PAISA for Panchayats Policy Brief

T.R. Raghunandan, Swaroop Iyengar et al
(2016)

The PAISA for Panchayats research project extends AI’s PAISA methodology to track fund flows and implementations processes at the Panchayat level. By focusing on understanding the state of fiscal devolution to rural local governments, this paper answers 2 key questions:

• What are the overall trends in fiscal devolution to Panchayati Raj Institutions (PRI) in Karnataka?
• How much money do Gram Panchayats actually receive?

To answer these questions we studied 30 Gram Panchayats (GP) in Mulbagal taluk, Kolar district, Karnataka. Our research shows that despite the State’s pioneering efforts in improving intergovernmental fiscal transfers, the system clearly falls short of the State’s vision for effective devolution to Panchayats. The 30 GPs in Mulbagal spent only 3 percent of all the money spent by the government within each GP’s jurisdiction. Not a single GP was aware of the nature or extent of expenditure made by other entities (like state line departments, parastatals, district and Taluk panchayats) in their jurisdiction. Further, these other entities do not track or maintain records of their fund flows at a GP level leading to inefficient expenditures which are non-transparent and non-accountable.

Based on our research, we recommend that the Karnataka Government make efforts to ensure there are no unfunded or overlapping (with other state bodies) mandates for panchayats and that their proportion of discretionary spending be increased. Also, as the old adage goes – What cannot be measured cannot be monitored. It is hence imperative to work towards creating and disseminating information on fund flows to relevant stakeholders through a holistic and open record keeping system that can measure in real time the allocations, releases and expenditure at a GP level.

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