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How Panchayati Raj System manages its Finances

How Panchayati Raj System in India manages its Finances.




Only giving constitutional status is not enough for Panchayati Raj System but need to ensure finance for its autonomous and democratic operation.


Every administration has its cost , so the Panchayati Raj System also need smooth inflow of fund for its independent and democratic way of functioning. Here we will discuss the sources of revenue for Panchayati Raj Institutions.The autonomy and efficiency of these Panchayati Raj Institutions depends upon their financial position.

1) Grants from the Union Government on recommendations of the Central Finance Commission( art 280).

2) As per art 243-I of the Indian Constitution the devolution from the State Government on recommendations of the State Finance Commission.

3) Programme/Scheme specific allocation under centrally sponsored schemes.

4) Loans and grants from the State Government.

5) From its own resources - tax and non- tax. In tax it includes house tax, professional tax, fair and festival tax ect. And in non tax it includes tolls on vehicles, octroi, fees and rent from non- agri land and shop owned by Panchyat. 

6) Voluntary Donation -  Panchyat also collect voluntary donation from villagers for construction and repair of temple and ponds.

All the above mentioned points are the ways to generate revenue for PRIs for their autonomous and democratic functioning.

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