Why in the news?
The Ministry of Panchayati Raj released the Report of the Committee on Datasets for State Finance Commissions to strengthen evidence-based fiscal decentralisation and improve financial governance of local bodies.
Key Highlights
- Released by V. Anantha Nageswaran.
- The report aims to strengthen:
- Fiscal decentralisation
- Local public finance
- Data-driven governance
- Focuses on improving data availability for:
- Panchayats
- State Finance Commissions (SFCs)
Why is the Report Important?
According to the Chief Economic Adviser:
- Better data leads to better governance.
- Sound fiscal decisions require:
- Reliable data
- Timely data
- Granular (local-level) data
- Effective delivery of services such as:
- Drinking water
- Roads
- Street lighting
- Anganwadi services
depends on empowered local governments.
Major Recommendations
1. Panchayat-Level Fiscal Database
- Creation of comprehensive databases on:
- Revenue
- Expenditure
- Assets
- Liabilities
2. Use of Panchayat Advancement Index (PAI)
- Classification of PAI indicators for SFC analysis and recommendations.
3. State Finance Commission Cells
- Dedicated SFC Cells in State Governments.
- To support:
- Data collection
- Research
- Technical analysis
4. Standardised Accounting Framework
- Uniform accounting and reporting systems across States.
5. Common Reporting Framework
- Standard format for SFC reports.
- Enables comparison and consistency.
6. Data Handbooks
- Publication of comprehensive Panchayat data handbooks.
7. State Finance Commission Manual
- Preparation of a standard operational guide for future SFCs.
State Finance Commission (SFC)
- Constitutional Basis: Article 243-I: Provides for constitution of a State Finance Commission by the Governor every five years.
Functions
- Review financial position of Panchayats.
- Recommend distribution of:
- State taxes
- Duties
- Tolls
- Fees
between State Government and local bodies.
- Suggest measures to improve local finances.
[2025] Consider the following statements :
I. Panchayats at the intermediate level exist in all States.
II. To be eligible to be a Member of a Panchayat at the intermediate level, a person should attain the age of thirty years.
III. The Chief Minister of a State constitutes a commission to review the financial position of Panchayats at the intermediate levels and to make recommendations regarding the distribution of net proceeds of taxes and duties, leviable by the State, between the State and Panchayats at the intermediate level.
Which of the statements given above are not correct?
[A] I and II only
[B] II and III only
[C] I and III only
[D] I, II and III