“Examining Fiscal Health of Gram Panchayat:

Abstract

Explosive urban growth and increased urbanization have changed the character of rural areas. Panchayats have been recognized as institutions of social and economic development (Pathak & Deshkar, 2023). 73rd Constitution Amendment Act, 1992 (73rd CAA’92) granted state governments the power to formalise gram panchayats and provide them with the means to exercise self-governance. It granted PRIs the authority to impose and collect taxes as well as to apply for grants-in-aid from the state and federal consolidated funds. The shift in the terms of reference of Central Finance Commission (CFC) from the tenth CFC and the constitution of State Finance Commission (SFC) as mandated in the 73rd CAA’92 remarkably changed the fiscal profile of the gram panchayats. Such statutory initiatives to improve the fiscal health of gram panchayats was further bolstered by the Central Sector and Centrally Sponsored schemes besides the State sponsored schemes. Despite such effort, it is observed that the gram panchayats are not fiscally stable. With the growing responsibilities of the gram panchayats, it is held that the finance of gram panchayats must be seen in the light of their functions since fund allocation often does not consider the functions in toto (Brahmanandam, 2018). This research shall make an attempt to profile the fiscal and financial profile of the gram panchayats in the light of their functions, various statutory grants in aid, various Central and State schemes besides their own attempt to improve the fiscal health. Such an exercise is expected to bring to the fore the fiscal issues plaguing the gram panchayats and the way outs and formulating a methodology to examine the fiscal health of the gram panchayat and suggest measures to strengthen the same.