the march of history cannot be reversed easily, yet we cannot turn a blind eye to the fact
that the whole structure has been evolved by the state. The local governments in India carry out
the functions and responsibilities assigned to them with devolution of power and authority for
the purpose. The same was the case before 73rd and 74th Amendments. The difference is that
states have now constitutional obligation to keep them alive and not to relegate them to
abeyance for indefinite period. Yet, it is for the states to create an enabling environment in
which they can function like self-governing units.
The Constitution of India has clearly demarcated legislative areas between the Union
and the states. It is within the province of state list of the Schedule VII, under Article 246, that
local governments have to function. Despite Constitutional status being accorded to
Panchayats, it is the state legislature which empowers Panchayats in any real sense. It is under IIPA

30 | P a g e
the Conformity Acts
5
of the states that Panchayats are governed in the respective states and in
turn they govern public affairs in their jurisdictions.
Under the Constitution Amendment Act (CAA), the state legislature is supposed to
devolve responsibilities, powers and authorities to Panchayats to enable them to function as
institutions of self–government. The legislature of a State may authorize the Panchayats to
levy, collect and appropriate certain taxes, duties, tolls and fees, etc., and also assign to them
the revenues of certain state level taxes subject to such conditions as are imposed by the state
government. Further, grants–in–aid may also be provided to these bodies.
New fiscal arrangements necessitates every state under Article 243 I to constitute, at a
regular interval of five years, a State Finance Commission (SFC), and assign it the task of
reviewing the financial position of Panchayats and making recommendations on the sharing
and assignment of various taxes, duties, tolls, fees, etc. and grants–in–aid to be given to the
panchayats from the consolidated fund of the state. The Conformity Acts of the CAA are
required to provide for the composition of the commission, the qualifications for its members
and the manner of their selection. Every recommendation of the commission is to be laid before
the legislature of the respective state.
It is 27 years now since Part IX was incorporated into the Constitution. Since the
establishment of Panchayats, one could find enough reasons to cheer. Conformity Acts have
been enacted in all the states. Regular elections for Panchayats have been conducted in all ten
select states. All select states have constituted State Finance Commission.Among ten select
states, six states namely Bihar, Madhya Pradesh, Maharashtra, Odisha, Tamil Nadu and Uttar
Pradesh have constituted their 5th State Finance Commission, and three states namely Andhra
Pradesh, Karnataka and West Bengal have constituted their 4th State Finance Commission. The
last one that is Gujarat among the ten select states has constituted its 3
rd
State Finance
Commission till date.

5
The 73
rd
Constitutional Amendment Act is the Union Act to establish the third tier of governments and the conformity Acts are
state legislations.
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31 | P a g e
Generally, the functional responsibilities are closely linked with the financial powers
delegated to the local government, however, in practice there is a mismatch between the two,
leading to a severe fiscal stress at the local level. Sufficient Panchayats’ own revenues are not
enough even to meet their O&M requirements; therefore they are dependent on the higher tiers
of government to finance their activities. The role of SFCs in this context becomes critical in
examining not only the revenue sharing arrangements between the state governments and their
Panchayats, but also the entire range of subjects concerning assignment of taxes, transfers of
power and such other subjects for improving the financial health of the Panchayats.
No doubt the actual performance of the individual Panchayats differs and depends upon
many other factors; these factors are specific to the state and different level of the Panchayats.
The enabling environment is also determined by village level factors. To reiterate, the study
seeks to measure the ‘enabling environment’ for the functioning of the Panchayats that state
governments have been able to create.
3.1.1 Constitutional Provisions
With the passage of the 73
rd
Constitution Amendment Act (CAA) Panchayats got
recognition in the statute book as institutions of self-government in India. This accelerated the
process of decentralization with greater devolution and delegation of powers to rural local
governments. Consequently, Part IX has been inserted in the Constitution for Panchayats and
the State legislature has been made responsible to assign responsibilities to Panchayats in the
matters listed in the Eleventh Schedule to the Constitution. The State is also expected to transfer
the concomitant powers to enable the Panchayats to carry out the responsibilities conferred
upon them.
Article 243A to Article 243O set out mandatory provisions regarding the structure,
constitution, composition, election procedures, resource allocation and core functions of
Panchayats. This includes reservation for elected positions for women, Schedule Castes,
Schedule Tribes. The others, in combination, ensures their continued existence and provide
safeguards against dissolution or suppressions, assure independent election by State Elections
Commissions and direct allocations of resources by independent State Finance Commission-in IIPA

32 | P a g e
all, providing a secure foundation for their existence and functioning. the provisions for
reservation for women, SC, ST representatives makes it even more representative of the general
population than higher levels of governments have been so far.
The new fiscal arrangement necessitates every State under Article 243(I) to constitute, at
regular interval of five years, a finance commission (SFC), and assign it the task of reviewing
the financial position of Panchayats and making recommendations on the sharing and
assignment of various taxes, duties, tolls, fees etc., and grants-in-aid to be given to the
Panchayats bodies from the Consolidated Fund of a State. The conformity Act of the CAA
provides for the composition of the commission, the qualifications for its members and the
manner of their selection. Every recommendation of the commission together with an
explanatory memorandum is to be laid before the legislature of the State.
It is about 27 years since Part IX was incorporated into the Constitution. During the
period, one could have found enough reasons to cheer. Conformity Acts have been enacted in
all the States. Elections have been conducted in all. Women have been elected as Sarpanchs for
rural local governments. All States have constituted their SFCs. Most States have received their
fifth generation SFC recommendations.
3.1.2 Reservation of Seats
As per the provision in article 243 D of the Constitution and Conformity Acts in States
Reservation of seats:
(1) Seats shall be reserved for
a) the Scheduled Castes; and
b) the Schedules Tribes
in every Panchayat and the number of seats so reserved bear, as nearly as may be, the same
proportion to the total number of seats to be filled by direct election in that Panchayat as the
population of the Scheduled Castes in that Panchayat area or of the Scheduled Tribes in that IIPA

33 | P a g e
Panchayat area bears to the total population of that area and such seats may be allotted by
rotation to different constituencies in a Panchayat.
(2) Not less than one-third of the total number of seats reserved under clause (1) shall be
reserved for women belonging to the Scheduled Castes or, as the case may be, the Scheduled
Tribes.
(3) Not less than one-third (including the number of seats reserved for women belonging to the
Schedules Castes and Schedules Tribes) of the total number seats to be filled by direct election
in every Panchayatshall be reserved for women and such seats may be allotted by rotation to
different constituencies in a Panchayat.
(4) The offices of the Chairperson in the Panchayats at the village or any other level shall be
reserved for the Scheduled Castes, the Scheduled Tribes and women in such manner as the
Legislature of a State may, be law, provide.
It is important to note that reservation for women has seen upward movement. As many
as 20 states have given 50% reservation to women at the level of Panchayats. Among ten select
states except Uttar Pradesh all states have given 50% reservation to women in Panchayat at all
rungs. In Table 3.1 reservations against women, SCs and STs in ten select states can been seen
below.
Table 3.1: Reservations for Women, SCs and STs in Panchayats
Sl.
N
o.
States
Percentage of Elected Representatives
Women Scheduled Caste (SCs) Scheduled Tribe (STs)
District Block Village District Block Village District Block Village
1. Andhra
Pradesh
50.0 50.0 50.0 18.3 18.3 18.3 8.3 8.3 8.3
2. Bihar 50.0 50.0 50.0 16.5 16.3 16.3 0.8 0.8 0.8
3. Gujarat 50.0 50.0 50.0 7.0 7.0 7.0 14.0 14.0 14.0
4. Karnatak
a
50.0 50.0 50.0 18.4 18.4 18.6 8.5 9.5 10.8
5. Madhya
Pradesh
50.0 50.0 50.0 15.0 15.0 15.0 26.1 27.8 28.7
6. Maharash
tra
50.0 50.0 50.0 11.0 11.0 11.0 13.0 13.0 15.0
7. Odisha 50.0 50.0 50.0 16.3 16.3 16.3 22.1 22.1 22.1
8. Tamil
Nadu
50.0 50.0 50.0 23.0 23.0 23.0 1.0 1.0 1.0 IIPA

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9. Uttar
Pradesh
50.0 50.0 50.0 26.0 23.0 24.0 0.0 0.0 0.0
10
.
West
Bengal
50.0 50.0 50.0 41.0 42.0 42.0 23.0 10.0 10.0
Source: State’s Panchayat Act
3.2 Constitution and Functioning of District Planning Committee (DPC)
The DPC plays very important role in the district planning process by consolidating
plans prepared at the local level by the villages and towns in the district and then preparing a
draft development plan for the district on the basis of the inputs so received from within the
district. DPC is crucial to the function of ‘planning for economic and social justice’, which is a
mandated to Panchayats. It provides the vital link between rural and urban plans as well as
sectoral plans.
In the Constitution, Article 243ZD, on DPC reads as follows:
Article 243 ZD of the Constitution of India envisages constitution of District Planning
Committee (DPC) at district level in every state to consolidate the plans prepared by the
Panchayats and municipalities to be integrated into a draft development plan of district as a
whole. The legislature of a State may, by law, make provision, with respect to
a) The composition of the District Planning Committee
b) The manner in which the seats in such committee shall be filled:
Provided that not less than 4/5
th
of the total number of members of such Committee shall be
elected by, and from amongst, the elected members of the Panchayats at the district level and of
the Municipalities in the districts in proportion to the ratio between the population of the rural
areas and of the urban areas in the districts;
c) The functions relating to district planning which may be assigned to such Committee;
d) The manner in which the Chairperson of such committee shall be chosen.
Every District Planning Committee shall, in preparing the draft development plan, -
a) Have regard to- IIPA

35 | P a g e
i) Matters of common interest between Panchayats and Municipalities including spatial
planning, sharing of water and other physical and natural resources, the integrated
development of infrastructure and environmental conservation;
ii) The extent and type of available resources whether financial or otherwise
b) Consult such institutions and organizations as the Governor may, by order, specify.

The Chairperson of every District Planning Committee shall forward the development plan, as
recommended by such Committee, to the Government of the State.
The status of DPC in ten select states can be seen below:
Table 3.2: Constitutions and Functioning of District Planning Committee in Ten Select States
Sl.
N
o.
State Legislati
ve
Provision
s related
to DPC
DP
O
Exis
ts
Guideli
ne for
Dist.
Plan
Functio
nal
Chairma
n of DPC
Regul
ar
Meeti
ng
Number
of DPC
constitut
ed
No. of
DPC
submitt
ed Plan
1 Andhra
Pradesh
AP DPC
Act, 2005
N.A. Notified N.A. Chairpers
on of DP
Yes - -
2 Bihar Sec. 134
of Bihar
PR Act,
1993
N.A. Notified Not
Active
Adhyaksh
a of DP
No 38 37
3 Gujarat N.A No Notified Not
Active
Minister-
in-charge
of the
dist.
No N.A. N.A.
4 Karnataka Section
310 of PR
Act
No Notified Active President
of DP
No 29 29
5 Madhya
Pradesh
MP DPC
Act, 1995
Yes Notified Little
Active
Minister
in Charge
of the
Yes 50 50 IIPA

36 | P a g e
Dist.
6 Maharash
tra
Maharash
tra DPC
Act, 1998
Yes Notified Active Dist.
Guardian
Minister,
Ex-
Officio
Chairman
of DPC
Yes 35 33+2
Rural +
Urban
7 Odisha Orissa
DPC Act,
1998
Yes Notified Little
Active
A
Minister
of the
State
Council
of
Minister
No 30 30
8 Tamil
Nadu
Sec 241
of TN
Panchaya
ts Act
1994
Yes Notified Little
Active
Chairman
of DP
Yes 28 28
9 Uttar
Pradesh
UP DPC
Act,
1999;
DPC
Rules
2008
No Notified Not
Active
Minister
Nominate
d by
Governm
ent
No 75 75
10 West
Bengal
Sec 3 of
WB DPC
Act, 1994
Yes Notified Active President
of DP-ex-
officio
Chairpers
on
Yes 17 17
IIPA

37 | P a g e
3.3 Role of Panchayats in Parallel Bodies
The Panchayat Act of all the ten select states envisages the functioning of the District
Panchayat, Intermediate Panchayat and Village Panchayats. Apart from these three tiers of
Panchayats, parallel bodies are created at every level of Panchayats to discharge certain
responsibilities in parallel. While the constitutionally created Panchayats are in position, in the
same geographical area, to discharge the same set of responsibilities, these bodies create
confusion and concurrency in the functioning.
Parallel bodies have a separate system of decision making, resource allocation and
execution of projects, which is independent of Panchayat bodies. They have been brought to
provide professional support, often multi-disciplinary and of supra departmental nature for
implementation of a programme. They also facilitate easy and accountable fund management
through receiving of funds directly from the State Government. They enable tracking of
utilization of funds through implementing agencies, enabling proper account keeping, providing
utilization details and meeting other financial management information requirements
6
. Overall
they provide a flexible organizational system for quick decision making and easy procurement
of goods and services.Examples of parallel bodies are; District Rural Development Agencies
(DRDAs), Forest Development Agencies (FDAs), District Watershed Development Societies,
the District Health Mission, District Education Mission, District Horticultural Missions and
District Project Management Units of Externally-assisted Projects.

6
Rural Local Bodies Core Functions and Finances: A Study of Fourteenth Finance Commission, First Report, May 2014, CPR,
New Delhi. IIPA

38 | P a g e
Table 3.3: Nature of Control of Panchayats on Parallel Bodies
Sl.
No
.
Status/Paral
lel Bodies
AP BI
R
GUJ KAR MAH MP ODI TN UP WB

1. Parallel body
merged with
the
Panchayat
Institution
Edu,
W,
HAS,A
C,
ITDA
-- W,
HAS
DRD
A
Edu,
W,
HAS,
AC,
ITD
A
W,
HAS
DRD
A
E,
HAS
-- -- DRD
A,
W,
HAS
2. Parallel body
made an unit
of the
Panchayat
Institution
-- -- Edu,
W
HAS
DRD
A
Edu,
W,
HAS,
AC,
ITD
A
Edu,
W,
HAS
-- DRD
A,
W,
HAS,
AC,
ITDA
DRD
A,
W,
HAS
-- DRD
A
Edu,
W,
HAS
3. Function of
parallel body
limited to
Fund/account
s
Management
-- -- DRD
A
Edu,
W,
HAS
DRD
A
Edu,
W,
HAS,
AC,
ITD
A
-- DRD
A
Edu,
W,
HAS,
AC,
ITD
A
DRD
A,
W,
HAS,
AC,
ITDA
DRD
A,
W,
HAS
-- DRD
A,
W,
HAS
4. Parallel body
is Presided/
Chaired by
Elected
Representati
ves of the
Panchayat
DRDA -- W,
HAS
DRD
A
Edu,
W,
HAS,
AC,
ITD
A
DRD
A
W,
HAS
DRD
A
DRD
A,
W,
HAS,
AC,
ITDA
DRD
A,
W,
HAS
DRD
A
DRD
A
Edu,
W,
HAS,
ITDA
5. Elected
Representati
ves of
Panchayats
are
represented
in Board of
the parallel
body
Edu,
W,
HAS,
AC,
ITDA
--
DRD
A
Edu,
W,
HAS,
AC,
ITD
A

DRD
A
Edu,
W,
HAS,
AC,
ITD
A
DRD
A,
Edu,
W
HAS
DRD
A,
W,
HAS,
AC,
ITDA
DRD
A,
W,
HAS
-- DRD
A
Edu,
W,
HAS,
ITDA
6. Parallel
Body
remains
separate, but
-- -- Edu,
W,
HAS

DRD
A
Edu,
-- DRD
A
DRD
A,
W,
HAS,
DRD
A,
W,
HAS
-- Edu,
ITDA IIPA

39 | P a g e
under the
control of
the
Panchayat.
W,
HAS,
AC,
ITD
A
AC,
ITDA
7. Parallel
Body
remains
separate and
not under the
control of
the
Panchayat
Institution
Edu,
W,
HAS,
AC,
ITDA
-- -- -- -- DRD
A
Edu,
W,
HAS,
AC,
ITD
A
DRD
A,
W,
HAS,
AC,
ITDA
DRD
A,
W,
HAS
W,
HAS
--
Notes: AP: Andhra Pradesh, BIR: Bihar, Guj: Gujarat, Kar: Karnataka, Mah: Maharashtra, MP: Madhya
Pradesh, Odi: Odisha, TN: Tamil Nadu, UP: Uttar Pradesh, WB: West Bengal.
DRDA: District Rural Development Agencies, EDU: Education, W: Water, HAS: Health and Sanitation,
AC: Agriculture Cooperation, ITDA: Integrated Tribal Development Agency, AO: Any Other

In the state of Andhra Pradesh parallel bodies are merged with the Panchayat institutions
in the sectors of Education Water, Health and Sanitation etc.
In the state of Bihar at the level of Panchayat, parallel bodies exit in the form of Village, Health
& Sanitation Committee, Watershed Development Committee, Joint Forest management
Committee, and Village Education Committee.
In the state of Gujarat, The Panchayat Act of the State envisages the functioning of the
Zila Parishads, Panchayat Samitis and Gram Panchayats through eleven functional
standing committees having elected representatives and concerned officials as members.
In the state of Karnataka parallel bodies have been merged with DRDA and Agriculture
Corporation.
In the state of Madhya Pradesh, the parallel bodies like District Rural Development
Agencies (DRDAs) works with the Zilla Panchayats (ZP) to implement the programmes
for rural development at the District level. In Madhya Pradesh at the level of Panchayats
some special institutions were created from bilateral and multilateral agencies funding
such as MP District Poverty Initiatives Project (DPIP) and the Madhya Pradesh Rural
Livelihood Programme (MPRLP). These also act as parallel bodies. At the village level,
the scheme-specific committees were made with the Sarpanch or a ward member in the
committees. IIPA

40 | P a g e
In the state of Maharashtra parallel bodies have been merged with Water and
Agriculture Corporation.
In the state of Odisha, there is a provision by which everyZilla Parishad shall constitute
a Standing Committee and nine Subject Committees.
In state of Tamil Nadu, parallel bodies have been made the unit of Panchayat such as
DRDA, Education, Water and Agriculture Cooperation.
In the state of Uttar Pradesh, a number of parallel bodies are constituted at Districtlevel
and GramPanchayat levels in the State to speed up developmental activities and
ensuring proper accountability. However, there is no parallel body functioning at
KshettraPanchayat level.
In the state of West Bengal, in order to implement the rural development activities
effectively and efficiently, there are provisions of parallel bodies at all the three tiers of
Panchayats. IIPA

41 | P a g e
3.4 Autonomy to Panchayats
The Constitutional framework of India defines Panchayat as a State Subject. They
empower Panchayats to function as institution of self-government for the preparation of plans
and social justice in their respective areas of matters which includes 29 subject listed in the 11
th

Schedule. In contrary, the division of powers and functions enumerated in the Union List and
State List, but, there is no such provisions exist between state and Panchayats. Hence, it is the
responsibility of the State legislature to make laws regarding the devolution of powers and
functions to the Panchayats. (Alok, 2011).
Almost all states and union territories claim that they have transferred responsibilities in
varying degrees to the Panchayats, by enacting laws in conformity with the CAA. However, the
functional domain of Panchayats pertains only to traditional civic functions in several states. In
those states where either the intermediate Panchayats or the district Panchayats were absent for
decades, the functional domain of Panchayats does not include adequate developmental
responsibilities. States where Panchayats have existed for a long time, have repeated the
provisions of the old statutes in their new laws with few adjustments. Moreover, many state
governments have not framed relevant rules or guidelines as a follow-up measure. A few states
realized that the transfer of additional functions requires the transfer of concomitant funds and
functionaries to Panchayats, enabling them to perform the specified responsibilities. However,
Panchayats are not very clear about the role they are expected to play in the new federal setup.
Almost all of the subjects enumerated in the 11
th
Schedule are state concurrent, involving
duplication and overlapping (Alok, 2011).
In practice, some States weakened the autonomy of Panchayats by making them
subservient to the field level functionaries of the State administration. They have been assigned
the power to dismiss the elected representative or dissolve the Panchayat. Ideally, such powers
need to be assigned to State Assembly or State Government.
Panchayats in various states functions under provision of particular Panchayat acts
passed. Panchayats in ten select states are governed under various provisions. IIPA

42 | P a g e
In the state of Andhra Pradesh; Representatives, Panchayat Bodies, and Resolution of
District Panchayat, Block Panchayat can be suspended/dismissed/dissolved by state
government whereas at the Gram Panchayat level District collector can suspend the
representatives of Panchayats. However, the charge sheet can be filed by state
government for all the level of Panchayats in Andhra Pradesh
In the state of Bihar; Representatives of District Panchayat, Block Panchayat and Gram
Panchayat can be suspended/dismiss/dissolved by state government.
In the state of Gujarat; Representatives, Panchayat Bodies, and Resolution of District
Panchayat, Block Panchayat can be suspended/dismissed/dissolved by DC/DDO. There
is provision of charge sheet by state government at all the level of Panchayats in
Gujarat.
In the state of Karnataka; Resolution of District Panchayat, Block Panchayat and Gram
Panchayat can be suspended/dismissed/superseded/dissolved by state government, Zilla
Panchayat and Block Panchayat respectively. There is provision of charge sheet by
state government at all the level of Panchayats in Karnataka
In the state of Madhya Pradesh; Representatives and Resolution of District Panchayat,
Block Panchayat and Gram Panchayat can be suspended by Divisional Commissioner,
Collector, and S.D.O.(R) respectively. There is provision of charge sheet by state
government at all the level of Panchayats in Madhya Pradesh.
In the state of Maharashtra; Representatives, Panchayat Bodies, and Resolution of District
Panchayat, Block Panchayat and Gram Panchayat can be suspended
dismissed/superseded/dissolved by State government in the case of district and block
Panchayat and Divisional Commissioner in case of Gram Panchayat. There is provision
of charge sheet by state government at all the level of Panchayats in Maharashtra.
In the state of Odisha; Representatives, Panchayat Bodies, and Resolution of District
Panchayat, Block Panchayat and Gram Panchayat can be suspended
dismissed/superseded/dissolved by State government in the case of district and block
Panchayat and District collector in case of Gram Panchayat.
In the state of Tamil Nadu; Representatives, Panchayat Bodies, and Resolution of District
Panchayat, Block Panchayat and Gram Panchayat can be suspended IIPA

43 | P a g e
dismissed/superseded/dissolved by State government in the case of district and block
Panchayat and District collector in case of Gram Panchayat. There is no provision of
charge sheet by state government at any level of Panchayats in Tamil Nadu.
In the state of Uttar Pradesh; Panchayats autonomy data is not available.
In the state of West Bengal; Representatives, Panchayat Bodies, and Resolution of
District Panchayat, Block Panchayat and Gram Panchayat can be suspended
dismissed/superseded/dissolved by Divisional Commissioner in the case of district and
by District Magistrate in case of block Panchayat and by SDO or Addl. SDO in case of
Gram Panchayat. There is provision of charge sheet by state government at the level of
Gram Panchayats and District Panchayat in West Bengal.
IIPA

44 | P a g e
3.5 Functions Assigned and Actual Involvement of Panchayats
Article 243G of the Constitution empowers Panchayats to function as institutions of
self-government for the purposes of a) preparing plans for economic development and social
justice for their respective areas and b) implementing schemes for economic development and
social justice in their respective areas for various subjects including those twenty-nine functions
listed in the Eleventh Schedule. However, the list is merely illustrative and indicative. Unlike
the division of powers and functions, as spelled out in the Union and State List in the
Constitution, no such clear demarcation exists between the State and Panchayats.It is for the
State Legislature to make laws regarding the devolution of powers and functions upon the
Panchayats.Panchayats in India have been assigned responsibilities de jure as enshrined in the
Constitution. In total, there are 29 items for which state is supposed to identify the role of
Panchayats in vertical schemes or otherwise. The challenge before the State Government has
been the identification of activities to the appropriate tier of the three-tier-Panchayat system.
Traditionally, the lowest level Panchayat, i.e. the village Panchayat (VP) has been the most
active in almost all States. Generally, the VPs carry out major functions including core
functions whereas intermediate and district Panchayats in most States are assigned supervisory
functions or act mainly as executing agents for the state government. Non-assignment of
responsibilities in turn, gives ways for de-facto responsibilities to the state.





IIPA

45 | P a g e
Exhibit 3.1
Classification of Functions Listed in Eleventh Schedule
Core Functions
Drinking Water.
Roads, culverts, bridges, ferries, waterways and other means of communication.
Rural electrification, including distribution of electricity.
Health and sanitation, including hospitals, primary health centres and dispensaries.
Maintenance of community assets.
Welfare Functions
Rural housing.
Non–conventional energy sources
Poverty alleviation programme.
Education, including primary and secondary schools.
Technical training and vocational education.
Adult and non–formal education.
Libraries.
Cultural activities.
Family welfare.
Women and child development.
Social welfare, including welfare of the handicapped and mentally retarded.
Welfare of the weaker sections, and in particular, of the Scheduled Caste and
the Scheduled Tribes
Public distribution system

Agriculture and Allied
Agriculture, including agricultural extension
Land improvement, implementation of land reforms, land consolidation and soil
conservation.
Minor irrigation, water management and watershed development.
Animal husbandry, dairying and poultry.
Fisheries.
Social forestry and farm forestry.
Minor forest produce.
Fuel and fodder.
Markets and fairs.
Industries
Small scale industries, including food processing industries
Khadi, village and cottage industries
Note: The Eleventh Finance Commission has given the above classifications to the functions enumerated in
the 11
th
Schedule.
The Andhra Pradesh Panchayati Raj Act, 1994 devolves number of functions to the
GramPanchayats, Mandla Parishad and Zilla Parishad. The maintenance of roads,
culverts, bridges, ferries, waterways, land use and building regulation etc., have been
assigned to Panchayats.
The Bihar Panchayati Raj Act, 1993 devolves 22 functions to the Gram Panchayats
under Section 22 of the Act. 30 functions have been given to the PanchayatSamitis
under Section 45 and 25 functions to the Zila Parishads under Section 71. The IIPA

46 | P a g e
Government of Bihar has transferred (September 2001) 79 functions to GPs, 60
functions to PSs and 61 functions to ZPs relating to 20 departments., Agriculture, Water
Resources, Industry, Energy, Arts and Culture, Labour, Animal Husbandry, Education,
Food, Forest, Health, Welfare, Horticulture, Industries, Minor Irrigation, Public Health,
Rural Development, etc. to the PanchayatiRaj Institutions.
The Gujarat Panchayat Act, 1993 devolves substantial powers and functions to the 3 tier
Panchayats. The transferred subjects to Panchayats include agriculture, minor
irrigation, animal husbandry, rural housing, drinking water, roads, culverts and bridges,
poverty alleviation programmes, fuel and fodder, minor forest produce, markets and
fairs, health and sanitation, family welfare, women and child development, welfare of
the weaker sections and STs. Primary and secondary education, adult and non-formal
education, cultural activities, social welfare and maintenance of community assets
constitute the five subjects that are partially transferred.
The Karnataka Panchayat Raj Act (1993) devolves functions to three tier of
Panchayats. The functions assigned to Panchayats include maintain water supply works
on its own or through annual contract, revise and collect taxes, rates and fees at fixed
periods, remove encroachments on public streets or public places, provide sufficient
number of street lights, maintain primary school buildings and provide sanction for
sufficient class rooms, establishment of health centers, drawing up a plan for social
forestry development in each taluka etc.
In the state of Madhya Pradesh functions are devolved to PRIs through the Madhya
Pradesh Panchayat Raj Avam Gram Swaraj Adhiniyam, 1993. Gram Panchayats are
entrusted with the functions which are of local importance like water, local streets,
public health, sanitation, maintenance of Panchayat property etc. Janpad Panchayat is
entrusted with the responsibility to control and supervise the administration of
community/tribal development blocks within its jurisdiction and to direct, control and
supervises the programmes/schemes assigned to such block by the state government
under the instructions issued from time to time. Zilla Panchayat was entrusted with the
task of coordination between different Panchayats within its jurisdiction, between
Janpad Panchayat, GramPanchayats, and State Government. IIPA

47 | P a g e
According to the Maharashtra Zilla Parishads and PanchayatSamitis Act 1961 there are
22 functions of ZillaParishads and 19 functions of Panchayat Samitis. As per schedule I
of the Maharashtra Village Panchayats Act, there are 12 activities and 79 sub activities
of the Village Panchayats. In Schedule II of Maharashtra Zilla Parishads and
PanchayatSamitis Act 1961, there are 15 activities and 71 sub activities for the
PanchayatSamitis. As per Schedule I of Maharashtra ZillaParishads and
PanchayatSamitis Act 1961, there are 16 main activities and 105 sub activities for Zilla
Parishads.
According to Orissa Panchayat Samiti Act, 1959, Gram Panchayat Act, 1964, and Zilla
Panchayat Act, 1991, Panchayats have been assigned roads, Culverts, bridges, ferries,
waterways, land use and building regulation etc.
Panchayats have been assigned certain functions as per the Tamil Nadu Panchayats Act
of 1994. Under section 110 of the Tamil Nadu Panchayats Act 1994, the obligatory
functions of the Village Panchayat include Construction, repair and maintenance of all
Village Panchayat roads; Lighting of Public roads and Public places in built up area,
Cleaning the streets, removal of rubbish heaps; provision and maintenance of Public
latrines. The obligatory functions of the Panchayat Unions are given in Sec. 112 of the
Act includes Establishment and maintenance of dispensaries and the payment of
subsidies to rural medical practitioners, Establishment and maintenance of maternity and
child welfare centers, Opening and maintenance and expansion of Elementary Schools
including payment of grants to private managements in respect of elementary schools
etc. The functions envisaged under the Act for the District Panchayat have been given
in Section 163 of the Act includes Family Welfare, Women & Child Development,
Welfare of the weaker sections, and in particular, of the Scheduled Castes & the
Scheduled Tribes, Libraries etc.
The Uttar Pradesh Panchayat Laws (Amendment) Act, 1994 has listed broad guidelines
regarding the powers of the Panchayats as per the 29 subjects mentioned in the Eleventh
Schedule of the Constitution. Panchayats at all level have been devolved works related
to the departments of primary education, rural drinking water, non-formal education,
youth affairs, social welfare, women and child development, public health, agriculture, IIPA

48 | P a g e
animal husbandry, land development, water resources, and farming and village
development have been formally brought under the control of the Panchayats.
The State of West Bengal has successfully devolved multiple functions among 29
subjects listed in the 11
th
Schedule of the Constitution. Panchayats are entrusted with
the functions which are of at the primary sector level includes Agriculture including
agricultural extension, Animal Husbandry, dairying and poultry, Fisheries, Land
improvement, implementation of land reforms etc. At secondary sector level functions
which have been devolved are Fuel and fodder, Khadi village and cottage industries,
Non-conventional energy sources, Rural electrification etc. At Tertiary Sector level
functions which have been devolved are Adult and non-formal education, Burials and
burial grounds, cremations and cremation grounds, Cultural activities, Drinking water,
Education including primary and secondary, Family welfare etc.
The state wise (Ten select states) functioned devolved to Panchayats can be seen
below: IIPA
49 | P a g e

Table 3.4: De facto Assignment of Functions of Different tiers of Panchayats in Ten Selected States
Sl.
No.
Functions

Tier wise Assignment of Panchayats in Ten Select States (De facto)
[AP- Andhra Pradesh, BR-Bihar, GUJ-Gujarat, KAR-Karnataka, MAH- Maharashtra, MP-Madhya Pradesh, OD-
Odisha, TN-Tamil Nadu, UP-Uttar Pradesh, WB-West Bengal, N/A-Not Available-V-Village Panchayat, I-
Intermediate Panchayat , D-District Panchayat]
AP BR GUJ KAR MAH MP OD TN UP WB
Core Functions
1. Drinking Water, Water
Supply for Domestic
Purpose
V,I,D V,I,D V,I,D V,I,D V,I,D I,D N/A N/A V,I,D V,I,D
2. Roads V,I,D V,I,D I,D V,I,D V,I,D I,D V V,I,D V,I,D V,I,D
3. Culverts V,I,D V,I,D I,D V,I,D V,I,D I,D V N/A V,I,D V,I,D
4. Bridges V,I,D V,I,D I,D V,I,D D N/A V N/A V,I,D V,I,D
5. Ferries V,I,D N/A D V,I,D G,D N/A V N/A V,I,D V,I,D
6. Waterways V,I,D N/A D V,I,D I,D I,D V V,I,D V,I,D V,I,D
7. Other means of
Communication
N/A N/A V,I,D V,I,D N/A N/A V,I,D V,I,D V,I,D V,I,D
8. Building Control N/A N/A V,I,D V,I,D V I,D V,I,D N/A I,D V,I,D
9. Land Use and Building
Regulation
V N/A V,I,D V,I,D V,D D V,I,D N/A I,D I,D
10. Maintenance of
Community Assets
V,I,D V,I,D V,I,D V,I,D V D V,I,D N/A V,I,D V,I,D
11. Street Lighting, Parking
Lots, Bus Stops
V V,I,D V V,I,D G,D D V,I,D V N/A V,I,D
12. Public Conveniences V V,I,D V V,I,D V,I,D D V,I,D N/A N/A V,I,D IIPA

50 | P a g e
13. Parks, Gardens,
Playgrounds (Civic
Amenities)
V N/A V,I,D V,I,D V,I,D D V N/A N/A V,I,D
14. Primary
Health Centre/Community
Health Centre
N/A V,I D V,I,D V,I,D I,D V,I,D V N/A V,I,D
15. Sanitation & Solid Waste
Management
V V,I,D V V,I,D V,I,D D V,I,D V N/A V,I,D
16. Cremation & Burial V V,I V,I V V,I,D I,D V,I,D V N/A V
17. Public Safety (Noxious
Vegetation, Pests &
Vermin’s)
V N/A V,I,D V,I,D V D V,I,D N/A N/A N/A
Welfare Functions
18 Poverty Alleviation
Programmes
V V,I,D V,I,D V,I,D V,I,D I,D V,I,D N/A V,I,D V,I,D
19. Family Welfare N/A V,I,D V,I,D V,I,D V,I,D D V,I,D V,I,D V,I,D V,I,D
20. Women & Child
Development
N/A V,I,D V,I,D V,I,D V,I,D D V,I,D V,I,D V,I,D V,I,D
21. Social Welfare, Welfare of
Handicapped & mentally
retarded
N/A V,I,D D V,I,D V,I,D D V,I,D V,I,D V,I,D V,I,D
22. Welfare of the weaker
sections, and in particular,
of the Scheduled Castes &
the Scheduled Tribes
N/A V,I,D V,I,D V,I,D V,I,D D V,I,D V,I,D V,I,D V,I,D
23. Public Distribution System N/A V,I,D N/A V,I,D V I,D V,I,D V,I,D V,I,D V,I,D
24. Vital Statistics Including
Registration of Births &
Deaths
V V,I,D V,I,D V,I,D V,I,D N/A V,I,D N/A N/A V
25. Elementary Education N/A V,I I,D V,I,D V,I,D N/A V,I,D I N/A V,I,D
26. Adult & Non-Formal
Education
N/A V,I V,I,D V,I,D V,I,D I V,I,D V,I,D N/A V,I,D IIPA

51 | P a g e
27. Secondary Education N/A I,D I,D V,I,D D I,D V,I,D N/A N/A V,I,D
28. Technical Training &
Vocational Education
N/A N/A V,I,D V,I,D N/A N/A V,I,D N/A N/A N/A
29. Libraries V V,I,D N/A V,I,D V,I,D I V,I,D V,I,D N/A V,I,D
30. Promotion of Cultural ,
Educational and Aesthetic
Aspects
N/A V,I,D V,I,D V,I,D V,I,D D V,I,D N/A N/A V,I,D
31. Slum Improvement & Up
gradation
N/A N/A N/A V,I,D V,I,D I,D V,I,D N/A N/A N/A
32. Fire Services N/A N/A N/A N/A V N/A V,I,D V,I,D N/A N/A
33. Rural Housing N/A V,I,D V,I,D V,I,D V,I,D V,I,D V,I,D V,I,D N/A V,I,D
34. Non-conventional Energy N/A V,I,D V,I,D V,I,D V,I,D I,D V,I,D V,I,D N/A I,D
Agriculture & Allied Functions
35. Watershed Development N/A V,I,D V,I,D V,I,D V,I I,D V,I,D N/A N/A V,I,D
36. Water supply for
Agriculture Purpose,
Minor Irrigation, Water
Management
N/A V,I,D V,I,D V,I,D V I,D V,I,D N/A N/A V,I,D
37. Agriculture & Agricultural
Extension
N/A V,I,D I,D V,I,D V,I,D I,D V,I,D V,I N/A V,I,D
38. Land Improvement N/A V,I,D N/A V,I,D V,I,D N/A V,I,D D N/A V,I,D
39. Implementation of Land
Reforms
N/A V,I,D N/A V,I,D N/A N/A V,I,D N/A N/A V,I
40. Land Consolidation N/A V,I,D N/A V,I,D N/A N/A V,I,D D N/A V,I,D
41. Soil Conservation N/A V,I,D N/A V,I,D V I,D V,I,D N/A N/A V,I,D
42. Animal Husbandry N/A V,I,D V,I,D V,I,D V,I,D I,D V,I,D V,I,D N/A V,I,D
43. Dairying N/A V,I,D V,I,D V,I,D V,I,D I,D V,I,D D N/A V,I,D IIPA

52 | P a g e
44. Poultry N/A V,I,D V,I,D V,I,D V,I,D I,D V,I,D D N/A V,I,D
45. Fisheries N/A V,I,D N/A V,I,D V,I,D I,D V,I,D V,I,D N/A V,I,D
46. Social Forestry N/A V,I,D V,I,D V,I,D V,D I,D V,I,D N/A N/A V,I,D
47. Farm Forestry N/A N/A V,I,D V,I,D N/A I,D V,I,D N/A N/A V,I,D
48. Minor Forest Produce N/A V,I,D V,I,D V,I,D V I,D V,I,D N/A N/A V,I,D
49. Market & Fairs V V,I,D V V,I,D V,I,D D V,I,D V,I,D N/A V,I,D
50. Regulation of
Slaughterhouses
V N/A V V,I,D V,I,D N/A V,I,D N/A N/A I
51. Prevention of Cruelty to
Animals
V V,I V V,I,D V N/A V,I,D N/A N/A N/A
Industries
52. Water supply for
Commercial and
Industrial Purpose
N/A N/A N/A V,I,D V,I,D N/A N/A N/A N/A V,I
53. Small Scale Industries N/A V,I,D N/A V,I,D V D N/A V,I,D N/A V,I,D
54. Food Processing Industry N/A V,I,D N/A V,I,D D N/A N/A V,I,D N/A N/A
55. Khadi, Gram & Cottage
Industry
N/A V,I,D N/A V,I,D V I,D N/A V,I,D N/A V,I,D
56. Rural Electrification &
Distribution
N/A V,I,D N/A V,I,D N/A I,D I V,I,D N/A I,D
57. Tourism N/A N/A N/A V,I,D N/A N/A N/A N/A N/A N/A
58. Knowledge Management N/A N/A N/A V,I,D N/A N/A N/A N/A N/A N/A
59. Conservation & Protection
of Public
N/A N/A N/A N/A V N/A N/A N/A N/A N/A
60. Supervision over Gram
Panchayats
N/A N/A N/A N/A N/A N/A N/A N/A I N/A
Source: State(s) Panchayats Acts, data received from State(s) IIPA
53 | P a g e

3.6 Involvement of Panchayats in Important Schemes
A substantial portion of resources for the development of Panchayats is provided by the
Union Government through various schemes. The Centrally Sponsored Schemes (CSSs). CSSs
are conceived under the provision of the Article 282 of the Indian Constitution with avowed
objective of tackling problems. The role of Panchayats varies across different CSSs of national
importance. Among the major CSSs, Mahatma Gandhi National Rural Employment Guarantee
Act (MGNREGA), SarvaSiksha Abhiyan (SSA), National Rural Health Mission (NRHM),
Indira Awas Yojana (IAY),Total Sanitation Campaign, Accelerated Rural Water Supply
Programme (ARWSP), National Programme of Nutritional Support to Primary Education (Mid-
Day Meals), National Horticulture Mission, Macro Management of Agriculture, Micro
Irrigation etc. are the schemes, which provide roles and responsibilities toPanchayats.The
design of these programs, particularly the structure and procedures prescribed for
implementation at the district level and below has important implications for the roles and
functioning of Panchayats:
In the state of Andhra Pradesh, Panchayats at District, Block and village level have been
involved in the schemes like Mahatma Gandhi National Rural Employment Guarantee
Programme (MGNEGP), Pradhan MantriKrishiSinchai Yojana (PMKSY), Swatch
Bharat Mission Gramin (SBM-G), Integrated Child Development Services, National e-
Governance Programme (NeGP) etc. Mission Antyodya is also implemented through
Panchayats.
In the state of Bihar, Panchayats at District, Block and village level have been involved
in the schemes like National Social Assistance Program (NSAP), Mahatma Gandhi
National Rural Employment Guarantee Programme (MGNEGP), Pradhan Mantari Gram
Sadak Yojana (PMGSY), Pradhan MantriKrishiSinchai Yojana (PMKSY), National
Rural Health Mission (NRHM), National Programme of Mid-Day Meal in Schools etc.
In the state of Gujarat, Panchayats at District, Block and village level have been
involved in the schemes like, Mahatma Gandhi National Rural Employment Guarantee
Programme (MGNEGP), Scheme(s) for Development of Scheduled Castes,
Scheme(s) for Development of Scheduled Tribes, Pradhan MantriKrishiSinchai Yojana IIPA

54 | P a g e
(PMKSY), National Rural Health Mission (NRHM), National Programme of Mid-Day
Meal in Schools etc.
In the state of Karnataka, Panchayats at District, Block and village level have been
involved in the schemes like, National Social Assistance Program (NSAP), Mahatma
Gandhi National Rural Employment Guarantee Programme (MGNEGP), Pradhan
MantriKrishiSinchai Yojana (PMKSY), Green Revolution-Krishonnatti Yojana, White
Revolution- RashtriyaPashudhanVikas Yojana, Blue Revolution(Integrated
Development of Fisheries), Pradhan MantriAwas Yojana-Gramin (PMAY-G),National
Rural Health Mission (NRHM), National Programme of Mid-Day Meal in Schools etc.
In the state of Madhya Pradesh the three rungs of Panchayats are entrusted with the
ground-level implementation of many centrally and state-sponsored schemes.
Implementing Mahatma Gandhi National Rural Employment Guarantee Scheme
(MGNREGS), Nirmal Bharat Abhiyan, Indira Aawas Yojana, Antodaya Anna Yojana,
PanchParameshwar Yojana emerges as the most significant with Gram Panchayats.
Mission Antyodaya is a framework of convergence and accountability with an objective
to converge various schemes of government with Gram Panchayats on grassroots level
for effective use of human and financial resources to ensure a sustainable livelihood.
In the state of Maharashtra, Panchayats at District, Block and village level have been
involved in the schemes like, Mahatma Gandhi National Rural Employment Guarantee
Programme (MGNEGP), National Rural Health Mission (NRHM), Swachh Bharat
Mission-Gramin(SBM-G), Integrated Child Development Services (ICDS),
DeendayalAntyodaya Yojana-National Rural Livelihood Mission(DAY-NRLM),
National Mission for Sustainable Agriculture(NMSA) etc.
In the state of Odisha, Panchayats at District, Block and village level have been
involved in the schemes like, Mahatma Gandhi National Rural Employment Guarantee
Programme (MGNEGP), Pradhan Mantri Gram Sadak Yojana (PMGSY), National
Rural Health Mission (NRHM) etc.
In the state of Tamil Nadu, Panchayatsat District, Block and village level have been
involved in various schemes of center as well as of state. The focus of these schemes in
Tamil Nadu is economic growth with social justice and improvement in the living IIPA

55 | P a g e
standards of the rural population, by providing adequate and quality services efficiently.
Panchayats in Tamil Nadu have been involved in the schemes like, National Social
Assistance Program (NSAP), Mahatma Gandhi National Rural Employment Guarantee
Programme (MGNEGP), Scheme(s) for Development of Scheduled Castes, Green
Revolution-Krishonnatti Yojana, White Revolution- RashtriyaPashudhanVikas Yojana,
Blue Revolution (Integrated Development of Fisheries), Pradhan MantriAwas Yojana-
Gramin (PMAY-G), etc.
In the state of Uttar Pradesh, Panchayatsat District, Block and village level have been
involved in various schemes of center as well as of state.Panchayats in UP are involved
in National Social Assistance Program (NSAP), Mahatma Gandhi National Rural
Employment Guarantee Programme (MGNEGP), Pradhan MantriAwas Yojana-Gramin
(PMAY-G), National Rural Drinking Water Mission (NRDWM), National Rural Health
Mission (NRHM), Swachh Bharat Mission-Gramin(SBM-G), DeendayalAntyodaya
Yojana-National Rural Livelihood Mission(DAY-NRLM) etc.
In the state of West Bengal, Panchayats at District, Block and village level have been
involved in various schemes of center as well as of state. Panchayats in West Bengal are
involved in National Social Assistance Program (NSAP), Mahatma Gandhi National
Rural Employment Guarantee Programme (MGNEGP), Pradhan MantriAwas Yojana-
Gramin (PMAY-G), National Rural Drinking Water Mission (NRDWM), National
Rural Health Mission (NRHM), Swachh Bharat Mission-Gramin(SBM-G), National
Programme of Mid-Day Meal in Schools etc.
IIPA

56 | P a g e
3.7 14
th
Finance Commission Grants (Basic and Performance Grants)
The 14
th
Finance Commission had recommended an amount of Rs. 2,00,292.20 crores to
the Gram Panchayatsof all States in the country over a period of five years. The Grant-in aid to
duly constituted Panchayats had been divided in two parts, namely: (i) Basic Grant and (ii)
Performance Grant. In case of Gram Panchayats, 90% of grants are the basic grant and 10% are
the Performance Grant. The 14
th
Finance Commission accordingly, marked Rs. 1,80,262.98
crores for Basic Grant and Rs.20029.22 crore for Performance Grant.
The grant provided by the 14
th
Finance Commission intended to be used by
Panchayatsto improve and deliver the basic services including maintenance of roads,
maintenance of community assets, footpaths and street-lighting, and burial and cremation
grounds, water supply, sanitation including sewage management, sewerage and solid waste
management, storm water drainage, and any other basic service within the functions assigned to
them under relevant legislations.
Mandatory criteria for disbursal of Performance Grant include the following,
Submission of Audited Accounts that relate to year not earlier than 2 years preceding
the year in which the GP seeks to claim the performance grant
Show increase in Own Resource Revenues (OSR) over the preceding year as reflected in
the audited accounts.
Completion of Gram Panchayat Development Plan (GPDP)of year of PG disbursal and
upload the same on PlanPlus Portal.
Display of sector wise expenditure in FFC Dashboard of the MoPR.
State wise allocation and release of basic and performance grants of select states in
2016-17, 2017-2018 2018-19 and 2019-20 can be seen in Table 3.5. IIPA
57 | P a g e

Table 3.5: Allocation and Release of Basic and Performance Grants to select States for Panchayats recommended by the 14
th
FC(2015-2020)
(Rs. in crore)
Sl
.
N
o.
States
2015-16 2016-17 2017-18 2018-19 2019-2020
Basic
Grants
Total
Alloca
tion
(BG &
PG)
Tota
l
Rele
ase
(BG
&
PG)
Basic Grant
Performance
Grant Total
Alloca
tion
(BG &
PG)-
2017-
18
Tota
l
Rele
ase
(BG
&
PG)-
2017
-18
Basic Grant
Performance
Grant
Basic Grant
Performance
Grant
Allo
cati
on
Rele
ase
Annua
l
Alloca
tion
Total
Relea
se
Annu
al
Alloca
tion
Relea
sed
Annua
l
Alloca
tion
Tota
l
Rele
ase
Annua
l
Alloca
tion
Relea
sed
Annua
l
Alloca
tion
Tota
l
Rele
ase
Annua
l
Alloca
tion
Relea
sed
1 #Andhra
Pradesh
934

928
1463 1454 1494 1485 192 190 1686 1675 1729 858 218 -- 2336 - 285 -
2 Bihar 226
9
2269
3554 3142 3630 3630 466 0 4096 3630 4199 4199 529 - 5674 2837 693 -
3 Gujarat 932 932 1460 1460 1491 1491 191 191 1683 1683 1725 1725 217 - 2331 1165 284 -
4 #Karnatak
a
100
2
972
1570 1547 1604 1580 206 204 1810 1784 1856 1841 234 - 2507 1251 306 -
5 Madhya
Pradesh
146
3
1463 2292 2292 2341 2341 300 296 2642 2638 2708 2708 341 - 3660 1830 447 -
6 Maharashtr
a
162
3
1623
2542 2542 2597 2597 333 0
2930 2597 3004 3004 378 - 4059 2029 496 -
7 Odisha 955 955 1496 1496 1528 1528 196 196 1725 1725 1768 1768 223 - 2389 1194 292 -
8 Tamil
Nadu
947 947 1484 1484 1516 1516 194 0 1710 1516 1753 1753 221 - 2369 - 289 -
9 #Uttar
Pradesh
386
2
3852 6050 6034 6179 6179 793 0 6973 6179 7148 7148 901 - 9659 4829 1180 -
1
0
#West
Bengal
153
2
1470 2399 2319 2451 2369 314 0 2766 2369 2835 2740 357 - 3831 1851 468 -
Source: Data Provided by State Governments.
# released on pro-rata basis as information provided by the State Government.
Performance Grant-2015-16-NA;
IIPA
58 | P a g e

The state governments transfer the resources to Panchayats not only according to 14
th

FC (2015-20) but also based on recommendations of State finance commissions. In Table 3.6
we can see the formula adopted by select states for distribution of basic grants.
Table 3.6: Formula adopted by State Government for distribution of Basic Grant under 14
th
FC
Award
Sl. No. States Formula adopted by state for
distribution of 14
th
FC Basic Grant
1 Andhra Pradesh FFC
2 Bihar SFC
3 Gujarat FFC
4 Karnataka FFC
5 Madhya Pradesh FFC
6 Maharashtra FFC
7 Odisha SFC
8 Tamil Nadu SFC
9 Uttar Pradesh SFC
10 West Bengal FFC

IIPA
59 | P a g e
3.8 State Finance Commission (SFC)

Generally, proceeds from own sources contributes abysmal share to the local pool.
Local governments generally rely more on fiscal transfers from State government in the form of
shared taxes and grants. State taxes are shared as per the recommendations of SFC. The SFC
created, under articles 243-I, is viewed as the sub-national equivalent of the Union Finance
Commission formed under article 280 of the Constitution. The legal provisions for the SFC are,
therefore, similar to that of the Union Finance Commission except the wordings of the first
paragraph of article 243-I that provides for the constitution of the SFC ‘at the expiry of every
fifth year,’ This is not akin to the provision exits under article 280 constituting Union finance
commission ‘at the expiry of every fifth year or earlier’. The missing part ‘or earlier’ disallows
the constitution of a new SFC before the completion of the five-year-period. The article
mandates SFC to review the financial position of the Panchayats and make recommendations to
the Governor on the principles that should govern:
i. The distribution between the State and the Panchayats of the net proceeds of the
taxes, duties, tolls and fees leviable by the State, and their inter se distribution
between the Panchayats at all levels for such proceeds,
ii. The determination of the taxes, duties, tolls and fees which may be assigned to, or
appropriated by, the Panchayats;
iii. The grants-in-aid to Panchayats from the consolidated fund of the State;
iv. The measures needed to improve the financial position of the Panchayats
v. Any other matter in the interest of sound finance of the Panchayats and
Municipalities.
Own revenues of local governments are generally adequate to meet only a part of their
operation and maintenance (O&M) requirements. Therefore, they are dependent on the higher
level of governments to finance their activities. The SFCs are responsible to examine not only
the revenue-sharing arrangements between the State governments and the local governments,
both rural and urban, but also the entire range of subjects concerning assignment of taxes,
transfers of power and such other subjects for improving the financial health of local
governments. In this case, the CAA does not draw any distinction between the plan and non- IIPA
60 | P a g e
plan financial requirements of the local governments. Therefore, SFCs are not confined only to
the assessment of non-plan expenditure of the local governments for recommending the
devolution of funds and
All ten select States have constituted their SFC. Most States have received their fourth-
generation SFC recommendations and six of them namely Bihar, Madhya Pradesh,
Maharashtra, Odisha, Tamil Nadu and Uttar Pradesh have constituted there 5
th
SFC.
The first SFC of Andhra Pradesh, have included the share of Union taxes in the state
taxes and non-tax revenue to form the divisible pool. However, the first SFCs of Madhya
Pradesh, and the second SFCs of Orissa have not included the share of union taxes and included
only the state tax and non-tax revenues. The first SFCs of Tamil Nadu, Uttar Pradesh and West
Bengal have gone a step further and recommended that only the tax revenues of the State form
the divisible pool. As an exception, the Karnataka SFCs have adopted a different mechanism by
using the phrase “Non loan gross own revenue receipts” in defining the divisible pool.
The following table contains information as to the constitution of SFC, submission of
SFC report, submission of Action Taken Report and certain important recommendations.
Table 3.7: SFC Recommendations for Share of Panchayats in State Resources
SFC of %
Share of Panchayats and
Municipalities
Basis of Distribution
Total Revenue of State
Andhra Pradesh (I) 39.24 70% and 30% Development criteria
Andhra Pradesh (III) 6.7% 72.25% and 27.25%
Madhya Pradesh (I) NA 2.91% and 8.66%
Madhya Pradesh (III) 5% 4% and 1%
Own Revenue of State
Andhra Pradesh(II)* 10.39* 65% and 35% Development Criteria
Karnataka (III) 30.0 70% and 30 % Not Mentioned
Madhya Pradesh(I) 11.57 25.13 % and 74.87% Population, area, tax efforts.
Odisha (II) 10.0 80% and 20 % Population, density, number of
holdings, revenue efforts
Uttar Pradesh (I) 10.0 30% and 70 % Population (80%); Area
(20%).
Uttar Pradesh (II) 12.5 40% and 60 % Population and area.
Uttar Pradesh (IV) 15.0 N.A. Population , SC/ST
Population, area, Per Capita
Index, Establishment comfort IIPA
61 | P a g e
backwardness Index,
integrated development
backwardness Index,
Non- Loan Gross Own Revenue
Karnataka (I) 36.0 85%and 15 % For Panchayats, population,
area, index of decentralization
and for ULBs population 67%
and illiteracy rate 33%[kar II
has followed it]
Karnataka (II) 40.0 80% and 20 %
Orissa (I) 10% 60% and 40%
State Own Taxes
Bihar 7.5
Madhya Pradesh (II) 4.0 77.33% and 26.67% Population
40.0 80% and 20% Distance from Highest Per
Capita Income District,
Backwardness, Population,
Area, Proportion of
Agricultural Income in Total
Income of the District, Inverse
Primary Income.
Odisha(III) 15.0 75% and 25% Expected Population 25.8 %
and 29.17 % respectively.
Odisha(IV) 3.0 75% and 25% N.A
Tamil Nadu(I)$ 8.0 60 % and 40 % Population
Tamil Nadu (II) 10.0 58% and 42 % Population, SCs and STs, Per
capita own revenue, area, asset
maintenance, resource gap.
Tamil Nadu (III) 10.0 58% and 42% Population, resources,
potential, needs
Tamil Nadu (IV) 10.0 56 % and 44% Population SC/ST Population,
Area
West Bengal (I) 16.0 Breakup as per population,
district wise
Population and % of SC/ST,
non-literates
West Bengal(II) 16.0 Breakup as per population ,
district wise
Population 50 % and 7% to
other variables, population
density, SC/ST, non-literates,
IMR, rural population per
capita income
West Bengal (III) 2.0 Not Mentioned Not Mentioned
Maharashtra (III)^ 7.8% NA
Source: Updated from Alok (2014)
Notes:$ In Tamil Nadu, the divisible pool called pool B consists of sales tax, motor vehicle tax, state excise
revenue and other state taxes. The other pool A consists of levies, which rightly belong to local governments i.e.
surcharge on stamp duties, local cess and local cess surcharge and entertainment tax. The entire proceeds of pool
at taxes are recommended to be distributed to the local governments. IIPA
62 | P a g e
* Second SFC of Andhra Pradesh recommended 10.39% share as additional devolution over and above the
existing annual devolution.
# 25 (Twenty-five) per cent of the total State Tax revenue of the year 2003-04 may be transferred to Local Self
Governments (LSGs) during the year 2006-07. During each of the four subsequent years’ amounts derived by
applying annual growth of 10 (ten) percent (which would accommodate reasonable rates of inflation and real
growth) may be so transferred.
@ It has excluded Entry tax and Land revenue
^ Total Additional Transfer

Article 243 I stipulates that succeeding SFC needs to be constituted “at the expiration of
every fifth year”.The following table gives a broad picture of the constitution of SFCs as on
November 01, 2019.
Table 3.8: Constitution and Submission of SFC Reports and Action Taken thereon
S.N. State
Date of Constitution
of SFC
Date of
Submission of
SFC Report
Date of
Submission
of ATR
Period Covered
by SFC
Fifth State Finance Commission
1. Andhra
Pradesh
Not Constituted -
2 Bihar Dec 13 Jan 2016 Feb 2016 2015-16 to 2020-
21
3. Gujarat Not Constituted -
4. Karnataka Not Constituted -
5. Madhya
Pradesh
March 17
6. Maharashtra March 18
7. Odisha May 18 Aug 2019 - 2020-21 to 2025-
26
8. Tamil Nadu Dec 09 Dec 16 Mar 17 2017-18 to 2022-
23
9. Uttar Pradesh 2015 Oct 18 - 2016-17 to 2021-
22
10. West Bengal Not Constituted
Fourth State Finance Commission
1
Andhra
Constituted (No data available) - - IIPA
63 | P a g e
Pradesh
2 Bihar Jun-07 Jun-10 2010
2010-11 to 2014-
15
3 Gujarat Not Constituted


4 Karnataka Dec 2015 Oct 2017 Dec 2018
2016-17 to 2021-
22
5
Madhya
Pradesh Jan-12 Jan 2017 July 2017
2015-16 to 2020-
21
6 Maharashtra Feb-11 - -
2010-11 to 2015-
16
7 Odisha Oct-13 Sep-14 Feb-15 2015-2020
8 Tamil Nadu Dec-09 Sep-11 May-13
2011-12 to 2016-
17
9 Uttar Pradesh Dec-11 Dec-14 Mar-15
2011-12 to 2015-
16
10 West Bengal Apr-13 Apr-14 -
2013-14 to 2017-
18
Third State Finance Commission
1
Andhra
Pradesh Dec-04 Jan-08 Jan-14
2005-06 to 2009-
10
2 Bihar Jul-04 Nov-07 Mar-07
2003-04 to 2007-
08
3 Gujarat Feb-11 Feb-14 -
2010-11 to 2013-
14
4 Karnataka Aug-06 Dec-08 Oct-11
2011-12 to 2015-
16
5
Madhya
Pradesh Jul-05 Jan-08 Feb 2010
2006-07 to 2015-
16
6 Maharashtra Jan-05 Jun-06 Dec-13
2006-07 to 2010-
11 IIPA
64 | P a g e
7 Odisha Sep-08 Jan-10 -
2010-11 to 2014-
15
8 Tamil Nadu Dec-04 Sep-06 May-07
2007-08 to 2011-
12
9 Uttar Pradesh Dec-04 Aug-08 Feb-10
2006-07 to 2010-
11
10 West Bengal Feb-06 Oct-08 Jul-09
2008-09 to 2012-
13
Second State Finance Commissions
1
Andhra
Pradesh Dec-98 Aug-02 Mar-03
2000-01 to 2004-
05
2 Bihar Jun-99 - -
1998-99 to 2002-
03
3 Gujarat Nov-03 Jun-06 -
2005-06 to 2009-
10
4 Karnataka Oct-00 Dec-02 Jun-06
2005-06 to 2010-
11
5
Madhya
Pradesh Jun-99 Jul-03 (1st Report) Mar-05
2001-02 to 2005-
06

Aug-03 (2nd
Report)



Dec-03 (3rd
Report)


6 Maharashtra Jun-99 Mar-02 Mar-06
1999-00 to 2001-
02
7 Odisha Jun-03 Sep-04 Aug-06
2005-06 to 2009-
10
8 Tamil Nadu Dec-99 May-01 May-02
2002-03 to 2006-
07
9 Uttar Pradesh Feb-00 Jun-02 Mar-04
2001-02 to 2005-
06 IIPA
65 | P a g e
10 West Bengal Jul-00 Feb-02 Jul-05
2001-02 to 2005-
06
First State Finance Commissions
1
Andhra
Pradesh Jun-94 May-97 Nov-97
1997-98 to 1999-
2000
2 Bihar Apr-94 - - -
3 Gujarat Sep-94 RLBs- July 1998 Aug-01
1996-97 to 2000-
01
4 Karnataka Jun-94 RLBs- July 1996 Mar-97
1996-97 to 2000-
01


5
Madhya
Pradesh Feb-95 Jul-96 Mar-97
1996-97 to 2000-
01
6 Maharashtra Apr-94 Jan-97 Mar-99
1994-95 to 1996-
97#
7 Odisha Nov 1996/Aug 1998* Dec-98 Jul-99
1997-98 to 2004-
05
8 Tamil Nadu Apr-94 Nov-96 Apr-97
1997-98 to 2001-
02
9 Uttar Pradesh Oct-94 Dec-96 Jan-98
1997-98 to 2000-
01
10 West Bengal May-94 Nov-95 Jul-96
1996-97 to 2000-
01

As per the practice followed in a number of developed and developing countries, the
property tax has been assigned to the Municipalities and Panchayats in almost all the States and
it remains the major source of own tax revenue for most local governments. Octroi was another
tax that was previously assigned to the Municipalities only to abolish in later stage in most IIPA
66 | P a g e
States. However, it continues to be levied in Maharashtra
7
and considered to be the most
buoyant source of revenue.
Water Tax, Lighting Tax, Animal and Vehicle Tax, Trade and Callings Tax, Boat Tax,
Toll Tax are the other taxes which have been assigned to the Municipalities and Panchayats in
most States.
Many SFCs have tried to rationalize the local tax structure by suggesting reforms in
assessment and administration of taxes besides assigning powers to local governments. SFC of
Karnataka, Tamil Nadu and Uttar Pradesh for example, have recommended reform in property
taxes and have suggested the `area based’ or `site valuation’ system for assessment of property
tax. SFC of Uttar Pradesh recommended even vacant land tax.

7
Only Municipal Corporations levy Octroi which has been changed to local body [LB] tax in Maharashtra about a year ago IIPA
67 | P a g e
Table 3.9: Assignment of Revenues by various SFCs
Assignment of Revenues

I SFC of:

II SFC of:

III SFC of:

IV SFC of:

V SFC of:
Entertainment Tax Guj, WB, M P
MP, TN
WB
--- Bih
Surcharge on various State taxes Guj
Advertisement Tax (Other than
News paper
Odi Bih
Profession tax Odi WB
Re-imposition of Octroi by the
Municipalities.
Guj MP
Vehicle Tax Guj AP
Vacant Land Tax TN Bih
Municipalities may levy property
tax and service charges on the
properties of the central and State
government undertakings.
Odi
Property Tax/ A surcharge of 50%
on the property tax by Local
Governments.
TN Bih
State entry tax. Odi
House Tax TN
Congestion Tax Bih
Betterment tax Bih

IIPA
68 | P a g e
3.9 Money Transferred on Account of SFC
State Finance Commissions are constituted in the State every five years since 1994 to
recommend the ways and means to increase the tax base of Panchayats and allocations of State
net tax receipts to and among the Panchayats.
Grants-in-aid are provided to fill the gap of the local governments – both Panchayat and
municipalities - so that they can meet the expenditure on local public goods. These can be (a)
general purpose grants or block grants based on some criteria or formula meant for additional
resources with no conditions attached; and (b) conditional or specific purpose grants, e.g. some
schemes or projects. This can be further classified into matching or incentive grants and non-
matching grants. From another perspective, grants can also be either statutory or non-statutory.
Statutory grants are compulsory transfers that may be in lieu of abolition or withdrawal of
certain taxes such as octroi.
SFCs of all generations have recommended various types of Grants. These grants vary
from state to state. Even the definitions and connotations are diverse across states over time.
Table 3.10: Types of Grants Recommended by SFCs
First Generation SFCs
SFC of: Types of Grants
Andhra Pradesh Special Purpose
8

Water supply schemes in municipal areas
A special grant to newly formed GPs for purchasing of furniture, forms
and registers.
Newly formed Gram Panchayat converted into Municipality.
Maintenance
9

Maintenance of rural roads
Maintenance of minor irrigation sources
Maintenance of family planning staff quarters.
Maintenance of school buildings.
Block Grant
10

To each Municipal Corporation. (Hyderabad, Vishakhpatnam and
Vijayawada)
To each of the remaining Municipal Corporations as block grants to be
utilized for felt needs.
Increment in Per capita grant

8
This grant is also implied as conditional or tied grant.
9
These grants are recommended to meet the operation and maintenance and establishment costs of panchayats.
10 Block grant is given by the upper level of government for general areas of social welfare rather than a specific programme. General-purpose
transfers are termed block transfers when they are used to provide broad support in a general area of the lower level of government expenditures
(such as education) while allowing recipient’s discretion in allocating the funds among specific uses. IIPA
69 | P a g e
Gujarat Per Capita Basic Grant
Incentive Grant to municipalities
For revenue mobilization
Madhya Pradesh General purpose grant
11

Given to Janpad/District Panchayats @ Rs. 14.65 crores and rs. 1.50 crores
respectively for 1995-96.
Maharashtra General Purpose
The irrigation cess grant equal to 66.67% of the demand should be given
to the Zila Parishads as advance grant.
Block Grant
12

The primary education grant

Odisha General Purpose Grant
Fixed amount of Rs. 2 crores would be assigned to PSs and GPs of Tribal
Sub-Plan (TSP) areas and inter-se distribution be made on the basis of
population.

Allocation of funds to among ZPs instead of District Planning Units for
the utilisation on creation of capital assets in deficient areas.
Special Purpose
For organizing training programmes for the officials and elected
representatives of all three tiers of Panchayats in their respective
jurisdictions.

Tamil Nadu Specific Purpose
lighting grants, water-supply grant, drainage grants,
Maintenance
Road maintenance grant,
Maintenance of maternity centers and dispensaries
General Purpose (Revenue)

matching grants (House Tax)
Uttar Pradesh Fund Equalization
Loans for integrated development and of small and medium towns, as on
31st March 1994 with interest thereon are to be converted into grant.
West Bengal General Purpose
Matching
A large number of Centrally Sponsored Programmes such as JRY, IRDP,
ARWSP etc. are now in operation in which the Central releases have to be
matched by proportionate State releases.
Covering of non-Plan expenditures will also be grants.
D.A. liabilities of approved staff should be available as grants.


11
General-purpose transfers are provided as general budget support, with no strings attached. These transfers are typically
mandated by law, but occasionally they may be of an ad-hoc or discretionary nature. Such transfers are intended to preserve
local autonomy and enhance inter-jurisdictional equity.
12
Shoup C. S. (1969)12 distinguished two types of per capita grants for general purposes, i.e. uniform and non-uniform.
Uniform per capita grant is the most generalized form of general purpose grant where the money is distributed on per capita
basis. The population of the receiving government is the most implicit index of need for the grant. No index of effort is
involved here. Whereas non-uniform per capita grant gives more weight to distributive factors. It takes into consideration the
ability to raise revenue. Poor jurisdictions get higher level of per capita grant in comparison to rich jurisdictions. This type of
grant is differentiated according to the relative resources and relative effort (Shoup 1969).
IIPA
70 | P a g e
Second Generation SFCs
SFC of: Types of Grants
Andhra Pradesh Special Purpose
To meet the demand of the salaries bill of teaching employees.
To provide drinking water in schools.
For construction of Panchayat building
Incentive
To establish Solid Waste Management Plants

Gujarat Incentive
Compensatory (in lieu of Octroi)
Maintenance
General purpose (Ad hoc)

Madhya Pradesh General purpose
Rs. 50 crores to GPs, Rs. 14.65 crores to Janpad Panchayats and Rs. 2
crores to ZPs
Special Purpose
(Establishment grant) for the payment of honorarium and other
payments to the staff working in the 3- tier Panchayats,
For organizing training programmes at the district level for the elected
representatives Panchayats in their respective jurisdictions.
Maharashtra Special Purpose
For VPs to eliminate backlog in the districts of Marathwada, Vidarbha,
Konkan and the rest of Maharashtra where backlog regarding
development exists
Incentive (Tax Recovery)
All VPs shall be given Tax Recovery Incentive Grant on the basis of
recovery of all the previous financial year
Odisha General Purpose
Special Purpose
Plantation Purpose
Grant to each ZPs, each year, to be spent on Medical Plant/ Agro-
foestry Project in one GP each year.
Tamil Nadu Specific Purpose
Reserve fund
Equalization Fund
Incentive Fund
Uttar Pradesh Block Grant (A one-time non-recurring grant)
For IT equipment and MIS needs of the Directorate of Local Bodies and
the Task Forces to be set up in all districts.
West Bengal General Purpose
Incentive Fund
Third Generation SFCs
SFC of: Types of Grants
Andhra Pradesh Per Capita
Special
For construction of GP office building
For providing basic civic amenities
For the Rural Water Supply Schemes
For Rural Sanitation. IIPA
71 | P a g e
For the construction of Rural Roads and released to Panchayats
For providing drinking water facilities in the schools for the
Panchayats
For maintenance of Mandal Office Buildings.
for maintenance of Municipal Buildings
Towards payments of arrears. (Deficit Grant)
Towards increase of half yearly D.A. and revision of pay scale of
Municipal Staff.

Karnataka Special Purpose
to organize programmes at village level covering sanitation, health
checkup, cultural and folk sports
construction of youth association buildings
For conducting folk arts training programmes.
To take up youth development programmes at village, hobli, taluk and
district levels.
Statutory Development
Fund Equalization (Additional Grant)
13

Incentive
Block Untied Grant
Madhya Pradesh Performance Based
14

To those Gram Panchayats which levy and collect the taxes on time.
General Purpose
Establishment
Maintenance
Compensatory
Conditional Matching Grant
Maharashtra Matching (Scheme Specific, Cost Sharing)
For maintaining water supply schemes
To initiate a programme of low cost sewage disposal scheme in large
size villages.
Maintenance
for repair and maintenance of School rooms
for repair and maintenance of health service to ZPs.
Fund Equalization (One Time Grant)
To meet 50% of the remaining outstanding amount of arrears of
Maharashtra Jeevan Pradhikaran by GPs.
Odisha Special purpose
Kendu Leaf Grant
Sairat Grant
Cess on Land Revenue Grant
Incentive Grant

Tamil Nadu Special Purpose
General Purpose
Uttar Pradesh Special Purpose

13
Fiscal equalization transfers program corrects distortions that may cause fiscally induced migration by equalizing net fiscal
benefits across states
14
Output-based or performance grant establish a link between the funds provided through grant and the performance associated
with the conditions of the grant. IIPA
72 | P a g e
To fulfill the basic infrastructural needs.
for the needs based on social justice
Conditional
15

One time grant and annual recurring grant for the construction of
libraries and information centers.
Matching (Scheme Specific)
To assist Mid-Day Meal Scheme.

West Bengal Deficit Grant (Pension Grant)
A special fund named as a ‘Pension Fund’ to be granted to the
Municipalities constituting of the amount received on account of arrear
Property Tax and the Service Charges.
General Purpose
Fourth Generation SFCs
SFC of: Types of Grants
Bihar General Purpose (Untied)
Special Purpose
Retirement Benefits of the Municipal Employees:
Odisha Special Purpose

Odisha Kendu Leaves Grants should be either shared with the pluckers
instead of Panchayats or it should be withdrawn completely.
The Commission does not consider the continuance of Sirat Grants and
MFP worthwhile and recommends that it should be stopped.
An additional amount if 20% to the Panchayats under TSP areas out of
the total devolution and some specific grants for Panchayats.

Tamil Nadu General Purpose (Lump Sum)
Uttar Pradesh No. Recommendation
Fifth Generation SFCs
SFC of Types of Grants
Bihar Capacity Building
16

Performance
Tamil Nadu Capital Fund Grant
Minimum Lump sum Grant


15
Conditional matching grants, or cost-sharing programs, require the recipient or local governments to match or contribute the
funds partially on explicit purposes on which the grants are approved.
16
The grant intends to enhance the capacity of both panchayats and municipalities in terms of administration and organization.
The objective behind capacity-enhancement grants is to strengthen the institutions so that they could be fully equipped to
perform their mandated functions IIPA
73 | P a g e
3.10 Empowerment of Panchayats to Impose/Collect Revenue
Powers to impose taxes by the local governments was considered imperative to be
enshrined in the Constitution under Article 243H to impart certainty, continuity and strength to
the Panchayats. The Union Minister of State for Rural Development, G VenkatSwamy said
while moving the Constitution (73rd Amendment) Bill in Parliament, “Constitution (Seventy-
third) Amendment cast a duty on the centre as well as the states to establish and nourish the
village Panchayats so as to make them effective self-governing institutions….We feel that unless
the Panchayats are provided with adequate financial strength, it will be impossible for them to
grow in stature”.. Devolution of taxes to local governments can easily be linked with the
activities assigned to them, which vary from State to State. From the long list of Eleventh
Schedule, certain basic functions could be said to be in the exclusive domain of Panchayats.
Even these essential services require huge funds.
Table 3.11 reveals that a variety of taxes have been devolved at different levels of
Panchayats. The relative importance of these taxes varies from State to State. The intermediate
and district Panchayats are endowed with very few taxes whereas village Panchayats are given
substantial taxing powers. From the list, property tax, land cess, surcharge on additional stamp
duty, tolls, profession tax, advertisement tax, non-motor vehicle tax, octroi, user charges, etc.
contribute the maximum to the small kitty of own revenue, which contributes only six to seven
percent in the total expenditure of Panchayats. In most States, property tax contributes the
maximum revenue. However, this remains an inelastic tax due to inefficient administration in
its collection. Its assessment is based on annual rental value of taxation with its associated evil,
i.e. under-declaration of rentals. However, some progressive States have reformed the tax
structure and use unit area method in the determination of the tax base.The property tax has
been assigned to local governments including Panchayats in the states of Andhra Pradesh,
Karnataka, Madhya Pradesh, Tamil Nadu, Uttar Pradesh and West Bengal among all ten select
States. It is important to note that it remains the major source of own tax revenue for most
Panchayats.
The Entertainment Tax stands assigned to the Panchayats in Andhra Pradesh, Tamil
Nadu and West Bengal. Most States have also authorized the Panchayats to collect IIPA
74 | P a g e
Landcess/Land tax. Panchayats in a number of States including Andhra Pradesh, Bihar,
Gujarat, Karnataka, Odisha, Tamil Nadu and Uttar Pradesh also collect Vehicle tax.
Tax on bicycles and on vehicles drawn by animals, Trade and Callings Tax, Toll Tax are
the other taxes which have been assigned to the Panchayats in most States.
The following table shows assignment of tax handles to Panchayats at different rungs in ten
sample states. Theinformation has been assimilatedfrom the State Panchayat Acts and their
subsidiary Acts.
Table 3.11: Revenue Handles Assigned to Panchayats

17
collected by the Government on materials other than minerals and minor minerals quarried in the village
18
Tax on the village produce sold in the village by weight, measurement or number subject to such rules as may be
prescribed
Sl.
No
.
State
s
Revenue Handles Assigned to Panchayats
Tax Revenue Receipts Non- Tax Revenue Receipts

Taxes Levi
ed/
Coll
ecte
d
Appro
priate
d
Depo
sited
Provis
ions
Non-
Taxes
Levi
ed
Coll
ecte
d
Appro
priate
d
Dep
osite
d
Provisi
ons
1. And
hra
Prad
esh
(Gra
m
Panc
hayat
-V,
Man
dal
Paris
had-
I,
Zilla
Paris
had-
D)

House
tax

V,I

V,I,D
GF
S/60,
S/61,S
/74

Surcharge
on
seigniora
ge Fee
17


V


V

GF

S/60,
S/74
Kolaga
ram, or
Katarus
um
18


V


V

GF

S/60,
S/74
Fees for
the
occupati
on of
building(
chavadie
s and
sarais)

V


V

GF

S/60(3)
(v)
Vehicle
tax
(option
al)

V,D

D

SF

S/70

Fees for
use of
porambo
kes or
commun

V


V

GF

S/60,
S/74 IIPA
75 | P a g e
A
nd
hr
a
Pr
ad
es
h
Pa
nc
ha
ya
t
A
ct,
19
94

al lands
Tax on
agricult
ural
land

V


S/60,
Income
from
Mandal
Parishad
market

VI

V,I

IF

S/112,
S/74
Duty
on
Transfe
r of
Propert
y(India
n
Stamp
Act,
1899)

V,I,
D

V,I,D

GF,
IF,
DF

S/60,
S/69

Fees for
the
temporar
y
occupatio
n of
village
sites,
roads and
other
similar
public

V


V

GF
S/74
Ferry
Tax

V,I
D

V,I,D
- S/57 Income
from
endowme
nts and
trusts

V

V

GF
S/74

Tolls
and
taxes(P
ublic
Health)

V
Sectio
ns 117
and
118
(Andh
ra
Area)
Public
Health
Act,
1939
(Act
III of
1939)
Payments
from
Market
Committe
e

I

V,I

GF
S/11,
Andhra
Pradesh
(Andhr
a Area)
Comme
rcial
Crops
Market
s Act,
1933

Enterta
inment
tax

V


V

GF
S/13,
Andhr
a
Prades
h
Entert
ainme
nt Tax
Act,
1939.
Income
from
fisheries

V

V

GF

S/74 IIPA
76 | P a g e
Educati
on Tax
(Local
Authori
ty-
I+D,
under
A.P
Educati
on Act,
1971)
V

V,I,D SF
(Loca
l
author
ity
comp
ensate
d for
expen
se
incurr
ed)
S/37,
Andhr
a
Prades
h
educat
ion
act,
1971
Water
Rate
S,
I,D
- ST Andhra
Pradesh
Water
Tax
Act,
1988
Land
Cess
V,I,
D
V,I,D DF S/78,
S/92
Andhr
a
Prades
h
Distric
t
Board
s Act,
1920
Inam
Assessme
nt

S,V
(Qui
t
rent,
Jodi,
kattu
badi
)
- GF,
ST
Andhra
Pradesh
(Andhr
a Area)
Inams
Assess
ment
Act,
1995 IIPA
77 | P a g e
2
Bihar
(Gram
Panchayat-V,
Panchayat
Samiti-I, Zilla
Parishad- D)

Bihar
Panchayat Raj
Act, 2006.




















Taxes Levi
ed/
Colle
cted
App
ropr
iated
De
po
sit
ed
Provisions Non-
Taxes
Levied/
Coll
Ected
Appro
priate
d
Deposit
ed
Provis
ions
Tax on
Occupants
of
holdings
V

V GF S/27(1)(a) Fees on
registratio
n of boats
&vehicles
V,I,D

- - S/27(2
)(a)
S/55(1
)(b)(i)
S/82(1
)(b)(i)
Tax on
Profession
trades,
callings
and
employme
nt
V

V GF S/27(1)(b) Fee(Sanit
ary
Arrangem
ents
@Pilgrim
age,
Fairs)
V,I,D

V,I,D GF, IF,
DF
S/27(2
)(b)
S/55(1
)(b)(ii)
S/82(b
)(i)
Fee for
license
haat or
market
I

I IF S/55(1
)(b)(iii
)
Tolls
(Ferry)
I,D

- - S/55(1)(a),
S/82(1)(a)
Water
rate
V,I,D

V,I,D GF, IF,
DF
S/27(2
)(c)
S/55(1
)(a)(iv)
S/82(1
)(b)(v)












Lightning
Fee
V,I,D

- GF, IF,
DF
S/27(2
)(d)
S/55(1
)(a)(v)
S/82(1
)(b)(iv
)
Fee for
license of
fair or
mela
D

D DF S/82(1
)(b)(iii
)
Conserva
ncy rate
V

V GF S/27(2
)(e)
3 Gujarat

(Gram
Panchayat[pop
ulation<10,000
]-V,
Nagar
Panchayat[pop
ulation>10,000
< 30,000]- N,
Taluka
Taxes

Levied
Collect
ed
Appro
priated
De
pos
ite
d
Provis
ions
Non-
Taxes
Levi
ed
Coll
ected
Ap
pro
pri
ate
d
De
pos
ite
d
Provisions

Tax on
building
and lands

V,N

V,N

GF

S/178(
i)
Fee levied
for
institution
of Suits
and cases

V

V

GF
S/244- Fee
levied
S/99-Gram Fund

Net S V,N GF S/181 Sums to S/234& S/235 IIPA
78 | P a g e

19

Panchayat- I,
District
Panchayat-D)


Gujarat
Panchayat Act,
1961.

[S/178-
tasxation by
GP & NP;

proceed of
cess
be paid as
compensa
tion
- V GF
Net
proceed of
stamp
duty
I I IF S/184
Ferry rate

D

D

DF
Bombay Ferries
and Inland
Vessels Act,
1868
Conversio
n Tax
19

S V,N ST S/65
Land
Reven
ue
code,1
879
Rent/Pena
lty(crimin
al case)

V

-
GF S/120(h)-Taluka
fund
Tax on
motor
vehicles
(other
than tolls
on
trailers)
V,N - ST S/20
Bomba
y
motor
vehicle
s tax
act,19
58

Water
rate
S I I

Bombay
irrigation Act,
1879

Pilgrim
Tax
V,N - GF S/178(
iii)
Tolls on
roads and
bridges
S V,
N,I
GF Tolls on roads
and bridges act
1875
Tax on
fairs,
festivals
and other
entertainm
ents
V,N,D - GF S/178(
iv)
Fee on
markets
and
weekly
bazaars
V,N
D
- GF S/178(x)
Tax on
bicycles
and on
vehicles
drawn by
animals
VND VND GF,
.DF
S/178(
v)
Fee on
cart
stands
and tonga
stands
VND VN
D
GF,
DF
S/178(xi)
Tax on
trade,
profession
s, callings
VND VND GF,
DF
S/178

District
Developm
ent Fund
(10% of
income)
VND VN DF S/103-DDF
Inter-
Governmental
aid(V+NDF)
Sanitary
Cess

VND VN GF S/178(xv)
4
Karnataka

Taxes Levi
ed
Colle
Appropri
ated
De
pos
ite
Provisio
ns
Non-
Taxes
Levi
ed
Coll
Appro
priate
d
Depos
ited
Provisi
ons IIPA
79 | P a g e
(Gram
Panchayats-V;
Taluka
Panchayat-I;
Zilla



KarnatkaPanch
ayat Raj Act,
1994

















cted d Ecte
d
Tax on
lands and
buildings

V

V

GF

S/199(1)
Pilgrim
fee
V V GF S/199(3
)(d)
Tax on
entertain
ment
other than
cinematog
raph
shows

V

V

GF

S/199(3)
(a)

Water rate

V

V

GF

S/199(2
)

Market
Fee

V

V

GF
S/199(3
)(e)
Tax on
vehicles,
other than
motor
vehicles
V V GF S/199(3)
(b)
Fee on the
registratio
n of cattle
brought
for sale in
any
market
place

V

V

GF
S/199(3
)(f)
Local cess S V GF S/204
(Karnatk
a Land
Revenue
act,
1964)
Fee on
buses and
taxies and
auto-
stands

V

V

GF
S/199(3
)(g)
Duty on
transfer of
property
S D DF S/205
(Karnatk
a Stamp
Act,
1957)
Fee on
grazing
cattle in
the
grazing
lands

V

V

GF
S/199(3
)(h)

5

Madhya
Pradesh

(Gram
Panchayat-V;
Janpad
Panchayat-I;
Zilla
Panchayat-D)

Madhya
Pradesh
Panchayat
RajAdhiniyam,
1993
Taxes Levi
ed
Colle
cted
App
ropr
iated
De
pos
ited
Provisions Non-
Taxes
Levi
ed
Coll
Ecte
d
Ap
pro
pri
ate
d
De
pos
ite
d
Provisions
Cess on
land
V I GF S/74 Market
fees
V - GF Schedule-
I[S/77(f)]
Duty on
transfer of
Property
S(Ind
ian
Stam
p act
V,I ST S/75 Fees on
the
registratio
n of cattle
sold
V - GF Schedule-
I[S/77(f)]
Developm
ent tax on
agricultur
e
I V,I IF,
GF
M.P.
Janpad
Panchayat
(Imposition
Light tax V(Gr
am
Sabh
a)
- GF Schedule I-
A[S/77A]
(3) IIPA
80 | P a g e


Schedule I-
(S/77(f))- A.
Obligatory
Taxes to be
imposed by
G.P)
B.Tax imposed
by B.P

Schedule I-A
(S/77A)
Obligatory
taxes to be
imposed by
Gram Sabha)

Schedule
II[S/77(2)]
Optional taxes
imposed by
G.P
B. Optional
taxes by B.P

Schedule
IIA[S/77A]
Optional taxes
by Gram Sabha

Schedule III-
Lease of
collection of
fess by G.P

of
Developme
nt Tax on
Agriculture
Land)
Rules, 1999

Water
rate

V
GF Schedule
II[S/77(2)]
Developm
ent Tax
D V,I GF,
DF
S/74(3)
S/77(3)
District
Panchayat
fund
rules,1998
Fees
payable
by the
owners of
the
vehicles
other than
motor-
vehicle
V - GF Schedule
II[S/77(2)]
Theatre
Tax
I V,I IF,
GF
Schedule-
I(B)
Drainage
Fee
V - GF Schedule
II[S/77(2)]
Tax on
private
latrines

V(Gr
am
Sabh
a)
-
GF
Schedule I-
A(2)
License
fee
(Lands
under
Janpad)
I - IF Schedule
II[S/77(2)]B
Tax on
Profession
, trades
and
callings)

V(Gr
am
Sabh
a)
-
GF
Schedule I-
A[S/77A]
(4)
Fees tor
the use of
sarais,
dharamsh
alas, rest
houses,
slaughter
houses
and
encampin
g ground
V(Gr
am
Sabh
a)
- GF Schedule II-A
[S/77(A)]
Tax on
the
bullock-
carts,
bicycles,
rickshaws
used for
hire
V - GF Schedule
II[S/77(2)]
Fee for
bullock-
cart stand
or tonga
stand
V - GF Schedule
III(S/80)
Tax on
animals
used for
riding,
V(Gr
am
Sabh
a)
- GF Schedule
II-A
[S/77(A)]
fee for
grazing
cattle
V - GF Schedule
III(S/80) IIPA
81 | P a g e

20
for special works of public utility
21
Lands benefitted from scheme or projects undertaken by a Panchayat from the village fund
driving,
drought or
burden or
on dogs or
pigs
Fees for
temporary
structure
or any
projection
over any
public
place
V - GF Schedule II-A
[S/77(A)]
Temporar
y tax
20
.
V(Gr
am
Sabh
a)
- GF Schedule
II-A
[S/77(A)]

Property
tax
V(Gr
am
Sabh
a)
- GF Schedule I-
A
(1)


6
Maharashtra

(Village
Panchayat- V;
Panchayat
Samiti/Taluka
Panchayat-I;
Zilla Parishad-
D)
Bombay
Village
Panchayat Act,
1968

Maharashtra
Zilla Parishad
and Panchayat
Samiti Act,
1961

Taxes Levi
ed
Colle
cted
App
ropr
iated
De
pos
ited
Provisions Non-
Taxes
Levi
ed
Coll
ected
Ap
pro
pri
ate
d
De
pos
ite
d
Provisions
Cess on
land
V - GF S/127

fee on
markets
and
weekly
bazars
V - GF S/124(1)(x)
Tax on
land and
buildings
V - GF S/124(1)(i) fee on
cart stand
and tong
stands
V - GF S/124(1)(x)
Bettermen
t tax
21

V - GF S/124(1)(i-
a)
fee for the
supply of
water
from
wells and
tanks
- - - S/124(1)(xii)
Local
Panchayat
s Tax
V - GF S/124(1)(i-
b)
Equalizati
on Grant
- - GF S/132A
Pilgrim
tax
V - GF S/124(1)(iii
)
village
water
supply
fund
- - GF S/132B IIPA
82 | P a g e
Tax on
fairs,
festivals
and other
entertain
ments
V - GF S/124(1)
(IV)
District
Developm
ent Fund
- - GF S/133
Tax on
bicycles
and on
vehicles
drawn by
animals
V - GF S/124
(1)(v)
Fee for
temporary
erection
on, or
putting up
projection
over, or
temporary
occupatio
n of, any
public
street or
place
V - GF S/124(1) (xiv)
Lightning
Tax
V - GF S/124(1)(vi
i)
Fee for
cleaning a
cess pool
constructe
d on land
V - GF S/124(1)(vi)
Sanitary
Cess
V - GF S/124(1)(vi
i)
Loans
from zilla
Parishad
- GF S/132
Water
Rate
V - GF S/124(1)(vi
ii)
Fee fro
grazing
cattle or
grazing
lands
V - GF S/124(1)(xvii)
Tax under
S/2 of
Bombay
Motor
Vehicles
Tax Act,
1958
V - GF S/124(1)(ix
)
Fee on the
registratio
n of
animals
sold
V - GF S/124(1)(xviii)
Tax on
trade,
calling or
employme
nt
V - GF S/124(1)(vi
)
-

7.
Odisha

Taxes Levi
ed
App
ropr
De
pos
Provisions Non-
Taxes
Levi
ed
Ap
pro
De
pos
Provisions IIPA
83 | P a g e

22
S/56, Orissa Gram Panchayat act, 1964Industries and factories including dangerous and offensive trades
23
S/57, Orissa Gram Panchayat act, 1964 Control over
24
“Dealers”, who are temporarily occupying open grounds or any structure belonging to G.P.

(Gram
Panchayat-V;
Panchayat
samiti-I;
Zilla Parishad-
D)

Orissa Gram
Panchayat
Act, 1964

S/83- Taxation
by G.P
S/93- Gram
Fund

Orissa
Panchayat
Samiti Act,
1999

S/29- Sources
of income for
Panchayatsa
miti

Orissa Zilla
Parishad Act,
1994

S/15-Sources
of income for
zillaparishad.







Colle
cted
iated ited Coll
ected
pri
ate
d
ite
d

Vehicle
tax


V

V

GF

S/83, S/86

Income
from
endowme
nts, trusts
I,D - IF,
DF
S/29(iii)
Orissa
Panchayat
Samiti Act, 1999



Conserva
ncy tax

V

V

GF

S/83
Power to
levy fees
under
S/55
22
&
S/56
23

S/57

Drainage
tax

V

V

GF

S/83
Ferry rate V V GF S/72-
Appropriation of
income of
ferr1ies
Land cess V V,D GF,
DF
S/93(V)
S/15(D)
Water
rate
V - GF S/83(d)

Lightning
rate
V - GF S/83( e)
Fee on
private
markets,
cart-
stands
and
slaughter
houses
within
gram
V GF S/83(g)
Fee on
animals
brought
for sale
into or
sold in a
public
market(Gr
am)
V GF S/83(h)
Rent from
dealers
24

V V GF S/83(l)
License V V GF S/83(m) IIPA
84 | P a g e

25
S/58(2)(b) Markets
26
S/167, Tamil Nadu Panchayats Act (I) There shall be levied in every Panchayat development block, a local cess
at the rate of one rupee on every rupee of land revenue payable to the Government in respect of any land for every
fasli..
Explanation.- In this section and. in section 168, 'land revenue' means public revenue due on land and includes
water cess payable to the Government for water supplied or used for the irrigation of land, royalty, lease amount or
other sum payable to the Government in respect of land held direct from the Government on lease or licence, but
does not include any other cess or the surcharge payable under section 168, provided that land revenue remitted
shall not be deemed to be land revenue payable for the purpose of this section.
27
shall becredited to the Panchayat Union (Education) Fund(S/167(4))
fees for
brokers,
commissi
on agents,
weigh
men and
measures
Fee for
use of any
infrastruct
ure in
market.
V VI GF S/83(j)
S/58(2)(b)
25

Income
from
property,
Institution
,
undertaki
ng.
- - GF S/93(e)
Fee for
regulating
the
movemen
t of cattle
(protectio
n of
crops)
V









- GF S/83(i)
8 Tamil Nadu


(Village
Panchayat-V;
Panchayat
Union
Councils-I;
District
Taxes Levi
ed
Colle
cted
App
ropr
iated
De
pos
ited
Provisions Non-
Taxes
Levi
ed
Coll
ected
Ap
pro
pri
ate
d
De
pos
ite
d
Provisions
Local
cess
26

V,I
,D
I(10
%pro
ceed
s)
27
,
GF,
IF,
DF
S/167
(Tamil
Nadu
Revenue
Local
education
grant
-

- IF S/179 IIPA
85 | P a g e

28
Explanation.- In this section, "vehicle" means a conveyance suitable for use on roads and includes any kind of
tram-car, carriage, cart, wagon, bicycle, tricycle and rickshaw, but does not include a motor vehicle as defined in
the Motor Vehicles Act, 1988
Panchayats-D)

Tamil Nadu
Panchayats
Act, 1994

-S/171- Taxes
leviable by
village
Panchayats

-S/186-
Panchayat
Union
(General)
Fund


-S/188-Village
Panchayat
Fund
D Recovery
Act, 1864)
Duty on
transfer of
property
V - GF S/171
S/175
Local
Roads
grant
- - IF S/182
House tax V - GF S/171
S/172
Local
Cess
Surcharge
Matching
Grant
- - IF S/180
Vehicle
tax
28

V - GF S/171
S/173
Fees on
licences
and
permissio
ns by
Panchaya
t union
I - IF S/186(e)
Entertain
ment tax
I - IF S/13,
Tamil
Nadu
Entertain
ment tax
act, 1939
Fee levied
in public
markets
I I,V IF,
GF
S/186(f)
Professio
nal tax
V V GF
S/188;

[Tamil
Nadu Tax
on
Professions
, Trades,
Callings
and
Employme
nts Act,
1992]
Fee for
use of
choultries
I - IF S/186(i)
Income
from
ferries
and
fisheries
- - IF,
GF
S/186(o)
S/188(n)
S/188(o)
Taxes and
tolls
levied in
the village
V V GF
S/188;

S/ 117 and
118,Tamil
Nadu
Public
Health Act,
1939
Income
from
endowme
nts and
trusts
I - IF,
GF
S/186(k)
S/188(k) IIPA
86 | P a g e

29
In areas where the right, title and interest of intermediaries have been acquired under the Zamindari Abolition
and Land Reforms Act, 1950(U.P. Act No. 1 of 1952), the JaunsarBawarZamindari Abolition andLand Reforms
Act, 1956 (U.P. Act XI of 1956) or the Kumaun andUttarakhand Zamindari Abolition and Land Reforms Act,
1960 (U.P.Act XVII of 1960) a tax on land 1[not less than twenty-five paise bynot exceeding fifty paise] in a rupee
on the amount of land revenuepayable or deemed to be payable therefor;
Sale
proceeds
of tools,
plants,
stores,
avenue
produce
- - IF S/186(n)
Income
derived
from
porambok
es
- - GF S/188(r)
Income
from
leases of
Governm
ent
property
- - GF S/188(t)
Fee for
temporary
occupatio
n of roads
I - IF,
GF
S/186(h)
S/188(i)
9 Uttar Pradesh


(Gram
Panchayat-V;
Kshetra
Panchayats-I;
Zilla
Panchayats-D)


*Uttar Pradesh
Panchayat Act,
1947

S/32- Gaon
Fund


Taxes Levi
ed
Colle
cted
Ap
pro
pri
ate
d
De
pos
ited
Provisions Non-
Taxes
Levi
ed
Coll
ected
De
pos
ite
d
Provisions

Land
Tax
29

V,D - GF,
DF
S/37(a)
U.P. Zilla
Panchayats
(Recovery of
Arrears of
Tax and Rent
on
Land) Rules,
1975
Fees on
the
registratio
n of
animals
sold in
any
market
V - GF S/37(f)
Tax on
land
revenue
V - GF S/37(b) Fees for
the use of
slaughter-
houses
and
V - GF S/37(g) IIPA
87 | P a g e

S/37-
Imposition of
taxes and fees


S/39- Expenses
of
nayayaPanchay
at to be charge
on Goan fund


*Uttar Pradesh
Kshettra
Panchayats
and
zillaPanchayat
sAdhiniyam,
1961

S/99-Zila Nidhi
and
Kshetranidhi(F
und)

S/119-Taxes
imposed by
Zila Panchayat


encampin
g ground
tax on
theater,
cinema or
similar
entertain
ment
V - GF S/37(c) Water
rate
V,I - GF,
IF
S/37(h)
S/131A
(a)
Irrigation
rate
V - GF S/37(k)
Tax on
animals
and
vehicles
V - GF S/37(d) Electricity
tax
I - IF S/131A(b)
Tax on
person
exposing
goods for
sale in
markets,
hats, or
melas
V - GF S/37(e)
Tax for
cleaning
and
lighting of
streets
and
sanitation;
V - GF S/37(j)
Tax for
cleaning
private
latrines
and
drains

V - GF S/37(i) IIPA
88 | P a g e
Tax on
circumsta
nces and
property
D

V(S/
122-
Colle
ction
of
tax)
- DF S/119, U.P
Kshetra and
zilla
Panchayat
Adhiniyam,
1961

United
Provinces
District
Boards Act,
1922
10
West Bengal


(Gram
Panchayat-V;

Panchayat
Samiti-I;

Zilla Parishad-
D)



West Bengal
Panchayat Raj
Act, 1973


S/47- Levy of
rates and
fees(Gram
Panchayat)


S/133- Levy of
tolls and fees
by Panchayat
Samiti


S/181- Levy of
tolls, fees, rates
by Zilla
Panchayat
Taxes Levi
ed
Ap
pro
pri
ate
d
De
pos
ited
Provisions Non-
Taxes
Levi
ed
Ap
pro
pri
ate
d
De
pos
ite
d
Provisions
Tax on
land and
building
V - GF S/46(1) fees on
the
registratio
n of
vehicles
V,I,
D
- GF,
IF,
DF
S/47(i)
S/133(i)
S/181(1)(c)(i)
Duty on
transfer of
property
V - GF S/46(4)(a) fees on
plaints
and
petitions
and other
processes
in suits
and cases
V - GF S/47(ii)
Duty on
entertain
ment
V - GF S/46(5) Sanitary
Fee
V,I,
D
- GF,
IF
S/47(iii)
S/133(ii)
S/181(1)
(c)(ii)
Road Cess D - DF S/180
(Cess Act,
1880)
water rate
V,I,
D
- GF,
IF
S/47(iv)
S/133(v)
S/181(1)(c)(iv)
Public
work cess
D - DF S/180 lighting
rate

V,D
- GF S/47(v)
S/181(1)(c)(v)
conservan
cy rate

V
- GF S/47(vi)
Ferry rate V,I,
D
- GF,
IF,
DF
S/47(ix)
S/133(b)
S/181(1)(b)
Drainage
rate
V - GF S/47(xii) IIPA
89 | P a g e
Fees for
use of
burning
ghat
V - GF S/47(xiv)

Fees on
license on
dogs and
birds and
other
domestic
pet
animal
V - GF S/47(x)
Fees on
registratio
n for
[shallow
or deep
tube-
wells]
fitted with
motor-
driven
pump sets
and
installed
for
irrigation
for
commerci
al
purposes,
V












- GF S/47(xv)
Tolls on
persons,
vehicles
or
animals(R
oads and
bridges)
V,I,
D
- GF,
IF,
DF
S/47(viii)
S/133(1)
(a)
S/181(1)
(a)
Fee on
running
dangerous
trade
I - IF S/116
S/133(iii)
Fee for
license
for a hat
or
market
I - IF S/117
S/133(iv) IIPA
90 | P a g e

fees on
registratio
n] for
running
trade,
wholesale
or retail,

V







- GF S/47(vii) IIPA
91 | P a g e

3.11 GST Implications on Panchayats
In the wake of the 101
st
Constitutional Amendment Act, 2016 which formed the basis of
new GST regime, has affected the tax base of local governments including Panchayats. The
Amendment Act has subsumed some taxes that formed base of own source revenue for
Panchayats. These taxes were Octroi
30
Tax on advertisement
31
and fee collected on sale and
purchase of agricultural produce.
32
Also Panchayats/ Municipality/Regional council/District
council are authorized to collect taxes on entertainments and amusements.
33

Table 3.12: Important/major changes in tax handles of Panchayats in State Pre and Post-GST
Sl
No
.
Selected Sample
States
Important/major changes in tax handles of Panchayats in State
Pre-GST Post- GST (As per the State GST Act)
A Central Region Taxes Subsumed Status
1. Madhya Pradesh

Acts/Amendments

Madhya Pradesh
Panchayat Raj
Adhiniyam,
1993

Madhya Pradesh
State GST Act, 2017

Madhya Pradesh
VrittiKar
(Sanshodhan)
Adhiniyam, 2017

Madhya Pradesh


Development Tax




Considered as
supply of
service under
Schedule II (5),
Section-7, M.P
SGST Act,
2017.
S/51 (1) (b)-The Government
may mandate local authority to
deduct tax at source or TDS at
the rate of 1 per cent from the
payment made to the supplier
/deductee of taxable goods &
services ,where the total value of
such supply > INR 2,50,000/-

S/52 (1)- Collection of tax at
source /TCS

S/173(Repealed Acts)

Madhya Pradesh
SthaniyaKshetra Me Mal
kepravesh par karAdhiniyam,
1976(Act No.52 of 1976)


Tax on Profession,
trades and callings

-
Rates revised
for Dealer
registered or not
registered under
M.P Vat Act,
2002 or M.P
GST Act, 2017.
a) Does not
exceed
rupees 20

30
Entry 52, omitted by the constitution (One Hundred and First amendment) Act, 2016, sec.17(b) (i) (w.e.f 16-9-2016,
vide,S,O. 2986(E), dated 16
th
September , 2016). Entry 52, before omission, stood as under:
“52. Taxes on the entry of goods into local areas for consumption, use or sale therein.”
31
Entry 55, omitted by the constitution (One Hundred and First amendment) Act, 2016, sec.17(b) (iii) (w.e.f 16-9-2016,
vide,S,O. 2986(E), dated 16
th
September , 2016). Entry 55, before omission, stood as under:
“55. Taxes on advertisements other than advertisements published in the newspapers and advertisements broadcast by radio or
television.
32
Entry 54, omitted by the constitution (One Hundred and First amendment) Act, 2016, sec.17(b) (iii) (w.e.f 16-9-2016,
vide,S,O. 2986(E), dated 16
th
September , 2016).Entry 54, before substitution by the (One Hundred and First amendment) Act,
2016, stood as under:
“54. Taxes on the sale or purchase of goods other than newspapers subject to the provisions of entry 92A of List I.”
33
Entry 62, omitted by the constitution (One Hundred and First amendment) Act, 2016, sec.17(b) (i) (w.e.f 16-9-2016,
vide,S,O. 2986(E), dated 16
th
September , 2016). Entry 52, before omission, stood as under:
“62. Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling.” IIPA
92 | P a g e
Municipal
(Entertainment and
Amusement) Tax
Rules, 2018

lacs(Nil)
b) Exceed
rupees 20
lacs(2500)
34


Madhya Pradesh vilasta,
manorajan,
Amodevamvigyapankar
adhiniyam,,2011(Act No. 11 of
2011)
Tax on luxury


Repealed
Madhya
Pradesh vilasta,
manorajan,
Amodevamvigy
apankar
adhiniyam,,201
1
Advertisement
Duty
35



Repealed
Madhya
Pradesh vilasta,
manorajan,
Amodevamvigy
apankaradhiniya
m,,2011



Entertainment
Duty
36



-


Given to
Municipal
authorities for
levy and
collection under
Madhya
Pradesh
Municipal
(Entertainment
and
Amusement)
Tax Rules,
2018

B Eastern Region
Sl
No
.
Selected Sample States Important/major changes in tax handles of Panchayats in State
Pre-GST Post- GST (As per the State GST
Act)
Taxes Subsumed Status

34
Madhya Pradesh VrittiKar (Sanshodhan) Adhiniyam, 2017
35
M.P Entertainment duty and advertisement tax act, 1936; Madhya Pradesh vilasta, manorajan, Amodevamvigyapankar
adhiniyam,,2011
36
Ibid9 IIPA
93 | P a g e

2.

West Bengal


W.B Panchayat Act,1993
[WBPA,1993]

West Bengal State GST
Act, 2017
[WBSGST,2017]


The Bengal Amusements
Tax Act, 1922


West Bengal
Entertainment-Cum-
Amusement Tax Act, 1982


Bengal Entertainments and
Luxuries (Hotels and
Restaurants)
Tax Act, 1972


West Bengal
Entertainment-Cum-
Amusement Tax Act, 1982
&

Advertisement
Fee




Repealed
S/47(xvii) of W.B
PA,1993
S/173 of WB SGST Act –
(i)The Bengal
Amusements Tax Act,
1922;

(ii) the West Bengal
Entertainments and
Luxuries (Hotels and
Restaurants)
Tax Act, 1972;

(iii) West Bengal
Entertainment-Cum-
Amusement Tax Act,
1982&

(iv) The West Bengal
Tax on Entry of Goods
into Local Areas Act,
2012,are hereby repealed.

S/51 C/1(b)-Tax
deduction at
Source or TDS by Local
Authority/Panchayats
S/51 Tax Collection at
Source or TCS
Schedule III S/3 C/a-
Exemption of functions
performed by
M.P/MLA/Panchayat
members from both Goods
& Services Category




Amusement
Tax

Repealed
The Bengal
Amusements Tax Act,
1922;

West Bengal
Entertainment-Cum-
Amusement Tax Act,
1982 &


Fees on
registration]
for running
trade,
wholesale or
retail,

Subsumed
under W.B SGST Act

Duty on
entertainment

Repealed
Bengal
Entertainments and
Luxuries (Hotels and
Restaurants)
Tax Act, 1972

West Bengal
Entertainment-Cum-
Amusement Tax Act,
1982 &
Sl
No
.
Selected Sample States Important/major changes in tax handles of
Panchayats in State

(As per the State GST
Act) Pre-GST Post- GST
Taxes Subsumed Status IIPA
94 | P a g e


3.


Odisha

Orissa Gram Panchayat
Act, 1964

Orissa Panchayat Samiti
Act, 1999


Orissa Zilla Parishad
Act, 1994

Orissa State GST
Act,2017

Odisha Entertainment
Tax Act, 2005,

Odisha Entertainment
Tax Act, 2005,


Entertainment
Tax



Repealed
Odisha
Entertainment Tax
Act, 2005,



S/51 C/1 (b) – TDS-
The Government may
mandate local authority to
deduct tax at source or
TDS at the rate of 1 per
cent from the payment
made to the supplier
/deductee of taxable goods
& services ,where the total
value of such supply >
INR 2,50,000/-

S/52 C/1 -Collection of
Tax at source

S/174 C/1-Repeal of
following taxes namely-
a)Odisha Value Added
Tax Act, 2004 so far as it
relates to the goods other
than the goods appearing
in Entry 54 of List-II of
the Seventh Schedule to
the Constitution,
b)Odisha Entry Tax Act,
1999,
c)Odisha Entertainment
Tax Act, 2005,
d) Odisha Luxury Tax
Act, 1995.
Schedule III S/3 C/a-
Exemption of functions
performed by
M.P/MLA/Panchayat
members from both Goods
& Services Category


Tax on
Profession,
trades and
callings

-

Rates revised for
Dealer registered or
not registered under
Orissa Vat Act, 2002
or Orissa GST Act,
2017.
i)Does not exceed
rupees 20 lacs(Nil)
ii)Exceed rupees 20
lacs(2500)
37



-









C Northern Region
Sl
No
.
Selected Sample States Important/major changes in tax handles of Panchayats in State
Pre-GST Post- GST (As per the State GST Act)
Taxes Subsumed Status

4.







Uttar Pradesh(UP)

Uttar Pradesh Panchayat
Act, 1947

Uttar Pradesh Kshettra
Panchayats and

Tax on theater,
cinema or
similar
entertainment

Repealed

The UP
Entertainment
and Betting Tax
Act ,1979,

S/51 (1) (b) –
TDS-
The Government may mandate
local authority to deduct tax at
source or TDS at the rate of 1
per cent from the payment made
to the supplier /deductee of
taxable goods & services, where

37
Odisha state tax on Professions, trade and calling, employment amendment act 2018. IIPA
95 | P a g e




zillaPanchayats
Adhiniyam, 1961


The UP Entertainment
and Betting Tax Act
,1979


The UP Advertisements
Tax Act, 1981



Tax on
Profession,
trades and
callings

-
Rates revised
for Dealer
registered or not
registered under
Orissa Vat Act,
2002 or Orissa
GST Act, 2017.
c) Does not
exceed
rupees 20
lacs(Nil)
d) Exceed
rupees 20
lacs(2500)
38

the total value of such supply >
INR 2,50,000/-

S/52 (1) -Collection ofTax at
source
S/174- Repeal of following acts
namely-
i)The UP value Added Tax Act,
2008, except in respect of goods
included in the Entry 54 of the
State list of the Seventh
Schedule of the Constitution,

ii)The UP Tax on Entry of
goods into local areas act,
2007,

ii)The UP Advertisements Tax
Act, 1981,

iii)The UP Entertainment and
Betting Tax Act ,1979,

iv)The United ProvincesSales
of Motor Spirit ,Diesel Oil &
Alcohol Taxation Act,1939,
The UP Sugarcane (Purchase
Tax) Act,1961

Inclusion of taxes on following
handles under purview of
GST-
Schedule II-
S/2- Land & building,
S/5-Supply of services say
renting of immovable property ,
construction of
building/structure


Advertisement
tax

Repealed

The UP
Advertisements
Tax Act, 1981

Sl
No
.
Selected Sample States Important/major changes in tax handles of Panchayats in State
Pre-GST Post- GST (As per the State GST Act)
Taxes Subsumed Status

5.

Bihar

Bihar Panchayat Raj Act,
2006.

Entertainment
tax



Repealed
The Bihar
Entertainment
Tax Act, 1948
S/7 (2)(b) - Such activities or
transactions under taken by the
Central Government, a
State Government or any local
authority in which they are

38
Uttar Pradesh state tax on Professions, trade and calling, employment amendment act 2018. IIPA
96 | P a g e

Bihar Entertainment Tax
Act, 194; and

The Bihar Advertisement
Tax Act, 2007.
Tax on
Profession
trades, callings
and
employment
- Rates revised
for Dealer
registered or not
registered under
Bihar Vat Act,
2002 or Bihar
GST Act, 2017.
e) Does not
exceed
rupees 20
lacs(Nil)
Exceed rupees
20 lacs(2500)
engaged as
public authorities, as may be
notified by the Government on
the
recommendations of the
Council, shall be treated neither
as a supply of
goods nor a supply of services.
S/51 (1)(b) – Tax deduction at
source/TDS- The Government
may mandate local authority to
deduct tax at source or TDS at
the rate of 1 per cent from the
payment made to the supplier
/deductee of taxable goods &
services, where the total value of
such
supply > INR 2,50,000/-

S/52-Collection of tax at source
S/173 – Repeal offollowing acts
namely-
(a)The Bihar Value Added Tax
Act, 2005, except in respect of
goods included
in the Entry 54 of the State List
of the Seventh Schedule to the
Constitution;
(b) the Bihar Tax on Entry of
Goods into Local Areas for
Consumption, Use or Sale
There in Act,1993;
(c) the Bihar Taxation on
Luxuries in Hotels Act,1988;
(d) the Bihar Entertainment
Tax Act, 1948; and
(e) The Bihar Advertisement
Tax Act, 2007.
Advertisement
tax
Repealed
The Bihar
Advertisement
Tax Act, 2007.

D Western Region
Sl.
No
.
Selected Sample States Important/major changes in tax handles of Panchayats in State
Pre-GST Post- GST(Status) (As per the State GST Act)
Taxes Subsumed Status
6.
Maharashtra

Maharashtra Village
Panchayat Act, 1959


Tax on fairs,
festivals and
other
entertainments




Repealed


Schedule III S/3 (a)-Exemption
of functions performed by
M.P/MLA/Panchayatmembers
from both Goods & Services
Category. IIPA
97 | P a g e
Maharashtra Zilla
Parishad and Panchayat
Samiti Act, 1961

Maharashtra state GST
act, 2017


Tax under S/2
of Bombay
Motor Vehicles
Tax Act, 1958


Repealed
The
Maharashtra
Tax on Entry of
Motor Vehicles
into LocalAreas
Act, 1987
S/51 C/1 (b) – Tax deduction at
source/TDS- The Government
may mandate local authority to
deduct tax at source or TDS at
the rate of 1 per cent from the
payment made to the supplier
/deductee of taxable goods &
services ,where the total value of
such
supply > INR 2,50,000/-

S/52-Collection of tax at source

S/173 – Repealed Acts namely
–
(a)The Maharashtra Betting Tax
Act, 1925,
(b) The Maharashtra Purchase
Tax on Sugarcane Act, 1962,
(c)The Maharashtra
Advertisements Tax Act, 1967.
(d) The Maharashtra Forest
Development (Tax on sale of
Forest
Produce by Government or
Forest Development
Corporation) Act, 1983.
(e) The Maharashtra Tax on
Luxuries Act, 1987.
(f) The Maharashtra Tax on
Entry of Motor Vehicles into
Local Areas Act, 1987.
(g) The Maharashtra Tax on the
Entry of Goods into Local Areas
Act, 2002.
(h) The Maharashtra Tax on
Lotteries Act, 2006

Advertisement
tax
- Repealed
The
Maharashtra
Advertisements
Tax Act, 1967
Tax on trade,
professions,
callings
- Rates revised
for Dealer
registered or not
registered under
Gujarat Vat
Act, 2002 or
Gujarat GST
Act, 2017.
-Does not
exceed rupees
20 lacs(Nil)
-Exceed rupees
20 lacs(2500)

Sl.
No
.
Selected Sample States Important/major changes in tax handles of Panchayats in State
Pre-GST Post- GST (As per the St
+3.
+…………….ate GST Act)
Taxes Subsumed Status
7. Gujarat

Gujarat Panchayat Act,
1961

The Gujarat
Entertainments Tax Act,
Tax on fairs,
festivals and
other
entertainments
S/178(iv)




Repealed
The Gujarat
Entertainments
Tax Act, 1977



Schedule III S/3 (a)
Exemption of functions
performed by
M.P/MLA/Panchayat members
from both Goods & Services IIPA
98 | P a g e
1977

Conversion
Tax
39


Considered as
supply of
service under
Schedule II (5),
Section-7,
Gujarat SGST
Act, 2017.
Category.

S/51 (1) (b) – Tax deduction at
source/TDS- The Government
may mandate local authority to
deduct tax at source or TDS at
the rate of 1 per cent from the
payment made to the supplier
/deductee of taxable goods &
services ,where the total value of
such
supply > INR 2,50,000/-

S/52-Collection of tax at source

S/173- List of Repealed Acts
namely
(i) The Gujarat Tax on Entry of
Specified Goods into Local
Areas Act, 2001;
(ii) The Gujarat Tax on Luxuries
(Hotels and Lodging Houses)
Act, 1977; and
(iii) The Gujarat Entertainments
Tax Act, 1977
Tax on trade,
professions,
callings
- Rates revised
for Dealer
registered or not
registered under
Gujarat Vat
Act, 2002 or
Gujarat GST
Act, 2017.
-Does not
exceed rupees
20 lacs(Nil)
-Exceed rupees
20 lacs(2500)

E Southern Region
Sl.
No
.
Selected Sample States Important/major changes in tax handles of Panchayats in State
Pre-GST Post- GST (As per the State GST Act)
Taxes Subsumed Status

8.














Karnataka

Karnataka Panchayat Raj
Act, 1994

The Karnataka
Entertainments Tax Act

Karnataka State GST
Act,2017

Tax on
entertainment
other than
cinematograph
shows
[S/199(3)(a)]




Repealed
Karnataka
Panchayat Raj
Act, 1994

The Karnataka
Entertainments
Tax Act, 1958

S/51 C/1 (b) – Tax deduction at
source/TDS- The Government
may mandate local authority to
deduct tax at source or TDS at
the rate of 1 per cent from the
payment made to the supplier
/deductee of taxable goods &
services ,where the total value of
such
supply > INR 2,50,000/-
S/52-Collection of tax at source
S/173- Repeals
(i) The Mysore Betting Tax Act,
1932 (Mysore Act IX of 1932),
(ii) The Karnataka
Tax on lands
and buildings
[S/199(1)]
(Any addition or
construction)
- Considered as
supply of
service under
Schedule II (5),
Section-7,
Gujarat SGST
Act, 2017.

39
S/65,Land Revenue code,1879
IIPA
99 | P a g e
Tax on trade,
professions,
callings
- Rates revised
for Dealer
registered or not
registered under
Karnataka Vat
Act, or
Karnataka GST
Act, 2017.
-Does not
exceed rupees
20 lacs(Nil)
-Exceed rupees
20 lacs(2500)
Entertainments Tax Act, 1958
(Karnataka Act 30 of 1958),
(iii) The Karnataka Tax on
Luxuries Act, 1979 (Karnataka
Act 22 of 1979),
(iv) The Karnataka Tax on Entry
of Goods Act, 1979, (Karnataka
Act 27 of 1979),
(v) The Karnataka Tax on
Lotteries Act, 2004 (Karnataka
Act 4 of 2004)
(vi) The Karnataka Special
Entry Tax Act, 2002 (Karnataka
Act 29 of 2004)
Schedule III S/3 C/a-
Exemption of functions
performed by
M.P/MLA/Panchayat members
from both Goods & Services
Category.





Sl.
No
.
Selected Sample States Important/major changes in tax handles of Panchayats in State
Pre-GST Post- GST(Status) (As per the State GST Act)
Taxes Subsum
ed
Status

9.


















Andhra Pradesh

Andhra Pradesh
Panchayat Act, 1994
[A.P PA, 1994]

Andhra Pradesh
Entertainments Tax Act,
1939;



Advertisement
tax
[S/63-S/68, A.P
PA,1994]





Omitted

Section 63-Tax
on Advertisement
of the Andhra
Pradesh
Panchayat Raj
Act,1994


S/173(iii)
- Omissions
Section 63 -Tax on
Advertisement of the Andhra
Pradesh Panchayat Raj
Act,1994
-Repeals
i) Andhra Pradesh Value Added
Tax Act, 2005, except in respect
of goods included in the Entry
54 of the State List of the
Seventh Schedule to the
Constitution of India;
(ii) the Andhra Pradesh
Entertainments Tax Act, 1939;
(iii) the Andhra Pradesh Tax on
Entry of Motor Vehicles into
Local Areas Act, 1996;
Entertainment
Tax
[S74(vi)]





Repealed

Andhra Pradesh
Entertainments
Tax Act, 1939

IIPA
100 | P a g e



















House Tax
Certain
provisions
regarding
construction or
reconstruction

-




Considered as
supply of service
under Schedule II
(5), Section-7,
Andhra Pradesh
SGST Act, 2017.



(iv) the Andhra Pradesh Tax on
Entry of Goods into Local Areas
Act, 2001;
(v) the Andhra Pradesh Tax on
Luxuries Act, 1987;
(vi) the Andhra Pradesh
(Telangana Area) Horse Racing
and Betting Tax Regulations,
1358 Fasli (Adaptation and
Amendment) Act, 2015;
(vii) the Andhra Pradesh Rural
Development Act, 1996

Schedule III S/3 (a)
Exemption of functions
performed by
M.P/MLA/Panchayat members
from both Goods & Services
Categes
Tax on trade,
professions,
callings
- Rates revised for
Dealer registered
or not registered
under Andhra
Pradesh Vat Act,
Andhra Pradesh
or Gujarat GST
Act, 2017.
-Does not exceed
rupees 20
lacs(Nil)
-Exceed rupees
20 lacs(2500)
Fee on entry of
motor-vehicle
into local areas







Repealed
the Andhra
Pradesh Tax on
Entry of Motor
Vehicles into
Local Areas Act,
1996;





Sl
No
.
Selected Sample States Important/major changes in tax handles of Panchayats in State
Pre-GST Post- GST (As per the State GST Act)
Taxes Subsumed Status IIPA
101 | P a g e
10.

Tamil Nadu

Tamil Nadu Panchayat
Act,1994
[TNPA,1994]

Tamil Nadu State GST
Act, 2017

Tamil Nadu Tax on Entry
of Motor Vehicles into
Local Areas Act, 1990

Tamil Nadu
Entertainments Tax Act,
1939;


House tax
[S/172(c),TNPA,
1994]


Considered as
supply of
service under
Schedule II (5),
Section-7,
Tamil Nadu
SGST Act,
2017


S/51 (1) (b) – Tax deduction at
source/TDS- The Government
may mandate local authority to
deduct tax at source or TDS at
the rate of 1 per cent from the
payment made to the supplier
/deductee of taxable goods &
services ,where the total value of
such
supply > INR 2,50,000/-

S/52-Collection of tax at source


S/173
Tamil Nadu Panchayats Act,
1994,—
(a) section 172-A shall be
omitted;
(b) in section 172-B, the
expression “after the levy of the
tax under section 172-A as
determined by the collector”
shall be omitted;
(c) in section 174, for the
expression “sections 171, 172
and 172-A”, the expression
“sections 171 and 172” shall be
substituted;
(d) Section 175-A shall be
omitted. 174.(1)

Repeals
(i) the Tamil Nadu Value Added
Tax Act, 2006 except in respect
of goods included in Entry 54 of
the State List of the Seventh
Schedule to the Constitution;

(ii) The Tamil Nadu Betting Tax
Act, 1935;

(iii) The Tamil Nadu
Entertainments Tax Act, 1939; IIPA
102 | P a g e


Fee on entry of
motor-vehicle
into local areas



Repealed
The Tamil Nadu
Tax on Entry of
Motor Vehicles
into Local
Areas Act, 1990


(iv) The Tamil Nadu Tax on
Luxuries Act, 1981; (v) The
Tamil Nadu Advertisement Tax
Act, 1983;

(vi) The Tamil Nadu Tax on
Entry of Motor Vehicles into
Local Areas Act, 1990;

(vii) The Tamil Nadu Tax on
Entry of Goods into Local Areas
Act, 2001; (hereafter referred to
as the repealed Acts) are hereby
repealed.


Schedule III S/3 (a)
Exemption of functions
performed by
M.P/MLA/Panchayat members
from both Goods & Services
Category.

Entertainment
Tax


Repealed
Tamil Nadu
Entertainments
Tax Act, 1939;
Section 175-A
shall be
omitted.

Advertisement
tax


Repealed
section 172-A
and 172B shall
be omitted;

IIPA
103 | P a g e
3.12 Expenditure by Panchayats
It is general perception that Panchayats are financially and technically under equipped
to perform even the core functions, much less than welfare functions and other economic
functions related to various subjects enshrined in the constitution under Part IX. Many core
functions that traditionally belonged to Panchayats i.e., drinking water, rural roads, street
lighting, sanitation, primary health and forth-have not been transferred fully in some states; they
are performed by the parallel bodies created by the state governments. As a result, per capita
total expenditure of Panchayats remains low in states of Bihar, Madhya Pradesh, Odisha, Uttar
Pradesh and West Bengal whereas Andhra Pradesh, Gujarat, Karnataka, Maharashtra and Tamil
Nadu spend high.
The revenue and expenditure by Panchayats (Average of 2012-13 to 2017-18) of ten
select states in comparison to total expenditure by states can be seen below.
Table 3.13: Revenue of Panchayats (Average of 2012-13 to 2017-18) of ten select states
(Rs. in crore)
Source: Office of the 15
th
FC &MoDWS- GoI for population data








Sl.
No.
State Revenue collection by Panchayats Rural
Population
01/04/2018
(in number)
Per-
capita
Revenue General Category States District Block Village Total
1 Andhra Pradesh 61.7 18.3 326.0 406.0 36829377 110.3
2 Bihar 0.0 0.0 0.0 0.0 99432883 0.0
3 Gujarat 709.1 68.0 312.6 1089.6 36989065 294.6
4 Karnataka 0.0 0.0 454.2 454.2 39514500 114.9
5 Madhya Pradesh 0.0 0.0 0.0 0.0 52719953 0.0
6 Maharashtra 6192.1 148.1 1205.9 7546.1 63317990 1191.8
7 Odisha 0.0 0.0 29.2 29.2 35787108 8.2
8 Tamil Nadu 1.1 183.8 642.7 827.6 39555747 209.2
9 Uttar Pradesh 1226.9 0.0 12.4 1239.3 167351926 74.1
10 West Bengal 400.6 54.1 178.1 632.7 75141830 84.2 IIPA
104 | P a g e
Table 3.14: The Expenditure by Panchayats (Average of 2012-13 to 2017-18) of ten select states
(Rs. in crore)

Source:Respective State Government
Note:
#
Handbook of Statistics on States by Reserve Bank of India
Sl.
No.
State Expenditure by Panchayats Expenditure
by State
#



Share of
Panchayats
in Total
Expenditur
e (in %)
Per-
capita
Expendit
ure in
Panchaya
ts
General Category States District Block Village Total
1. Andhra Pradesh 309 5211 465 5977 140036 4.27 1623
2. Bihar 100 181 723 1005 109476 0.91 101
3. Gujarat 6532 8601 1305 16438 126753 12.97 4444
4. Karnataka 9238 11864 5164 26267 139755 18.79 6647
5. Madhya Pradesh 275 1252 2644 4171 122778 3.39 791
6. Maharashtra 32550 273 3773 36596 222823 16.42 5780
7. Odisha 284 819 2810 3913 73840 5.30 1093
8. Tamil Nadu 233 1384 3499 5117 165071 3.10 1293
9. Uttar Pradesh 1096 379 3690 5166 265990 1.94 309
10. West Bengal 2226 3688 7583 13497 135811 9.94 1796 IIPA
105 | P a g e
3.13 Gram Sabha
The year of 2009-10 were marked as ‘The Year of the Gram Sabha’. The Gram Sabha is
explained in the context of Panchayati Raj as a body of all adult members of a village who has
the right to vote. The Gram Sabha enables each and every voter of the village to participate in
decision making at the local level. It is important to note that the participation of people at level
of Panchayat helps us to reduce development cost, increase perceived and actual benefits and
increase awareness among the people and help in the mobilization of local resources, facilitates
smooth and easy project implementation. It further enables people to have access and control
over the resources and ensures that the benefits reach to the legitimate claimants. It also creates
sustainability aspect and gradually empowers the socially and economically disadvantaged
people.
Gram Sabha in political context conceptualized as a forum of village people to meet and
discuss their common problems, and consequently, understands the needs and aspirations of the
community and ensures the accountability of the elected representatives at the village level and
has been recommended to act as a watchdog on the working of Gram Panchayats. The
strengthening of Gram Sabha becomes pertinent for deepening democracy, economic
empowerment and for bringing social justice. By an estimate in every fifth year, about 3.4
million representatives are elected by the people through democratic process, out of whom one
million are women who head about 175 district Panchayats, more than 2,000 block Panchayats
and about 85,000 Gram Panchayats.The situation in ten select states is not different
40
.












40
Empowering Gram Sabha, Kurukshetra, A Journal of Rural Development, Vol.61, No. 7, May 2013, pp. 2-8
IIPA
106 | P a g e
Table 3.15: Status of Gram Sabha in Panchayats of select States
Sl.
No.
State Nomenclature
for Gram Sabha
Is there any
minimum
number of
Gram Sabha
meetings
mandated?
Quorum
Prescribed for
Gram Sabha
Recommended
for Gaurav Gram
Sabha
1 Andhra Pradesh Gram Panchayat Yes Not Specified
in Act
Yes
2 Bihar Gram Sabha Yes one-twentieth Yes
3 Gujarat N.A Yes one-twentieth N.A
4 Karnataka Grama Sabha Yes one-tenth Yes
5 Madhya Pradesh Gram Sabha Yes one-tenth Yes
6 Maharashtra Gram Sabha Yes one-seventh Yes
7 Odisha Gram Sabha Yes one-tenth Yes
8 Tamil Nadu Grama Sabha Yes one-tenth Yes
9 Uttar Pradesh Gram Sabha Yes one-fifth No
10 West Bengal Gram Sabha Yes one-tenth Yes

IIPA
107 | P a g e
3.14 Gram Panchayat Development Plan (GPDP)
Ministry of Panchayati Raj has supported States to develop State specific guidelines for
Gram Panchayat Development Plans (GPDP) which converge all the resources over which the
Panchayats have command including 14
th
FC funds, MGNREGS funds, Swachh Bharat funds,
etc. The GPDP also provides an opportunity for the community to be engaged in setting
Panchayat level agenda and finding local solutions to development issues. The GPDP planning
process has to be comprehensiveand based on participatory process which involves the full
convergence with schemes of all related Central Ministries / LineDepartments related to 29
subjects enlisted in the Eleventh Schedule of the Constitution. Panchayats have a significant
role to play in the effective and efficient implementation of flagship schemes on subjects of
National Importance for transformation of rural India. The focus of GPDP expected to
encompass all the Sustainable Development Goals (SDG) so that they are achieved in timely
manner. The focus of GPDPs has been mainly in the areas like roads, health, drinking water,
etc.
It is important to note that to make GPDP more productive a People’s Plan Campaign
(PPC) was launched on 2
nd
October 2018 by MoPR for preparing GPDP for2019-20 known as
Sabki Yojana SabkaVikas. The PPC is an intensive and structured exercise for planning at Gram
Sabha through convergence between Panchayati Raj Institutions (PRIs) and concerned Line
Departments of the State.
This campaign expected to bring intensive and structured exercise for planning at Gram
Sabha. Status of GPDP in 10 select states is presented in following table:
Table 3.16: Status of Gram Panchayat Development Plans (GPDPs) prepared in States
Sl.
No.
State Number of Plans Prepared
2015-16 2016-17 2017-18 2018-19 2019-20
1 Andhra Pradesh 12920 12920 12920 12893 12905
2 Bihar 8391 8391 10066 4008 6042
3 Gujarat 14029 14029 14250 14268 14253
4 Karnataka 6021 6021 6022 5715 2427
5 Madhya Pradesh 22824 22816 22598 68 22748
6 Maharashtra 1002 27824 27813 26669 26497
7 Odisha 6212 6284 6793 5985 120
8 Tamil Nadu 12524 12524 12513 10240 1747 IIPA
108 | P a g e
9 Uttar Pradesh 143 59013 58892 59300 49543
10 West Bengal 3237 3230 3228 3235 3030
Total 87,303 1,73,052 1,75,095 1,42,381 1,39,312

IIPA
109 | P a g e
3.15 Transparency and Anti-Corruption
Accountability of Panchayats to its residents is the most important aspect for the
existence of Panchayat- a local self-government. It is important to note that mostly select states
have adopted either Lokayuktaor Ombudsman in Panchayats (Please see Table3.17). The
Lokayukta entertains the complaint related to any issue of Panchayats. Apart from this, citizens
are also empowered to seek information at the level of Panchayat under Right to Information
Act 2005. Citizen Charter at the level of Panchayatsexists in the states of Andhra Pradesh,
Karnataka, Maharashtra, Madhya Pradesh, Odisha, Tamil Nadu, and Uttar Pradesh.In Bihar and
West Bengal, Citizen Charter does not exist at the level of Panchayats.It is important to note
that among ten select states State of Andhra Pradesh, Bihar, Karnataka, Maharashtra, Madhya
Pradesh, Odisha, Tamil Nadu, Uttar Pradesh and West Bengal have made provisions for either
Lokayukta or Ombudsman in Panchayats.In Gujarat, it is Lokayuktaor Govt. Agency which
undertakes the complaints of Panchayats.In Uttar Pradesh,government agency undertakes the
complaints of Panchayats
Table 3.17: Transparency and Anti-Corruptionin Panchayats of select States
S
l.
N
o.
State Citi
zen
Cha
rter
Institutions
undertaking/
Complaints
of
Panchayats
Information Officer
under
RTI
I
Appellate
Authority
Under RTI
II Appellate
Authority under
RTI
VP IP DP VP IP D
P
VP IP DP
1 Andhr
a
Prade
sh
Yes Lokayukta EO Supdt,
MPDO
Dy.CEO
., (DP)
MPD
O
MPD
O
C
E
O,
D
P
SIC SIC SIC
2 Bihar No Ombudsman PS Block
PR
Officer
DPRO BDO BDO D
D
C
SD
O
SD
O
DM IIPA
110 | P a g e
3 Gujar
at
Yes Lokayukta
and
Government
Agency
Tal
ati
cu
m
Ma
ntri
TDO Dy.
DDO
TDO Dy.
DDO
D
D
O
Dy.
DD
O
SIC SIC
4 Karna
taka
Yes Ombudsman
and
Lokayukta
GP
Sec
y
Manag
er of
BP
Dy.
Secy of
DP
PDO
of
GP
EO
of
BP
C
E
O
of
D
P
Cp
msn
r,
KIS
Cp
msn
r,
KIS
Cp
msn
r,
KIS
5 Mahar
ashtra
Yes Ombudsman GS SO SO EO
of
Panc
hayat
BDO He
ad
of
D
P
SIC SIC SIC
6 Madh
ya
Prade
sh
Yes Ombudsman
and
Lokayukta
GP
Sac
hiv
P &
SEO
Project
Officer
P &
SEO
CEO,
BP
C
E
O,
D
P
SIC SIC SIC
7 Odish
a
Yes Ombudsman PE
O
offi
cer
APD GPEO BDO PD SI
C
SIC SIC NA
8 Tamil
Nadu
Yes Ombudsman Dy
BD
O
Dy.
BDO(
Admin
)
Supdt,
DP
BDO
(GP)
BDO
(BP)
Se
cy,
D
P
SIC SIC SIC IIPA
111 | P a g e
9 Uttar
Prade
sh
Yes Government
Agency
DP
RO
DPRO Upper
Mukhya
Adhikari
DD,
Panc
hayat
DD,
Panc
hayat
C
D
O
NA NA NA
1
0
West
Benga
l
No Ombudsman
and
Lokayukta
EA JEO Secy Prad
han
EO A
E
O
SIC SIC SIC
Source: Information submitted by State Governments,
Note: NA – data not available in given source
n.a- not applicable
Expanded term of Officials: AEO: Additional Executive Officer; APD: Additional Project Director; BDO:
Block Development Officer;; CEO: Chief Executive Officer; CO: Chief Officer; Comsnr: Commissioner;
CDO: Chief Development Officer; Dy. CEO: Deputy Chief Executive Officer; DC: District Collector; DD:
Deputy Director; DDC: District Development Commissioner; DM: District Magistrate; DPO*: District
Planning Officer; DPRO: District Panchayat Returning Officer; EO: Extension Officer; EO*: Executive
Officer; GPEO: Gram Panchayat Extension Officer; GS: Gram Sevak; JD: Joint Director; KIC: Karnataka
Information Commissioner; MPDO: Mandal Parishad Development Officer; PD: Project Director, PDO:
Panchayat Development Officer; and PEO: Panchayat Executive Officer. IIPA
112 | P a g e
3.16 Infrastructure of Panchayats (Physical & Digital)
Infrastructure-both physical and digital are the most fundamental attributes for the
smooth functioning of Panchayats which functions for social and economic development at the
grass root level. The provision of Puccaghar together with the basic infrastructure exists for the
working of Panchayats at the level of Gram Panchayat, Block Panchayat and District
Panchayat in all ten states.In terms of infrastructure at the level of Panchayat in select states
Uttar Pradesh has largest number of PuccaGhar at the level of Gram Panchayat (33414), Block
and District Panchayat (72) followed by in the state of Maharashtra. On the other hand, in
Bihar at the level of Panchayat there are only 5624, 531 and 38 PuccaGhar at the level of
Gram Panchayat, Block Panchayat and District Panchayat respectively. In Panchayats of
Maharashtra there is highest number of computers, Printers, Scanners & Other Peripherals
among select states followed by in the state of Gujarat. In Maharashtra highest number of
Telephone connection is available at the level of Gram Panchayats that is 22000 followed by in
Gujarat 14192.It is in Maharashtra highest number of Internet connection available at the level
of Gram Panchayats that is 26528 followed by in Gujarat that is 14192. There are several
components of infrastructure. Among them, Table 3.18 represents availability of physical
infrastructure among three tiers of Panchayats in ten select states. IIPA
113 | P a g e
Table 3.18: Availability of Physical Infrastructure among three tiers of Panchayats in ten
select States
Note:GP: Gram Panchayat, BP: Block Panchayat, DP: District Panchayat


Sl.
No.

State

How many
Panchayats have
Panchayat ‘Ghar’
(Pucca building)?

How many
Panchayats have
computers,
Printers,
Scanners & Other
Peripherals
How many
Panchayats have
Telephone?
How many
Panchayats have
Internet?
GP BP DP GP BP DP GP BP DP GP BP DP
1 Andhra
Pradesh
12918 660 13 NA 660 13 NA 660 13 NA 660 13
2 Bihar 5624 531 38 NIL 531 38 8442 531 38 NIL 531 38
3 Gujarat 14192 248 33 14192 248 33 14192 248 33 14192 248 33
4 Karnataka 5919 176 30 6021 176 30 6021 176 30 6021 176 30
5 Madhya
Pradesh
19338 313 48 1260 313 50 1260 313 50 2600 313 50
6 Maharashtra 23160 351 33 27892 351 33 22000 351 33 26528 351 33
7 Odisha 5978 314 30 6232 314 30 6232 314 30 - - -
8 Tamil Nadu 12620 385 31 12524 385 31 12524 385 31 9345 385 31
9 Uttar
Pradesh
33414 - 72 - - 72 - 821 72 - - 72
10 West
Bengal
3303 334 21 3341 334 21 3341 334 21 3341 334 21 IIPA
114 | P a g e
3.17 Training Institutions/Activities
Capacity building and training to the elected representatives of Panchayats and other
stakeholders is important for the holistic development of the Panchayats. The programme
called Rajiv Gandhi PanchayatSashaktikaranAbhiyaan (RGPSA) renamed as Rashtriya
GramSwaraj Abhiyan (RGSA) had been implemented during the year 2012-13. It continued till
2015-16 and attempted strengthening of Panchayati Raj System across the country. The
programme also addresses the critical gaps that constrain the functioning of Panchayats,
through devolution of powers, facilitating democratic decision making through People’s
participation, accountability in Panchayats, strengthening the institutional structure for
knowledge creation and capacity building of Panchayats etc. Further, during 2016-17 and 2017-
18, pending restructuring of the scheme, Ministry provided financial support to States under
Capacity Building-Panchayat Sashaktikaran Abhiyan (CB-PSA) for Capacity Building &
Training (CB&T) with focus on Gram Panchayat Development Plan (GPDP) so as to enable
them to discharge their mandated functions effectively. Under these schemes, funds were
released to the States/UTs towards capacity building and training. Table 3.19 and 3.20
represents thefunds released and number of people trained in ten select states.
Table 3.19: States wise Funds released under RGPSA/CB-PSA/RGSA schemes
(Rs. in Crore)
Sl. No. States 2014-15 2015-16 2016-17 2017-18 2018-19
1 Andhra Pradesh 24.19 12.50 91.61 81.35 67.69
2 Bihar 63.67 0.00 0.00 0.00 4.25
3 Gujarat 1.06 0.00 33.38 0.00 --
4 Karnataka 46.80 32.71 15.08 41.08 -
5 Madhya Pradesh 37.46 10.80 55.45 30.25 62.79
6 Maharashtra 34.76 4.50 21.17 44.53 11.54
7 Odisha 32.92 0.00 25.06 32.90 -
8 Tamil Nadu 20.16 8.96 27.32 36.83 57.60
9 Uttar Pradesh 0.00 11.00 39.87 84.07 57.14
10 West Bengal 27.71 9.91 21.86 48.44 54.94
Total 481.45 168.47 586.39 621.72 548.65
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Table 3.20: Number of Trained Elected Representatives, Panchayat Functionaries and other Stake
holders in State
(No. of people Trained)
Sl.
No.
States 2014-15 2015-16 2016-17 2017-18 2018-19
1 Andhra Pradesh 43684 195566 174240 1083659 405500
2 Bihar - 62568 251906 0 339950
3 Gujarat - 1730 321206 71078 14859
4 Karnataka - 83059 218760 252294 602280
5 Madhya Pradesh 314553 60626 236999 391155 818137
6 Maharashtra 69152 1089 652145 1204606 104004
7 Odisha 17479 23882 105494 41795 95040
8 Tamil Nadu - 17143 481 324873 544748
9 Uttar Pradesh - 370663 614 298895 574235
10 West Bengal 139452 132453 322114 473063 416362
Total 584320 948779 2283959 4141382 3915115

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3.18 E-Connectivity and ICT Measures
National e- Governance Plan (NeGP) was introduced in 2006 with the objective of
transforming the governance through participation of citizens in policy making and providing
easy access of information to the citizens. The accessibility to common man was the main
motive behind NeGP. This aims to make all government services accessible to the common
man in his/her locality, through common service delivery outlets which is mandated to ensure
efficiency, transparency and reliability of such services at affordable costs to common man. e-
Panchayat is one such Mission Mode Project (MMP) under the Digital India programme with a
vision to empower and transform rural India.
ICT measures in Panchayat aim to transform the latter into symbols of modernity,
transparency and efficiency. IT initiative introduced by the Ministry of Panchayati Raj (MoPR)
endeavours to ensure people's participation in programme decision making, implementation and
delivery. The project aims to automate the functioning of nearly 2.55 lakh elected
Panchayats.The system of e-Financial Management System (e-FMS) comprising PlanPlus,
ActionSoft, PRIASoft and National Asset Directory (NAD) with Local Government Directory
(LGD) are in action to make the functioning Panchayats more robust. The system adopted by
select states can be seen in the following tables.
The following tables show the number of measures being implemented in select states.
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Table 3.21: Panchayat Enterprise Suite (PES) Applications in Select States

State Functionality Application
Name
URL
Andhra Pradesh Service Delivery MeeSeva http://www.meeseva.gov.in
Bihar NA NA NA
Gujarat Accounting Gram Soft www.gujaratgram.in
Asset Directory Gujarat Asset
Management
www.gujaratgram.in/gam
Karnataka Accounting, Asset
Directory
&Panchayat
Websites Panchatantra http://panchatantra.kar.nic.in/stat/
Madhya
Pradesh Accounting
Panchayat
Darpan
http://www.mppanchayatdarpan.gov.i
n
Decentralized
Planning
Application
http://164.100.196.97/spc/
Maharashtra Service Delivery SangramSoft http://www.sangram.co.in
Odisha NA NA NA
Tamil Nadu Monitoring of
works
http://www.tnrd.gov.in
Uttar Pradesh NA NA NA
West Bengal
Accounting (for
Gram Panchayats)
Gram
Panchayat
Management
System (GPMS)
http://www.wbprdgpms.in
(For Panchayat
Samities&Zila
Parishad)
Integrated Fund
Monitoring and
Accounting
System
(IFMAS)

Maintaining of
beneficiaries for
National Social
Assistance Program
(NSAP) SEBA

Service Delivery GPMS http://www.wbprdgpms.in IIPA
118 | P a g e
Table 3.22: State-wise Adoption status for Application – PRIA Soft
41


Table 3.23: State-wise Adoption Status for Application –National Asset Directory

41
It is a web based Application that captures receipt & expenditure details through voucher entries and
automatically generates cash book, registers, utilization certificates, etc.

Sl.
No.
State District Panchayat Intermediate
Panchayats

Village Panchayat
Total Adopted % Total Adopted % Total Adopted %
1 Andhra
Pradesh 13 3 23.08 660 138 20.91 12918 12916 99.98
2 Bihar - - - - - - - -
3 Gujarat 33 3 9.09 248 0 0 14292 10183 71.25
4 Karnataka 30 0 0 176 0 0 6021 1092 18.14
5 Madhya
Pradesh 51 0 0 313 0 0 22816 4114 18.03
6 Maharashtra 34 1 2.94 351 18 5.13 27867 27723 99.48
7 Odisha 30 28 93.33 314 311 99.04 6798 6645 97.75
8 Tamil Nadu 31 31 100 385 385 100 12524 12524 100
9 Uttar
Pradesh
- - - - - - - -
10 West
Bengal 75 75 100 821 399 48.6 58808 58726 99.86
Sl.
No.
State District Panchayat Intermediate
Panchayat
Village Panchayat
Total Adopted % Total Adopted % Total Adopted %
1 Andhra
Pradesh 13 13 100 660 660 100 12918 12918 100
2 Bihar 38 38 100 534 534 100 8386 8386 100
3 Gujarat 33 33 100 248 248 100 14292 14292 100
4 Karnataka 30 30 100 176 176 100 6021 6021 100
5 Madhya
Pradesh 51 51 100 313 313 100 22816 22816 100
6 Maharashtra 34 34 100 351 351 100 27867 27867 100
7 Odisha 30 30 100 314 314 100 6798 6798 100
8 Tamil Nadu 31 31 100 385 385 100 12524 12524 100
9 Uttar
Pradesh 75 75 100 821 821 100 58808 58808 100
10 West
Bengal 75 75 100 821 399 48.6 58808 58726 99.86 IIPA
119 | P a g e
Table 3.24: State-wise Adoption Status for Application – ActionSoft
42


Table 3.25: State-wise Adoption Status for Application –National Asset
43




42
It aims at monitoring and keeping record of the progress of the works being undertaken as part of the finally
approved plans (Action Plan) of various ULB, RLB and Line departments as available in PlanPlus. It facilitates
proper recording of the Financial and Physical progress of the works.
43
Captures details of assets created/maintained; helps avoid duplication of works and provides for maintenance.

Sl.
No.
State District Panchayat Intermediate
Panchayat
Village Panchayat
Total Adopted % Total Adopted % Total Adopted %
1 Andhra
Pradesh 13 0 0 660 5 0.76 12918 36 0.28
2 Bihar 38 37 97.37 534 526 98.5 8386 7764 92.58
3 Gujarat 33 6 18.18 248 40 16.13 14292 2359 16.51
4 Karnataka 30 6 20 176 32 18.18 6021 1079 17.92
5 Madhya
Pradesh 51 25 49.02 313 170 54.31 22816 12973 56.86
6 Maharashtra 34 11 32.35 351 54 15.38 27867 19147 68.71
7 Odisha 30 20 66.67 314 182 57.96 6798 2428 35.72
8 Tamil Nadu 31 2 6.45 385 8 2.08 12524 1 0.01
9 Uttar
Pradesh 75 29 38.67 821 677 82.46 58808 58778 99.95
10 West
Bengal 22 13 59.09 342 210 61.4 3340 2690 80.54
Sl.
No.
State District Panchayat Intermediate
Panchayat
Village Panchayat
Total Adopted % Total Adopted % Total Adopted %
1 Andhra
Pradesh 13 7 53.85 660 118 24.48 12918 7853 60.79
2 Bihar 38 28 73.68 534 192 35.96 8386 1220 14.55
3 Gujarat 33 0 0 248 3 1.21 14292 41 0.29
4 Karnataka NA NA NA NA NA NA NA NA NA
5 Madhya
Pradesh NA
NA NA NA NA NA NA NA NA
6 Maharashtra 34 36 105.88 351 350 99.72 27867 27139 97.39
7 Odisha 30 0 0 314 7 2.23 6798 17 0.25
8 Tamil Nadu 31 17 54.84 385 198 51.43 12524 7488 59.79
9 Uttar Pradesh 75 56 74.67 821 293 35.69 58808 7246 12.32
10 West Bengal 22 1 4.55 342 0 0 3340 2 0.06 IIPA
120 | P a g e
Table 3.26: State-wise Adoption Status for Application – Area Profiler
44



44
Captures geographic, demographic, infrastructural, socio-economic and natural resources profile of a
village/panchayat. Universal database for planning of all sectoral programmes and provides details of Elected
Representatives & Panchayat Functionaries, Election details etc. AreaProfiler is a centralized database also
providing various details of the Panchayats such as neighbouring local bodies, tourist places and lodging facilities
etc. AreaProfiler.

Sl.
No.
State District Panchayat Intermediate
Panchayat
Village Panchayat
Total Adopted % Total Adopted % Total Adopted %
1 Andhra
Pradesh 13 13 100 660 659 99.85 12918 5154 39.9
2 Bihar 38 38 100 534 532 99.63 8386 8340 99.45
3 Gujarat 33 14 42.42 248 80 32.26 14292 3415 23.89
4 Karnataka 30 9 30 176 27 15.34 6021 659 10.95
5 Madhya
Pradesh 51 32 62.75 313 120 38.34 22816 3708 16.25
6 Maharashtra 34 34 100 351 347 98.86 27867 27646 99.21
7 Odisha 30 29 96.67 314 275 87.58 6798 3138 46.16
8 Tamil Nadu 31 9 29.03 385 18 4.68 12524 183 1.46
9 Uttar
Pradesh 75 48 64 821 100 12.18 58808 601 1.02
10 West
Bengal 22 4 18.18 342 37 10.82 3340 1327 39.73 IIPA
121 | P a g e
CHAPTER 4
Summary and Recommendations
Like many other foreign federations, local governments in India are supposedly
responsible for rendering essential services, including sanitation, drinking water, primary
health, street lighting and roads. They are also empowered to collect certain tax and non-tax
revenues. However, in most cases, considerable gap between own resources and requirements
can easily be seen. The gap is more noticeable in the case of rural local governments
(Panchayats) than their counterparts in urban areas due to their narrow resources base. Both
these local governments largely depend upon the financial support from their respective State
Governments. In this summary an attempt is made to objectively present the potential of the
corrective measures that the Union Government and 15
th
Finance Commission (15
th
FC) could
take for Panchayats in India.
The Legal Framework
With the passage of the 73
rd
Constitution Amendment Act (CAA),Panchayats got
recognition in the statute book as institutions of self-government in India. This accelerated the
process of decentralization with greater devolution and delegation of powers to rural local
governments. Consequently, Part IX has been inserted in the Constitution for Panchayats and
the State legislature has been made responsible to assign responsibilities to Panchayats in the
matters listed in the Eleventh Schedule to the Constitution. The State is also expected to transfer
the concomitant powers to enable the Panchayats to carry out the responsibilities conferred
upon them.




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Table 1: Numbers of Panchayats in each State/UT as on 1
st
November 2019
Sl.
No.
State/UT


Levels of Panchayats (Numbers) Rural
Population
per VP
District
3

Block
2

Village
1

Total

1 Andhra Pradesh 13 660 13042 13715 2824
2 Arunachal Pradesh 23 177 1785 1985 695
3 Assam 26 191 2199 2416 13472
4 Bihar 38 534 8386 8958 11857
5 Chhattisgarh 27 146 10978 11151 1804
6 Goa 2 n.a. 191 193 3827
7 Gujarat 33 248 14292 14573 2588
8 Haryana 21 126 6197 6344 2986
9 Himachal Pradesh 12 78 3226 3316 2100
10 Jammu & Kashmir 22 306 4482 4810 2259
11 Jharkhand 24 263 4370 4657 6255
12 Karnataka 30 176 6021 6227 6563
13 Kerala 14 152 941 1107 49385
14 Madhya Pradesh 51 313 22817 23181 2311
15 Maharashtra 34 351 27869 27869 2272
16 Manipur 6 -na- 161 167 14668
17 Meghalaya(d) -na- -na- -na- 0 -na-
18 Mizoram(d) -na- -na- -na- 0 -na-
19 Nagaland(d) -na- -na- -na- 0 -na-
20 Odisha 30 314 6798 7142 5264
21 Punjab 22 147 13271 13440 1335
22 Rajasthan 33 295 9892 10220 5127
23 Sikkim 4 -na- 185 189 2672
24 Tamil Nadu 31 385 12523 12939 3159
25 Telangana 9 438 13057 13504 1726
26 Tripura 8 35 591 634 7600
27 Uttar Pradesh 75 822 58791 59688 2847
28 Uttarakhand 13 95 7762 7870 927
29 West Bengal 22 342 3340 3704 22498
Union Territories
1 Andaman &
Nicobar
3 9 70 82 3784
2 Chandigarh -na- -na- n.a. 0 -na-
3 Dadra & Nagar
Haveli
1 n.a. 20 21 -na-
4 Daman & Diu 2 n.a. 15 17 -na-
5 NCT of Delhi(e) n.a. n.a. n.a. 0 -na-
6 Lakshadweep 1 n.a. 10 11 -na-
7 Puducherry n.a. 10 98 108 4470
India 630 6613 253380 260623 3624
Source: Chapter 1 of this report
Notes: na-not available
1. VPs-Village Panchayats or Gram Panchayats in almost all States. IIPA
123 | P a g e
2. The nomenclature of intermediate rung differs from one State to another. It is known as Mandal
Parishad in Andhra Pradesh, Anchal Samiti in Arunachal Pradesh, Anchalic Panchayat in Assam,
Janpad Panchayat in Chhattisgarh and Madhya Pradesh, Taluka Panchayat in Gujarat, Taluk Panchayat
in Karnataka, Panchayat Union in Tamilnadu, Kshetra Panchayat in Uttar Pradesh and Uttarakhand and
Panchayat Samiti in many States i.e. Bihar, Haryana, Himachal Pradesh, Jharkhand, Maharashtra,
Orissa, Punjab and Rajasthan.
3. It is also known as Zilla Panchayat/Parishad in many States.
d The State is outside the purview of Part IX of the Constitution under its Article 243 M.
e Panchayat has yet to be revived

Under the CAA, the state legislature is expected to devolve responsibilities, powers and
authorities to the Panchayats to enable them to function as institutions of self-government. The
legislature of a State may authorize the Panchayats to levy, collect and appropriate certain
taxes, duties, tolls, fees, etc, and also assign to them the revenues of certain state level taxes
subject to such conditions as are imposed by the state government. Further, grants-in-aid may
also be provided to the Panchayats. Resulting from the CAA, the number of Panchayats in
India stands at 2, 60,623 of which 2, 53,380 are village Panchayats, 6,613 are intermediate
Panchayats, and 630 are district Panchayats (please see table 1).
The new fiscal arrangement necessitates every State under Article 243(I) to constitute, at
regular interval of five years, a finance commission (SFC), and assign it the task of reviewing
the financial position of Panchayats and making recommendations on the sharing and
assignment of various taxes, duties, tolls, fees etc and grants-in-aid to be given to the
Panchayats bodies from the Consolidated Fund of a State. The conformity Act of the CAA
provides for the composition of the commission, the qualifications for its members and the
manner of their selection. Every recommendation of the commission together with an
explanatory memorandum is to be laid before the legislature of the State.
Generally the functional responsibilities are closely linked with the financial powers
delegated to the local government, in practice the huge mismatch between these two leads to a
severe fiscal stress at the local level. The own revenues of local governments are good enough
to meet only a part of their operations and maintenance requirement. Therefore they are
dependent on the higher levels of governments to finance even their recurring expenditure.
Towards this end, the devolution of resources from the Centre to States and the States to
Panchayats was considered a necessary requirement and clause “measures needed to augment IIPA
124 | P a g e
the Consolidated Fund of a State to supplement the resources of the panchayats and
municipalities” was inserted in article 280 (3) of the Constitution on the recommendations of
the Joint Parliamentary Committee headed by K P Singh Deo, which went into the Constitution
(Seventy-third Amendment) Bill, 1991. Later, it was also inserted in the Seventy-second
Amendment Bill. Para 4(iii) of the Presidential Order dated November 27, 2017 regarding the
constitution of the 15
th
FC is the verbatim reproduction of the sub-clause 280(3) (bb & c).
Finances of the Local Governments
The shrinking fiscal space for the Panchayats can be noticed easily. Table 2 reveals that
the total expenditure of Panchayats is far less than the revenue they generate. Many feel that
this situation needs to be radically improved. It is argued that there is a need to have inclusive
governance for inclusive growth, by restructuring the fiscal architecture to accommodate
Panchayats in a more equitable and efficient manner. The hallmark of any self-government is
the degree of financial autonomy it enjoys in formulating and implementing public policies in
regard to those functional responsibilities assigned to it. The amendment to the sub-clause
280(3) is a firm affirmation of the organic link between the UFC and the State - sub-State
public finances. The task of restructuring public finance substantially depends on streamlining
the multiple channels of resource flow from the Centre to the rural local governments through
the States.
Fiscal transfers in the form of shared revenue and grants are the mainstay of the
Panchayats’ finances even in progressive States. Revenue is shared from the divisible pool of
the State following the recommendations of the respective SFC. However, wide variations are
seen across States in defining the divisible pool. A few SFCs form the divisible pool by
including the share of central taxes with the State tax and non-tax revenues, e.g. the SFC of
Andhra Pradesh.


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Table 2: Resource Gap for Panchayats (Average of 2012-13 to 2017-18)of ten select states
(Rs. in crore)
Sl. No. State Expenditure
by Panchayats
Own
Resources of
Panchayats
Resource
Gap
Share of Own
Revenue in Total
Expenditure
General Category States
1 Andhra Pradesh 5976.9 406.0 5570.9 6.8
2 Bihar 1005 0.0 0.0 0.0
3 Gujarat 16438.2 1089.6 15348.6 6.62
4 Karnataka 26266.7 454.2 25812.6 1.7
5 Madhya Pradesh 4171 0.0 0.0 0.0
6 Maharashtra 36595.8 7546.1 29049.7 20.6
7 Odisha 3912.8 29.2 3883.5 0.7
8 Tamil Nadu 5116.6 827.6 4289.0 16.2
9 Uttar Pradesh 5166.3 1239.3 3927.0 24.0
10 West Bengal 13496.6 632.7 12863.9 4.7

In other words, some of the States, despite the constraints on their resources, do reduce
the fiscal imbalance of the local governments, though partly, through a share in Union taxes. It
can be observed that the fiscal capacity of the local governments in general, is not very strong.
Property tax, advertisement tax, profession tax, taxes on vehicles and animals, theatre tax, user
charges on services, rental income from properties, developmental charges, fees and fines, and
the like contribute the maximum to the kitty of the local governments’ own-source revenue.
It may be argued that States could reduce the vertical fiscal imbalance by assigning a
few buoyant revenues to Panchayats. But, the limited financial space open to the States and the
perceived low organizational and administrative capacity of Panchayats has prevented the
States from exercising this option. The dependence on fiscal transfers, particularly conditional
and purpose specific ones is reducing the autonomy of the Panchayats to allocate resources
according to their own priorities. It is critical to enable and empower the local governments to
enhance their capacity. In order to make this happen, a mechanism of untied transfer of funds to
the local governments is essential for enhancing their fiscal capacity and functional autonomy.
It is argued that the resources could also be transferred to the Panchayats from other
channels but they are tied and hardly assist in building the fiscal capacity of the Panchayats.
Hence, responsibility lies with the 15
th
FC to devolve adequate funds for this purpose to IIPA
126 | P a g e
Panchayats under Article 280(3) (bb). Significant tied funds are being transferred to
Panchayats through the centrally sponsored schemes (CSSs). For long, the CSS transfers were
administered and utilized mainly by the line departments. In recent years, the local
governments are being increasingly recognised as implementing institutions for the vertical
schemes of line ministries.
Recently, many vertical schemes have started assigning a range of responsibilities to
Panchayats and depend upon them for grassroots implementation. In addition, there are several
important flagship programmes of the central government, which aim at provisioning basic
essential services across the country through the local governments. The allocations to the
programmes, entailing the involvement of the local governments, have shown a substantial
growth. It is a good augury that the institutional mechanisms tend to provide centrality to
Panchayats in their planning and implementation. It is observed that today the physical and
social infrastructure is growing gradually in rural areas of some States. Tomorrow, the emphasis
will shift to the operation and maintenance of the assets created, the cost of which would have
to be met largely through devolution and grants recommended by the UFC and SFCs. In
addition, the Disaster Management Act, 2005 has also identified the role for Panchayats at the
local level.
The Study
Against the backdrop, the study on ‘measures to augment the resources of Panchayats’
attempts to assess the status of devolution of finances (including the power for own revenue
generations by Panchayats), functions, and functionaries to Panchayats in the spirit of 73
rd

Constitutional Amendment or Part IX of the Constitution. The assessment has been carried out
at the level of States with reference to the themes specified in the scope of the study. The thrust
has been augmenting own resources/revenue generation by various rungs of Panchayats,
identifying gaps in the process of financial devolution.
Hence, the study assesses the enabling environment created by States for the Panchayats
to function under. This study has analyzed the extent to which ten select States have devolved
their powers and resources to Panchayats mandated to promote economic development and IIPA
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social justice in their respective jurisdictions. The study has focused on 18 parameters i.e, Basic
details of Panchayats, Constitution and Functioning ofDistrict Planning Committee, Role of
Panchayats in Parallel Bodies, Autonomy to Panchayats, Functions Assigned to Panchayats
and Actual Involvement, Panchayats involvement in important schemes, Fourteenth Finance
Commission Grants (basic grants and performance grants), Status of State Finance
Commissions (SFCs), Money Transferred on account of SFCs to Panchayats, Empowerment of
Panchayats to impose/collect revenue, GST Implications in Panchayats, Expenditure, Role of
Gram Sabha, Number of Plans prepared under Gram Panchayat Development Plan,
Transparency and Anti-Corruption, Infrastructure (Physical and Digital), Training
Institutions/Activities and E-Connectivity & ICT Measures. The summaries of findings against
the parameters are outline below:-
Summary of the Report:
1. Basic Details of Panchayats:
ThePanchayats in India carry out the functions and responsibilities assigned to them
with the devolution of power and authority for the purpose. With the passage of the 73rd
Constitution Amendment Act (CAA),Panchayats got recognition in the statute book as
institutions of self-government in India.
Panchayats in Andhra Pradesh at the level of Gram Panchayat, Block Panchayat and
District Panchayat are known as Gram Panchayat, Mandal Parishad, and Zilla Parishad
respectively. In Andhra Pradesh, there are total 13042 Gram Panchayat, 660 Mandal Parishad
and 13 Zilla Parishad. On an average, each Gram Panchayat covers 2824 rural population. The
state of Andhra Pradesh has given 50% reservation to women, 18.18% to Scheduled Castes
(SCs) and 9.15% to Scheduled Tribes (STs) at the level of Panchayats. Election to the
Panchayats in the state for the first time conducted in 1995 followed by in 2001, 2006, and
2013 and last one in 2018-19.
Panchayats in Bihar at the level of Gram Panchayat, Block Panchayat and District
Panchayat are known as Gram Panchayat, Panchayat Samiti, and Zilla Parishad respectively. IIPA
128 | P a g e
In Bihar, there are total 8386 Gram Panchayat, 534 Panchayat Samiti and 38 Zilla Parishad.
On an average, each Village Panchayat covers 11857 rural populations. The state of Bihar has
given 50% reservation to women, 16.31% to Scheduled Castes (SCs) and 0.77% to Scheduled
Tribes (STs) at the level of Panchayats. Election to the Panchayats in the state for the first time
conducted in 2001 followed by in 2006, 2011 and last one in 2016.
Panchayats in Gujarat at the level of Village, Block and District Panchayat are known
as Gram Panchayat, Taluka Panchayat and Zilla Panchayat respectively. In Gujarat, there are
total 14292 Gram Panchayat, 248 Taluka Panchayat and 33 Zilla Panchayat. On an average,
each Gram Panchayat covers 2588 rural population. The state of Gujarat has given 50%
reservation to women, 7% to Scheduled Castes (SCs) and 14% to Scheduled Tribes (STs) at the
level of Panchayats. Election to the Panchayats in the state for the first time conducted in 1995
followed by 2000-01, 2005-06, and 2010-11 and for the last time conducted in 2015-16.
Panchayats in Karnataka at the level of Gram Panchayat, Block Panchayat and District
Panchayat are known as Gram Panchayat, Taluka Panchayat, and Zilla Panchayat
respectively. In Karnataka, there are total 6021 Gram Panchayat, 176 Taluka Panchayat and 30
Zilla Panchayat. On an average, each per Gram Panchayat covers 6563 rural population. The
state of Karnataka has given 50% reservation to women, 18% to Scheduled Castes (SCs) and
7% to Scheduled Tribes (STs) at the level of Panchayats. Election to the Panchayats in the state
for the first time conducted in 1995 followed by in 2000, 2005, and 2010 and last one in 2015.
Panchayats in Madhya Pradesh at the level of Gram Panchayat, Block Panchayat and
District Panchayat is known as Gram Panchayat, Janpad Panchayat, and Zilla Parishad
respectively. In Madhya Pradesh, there are total 22817 Gram Panchayat, 313 Janpad
Panchayat, and 51 Zilla Parishad. On an average, each Gram Panchayat covers 2311 rural
population. The state of Madhya Pradesh has given 50% reservation to women, 15% to
Scheduled Castes (SCs) and 26.1 at District, 27.8 at Intermediate and 28.7% at village to
Scheduled Tribes (STs) at the level of Panchayats. Election to the Panchayats in the state for
the first time conducted in 1994 followed by in 1999, 2000, 2004-05, and 2010 and last one in
2015. IIPA
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Panchayats in Maharashtra at the level of Village, Block and District Panchayat are
known as Gram Panchayat, Panchayat Samiti and Zilla Parishad respectively. In Maharashtra,
there are total 27869 Gram Panchayat, 351 Panchayat Samiti and 34 Zilla Parishad. On an
average, each Gram Panchayat covers 2272 rural population. The state of Maharashtra has
given 50% reservation to women, 11% to Scheduled Castes (SCs) and 13% to Scheduled Tribes
(STs) at the level of Panchayats. Election to the Panchayats in the state for the first time
conducted in 2000 followed by in 2005, 2010, and 2012 and last one in 2017.
Panchayats in Odisha at the level of Gram Panchayat, Block Panchayat and District
Panchayat are known as Gram Panchayat, Panchayat Samiti, and Zilla Parishad respectively.
In Odisha, there are total 6798 Gram Panchayat, 314 Panchayat Samiti and 30 Zilla Parishad.
On an average, each Gram Panchayat covers 5264 rural population. The state of Odisha has
given 50% reservation to women, 16.25% to Scheduled Castes (SCs) and 22.05% to Scheduled
Tribes (STs) at the level of Panchayats. Election to the Panchayats in the state for the first time
conducted in 1994 followed by in 1999, 2000, 2004-05, and 2010 and last one in 2015.
Panchayats in Tamil Nadu at the level of Gram Panchayat, Block Panchayat and
District Panchayat are known as Village Panchayat, Panchayat Union, and District Panchayat
respectively. In Tamil Nadu, there are total 12523 Village Panchayat, 385 Panchayat Union
and 31 District Panchayat. On an average, each Village Panchayat covers 3159 rural
population. The state of Tamil Nadu has given 50% reservation to women, 23% to Scheduled
Castes (SCs) and 1% to Scheduled Tribes (STs) at the level of Panchayats. Election to the
Panchayats in the state for the first time conducted in 1995 followed by in 2001, 2006, and
2011 and last one in 2016.
Panchayats in Uttar Pradesh at the level of Gram Panchayat, Block Panchayat and
District Panchayat are known as Gram Panchayat, Kshettra Panchayat/Area Panchayat, and
Zilla Parishad respectively. In Uttar Pradesh, there are total 58791 Gram Panchayat, 822
Kshettra Panchayat/Area Panchayat and 75 Zilla Parishad. On an average, each Gram
Panchayat covers 2847 rural population. The state of Uttar Pradesh has given 33% reservation
to women, 27% to Scheduled Castes (SCs) and 0.6% to Scheduled Tribes (STs) at the level of IIPA
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Panchayats. Election to the Panchayats in state for the first time conducted in 1995 followed by
in 2000, 2005, and 2010 and last one in 2015-16.
Panchayats in West Bengal at the level of Gram Panchayat, Block Panchayat and
District Panchayat is known as Gram Panchayat, Panchayat Samiti, and Zilla Parishad
respectively. In West Bengal, there are total 3340 Gram Panchayat, 342 Panchayat Samiti and
22 Zilla Parishad. On an average, each Gram Panchayat covers 22498 rural populations. The
state of West Bengal has given 50% reservation to women, 41% at District, 42% at Intermediate
and 42%% at village to Scheduled Castes (SCs) and 23% at District 10% at Intermediate and
village to Scheduled Tribes (STs) at the level of Panchayats. Election to the Panchayats in state
for the first time conducted in 1995 followed by in 1998, 2003, and 2008-09 and last one in
2018.

2. District Planning Committee:
‘District Planning Committee’, a mandatory provision in the Constitution, is an
important indicator in the study. The DPC plays very important role in the district planning
process by consolidating plans prepared at the local level by the villages and towns in the
district and then preparing a draft development plan for the district on the basis of the plans so
received from within the district. DPC is crucial to the function of ‘planning for economic and
social justice’, which is now a mandated local function, in that it provides the vital link between
rural and urban plans as well as sectoral plans.
Under this indicator, Karnataka, Madhya Pradesh, Maharashtra, and Tamil Nadu out of
ten select states seem to be active in terms of establishment of District Planning Committees
(DPCs), which conduct their meetings regularly and also submit district plans to the respective
state governments. Since it is a mandatory provision of the Constitution all States under study
have provisions related to the constitution of DPCs in their respective Acts.
3. Role of Panchayats in Parallel Bodies: IIPA
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Apart from three rungs of Panchayats, parallel bodies are created at most levels of
Panchayats to discharge certain responsibilities at the directions of the state government. This
creates confusions and concurrency as constitutionally mandated Panchayasare in position, in
the same geographical area, to discharge the same set of responsibilities.
The motive behind creating parallel bodies is to have speedy implementation of the
schemes and accountability of the same to the state government. For example, there are parallel
bodies functioning in one or other form at the level of District Rural Development Agencies
(DRDA)s, Education (SarvaSiksha Abhiyan), Water, Health (National Rural Health Mission)
and Sanitation (Swatch Bharat Mission (Gramin), Agriculture Corporation, and Integrated
Tribal Development Agency.
4. Autonomy to Panchayats:
Panchayats in various states, function under the provisions of particular Panchayat Acts
passed in the respective Legislative Assembly. In some States among select ten states,
representatives, Panchayat bodies, and resolution of District Panchayat, Block Panchayat and
Gram Panchayat are suspended/dismissed/dissolved by state government/DC/SDO/Divisional
Commissioner.
The State Government has the power to issue charge sheet to all the levels of
Panchayats in the states of Andhra Pradesh, Gujarat, Karnataka, Madhya Pradesh, Maharashtra,
Tamil Nadu and West Bengal. Data from other States were not available on the subject.
5. Functions Assigned and Actual Involvement:
Article 243 G envisages the involvement of Panchayats in various matters including
those listed in the 11th Schedule of the Constitution. Over a period of time, role of the
Panchayats has increasingly been identified in various vertical schemes of the Union
government. Such direct involvement of these grassroots institutions make them participatory in
the multi order federal system. IIPA
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Panchayats are the key institutions in rural areas through which various schemes of the
government can be implemented. The involvement of Panchayats across ten select states have
been found in the schemes such as National Social Assistance Programme (NSAP), Mahatma
Gandhi National Rural Employment Guarantee Programme (MGNREGP), Swatch Bharat
Mission (Gramin), Integrated Child Development Schemes (ICDS), Mission Antyodaya etc.
6. Involvement of Panchayats in Important Schemes:
A substantial portion of resources for the development of Panchayats is provided by the
Union Government through various schemes. The Centrally Sponsored Schemes (CSSs). CSSs
are conceived under the provision of the Article 282 of the Indian Constitution with avowed
objective of tackling problems. The role of Panchayats varies across different Centrally
Sponsored Schemes (CSSs), which are administered by different Union Ministries.
Among the major CSSs, National Rural Employment Guarantee Programme,
IndiraAwas Yojana, Total Sanitation Campaign, Accelerated Rural Water Supply Programme,
National Programme of Nutritional Support to Primary Education (Mid-Day Meals), National
Horticulture Mission, Macro Management of Agriculture, Micro Irrigation etc. are the schemes,
which provide for roles and responsibilities for Panchayats.

7. Fourteenth Finance Commission Grants:
The Union Finance Commission (UFC) has a major role to induce the institutions of
governance that are closest to the people. The processes of fiscal devolution from States to the
Panchayats are taking place through SFCs. In many States, the report of fifth generation SFC
has been submitted. Assets are being either created or transferred to the Panchayats. All of this
imposes an administrative cost on the Panchayats and draws on scarce resources that they
receive from their own sources and from the state. In this connection, fiscal transfers through
UFC have to play a critical role. IIPA
133 | P a g e
It is to be mentioned that ad hoc grants of a token nature given by the 14th Finance
Commission now need to be replaced by regular transfer arrangement. The role now for the
Fifteenth Finance Commission is to act as the path breaker in creating an enabling environment
for fiscal decentralisation at the sub-state level. This could be done through fiscal capacity
equalisation, an essential condition for a controlled and gradual process of fiscal
decentralisation. This requires, at this stage, the support from the Union Finance Commission as
various sub national governments have different and inadequate capacities to finance the
Panchayats. This is partly due to hard budget constraints imposed on them. It is expected from
the Fifteenth Finance Commission to accept that fiscal decentralisation is not a zero sum game.
In this context, the following points are worthy of being noted:
Certain annual rise in the administrative cost is inherent with the increase of
public employees’ salaries particularly after the implementation of the
recommendations of the Seventh Pay Commission. This will have effect in the
establishment cost of the local governments including the salary of the staff in
the account and a computer section (necessary minimum staff need to be
appointed in all Panchayats.
Due to increased activities, there would be an additional maintenance cost of
office space including storage, record rooms, computer centre, libraries etc.
In order to impose a uniform system of financial accounts, audit rules, disclosure
requirements under Right to Information (RTI) Act, there would be a need for
technical assistance to local governments in several areas such as
computerisation, accounting, treasury, tax administration, data processing,
project evaluation, audit at local fund and Comptroller and Auditor General
(CAG) levels, transparent procurement procedures etc.
Operation and maintenance costs will go up chiefly due to greater investment in
the form of local infrastructure particularly for drinking water supply, irrigation
and communication for the poor. IIPA
134 | P a g e
There would be additional recurring expenditure on traditional civic services like
public lighting, roads and sanitation arising out of increased people’s
expectations.
Under article 280 (3) bb, Union Finance Commission (UFC) has to suggest measures to
augment the consolidated fund of states for Panchayats. So far, five UFC’s have made their
recommendations for five years.Fourteenth Finance Commission which made its
recommendations of Rs. 2, 00,292.20 crores to the Gram Panchayats in states for a period of
five years i.e. 2015-20. The grants-in-aid were divided into two parts i.e. basic grants and
performance grants.
The 14
th
FC allocated 90 percent of the total grants as basic grants and 10 percent was
based on performance on select indicators including own revenue enhancement of Panchayats.
Basic grants are extremely important for the working of Panchayats, as the same covers the
operation and maintenance cost. On the other hand
It is important to note that all the ten select states, Andhra Pradesh, Bihar, Gujarat,
Karnataka, Madhya Pradesh, Maharashtra, Odisha, Tamil Nadu, Uttar Pradesh and West Bengal
have released funds related to the Fourteenth Finance Commission to the Panchayats on time.
It is to be mentioned here that states of Gujarat, Madhya Pradesh, Maharashtra, Odisha,
and Tamil Nadu have released 100% Basic and Performance Grants to Panchayats and overall
there has been 96.57% of transfer of basic and performance grants recorded among ten select
states.
In its first report presented in the parliament on 31
st
January 2020, the15
th
Finance
Commission hasrecommended a total amount of Rs. 60,750 crores or approximately 2.90
percent share of the Union divisible pool for Panchayats for the year 2020-21. As far as, ten
select states are concerned, the recommended devolution for Panchayats of ten select states is
43,895 crores for interim award period of 2020-21. This grant is having two components
namely: Untied or basic and tied and will be in the ratio of 50:50. The basic grant will be
utilized by Panchayats for their specific needs except for salary or expenditures on other
establishments. On the other hand, tied grants targets critical areas like sanitation & drinking IIPA
135 | P a g e
water as an additional ensured fund over and above the fund allocated to Panchayats through
centrally sponsored schemes & state schemes.
8. State Finance Commission (SFC):
Constitution of State Finance Commission (SFC) in every fifth year is the mandatory
requirement of the Constitution under Article 243 (I). SFC is required to recommend the
principles to be applied in determining the allocation of funds to Panchayats and the range of
taxes and non-taxes to be devolved to them.
The SFCs have a major role to ensure that the democratic decentralization envisaged
under the CAA becomes operational and effective. The State Governments have the
responsibility to enhance the credibility and acceptability of the SFCs. It is the State
Government that has to enact a conformity act prescribing the number and qualification of
members of the Commission.
Among ten select states, six states namely Bihar, Madhya Pradesh, Maharashtra,
Odisha, Tamil Nadu and Uttar Pradesh have constituted their 5th State Finance Commission,
and three states namely Andhra Pradesh, Karnataka and West Bengal have not constituted their
5th State Finance Commission. The last one that is Gujarat among the ten select states has to
constitute even its 4th State Finance Commission.
9. MoneyTransferred on account of SFCs to Panchayats:
State Finance Commissions are constituted in the State every five years to recommend the
ways and means to increase the tax base of Panchayats and allocations of State net tax receipts
to and among the Panchayats.
Grants-in-aid are provided to fill the gap of the local governments – both Panchayat and
municipalities - so that they can meet the expenditure on local public goods. These can be (a)
general-purpose grants or block grants based on some criteria or formula meant for additional
resources with no conditions attached; and (b) conditional or specific purpose grants, e.g. some
schemes or projects. IIPA
136 | P a g e
SFCs of all generations have recommended various types of Grants. These grants vary from
state to state. Even the definitions and connotations are diverse across states over time. SFC in
state of Andhra Pradesh has a provision of special-purpose, maintenance, and block grant. In
Gujarat there is provision for Incentive grant, compensatory grant, and maintenance grant apart
from general purpose grant. In Madhya Pradesh, there is a provision of performance-based
grant, conditional matching grant, and compensatory grant apart from general-purpose grant. In
Maharashtra apart from general purpose grant there is also provision of block grant, incentive
grant, and fund equalization grant. In Odisha, there is a provision of general-purpose and
specific grant. In Tamil Nadu, there is a provision of matching grant and maintenance grant
apart from general and specific purpose grant. In Uttar Pradesh grant name fund equalization
grant, block grants are in existence apart from General and specific purpose grants. In West
Bengal Matching grant, Incentive fund and deficit grants are in existence apart from general and
specific purpose grants.
10. Empowerment of Panchayats to impose/collect revenue:
Powers to impose taxes by the local governments was considered imperative to be enshrined
in the Constitution under Article 243H to impart certainty, continuity and strength to the
Panchayats. In most states, the property tax contributes maximum revenue of Panchayats. It is
important to note thatthe property tax has been assigned to local governments including
Panchayats in the states of Andhra Pradesh, Karnataka, Madhya Pradesh, Tamil Nadu, Uttar
Pradesh and West Bengal among ten select States. It is important to note that it remains the
major source of own tax revenue for most Panchayats. The Entertainment Tax stands assigned
to the Panchayats in Andhra Pradesh, Tamil Nadu and West Bengal. Most States have also
authorized the Panchayats to collect Land cess/Land tax. Panchayats in a number of States
including Andhra Pradesh, Bihar, Gujarat, Karnataka, Odisha, Tamil Nadu and Uttar Pradesh
also collect Vehicle tax. Tax on bicycles and on vehicles drawn by animals, Trade and Callings
Tax, Toll Tax are the other taxes which have been assigned to the Panchayats in most States.
However, all these tax handles provide abysmal revenue to Panchayats and they have to depend
on intergovernmental fiscal transfers from the respective state government and Union
government. IIPA
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11. GST Implications:
New GST regime, has affected the tax base of local governments including Panchayats.
The Amendment Act has subsumed some taxes that formed base of own source revenue for
Panchayats. One of such taxes is Octroi which was abolished long back and changed to entry
tax in some states, Tax on advertisement and fee collected on sale and purchase of agricultural
produce. Also Panchayats/ Municipality/Regional council/District council are authorized to
collect taxes on entertainments and amusements. It is pertinent to mention here that Panchayats
collect very little of their own expenditure requirements and depend largely on
intergovernmental fiscal transfers from upper levels of governments both Union and State. The
introduction of GST subsuming few tax handles of Panchayats has not affected the tax
collection of Panchayats substantially. Though Panchayats did have the resource base as per
the respective State Panchayat Act but had little capacity and willingness to administer and
collect those taxes for various reasons. In short, introduction of GST has little implication on
the own revenue collection of Panchayats.
12. Expenditure:
In international literature on fiscal decentralization, the expenditure incurred by local
governments is considered a key indicator for empowerment. The expenditure by all rungs of
Panchayats as a proportion of total State public expenditure is considered a reliable indicator.
Its State wise analysis is given below:
The Panchayats in the State of Andhra Pradesh spends 4.27% of the total State public
expenditure on Panchayats with per capita expenditure of Rs 1623 as per the average
during the fiscal years 2012-13 to 2017-18.
The Panchayats in the State of Bihar spends 0.91% of the total State public expenditure
on Panchayats with per capita expenditure of Rs. 101 as per the average during the
fiscal years 2012-13 to 2017-18.
The Panchayats in the State of Gujarat spends 12.97% of the total State public
expenditure on Panchayats with per capita expenditure of Rs. 4444 as per the average
during the fiscal years 2012-13 to 2017-18. IIPA
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The Panchayats in the State of Karnataka spends 18.79% of the total state expenditure
on Panchayats with per capita expenditure of Rs. 6647 as per the average during the
fiscal years 2012-13 to 2017-18.
The Panchayats in the state of Madhya Pradesh spends 3.39% of the total State public
expenditure on Panchayats with per capita expenditure of Rs. 791 as per the average
during the fiscal years 2012-13 to 2017-18.
The Panchayats in the state of Maharashtra spends 16.42% of the total State public
expenditure on Panchayats with per capita expenditure of Rs. 5779 as per the average
during the fiscal years 2012-13 to 2017-18.
The Panchayats in the state of Odisha spends 5.30% of the total State public
expenditure on Panchayats with per capita expenditure of Rs. 1093 as per the average
during the fiscal years 2012-13 to 2017-18.
The Panchayats in the state of Tamil Nadu spends 3.10% of the total state expenditure
on Panchayats with per capita expenditure of Rs. 1293 as per the average during the
fiscal years 2012-13 to 2017-18.
The Panchayats in the state of Uttar Pradesh spends 1.94% of the total State public
expenditure on Panchayats with per capita expenditure of Rs. 309 as per the average
during the fiscal years 2012-13 to 2017-18.
The Panchayats in the state of West Bengal spends 3.10% of total State public
expenditure on Panchayats with per capita expenditure of Rs. 1293 as per the average
during the fiscal years 2012-13 to 2017-18.
IIPA
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Table 3: Expenditure by Panchayats (Average of 2012-13 to 2017-18) of ten select states
(Rs. in crore)

Source:Respective State Government
Note:
#
Handbook of Statistics on States by Reserve Bank of India

It is important to mention that average expenditure (2012-13 to 2017-18) of Panchayats
in Maharashtra is highest among ten select states which is Rs. 36596 Cr. followed by Rs. 26267
Cr. in Karnataka. The lowest average expenditure (2012-13 to 2017-18) among the select states
is Rs. 1001 Cr. and Rs. 3913 Cr. in Bihar and Odisha respectively.
Among ten select states, share of Panchayats in public expenditure is highest in
Karnataka which spend 18.79% of total public expenditure in the state followed by Maharashtra
16.42%. The share of Panchayats is lowest in Bihar which is 0.91% of the total public
expenditure followed by Uttar Pradesh which spends 1.94% of the total public expenditure by
Panchayats.
Sl.
No.
State Expenditure by Panchayats Expendit
ure by
State
#



Share of
Panchayat
s in Total
Expenditu
re (in %)
Per-capita
Expenditu
re in
Panchayat
s
(Rs. in
thousands)
General Category
States
Distri
ct
Bloc
k
Villag
e
Tota
l
1 Andhra
Pradesh
309 5211 465 5977 140036 4.27 1623
2 Bihar 100 181 723 1005 109476 0.91 101
3 Gujarat 6532 8601 1305 1643
8
126753 12.97 4444
4 Karnataka 9238 1186
4
5164 2626
7
139755 18.79 6647
5 Madhya
Pradesh
275 1252 2644 4171 122778 3.39 791
6 Maharashtra 32550 273 3773 3659
6
222823 16.42 5780
7 Odisha 284 819 2810 3913 73840 5.30 1093
8 Tamil Nadu 233 1384 3499 5117 165071 3.10 1293
9 Uttar Pradesh 1096 379 3690 5166 265990 1.94 309
10 West Bengal 2226 3688 7583 1349
7
135811 9.94 1796 IIPA
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13. GramSabha:
‘Gram Sabha’, a basic unit of local democracy, is deemed to safeguard the collective
interests of all the residents. The Ministry of Panchayati Raj, Government of India laid huge
emphasis, in the past, to energize gram sabha in all States and prescribed minimum four
meetings of the same in a year. Quorum in the meeting was also considered important.
The quorum prescribed for the meeting of Gram Sabha is highest in the state of Uttar
Pradesh that is one-fifth of the total population. The same is lowest in Bihar and Gujarat, i.e.
one-twentieth of total population.It may be noted that, Gram Sabha in Maharashtra, Karnataka,
West Bengal and Madhya Pradesh are assessed as strong.
14. Gram Panchayat Development Plan (GPDP):
Gram Panchayats have been mandated for the preparation of Gram Panchayat
Development Plan (GPDP) covering all the resources over which the Panchayats have
command including 14th FC funds, MGNREGS funds, Swachh Bharat funds, etc.
The efforts of the Ministry of Panchayati Raj towards facilitating the Gram Panchayats
through GPDP have enabled preparation of 1,35,590; 2,44,042; 2,44,689; 2,07,278 and
1,95,570 (1,39,312 for ten select states) GPDP plans in the country during 2015-16, 2016-17,
2017-18, 2018-19 and 2019-20 respectively. The data are also being captured in the Plan Plus
portal.
15. Transparency& Anti-Corruption:
Accountability of Panchayats to its residents is the most important aspect for the
existence of Panchayat. Citizen Charter at the level of Panchayatsexists in the states of Andhra
Pradesh, Karnataka, Maharashtra, Madhya Pradesh, Odisha, Tamil Nadu, Uttar Pradesh and
Uttar Pradesh.
In Bihar and West Bengal, Citizen Charter does not exist at the level of Panchayats. IIPA
141 | P a g e
It is important to note that among ten select states, Andhra Pradesh, Bihar, Karnataka,
Maharashtra, Madhya Pradesh, Odisha, Tamil Nadu, Uttar Pradesh and West Bengal have made
provisions for either Lokayuktaor Ombudsman in Panchayats.
In Gujarat, it is Lokayukta or Government agency which undertakes the complaints of
Panchayats.Whereasin Uttar Pradesh, only government agency undertakes the complaints of
Panchayats.
16. Infrastructure (Physical/Digital):
Infrastructure-both physical and digital are the most fundamental attributes for the
smooth functioning of Panchayats which functions for social and economic development at the
grass root level. The provision of PuccaGhar together with the basic infrastructure exists for the
working of Panchayats at the level of Gram Panchayat, Block Panchayat and District
Panchayat in all ten states
In terms of infrastructure at the level of Panchayat in select states Uttar Pradesh has
largest number of PuccaGhar at the level of Gram Panchayat (33414), Block and District
Panchayat (72) followed by in the state of Maharashtra. On the other hand, in Bihar at the level
of Panchayat there are only 5624, 531 and 38 PuccaGhar at the level of Gram Panchayat,
Block Panchayat and District Panchayat respectively.
In Panchayats of Maharashtra, there is highest number of computers, Printers, Scanners
& Other Peripherals among select states followed by in the state of Gujarat.
In Maharashtra highest number of Telephone connection is available at the level of
Gram Panchayats that is 22000 followed by in Gujarat 14192.
Highest numbers of internet connections are available in Maharashtra, among the select
ten states, at the level of Gram Panchayats that is 26528 followed by Gujarat that is 14192
17. Training Institutions/Activities:
Panchayats have criticized quite often for its low capacity to govern due to this very
reason constitutionally mandated roles of Panchayats have been denied in many States. Hence, IIPA
142 | P a g e
capacity enhancement of elected representatives and employees is key for its sustained growth.
Training institutions and their activities are important to strengthen Panchayats and play a
critical role in the overall performance of Panchayat. Ministry of Panchayati Raj provided
financial support to States under Capacity Building-PanchayatSashaktikaran Abhiyan (CB-
PSA) for Capacity Building & Training (CB&T) with focus on Gram Panchayat Development
Plan (GPDP) so as to enable them to discharge their mandated functions effectively.
Under these schemes funds were released to the ten select States towards capacity
building and training which amount to Rs. 292.73 Cr. in 2014-15, Rs. 81.42 Cr. in 2015-16, Rs.
330.08 Cr. in 2016-17, Rs. 354.92 Cr. in 2017-18 and Rs. 315.95 Cr. in 2018-19.
If we look at the number of Elected Representatives, Panchayat Functionaries and other
Stake holders were trained in Panchayats we find that total number of 584320, 948779,
2283959, 4141382 and 3915115representatives in ten select states were trained during the
2014-15, 2015-16, 2016-17, 2017-18 and 2018-19 respectively.
18. E-Connectivity& ICT Measures:
E-Connectivity and ICT measures in Panchayat aim to transform the latter into symbols
of modernity, transparency and efficiency. E-Connectivity has been identified as one of the
objective of MoPR under RGPSA which aimed at supporting all the effective use of
information technology (IT) at grass root level or in all rungs of Panchayats.
It aims at computerization of Panchayats process and its data so that they are available
to the public in electronic mode and acts as a bridge between rural and urban. There is a robust
system put by government for effective monitoring of public expenditure by means of a holistic
system capturing the entire gamut of activity right from the stage of planning to monitor the
various stages of work, recording the expenditure incurred for the works to providing a
complete detail of the asset created.
There is a system called e-Financial Management System (e-FMS) comprising PlanPlus,
ActionSoft, PRIASoft and National Asset Directory (NAD) with Local Government Directory IIPA
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(LGD) forming the base for such a robust system along with the Public Financial Management
System (PFMS).
If we look the present status of the mechanism at the level of Panchayats we find the
following:
Pria-Soft is used in states of Andhra Pradesh, Gujarat, Karnataka, Maharashtra, Madhya
Pradesh, Odisha, Tamil Nadu, and Uttar Pradesh.
Local Government Directory (LGD) is used by all ten select states,
ActionSoft is also used by all ten select states,
National Asset Directory is used by all states except Karnataka and Madhya Pradesh,
and
Area Profiler is used by all ten select states.
Recommendations
1. It is important to note that reservation for women has seen upward movement across States.
As many as 20 states have given 50% reservation to women at the level of Panchayats. All
States, except Uttar Pradesh among ten select States, have given 50% reservation to women in
Panchayat at all rungs. Hence, reservation at Panchayatlevel could be enhanced to 50% from
the current 33% so that participation of women at the Panchayat level in all States becomes
equal.
2. The District Planning Committee plays avery important role in the district planning process
by consolidating plans prepared at the local level by the villages and towns in the district and
then preparing a draft development plan for the district,based on inputs so received from within
the district. This is a mandatory provision of the Constitution under Article 243 ZD. DPCs
signify bottom-up planning which is at the core of the formation of NITI Aayog advocating
cooperative and competitive federalism. The functioning of DPCs in States where it has been
notified but has not been active or little active needs monitoring. There is also a need for
monitoring on a regular meeting of DPCs in States. The NITI Aayog can play a vital role in
ensuring that all states, where Part IX & Part IX(A) are applicable, formulate their DPCs and
integrate district development plans through the inputs of Panchayats and Municipalities within IIPA
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the district. Such a process could be incentivized through intergovernmental fiscal transfer
mechanisms from Union to States.
3. It is believed that political masters at higher levels in States seem to be reluctant to devolve
powers to Panchayats, but the minimum set of functions, finances, and functionaries have been
devolved to Panchayats. Since the capacity of Panchayats across States is different, any
compulsion in this regard may not be appropriate. There could be the following options by
which the functioning of parallel bodies could be integrated to enhance the ownership of the
villagers:
a) Parallel bodies could be merged with Gram Panchayats.
b) Parallel bodies could be made accountable to Gram Panchayats
c) Sarpanch/ Chairperson/Member Gram Panchayat could preside over the parallel bodies in
meetings.
d) The Function of parallel bodies is limited to fund/account management.

4.The Autonomy of Panchayatsis seriously compromised through various practices by which
field level functionary in the State bureaucracy suspend or dismiss head/member or even
supersede(dissolve) the Panchayat. Since Panchayats are elected Institution of Self-
governments, only the other elected institution in the State or the judiciary should be the only
authority to dissolve Panchayats. Committee of State Legislature or other equivalent authority
should be vested with the power of suspension and supervision.
5. In addition to waste management, issuance of birth and death certificates and some other core
functions could be drawn from the 29 matters enumerated in the 11
th
Schedule. These are listed
below:
Drinking Water.
Roads, culverts, bridges, ferries, waterways and other means of communication.
Rural electrification, including the distribution of electricity.
Health and sanitation, including hospitals, primary health centres, and dispensaries.
Maintenance of community assets.

At least, these core functions should be in the exclusive domain of Panchayats at different
rungs as per the priority of the respective State government. The State government has to see IIPA
145 | P a g e
whether concomitant funds and functionaries are adequately devolved to different rungs of
Panchayats. Fund transfers for these functions should be unconditional. Union Finance
Commission award to Panchayats could be leveraged for the purpose. More functions could be
in the exclusive list of Panchayatsin a phased manner as and when their capacity and
accountability increase.
6.The Panchayats at all the three rungs should directly involve in the implementation of the
schemes. The involvement of Panchayats at only select levels in important schemes does not
fulfil the purpose of the schemes. As of now only selected or few schemes are devolved to all
three rungs of Panchayats.There should be synchronization at all the three levels of
Panchayats.Panchayatsat all the three-level in the state of Gujarat, Karnataka and Tamil
Naduhas seen involvement in important schemes. Other state can learn from the practices of
these states.
7. While addressing article 280(3) bb, 14
th
Finance Commissionconsidered only the Gram
Panchayats and left the other two rungs i.e. district and block Panchayats.The 14
th
Finance
Commission had recommended an amount of Rs. 2,00,292.20 crores to the Gram Panchayatsof
all States in the country over a period of five years. While the Constitution prescribes three tiers
Panchayat system including district and block Panchayats, the recommendations seem
inconsistent with the Constitutional provision. The 15
th
Finance Commission attempted to
correct it and has recommended grants for all the three rungs of Panchayats to enable pooling
of resources across village, block & district to create durable community assets and improved
functioning.15
th
Finance Commission has recommended a total amount of Rs. 60,750 crores or
approximately 2.90 percent share of the Union divisible pool for Panchayats for the year 2020-
21 in its first report presented in the parliament on 31
st
January 2020.
8. The institution ofState Finance Commission (SFCs) is evolving over a period of time. The
working of SFCs could be improved further through concerted efforts of Union and State
governments. Recommendations in that direction are outlined below:
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Role of Union Government:
To introduce a bill to amend Articles 243 I, 243 Y and 280 (3) (bb) & (c) mooted by
various SFCs to provide teeth to SFCs;
To oversee the fulfilment of constitutional provisions in states particularly the
mandatory provisions of Article 243 I and 243 Y related to SFC. “A Commission be
constituted every five years to report on the Status of Local Government Devolution of
Powers. For this requisite provision be made in Parts IX and IX-A on the same lines as
Articles 339 and 340;
To set up an SFC cell in a National Institute for Ministry of Panchayati Raj (MoPR),
Ministry of Urban Development (MoUD) and Ministry of Finance, each non-
overlapping and synergetic;
To disseminate best practices of SFCs;
To monitor national grants both from UFCs and Ministries to local governments through
periodic evaluations of inter se distributions to local governments by SFCs and states;
To hand hold states for capacity equalization of local governments;
To set national minimum goal for equalization of basic services;
To create vertical schemes so that the above objectives could be achieved;
To help states in all matters as and when needed;
To conduct international experience-sharing through workshops and conferences;
To conduct national & international programs for capacity enhancement;
To disseminate best practices of SFCs.

Role of State Governments:
To constitute the SFCs for a life span of 18 months and a time limit of six months to act
on SFCs’ recommendations;
To issue Government Orders (GOs) on the accepted recommendations and release funds
timely to the banks of Panchayats;
To appoint Chairman and members of eminence with requisite qualifications in public
affairs and public finance on the lines of UFC;
To establish a permanent SFC Cell in the Finance Department;
To provide core staffs to SFCs;
To institutionalize the arrangements for annual data collection, preferably work-flow
based;
To adopt standard accounting systems as prescribed by the National agencies, including
PRIA Soft;
To indicate entitlements of Panchayats in the State annual budgets;
To prescribe a common set of accounting practices that ensure that the accounts of the
parallel structures which remain or are created because of functional efficiency are
captured in the accounts of the local governments concerned.

To standardize and notify: IIPA
147 | P a g e
o Procedures for levy of property and other local taxes
o Norms for basic services at local level
o Norms for staffing & salaries for local governments

To incentivize performance through:
o Levy and collection of taxes and user charges
o Economy in expenditure
o People’s participation
o Database on local finances
To maintain a local government profiler, directory, assets register, PRIA Soft, etc.
9. Most State Finance Commission (SFCs) have recommended a medley of taxes, cesses, or
even surcharge on State taxes. Given the fact that the collection of taxes at the local level is
difficult, such type of efforts lead only to the escalation of administrative cost as each tax
requires tax collection machinery. At times, the cost of collection exceeds the actual collection
of a particular tax. To strengthen the revenue base of the local governments, SFCs should
recommend measures to tighten tax administration for better compliance of existing taxes,
rationalization of taxes and recovery of cost through appropriate user charges.
10. The power of Panchayats to impose and collect taxes and non-taxes is significant to
impart certainty and strength to Panchayats. From the list of taxes levied at local level, property
tax, land cess, surcharge on additional stamp duty, tolls, profession tax, advertisement tax, non-
motor vehicle tax, octroi, user charges, etc. contribute the maximum to the small kitty of own
revenue, which contributes only six to seven percent in the total expenditure of Panchayats. The
property tax is one of the major tax contributes to maximum revenue for Panchayats. Only
states like Kerala and Tamil Nadu collect maximum tax followed by Madhya Pradesh and Uttar
Pradesh. Thetax capacity of Panchayats should be increased through allocation of more power
to impose and collect revenue of the highest nature. Besides this, better-performing Panchayats
in the collection of taxes should be awarded at state and national level.
11. The Constitution (One Hundred & First Amendment) Act, 2016, which implemented Goods
and Services Tax (GST) regime, also affected article 243H of the Constitution, under which
the Panchayats are authorized to levy, collect and appropriate such taxes, duties, tolls & fees in
accordance with procedure prescribed by the Legislature of a State. The Union & respective
State governments should analyse & compensate Panchayats post-GST implementation while
keeping the following points in concern: IIPA
148 | P a g e
i) Making a list of all those taxes which have been withdrawn from Panchayat followed
by data on revenue loss incurred to the own source revenue handles of Panchayats as a
by-product of those withdrawals;
ii) Measures taken with respect to allowingPanchayats on dual taxation attributes under the
corresponding State GST legislations namely: tax deduction at source(TDS) & tax
collection at source (TCS);
iii) Making arrangement for additional grant-in-aid or compensatory funding to check fund
inadequacy as a result of GST;
12. In the medium term, the States could bring the revenue expenditure of the local
governments to the level of at least 10 percent of total public expenditure. At present, the
Panchayats’ public expenditure in Karnataka as a proportion of total State expenditure is the
highest followed by Maharashtra. However, the pattern is different across the States. In the long
run, the share of expenditure of the local governments in total public expenditure should be
raised to about 20 percent which is the international norm of developing countries.
Other points which can be taken into account areall expenditure incurred by Panchayats on
basic services within the functions devolved to them under the State laws may be incurred after
proper plans are prepared by Panchayats. This should beas per relevant rules, regulations,
plans, processes, and procedures applicable in the state concerned. The expenditure by
Panchayats should also be towards creating infrastructure or community assets within the area
of Panchayats and incurring user charges to create an asset.
13. It is evident that Article 243A of the Constitution enables Gram Sabha to exercise such
powers & perform such functions at the village level as the Legislature of State may, by law,
provide. In conformity with this Constitutional provision, almost all states including select
sample states have enshrined corresponding provisions in their respective State Panchayats
legislations for ensuring smooth working of Gram Sabha, however, the de facto functioning of
Gram Sabha should be critically analyzed depending upon following parameters:
i) Whether the State governments has taken any legislative or executive measures to put a
check and balance on following issues: IIPA
149 | P a g e
a) Minimum numbers of Gram Sabha meetings mandated to be held in a month/year;
b) Prescribed mandated quorum for convening of meetings of Gram Sabha;
c) State’s specific guidelines or procedure regarding convening of meetings of Gram
Sabha;
d) Any disciplinary action taken by State government or an appropriate authority in case of
non-convening of meetings of Gram Sabha& or violations of any prescribed provisions
with respect to Gram Sabha across Gram Panchayats in the State.
ii) Whether the Gram Sabha has been fulfilling its roles in following important matters:
a) Preparation of the budget for the Gram Panchayat at the village level;
b) Conducting social audits on major centrally sponsored schemes like Mahatma Gandhi
National Rural Employment Guarantee Scheme/MNREGS,
PradhanMantriAwaasYojana-Gramin/PMAY-G, DeendayalAntyodayaYojana/DAY or
any state sponsored schemes in order to find out any irregularities while preparing
beneficiary list, BPL list, spending fund etc.
14. The Gram Panchayat Development Plan (GPDP)isan essential initiative launched by the
Ministry of Panchayati Raj (MoPR), Government of India, under the aegis of tagline Sabki
Yojana SabkaVikas. Itis annual plan designed for every Gram Panchayatacross country, where
villagers have their consent on where the Panchayat fund should be spent. Its preparation and
implementation are mainly catalyzed by twin factors namely: economic prosperity of Gram
Panchayat & prevalence of social justice. The GPDP has also strengthened the role of Gram
Sabha in the form of an authority which appoints GPDP at the village level.
The GPDP has to be participatory, comprehensive as well as in conformity with the 29 matters
enumerated in the Eleventh Schedule of the Constitution. The MoPR has issued detailed
guidelines with amendments made fromtime to time to carry out GPDP across Panchayats. The
guidelines are given below.
Model Guidelines for Preparation of GPDP (2015);
i) Manual for Preparation of GPDP (March 2016);
ii) MoPR letter regarding preparing participatory GPDP to States (May 2016); IIPA
150 | P a g e
iii) Revised GPDP Guidelines (October 2018);
Further, in conformity with MoPR guidelines the departments of respective state governments
including select sample states dealing with matters of Panchayats have also issued state
equivalent guidelines; some of the states GPDPs are as follows:
a) Integrated Participatory Planning Exercise (IPPE)& GPDP Integration (Bihar);
b) Village Development Plan (Gujarat);
c) NammaGrama, Namma Yojana (Karnataka);
d) Smart Gram Smart Panchayat (Madhya Pradesh);
e) AamchaGaon, AamchaVikas (Maharashtra);
f) Our Village Our Plan (Odisha);
g) Gram PanchayatVikash Yojana (Uttar Pradesh); and
h) Participatory planning at the Gram Panchayat level (West Bengal).
Others states should also work towards preparing &implementing GPDP in their Gram
Panchayats keeping in view below mentioned focal points:
i) Improving basic civic services like drinking water, sanitation,etc.& public distribution
system;
ii) The economic well-being of villagers & poverty-reducing measures;
iii) Human & Social Development measures in Gram Panchayat;
iv) Expanding the scope of Own Source Revenue (OSR) of Gram Panchayat;
v) Emphasis on Gram Panchayat infrastructure (physical, digital & human resource);
vi) Localizing Sustainable Development Goals;
15. Accountability of Panchayats to its residents is the most important aspect of the existence
of Panchayats. It is important to note that mostly select states have adopted either Lokayuktaor
Ombudsman in Panchayatsfor checking corruption practices. The mere creation of bodies at the
level of Panchayats has not helped in checking the leakages. These bodies need to be assigned
more power to take strict actions against the complaints filed. In transparency measures Madhya
Pradesh has set an example by putting a web-enabled system namely Panchayats Darpanto
keep a track record of the transfer of funds as well as the expenditure of the GPs, the same may IIPA
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be replicated by Gram Panchayats of other states. The other measure which can be taken for
bringing transparency at the Panchayat level is displaying approved projects under GPDP on
the walls of the Panchayat building by Gram Panchayats.
16. Infrastructure-both physical and digital are the key fundamental,provision for the smooth
functioning of Panchayats which function for social and economic development at the grass-
root level. As per the recent Demand for Grant 2019-20 report of the Standing Committee on
Rural Development of the Ministry of Panchayati Raj,a) the proportion of Gram Panchayats
without building,b) Gram Panchayats without computer &c) Gram Panchayats without internet
connectivity in the country were 25 percent, 47 percent & 59 percent respectively. The effort
should be made towards bridging this gap by building Panchayats Bhawans& attached
infrastructural arrangements for smooth functioning of Panchayats across all States. With these
infrastructures, there is also a need to have trained manpower to execute these facilities for the
benefit of the people.
17. There is a need to empower the human resource working at the level of Panchayats through
speeding up the extensive training and capacity-building measures. As per the second report
of the Standing Committee on Rural Development (2019-20) of the 17
th
Lok Sabha,which was
laid before the Parliament in December 2019, it has been highlighted that staff availability in
most of the Gram Panchayats across States is quite low. This leads to responsibility burdening
of Panchayat Secretary, who has to deal with five to six Gram Panchayatsat a time. There is a
need to address this issue of lack of manpower at Gram Panchayats.There is a need forrobust
infrastructure and capacity building measures through state-level institutions. Another thing
which can be looked upon for improvement is fund allocation to Panchayatsfor capacity
buildingwhich has been inconsistent. For example total funds allocated for ten select States
towards capacity building and training amount to Rs. 292.73 Cr. in 2014-15, Rs. 81.42 Cr. in
2015-16, Rs. 330.08 Cr. in 2016-17, Rs. 354.92 Cr. in 2017-18 and Rs. 315.95 Cr. in 2018-19.
The budget allocation for training needs to be more predictable and consistent for the
strengthening of Panchayats.
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18. ICT measures in Panchayat aim to transform the latter into symbols of modernity,
transparency and efficiency. A series of awareness campaigns need to be conducted for
functionaries of Panchayats. Government of Andhra Pradesh organized Janmabhoomi-Maa
Vooru Programme (JBMV) from 2nd to 11th January, 2017. Through Janmabhoomi-MaaVooru
Programme (JBMV) all District and Mandal level officials were trained on digital modes of
financial transactions. Similarly in Maharashtra, every village in the State has Village
Correspondence and they are trained to create awareness and handholding supports in the
villages for a digital mode of transactions. The same kind of awareness needs to be imparted in
all the states. There can also be effective use of Social Media to encourage people to participate
at large.
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References
Apart from the following primary sources, other sources have been presented under
secondary sources in an alphabetical order. The following are the proposed resources for
reference:
State Panchayat Acts
Andhra Pradesh Panchayati Raj Act, 1994
Andhra Pradesh Goods and Services Tax Act, 2017
Bihar Panchayat Samitis and Zila Parishads (Budget and Accounts) Rules 1964
Bihar Panchayat Raj Act, 1993
Bihar Panchayati Raj Act, 2006
Gujarat Taluka and District Panchayat Finance Accounts and Budget Rules 2010
Bombay Village Panchayats (Budget and Accounts) Rules,1959
The Maharashtra Zila Parishads and Panchayat Samitis Account Code, 1968
Madhya Pradesh Panchayat Audit Rules, 1997
Madhya Pradesh Panchayat Audit Rules, 2001
Madhya Pradesh Panchayati Raj and Gram Swaraj SansodhanAdhiniyam 2011
Tamil Nadu Panchayats (Issue and Disposals of Audit Reports of Panchayat Union Council and
District Panchayat) Rules – 2000
Tamil Nadu Panchayats (Receipts and Expenditure and Maintenance of the Accounts of Village
Panchayats) Rules – 2000
The W.B. Panchayat (Gram Panchayat Accounts Audit and Budget) Rules, 2007
The W.B. Panchayat (Zila Parisadand Panchayat Samiti) Accounts & Finance Rules, 2003
Constitutional (One Hundred and First amendment) Act, 2016
MNNREGA guidelines
Fourteenth Finance commission report
State Finance commission report.
Based on Accountability of Local Governments: CAG Initiative
Auditing Standards for PRIs and Urban Local Bodies by CAG
Previous reports of IIPA
MoPR. Strengthening Social Accountability for Panchayati Raj
MoPR. 2009. Guidelines for Effective Functioning of Gram Sabhas
e-PRI study report: ISNA report for Panchayati Raj Institutions in India, MoPR 2009 etc.
Action Agenda of the NITI Aayog


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Aiyar, Mani Shankar. 2002. “Panchayati Raj: The Way Forward”, Economic and Political Weekly,
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Aiyar, Mani Shankar. 2004. Towards Time-bound Panchayati Raj, Tenth Anniversary Plan of Action, in
D.Bandyopadhyay and AmitavaMukkherjee (ed) New Issues in Panchayati Raj, New Delhi,
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Alagh, Y.K. 2005.Panchayati Raj and Planning in India: Participatory Institutions and Rural Roads,
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Alagh, Yoginder.K. 2002.“Emerging Institutions and Organisations: Some Aspects of Sustainable Rural
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Alok, V. N. 2004. “State Finance Commissions in Indian: An Assessment”, inIndian Journal of Public
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Alok, V. N. 2006. “Local Government Organization and Finance: Rural India”, in Anwar Shah (ed.),
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Alok, V.N. 2009.“Share of Local Governments in the Union Divisible Pool: An Option before the 13th
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Alok, V N, 2011. Role of Panchayat Bodies in Rural Development Since 1959, Theme Paper for 55th
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Bahl, Roy. 2008. Opportunities and Risk of Fiscal Decentralization. In Gregory Ingram and Yu-Hung
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MA: Lincoln Institute of Land Policy..
Bird, Richard and Christine Wallich. 1993. Fiscal Decentralization and Intergovernmental Relations in
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Bowman, Ann and Richard Kearney. 1990. State and Local Government, Boston, Houghton Mifflin.
Brecher, Michael. 1959. Nehru: A Political Biography, London, Oxford University Press.
Chaudhuri, Shubham 2007. “What Differences Does a Constitutional Amendment Make? The 1994
Panchayati Raj Act and the Attempt to Revitalize Rural Local Government in India”, in
PranabBardhan and DilipMookherjee (eds),Decentralization and Local Governance in
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Center for Policy Research (2014), Rural Local Bodies Core Functions and Finances, A Study of
Fourteenth Finance Commission, New Delhi.
Dreze, Jean and Amartya Sen. 2002.India: Development and Participation, New Delhi, Oxford
University Press.
Friedman, H. 1983,“Decentralised Government in Asia: Local Political Alternatives for Decentralised
Development”, in G.S. Cheema and D. Rondinelli (ed.), Decentralisation and Development,
Sage, Beverly Hills. IIPA
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Ghatak, Maitreesh and MaitreyaGhatak. 2002. “Recent Reforms in the Panchayati System in West
Bengal: Towards Greater Participatory Governance?” Economic and Political Weekly, 37(1):
45-58.
Government of India. 1963. Report of the Study Team on Position of Gram Sabha in Panchayati Raj
Movement (Chairman: R.R. Diwakar), New Delhi.
Government of India, 1965.Report of the Committee on Panchayati Raj Elections (Chairman: K
Santhanam), New Delhi, Ministry of Community Development and Cooperation.
Government of India, 1978.Report of the Committee on Panchayati Raj Institutions (Chairman: Asoka
Mehta), New Delhi, Department of Rural Development, Ministry of Agriculture and Irrigation.
Government of India.1984.Report of the Working Group on District Planning (Chairman C.H.
HanumanthanaRao), New Delhi, Planning Commission.
Government of India. 1985. “Administrative Arrangements for Rural Development: A Perspective-
Proceedings of the National Workshop Held at NIRD,” Hyderabad, National Institute for Rural
Development.
Government of India. 2000.Report of the Eleventh Finance Commission for 2000-05, New Delhi.
Government of India.2001.“Report of the Task Force on Devolution of Powers and Functions upon
Panchayati Raj Institutions,” Ministry of Rural Development, New Delhi.
Government of India. 2001. Report of the Task Force on Panchayati Raj Institutions, New Delhi,
Planning Commission.
Government of India. 2001. Report of the Working Group on Decentralized Planning and Panchayati
Raj Institutions, New Delhi, Ministry of Rural Development.
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Government of India.2004.“Report of the Task Force of Officials in Charge of Panchayati Raj in States
to Examine the Centrally Sponsored Schemes ”New Delhi, Ministry of Panchayati Raj.
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Raj, Kolkata, July 24–25. http://www.panchayat.gov.in. IIPA
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Government of India. 2005.Report of the Twelfth Finance Commission for 2005-10, New Delhi.
Government of India. 2006.Annual Report,(2005–2006), New Delhi, Ministry of Panchayati Raj.
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Five Year Plan, Report of the Expert Group, New Delhi,Ministry of Panchayati Raj.
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Delhi, Ministry of Panchayati Raj.
Government of India. 2008. “Centrally Sponsored Schemes: Identifying a Domain for the Panchayati
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Ministry of Panchayati Raj. pp. 337-45.
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Delhi, Ministry of Panchayat Raj.
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Panchayati Raj. pp. 135-163.
Government of India 2009.Report of the Thirteenth Finance Commission for 2010-15, New Delhi.
Government of India. 2004. “Background Note and Action Points.” Paper prepared for the Chief
Ministers’ Conference on Poverty Alleviation and Rural Prosperity through Panchayati Raj,
New Delhi, June 29http://www.panchayat.gov.in.
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Poverty Alleviation and Rural Prosperity through Panchayati Raj, New Delhi, June 29.
Government of India. 2007. Local Governance: An Inspiring Journey into the Future, Sixth Report of
the Second Administrative Reforms Commission.
Government of India. 2013. Towards Holistic Panchayati Raj: Twentieth Anniversary Report of the
Expert Committee on Leveraging Panchayats for Efficient Delivery of Public Goods and
Services, (Chairman: Mani Shankar Aiyar), New Delhi, Ministry of Panchayat Raj. IIPA
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Government of India 2013. Empowering Gram Sabha, Kurukshetra: A Journal of Rural Development,
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Development, Seventeenth Lok Sabha, (Chairperson:Prataprao Jadhav), New Delhi, Ministry of
Panchayati Raj.
Government of India. 2019. Report of the Fifteenth Finance Commission for 2020-21, New Delhi.
IIPA 2019. Report on Financial Matrix for Empowerment Design of Inter-Governmental Fiscal
Transfers in India to Rural Local Governments, New Delhi, Indian Institute of Public
Administration, (Team Leader: V.N. Alok)
IIPA 2009. Report of the Technical Committee of the Ministry of Panchayati Raj to prepare Draft Joint
Memorandum on behalf of Panchayats to the 13th Finance Commission, New Delhi, Indian
Institute of Public Administration, (Chairman: V Ramachandran).
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Sixties.
IIPA. 1973. Indian Journal of Public Administration, Special Number on Multi Level Planning, July-
September.
IIPA 1978.Indian Journal of Public Administration, July- September, Special Number on
Decentralisation in Administration.
IIPA. 1987. New Thrust in Democratic Decentralisation, Theme Paper for 31st Annual Members
Conference.
IIPA. 1995 Panchayati Raj and People’s Aspirations, Theme Paper for 39th Annual Members
Conference.
Joshi, R.P and G.S.Narwani. 2002. Panchayati Raj in India: Emerging Trends Across States, Jaipur,
Rawat.
Mathew, George. 1995. Status of Panchayati Raj in India, Institute of Social Sciences, New Delhi. IIPA
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Mathew, George. (ed.) 1987.Panchayati Raj in Karnataka and its National Dimensions, New Delhi,
Concept Publishing Company.
Mathew, George. (ed.) 2000.Status of Panchayati Raj in the States and Union Territories in India, New
Delhi, Concept Publishing Company.
Mathew, George. (ed.) 2002.Panchayati Raj: From Legislation to Movement, New Delhi, Concept
Publishing Company.
Mathew, George. (ed.) 2004. “Strategy for Strengthening Panchayati Raj Institutions”, in Surat Singh
(ed.), Decentralised Governance in India: Myth and Reality, New Delhi, Deep and Deep
Publications.
Matthew, G. 2001. “Panchayat Elections: Dismal Record”, Economic and Political Weekly, January 20,
pp. 183-184.
Wolman, Harold. 1990. “Decentralization: What it is and Why We Should Care” inDecentralization,
Local Governments, and Markets. (ed.) Robert J. Bennett, Oxford (England), Clarendon Press.
Sources of SFC Reports
SFC Reports of Andhra Pradesh
Andhra Pradesh, Government of (1997), Report of the First State Finance Commission for 1997-2000,
May, Hyderabad (Chairperson: G Lakshmana Swamy).
-----. Second State Finance Commission, Report for 2000-01 to 2004-05, August 19, Hyderabad
(Chairperson: Prof. D L Narayana).
-----. Third State Finance Commission, Report for 2005 -06 to 2009-10, Hyderabad
(Chairperson:Prof.D.L.Narayana).
SFC Reports of Bihar
Bihar, Government of (2004), State Finance Commission (III): Report, November, Patna, Rural
Development Department (Chairperson: G S Kang, Development Commissioner, ex-officio).
-----. (2010), Report of the Fourth State Finance Commission, June, Award Period: 2010-11 to 2014-15,
(Chairman: D.R. Mehta), Government of Bihar. IIPA
160 | P a g e
-----. (2016), Report of the Fifth State Finance Commission, January, Award Period: 2015-16 to 2019-
20, Chairperson: A N P Sinha).
SFC Reports of Gujarat
Gujarat, Government of (1998), The Second Interim Report of the Gujarat Finance Commission (I),
(Final Report pertaining to rural local self – Government bodies- Part 2) June (Chairperson:
Vinay Sharma).
-----. (1998), Report on Urban Local Bodies in Gujarat State, Third (Final) Report of Gujarat Finance
Commission (I), October (Chairperson: Vinay Sharma).
-----. (2006), Report of the Second Gujarat Finance Commission, June, (Chairperson: Dhirubhai Shah).
SFC Reports of Karnataka
Karnataka, Government of (1996), Report of the State Finance Commission, Vol I and II, July,
Bangalore (Chairperson: G Thimmaih).
-----. (2002), Report of the Second State Finance Commission, December, (Chairperson: K P
SurendraNath).
-----. (2008), Report of Third State Finance Commission, December, (Chairperson: A G Kodgi).
SFC Reports of Madhya Pradesh
Madhya Pradesh, Government of (1996), Report of Madhya Pradesh State Finance Commission for
1996-97 to 2000-01), June, Bhopal, (Chairperson: S SSisodia).
-----. (2003), Report of the Second State Finance Commission, 2001 to 2006, July, Bhopal (Chairperson:
S SSisodia).
-----. (2008), Report of Third State Finance Commission, 2006-2016, November, Bhopal (Chairperson:
SheetalSahaya).
-----. (2017), Report of Fourth State Finance Commission, 2016-2020, January, Bhopal (Chairperson:
Dhan Singh Bisen).
SFC Reports of Maharashtra IIPA
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Maharashtra, Government of (1997), Report of the First Maharashtra Finance Commission, January,
State Finance Commission, Mumbai (Chairperson: MakrandHerwadkar).
-----. (2002), Report of the Second Maharashtra Finance Commission, March, State Finance
Commission, Mumbai (Chairperson: S Habeebullah).
-----. (2006), Report of the Third Maharashtra Finance Commission, June, State Finance Commission,
Mumbai (Chairperson: Satish Tripathi).
-----. (2016), Report of the Fourth Maharashtra Finance Commission, June, State Finance Commission,
Mumbai (Chairperson: J P Dange).
-----. (2016), Report of the Fourth Maharashtra Finance Commission, June, State Finance Commission,
Mumbai (Chairperson: J P Dange).
SFC Reports of Odisha
Orissa, Government of (1998), Report of the State Finance Commission, 1998-89 to 2002-03,
December, Bhubaneswar, (Chairperson: Baidyanath Mishra).
-----. (2003), First Report of the Second State Finance Commission, October, Bhubaneswar,
(Chairperson: TrilochanKanungo).
-----. (2010), Report of the Third State Finance Commission, January, Bhubaneswar, (Chairperson:
Sudhakar Panda).
-----. (2014, September), Report of the Fourth State Finance Commission, Award Period: 2015-16 to
2019-20, (Chairman: ChinmayBasu), Government of Odisha.
SFC Reports of Tamil Nadu
Tamil Nadu, Government of (1996), Summary of Recommendations of the State Finance Commission
for Local Bodies, Volume I; The Report, November, Chennai (Chairperson: R Arumugham).
-----. (2001), Report and Recommendations of the Second State Finance Commission (2002-2007),
Volume I, October, Chennai (Chairperson: Sukavaneshwar).
-----. (2006), Report and Recommendations of the Third State Finance Commission (2007-2012),
September, Chennai (Chairperson: M A Gowrishankar). IIPA
162 | P a g e
-----. (2011, September), Report of the Fourth State Finance Commission, Award Period: 2012-13 to
2016-17, (Chairman: K. Phanindra Reddy), Government of Tamil Nadu.
-----. (2016, December), Report of the Fifth State Finance Commission, Award Period: 2017-18 to 2022-
23, (Chairman: S. Krishna), Government of Tamil Nadu. IIPA
163 | P a g e
SFC Reports of Uttar Pradesh
Uttar Pradesh, Government of (1995), State Finance Commission (Panchayati Raj and Urban Local
Bodies), Uttar Pradesh, Interim Report, December, Lucknow (Chairperson: Bhal Chandra
Shukla).
-----. (2002), Report of Second State Finance Commission, June, 2001-02 to 2005-06, Lucknow,
(Chairperson: T N Dhar).
-----. (2008), Report of Third State Finance Commission, August, 2006-2011, Lucknow, (Chairperson: S
A T Rizvi).
-----. (2014), Report of Fourth State Finance Commission, December, 2011- 2016, Lucknow,
(Chairperson: Atul Kumar Gupta).
-----. (2018), Report of Fourth State Finance Commission, December, 2016-17- 2021-22, Lucknow,
(Chairperson: Anand Mishra).
SFC Reports of West Bengal
West Bengal, Government of (1995), Recommendations of the State Finance Commission, West Bengal,
November, Calcutta (Chairperson: Satyabrata Sen).
-----. (2002), Report of the Second State Finance Commission, West Bengal, February, Kolkata
(Chairperson: Deb Kumar Basu).
-----. (2008), Report of the Third State Finance Commission, West Bengal, October, Kolkata
(Chairperson: SukhbilasBarma).
-----. (2016), Report of the Fourth State Finance Commission, West Bengal, February, Kolkata
(Chairperson: Abhirup Sarkar).
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Annex-A
Panchayat Devolution Survey Questionnaire-2018-19
Panchayats Survey for States-2018–19
As on March 31, 2019
(To be answered by the State Government)

Name of the State : ___________________________________________________________________________________
Nodal Officer’s Name : __________________________________Designation: ______________________________________
Nodal Officer’s Contact Number : Tel: _________________Fax:_________________Mobile: _____________Email: ________________
Instructions:
1. All the sections need to be answered. Please read the following notes as well as note (s) against each question.
2. Please tick (√) the appropriate box against each question/ information sought, unless mentioned otherwise. Please make multiple selections, if
needed. If a box is not ticked or not filled, it will be treated as ‘No’ filled in that box. Please write -NA- if not applicable.
3. Please add more rows if need arises and give explanatory notes/observations wherever required. Please read the following table for acronyms.
4. The information sought in this exercise is for research purpose only.

Acronyms Expansions Acronyms Expansions
ASHA Accredited Social Health Activist NDRGGSP NanajiDeshmukhRashtriya Gaurav Gram Sabha Puraskar
ATR Action Taken Report NGO Non- Governmental Organization
BDO Block Development Officer NRDWP National Rural Drinking Water Program
BP Block Panchayat NRHM National Rural Health Mission
C&AG Comptroller and Auditor General NRLM National Rural Livelihoods Mission
CBO Community Based Organizations PMGSY Pradhan Mantri Gram Sadak Yojana
DPC District Planning Committee PHC Primary Health Centre
DRDA District Rural Development Agency PSA Panchayat Sashaktikaran Abhiyan
DI Digital India NRLM National Rural Livelihoods Mission
DDUPSP DeenDayalUpadhyaya Panchayat ShasaktikaranPuraskar PMGSY Pradhan Mantri Gram Sadak Yojana
EVM Electronic Voting Machine PMAY-G Pradhan MantriAwas Yojana-Gramin
GP Gram Panchayat RTI Right to Information Act
GIS Geographic Information System RAGAV Rashtriya Gram AnudaanevamVikas
GS Gram Sabha RGSA Rashtriya Gram Swaraj Abhiyan
GST Goods and Services Tax SFC State Finance Commission
ICDS Integrated Child Development Scheme SAUBHAGYA SahajBijliHarGhar Yojana
ICT Information and Communication Technology Sl. No. Serial Number
ITDA Integrated Tribal Development Agency SSA SarvaSiksha Abhiyan
ISS Interest Subvention Scheme SIRD State Institute for Rural Development IIPA
165 | P a g e
MDM Mid-Day Meal Programme STs Scheduled Tribes
MNREGA Mahatma Gandhi National Rural Employment Guarantee Act WAN Wide Area Network

A. Basic Details of Panchayats

Sl.
No
Documents Whether such Act/
document made
Year of Publication/
Enactment/ Order
Sending all document(s)
Yes Some
1. Panchayat Act of State
2. Amendment(s) on State Panchayat
Act

3. Enactment/notification on SFC
4. Amendment on SFC
5. Latest Report of SFC
6. ATR on report of SFC
7. Office Orders on the ATRs
8. Act on SEC
9. Amendment(s) on SEC
10. Circulars on and by SEC
11. Election Notification by SEC
12. Act on DPC
13. Amendment on DPC
14. State Guidelines on DPC
15. Circulars on DPC
16. Annual Report on Panchayats for the
year 2017- 18

17. Panchayat Rules
18. Recruitment Rules for Panchayat
Officials

19. Compilation of Acts/Amendments/
Rules

20. Service Rules for Panchayat Officials
21. Social Audit Orders and Rules
22. RTI Provisions
23. Gram Panchayat Development Plan
(GPDP)
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166 | P a g e
24. Key Performance Indicators Report

Documents Sought: Please send the following reports/ documents/ any other relevant material and questionnaire duly filled in to Prof. V N
Alok, Indian Institute of Public Administration, Indraprastha Estate, and Ring Road, New Delhi 110002. Please email soft copies of reports/
documents/ any other relevant material and questionnaire to vnalokindex@gmail.com.

B. Constitution and Function of District Planning Committee (DPC)

Please answer question no. 1 to 6 and 9 & 10 in “Yes” or “No”. Please mention numbers in question no. 7 and 8
Sl.
No.
Questions Response
1. Whether notification/order for DPC is issued by the State Government?
2. Whether DPCs are functional and holding meetings for planning purposes; integrating grass root rural
and urban plans to District Plans?

3. Are there guidelines or rules to make the DPCs functional?
4. Whether the State has issued any guidelines for the preparation of District Plan?
5. Whether the District Plans takes into consideration the proposals of SHGs, International NGOs, and
Financial Institutions etc.?

6. Whether Chairperson of DPC is an elected representative of Panchayats/ Municipal Authorities?
7. How many DPCs submitted integrated plan to State government in 2017 – 18?
8. How many DPCs have submitted integrated plan to State government in 2018– 19 till date?
9. Does the Plan of DPC form the part of State plan?
10. Are the Gram Panchayats involved in planning at the local level?
Please write the composition of DPC. Please mention, from which background nominated members are taken.
What is the ratio of elected representatives of Panchayats and Municipalities in the total membership of DPC?





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167 | P a g e
C. Role of Panchayats in Parallel Bodies/Institutions
Please tick in appropriate box to show the nature of control of Panchayats on parallel bodies? The list is only indicative. Please add other
important parallel bodies.

Sl.
No.
Status/Parallel Bodies DRDA Education Water Health and
Sanitation

Agriculture
Corporation
Tribal
Development
(ITDA)
Any other
1. Parallel body merged with the
Panchayat Institution

3. Parallel body made an unit of the
Panchayat Institution

4. Function of parallel body limited
to Fund/accounts Management

5. Parallel body is Presided/ Chaired
by Elected Representatives of the
Panchayat

6. Elected Representatives of
Panchayats are represented in
Board of the parallel body

7. Parallel Body remains separate,
but under the control of the
Panchayat.

8. Parallel Body remains separate
and not under the control of the
Panchayat Institution

8. Please mention recent
initiative(s) that has/have been
undertaken since 1
st
April 2017
regarding role of Panchayats in
parallel bodies.



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168 | P a g e


D. Autonomy to Panchayats

Please write the designation(s) of the authority(ies) who has/have the power to Suspend or Supersede (Dissolve) Panchayats/ Suspend or
Dismiss Representatives of Panchayats/ resend the resolutions for reconsideration or quash such resolutions.[Please name the authority/
official whose approval is needed.]

Category Level of
Panchayats
Suspend
representatives/
Panchayats
Resend for reconsideration of resolutions Dismiss/Supersede/
Dissolve/Quash
Representatives
of
District Panchayat **************************************
***

Block Panchayat **************************************
***

Gram Panchayat **************************************
***

Panchayat Bodies
of
District Panchayat **************************************
***

Block Panchayat **************************************
***

Gram Panchayat **************************************
***

Resolutions of District Panchayat
Block Panchayat
Gram Panchayat
Is there any provision of charge sheet
by State Government? (Yes/No)
Gram Panchayat Block Panchayat District Panchayat

Please mention recent initiative(s) that has/have been undertaken in this regard since 1
st
April 2017:



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169 | P a g e
E. Functions Assigned to Panchayats and Actual Involvement of Panchayats
Please tick the appropriate box, if answer is “Yes”. Add other important functions but not the revenue collecting functions in this table at the
end.

Sl.
No.
Functions Delegated by
Legislature
Level of Panchayats Actually Undertaking
(Please tick the appropriate box)
Gram Panchayat Block Panchayat District
Panchayat
Core Functions
1. Drinking Water, Water Supply for
Domestic Purpose

2. Roads
3. Culverts
4. Bridges
5. Ferries
6. Waterways
7. Other means of Communication
8. Building Control
9. Land Use and Building Regulation
10. Maintenance of Community Assets
11. Street Lighting, Parking Lots, Bus Stops
12. Public Conveniences
13. Parks, Gardens, Playgrounds (Civic
Amenities)

14. Primary Health Centre/Community Health
Centre

15. Sanitation & Solid Waste Management
16. Cremation & Burial
17. Public Safety (Noxious Vegetation, Pests &
Vermin’s)

Welfare Functions
18 Poverty Alleviation Programmes IIPA
170 | P a g e
19. Family Welfare
20. Women & Child Development
21. Social Welfare, Welfare of Handicapped &
mentally retarded

22. Welfare of the weaker sections, and in
particular, of the Scheduled Castes & the
Scheduled Tribes

23. Public Distribution System
24. Vital Statistics Including Registration of
Births & Deaths

25. Elementary Education
26. Adult & Non-Formal Education
27. Secondary Education
28. Technical Training & Vocational Education
29. Libraries
30. Promotion of Cultural , Educational and
Aesthetic Aspects

31. Slum Improvement & Up gradation
32. Fire Services
33. Rural Housing
34. Non-conventional Energy
Agriculture and Allied Functions
35. Watershed Development
36. Water supply for Agriculture Purpose,
Minor Irrigation, Water Management

37. Agriculture & Agricultural Extension
38. Land Improvement
39. Implementation of Land Reforms
40. Land Consolidation
41. Soil Conservation
42. Animal Husbandry
43. Dairying IIPA
171 | P a g e
44. Poultry
45. Fisheries
46. Social Forestry
47. Farm Forestry
48. Minor Forest Produce
49. Market & Fairs
50. Regulation of Slaughterhouses
51. Prevention of Cruelty to Animals
Industries
52. Water supply for Commercial and
Industrial Purpose

53. Small Scale Industries
54. Food Processing Industry
55. Khadi, Gram & Cottage Industry
56. Rural Electrification & Distribution
57. Any other
58. Any other
59. Any other
60. Any other


F. Involvement of Panchayats in Important Schemes & Scheme Based Performance Measures
1. Please tick the appropriate box (es) indicating respective activities undertaken by Panchayats under each scheme.

Sl.
No
Important Union Government Schemes

Levels of Panchayats Actually undertaking in each
scheme
A.

Centrally Sponsored Schemes

Gram
Panchayats
Block
Panchayats
District
Panchayats
1. National Social Assistance Program (NSAP)
2. Mahatma Gandhi National Rural Employment Guarantee Programme (MNREGP)
3. Scheme(s) for Development of Scheduled Castes
4. Scheme(s) for Development of Scheduled Tribes IIPA
172 | P a g e
5. Pradhan MantriKrishiSinchai Yojana(PMKSY)
6. Green Revolution-Krishonnatti Yojana
7. White Revolution- RashtriyaPashudhanVikas Yojana
8. Blue Revolution(Integrated Development of Fisheries)
9. Pradhan Mantri Gram Sadak Yojana (PMGSY)
10. Pradhan MantriAwas Yojana-Gramin (PMAY-G)
11. National Rural Drinking Water Mission(NRDWM)
12. National Rural Health Mission (NRHM)
13. Swachh Bharat Mission-Gramin(SBM-G)
14 National Programme of Mid-Day Meal in Schools
15. Integrated Child Development Services(ICDS)
16. DeendayalAntyodaya Yojana-National Rural Livelihood Mission(DAY-NRLM)
17. RashtriyaSwasthyaBima Yojana
18. National Education Mission(NEM)
19. Shyama Prasad MukherjiRurban Mission(SPMRM)/National Rurban
Mission(NRuM)

20. Rashtriya Gram Swaraj Abhiyan (RGSA)
21. Pradhan MantriSahajBijliHarGhar Yojana (Rural)- PM-SAUBHAGYA
22. Pradhan MantriAnnadataAaySanraksHan Abhiyan(PM-AASHA)
23. National Mission for Sustainable Agriculture(NMSA)
B. Central Sector Schemes
1. Crop Insurance Scheme(Pradhan MantriFasalBima Yojana)
2. Interest Subvention Scheme (for Short Term Credit to Farmers)
C. Other Schemes
1. DeenDayal Panchayati Raj Infrastructure Scheme
2. DeenDayalUpadhyaya Gram Jyoti Yojana
3. National e-Governance Programme(NeGP)
D. State Government Schemes
1. Pension Schemes
2. Health and Sanitation
3. Agriculture and Employment
4. Any other (specify) IIPA
173 | P a g e
Scheme Based Performance Measures Gram Panchayat Block Panchayat District Panchayat
1 Number of Panchayats availing Action Soft (a scheme implementation &monitoring
software) or any such equivalent application in place?






Mission Antyodaya 2016-17 2017-18

2

Number of Panchayats covered under Mission Antyodaya in the following financial
years?

3 Number of Antyodaya Panchayats marked on NREGAsoft portal in the following
financial years?



G. 14
th
Finance Commission (14
th
FC) Grants to the Panchayats

G.1 Basic Grants
Please mention amount in Rs. Lakh and Date/ Month/Year in the format DD/MM/YYYY.

Installments of FFC
Grants
FFC Grants Released by Govt. of India Released by State
Amount Received by State on
DD/MM/YYYY
Amount Released to Panchayats on
DD/MM/YYYY
1
st
for the year 2014-15
2
nd
for the year 2014-15
1
st
for the year 2015-16
2
nd
for the year 2015-16
1
st
for the year 2016-17
2
nd
for the year 2016-17
1
st
for the year 2017-18
2
nd
for the year 2017-18
1
st
for the year 2018-19
2
nd
for the year 2018-19


G.2 Performance Grants
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174 | P a g e
Sl.
No.
Performance Grants
2017-18


2018-19
1. Whether Performance Grants have been released to Gram Panchayats for following financial years? (Yes/No)


2. If yes, please mention the number of Gram Panchayats that have qualified to get Performance Grants based on
scores as mentioned below:




a. Number of Gram Panchayats which have scored 71 and above and got 100 % of allocation
b. Number of Gram Panchayats which have scored between 61 and 70 and got 80 % of allocation
c. Number of Gram Panchayats which have scored between 50 and 60 and got 70 % of allocation
d. Number of Gram Panchayats which have scored upto 49 and got 50 % of allocation


Mandatory Conditions Related to Performance Grants 2015-16

2016-17

3. How many Gram Panchayats have submitted Audited Annual Account for the following financial years?



4. Number of Panchayats where an increase in Own Sources of Revenue is reflected in the Audited Annual
Account for the following financial years?

5. Number of Gram Panchayat which have uploaded their GPDP on PlanPlus portal for following financial years? 2017-18

2018-19



6. How many Gram Panchayats have updated Sector wise Expenditure on dashboard of following e-application in
the following financial years?
2016-17 2017-18
a) PlanPlus portal
b) RAGAV
c) Any other
Additional Conditions Related to Performance Grants 2016-17 2017-18
7. Number of Gram Panchayats declared Open Defecation Free (ODF) status in the following financial years?

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175 | P a g e
8. Number of Gram Panchayats achieved universal immunization (0-2 year age group children) status in the
following financial years?



H. State Finance Commission (SFC)

Whether qualifications and manner of selection of members of SFC are prescribed in the Act/ Rules?
(Yes/No)


Period Covered MM/YY of Formation MM/YY of Submission of
Report
MM/YY of ATR laid before the
Legislature
1
st
SFC
2
nd
SFC
3
th
SFC
4
th
SFC
5
th
SFC
Please State the reasons, if the gap is more than 5 years in the constitution of two SFCs, if there is substantial delay in submission of report by the SFCs
or there is substantial delay in laying of the same in the Legislature.

Please list 5 most important recommendations of last SFC on which ATR is laid before the legislature. Also illustrate the ATR on those
recommendations. Please State, if major recommendations of (e.g. Resource Sharing, Assignment of Tax Proceeds, and Grants) have been accepted.




Whether any fresh allocation, on the basis of SFC, has been made for Panchayats since 1
st
April 2017?


I. Money Transfers to Panchayats on account of the SFC recommendations (Rupees in Lakhs) IIPA
176 | P a g e

Financial Year Amount Recommended Amount Budgeted Amount Sanctioned Amount Released
2014-15
2015-16
2016-17
2017-18
2018-19

J. Empowerment of Panchayats to Impose and Collect revenue (Taxes/ Fees/ Duties/ Cess/ Toll/ Rent etc.)
Please tick appropriate boxes, if Panchayats are empowered and/or actually collecting taxes. Please add any other Panchayat revenue not in
the list.
Sl.
No.
Name of
Revenues
Please tick
only those
revenues
collected by
State agencies
on behalf of
Panchayats
Please tick only
those revenues
collected by the
State but
transferred to
Panchayat
Gram Panchayat Block Panchayat District Panchayat
Empowered
to collect
Actually
collecting
Empowered
to collect
Actually
collecting
Empowered
to Collect
Actually
collecting
1. House or
Building tax

2. Surcharge on
house or
property tax

3. Tax on
agriculture land
for specific
purpose

4. Cess on land
revenue
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177 | P a g e
or surcharge
5. Surcharge on
additional
stamp duty

6. Tax on
professions,
trades, calling,
etc.

7. Entertainment
tax

8. Pilgrim tax or
fees

9. Education Cess
10. Tolls
11. Vehicle tax
12. Cattle tax
13. Conservancy
rate

14. Lighting rate
15. Water rate
16. Drainage rate
17. Special tax for
community
civic services or
works

18. Surcharge on
any tax imposed
by Gram
Panchayat

19. Minor Minerals
Tax

20. Pond/Tank
Lease

21. Village Land
Lease
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178 | P a g e
22. Shops Lease
23. Tax on income
from sale or
rent of a
property
(Above Rs. 20
lakhs)

24. Betterment Tax
25. Tax on
cultivable land
lying fallow

26. Tax on
commercial
crops

27. Land cess/
surcharge /
local rate on
lands

28. Land
conversion cess

29. Surcharge on
addl. stamp
duty/ duty on
transfer of
property

30. Any other
Additional questions related to Tax
a. When were the rates of tax(es) last revised? ( Please mention in DD/MM/YY format)

b. Whether Demand Collection Balance (DCB) data available in public domain? If yes, please specify.
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K. GST Implications on Panchayats

Sl.
No.
Questions Response
1. List out the taxes which have been withdrawn from Panchayats due to GST implementation.
2. Any compensatory mechanism/additional grant for Panchayats due to GST
implementation?(Yes/No)

If yes, please elaborate.
3. Is there any fee/tax being levied by Panchayats on sale/purchase of goods in the State?(Yes/No)
If yes, please elaborate.
4. Is there any order issued by the State allowing Panchayats to levy Entertainment tax ?(Yes/No)
If yes, please elaborate.
5. Is Panchayat allowed to deduct tax at source (TDS) under State GST Act?(Yes/No)
If yes, please elaborate with specific provision
If yes, which level of panchayat deducts tax at source?(Please tick in the relevant box) Gram
Panchayat
Block
Panchayat
District
Panchayat

6. Is Panchayat allowed to collect tax at source (TCS) under State GST Act?(Yes/No)
If yes, please elaborate with specific provision IIPA
180 | P a g e
If yes, which level of panchayat collects tax at source?(Please tick in the relevant box) Gram
Panchayat
Block
Panchayat
District
Panchayat


L. Expenditure of Panchayats
Sl.
No.
Item 2015-16 2016-17 2017-18 2018-19
1. Expenditure on Salaries for Panchayat Officials by the
State

2. Expenditure on Salaries paid by the Panchayat
3. Expenses on Operation and Maintenance (O&M)
4. Travel Allowances
5. Capital Expenditures (Under following heads)
a) Water Supply
b) Sanitation and Hygiene related works
c) Drainage & Street
d) Maintenance of Road Infrastructure
e) Maintenance of Community assets
6. Expenditure on Schemes
7. Any Other
8. Total Expenditure made by all Panchayats of the State

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181 | P a g e
M. Gram Sabha (GS)

1. Is there any minimum number of Gram Sabha meetings mandated? (Yes/No)
2. Is there a system in the State to monitor and ensure the mandated quorum of GS meetings in each Panchayat?
(Yes/No)

If so, please elaborate:
3. As per the State Panchayat Act, enumerate the powers and functions of Gram Sabha:
a)
b)
c)
d)
e)
4. Is there a mandated Quorum for Gram Sabha meetings? (Yes/No)
If yes, what is the prescribed quorum of GS in the State?
5. Has the State issued guidelines as to how the Gram Sabha Meetings can be convened? Please elaborate:

6. In case of insufficiency of funds, do the State provide fund to Gram Panchayats for convening Gram Sabha
meetings?(Yes/No)

7. In case of non-convening of Gram Sabha, what are the actions taken by the State, if any?

8.


Elaborate the measures taken by the State to promote people’s assemblies below Gram Sabha, including the following in Gram Panchayats?
a. Ward Sabha:
b. Mahila Sabha:
c. Any other
9. What is the role of Gram Sabha that the State has identified in the following?
a. Planning
b. Budget Preparation
c. Passing of Accounts IIPA
182 | P a g e
d. Social Audit
e. Preparation of BPL List
f. Preparation of Beneficiary list(Under the following schemes)
MGNREGA
PMAY
DDUAAY
Others (Specify)
g. Preparation of Labour Budget under MGNREGA
Recent initiative(s) undertaken since 1
st
April 2017 to strengthen “Gram Sabha”:


N. Gram Panchayat Development Plan (GPDP)

Sl.
No.
Questions Response
1. Number of Gram Panchayat that have formulated GPDP in the State till 31
st
December 2018.
2 Whether such GPDP is being integrated on Plan Plus Software?(Yes/No)
3. Whether any State level Steering Committee has been formulated for convergence of GPDP-
FFC & SHG?(Yes/ No)

4 Numbers of panchayat(s) in the State that has/have received ‘Gram Panchayat Development
Plan Award-2018’.


O. Transparency and Anti-corruption

Sl.
No.
Questions Gram
Panchayat
Block
Panchayat
District
Panchayat
1 Whether the following Panchayats provide information to the public under RTI Act?
(Yes/No)

2 Who is the Information Officer under RTI Act at each Panchayat? (mention their
designations)
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183 | P a g e
3 Who is the 1st Appellate Authority under RTI Act? (mention their designations)
4 Who is the 2
nd
Appellate Authority under RTI Act? (mention their designations)
5 Has the State made any policy for disclosure of information by the Panchayat to the
public? (Yes/No)

If yes, what are the modes used for disclosure of information?
a) Display on Notice Boards
b) Website
c) Others (Specify)
6 Does the State have the provision of Citizens’ Charter at each level of Panchayats?
(Yes/No)

If yes, does the charter have the following? Please tick
a) List of services
b) Procedure for obtaining the service
c) Time required for providing service
d) Grievance redress Mechanism(GRM)
e) Others (Specify)
7 Which institution undertakes the complaints of Panchayat? Please tick
a) Ombudsman
b) Lokayukta
c) Govt. Agency
d) Others (Specify)
9 Number of cases reported for action by the above institutions in the last fiscal year.
(Give numbers)

10 Number of complaints received against the following. (Please give numbers) Elected
Representatives
Panchayat
Officials
Others
(Specify)

Please describe recent initiatives undertaken since 1
st
April 2017 with respect to transparency improvement in Panchayats:


P. Infrastructure of Panchayats (Physical and Digital) IIPA
184 | P a g e

Please write numbers. The list is only indicative. Please add other most important infrastructures in last rows.

Sl.
No.
Equipments & Applications Gram Panchayat Block Panchayat District Panchayat
1. How many Panchayats have Panchayat ‘Ghar’ (Pucca
building)?

2. How many Panchayats have Computers, Printers,
Scanners & other peripherals?

3. How many Panchayats have Telephone?
4. How many Panchayats have Internet?
5. Has the State Government taken any measure for construction of new GP buildings, repair of existing buildings, construction of barrier free access,
construction of toilets (including separate toilets for women) and electricity and water connections?


6. Staff Structure of Gram Panchayats Secretary Community
Resource
Person
Junior
Engineers
Technical
Assistants
Data
Entry
Operators
Accountant Others (Pl.
specify)
Please tick, if applicable
How many Gram Panchayats have the following
staff?(in Numbers)

Who pays the salary of the above staff?
What percentage of Panchayat staff salaries are
met by the State?

20% - 40%
41% - 60%
61% - 80%
81% - 100%
Any other (Please specify)
Recent initiatives taken since 1
st
April 2017 with respect to infrastructure development of Panchayats :

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185 | P a g e
Q. Training Institutions and Training Activities

Does the State have its own capacity building framework to train the elected representatives and panchayat
officials? (Yes/No)


If yes, please specify

R. e-Connectivity & ICT Measures Taken

Sl.
No.

Questionnaire Gram
Panchayat
Block Panchayat District
Panchayat
1. How many Panchayats have computers? (in numbers)
2. How many Panchayats use wireless connectivity?
3. How many Panchayats is part of the National Optical Fiber Network?
4. How many Panchayats have their e-mail address (es)?

Thank You!