State Finance Commissions and Devolution of Funds to Panchayati Raj Institutions in Odisha: A Critique

Abstract

State Finance Commissions (SFCs) support the Local Self-governments in receiving the funds from the state resources and effectively discharging their functions as institutions of self-government. Constituted in 2018, the fifth SFC has, in its report submitted to the state government, recommended various measures for transferring funds to the Panchayats and strengthening the revenue of these bodies. This article examines the key recommendations of the fifth SFC, recommendations of the previous SFCs and implications of these recommendations on improving the finances of the Panchayats. This article argues that the working of SFCs and their recommendations have in many ways impacted the finances of the Panchayati Raj Institutions on the basis of review of various SFC Reports and secondary data from the government. However, in some cases, the state government has not effectively implemented the recommendations of the SFCs. So, it is important for the state government to implement the key recommendations of fifth SFC and accordingly transfer funds to the PRIs.