State finance commissions and rural local bodies - Devolution of resources

The 73rd and 74th Constitutional Amendment Acts, 1992 have added a new dime nsion to fiscal federalism and decentralised public finance in the Indian f ederal system. The structure of intergovernmental fiscal relations and tran sfers necessarily will have to undergo significant changes. Their provision s relating to the creation of state fin an ce commissions (SFCs) to rationa lise fiscal relations at the sub-state level and make periodic fiscal corre ctions assume significance in this context. This paper seeks to critically review the recommendations of five SFCs, viz, Karnataka, Kerala, Punjab, Ra jasthan and West Bengal, on fiscal devolution with reference to rural local bodies - the panchayati raj institutions (PRIs).