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Lesson 34:Panchayat Raj Institutions

Financial Powers of Panchayati Raj Institutions

Article 243-G of the Constitution of India provides that the States/UTs may, by law, endow the Panchayats with such powers and authority as may be necessary to enable them to function as institutions of self-government and to prepare plans for economic development and social justice and their implementation including those in relation to the matters listed in the Eleventh Schedule. As per Article 243-H of the Constitution, State Legislatures have been empowered to enact laws;

1. to authorize a Panchayat to levy, collect and appropriate some taxes, duties, tolls and fees;
2. to assign to the Panchayat, some taxes, duties, tolls levied and collected by the State Government;
3. to provide for making grants-in-aid to the Panchayats from the Consolidated Fund of the State; and
4. to provide for constitution of such funds for Panchayats for crediting all money received by or on behalf of Panchayats and also the withdrawal of such money there from.