Fund crunch, spending curbs stifle panchayats: CAG

Panaji: Goa’s village panchayats and zilla panchayat bodies are starved of funds and are overly dependent on grants from state govt, said the report of the Comptroller and Auditor General (CAG) of India. The report said the non-revision of property tax, an inefficient collection mechanism, and the inaction on arrears force panchayats into a precarious financial position.
While village panchayats have some sources of revenue, the two zilla panchayats (ZPs) of Goa do not have any source of their own revenue and depend on govt handouts.
“In the absence of adequate sources of own revenues, the Panchayati Raj institutions (PRIs) were found to be highly dependent on govt grants for carrying out their functions,” the CAG said. “The ZPs did not have any source of own revenue and their dependence on govt grants for even their establishment expenditure severely affected their autonomy and curtailed their role.”
The CAG said govt has “far-reaching powers” over village panchayats, which include restrictions on how panchayats use funds. This, said the CAG, significantly curtailed the autonomy of panchayats to function as institutions of self-govt.
Moreover, the CAG found that Goa’s ZPs did not prepare the budgets and the budgets of village panchayats were unrealistic.
“A majority of village panchayats were not able to meet even their establishment expenditure out of their own resources which increased their dependence on govt grants. The full potential of collecting own revenues was not tapped by village panchayats,” the CAG said.
While panchayats remain overly dependent on funds from the state and the Centre, the release of funds by state govt was “uneven” while Central Finance Commission grants were delayed, the CAG said.
Delays in the constitution of State Finance Commissions and inaction on their recommendations by govt rendered the mechanism redundant, it said.