Bio gas is generated from anaerobic digestion of wet waste, farm slurry, night soil and certain industrial effluent streams. In India community based biogas plants are being developed and being used in some areas. Biogas is an important solution to the present energy crisis, especially in rural areas. This is an environmentally clean technology. This can replace kerosene oil used in the villages mainly for lighting and partially for cooking. It is estimated that 150,000 plants of biogas will save 600,000 tonnes of wood equivalent energy every year. Panchayats can be benefitted a lot from this innovative technology without much technical expertise. The bio gas offers a cheap and efficient means of cooking fuel. It can also benefit in solid waste management of the Panchayats by using organic wastes, night soil, cow dung etc. thus helping in its basic function of sanitation and hygiene maintenance. The compost produced from these plants can serve as an excellent bio-fertilizer and is economically viable option for the village people. Panchayats can ensure technical expertise and help from local research and academic institutes in addition to providing funds for such activities.