Center working on framework to help Panchayats become financially autonomous

New -delhi: The government is working on a framework to help village councils (Panchayats) generate their own income and become financially autonomous, and develop developmental works without relying on funds from the center or states. The Union Panchayati Raj ministry has erected a panel, consisting of senior officials from various state governments, who have the task of formulating a blueprint that can act as a guideline for states and trade union areas (UTS) to create and edit their model OSR (own revenue revenue). “We have compiled a committee consisting of senior officials from various state governments to set up an OSR framework of Panchayats, which can serve as a measure of the states in the formulation and amendment of their OSR rules,” said Vivek Bharadwaj, Secretary, Panchayati Raj. The template, which must be shared with states and UTS, aims to include the gaps in existing regulations and to guide local bodies to mobilize revenue, which comes mainly from tax, fees and other costs. Read also | Budget 2025 | Grassroots governments can increase financing, the development assumes the meaning, as almost a dozen states and UTs do not have OSR rules. The 22 states and UTs that have already formulated the rules to update them, Bharadwaj said. Own Source Revenue (OSR) refers to the revenue that Panchayats generate on their own, from sources such as property taxes, water costs, market fees, trading license fees and building permit fees. OSR rules help regulate, standardize and empower Panchayats to collect and manage the income effectively. The OSR rules are crucial to Panchayat, as it empowers them to function independently and also reduces the over-dependence of central and state grants. In addition, they support local development projects with locally generated funds. Lack of OSR rules According to Bharadwaj, there are 11 states and UTs that have not yet set OSR rules. These include Arunachal Pradesh, Bihar, Jharkhand, Manipur, Nagaland, Sikkim, Uttar Pradesh, Andaman & Nicobar Islands, Dadra and Nagar Haveli and Daman and Diu, Ladakh and Lakshadweep. Twenty states and UTs have already developed and implemented OSR-based regulations, allowing to charge and collect Panchayats, fees, tolls or other local revenue sources. Among these states are Andhra Pradesh, Assam, Chhattisgarh, Goa, Gujarat, Haryana, Kerala, Maharashtra, Tamil Nadu and Karnataka. Read also | Niti Aayog asks for improvement in data quality Some states have detailed guidelines for determining OSR rates. In many cases in the countries, it has been observed that many more efforts must be made to meet these requirements. “Financial rules associated with OSR generation have been drawn up in states long ago, and have therefore suffered from various shortcomings, such as the use of incomprehensible legal jargons and a lack of update,” Bharadwaj added. Panchayats, which act as grassroots to implement government programs and to achieve the sustainable development goals, receive grants from the center, state governments, as well as to increase their own income in a limited way by internal resources such as income to local taxes and user costs. “Self -supply is an ideal state for Gram Panchayats as they may have more funds to perform development works. However, the income of income is conditional as it depends on economic activities in a specific area,” says Sri Hari Nayudu, Economist, National Institute of Public Finance and Policy (NIPFP), New Delhi. “Most of the time, we depend on state government grants, because most of us don’t know how to increase revenue. The proposed rules can lead us in that direction,” said Gurcharan Singh, Panch-Charik Patti Sarkar, a rural local body in the Moga district Punjab. In 2021-22, the average OSR per capita collected by panchayats at the entire India level was £ 100. ‘The main reasons for collecting low income are too much dependence on grants, under -utilization of tax powers, poor administrative systems and trust deficiency with citizens limiting revenue,’ said an economist who requested not to be identified. Read also | Urban Renewal: Indian cities need a review of management