India’s local government are constitutional entities. However, across all states the local bodies are facing daunting challenges due to lack of genuine devolution of funds. Several Finance Commissions had acknowledged the issue of lack of fiscal devolution at the local government level. In this context the study analyses the extent of the socio-economic improvement at the Indian Local Government Level (both Urban and Rural bodies) due to the gradual improvement in the devolution of funds by the subsequent Finance Commission.

The study has selected 10 representative states (Punjab, Uttar Pradesh, Gujrat, Rajasthan, West Bengal, Bihar, Assam, Tripura, Tamil Nadu and Kerala) from different regions based socio-economic factors and made a trend analysis of selected secondary data from the Niti-Ayog (formerly The Planning Commission of India) to understand the reflection of grassroot level development align with the Finance Commissions’ commitment of fiscal devolution at the local bodies level.

The finding shows across the board capital receipt has increased at the state-level align with the Finance Commissions’ promise for fiscal devolution, except the north-eastern states. The analysis reflects social sector capital assets have improved corresponding to population pressure except operational health infrastructure. Hence, the study also shows that subsequent Finance Commissions’ commitment for fiscal devolution at state and local level have made some positive impact at the grass-root level.

Dr Kuntal Goswami, Founder, South Asian Institute of Sustainable Development.