Panchayat Empowerment & Accountability Incentive Scheme (PEAIS)

The Panchayat Empowerment & Accountability Incentive Scheme (PEAIS) is a Central Sector Plan Scheme which is being implemented by the Ministry of Panchayati Raj since 2005-06. The scheme had an allocation of Rs.5.00 crore for 2005-06, which was raised to Rs.10.00 crore for the subsequent years.  Funds released to the State Governments/UTs on 100% grant basis, after assessing their devolution of the 3Fs (Funds, Functions and Functionaries).  The Scheme has continued in the 11th Five Year Plan period with annual allocation of Rs.10.00 crore.

From 2006-07 onwards the criteria for eligibility were derived on the basis of devolution of 3Fs, which was developed by the National Council of Applied Economic Research (NCAER), New Delhi.  During 2007-08, the index was revised to include a fourth dimension of “Framework”, which specifically tests if the State has met the four mandatory Constitutional requirements viz. establishing the State Election Commission, holding PRI Election every five years, establishing  State Finance Commission and setting up of District Planning Committees.

For 2008-09 NCAER, New Delhi was engaged by the Ministry for compiling the information on the parameters constituting the DI and processes the same.  NCAER submitted the final Report titled ‘An Index of Devolution for Assessing Environment for PRIs in the States-Empirical Assessment-2008. An Evaluation of the States under the PEAIS for 2008-09 was based on a two stage assessment. The first stage was called the Framework Criteria, which was based on the following 4 fundamental Constitutional requirements:

Establishment of State Election Commission; Holding of elections to the PRIs; Setting up State Finance Commission   and  Constitution of the District Planning Committees (DPCs).

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For the year 2008-09, the Ministry awarded 10 prizes in all, which went to  Madhya Pradesh, West Bengal, Tamil Nadu & Kerala    as   First Prize   of  Rs.1.50 crore each, Karnataka, Sikkim, Himachal Pradesh and Haryana    as   Second Prize of     Rs.75 lakh each and to Chhattisgarh and Assam as  Third Prize of  Rs.50 lakh each.

For 2009-10, the Indian Institute of Public Administration (IIPA) was commissioned to undertake the study of the Devolution Index and rank States accordingly.

As in 2008-09, evaluation of States under PEAIS for 2009-10 was based on a two-stage assessment.  The first stage, called the Framework Criteria, was based on the following 4 fundamental Constitutional requirements as in 2008-09. States that fulfilled each of these 4 fundamental requirements, qualified for evaluation in terms of various indicators of the DI.

The indicators for the DI aim at assessing the state of devolution in respect of the 3Fs, namely, funds, functions, and functionaries by the respective States to the PRIs.  The 2009-10 study has attempted some important conceptual and methodological improvements. Firstly, States have been assessed on how well they have implemented the framework criteria.  For example, as against only assessing if State Finance Commission (SFCs) have been set up as a qualifying criterion, delays in constitution of SFCs, submission of reports etc. have also been studied. Secondly, weightedscores, that reflect in the importance of particular criteria have been used.  Thirdly, scoring has been more differentiated by grading various responses.  Finally, the accountability parameters have been built in systematically.  The indicators for the DI study this year are as follows:

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Indicators for the Devolution Index Study 2009-10:


  • State Election Commission-Holding regular Panchayats elections,  Gap and dissolution
  • State Finance Commission -Qualification of members prescribed in the Act, Constitution at regular interval, Acceptance of recommendations, Timeliness of actions thereon.
  • District Planning Committees and their  working – Regular Meeting, Regular submission of plans, Consolidation of plans and its integration with State plan.


  • Functions Assigned to Panchayats  -Legislative devolution , Activity mapping,Executiveorders issued,  The role of Panchayats in planning, implementation, spending funds and monitoring.
  • Role of Panchayats in Important Central and State Schemes
  • Role of Gram Sabha Number and of meetings held and whether minutes are maintained; Role of Gram Sabha in approval of plans, budget, UCs and beneficiary lists
  • Transparency in Panchayats – Mechanism to deal with RTI and corruption, Whether there is an Ombudsman


  • Empowerment of Panchayats to impose and collect revenue- Taxes, fees, duties, cess etc. collected by Panchayats, Share of own revenue of Panchayat in State own revenue
  • Fund availability with Panchayats
  • Panchayat Nidhi/Fund: (Receipt & Expenditure)
  • Timely release of Twelfth Finance Commission grants to the Panchayats
  • Set of criteria, weight to allocate fund to the Panchayats
  • System of fiscal management, monitoring and evaluation


  • Accountability of functionaries to Panchayats
  • Panchayats’ own officials
  • Panchayats super cession
  • Role of Panchayats in parallel bodies/institutions
  • Capacity building of functionaries
  • Infrastructure for efficient & effective management of Panchayats

Indicators related to functional devolution include legislative devolution, activity mapping, issuing of executive orders, the actual activities performed by Panchayats, the role of the GramSabhas etc.  The indicators regarding devolution of finances include the fiscal domain ofPanchayats, i.e. taxes, fees etc. levied by them, grants from State Government and the system of fiscal management.  The indicators regarding the devolution of functionaries include control ofPanchayats over officials, capacity building, role of Panchayats in parallel bodies etc.

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Performance of the States and the UTs

24 States and Union Territories (UTs) participated in the evaluation exercise.  Jharkhand did not qualify, as elections to Panchayats have not been held in the State.  Evaluation of the performance of the 23 States / UT that qualified on the DI is as follows:

Raja Raja Cholan
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Trainer & Mentor for aspirants preparing for civil service examination

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