Panchayati Raj

The first principle

Decisions about a village well, a school wall or a drain are best taken by the people who use them, because they know the need and can watch the money. Democracy at the top does not guarantee democracy at the bottom, so the Constitution had to create a third tier of government with its own elections, powers and finances. Panchayati Raj is that tier for rural India, and the gap between the tier the Constitution created and the tier states actually empowered explains almost every problem in this note.

The core

The road to the Seventy third Amendment

• Balwant Rai Mehta Committee (1957). Set up to review the Community Development Programme, it found that development without people's participation had failed, and it recommended "democratic decentralisation" through a three tier system of village panchayat, Panchayat Samiti at the block and Zila Parishad at the district. Rajasthan inaugurated the first such system at Nagaur on 2 October 1959.
• Ashok Mehta Committee (1978). It found that the early institutions had declined into neglect, and it proposed a two tier system with the district as the first point of decentralisation below the state, open participation of political parties, compulsory taxation powers and constitutional protection.
• G. V. K. Rao Committee (1985). It warned that development had become bureaucratised and cut off from local bodies, "grass without roots", and it recommended making the district the basic unit of planning, with the Zila Parishad at its centre.
• L. M. Singhvi Committee (1986). It recommended constitutional recognition of local self government, regular elections, more financial resources and the Gram Sabha as the base of direct democracy.
• Sixty fourth Amendment Bill (1989). It passed the Lok Sabha but was defeated in the Rajya Sabha, largely because opposition parties saw it as the Union dealing directly with panchayats over the heads of the states. The lesson shaped the 1992 design, which leaves most devolution to state law.

What Part IX provides

• Gram Sabha and three tiers. Article 243A recognises the Gram Sabha, all registered voters of a village, and Article 243B requires panchayats at village, intermediate and district levels, though states with a population under twenty lakh may skip the intermediate tier.
• Elections and term. All seats are filled by direct election, every panchayat has a five year term (Article 243E), and a dissolved body must be re elected within six months. A State Election Commission (SEC) under Article 243K superintends these elections, and its commissioner can be removed only like a High Court judge.
• Reservation. Article 243D reserves seats for Scheduled Castes and Scheduled Tribes in proportion to population, and not less than one third of all seats and chairperson posts for women, including within the reserved seats. Reservation for backward classes is left to the states.
• Powers and finances. Article 243G lets the state legislature endow panchayats with powers over the 29 subjects of the Eleventh Schedule, Article 243H lets it authorise local taxes and grants, and Article 243I requires a State Finance Commission (SFC) every five years to recommend how state revenue should be shared with panchayats.
• Compulsory and voluntary parts. The structure, elections, reservation for women and Scheduled groups, the SEC and the SFC are compulsory, while the actual transfer of functions, staff and taxes is voluntary, which is why devolution varies so widely across states.

• Panchayats (Extension to the Scheduled Areas) Act, 1996 (PESA). Article 243M kept Fifth Schedule areas out of Part IX, and PESA extends it to them with changes: the Gram Sabha must be consulted before land acquisition, and it gains powers over minor forest produce, minor minerals, sale of liquor, money lending and village markets, in keeping with tribal customary law.

Dimensions

• Political. Panchayats added about three million elected representatives to Indian democracy, one of the largest bodies of elected people anywhere, and gave many women, Dalits and Adivasis their first public office.
• Administrative. The useful test is not whether panchayats exist but whether they have the three Fs: functions clearly assigned, functionaries answerable to them, and funds they control. The newer stage is functionality: whether panchayats can plan, spend, keep accounts and deliver services well with what they have.
• Fiscal. The Reserve Bank of India (RBI) study of panchayat finances (2024) found that own revenue makes up about 1 per cent of total panchayat revenue, with the rest coming as grants from the Union and the states, so a panchayat behaves more like a spending agency than a government.
• Social. Reservation for women has changed who sits in the panchayat, and about 21 states have raised it to 50 per cent. Chattopadhyay and Duflo's study of West Bengal and Rajasthan (2004) found that women heads invested more in drinking water, the good women had asked for most. The limit is proxy rule, where a husband, the "sarpanch pati", runs the office, which shows that a quota changes faces faster than it changes patriarchy.
• Federal. Local government is a state subject (Entry 5, List II), so the Union can only nudge, through Finance Commission grants and schemes, while states decide how much power to pass down. Many states resist, because a strong panchayat competes with the local Member of the Legislative Assembly and the district bureaucracy.

In practice

Money beyond grants

• Own taxes and fees. Panchayats can levy property and house tax, fees on markets and fairs, user charges for water and street lights, and a cess on land revenue where state law allows. Property cards issued under the SVAMITVA scheme (2020), which maps village homes by drone, give panchayats a record on which property tax can be assessed.
• Remunerative assets. Shops, community halls, fishponds, village markets and solar plants built on panchayat land can earn steady income.
• Convergence. Corporate Social Responsibility (CSR) funds, the Members of Parliament Local Area Development Scheme (MPLADS), cooperatives and self help group federations can co fund projects that fit the village plan.
• Grants with conditions. The Fifteenth Finance Commission gave about ₹2.37 lakh crore to rural local bodies for 2021 to 2026, part of it tied to water and sanitation, and it made audited accounts available online an entry condition for the grants.

Tools of planning and accountability

• Gram Panchayat Development Plan (GPDP). Since 2015 every panchayat prepares an annual plan in the Gram Sabha, matching its untied funds and schemes to local needs; Kerala's People's Plan Campaign (1996), which passed a large share of state plan funds to local bodies, was the model.
• e Gram Swaraj (2020). This portal records panchayat plans, spending and assets online, which makes the money traceable.
• Panchayat Advancement Index. The Ministry of Panchayati Raj now scores panchayats on themes drawn from the localised Sustainable Development Goals, so progress can be compared.
• Social audit. Under the Mahatma Gandhi National Rural Employment Guarantee Act, 2005 (MGNREGA), Gram Sabhas audited muster rolls and works in public, a practice Andhra Pradesh built into a state system and which turned citizens into checkers of local spending.

Judgements

• Kishansing Tomar v Municipal Corporation of Ahmedabad (2006). Elections to local bodies must be held before the term ends, and the SEC can seek the help of courts if the state does not cooperate.
• K. Krishna Murthy v Union of India (2010). Reservation in local bodies, including for chairpersons, was upheld, but backward class reservation must rest on evidence of political backwardness and stay within the 50 per cent ceiling.
• Vikas Kishanrao Gawali v State of Maharashtra (2021). The Court set a triple test for backward class reservation in local bodies: a dedicated commission to study backwardness, proportions fixed body by body on its findings, and a total within 50 per cent.

Issues and way forward

• Functions on paper. Many states have listed the 29 subjects without transferring the schemes and staff behind them, because Article 243G is permissive. The Second Administrative Reforms Commission (ARC), in its sixth report on Local Governance (2007), recommended activity mapping, a clear division of each subject into tasks for each tier, written into state law.
• Staff who answer elsewhere. Teachers, health workers and engineers report to state departments, so the panchayat cannot direct them. The ARC recommended a local cadre of staff and capacity building of elected members.
• Dependence on grants. Weak own revenue keeps panchayats tied to schemes designed elsewhere. States should notify property tax floors, constitute SFCs on time and act on their reports, which many have delayed.
• Delayed elections and parallel bodies. Elections have been postponed in several states over reservation disputes, and parallel bodies such as user groups and scheme committees bypass panchayats. The triple test should be completed in time, and parallel bodies should report to the Gram Sabha.
• Proxy representation. Training of women members, action on proven proxy cases and support from self help group networks can make reserved seats real.

Common confusions

• Gram Sabha and Gram Panchayat. The Gram Sabha is the body of all voters of the village; the Gram Panchayat is the elected executive that answers to it.
• SEC and Election Commission of India. The SEC conducts panchayat and municipal elections and is separate from the Election Commission of India, which conducts elections to Parliament, state legislatures and the offices of President and Vice President.
• SFC and the Finance Commission. The SFC (Article 243I) divides state revenue with local bodies; the Finance Commission (Article 280) divides Union revenue with states and, under Article 280(3)(bb), suggests measures to augment the state funds for panchayats.
• PESA and the Sixth Schedule. PESA covers Fifth Schedule areas through empowered Gram Sabhas; Sixth Schedule areas in the North East have autonomous district councils instead and are outside Part IX.

For the exam

• Keyword bank: democratic decentralisation, Seventy third Amendment, Part IX, Eleventh Schedule, Gram Sabha, State Election Commission, State Finance Commission, PESA, three Fs, functionality, activity mapping, own source revenue, Gram Panchayat Development Plan, social audit, triple test.
• Practise the previous year questions on this topic →
• Use in an answer:
  • Introduction with data: "Three decades after the Seventy third Amendment, panchayats raise only about 1 per cent of their revenue on their own, according to the RBI study of 2024, so the third tier still lives on grants."
  • Introduction with a report: "The Balwant Rai Mehta Committee (1957) argued that development imposed from above had failed for want of people's participation, the idea the Seventy third Amendment turned into a constitutional duty."
  • Conclusion: "Panchayats have succeeded in widening representation; the next stage is functionality, which needs clear activity mapping, a local cadre of staff and a steady base of own revenue."
  • Conclusion: "A Gram Sabha that plans, audits and questions is the real safeguard of local democracy, and states that trust it gain better delivery rather than lose power."