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Fiscal Empowerment of Panchayats in India

M. Shafi Bhat

Post Doctoral Fellowship Indian Council of Social Science Research (ICSSR) JNU Institutional Area, New Delhi - 110 067, INDIA.

ABSTRACT

In recent years, there has been a world-wide trend towards decentralization. Many countries have experienced devolution of administrative, political and fiscal responsibilities to lower levels of government. Dissatisfaction with the prevailing centralized systems of service delivery, transition from centralized planning to market economy, deepening democratic principles and increasing need to recognize social, economic and political diversities in different regions within the countries are some of the important reasons cited for this phenomenon. This trend towards decentralization is seen in countries with federal as with unitary systems; it has spanned across developing as well as developed countries. The trend was also seen in transitional countries and even military dictatorships as in democratic countries. The focus of the present paper is to review the financial position of Panchayats in India. It is argued here that Panchayats have very little fiscal autonomy. The locally raised revenues are very negligible. The funds flow from higher level governments is very low and lack any devolution design or principles. The transfers are made at the convenience and mercy of such governments.

Keywords :Panchayats, administrative, political and fiscal responsibilities to lower levels of government.