{"id":239100,"date":"2023-04-21T20:15:02","date_gmt":"2023-04-21T14:45:02","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=239100"},"modified":"2023-04-24T16:51:54","modified_gmt":"2023-04-24T11:21:54","slug":"bring-government-closer-to-people","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/bring-government-closer-to-people\/","title":{"rendered":"Bring government closer to people"},"content":{"rendered":"\n

Source<\/strong>: The post is based on the article\u00a0\u201cBring government closer to people<\/strong>\u201d published in Business Standard <\/strong>on\u00a021st<\/sup> April 2023<\/strong>.<\/p>\n

Syllabus: GS 2 \u2013 Governance<\/strong><\/p>\n

Relevance: <\/strong>concerns associated with local government.<\/strong><\/p>\n

News<\/strong>: India is preparing to become an advanced economy in the next 25 years.<\/p>\n

What are the features of advanced economies?<\/strong><\/h2>\n

A distinguishing feature of advanced economies is their significant allocation of revenues and responsibilities at the local government level.\u00a0<\/strong><\/p>\n

These include primary education, health care, basic law and order, and civic infrastructure \u2014 sewage, water supply, road maintenance and local zoning and regulations.<\/p>\n

How much does India currently spend at the state and local level of government?<\/strong><\/h2>\n

India\u2019s share of sub-national (state plus local) spending is at 60 percent<\/strong> of total spend, which is very high at its level of development.<\/strong><\/p>\n

Other large federal states spend less. For example,<\/strong> Brazil spends around 50 percent while the United States around 40 per cent. Only Canada and China spend more than 70 per cent at the subnational level.\u00a0<\/strong><\/p>\n

What are the concerns with this devolution of money?<\/strong><\/h2>\n

This devolution of money was proposed by the 14th Commission and was accepted by the 15th Finance Commission.\u00a0<\/strong><\/p>\n

However, simply shifting resources from the Centre to the states will not be of great help unless it reaches the lower levels of government.<\/p>\n

For genuine devolution,<\/strong> the focus must shift to looking at ways to ensure more resources flow to local institutions, such as panchayats and mayors.<\/p>\n

This is because many smart city projects are hampered by the inability of city mayors to deliver on their components of the scheme.<\/p>\n

Further, the cost of delivering services at the same time improves and is made more effective and monitorable.<\/p>\n

What are the concerns with the local government?<\/strong><\/h2>\n

India\u2019s local government spend is less than 4 percent of total government spending.<\/strong>\u00a0This share is much smaller than in most advanced economies.<\/p>\n

For example,<\/strong> spending by the local government in China exceeds 50 percent of total spending by the government.<\/p>\n

Hence, India must prepare a road map for greater devolution from state-level spending to local governments and raise more local government revenues.<\/p>\n

How can the revenues of local government be increased?<\/strong><\/h2>\n

The best way to allow local governments to raise their own resources is an increase in property taxes and higher user fees. <\/strong><\/p>\n

Objections to higher property taxes from elderly owners can be handled through different means such as grandfathering clauses that exempt them during their lifetime.<\/p>\n

At present,<\/strong> India has a very low property tax rate, accounting for around 0.5 percent of its total tax revenue and only a little over 0.1 percent of GDP.<\/p>\n

Whereas the OECD countries<\/strong> on average collect about 5.6 percent of total tax revenue in property taxes and the US, UK and Canada at over 11- 12 per cent at the highest levels.<\/p>\n

What can be the way ahead?<\/strong><\/h2>\n

The 15th Finance Commission<\/strong> provided grants to states subject to them updating their property tax rates and improving collection.<\/p>\n

This route could be used to discuss raising rates by the upcoming 16th Finance Commission to increase local government resources.\u00a0<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Source: The post is based on the article\u00a0\u201cBring government closer to people\u201d published in Business Standard on\u00a021st April 2023. Syllabus: GS 2 \u2013 Governance Relevance: concerns associated with local government. News: India is preparing to become an advanced economy in the next 25 years. What are the features of advanced economies? A distinguishing feature of… Continue reading Bring government closer to people<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[10503,212,11479],"class_list":["post-239100","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-business-standard","tag-gs-paper-2","tag-local-government-finances","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/239100","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=239100"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/239100\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=239100"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=239100"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=239100"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}