India Union Budget 2019: In order to strengthen self-governance at the local level, more than Rs 2 lakh crore has been allocated to Panchayati Raj Institutions in five years. The aggregate amount allocated to Panchayati Raj Institutions in 26 states of the country works out to be Rs 2,00,292 crore and per capita allocation works out to be Rs 488 per person. Finance Minister Nirmala Sitharaman is expected to significantly increase allocation to the rural sector in her maiden budget to be presented on July 5.
The 73rd Constitutional Amendment has provided constitutional status to local village bodies in India that had existed for thousands of years as a unit of self-rule at the village level. Over the last three decades, successive finance commissions have assigned more funds to Panchayati Raj institutions at all three levels-village level, block level and district level.
"The grants are allocated among the States using the criteria of population and area in the weight of 90:10 respectively," Panchayati Raj Minister Narendra Singh Tomar told the Lok Sabha.
Twenty-six states in the country have three-tier local self-rule in form of Gram Panchayats at the village level, Mandal Parishads at the block level and municipalities or city councils at the district level. Only three states Nagaland, Meghalaya and Mizoram do not have Panchayati Raj Institutions.
The 73rd constitutional amendment has also provided funds, functions and functionaries to these bodies of self-governance at the local level. The 14th finance commission headed by YV Reddy, former governor of Reserve Bank of India, has substantially increased the allocation to Panchayati Raj Institutions at all levels under the devolution formula recommended by it.
State governments have two ways to further distribute the funds received from the central government for Panchayati Raj institutions. If there is a state finance commission in the state then the state finance commission decides the formula to distribute the tax proceeds between a state government and its Panchayati Raj Institutions.
However, if there is no finance commission in a state that has Panchayati Raj Institutions then the funds are divided between the state government and Panchayats as per the formula recommended by the 14th finance commission.