Which one of the following authorities makes recommendation to the Governor of a State as to the principles for determining the taxes and duties which may be appropriated by the Panchayats in that particular state? 

The Panchayats

1. Decentralization

i. Decentralization is the shifting of power and authority from a central institution to a regional institution.
ii. It is different from simple delegation of authority due to the fact that significant power, authority and responsibility is transferred to the regional entity.
iii. When decentralization occurs in a democracy - from Union to states, or from states to local governments - it is called democratic decentralization.
iv. In India, democratic decentralization is commonly referred to as panchayati raj.

2. Panchayati Raj Institutions (PRI)

i. Panchayati Raj Institutions, the grass units of local self-government, have been considered as instruments of socio-economic transformation in rural India.
ii. 73rd and 74th Constitutional Amendments, by constitutionally establishing Panchayati Raj Institutions (PRIs) in India, mandated the establishment of panchayats and municipalities as elected local governments.
iii. The exact type of devolution is decided by the states.
iv. The Constitution mandates that panchayats and municipalities shall be elected every five years. The State Election Commission (SEC) is responsible for conducting free and fair elections to the PRI.
v. States have formally devolved powers with respect to five core functions of water supply, sanitation, roads and communication, streetlight provision and the management of community assets to the gram panchayats.

3. The Panchayats

i. 73rd amendment deals with the panchayats.
ii. Article 234 - 243O deals with the various provisions regarding panchayats in India. Some of these provisions are:
iii. Gram Sabha is the primary body of the Panchayati Raj system. It is a village assembly consisting of all the registered voters within the area of the panchayat.
iv. The functions of the panchayat will be determined by the state legislature.
v. Reservation for SC/ST to be provided at all the three tiers in accordance with their population percentage.
vi. Not less than one-third of the total number of seats to be reserved for women.
The state legislature may –
(a) Authorize a panchayat to levy, collect and appropriate taxes, duties, tolls and fees.
(b) Assign to a panchayat taxes, duties, tolls and fees levied and collected by the state government.
(c) Provide for making grants-in-aid to the panchayats from the consolidated fund of the state.
(d) Provide for the constitution of funds for crediting all money of the panchayats.

3. The state legislature may endow the Panchayats with such powers and authority as may be necessary to enable them to function as institutions of self-government. Such a scheme may contain provisions related to Gram Panchayat work with respect to:

(a) the preparation of plans for economic development and social justice.
(b) the implementation of schemes for economic development and social justice as may be entrusted to them, including those in relation to the 29 matters listed in the Eleventh Schedule.