The Narendra Modi government, which has been making hectic preparations for celebrating Mahatma Gandhi’s 150th birth anniversary on Tuesday, seems to have dried up funds for the panchayat raj institutions (PRIs) that Gandhi considered major institutions for village development.
The Centre’s funding for PRIs declined sharply from a high point of 48.45% in 1997-98 to 4.87% in 2015-16, while the Karnataka government’s share increased manifold from 55.29% to 95.13% during the same period, according to the study ‘Karnataka State’s fiscal transfers to local bodies: the current status and the State’s fiscal capacity’ conducted by K. Gayithri, professor, Institute for Social and Economic Change (ISEC), Bengaluru.
Out of the allocated funds of ₹26,576 crore in 2015-16, the Centre’s allocation was just about ₹1,350 crore and rest by the State government. Total allocation for PRIs in 2016-17 was ₹29,558 crore.
The 14th Finance Commission recommendation to increase the share of States in Central taxes to 42% from the previous 32% and restructuring of the Centrally sponsored schemes by the Modi government were major reasons for the drastic reduction in allocation of funds by the Centre to the PRIs, said the study, sponsored by the Fourth State Finance Commission of the Karnataka government.
Devolution of funds to local bodies depends on the State’s overall fiscal position. Transfers to local bodies from the State government has risen from ₹3,320.81 crore in 1997-98 to ₹35,538.62 crore in 2016-17, over nine times more.
On an average, rural local bodies account for a much larger share with 85%, while the ULBs account for 15% share in the total.
A huge amount of outlay was being accrued to the taluk panchayats (TPs) followed by the zilla panchayats (ZPs) and gram panchayats (GPs). The share of the former two-tiers has declined over the period. For instance, of the total ₹29,558 crore during 2016-17, allocations for ZP stood at ₹9,633 crore (32.59%), TP ₹1,5178 crore (51.35%), and GP ₹4,748 crore (16.06%).
The own resource mobilisation by the PRIs has had an absolute increase from ₹111.96 crore in 2004-05 to ₹228.84 crore in 2015-16. However, its share in the total resources has not only been abysmally low, it declined further from 1.14 % to 0.89 % during the period.
The allocation to local bodies as a percent share in GSDP declined from 4.89% in 1998-99 to 4.5% in 2015-16 and dropped further to 3.18% in 2016-17, it said.