Governance Data – Strengthening Panchayat Finance Through Reliable Local Data
Governance Data – India’s Chief Economic Advisor, Dr. V. Anantha Nageshwaran, has praised the efforts made by Karnataka and Goa in improving local governance data systems and strengthening financial management at the panchayat level. He noted that the initiatives undertaken by both states provide a useful model for other regions seeking more effective and evidence-based planning.
Report Highlights Need for Better Local Data
Dr. Nageshwaran made the remarks while releasing the report titled “Committee on Datasets for State Finance Commission.” The study reviewed the availability of information used by State Finance Commissions and assessed the quality of data collected at the grassroots level. It also proposed measures to improve data collection and management for better fiscal decision-making.
According to the report, several critical information gaps continue to affect planning processes across states. Areas such as detailed population statistics, human development indicators, financial audits of panchayats, records of public assets, and civic infrastructure data remain insufficient or inconsistently maintained.
Challenges in Accessing Grassroots Information
Many state governments continue to face difficulties in gathering accurate local-level information related to development programmes, socio-economic conditions, public services, and financial resources. The absence of reliable data often limits the ability of policymakers to assess needs and allocate resources efficiently.
S. M. Vijayanand, former Secretary of the Ministry of Panchayati Raj and a member of the committee, stated that State Finance Commissions frequently lack visibility into how funds transferred to panchayats are ultimately utilized. This also makes it difficult to evaluate the effectiveness of spending and measure outcomes at the village level.
Importance of State Finance Commissions
State Finance Commissions play a central role in strengthening fiscal decentralization under the Panchayati Raj system. These bodies periodically review the financial condition of local governments and recommend how financial resources should be shared and distributed among panchayats.
Dr. Manish Gupta, Associate Professor at the National Institute for Public Finance and Policy and a committee member, explained that data shortages continue to affect evidence-based fund distribution. Without dependable information, it becomes challenging to determine the actual requirements of individual panchayats.
He noted that local bodies often face different developmental priorities. While one panchayat may require greater investment in sanitation, another may need support for healthcare services or infrastructure projects. Reliable data helps ensure that funding decisions reflect these specific needs.
Karnataka’s Model Receives Recognition
Vijayanand highlighted Karnataka’s progress in building technology-driven systems for collecting and organizing local governance data. He said the state has developed effective software tools that support systematic record management and improve data quality.
While Kerala has also established mechanisms for collecting local-level information, he observed that concerns remain regarding the accuracy and consistency of some datasets. In contrast, Karnataka’s approach was cited as an example of how digital systems can improve data reliability.
Dr. Nageshwaran encouraged other state governments to study and adopt similar practices implemented by Karnataka and Goa to enhance governance and financial planning.
Recommendations for Future Data Systems
The report also referred to a recent nationwide survey conducted by the Ministry of Panchayati Raj. The exercise covered nearly 2.6 lakh panchayats and evaluated them across 150 indicators under the Panchayat Advancement Index (PAI 2.0).
To improve future assessments, the committee recommended organizing data into three broad categories: panchayat needs, panchayat performance, and backward areas requiring equity-focused support. Such a framework would help State Finance Commissions conduct more structured and objective evaluations.
Additionally, the committee suggested stronger coordination between the Ministry of Panchayati Raj and the Ministry of Statistics and Programme Implementation. It also recommended establishing dedicated institutions at both central and state levels to ensure continuous collection, verification, and management of panchayat-level data across the country.