Finances of Panchayats and Status of Own Revenues in Telangana State: A Critique M. Gopinath Reddy 1 and Bishnu Prasad Mohapatra 2 Abstract The Panchayati Raj Institutions (PRIs) have emerged as instruments of local gov- ernment since 1992 with the passage of the 73rd Constitutional Amendment Act in India. In Telangana, the state government in the recent period has enacted State Panchayat Raj Act and constituted its first State Finance Commission (SFC). This article is a part of a larger study conducted in the context of the constitution of the first SFC. The article reveals that the own revenue of panchayats is quite low and transfer from the state and central governments constitute two key sources of these bodies. However, these bodies have faced various internal and external challenges while imposing and implementing taxes and fees to augment their sources of revenues. It is on this reality that this article suggests for the devolution of more taxes to PRIs by the SFC for strengthening their revenues and sharing at least 10% of the state’s revenue to meet service delivery functions. Keywords Fiscal decentralisation, taxes and non-taxes, state’s own tax revenue, Telangana Introduction The role of the rural local self-governing institutions in achieving the agenda of fiscal decentralisation has been vigorously explored by many scholars in India and abroad. These institutions as an instrument of decentralised governance have emerged as a pioneer of promoting development in rural areas in many countries. The increasing attention paid by the state administrative apparatus to effective delivery of goods and services through decentralised institutions has made them as the nerve centre for promoting development at the grassroots level. The process Article Indian Journal of Public Administration 68(1) 100–115, 2022 © 2022 IIPA Reprints and permissions: in.sagepub.com/journals-permissions-india DOI: 10.1177/00195561211052112 journals.sagepub.com/home/ipa 1 Centre for Economic and Social Studies (CESS), Hyderabad, Telangana, India. 2 School of Liberal Arts, MIT-World Peace University, Pune, Maharashtra, India. Corresponding author: M. Gopinath Reddy, Centre for Economic and Social Studies (CESS), Begumpet, Hyderabad, Telangana 500 016, India. E-mail: mgopinathreddy@gmail.com