Sector Scheme Level: Panchayats

PAISA for Panchayats Study for the State of Kerala

The PAISA for Panchayats research project extends Accountability Initiative’s PAISA methodology to track fund flows and implementations processes at the Panchayat level. This study attempts to bridge this gap in measuring the extent of fiscal decentralisation by:

  1. Tracing the state’s commitment to devolution by analysing a time trend of intergovernmental transfers from the state and union government to the LGs;
  2. Quantifying the extent of untied funds in the resource pool of funds available to the LGs;
  3. Ascertaining whether functional transfers to PRIs have been accompanied with appropriate fiscal transfers, and consequently assess the extent of overlaps in functional responsibilities between PRIs and other implementing agencies at the local level.

Decentralisation, Governance and Development: An Indian Perspective

About the Book

India believed it could take development closer to its people, make the government more accountable, and empower women and oppressed communities through decentralisation—the provision of political and financial autonomy at the local level through the three-tier Panchayati Raj structure.

Fifteen years after the 73rd and 74th Amendments that brought in this innovation, what is the performance of the local government in India? Decentralisation, Governance and Development provides a comprehensive assessment that answers this question.

Drawing from the examples of the two states where decentralisation has been most successful—Kerala and West Bengal—this volume explores the causes and effects of failures in implementation and issues of governance. These essays by scholars from diverse disciplines, as well as policymakers and practitioners, will equip readers with both a theoretical understanding of the issues concerning local government, and the practical problems of designing and implementing policy framework in the field.

This book will be useful to students and scholars of development studies, economics, political science and sociology, and public servants and policymakers.

PAISA for Panchayats Policy Brief

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.

Access the full report here.

PAISA for Panchayats Report

The PAISA for Panchayats research project extends Accountability Initiative’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.

To access data sheets used for the study click here. 

Do GPs get their money?

A Case Study of Gram Panchayat Fund Flows in Birbhum District, West Bengal

Analytical studies on rural local government finance are few and far between in India. The paucity of reliable data and the lack of transparency in Panchayat finances and associated difficulties in accessing data are important reasons for this. These data gaps are well known and successive Finance Commissions have highlighted this problem with little effect. This PAISA Gram Panchayat (GP) study: ‘Do Gram Panchayats Get Their Money?’ is a small step towards filling this analytical gap. This study analyzes GP level finances in Birbhum district of West Bengal by asking the following questions

  • Do GP’s get their money?
  • If so, do GP’s get all their money? i.e. their entire entitlement?
  • When do GP’s receive their funds? i.e. do funds arrive on time?
  • Do GP’s spend their money?
  • If so, what do GP’s spend their money on? And does this expenditure reflect local needs and priorities?

This PAISA study investigates these questions in the context of untied funds– funds that do not impose any specific rules regarding their utilization on the spending agency. Untied funds typically constitute less than 10% of a GP’s resource pool, but are significant because they have the potential to enable GPs to prioritize activities that reflect local needs and preferences.

The study tracks the fund flow process and expenditures incurred through 3 untied funds in a sample of 20 GPs in Birbhum district over a 5 year period from 2005-06 to 2009-10. In addition, it tracksthe receipt of SRD funds at the GP level. As a point of comparison, the study also tracks receipts and expenditures of tied funds – funds which are to be utilised strictly as per the rules or guidelines framed by the Central or State government, and thus, provides no flexibility to GPs.