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What Villages Ignore: Water, Sanitation, Streetlights

Prachi Salve & Saumya Tewari,
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A woman next to a well collecting water the old-fashioned way in Methgharkila village near Nashik, Maharashtra. Image: Flickr/Michael Foley


  • Panchayats (village councils) spend most of their money on roads and bridges (38%), followed by maintenance of panchayat buildings (26%).

  • Not enough is being spent on water supply, sanitation and streetlights.

  • Tripura has the highest per capita panchayat expenditure, followed by Telangana and Manipur.


Local governments spend most of their money on the upkeep of roads and bridges, water supply, buildings and community assets, street lighting, sanitation, water drainage and solid-waste management, but a breakup reveals spending imbalances.


Every panchayat spent Rs 189 per capita on an average—between 2007-08 and 2012-13—on roads and Rs 130 per capita on community assets, according to our analysis of panchayat budgets. This is likely to increase.


Little money is being spent on water supply (Rs 73), sanitation (Rs 24) and other services like streetlights (Rs 10), according to the study.



Total expenditure has increased 104%, from Rs 309 per capita in 2007-08 to Rs 631 per capita in 2012-13.


As we previously reported, money allotted to villages for self-governance is set to triple over the next five years, according to a study by Accountability Initiative, a New Delhi-based think tank.


Tripura leads the way in rural spending


The top five states with the highest financial decentralisation in India are Kerala, Karnataka, Maharashtra, Tamil Nadu and Chhattisgarh, according to a study by the Ministry of Panchayati Raj on devolution to local bodies in villages.


However, the panchayats in these states are not among the top spenders.


The highest-spending rural bodies are in Tripura. Its per capita spending is almost double that of states with more money and financial powers.


Tripura has increased its tax collection by 34.48% between 2007-08 and 2011-12. Tripura ranks 22nd in the country with a population of 3.6 million and has a rural population of 2.7 million.


Tripura tops the list due to low population and the increase in tax revenues of panchayats.



The spending patterns are based on the study of panchayat budgets before the recommendations of the 14th Finance Commission were put in place.


What the 14th Finance Commission recommended


The 14th Finance Commission has awarded Rs 200,292.2 crore to panchayats for 2015-2020, which is more than three times the grant of the 13th Finance Commission.


While the 13th Commission grant was for all three tiers of panchayats; district, block and gram panchayat, the 14th Commission grant is only for gram panchayats.


Gram panchayats will now get Rs. 2,404 per capita over five years and Rs 0.17 crore per year (Rs 0.85 crore for five years).


The grant is for basic services, such as sanitation, drinking water and maintenance of community assets. Panchayats must ensure basic services reach everyone, including the most marginalised sections of society, the Commission said.


The panchayats, according to the 14th Finance Commission, will receive the two types of grants from states: basic grants and performance grants.


Performance grants are for panchayats that submit audited annual accounts and increase revenues over the preceding year.


Money allocated for rural India has increased, but the Accountability Initiative study has indicated that data on expenditure of panchayats is not adequate and inconsistent.


Better training for Panchayat functionaries would ensure better audits and more transparency. ■


(You can read the first part—Money For Rural India From Delhi Triples—of this two-part series here.)


(Salve and Tewari are policy analysts at IndiaSpend.)



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  1. T.R. Raghunandan Reply

    June 25, 2015 at 5:13 pm

    Thanks for your quoting the report that we in Accountability Initiative had prepared for the 14th FC. If you go through the report in detail, you will discover that some of the States that report high fiscal decentralisation do so because they send salaries to their staff through their Zilla Panchayats. Second, several of the reports sent by States to the MoPR (and to the FFC) are unreliable and unverifiable. Because of the different ways in which incomes and expenditures are recorded in the State specific Panchayat accounting systems, data from one State cannot be compared with that from others, to the extent required. Please read the chapter on ‘consistency checks’, in our report to the FFC and you will see what I mean.

    Still, congratulations for a commendable effort in highlighting Panchayat finances to the general public!

    T. R. Raghunandan

  2. Anirudh Tagat Reply

    June 25, 2015 at 11:17 pm

    Thank you for this very interesting analysis of Panchayat spending in India. Indeed, we have much to learn about how fiscal responsibility and efficiency ultimately lead to development outcomes at the local level.

    Chattopadhyay and Duflo (2004) and Nagarajan et al (Decentralization and Empowerment for Rural Development; 2014) both talk about how women leaders tend to prioritise spending on water supply and other public goods that cater to local preferences and needs. Perhaps political reservations for women is an important policy measure in this regard if we want to ensure that Panchayat continue to function efficiently and are able to take advantage of this generous fiscal bonus that the Finance Commission has recommended.

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