The Hindu : New Delhi News : ‘Panchayats need wider revenue base’

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Friday, Sep 07, 2007
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New Delhi

‘Panchayats need wider revenue base’

Special Correspondent

NEW DELHI: The legal and policy regime should be reoriented to help panchayats widen their revenue base, Union Panchayati Raj Minister Mani Shankar Aiyar told the Lok Sabha in a statement.

Better coordination was required between panchayats and the State government as the former’s taxation powers were governed by the State Panchayati Raj Act, Mr. Aiyar said in response to a calling attention motion on the “Need to strengthen the panchayats financially in order to fulfil their constitutional obligations and to discharge their duties effectively.”

The statement, tabled in the House, said the Ministry wanted the States to introduce a Panchayat Sector Window in their budgets for each department concerned with the functions devolved to the panchayats to show the funds assigned to each tier. The panchayats needed adequate untied funds to execute their assigned public services, he said. Quoting a study by the National Institute of Public Finance and Policy, the Minister said that although there were 66 kinds of fees and taxes levied by panchayats in different States, most existed on paper only. Expanding the revenue envelope involved a re-look at the tax powers assigned to panchayats, a reliable data and information system, capacity building to administer and enforce the tax and adopting a set of incentives and disincentives aimed at increasing the collections.The Institute estimated that the current revenue of panchayats was Rs. 3,000 crore and without reforms in the taxation structure, improving collection would fetch only Rs. 10,000 crore, Mr. Aiyar said.

A committee with Secretary as co-chair has been constituted on the direction of the Cabinet Secretary to review the major centrally-sponsored schemes to ensure the key role of the panchayats in their implementation.

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