Lok Sabha Question No. 4413 (UNSTARRED), answered on 2023-03-28
Subject: Strengthening of PRIs
Ministry: PANCHAYATI RAJ
Asked by: P. Ravindhranath

## GOVERNMENT OF INDIA MINISTRY OF PANCHAYATI RAJ

## LOK SABHA UNSTARRED QUESTION NO. 4413

ANSWERED ON 28.03.2023

## STRENGTHENING OF PRIS

## 4413. SHRI P. RAVINDHRANATH:

Will the Minister of PANCHAYATI RAJ be pleased to state:

the  details  of  steps  taken/being  taken  by  the  Government  to  increase  the  sources  of  income  of  the village  Panchayats  along  with  the  measures  to  strengthen  the  Panchayati  Raj  Institutions  (PRIs) during the last three years and the current year?

## ANSWER

## THE MINISTER OF STATE FOR PANCHAYATI RAJ

## (SHRI KAPIL MORESHWAR PATIL)

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 self-government. 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.

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.

The  Ministry  has  also  been  implementing  the  Centrally  Sponsored  scheme  of  Revamped Rashtriya  Gram  Swaraj  Abhiyan  (RGSA)  with  the  primary  objective  of  developing  governance capabilities of Panchayati Raj Institutions to deliver on Sustainable Development Goals. The scheme envisages  to  enhance  capabilities  of  Panchayats  for  formulating  holistic  and  inclusive  GPDP converging resources available at GP level for economic development and social justice. The scheme also aims at enhancing capabilities of Panchayats to raise own sources of revenue and provides for interventions relating to gap filling support for economic development and income enhancement in Panchayats.

Further,  Under  Fifteenth  Finance  Commission  (XV  FC),  Grants  to  the  tune  of  Rs.  60,750 crore were allocated for the interim period FY 2020-21 and Rs.2,36,805 Crore are allocated for the period  FY  2021-26  to  Panchayats  in  all  the  three  tiers  and  Traditional  Local  Bodies  and  Sixth Schedule areas in 28 States. The XV FC Grants have two components-Tied and Untied. Tied Grants are to be used for drinking water, rainwater harvesting, water recycling, sanitation and maintenance of ODF status.  Untied  grants  are  to  be  used  for  felt  needs  under  the  29  subjects  enshrined  in  the  XI Schedule of the Constitution of India, except for salaries and other establishment costs. The release of RGSA scheme and Central Finance Commission (CFC) Grants for Rural Local Bodies during the last three years and current year is as under :-

( Rs. in Crore)

| Sl.   | Scheme/ CFC Grant   | Year     | Year     | Year     | Year                       |
|-------|---------------------|----------|----------|----------|----------------------------|
| No.   |                     | 2019-20  | 2020-21  | 2021-22  | 2022-23 (As on 24.03.2023) |
| 1.    | RGSA                | 432.74   | 491.34   | 614.25   | 672.97                     |
| 2.    | CFC                 | 52461.65 | 60750.00 | 44332.89 | 31547.10                   |