TRUNCATED WRITEUP ON “EFFECTIVE MANAGEMENT OF PANCHAYATS IN INDIA- AN APPROACH PAPER”

 TRUNCATED WRITEUP ON “EFFECTIVE MANAGEMENT OF PANCHAYATS IN INDIA- AN APPROACH PAPER” by Ajay S Singh*

1.     INTRODUCTION

1.1.  Background

World over communities are favouring decentralisation of power. They are increasingly looking at solutions promoting democratic decentralisation, participative local governance and involvement of civil societies. Citizen-centric service delivery requires increasing attached government set up which is spatially close and smoothly accessible to the citizen, rather than typical empathy-invariant bureaucracy.

 

1.2.  Panchayati Raj in India

 

     Panchayati Raj was discussed and conceptualised in great detail in 1957 when Balwant Rai Mehta Committee, submitted its report and recommended the establishment of a three-tier Panchayati Raj Institution (PRI) system at the village (gram), block (samiti) and district (zilla) levels. It remained only a concept and could not take off on the ground. The symbolic implementation of local government was noted by the Ashok Mehta Committee in its 1978 report. He highlighted the lukewarm attitude of the political elite and bureaucracy as the primary factor leading to the stagnation and eventual decline of PRIs. Finally through 73rd Constitutional Amendment Act (CAA)  India decided to introduce decentralisation through legislation in 1992. This amendment aimed at enabling the 2.74 lakh PRIs in this country (2.67 lakh Gram Panchayats or GPs, 6,895 Block or Intermediate Panchayats and 700 District Panchayats) to handle responsibilities and take care of the “preparation and implementation of plans for economic development and social justice as may be entrusted to them, including those in relation to the 29 matters listed in the Eleventh Schedule.”

 

1.3.  Challenges

 

    Since India is a federal democracy, this devolution of powers between the state legislature and panchayats in the Indian Constitution is only outlined and actual devolution was left at the discretion of the State. Thus the aspect of implementation of the cardinal provisions of the CAA to a large extent is dependent on the intention and strength of the State government

enactment and the will to take forward process of decentralization. After the recommendations made by the Fourteenth Central Finance Commission, fund devolution to panchayats has increased significantly. It has awarded Rs 2,00,292.20 crores as grants to Gram Panchayats (GPs) for the period from 2015-16 to 2019-20 towards provision of basic services in the GP. There are several schemes of Government of India being implemented through Panchayats or providing benefits to villagers with direct or indirect involvement of GP. Schemes under Ministry of Rural Development and Ministry of Drinking Water and Sanitation have annual allocation of more than Rs.1.28 lac crores. (2018-19) Similarly, Ministry of Food, Ministry of Health and Ministry of Human Resource Development have huge allocations for rural areas. Governments alone spend an average amount of about Rs.2 crore in every panchayat every year. This huge allocation is not yielding desired results. ______________________________________________________________________

*Ajay S Singh is an ICAS officer and posted as Director-Finance in Punatsangchhu Hydroelectric Project Authority, Bhutan. Views are personal. This is an extract of an article published in Journal available at https://jir.mewaruniversity.org/wp-content/uploads/2021/03/JIR%20Volume%205,%20Issue%203,%20Jul-Sep%202017.pdf 

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There is an urgent need to empower these PRIs by transferring functions, responsibilities and commensurate powers to manage it.

 

2.     AREAS OF IMPROVEMENT IN PRIS

 

PRIs must get relevant functions, responsive functionaries and adequate finances before they may be expected to attain autonomy and work like a corporate. This would certainly result in improved decision making; operational flexibility – man power deployment, etc.; accountability and efficiency;  disclosure of activities and financial health of the PRIs in time and in a professional manner and reward and remuneration linked with performance and productivity.  

 

 

3.     CRITICAL COMPONENTS FOR EFFECTIVE MANAGEMENT OF PRIS

 

In order to make PRIs successful four components shall be strengthened namely functions , functionaries and their capacity building, transfer and generation of finances and autonomy. 

   Transfer of functions to PRIs after due study of local eco-system, availability of commensurate functionaries to help elected representatives to discharge these functions and providing adequate finances to manage the assigned functions are essential requirements of successful management of PRIs. Manpower is another constraint which has been highlighted by the Sumit Bose Committee in its draft report on HR requirements of Panchayats with a focus on implementation of rural development programs. The report has broadly looked at the administrative structure of schemes of Rural Development. Problem identified by the Committee “is the profusion of ill-organised cadres and temporary workers to manage programmes”. 

Availability of funds and delegation to incur expenditure is another area where a lot needs to be done.

                      Chart 1: Sources of Revenue of PRIs

Independence of PRIs as local governments is critically dependent on the non-discretionary financial resources available to them.  

4.    RECOMMENDED SYSTEM FOR GOVERNANCE, ACCOUNTABILITY AND TRANSPARENCY

 

4.1.                  Every state must come up with a road map to transfer functions to PRIs. Transfer shall be done along with detailed guidelines about expectations from different levels of PRIs, corresponding delegation of administrative and financial powers and guidelines about exercising these powers. 

4.2.                  PRIs need to be empowered to engage manpower and to have control over them. There is a need to assess manpower for the functions to be performed by GP and other PRIs. Manpower and capacity building should not only be engaged  for execution, but also for planning, monitoring, internal controls, financial management and evaluation to realize equitable growth and holistic development.

4.3.                  Pooled resources for GPs may be thought of with well-defined responsibility and reporting structure so that such functionaries do not end up not doing the work of a few GPs and get paid by the Block or any GP where he is reporting. There is a need to carry out assessment of skill gap and enhance the skill sets. 

4.4.                  PRIs need to be trained to manage finances without compromising their autonomy and quality of decisions. IT is a good tool to strengthen them for this purpose.

 

4.5.  Use of PFMS and other ICT tools for better Panchayat administration

There are flagship schemes getting implemented through them. Under Ministry of Rural Development, Ministry of Panchayati Raj and Ministry of Drinking Water and Sanitation these are getting implemented through State government which in turn uses Panchayat as implementing agency. In all centrally sponsored schemes, funds are transferred from Government of India to State Treasury and then to Sub-Treasury or through SPV to GPs.

 

 

Chart 2: Fund Flow from Government of India to GPs

 

Entire fund flow from GoI to States or other autonomous bodies, directly implementing central sector or centrally sponsored schemes are taking place through Public Financial Management System (PFMS). Many bigger schemes capture further details of the implementing agencies and beneficiaries. In many schemes there is dedicated software which is primarily Management Information System (MIS). It intends to capture fund flow and physical deliverables or outputs of the schemes. Some of the software is elaborate and they capture transactions recording physical and financial activities. 

 

 

 

Chart 3: Process of Initiation of Payment Requests and Fund Transfer in MGNREGA

 

 

Software NREGASOFT has been developed by NIC and it is taking care of document processing and forwarding the payment requests to PFMS. PFMS takes care of payment and accounting at GoI level. Accounting at GP level is left to Panchayats to handle. Similarly there are other software portals handling fund flow or document processing up to district or GP level. Ministry of Panchayati Raj has put in place a software developed by NIC called Priasoft. This accounting and transaction software portal has been designed to capture transactions taking place at panchayat level. This is being used by many Pancahyats to handle accounting at GP level. However, as mentioned above, there are software already in use in the Panchayats where the Panchayat functionaries are required to key-in data and same or similar data is required to be keyed in again in Priasoft. Further, there are reporting requirements, which consume a lot of time of the functionaries in preparing reports which may be easily generated electronically. All this not only adds to redundancy but additional work at Panchayat level which is already deprived of trained manpower. In order to derive the benefits from technology and already developed software, there is a need to integrate MIS and other IT tools in such a manner that data interchange can take place seamlessly and benefits can be derived by the Panchayat, State and Central government as the case maybe. To begin with, data captured in NREGASOFT and other similar software maybe interchanged with Priasoft so that all the payments happening in the Panchayat can also be captured in Priasoft without making separate entries in the software. 

 

 

 

Chart 4: Software Flowchart

 

After mapping of data structure of schemes and PFMS with Priasoft, data interchange may happen seamlessly. Thus accounts would get prepared without any significant efforts at Panchayat level for these schemes. In all other cases, vouchers may be prepared using Priasoft and fund transfer orders may be handled the way it is handled today. Once payment is made expenditure report may be filed in PFMS using an interface to be developed between Priasoft and PFMS. Wherever GPs have capacity to handle payment using online systems or internet enabled fund transfers, PFMS’s EAT (Expenditure, Advance and Transfer) module may be used. PFMS has a provision to release payments to the beneficiary, through this module, if the GPs is registered on the portal. It has a provision whereby all the money going to GPs can also be tracked scheme wise, program wise, agency wise or any other attribute defined in the software. EAT module of PFMS captures expenditure incurred by the agency, advances given to any other agency or transfers made to any other agency. This module also handles payments to be made to the beneficiaries through electronic mode using the secure digital payment method. Thus, there will a process through which payment will be made using PFMS, to the beneficiary and related account will be maintained in Priasoft whereas many management reports would be available in PFMS as well as Priasoft. It will also provide facility to look into the passbook of the agencies so that the minimum idle fund is kept with them and it may also be monitored by the higher level implementing agency. Once this PFMS module is used, Panchayats will be able to make payment through their bank and keep the account maintained and consolidated using the same. This will also enable them to get the bank re-conciliation done in a more scientific manner. For working under this module, officers need to be trained to work on this module using digital payment methods.

 

    In the village, every beneficiary may be allotted with one Ledger under which its accounts will be maintained. Each Ledger will contain details of the beneficiary and separate flags for payments received under different schemes of government of India, state government or local government. Demographic and other relevant data for ledger is already available in one scheme database or the other. SECC data is also a good source to link to the ledger. This Ledger will enable the Panchayat to look at the money going into the beneficiary accounts, and overall benefits provided to the family. As per SECC data, reports may also be generated about the help extended to such families of poor economic status. Architecture of accounting maybe designed in such a manner that the ledgers may be maintained for schemes, beneficiaries and sub-ledgering may be done to capture expenditure with minimum efforts.

 

  Further, geo-tagging and photo evidence of works and beneficiaries also needs to be synergised at GP level. Technical persons going to capture photo or geo-tagged images may be used by GP administration to do the work for the GP, rather than only focussing on a scheme.