The Chief Economic Advisor to the Government of India, Dr. V. Anantha Nageshwaran, has recognized the efforts of the Karnataka and Goa state governments in streamlining panchayat finance and collecting accurate socio-economic data to support evidence-based planning.
Nageshwaran made these comments during the release of the report titled ‘Committee on Datasets for State Finance Commission.’ The report examined existing sources of data at the panchayat level and recommended improvements to data systems to enhance evidence-based fiscal analysis.
The report highlighted a lack of data sets related to demographic details, which include disaggregated population figures, human development indicators, audits of panchayat finances, inventory of assets, and availability of civic infrastructure.
State governments are facing challenges in obtaining grassroots data on various developmental indicators, ranging from socio-economic data to information on schemes and financial resources.
“State Finance Commissions (SFCs) are often unaware of how the funds allocated to panchayats are spent and struggle to assess their impact,” stated S. M. Vijayanand, a former secretary of the Ministry of Panchayati Raj and a member of the committee.
SFCs play a crucial role in fiscal decentralization within Panchayati Raj Institutions. They periodically review the financial position of panchayats and recommend principles for the devolution and distribution of finances.
“However, the lack of data has hindered evidence-based devolution and distribution of financial resources,” said Dr. Manish Gupta, an associate professor at the National Institute for Public Finance and Policy and a committee member.
Gupta explained that grassroots data is essential for making informed decisions about fund allocation, as different panchayats may require varying levels of funding for sanitation, health, or infrastructure interventions.
Vijayanand, who previously served as the Chairperson of the SFC in Kerala, noted that Karnataka has developed robust software to assist in the proper collection and organization of data. He added that while Kerala has established data collection points, their accuracy is questionable.
Nageshwaran urged other state governments to adopt the practices implemented by Karnataka and Goa.
Recently, the Ministry of Panchayati Raj (MoPR) conducted a comprehensive survey of approximately 260,000 panchayats, assessing 150 indicators known as the Panchayat Advancement Index (PAI 2.0).
In its recommendations, the committee suggested classifying data into three categories: ‘needs of panchayats,’ ‘performance of panchayats,’ and ‘backward areas for equity.’ This classification would facilitate structured and objective analyses by SFCs. Additionally, the committee advised MoPR to collaborate with the Ministry of Statistics, Programme Implementation and to establish dedicated institutions at various levels, including the Ministry of Finance and state governments, to capture panchayat-level data.