Page 308 www.ijiras.com | Email: contact@ijiras.com International Journal of Innovative Research and Advanced Studies (IJIRAS) Volume 4 Issue 11, November 2017 ISSN: 2394-4404 An Overview Of The Effective Financial Management Of Panchayati Raj Institutions In India Dr. Richa Singhal Assistant Professor, S.S. Jain Subodh PG College, Jaipur Rahul Kumar Research Scholar, Dept. Of EAFM, University of Rajasthan, Jaipur I. CONCEPT OF EFFECTIVE FINANCIAL MANAGEMENT Financial management is concerned with effective utilization of funds at all times. It ensures whether sufficient funds are available to meet various day-to-day requirements of a PRI. This involves maintaining both liquidity and profitability of a PRI effectively and efficiently. As regards profit maximization, it sets such effective tools and techniques through which the objective of optimum development can be achieved successfully. In this way, it is concerned with managing timely utilization of grants received in adequate manner in the works prescribed to carried out by a PRI. In relation to the investment activities, one of the important tasks of financial management is to undertake capital budgeting and management of mergers, the process of which leads to gain high returns to a business entity on the basis of managerial efficiency. While encompassing various financing activities, financial management deals with cultivating sources and raising funds that leads eventually to maximize the wealth of PRIs. Thus, being concerned with all the aspects of PRI operations, finance function is of great value and importance in a PRI leading to long term progress and development. It is due to the efficient financial management that the value of an institution is increased, while the ability of an entity in terms of its efficiency can be immensely developed as well as the liquidity position be maintained efficiently at all times. Effective financial management is critical to any organisation. In the context of local government, a lack of sound financial management will have a direct adverse impact on service delivery as there is a strong correlation between sound financial management and effective service delivery. Abstract: Traditionally in India, plans and programs for the rural population originated at the state level. This top- down approach imposed development priorities on rural communities and restricted the development of administrative institutions at rural communities and restricted the development of administrative institutions at rural local bodies called Panchayati Raj Institutions (PRIs) in India. In the 1990 there was a paradigm shift in the strategy for rural development. The Government of India divided to decentralize financial and administrative powers to PRIs. As a result, the administrative capacity of PRIs began to accommodate their new role. Under the Constitution Amendment Act (CAA), the state legislature is supposed to devolve responsibilities, powers and authorities to panchayats to enable them to function as institutions of self-government. The legislature of a State may authorize the panchayats to levy, collect and appropriate certain taxes, duties, tolls and fees, etc, and also assign to them the revenues of certain state level taxes subject to such conditions as are imposed by the State government. Further, grants-in-aid may also be provided to these bodies. The main objective of the present study are to study that how revenues and expenditures are managed by Panchayati Raj Institutions by gather the statistics about liquidity and profitability of a PRIs in India. The suggested ways and means will help in improving the financial management and working of Panchayati Raj. Keywords: leadership, decentralized finance, liquidity and profitability, Self- governance, Grant-in-aid.