States oppose local funding

Several states, including Bihar and Gujarat, have opposed the idea of direct funding of Panchayati Raj Institutions (PRIs) by the Centre, as outlined by Prime Minister Manmohan Singh yesterday.

However, a consensus was reached yesterday on the effective devolution of functions, functionaries and funds to PRIs at the two-day chief ministers' meeting on rural development and Panchayati Raj here.

At the end of the conference, Rural Development Minster Raghuvansh Prasad Singh said the Rs 17,000 crore funding was not adequate to carry out rural development programmes, and there was a need to raise the budgetary allocation.

To a question regarding the response of states on the issue of direct funding of Panchayats, he said the views of chief ministers were elicited at the meeting and added that many states did not favour it.

Panchayati Raj Minister Mani Shankar Aiyar said the the principle of "fiscal federalism" would be followed in the transfer of funds to PRIs.

"We have called for non-diversion of funds for Panchayats and their timely transfer," the Prime Minister had said, and added that in the best traditions of fiscal federalism, the Centre and states needed to cooperate in strengthening local government finances.

The rural development minister said the utilisation of funds by PRIs needed to be strictly monitored and favoured regular meetings of Panchayats and gram sabhas, at least four to six times a year.

In his concluding remarks, Aiyar said, "We have succeeded in giving shape, content and direction to what the Prime Minister had said yesterday."

To carry it forward, he said, seven round-table meetings would be held in the next six months.

The first round-table would be held in Kolkata on July 24 and 25 to discuss effective devolution in terms of functions, functionary and funds.