Local bodies should look at raising their own resources: Finance Commission Chairman Panagariya

New Delhi, Nov 14 (PTI) The rural and urban local bodies should look at raising their own resources and it will mobilise the citizens in terms of their expectations and demands from the local bodies, 16th Finance Commission Chairman Arvind Panagariya said on Thursday.

Speaking at a one-day Finance Commissions Conclave on 'Devolution to Development' organised by the Ministry of Panchayati Raj, Panagariya also said that a convergence is being witnessed in the demands of the urban and rural local bodies.

Fostering financial autonomy and self-reliance was in focus at the conclave aimed at facilitating deliberations on addressing systemic challenges to ensure a smooth flow of funds to the Panchayati Raj Institutions (PRIs).

The issue of panchayat finances, including devolution of funds, functions and functionaries, along with strategies to enhance local revenue sources were among the key issues.

Panagariya stressed that the path to sustainable rural development lies in strengthening 'Own Source Revenues' (OSR).

"From the view point of service provision it is important to raise some own resources also... when citizens pay taxes, they are also aware of services that ought to be rendered to them," he said.

"It is also the logic of devolution of the functions at local levels. Locals know what they need and want. That knowledge will convert into a more activist kind of demand," he added.

Panagariya said it will also mobilise the citizens.

"In some way efforts should be made by the panchayats and urban local bodies to raise at least some part of their revenues from their own jurisdiction. That is an important way to mobilise citizenry in terms of its expectations and demands," he said.

On the occasion, Panchayati Raj Secretary Vivek Bharadwaj said the conclave brings together stakeholders so that there is an integration in thought and action.

"For the 2.5 lakh Panchayats and people, the Finance Commission is responsible for devolution of resources. We have been trying that there should be an integration of action and thought between the central and state finance commissions. Through this conclave, all stakeholders have come on one platform," he said.

The Panchayati Raj secretary said 37,000 gram panchayats are being computerised and Gram Panchayat Bhawans have been built at 40,000 villages with population exceeding 3,000.

He said government has made inclusion of OSR details in Gram Panchayat Development Plans (GPDPs) on the eGramswaraj portal mandatory, marking a crucial step towards fiscal transparency.

"The ministry's dedicated OSR Cell is actively engaged in reviewing and streamlining revenue rules across states, simplifying complex procedures to enhance efficiency in local governance and facilitating more efficient local resource mobilization," he said.

According to an official statement, significant emphasis was placed on strengthening State Finance Commissions at the conclave, with participating chairpersons discussing challenges in fiscal devolution and proposing solutions for more effective resource allocation.

Special attention was given to the unique challenges faced by peri-urban panchayats in managing rapid development.

At the conclave, over 150 participants from 22 states deliberated on strengthening the fiscal framework of Panchayati Raj Institutions. PTI AO KVK KVK