Panchayati Raj Finances in Madhya Pradesh

Intergovernmental transfers are the dominant source of revenues for rural local government system, that is, Panchayati Raj in the country. The design of these transfers affects the efficiency and equity of local service provision and the fiscal health of these institutions. So far the financial position of Panchayats are concerned, it is stated to be a dependency syndrome. Despite the fact that they are empowered to raise internal resources but it is not encouraging. Therefore, these institutions are mainly dependent on transfers from higher levels of government. Unfortunately, the subject of transfers of finance between the state and local government is relatively less explored. Keeping in view the importance and imperatives of fiscal transfers, the present study attempts to examine critical aspects of State Panchayat fiscal relations, particularly in the context of recommendations of State Finance Commission and action taken by the state government. Besides, this study presents financial status of panchayat and provides insights into the intricate issues of fiscal transfer in a federal set-up. This book is based on a research study conducted in the state of Madhya Pradesh and provides empirical evidences and analysis of financial situation of Panchayati Raj Institution. This book will be useful to the policy makers, particularly the State Finance Commissions, while looking into the aspects of fiscal transfer to panchayats. This will also be useful to the practitioners in the local government system to understand financial composition and functional as well financial devolution so as to bring fiscal discipline in the system. Apart from this, scholars and the students dealing with the subject of local finance will appreciate this volume.