ABSTRACT
Fiscal decentralisation is important in the decentralised governance because financial resources at the disposal of the local government allow the planning and execution of service delivery functions as per the local needs. This chapter maps the fiscal decentralisation process in the Indian state of Chhattisgarh by analysing recommendations of the State Finance Commissions and central Finance Commission and offers policy recommendations to improve the financial situation of the Panchayati Raj Institutions (PRIs). The chapter concludes that taxes and non-taxes are the main sources of own revenues of the PRIs, particularly in the case of GPs. However, the gap between demand and collection of taxes has increased and this has disturbed the fiscal decentralisation agenda in the state. Policy suggestions emerging from the chapter are the following: (i) reduce and rationalise the number of taxes as taxes and non-taxes instead of obligatory and optional as mentioned in the State Panchayati Raj Act, and ii) share at least 10 per cent of state own tax revenue with Panchayats to effectively deliver services at the local level.
