A government-appointed panel has flagged the absence of reliable and granular data at the Gram Panchayat level as one of the biggest challenges affecting the functioning of State Finance Commissions (SFCs).
The panel warned that the data deficit is undermining efforts to strengthen fiscal decentralisation and local self-governance across the country.
In its report submitted to the Ministry of Panchayati Raj, the Committee on Datasets for State Finance Commissions said the lack of a robust data ecosystem has adversely impacted both the quality and timeliness of SFC recommendations.
The commissions, constituted under Article 243-I of the Constitution, are responsible for assessing the financial position of Panchayati Raj Institutions and recommending the sharing of financial resources between state governments and local bodies.
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The committee observed that crucial information on local government finances, assets and service delivery remains fragmented across departments, with no integrated database available for comprehensive analysis.
It also highlighted the absence of Panchayat-level disaggregated data, making it difficult for SFCs to carry out accurate fiscal assessments and formulate evidence-based recommendations.
The report pointed to several other challenges, including inconsistencies in accounting practices across states, inadequate availability of sector-wise expenditure data, capacity constraints at the local level and delays in the constitution and submission of SFC reports.
While recognising the role of digital platforms such as eGramSwaraj and the Panchayat Advancement Index, the panel noted that the existing data ecosystem still falls short of meeting the analytical needs of State Finance Commissions.
It also expressed concern over the continued dependence on outdated datasets, including Census 2011 figures.
To bridge these gaps, the committee recommended the creation of comprehensive Gram Panchayat-level fiscal databases across states, establishment of dedicated SFC Cells within state governments, standardisation of accounting frameworks and publication of detailed budget documents on transfers to local bodies.
It also called for enhanced training and capacity building, revival of Panchayat statistics publications and greater collaboration among institutions to ensure systematic availability of Panchayat-level data.
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