Q. With reference to ‘Finances of Panchayati Raj in India’, consider the following statements:
1. Union government provide grants to the Panchayats based on the recommendations of Finance Commission of India.
2. The internal resource generation at the Panchayat level is the major source of funds for Panchayats in India.
3. Panchayats cannot borrow money in the form of loans.
How many of the above given statements are correct?
Exp) Option a is the correct answer.
Statement 1 is correct: Panchayats are entitled to get grants from the Union Government based on the recommendations of the Central Finance Commission as per Article 280 of the Constitution.
Statement 2 is incorrect: Across the country, States have not given adequate attention to fiscal empowerment of the Panchayats. The Panchayats own resources are meager. Internal resource generation at the Panchayat level is weak. This is partly due to a thin tax domain and partly due to Panchayats own reluctance in collecting revenue.
Statement 3 is incorrect: Loans can be obtained by local bodies from financial institutions for implementation of various schemes relating to Urban Development, Water Supply and Roads etc. A Panchayat may borrow money as loans from state governments, and market borrowings.
| Important Tips In general, Panchayats in our country receive funds in the following ways: (i) Grants from the Union Government based on the recommendations of the Central Finance Commission as per Article 280 of the Constitution. (ii) Devolution from the State Government based on the recommendations of the State Finance Commission as per Article 243-I. (iii) Loans / grants from the State Government. (iv) Programme-specific allocation under Centrally Sponsored Schemes and Additional Central Assistance. (v) Internal Resource Generation (tax and non-tax). |
