The lack of effective functioning in local bodies partly result from their incapability to generate independent financial resources despite.

73rd & 74th CAA provided for creation of local bodies as third tier government. Financial Challenges: (1) RBJ's Report on Municipal Finance highlight the poor tax base of Urban local bodies. (2) Dependence: Excessive dependence on property tax for both PFIs & ULBs. (~ 40% revenue) (3) Devolution: State governments have not devolved tax collection powers at many ULBs & PFIs. e.g: Ghai govt. (4) Hesitant: Local bodies fear lack of public support if taxed. (5) Government transfers: LBs sides Other Issues: (No SFC constituted) [No SFC Constituted] - Functional → They have not been devolved by Govt. - Functionaries → Staff shortage e.g: 2S+J, Pan-chayed don't have Secretary. (Way forward): 2nd AFC → (1) Mandatory Constitution of State Finance Commission by State govt. → (2) Activity mapping. → (3) Creation of Land bank for osensor general revenue. → (4) Expanding tax mesh There are more than 39 lakh elected people at ground level it can revitalize the local governance if above systems are done

— Abhishek Singh