ISS Previous Year Paper 2020 GS Solution Question 3(d) Fiscal Decentralisation and Strengthening Local Governments in India

ISS Previous Year Paper 2020 GS Solution Question 3(d) Fiscal Decentralisation and Strengthening Local Governments in India. Detailed answer discussing the importance of financial autonomy for Panchayats and Urban Local Bodies.

ISS Previous Year Paper 2020 GS Solution Question 3(d) Fiscal Decentralisation and Strengthening Local Governments in India

ISS Previous Year Paper 2020 GS Solution Question

Q.3(d) Discuss the importance of fiscal decentralisation in strengthening local self-government institutions in India.

Answer :

Fiscal decentralisation is a crucial component of democratic governance because it empowers local governments to address local needs more effectively. It enables Panchayats and Urban Local Bodies to plan and implement development programs based on local priorities.

One of the major benefits of fiscal decentralisation is financial autonomy. When local institutions have access to adequate financial resources, they can provide essential public services such as drinking water, sanitation, healthcare, education, and local infrastructure more efficiently.

Fiscal decentralisation also promotes accountability and transparency. Since local representatives are directly answerable to citizens, public expenditure can be monitored more effectively. This encourages greater public participation and improves governance outcomes.

The Constitution provides for State Finance Commissions (SFCs) to recommend the sharing of financial resources between state governments and local bodies. Grants from the Central and State Governments further support local development activities.

However, many local bodies continue to face challenges such as inadequate revenue-generating powers, dependence on grants, delays in fund transfers, and limited administrative capacity. These constraints often reduce their effectiveness.

Strengthening fiscal decentralisation requires greater financial devolution, timely transfer of funds, improved local taxation mechanisms, and capacity-building initiatives for local institutions.

Conclusion

Fiscal decentralisation is essential for strengthening local self-government and deepening democracy at the grassroots level. Greater financial autonomy and resource availability can enhance service delivery, accountability, and inclusive development across India.