Increased Funding for Panchayats | 26 Jun 2020

Recently, in a meeting with the 15^th Finance Commission, the Panchayati Raj Ministry has pitched for a fivefold increase in funding for rural local bodies.

The Ministry asked for Rs 10 lakh crore to be allocated for the 2020-21 to 2025-26 period, in comparison to the Rs 2 lakh crore allocated under the 14^th Finance Commission.

Allocations had tripled between the 13^th and 14^th Commissions and the utilisation rate for FC grants between 2015 and 2019 stands at 78%.
The 2.63 lakh panchayats across the country have 29 functions under their ambit, according to the 11^th Schedule of the Constitution.
- Road construction, its maintenance and drinking water supply are the major projects carried out by panchayats using FC grants.
- Seventy-Third Amendment Act, 1992:
  - Granted constitutional status and protection to the Panchayati Raj institutions.
  - For this purpose, the Amendment added a new Part-IX entitled as ‘the panchayats’ and a new 11^th Schedule containing 29 functional items of the panchayats.
During the Covid-19, panchayats gained importance as crucial nodal points as they ran isolation centres, medical camps and contact tracing.
- However, a major challenge during the pandemic and lockdown was that most panchayats could not provide cooked food at short notice.
- The Ministry has proposed to set up community kitchens in each panchayat, operated by local self-help groups (SHGs).
The role of panchayats also becomes important because now the Garib Kalyan Rojgar Abhiyan will also depend on them to generate employment for newly returned migrant workers.

Finance Commission

It is a constitutional body, that determines the method and formula for distributing the tax proceeds between the Centre and states and among the states as per the constitutional arrangement and present requirements.
Under Article 280 of the Constitution, the President of India is required to constitute a Finance Commission at an interval of five years or earlier.
The 1^st Finance Commission was set up in 1951 and there have been fifteen so far.
The 15^th Finance Commission was constituted by the President of India on 27^th November 2017, against the backdrop of the abolition of the Planning Commission and the introduction of the Goods and Services Tax (GST).
- The 15^th Finance Commission is headed by N.K. Singh.
In November 2019, the Union Cabinet approved the 15^th Finance Commission to submit its first report for the first fiscal year 2020-21 and to extend its tenure to provide for the presentation of the final report covering Financial Years 2021-22 to 2025-26 by 30^th October, 2020.