• Mention the constitutional provisions for local bodies in the country.
• Highlight the significance of these bodies.
• Discuss the challenges faced by these institutions in financing developmental projects.
• Mention steps ahead regarding financing developmental projects.

Answer:

Envisaged in the Directive Principles of State Policy (DPSP – Article 40 of Indian Constitution) Panchayati Raj Institutions (PRIs) and Urban Local Bodies (ULBs) were given constitutional status through the 73rd and 74th Amendment Act to the Constitution of India. They added Schedule 11 and 12 to the Indian Constitution giving powers to the local bodies.

Importance of the Panchayat system in India as a part of the local government:

• People participation: PRIs working at the grassroots, ensure the opportunity for people’s participation and involvement in the formulation and implementation of rural development programmes.
• Women empowerment: through the provision of reservation of one-third seats for women in PRIs which has even been increased up to fifty per cent by some states (Article 243D of Indian Constitution).
• Empowerment of Depressed sections of society through reservation of one-third of the seats SCs and STs (Article 243D of Indian Constitution)
• Through powers devolved under Schedule 11 (Article 243G), it makes Panchayats as institutions of local governance by responsibilities such as agriculture development, land development, rural development etc.
• District Planning Committee  (Article 243ZD) ensures bottom-up planning of development activities. 

Sources of Finance of PRIs

• Article 243I of Indian Constitution envisages creation of State Finance Commissions to ensure sharing of State finances and Government grants to the PRIs. 

Issues with the funding of PRIs:

• The inadequacy of funds has stood in the way of successful working of the Panchayati Raj.
• The Panchayati Raj bodies have limited powers in respect of imposing cesses and taxes.
• They have very little funds doled out to them by the State Government.
• Further, they are generally reluctant to raise necessary funds due to the fear of losing popularity with the masses.

Other sources the Panchayats can look out for financing developmental projects

• Article 243H – The taxes imposed by the Village Panchayats are an important source of income of Gram Panchayats, such as:
  • taxes on land and houses
  • the custom duty
  • toll tax
  • license fees
• Under Article 243H State Governments may devolve more powers of tax collection.
• Money collected from gifts through Government schemes such as MPLADS also becomes a source of earning for the Panchayat.

Way Forward

PRIs in India are the most important level of governance due to their proximity to people. Their fiscal empowerment can and should be ensured through:

• Other sources the Panchayats by State governments under Article 243G and more powers of taxation under Article 243H.
• Dedicated cadre of panchayat officers to help functioning of elected PRI representatives such as in Karnataka.
• Training should be provided to local representatives to develop expertise so that they contribute more in planning and implementation of policies and programmes.
• States should adopt the concept of ‘activity mapping’, wherein each state clearly delineates the responsibilities and roles for the different tiers of the government.

Mahatma Gandhi a true supporter of village republics said that “If we would see our dream of Panchayat Raj, i.e., true democracy realized, we would regard the humblest and lowest Indian as being equally the ruler of India with the tallest in the land.”

If we have to realise this dream of equal participation of all in governance, empowerment of PRIs should be the cornerstone.