Chandigarh: Punjab Chief Minister Bhagwant Mann has called for a stronger and more sustainable financial framework for the state’s rural and urban local bodies, stressing that panchayats and municipalities need adequate resources to deliver civic services and develop local infrastructure.
Mann made the remarks while chairing a meeting with the newly constituted Seventh State Finance Commission. The commission will examine the financial position of Panchayati Raj Institutions and municipalities and recommend measures to improve their fiscal capacity and financial sustainability.
The commission’s work will cover a five-year period beginning April 1, 2026, and it is expected to submit its report by September 30, 2027.
Focus on Financial Strength of Local Bodies
The State Finance Commission has been constituted to recommend how taxes, duties, road tax and other revenues should be distributed among the state government, panchayats and municipalities.
It will also examine measures that can improve the financial health of local governments and help them meet their growing responsibilities.
Mann said the commission has an important role in creating a system of resource distribution that is transparent, equitable and sustainable.
The focus is particularly significant because local bodies are responsible for several essential services and local infrastructure works. Their financial capacity directly affects their ability to undertake these responsibilities.
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Commission to Review Revenue and Expenditure
The commission has been asked to undertake a comprehensive assessment of the revenue potential, expenditure responsibilities and financial requirements of local bodies.
This assessment will help determine the resources required by panchayats and municipalities to perform their functions effectively.
The commission is also expected to suggest ways to reduce unproductive revenue expenditure and improve the quality of administration and technical support.
Better use of capital resources will be another part of the exercise, with the objective of ensuring that available funds are used efficiently.
Strengthening Grassroots Governance
The State Finance Commission is a constitutional mechanism for fiscal decentralisation to Panchayati Raj Institutions and municipalities.
During the meeting, Mann linked the financial capacity of these institutions with their ability to perform the responsibilities assigned to them under the decentralised governance framework.
The objective is to ensure that local governments have adequate resources to respond to community-level needs while maintaining financial discipline.
For rural areas, stronger finances can support panchayats in carrying out local development and essential services. In urban areas, financially stronger municipalities can improve their ability to manage civic infrastructure and public services.
Seventh State Finance Commission Constituted
The Seventh State Finance Commission has been constituted by the Punjab government under Section 3(1) of the Punjab Finance Commission for Panchayats and Municipalities Act, 1994.
Former Punjab Additional Chief Secretary K Siva Prasad is the chairman of the commission.
Its other members include:
- Shoikat Roy as expert member
- Administrative Secretary, Rural Development and Panchayats, as an ex-officio member
- Administrative Secretary, Local Government, as an ex-officio member
- Special Secretary, Finance, as ex-officio member secretary
The composition brings together administrative and financial expertise for the commission’s review of local government finances.
Report Due by September 2027
The commission has been given a defined period to examine the finances and requirements of local bodies before submitting its recommendations.
Its report will cover five financial years beginning April 1, 2026, with the deadline set for September 30, 2027.
The recommendations are expected to cover the distribution of resources as well as measures for improving the financial position and functioning of local governments.
The exercise could therefore influence how resources are shared between the state government and local bodies during the five-year period.
Why the Review Matters for Punjab
Panchayats and municipalities form the foundation of local governance, handling responsibilities that directly affect residents’ everyday lives. Their financial position determines how effectively they can support local infrastructure and civic services.
By reviewing revenue sources, expenditure responsibilities and resource requirements together, the Seventh State Finance Commission will provide a framework for the state to assess the financial needs of local governments.
The larger objective is to create financially sustainable local institutions capable of handling their responsibilities while maintaining fiscal discipline.
For Punjab, the commission’s recommendations will therefore be important for the future distribution of resources and the functioning of grassroots governance across both rural and urban areas.
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