Subject: Polity
Financial resources are vital for the effective functioning of Panchayati Raj institutions. Panchayats derive their funds from a combination of local taxes, state grants, and transfers from the central government. The 73rd Amendment also provided for the creation of a State Finance Commission to ensure that adequate resources are allocated to local bodies.
In simple language, without enough money, Panchayats cannot provide basic services like water, roads, or health facilities. Many villages still face financial constraints, as delays in fund disbursement or insufficient budget allocations hamper local development. For instance, recent media reports have highlighted cases where poor funding has led to inadequate maintenance of rural infrastructure.
To address these issues, some states are exploring digital financial management and better budgeting techniques to ensure transparency and efficiency. This financial framework is essential to empower Panchayats and improve the quality of rural governance.