18-February -2025-Special-Article

PANCHAYAT DEVOLUTION INDEX (PDI) 2024

The “Status of Devolution to Panchayats in States – An Indicative Evidence-Based Ranking” report, also known as the Panchayat Devolution Index (PDI) 2024, assesses the degree of empowerment of Panchayati Raj Institutions (PRIs) in India. The report evaluates the devolution of powers, functions, finances, and accountability to Panchayats across the country, in line with the constitutional provisions (Article 243G).

Key Findings

Overall Devolution Progress

• Increase in Devolution: There has been a rise in the devolution of powers to Panchayats, from 39.9% in 2013-14 to 43.9% in 2021-22.
• Top-Ranked States: Karnataka leads the rankings followed by Kerala, Tamil Nadu, Maharashtra, and Uttar Pradesh in terms of devolution practices.
• Lowest-Ranked States: Dadra & Nagar Haveli and Daman & Diu, Puducherry, and Ladakh are at the bottom of the list, indicating limited empowerment and devolved functions.

Improvements in Infrastructure and Functionaries

• Enhanced Functionaries Index: The functionaries index improved from 39.6% to 50.9% due to better staffing, infrastructure, and digitalization efforts.
• Capacity Building Efforts: The Rashtriya Gram Swaraj Abhiyan (RGSA), which started in 2018, helped improve the capacity-building component from 44% to 54.6%.

Performance in Key Dimensions

The report assesses the performance of Panchayats across six important dimensions:

1. Framework: Kerala has a robust legal and institutional framework for the functioning of Panchayats.
2. Functions: Tamil Nadu has effectively devolved functional responsibilities to its Panchayats.
3. Finances: Karnataka has the best financial management practices, enabling better financial autonomy for its Panchayats.
4. Functionaries: Gujarat has made notable strides in managing personnel and capacity-building efforts for local bodies.
5. Capacity Building: Telangana stands out for its institutional strengthening efforts to enhance Panchayat functioning.
6. Accountability: Karnataka excels in ensuring financial transparency and accountability within its Panchayats.

Challenges in Devolution to Panchayats

Institutional Issues

• Leadership Discontinuity: The rotation of reserved seats for SCs, STs, and women in Panchayats disrupts leadership continuity, resulting in inconsistent governance.
• District Planning Committees (DPCs): Though DPCs exist, they are not being implemented effectively, limiting planning at the local level.

Limited Devolution of Powers

• Inconsistent Transfer of Functions: Many of the 29 functions listed in the 11th Schedule of the Constitution have not been fully transferred to Panchayats. State governments often hesitate to devolve more power for fear of losing control at the grassroots level.

Financial Autonomy Issues

• Weak Financial Control: Panchayats face difficulties in controlling their finances due to factors such as the non-implementation of State Finance Commissions (SFCs) recommendations and the centralization of funds (e.g., GST).
• Lack of Resource Capacity: Elected representatives of Panchayats often lack training in areas like governance, budgeting, and planning, which limits their effectiveness.
• Low Accountability: Limited social audits, low participation in Gram Sabhas, and lack of transparency in financial reporting contribute to low accountability in Panchayats.

Recommendations for Improving Panchayats

1. Fund Utilization: Strong monitoring mechanisms should be implemented to ensure the proper use of funds, minimizing misuse and corruption.
2. Strengthening Panchayat Bhawans: Panchayat Bhawans should be better utilized as hubs for local public services and schemes like Ayushman Bharat, improving access to government programs.
3. Empowering Panchayats: States should fully devolve powers to Panchayats, particularly in flagship schemes such as MGNREGA, PMAY, and NHM.
4. Strengthening SFCs: State Finance Commissions must be empowered to ensure timely allocation and distribution of funds to Panchayats.
5. Digital Infrastructure: Improve digital infrastructure at the Panchayat level to enhance transparency, governance, and accountability.

PRI Funding and Financial Overview

Current Revenue Composition

• Revenue Generation: Panchayats generate only about 1% of their revenue through taxes, which shows their limited ability to self-finance.
• Central and State Grants: Approximately 80% of PRI funding comes from Central government grants, while 15% is contributed by State governments.
• Revenue Per Panchayat: On average, Panchayats generate Rs 21,000 from own taxes and Rs 73,000 from non-tax sources. Central government grants average Rs 17 lakh, and State government grants are around Rs 3.25 lakh per Panchayat.

Inter-State Disparities in Funding

• High Revenue States: Kerala and West Bengal have the highest average revenue for their Panchayats, with over Rs 60 lakh and Rs 57 lakh, respectively.
• Low Revenue States: States like Andhra Pradesh and Punjab report significantly lower revenues, below Rs 6 lakh, pointing to a disparity in PRI funding across the country.

Ways to Improve PRI Funding

1. Regular Fund Transfers: Regular, consistent transfers of funds (instead of ad-hoc grants) should be ensured to maintain sustainability.
2. Financial Transparency: Panchayats must adhere to regular audits, RTI disclosures, and strong procurement procedures to ensure effective fund use and accountability.
3. Fiscal Equalization: Fiscal transfers should be designed to match states’ capacities, ensuring balanced development and governance at the local level.
4. Boosting Own Revenue: Panchayats should be encouraged to improve their own revenue generation through local taxes, such as land taxes. States should offer support for better tax collection.
5. Special Purpose Grants: States should create special-purpose grants to improve rural infrastructure and services, such as water, sanitation, and roads.

Conclusion

The Panchayat Devolution Index 2024 underscores the progress made in decentralizing powers and strengthening Panchayati Raj Institutions across India. However, challenges related to financial autonomy, inconsistent devolution of functions, and accountability persist. Addressing these challenges through reforms in fund utilization, capacity building, and greater autonomy for Panchayats will lead to more effective local governance and sustainable rural development.

Mains Question:

1. “Critically analyze the findings of the Panchayat Devolution Index 2024 and its implications for the empowerment of Panchayati Raj Institutions in India.”