FISCAL DECENTRALIZATION: A STUDY OF KARNATAKA STATE

Suresh Chandra Babu

The IUP Journal of Journal of Public Administration, 2007, vol. III, issue 1, pages 23-43

Abstract: The Panchayat Raj Institutions (PRIs), inter alia, need a certain degree of fiscal autonomy. The analysis of this issue in the context of Karnataka, however, reveals certain disturbing trends. Fiscal provisions incorporated in the state’s Panchayat Raj Act have centralized tendencies. The institutions lack fiscal autonomy. They largely depend upon transfers from higher level governments and are tied to certain programs/schemes. Further, the trends show that the percentages of transfers are declining gradually. The efforts to mobilize the resources of PRIs are not satisfactory. Though the state dutifully constitutes the Finance Commission from time to time, as required by the Constitution, the same interest is not observed during the implementation of its recommendations. This may be due to its credit of being transferring larger resources to PRIs compared to all other states in India. In order to overcome regional imbalances, it is necessary to sincerely evolve better formulas/criteria for horizontal distribution of resources. Hence, various measures need to be taken for strengthening the finances of PRIs.

Date: 2007

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