The Hindu Business Line : `Panchayats should raise more resources'

THE Panchayat Raj Institutions (PRIs) need to do their best to raise as much resources as possible through various avenues, including own tax and non-tax, available to them, according to the Chairman of the Twelfth Finance Commission, Dr C. Rangarajan.

Addressing a seminar on Panchayati Raj Finances at the National Institute of Rural Development (NIRD) here on Friday, Dr Rangarajan, however, said there was no strong evidence at present that the panchayats were exercising their full powers given to them to raise resources.

As per the Eleventh Finance Commission, he said, the internal revenue mobilisation constituted only 4.17 per cent of the total revenue of panchayats during 1990-91 to 1997-98. In a few States such as Bihar, Rajasthan, Manipur and Sikkim, IRM by the panchayats was totally absent during the 8-year period.

Dr Rangarajan said that research studies had brought out that the tax mobilisation effort by PRIs had weakened over the years. Levy of taxes by PRIs so far had not been efficient, assessments were not done periodically and rates of fee imposed were low and not revised for long.

The reasons for general reluctance on the part of panchayats to levy taxes were fear of erosion in the vote base, lack of necessary administrative machinery to collect taxes and limited capacity of the people to pay taxes in villages.

Nevertheless, he said, certain essential services such as provision of safe drinking water, rural sanitation, lighting of public places, preventive healthcare and primary education have come to be accepted as the legitimate and core functions of the PRIs.

The funding requirements of these services, as per the study done by NIRD for the Eleventh Finance Commission, were staggering.

The operation and maintenance costs alone of these services were estimated to be over Rs 1,40,000 crore for a five-year period.

The capital expenditure required to set up or upgrade the necessary infrastructure was assessed to be over Rs 83,500 crore.

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