6.1. Suggestions to Increase Revenue of Panchayats

In order to widen their tax base the PRIs will need to explore additional sources of revenue.

♤ Sectors like transport, tourism and infrastructure have grown remarkably and a part of this growth has also percolated to the rural sector.

♤ Among the classical items of tax collection – imposition of profession tax, cattle registration fee and vehicle registration fee are the three notable areas which have not been exploited optimally by the Panchayats. The Panchayats need to be more imaginative and assertive in tapping such resources.

♤ All common property resources vested in the Village Panchayats should be identified and made productive for revenue generation.

♤ The local community represented by the local Panchayat should have prime right over the income from royalty accrued to the State Government for mining in that area. State Finance Commissions should bear this in mind while finalizing devolution of grants to the rural local bodies. State Governments should consider empowering the PRIs to collect cess on the royalty from mining activities.

♤ One of the effective and fair tools to improve revenue collection of the local bodies is to incentivize their efforts. Panchayats which have shown positive results must be suitably rewarded. This can be done by linking grants and aids from centre and state to their own revenue generation efforts.