Q1) Panchayati Raj Institutions must overcome the ‘dependency syndrome’ for funding to truly function as institutions of self-governance. Analyse.

(150 Words/10 Marks)

ANS:

Panchayati Raj institutions in India generate only about 5% of their revenue and rely heavily on external sources of funding, particularly grants from central and state governments. This lack of capability to generate their own revenue leads to ‘dependency syndrome’.

Reasons for not being able to generate their own revenues:

1. Lack of frameworks for revenue generation: (a) Stage governments have not framed laws/rules to broaden sources of revenue; (b) not given adequate power to levy and collect taxes, fees duties, or tolls
2. Inadequate capacity: (a) limited tax base, shortage of administrative infrastructure and adequately trained staff for tax collection and lack of clear guidelines for introducing new taxes
3. Reluctance to tax: Local bodies are reluctant to tax their own members due to political considerations or fearing backlash.
4. The ability of PRIs to mobilize local resources through innovative means, such as public-private partnerships or local enterprise initiatives, is often underdeveloped.

Following steps can be taken to overcome the dependency syndrome of PRIs:

1. State governments need to provide legal authority to collect taxes/generate revenue as per the provisions of Article 243H (b) devolve greater taxation powers to the local bodies.
2. Participatory funding – (a) Tap private sector [ppp], CSR, and local community as has been done by Bengaluru, Ahmedabad; (b) explore innovative financing mechanisms, such as issuing bonds or engaging in revenue-generating activities.
3. Strengthening Capacity: (a) raining programs for PRI members and staff in areas such as financial management, planning, and resource mobilization; (b) technical assistance to PRIs in developing and implementing revenue enhancement strategies.
4. Leverage Technology: – (a) use GIS mapping for effective property tax collection, (b) portals to check building licenses, ration cards, etc.
5. Citizen participation: (a) include local population in consultation/policy making process on revenue generation; (b) transparency measures, such as public disclosure of budgets and expenditures, to build trust.