CEA coins ‘ease of living’ agenda to determine strength of panchayats

Chief Economic Advisor (CEA) V Anantha Nageswaran on Monday said the ‘Ease of Living’ agenda was the ground-level counterpart of ‘Ease of Doing Business’ that could only be determined by how well-equipped and capable panchayats were.He also bated for the Comptroller and Auditor General (CAG) conducting performance audits on the implementation of the 73rd Amendment across all states to evaluate functional, financial, and administrative devolution to Panchayati Raj Institutions (PRIs).

The official was speaking after releasing the Report of the Committee on Datasets for State Finance Commissions.

“It is time we advocate ‘Ease of Living’ agenda, which is the ground-level counterpart of ‘Ease of Doing Business’, about which we often speak about in policy circles. If we want to know India’s actual economic potential, we need to look beyond the GDP numbers,” he said.

"A large population of the country lives in rural areas where the quality of roads, houses, schools, hospitals as well sanitation facilities determine not only the well-being of its populace but also their productivity. Their children are their human capital, ultimately reflecting the trajectory of India’s development itself,” he added.

Nageswaran noted that weak and fragmented data systems at the gram panchayat-level have left State Finance Commission (SFC) reports too weak to guide recommendations, with the 16th Finance Commission unable to rely on them while framing its recommendations.

Finance Commission transfers to rural local bodies form a key part of India’s fiscal decentralisation framework, helping fund basic services such as drinking water, roads, sanitation and anganwadis in villages.

The CEA emphasised that the quality of decisions on resource allocation was directly determined by the quality of data and analysis available, and described the report as an important step towards strengthening the information architecture for local governance.

Panchayat Secretary Vivek Bharadwaj emphasised upon the need for greater coordination between the State Finance Commissions (SFCs) and Central Finance Commissions. He stated that reliable and accessible data was fundamental to improving the quality and timeliness of SFC recommendations.

“Strengthening the data ecosystem for local governments will enable evidence-based decision-making and enhance the effectiveness of fiscal devolution to Panchayati Raj institutions,” he said.

Bharadwaj highlighted two key outcomes of the ministry’s sustained engagement with the 16th Finance Commission.

He said, “Recognising the governance needs of India’s rapidly expanding peri-urban areas, the commission has proposed an Urbanisation Premium of Rs 10,000 crore to support local bodies managing the transition of census towns into urban entities.”

“Secondly, the panel has reintroduced a performance-based grant framework, allocating Rs 87,000 crore exclusively for panchayats. The grants will be linked to annual growth in own-source revenues of at least 2.5 per cent, reflecting confidence in the increasing financial capacity and self-reliance of local governments,” he added.