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29 Jul 2026POLITY3 questions

Money of Their Own: The Push to Make Gram Panchayats Fiscally Self-Reliant

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Article summary

The Ministry of Panchayati Raj launched the Atmanirbhar Panchayat Programme to strengthen the revenue generation and financial autonomy of gram panchayats, alongside SAMARTH, described as India's first unified digital platform for the end-to-end management of panchayats' own-source revenue. Own-source revenue (OSR) is the income a local body raises itself — through local taxes, fees, rents and user charges — as distinct from grants transferred from higher levels of government. The push addresses a long-standing weakness of India's local-government system: while the 73rd Constitutional Amendment (1992) created elected panchayats and provided for devolving functions to them, the corresponding devolution of finances and functionaries has lagged, leaving most panchayats heavily dependent on central and state grants and therefore with little real autonomy. Strengthening own-source revenue and digitising its collection aims to make panchayats genuinely self-reliant local governments rather than mere implementing agencies for schemes designed above them.

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recallTests whether you read the article and retained key facts.
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applicationTests whether you can apply the concept to a new scenario.
1Q
analysisTests whether you can reason across multiple related facts.
1Q

Sample questions — answers revealed after test

POLITYRecallEasy

Q1. The 73rd Constitutional Amendment Act, 1992 introduced which of the following features for Panchayati Raj Institutions?

AA three-tier structure, mandatory elections through State Election Commissions, and State Finance Commissions to recommend fiscal devolution.
BDirect election of panchayat heads by the Union Parliament.
CAbolition of all reservations in local bodies.
DA single-tier village council with no district or block level.
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POLITYApplicationMedium

Q2. The programme's focus on 'own-source revenue' is said to target the weakest of the '3Fs' of devolution. Why is own-source revenue treated as central to genuine fiscal autonomy?

ABecause grants from higher governments are unconstitutional for local bodies.
BBecause a body dependent on tied grants has little discretion, whereas revenue it raises itself gives it untied funds and real independence over spending priorities.
CBecause own-source revenue is the only legal way to pay panchayat staff.
DBecause the Constitution bars panchayats from receiving any State funds.
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POLITYAnalysisHard

Q3. Consider the following statements about fiscal devolution to panchayats: 1. The '3Fs' framework holds that meaningful devolution requires functions, funds and functionaries to move together to the local level. 2. State Finance Commissions are meant to recommend how resources are shared between a State and its local bodies. 3. Because the 73rd Amendment is in force, all States have fully devolved the 29 subjects of the Eleventh Schedule to panchayats. Which of the statements given above are correct?

A1 and 2 only
B1 only
C2 and 3 only
D1, 2 and 3
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