Lok Sabha Question No. 3087 (UNSTARRED), answered on 2022-03-22
Subject: Self Financed Gram Panchayats
Ministry: PANCHAYATI RAJ
Asked by: Pratibha Singh

## GOVERNMENT OF INDIA

## MINISTRY OF PANCHAYATI RAJ LOK SABHA UNSTARRED QUESTION NO. 3087

ANSWERED ON 22.03.2022

## SELF FINANCED GRAM PANCHAYATS

## 3087. SHRIMATI PRATIBHA SINGH:

Will the Minister of PANCHAYATI RAJ be pleased to state:

- (a) whether the Government is planning to make Gram Panchayats self financed;
- (b) if so, the steps taken in this regard; and
- (c) the impact of making Rural India self-financed in the economy?

## ANSWER

## THE MINISTER OF STATE FOR PANCHAYATI RAJ

## (SHRI KAPIL MORESHWAR PATIL)

(a)  & (b) Panchayat, being 'Local Government', is a State subject and part of State list of Seventh Schedule of Constitution of India. Mandate for setting up of Panchayats is provided by Article 243 in Part IX of the Constitution of India.

The  Constitution  envisages  the  panchayats  to  be  effective  instruments  of  selfgovernment.  In  terms  of  Article  243  G,  the  state  legislatures,  by  law,  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.

For  financial  empowerment  of  Panchayats,  provisions  have  been  made  in  terms  of Article 243H, Article 280(3)(bb) and Article 243-I of the Constitution.

In terms of Article 243H, 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.

In terms of Article 280(3)(bb), it shall be the duty of the Central Finance Commission to  make  recommendations  to  the  President    as  to  the  measures  needed  to  augment  the Consolidated Fund of a 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.

In terms of Article 243-I, 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

- (i) the  principles  which  should  govern  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; the determination  of  the  taxes,  duties,  tolls  and  fees  which  may  be  assigned  to,  or appropriated  by,  panchayats,  and  the  grants-in-aid  to  the  panchayats  from  the consolidated fund of the state;
- (ii) the measures needed to improve the financial position of the panchayats and
- (iii) any other matter referred to the commission by the Governor in the interests of sound finance of the panchayats.

(c)  This will have the effect of making the Panchayats as self-reliant and vibrant institutions of local governance and empower them for the effective delivery of services to strengthen the rural economy.

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