Policy Briefs & Reports

Analytical studies on rural local government finance are few and far between in India. The paucity of reliable data and the lack of transparency in Panchayat finances and associated difficulties in accessing data are important reasons for this. These data gaps are well known and successive Finance Commissions have highlighted this problem with little effect. This PAISA Gram Panchayat (GP) study: ‘Do Gram Panchayats Get Their Money?’ is a small step towards filling this analytical gap. This study analyzes GP level finances in Birbhum district of West Bengal by asking the following questions

Do GP’s get their money?
If so, do GP’s get all their money? i.e. their entire entitlement?
When do GP’s receive their funds? i.e. do funds arrive on time?
Do GP’s spend their money?
If so, what do GP’s spend their money on? And does this expenditure reflect local needs and priorities?
This PAISA study investigates these questions in the context of untied funds– funds that do not impose any specific rules regarding their utilization on the spending agency. Untied funds typically constitute less than 10% of a GP’s resource pool, but are significant because they have the potential to enable GPs to prioritize activities that reflect local needs and preferences.

The study tracks the fund flow process and expenditures incurred through 3 untied funds in a sample of 20 GPs in Birbhum district over a 5 year period from 2005-06 to 2009-10. In addition, it tracksthe receipt of SRD funds at the GP level. As a point of comparison, the study also tracks receipts and expenditures of tied funds – funds which are to be utilised strictly as per the rules or guidelines framed by the Central or State government, and thus, provides no flexibility to GPs.