What is the primary objective behind the introduction of the Performance Grant Scheme by the central government of India?

The correct answer is To enhance the financial revenue generation of local governing bodies.

Key Points

• The Performance Grant Scheme by the central government aims to augment the financial resources of local governing bodies.
• It seeks to incentivize Gram Panchayats and Urban Local Bodies for better performance in revenue collection.
• The scheme promotes transparency and accountability in the functioning of local bodies.
• It encourages local bodies to enhance their own source of revenue through improved financial management practices.

Additional Information

• 14th Finance Commission Recommendations
  • The 14th Finance Commission recommended performance-based grants to incentivize local bodies.
  • The grants are aimed at encouraging local bodies to improve governance and service delivery.
• Own Source Revenue (OSR)
  • OSR refers to the revenue generated by local bodies from their own sources such as taxes, fees, and charges.
  • Enhancing OSR is crucial for the financial sustainability and autonomy of local bodies.
• Devolution of Funds
  • Devolution of funds refers to the transfer of financial resources from the central or state government to local governing bodies.
  • This process aims to empower local bodies to manage their own affairs more effectively.
• Capacity Building
  • Capacity building involves training and developing the skills of local government officials.
  • It is essential for improving the efficiency and effectiveness of local governance.