Implication of Fiscal Decentralisation and Panchayati Raj Institutions (PRIs) in Poverty Reduction in Rural U.P.

This paper examines the role of Fiscal Decentralisation and Panchayati Raj Institutions in Poverty Reduction in U.P. The main purpose of this study is to find out that how fiscal decentralisation solves the problem of poverty in rural areas over the last decades. We measure the scope of fiscal decentralisation that has taken place to estimate how far the rural governments have effective control over expenditure decision-making. According to the Fourth Poverty and Social Monitoring Survey, 2009–2010 report, Uttar Pradesh is the most populous state of the country and per capita net state domestic product on current prices had increased substantially from Rs. 12, 950 in 2004–2005 to Rs. 23, 671 in 2009–2010.

The analysis shows that poverty ratio had declined by 3.2% from 40.9% to 37.7% in U.P., whereas the poverty rate in rural areas had declined from 42.7% to 39.4% for the period 2004–2005 to 2009–2010, respectively. The head count ratio for U.P. fell from 40.9% to 37.7% between 2004–2005 and 2009–2010. But other poverty measures such as income gap ratio, poverty gap ratio and squared poverty gap ratio increased for the same period. As we know that if the government spends more on education, health and agriculture improves resulting in better living standard of the people.