UPSC Mains 2018 GS Paper 2 Q15: model answer

In Punsari village of Gujarat, a sarpanch in the 2010s put Wi-Fi, CCTV and RO water plants in place, partly by charging users and pooling scheme money. That is what this question is about: panchayats that find their own money.

Why panchayats matter

• Closest government to nearly 65% of Indians.
• Gram sabhas give a platform for social audit and participation.
• They deliver MGNREGA, Jal Jeevan Mission and Swachh Bharat on the ground.
• One-third (in about 21 States, half) of seats for women; reserved seats for SCs and STs.

The money gap

RBI's study of panchayat finances found own revenue to be only around 1% of their total receipts; the rest comes as grants.

Own sources they can tap

• Taxes under Article 243H: property and house tax, tax on fairs and markets, professions, vehicles.
• User charges: water, street lighting, solid waste collection.
• Fees and rents: market yards, shops, community halls.
• Common property: fisheries ponds, minor forest produce, quarry leases, as allowed by PESA in Scheduled Areas.

Innovative sources

• CSR funds from nearby industries (Companies Act Schedule VII includes rural development).
• Convergence with MPLADS, MLA funds and MGNREGA for assets.
• Crowdfunding and diaspora giving, as in many Kerala and Punjab villages.
• Carbon credits from forests and solar, still small.
• Pooled finance through district-level bodies to borrow for bigger projects.

Enablers

SVAMITVA property cards to widen the tax base, the 16th FC performance grant that rewards growth in own revenue, and the e-GramSwaraj accounting system, which makes every rupee visible to the gram sabha and so builds the trust people need before they pay a local tax.

A panchayat that raises one rupee of its own spends it more carefully than ten rupees sent from Delhi.