Describe the functional devolution of Panchayat? How activity mapping doesis done in
Panchayat?
Financial decentralisation has progressed to a very limited extent as resource flows are
determined by the implementational guidelines for state and central government antipoverty schemes.
The scope for local revenue mobilisation is very restricted, resulting in
a high level of dependence on fund flows from higher levels of government. Elected
representatives, especially in gram panchayats, exercise minimal influence over local
expenditure priorities. In practice, the recommendations of state finance commissions
governing panchayat finances are often ignored by their respective state governments
usually on the grounds of resource constraints. Most state governments in India are
experiencing fiscal deficits and are reluctant to devolve greater expenditure autonomy to
local governments. The budget for capital expenditure is very limited since recurrent salary
costs absorb the lion’s share of resources and the bureaucracy is very resistant to reform.
Political commitment alone cannot ensure well-functioning panchayati raj institutions and
urban bodies in the absence of transfer of sufficient powers; responsibilities, and resources
to the lower tiers of government. Across states there has been extremely uneven progress
on fiscal devolution. For the most part, development resources are tied into programmes
determined by state and central governments and subject to narrowly specified spending
parameters and end uses. The role of panchayats in these programmes is generally
restricted to identification of beneficiaries for subsidized housing schemes (Indira Awas
Yojana) and employment generation (Sampoorna Grameen Rojgar Yojana), subject to
ratification by the gramsabha. Small amounts of untied funds are provided for local
development purposes mainly in the form of small-scale infrastructure like village roads
and community buildings. Gram panchayats are empowered to raise modest resources
through local property taxes but these are difficult to collect and only a small proportion
of their funds are raised through this source.
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Only two states have devolved resources on a significant scale to panchayat bodies,
namely, West Bengal and Kerala, both under left-dominated political coalitions. West
Bengal has witnessed the most sustained attempt of any state in the country over a period
spanning twenty-five years to devolve powers and responsibilities to panchayats. This has
been accompanied and in turn fortified by an ambitious and reforms programme to
provide sharecroppers with security of tenure and ownership rights. Under the People’s
Campaign for Decentralised Planning in Kerala, the extent of fiscal devolution was much
greater and faster with nearly 40 per cent of state development resources devolved to
panchayats in the period 1996/97-2000/01. In both states, fiscal devolution provided a
significant amount of untied funds to local bodies and increased the powers and
responsibilities of elected representatives. Financial devolution, however, has not been
accompanied by greater responsibility for revenue raising, which leaves panchayats as well
as municipalities largely dependent on transfers from central and state governments
(Robinson, Mark; 2005)
Effective devolution of decision making on expenditure priorities, and to some extent
revenue-raising powers, is a critical element of successful decentralisation initiatives, as it
provides a legitimate role for elected representatives. Political representation without
responsibility for raising resources and determining expenditure priorities within devolved
budgets is a very limited form of decentralisation that can undermine the legitimacy and
commitment of elected representatives at the local level. Fiscal devolution thus has a direct
bearing on the democratic character and developmental potential of panchayati raj
institutions. Increased availability of resources in panchayats however, does not guarantee
that expenditure priorities will generate development and poverty reduction since these
outcomes are a function of the representativeness of panchayat bodies, the extent and
depth of political participation, and the powers of vested local interests to exert influence,
as well as broader structural factors that condition developmental outcomes.
