Uttar Pradesh has moved to strengthen the finances of its gram panchayats by directing that 75% of the revenue generated from auctioning leases of village ponds, water bodies and government agricultural land be transferred to village funds.
The move could potentially put an additional Rs 500-600 crore into the hands of gram panchayats every year, giving them more resources to fund local development projects.
Also read: Hindustan Power Secures ₹1,135 Crore IREDA Financing for 435 MWp Solar Project in Uttar Pradesh
75% of Auction Revenue to Go to Village Funds
Uttar Pradesh has 57,694 gram panchayats, and the state government now plans to make village ponds, water bodies and government agricultural land an important source of their own revenue.
Under the latest directions, 75% of the money earned through the auction of leases for ponds and other such government resources must be deposited into the concerned gram panchayat’s village fund.
The Panchayati Raj Department has directed all district magistrates to ensure that the money currently with the Revenue Department is transferred to the respective village funds.
DM’s Asked to Complete Transfer by August 31
Principal Secretary, Panchayati Raj, Anil Kumar has written to all district magistrates, referring to a government order issued by the Revenue Department on July 17.
The DMs have been asked to ensure that the eligible share of revenue from lease auctions is transferred to village funds by August 31.
They have also been instructed to hold meetings with officials at the district and tehsil levels and complete the necessary procedures for transferring the funds to gram panchayats.
Revenue Could Boost Village Development
The move is expected to give gram panchayats greater financial independence and provide them with additional resources for development programmes.
Instead of remaining with the Revenue Department, a significant portion of the revenue generated from village-level resources will now be available to local bodies for their own development needs.
The estimated annual inflow into village funds could be between Rs 500 crore and Rs 600 crore once the system is fully implemented.
Link With 16th Finance Commission Grants
The decision also has a larger financial significance for Uttar Pradesh’s gram panchayats.
According to the Panchayati Raj Department, the recommendations of the 16th Finance Commission link 10% of the grant allocation to the performance of villages in generating their own revenue.
This makes the revenue collected through pond and other lease auctions particularly important for gram panchayats seeking to qualify for performance-based grants.
UP Could Receive Rs 8,326.5 Crore in Performance Grants
The state is expected to receive Rs 8,326.5 crore as performance grants from the 16th Finance Commission over three financial years — from 2028-29 to 2030-31.
With a portion of these grants linked to the performance of gram panchayats in generating their own revenue, the funds collected through lease auctions could become an important factor in determining the amount received.
An Order From 2018 Finally Gets a Push
Interestingly, the provision is not entirely new.
In August 2018, then Commissioner and Secretary of the Revenue Council Leena Johri had issued an order directing that 75% of the revenue generated through the auction of leases for ponds and other village resources be deposited into gram panchayat funds.
However, the order could not be effectively implemented.
Last month, on July 17, Principal Secretary, Revenue, Aparna U had once again issued directions for transferring revenue from such lease auctions to village funds.
The Panchayati Raj Department has now followed up by writing to all district magistrates, giving the old provision a fresh push towards implementation.
A Potential Financial Boost for 57,694 Panchayats
If implemented effectively, the system could give thousands of gram panchayats a significant and recurring source of their own revenue.
For rural Uttar Pradesh, the change could mean that income generated from local resources such as ponds and government land is channelled back into the villages, potentially strengthening their ability to undertake development works without relying entirely on government grants.
Also read: Uttar Pradesh Lands ₹2,000-Crore Escorts Kubota Plant, Boosting YEIDA’s Manufacturing Push
