Local rural bodies should raise their own resources, says Arvind Panagariya

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Local rural bodies must raise some resources of their own, not only for financing needs but also to strengthen the participation of citizens, Arvind Panagariya, Chairman of the 16th Finance Commission, said on Thursday. 

Speaking at a conclave of finance commissions titled ‘Devolution to Development’, Panagariya said, “When citizens pay taxes, then they are aware of services that ought to be rendered to them. It is an important way to strengthen the participation of the local bodies.”

 

The Commission in its visit across 11 states so far has found a convergence between rural local bodies and urban local bodies on not just finance matters but also on issues which have been considered more urban such as plastic and non-plastic garbage separation, and carbon coupons, among others.

 

“If citizens at local levels know what they want and need, then they can convert it into a more activist kind of demand…It will mobilise citizenry,” the 16th Finance Commission chairperson said.

 

Several states do not have proper State Finance Commissions (SFCs) for fund distribution to urban local bodies and panchayati raj institutions which impairs their functioning.

 

SFC is a constitutional body that reviews and revises the financial position of Panchayati Raj institutions and urban local governments. It is appointed by the state government every five years.

 

The event organised by the Panchayati Raj Ministry brought together Central and SFCs to foster a synergistic dialogue between Central and State-level constitutional finance bodies and to establish a robust framework for the financial empowerment of Panchayats. 

 

Except for Arunachal Pradesh, all states have SFCs in place, the latest being Gujarat, which formed its commission on November 4 after the nudge from the 15th Finance Commission.