2024-11-16 09:49:00
This comes down to Rs 59 per capita and Rs 2.27 lakh per panchayat over the five-year period for 2.25 lakh gram panchayats across the country. The total population coming under these panchayats was more than 86.95 crore in the said period.
Among the states, Gujarat collected the highest amount as OSR at Rs 829.75 crore, while Kerala came second collecting Rs 802.95 crore.
Andhra Pradesh, which raised Rs 791.93 crore, occupied the third position, followed by Karnataka (Rs 627.56 crore), Tamil Nadu (Rs 516.3 crore) and West Bengal (Rs 435.17 crore).
In terms of the per capita OSR raised by the panchayats, Goa topped the list with Rs 1,635 raised in taxes per person, followed by Puducherry, which raised Rs 757 per capita.
At a one-of-its-kind conclave organised by the Panchayati Raj ministry recently, in which representatives from the 16th Finance Commission participated along with officials from the ministries of Panchayati Raj, rural development, finance, housing and urban affairs, experts and representatives from the state finance commissions and other relevant institutions, the issue of panchayats raising their own resources was discussed. However, according to the information shared by the ministry at the conclave, Arunachal Pradesh, Bihar, Jharkhand, Manipur, Nagaland, Sikkim, Uttar Pradesh, the Andaman and Nicobar Islands, Dadra and Nagar Haveli and Daman and Diu, Ladakh and Lakshadweep are among the states and Union territories that do not have OSR rules. Andhra Pradesh, Assam, Chhattisgarh, Goa, Gujarat, Haryana, Himachal Pradesh, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Mizoram, Odisha, Punjab, Rajasthan, Tamil Nadu, Telangana, Tripura, Uttarakhand, West Bengal and Puducherry, meanwhile, have framed these rules.
Panchayats, which act as grassroot-level bodies to implement government programmes and for achieving the sustainable development goals, get grants from the Centre, state governments, as well as raise their own revenue in a limited way through internal sources like local-tax revenues and user charges, and from external sources, including grants from international bodies like the World Bank.
The total 15th Finance Commission fund allocation to rural bodies is around Rs 2.36 lakh crore (2021-22 to 2025-26). Of this, around 60 per cent is “Tied Grants”, which include heads like drinking water supply, rainwater harvesting, sanitation and maintenance services, while around 40 per cent is “Untied Grants” for improving basic services.
For panchayats to generate OSR, the states may authorise them to levy taxes, duties, tolls and fees, and it strengthens the panchayat identity as a local government through tax-based OSR. However, limited elected representatives’ hesitance and administrative limitations often restrict it.
Matching grants based on OSR have been used as one of the ways by the Centre to encourage panchayats, like in the Andaman and Nicobar Islands, up to three times of the OSR is given as incentive.
Sharing of royalties from local mining and Goods and Services Tax (GST) and District Mineral Fund (DMF) revenues with gram panchayats are among other the means for these rural bodies to raise their own revenue.
The government has also been pushing for the utilisation of tools like the SVAMITVA data for property-tax assessments to enable the rural local bodies to raise more funds.
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What are some effective strategies that panchayats can adopt to enhance Own Source Revenue (OSR) generation?
**Interview with Dr. Anjali Sharma, Expert on Rural Governance and Finance**
**Editor:** Thank you for joining us today, Dr. Sharma. The recent data highlights that Own Source Revenue (OSR) generation for panchayats remains alarmingly low. Can you shed some light on the implications of such low revenue generation for rural governance?
**Dr. Sharma:** Thank you for having me. Indeed, the figures are concerning. An average of just Rs 59 per capita in OSR over five years indicates a significant reliance on grants and external funding for panchayat functioning. This limits their financial autonomy and ability to respond to local needs effectively. With inadequate revenue, panchayats struggle to implement sustainable development projects and improve local infrastructure.
**Editor:** The data shows that states like Gujarat and Kerala have performed significantly better in OSR collection. What can other states learn from their strategies?
**Dr. Sharma:** Absolutely. Gujarat and Kerala have successfully engaged in revenue generation by streamlining tax collection processes, raising community awareness about the importance of local taxes, and enhancing administrative efficiency. Other states can adopt these practices—investing in training for local governance officials and utilizing technology for better tax collection and transparency can create a more favorable environment for OSR growth.
**Editor:** The conclave organized by the Panchayati Raj ministry highlighted the absence of OSR rules in many states. What impact does this have on revenue collection?
**Dr. Sharma:** The absence of OSR rules in states like Arunachal Pradesh and Bihar creates a regulatory vacuum, making it difficult for panchayats to establish a framework for collecting local taxes. OSR rules provide a structured approach to revenue generation, and without them, local bodies are limited in their ability to harness potential funding sources. It’s essential for these states to develop and implement these frameworks to enhance their fiscal positions.
**Editor:** You mentioned community awareness. How important is public engagement in improving OSR collection at the panchayat level?
**Dr. Sharma:** Very crucial. Public engagement fosters a sense of ownership among residents regarding local governance. When communities understand the value of contributing to local revenues—through taxes or service fees—they are more likely to comply. Initiatives such as financial literacy programs and open forums can help bridge the gap between panchayat officials and residents, ensuring a collaborative approach to local governance.
**Editor:** Lastly, what do you see as the next steps for improving OSR generation across panchayats in India?
**Dr. Sharma:** The key steps involve both policy reforms and community-led initiatives. States need to enact OSR rules, coupled with capacity-building programs for panchayat officials. There should be a concerted focus on enhancing the skills needed to collect local taxes effectively. Simultaneously, encouraging community participation through awareness campaigns can drive home the importance of local revenue generation. a multi-faceted approach is essential for building financial autonomy at the grassroots level.
**Editor:** Thank you, Dr. Sharma, for sharing your insights on this important issue. We hope to see progress in the coming years.
**Dr. Sharma:** Thank you for the opportunity!