Model Question and Answers for APSC | Assess the importance of the Panchayat system in India as a part of local government. Apart from government grants, what other sources can the Panchayats look for to finance developmental projects.

Ans: The Panchayati Raj Institutions (PRIs) and Urban Local Bodies (ULBs) were granted constitutional status by the 73rd and 74th Amendment Acts to the Constitution of India, as intended in the Directive Principles of State Policy (DPSP - Article 40 of Indian Constitution). They amended the Indian Constitution by adding Schedules 11 and 12 that grant local bodies authority.

The importance of the Panchayat system in India as a part of the local government:

• Participation of the public: PRIs working at the local level make sure that the public has the chance to be involved in the creation and execution of rural development programmes.
• Women's empowerment: through the requirement that one-third of the seats in PRIs be reserved for women, which has even been increased to fifty percent by some states (Article 243D of Indian Constitution).
• Empowerment of underprivileged sections in society through the reservation of one-third of seats for SCs and STs (Article 243D of Indian Constitution).
• Bottom up planning The District Planning Committee (Article 243ZD) ensures that development activities are planned from the ground up.
• Rural development, PRIs are used to strengthen the democratic foundation of society. The infrastructure of rural areas, the income of rural households, and delivery systems for safety, health, and educational programmes have all benefited from the use of of PRIs.

These organisations need to be inspired to become powerful tools for local social and economic change.

Sources of finance for PRIs other than government grants:

• Taxes levied by village panchayats, such as those on land and housing, custom duty toll taxes, and licence fees, are a significant source of income for gram panchayats.
• Grants in aid are given by the Panchayat Samiti, the Central or State governments, the ZillaParishad, or other organizations.
• Loans obtained from the federal, state, or other financial institutions are another source of income for the panchayat. Money received as gifts also works as a revenue stream for the Panchayat through government programs like MPLADS.

The decision regarding which taxes, duties, tolls, and fees local governments should be responsible for paying and which should be split between them and the state remains in the hands of state legislatures. More financial authority must be devolved to the PRIs for them to become viable institutions capable of affecting change in the socioeconomic development of rural India.