Challenges to Fiscal Decentralisation in India

Abstract

There has been a trend towards decentralisation throughout the world with the heated discussions about its advantages, mainly from the last five decades. Perceived advantages of decentralisation are ranging from better public service delivery to public involvement in the governance process to mobilisation of revenue resources. Most of the countries throughout the world are strengthening their local governments as priority is given on their development policy framework. India is also become a highly decentralised country after the passage of 73rd and 74th Constitutional Amendment Acts. Decentralisation in India can be seen in three different aspects- political, administrative and fiscal, but still needs to do more to meet all its objectives. Even after empowering the local governments with taxing powers, however, it is still lagging behind in terms of fiscal decentralisation. This paper is an attempt to highlight some challenges to fiscal decentralisation to Panchayats in India.