The World Bank has suggested 'hire and fire' powers for panchayats to enable local administration to deal with resource crunch so as to control their budgets better.

"Local governments should have power to hire, fire and determine the compensation level for their employees," the World Bank said in its report on 'India: Fiscal Decentralisation to Rural Government.'

Without this power, gram panchayats cannot control their budgets and handle the serious resource crunch, it said.

However, this suggestion comes against the Left parties' contention that there should not be such a policy and the Common Minimum Programme of the United Progressive Alliance government asserting there would be no automatic hire and fire system.

The bank lamented that though gram panchayats had the constitutional mandate to perform the role of local self governments, "they do not have enough discretionary resources to do so in a meaningful way."

In this context, the CMP stressed the UPA government would ensure that all funds for poverty alleviation and rural development programmes would be credited directly to panchayat bodies.

Incidentally, the Bank suggested that states should 'avoid' devolving responsibilities to panchayats for scheme designed completely by a higher-level government.

The World Bank asked states and higher level of governments to 'refrain' from unnecessarily intervening in GPs' matters except to monitor their performance in shared schemes.

"Gram panchayats should be allowed to spend public resources according to their priorities, to pay their own staff and to procure technical assistance, contractors and other services from the private, NGOs or public sector as they see fit," it said.

Panchayats, which are near to people and could better serve their needs, should be given sufficient autonomy and resources to fulfil the local aspirations.