Asian Journal of Sociological Research

Decentralization refers to the devolution of authority, finance, and power to several local authorities or organizations. There are many ways a government may transfer powers to the sub-national level. Thus, decentralization can be economic, political, fiscal, or administrative. In Indian social life, the Panchayati Raj Institutions (PRIs) serve as an essential component. The 73^rd-74^th Indian constitution amendments act 1992 had envisaged the formation of the structure of PRIs and given a new charter of life all over the country. It was reported by “The World Bank (2007) that fiscal autonomy is the key element of decentralization, and the local government autonomy can’t be sustained without the proper fiscal empowerment”. To increase the integrity, answerability, efficiency, and autonomy of Panchayati Raj Institutions (PRIs), the best way which has been viewed is the generating of own sources of revenue (OSR). The 14^th finance commission reported that Panchayat’s own-source revenue is very little, mostly dependent on transferring state and central government funds. The accomplishment of decentralization depends upon the intensification of the revenue base Panchayati Raj Institutions (PRIs). The present paper will focus on the decentralization of fiscal aspects of Panchayati Raj Institutions & the recommendations of the Finance commissions. The objective of the present study is to analyze the challenges and issues faced by Local-self-government in India regarding fiscal devolution. The present study also gives suggestions about the policies related to State and local governments that their financial relationship needs a clean review as it is observed from the experiences of state-specific fiscal devolution and recommendations status of the state finance commission. The study concludes with a wider supposition, i.e., local government should be superior in framing development programs & increasing returns in keeping the local fund’s availability in mind.