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February 22 @ 7:00 am - 11:30 pm


It has been thirty years since the 73rd and 74th Constitutional Amendment Acts came into effect, envisioning local bodies in India as institutions of local self-government.

Instituted in 2004, the Ministry of Panchayati Raj aimed to strengthen rural local governments in line with these amendments.

The fiscal devolution, a key aspect, encourages local bodies to generate their own revenues.

Despite these efforts, recent data raises concerns about the financial sustainability of Panchayati Raj Institutions (PRIs).

Salient Features of the 73rd and 74th Amendments:

  • Constitutional Additions: Added Part IX (“The Panchayats”) and Part IXA (“The Municipalities”) to the Constitution.
  • Basic Units: Gram Sabhas for villages and Ward Committees for Municipalities, following a three-tier system.
  • Reservation Provisions: Reserved seats for SCs, STs, and women at various levels.
  • Tenure: Uniform five-year term with elections to constitute new bodies before term expiry.
  • Developmental Planning: Empowered Panchayats to prepare plans for economic development and social justice.
  • Revenue and Finances: Dependent on budgetary allocation, revenue share, Central Government programs, and Union Finance Commission grants.

Current Status of Finances of PRIs:

  • Revenue Statistics: In FY 2022-23, panchayats recorded Rs 35,354 crore total revenue, with only Rs 737 crore from own tax revenue.
  • Revenue Per Panchayat: On average, each panchayat earned Rs 21,000 from own tax revenue and Rs 73,000 from non-tax revenue.
  • State Revenue Share: Panchayats’ share in State revenue remains minimal, varying widely across states.

Need for Self-Sufficiency:

  • Excessive Reliance on Grants: Panchayats earn only 1% of revenue through taxes, with 80% from the Centre and 15% from States.
  • Disparities Across States: Wide variations in revenue earned per panchayat among states.
  • General Aversion Towards Generating Income: Panchayats show less interest in own-source revenue due to increased grants from the Central Finance Commission (CFC).

Suggestions for Boosting Financial Resources of PRIs:

  • Expert Committee Report: Detailed State Acts on tax and non-tax revenue collection.
  • Establishing Conducive Environment: Panchayats to decide tax and non-tax bases, rates, periodic revisions, and enact effective tax management laws.
  • Diversifying Non-Tax Revenues: Exploring potential in fees, rent, income from investments, and innovative projects.
  • Leveraging Local Resources: Gram sabhas play a role in leveraging local resources for revenue generation.
  • Fostering Partnerships: Promoting entrepreneurship, fostering partnerships, and enhancing effectiveness in revenue generation.

Related Initiatives:


  • Launched on National Panchayati Raj Day 2020.
  • Aims to provide “Record of Rights” to every rural household owner.
  • Enables economic progress in rural India through land rights.

e-Gram Swaraj e-Financial Management System:

  • Simplified Work Based Accounting Application for Panchayati Raj.
  • Streamlines financial management processes for local governance.
  • Enhances transparency and accountability in financial transactions.

Geo-Tagging of Assets:

  • “mActionSoft” developed by the Ministry of Panchayati Raj.
  • Mobile-based solution for capturing photos with Geo-Tags (GPS Coordinates).
  • Facilitates tracking and monitoring of assets created through government programs.

Citizen Charter:

  • Platform provided by MoPR to upload Citizen Charter documents.
  • Focuses on improving the standard of services delivered by PRIs.
  • Promotes accountability and citizen empowerment in local governance.

Revamped Rashtriya Gram Swaraj Abhiyan (2022-23 to 2025-26):

  • Aims to reimagine PRIs as vibrant centers of local self-governance.
  • Special focus on Localisation of Sustainable Development Goals (LSDGs) at grassroots level.
  • Emphasizes a collaborative approach involving Central Ministries, State Line departments, and stakeholders.


While constitutional amendments aimed at empowering local bodies, the recent data on PRIs’ finances highlights challenges.

Excessive reliance on grants, disparities across states, and aversion to generating own income pose significant hurdles.

Educating elected representatives and the public on the importance of self-sufficiency is crucial for PRIs to evolve into effective local self-governing institutions.

Mains Question:

  1. In your view, how significantly has the decentralization of power in India altered the governance dynamics at the local level? (150 WORDS)


February 22
7:00 am - 11:30 pm
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