Why do the Panchayati Raj Institutions face problems regarding finances? How does the socio-economic structures of India hamper the growth of Panchayati Raj Institutions?

Finance is the most important problem faced by Panchayati Raj Institutions. Panchayati Raj Institutions are expected to function for development of least developed part of society and development is expected in every aspect of life i.e. social, political and economic. For this a sound system of finance allocation is required. The resources available depend on local economy and grant from the state the economic condition in rural area is very weak, so Panchayati Raj Institutions have very limited scope to impose the taxes in their jurisdiction. In India, the revenue system is highly centralized and is a matter of confrontation between center and states.

Similarly, states are also in same condition, so the Panchayati Raj institutions have to look towards higher authorities for necessary grant. Thus there occurs a grave imbalance between the responsibilities and resources available with the local bodies. The Panchayati Raj authorities do not have any right share the taxes appropriated by the states, however the states own such rights against the central taxes. So, it is required that some statutory arrangement should be made to strengthen the financial condition of these local bodies.

The weak socio-economic structure of Indian society is a major cause to restrict the growth of Panchayati Raj Institutions here. The elected members of every level in Indian society comes from the rich higher class so is the case with Panchayati Raj Institutions. They have their own vested interest in continuation with the existing system and try to maintain it. It has been usually said that leadership in Panchayati Raj Institutions act like a “gatekeeper” to prevent the flow of benefits to the weaker section of the rural community.

However, certain devices.are used to ensure the participation from the weaker sections in the form of reservation of seats but it has not been effectively adopted. The problem arises with unorganized nature of weaker communities. So, the concept of participation of people in the process of democratic decentralization is highly difficult under such conditions. There are only slight chances of downtrodden and poor take part in development activities. That is why it is first required to improve the socio-economic conditions of society only then we can expect the Panchayati Raj Institutions work in full Swing.

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