Several industries located in gram panchayat limits have avoided paying a single paisa to the Government in form of taxes while utilising the land and water resources of the villages.

This and indiscriminate sand mining and excavation of sand, stone and moram by illegal syndicates were causing financial losses to panchayat raj institutions, the Departmentally Related Standing Committee on Rural Development observed in its report on Demand for Grants 2013-14.

The 34-member panel made significant recommendations while studying the grants. It concluded that the sum of Rs. 4,421 crore allocated to Panchayat Raj and Rural Employment was insufficient to carry out on going schemes.

While observing that gram panchayats were relying heavily on the grants provided to them, the panel felt that attempt should be made to improve their financial resources. Industries located in the vicinity of the villages should be forced to pay taxes to the panchayats. They recommended usage of Geo Informatics System to ensure all legitimate taxes in the gram panchayats are accounted for.

The panel disapproved the Government’s decision on transferring sand mining from the Panchayat Raj to the Industries Department. Because of this, the revenue accruing to the panchayats had stopped. They said the contractors in rural areas were looting the revenues by forming illegal syndicate.

Members expressed displeasure when informed that Government had discontinued NABARD assisted RIDF programme for rural road construction. The panel was informed that as the rural roads were under the administrative control of PR institutions, the Government could not categorise the spending as plan expenditure.