Lok Sabha Question No. 87 (UNSTARRED), answered on 2021-02-02
Subject: Funds to Gram Panchayats
Ministry: PANCHAYATI RAJ
Asked by: Rajyavardhan Singh Rathore

## LOK SABHA UNSTARRED QUESTION NO. 87 ANSWERED ON 02.02.2021

## FUNDS TO GRAM PANCHAYATS

## 87. COL.RAJYAVARDHAN RATHORE:

Will the Minister of PANCHAYATI RAJ be pleased to state:

(a)  whether  the  73rd  Constitutional  Amendment,  in  addition  to  giving  local  self  Government constitutional  status,  also  endowed  Gram  Panchayats  with  funds,  and  divested  financial  authority regarding fund usage to their Sarpanch and if so, the details thereof;

(b) the details of the total amount of funds allocated and released in the past two years through Central and State financial commissions, State-wise;

(c) the amount disbursed by each State to the respective Gram Panchayats in the last two years;

(d) the time when the amount was disbursed to the Gram Panchayats by each states and whether the funds provided by the Centre was transferred within fifteen days as mandated by the law;

(e) the details of the action taken against States in cases where the funds were not disbursed in a timely manner; and

(f)  the  details  of  the  steps  being  taken  to  ensure that the autonomous  economic development being fulfilled and social justice goals of Panchayats are being fulfilled?

## ANSWER

## THE MINISTER OF PANCHAYATI RAJ (SHRI NARENDRA SINGH TOMAR)

(a) The 73 rd Constitution Amendment gave the constitutional status to the Panchayats as institutions of rural  local  governance.  These local governments, however, work on the principle of delegation of administrative power. Constitution of local bodies is mandatory but their powers, including those on taxes, duties, tolls, fees and fund are recommendatory.

Article 243G of the Constitution of India lays down powers, authority and responsibilities of Panchayats.  Accordingly, the state legislatures, by law, may endow the Panchayats to be effective instruments of self-government and may provide for devolution of powers and responsibilities upon Panchayats, at the appropriate level, subject to specified conditions with respect to the preparation of plans  for  economic  development  and  social  justice  and  implementation  of  schemes  for  economic development  and  social  justice  as  may  be  entrusted  to  them  including  those  in  relation  to  matters included in the eleventh schedule.

Article 243Hof the Constitution of India lays down provisions relating to powers to impose taxes by, and funds of, the Panchayats. In terms of this Article, the state legislatures may, by law, authorize the Panchayats to levy, collect and appropriate taxes, duties, tolls and fees; assign to the

Panchayats such taxes, duties, tolls and fees subject to conditions and limits; provide for grants-in-aid to the Panchayats from the consolidated fund of the state, and create its own fund to credit its money to.

Article 243-I of the Constitution of India provides for constitution of Finance Commission to review financial position of Panchayats and to make recommendations therein to the Governor. In terms of this Article, the Governor shall constitute state finance commission every five years to review the financial position of the Panchayats and make recommendations to the Governor as to (a) the principles which 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, which may be divided between them and the allocation between the Panchayats at all levels of their respective shares of such proceeds, (ii) the determination of the taxes, duties, tolls and fees which may be assigned to, or appropriated by, Panchayats, and (iii) the grants-in-aid to the Panchayats from the consolidated fund of the state; (b) the measures needed to improve the financial position of the Panchayats and (c) any other matter referred to the commission by the Governor in the interests of sound finance of the Panchayats.

Article  280  (3)  (bb)  was  also  inserted  in  the  Constitution  of  India  by  73 rd Constitution Amendment Act. Article 280 (3) (bb) provides for the Central Finance Commission to recommend the measures  needed  to  augment  the  Consolidated  Fund  of  State  to  supplement  the  resources  of  the Panchayats in the State on the basis of the recommendations made by the Finance Commission of the State.

However, the 73rd Constitutional Amendment did not have any provision regarding financial authority for fund usage by the Sarpanches.

(b)  &(c) The details of State-wise allocation and release of Fourteenth Finance Commission (FFC) Grants to the States for FY 2018-19 and 2019-20is as per Annexure-I. The details of State Finance Commission funds allocated and released to Panchayats by the State Finance Commissions being under the purview of the State Governments are not maintained by the Ministry of Panchayati Raj (MoPR).

(d)&(e) The States are required to transfer the FFC Grants received from the Ministry of Finance (MoF) within 15 days of the receipt to the Gram Panchayats. The details of such transfer are to be reflected by the States in their Utilisation Certificate (UC). In case of delay, penal interest at the applicable bank rate of RBI are to be paid to the Gram Panchayats for the period of delay beyond allowed limit. As per details reported in the respective UCs submitted to MoPR, the States have paid total of Rs.4633.41Lakhs as penal interest on account of delayed transfer of FFC Grants to the Gram Panchayats for FY 2018-19 and 2019-20, the details of which are given at Annexure -II.

(f) The FFC award created enormous opportunity for responsive local governance at the cutting edge institutional level of the Gram Panchayats. The guidelines issued for the FFC Award for the release and utilization  of  the  local  bodies  grant  stipulated  that  proper  plans  are  to  be  prepared  by  the  gram Panchayats for the basic services within the functions devolved to them as per the State laws before incurring  expenditure  under  the  FFC  award.  Ministry  of  Panchayati  Raj  (MoPR)  prepared  model guidelines for Gram Panchayats Development Plan (GPDP) and shared the same with all the States during 2015. Based upon these model guidelines, all the states notified their State specific guidelines for GPDP and have been formulating GPDP since then. Further, with a view to address the challenges as well as opportunities emerging to fulfill the needs and aspirations of rural people through effective convergent  and  participatory  planning  to  Rural  Local  Governments,  the  Ministry  has  revised  the guidelines in 2018 and shared the same with the States for amplifying their respective Guidelines.  The revised guidelines ensure that these plans go beyond infrastructure, cover areas like poverty reduction, address  social  issues  and  needs  of  vulnerable  groups  and  thus  address  the  goals  of  economic development and social justice by the Panchayats.

In order to enable the Gram Panchayats for preparation of the GPDP in an evidence based and structured manner, the People's Plan Campaign (PPC) was launched as 'Sabki Yojana Sabka Vikas' in the year 2018 during 2nd October to 31st December. The campaign was also rolled out during 2019 and 2020. In implementing PPC, structured Gram Sabhas were held for preparing GPDP for the respective financial years. The Campaign was implemented effectively inter-alia in partnership with the State and Local Governments by capacitating the Gram Panchayats (GPs) /Gram Sabhas for making the entire process of GPDP formulation participatory and convergent.

******

(Annexure  referred  to  in  reply  to  parts  (b)  &  (c)  of  the  Lok  Sabha  Unstarred  Question  No.  87 answered on 02.02.2021)

State-wise  Allocation  and  Release  of  Fourteenth  Finance  Commission  (FFC)  Grants  for  Gram Panchayats for FY 2018-19 and 2019-20

(Rs. In crore)

| Sl. No.   | States            | 2018-19    | 2018-19                                  | 2019-20    | 2019-20                                  |
|-----------|-------------------|------------|------------------------------------------|------------|------------------------------------------|
| Sl. No.   | States            | Allocation | Released &Transferred to Gram Panchayats | Allocation | Released &Transferred to Gram Panchayats |
| 1         | Andhra Pradesh    | 1947.32    | 1729.23                                  | 2622.13    | 2336.56                                  |
| 2         | Arunachal Pradesh | 184.49     | 163.83                                   | 248.44     | 221.38                                   |
| 3         | Assam             | 1218.82    | 1082.32                                  | 1641.19    | 1462.45                                  |
| 4         | Bihar             | 4729.38    | 4199.71                                  | 6368.25    | 5674.70                                  |
| 5         | Chhattisgarh      | 1180.02    | 1047.86                                  | 1588.94    | 1415.89                                  |
| 6         | Goa               | 30.10      | 26.73                                    | 40.53      | 36.12                                    |
| 7         | Gujarat           | 1942.96    | 1725.36                                  | 2616.26    | 2331.33                                  |
| 8         | Haryana           | 873.86     | 775.99                                   | 1176.68    | 1048.53                                  |
| 9         | Himachal Pradesh  | 407.24     | 361.63                                   | 548.36     | 488.64                                   |
| 10        | Jammu &Kashmir*   | 779.40     | 544.83                                   | 1049.49    | -                                        |
| 11        | Jharkhand         | 1360.62    | 1208.24                                  | 1832.12    | 1632.59                                  |
| 12        | Karnataka         | 2090.10    | 1841.54                                  | 2814.39    | 2504.13                                  |
| 13        | Kerala            | 904.03     | 802.78                                   | 1217.30    | 1084.73                                  |
| 14        | Madhya Pradesh    | 3050.41    | 2708.78                                  | 4107.48    | 3660.14                                  |
| 15        | Maharashtra       | 3383.28    | 3004.37                                  | 4555.70    | 4059.55                                  |
| 16        | Manipur           | 46.36      | 41.17                                    | 62.43      | 55.63                                    |
| 17        | Odisha            | 1991.48    | 1768.44                                  | 2681.59    | 2389.54                                  |
| 18        | Punjab            | 920.58     | 817.48                                   | 1239.58    | 1104.58                                  |
| 19        | Rajasthan         | 3067.8     | 2724.22                                  | 4130.90    | 3681.01                                  |
| 20        | Sikkim            | 33.41      | 29.67                                    | 44.99      | 40.09                                    |
| 21        | Tamil Nadu        | 1975.07    | 1753.87                                  | 2659.50    | 1821.11                                  |
| 22        | Telangana         | 1209.53    | 1071.59                                  | 1628.68    | 1451.30                                  |
| 23        | Tripura           | 75.53      | 67.07                                    | 101.71     | 90.63                                    |
| 24        | Uttar Pradesh     | 8050.34    | 7148.74                                  | 10840.04   | 9659.47                                  |
| 25        | Uttarakhand       | 423.64     | 376.19                                   | 570.44     | 508.31                                   |
| 26        | West Bengal       | 3193.39    | 2740.69                                  | 4300.01    | 3703.25                                  |
|           | Total             | 45069.16   | 39762.32                                 | 60687.13   | 52461.65                                 |

Annexure-II answered on 02.02.2021)

(Annexure referred to in reply to parts (d) & (e) of the Lok Sabha Unstarred Question No. 87 Statement showing the amount of interest paid by States to Gram Panchayats for delayed release of Basic Grant under Fourteenth Finance Commission (FFC) during 2018-19 and 2019-20.

| Sl. No.   | State             | Interest paid (Rs. In lakh)   | Interest paid (Rs. In lakh)   | Total Interest paid (Rs. In lakh)   |
|-----------|-------------------|-------------------------------|-------------------------------|-------------------------------------|
| Sl. No.   | State             | For FY 2018-19                | For FY 2019-20                | Total Interest paid (Rs. In lakh)   |
| 1         | Arunachal Pradesh | 163.49                        | -                             | 163.49                              |
| 2         | Assam             | 16.01                         | -                             | 16.01                               |
| 3         | Bihar             | 349.50                        | -                             | 349.50                              |
| 4         | Chhattisgarh      | 436.64                        | -                             | 436.64                              |
| 5         | Goa               | 2.58                          | -                             | 2.58                                |
| 6         | Jharkhand         | 536.26                        | -                             | 536.26                              |
| 7         | Kerala            | -                             | 26.75                         | 26.75                               |
| 8         | Punjab            | 228.04                        | -                             | 228.04                              |
| 9         | Rajasthan         | 339.60                        | 1895.35                       | 2234.95                             |
| 10        | West Bengal       | -                             | 639.19                        | 639.19                              |
| Total     | Total             | 2072.12                       | 2561.29                       | 4633.41                             |

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