How does the inability of local bodies to generate their own funds affect their ability to function effectively? Suggest necessary measures to empower local governments in generating independent revenue streams.

73rd & 74th constitutional amendment act established local bodies in Indic & thus began the world's greatest democratic experiment. However the local bodies have been stressed with lower devolution of funds i.e. Goods, Junctions & Functioneries. The total revenue generation of Panchayati Raj Institution is less than 1% GDP. Reasons for inability to generate funds: (1) lowers tax collecting devolution by state. (2) Incompetent Panchayats. (3) Tied nature of central & state funds. (5) Refusal by panchayats to collect taxes from people they know.

Inability of funds leading to ineffective functioning: (1) Tied nature of funds do not allow resolution of local issues. (2) Dependence on centre and state impedes autonomy and causes delay in decision making. (3) Low funds limits the working ability. (5) Lower funds causes prioritization of issues leaving some important ones unattended. (6) Political considerations of centre & state causes changes in inflow to local bodies do not allow local bodies to take long term projects. Measures to empower governments in generating revenue:

Measures to empower governments in generating revenue: (1) Raising awareness among people about necessity of funds. (2) Creates devolution & taxing powers to local bodies. (3) Having consistent state finance commissions and following their recommendations. (4) Digitization of revenue generating streams like property tax, etc to avoid leakages & corruption. (5) Appointment of revenue collecting officers. (6) Exploring options like ecotourism, one village-one product, rural tourism, etc to generate external revenue. (7) Exploring options for municipal bonds. Local bodies in Indic must be strengthened to take governance at the door steps.