This article caters to Social segment of General Studies-Paper II and
for Essay Paper in UPSC Main Examination

The essence of democracy is decentralisation of power and allowing governance to reach to the grass-roots level for welfare of people. Local government elected by the people thus imbibes democratic functioning of the society involving residents of the area. The concept of local government has been in India ever since the dawn of civilisation in various forms including that of Sabhas and Samitis at the village level. It was in the year 1882 when Lord Ripon issued a resolution on Local Self-Government. Objections were raised by the bureaucracy of those days against any extension of the powers of local bodies and giving them a democratic character. It was a comprehensive resolution which dealt with administrative areas, the constitution of local bodies, their functions, finances and powers. This was an important landmark in the evolution of local self- government in India. This led to the strengthening of local institution over a period of time leading to its incorporation in PART IV of the Constitution.

Constitution of India

Article 40 of the Constitution provides for organisation of village panchayats and also endows them with such powers and authority to enable them to function as units of self-government. But Article 40 being part of Directive Principles of State Policy could not be judicially imposed. Consequently Government of India constituted various committees for the proper functioning and devolution of power at the ground level. The government accepted the recommendations of Balwant Rai Mehta Committee which proposed to set up a three-tier structure of panchayats in India having gram panchayats at the village level, Panchayat Samiti at the block level and Zilla Parishad at the district level. It was also considered that there is an imperative need to enshrine in the Constitution certain basic and essential features of Panchayati Raj Institutions to impart strength, certainty and continuity to it. Thus, accordingly the Constitution (Seventy-Third Amendment) Act, 1992 and Constitution (Seventy-Fourth Amendment) Act, 1992 were enacted by the government.

PART IX and IXA were added to the Constitution after the amendment to the Constitution. It provides for constitution of Panchayat at the village, intermediate and district level; Gram Sabha at the village level consisting of persons registered in the electoral rolls of the village; reservation of seats for Scheduled Caste, Scheduled Tribes, women; constitution of Finance Commission to review financial position of panchayats and make suitable recommendations for devolution of funds to panchayats; elections to be conducted for panchayats by State Election Commission. PART IXA provides for the constitution and composition of Municipalities; ward committees; power to impose tax by municipalities; Finance Commission to review financial position of municipalities and allocate taxes; election to Municipalities; District Planning Committee and Metropolitan Planning Committee.

Issues with Panchayats in India

Though the Panchayati Raj Institutions have been in existence for a long time, the participation of people at the grass-roots levels has become more of a bureaucratic and mechanical exercise. There have been various instances in the past where approval from Gram Sabha has been either forced or forged for acquisition of land for various commercial purposes including mining. Even the local bureaucracy has not helped much in nurturing the institution to grow and sustain at ground level. Merely by making panchayats a part of the Constitution will not solve the case of grass root democracy unless its limbs are empowered. Thus, the core issues of local self-governance involves the principle of subsidiarity which means that what can best be done at the lower levels of government should not be centralised at higher levels; a clear delineation of functions entrusted to the local bodies; effective devolution of financial powers and functions and convergence of services for the citizens as well as citizen centric governance structures. The Second Administrative Reform Commission (2nd ARC) on Local Governance has suggested various measures to address these core issues. Let us understand each of those issues and probable solutions suggested by the 2nd ARC.

Principles of Subsidiarity

Constitutional status to panchayats and municipalities aimed at a fundamental shift in the nature of governance. However, experience of the past suggests that creating structures of elected local governments and ensuring regular elections do not necessarily guarantee effective local empowerment. While Panchayats, Nagarpalikas and Municipalities have come into existence and elections are being held, this has not always translated into real decentralisation of power because the Constitution left the issue of degree of empowerment and devolution to the State Legislature. State Governments and their bureaucracy are not always in favour to effectively empower local governments because they view it as diminishing of their power and hold. Even mandatory provisions like the constitution of District Planning Committees and Metropolitan Planning Committees have been ignored in many States. Thus, compulsory empowerment of panchayats and municipalities by the State having a dedicated bureaucracy at ground level is necessary for effective local empowerment. 


While framing laws on Panchayats under Article 243G, State Legislatures should endow these institutions ‘with such power and authority as may be necessary to enable them to function as institutions of self-government’. Thus, Panchayats are ‘governments at their own level’ and have autonomous jurisdiction of their own. However, the problem arises when we find government functioning at various levels thereby creating overlapping jurisdiction and autonomy. In such a case, autonomy of one may rub against autonomy of another in similar jurisdictions. Thus, providing autonomy to panchayats will also mean withdrawal of certain activities or functions from the State Government and transferring them to local bodies. This will give panchayats a true independent and autonomous identity independent from the State government to perform their powers and functions.

Delineation of Functions

Powers to panchayats and municipalities have been provided to enable them to function as institutions of self-governance under Article 243(G) and 243(W) respectively. For this, they may also be empowered to prepare local plans for economic development and social justice and to implement schemes and perform functions including those listed in the Eleventh and Twelfth Schedules. However, the past experience suggests that progress of devolution of powers and responsibilities to local governments at various levels has been poor and uneven. The implementation space at local levels is thus occupied by a multiplicity of governmental agencies leading to confusion, unnecessary duplication and wastage of funds. Thus, there should be clear delineation of functions for each level of local government. It has to be done continuously by restructuring organisations and framing subject-matter laws so as to avoid overlapping of functions. The 2nd ARC has suggested adding subjects on education, public health including community health centres/area hospitals, traffic management and civic policing activities, urban environment management and heritage and land management including registration in the 12th Schedule.

Devolution of Funds

The local bodies rely heavily on their respective State governments for financial inflows. The major sources of income for local governments like property tax are not properly collected due to lack of a proper mechanism of levying and collection of such tax. This makes the coffers of local bodies extremely inadequate to meet their operational needs. Provision of civic amenities falls short of expectations due to inadequacy of funds. Thus, the local governments have to stay at the mercy of their State government for allocation of funds through grants to meet their needs including salary of the staff. In this respect, Article 243H and 243X make it obligatory for the State government to authorise the local bodies by law to impose taxes, duties, etc. and assign to the local bodies such taxes/duties levied and collected by the State government.

State Finance Commission (SFC) under Article 243I and 243Y recommends principles for distribution of funds between the urban local bodies and different panchayats. Thus, the role of State Finance Commission becomes important regarding devolution of financial resources for panchayats and municipalities. However, devolution of finance to local bodies depends upon the revenue generated by each State which is never same. While some States have followed the concept of pooling of all revenues and then sharing, others follow different percentages of devolution for different taxes. Thus, apart from principles of devolution of taxes, even fiscal administration of every State needs to be improved as it involves levy and collection of taxes at local level. State governments generally take a long time to implement the reports of SFCs which further delays the process of devolution of funds. 

Capacity Building for

The crucial issue of capacity building in urban and rural local bodies remains a largely neglected area in decentralised self-governance. Lack of training of personnel has resulted in capacity deficit within the Panchayat and Municipal Institutions. Thus, a proper exercise needs to be undertaken for capacity building which includes individual development along with organisational development through various schemes. Individual development involves the development of human resources including enhancement of an individual’s knowledge, skills and access to information. It enables them to improve their performance and that of their organisation. State government should encourage holistic training programmes involving expertise in different fields. This can be best achieved by ‘networking’ of institutions concerned with various subjects such as financial management, rural development, disaster management and general management, etc.

Conclusion: Empowering local bodies at ground level is very important as it involves people at local level which helps in strengthening democratic decentralisation. However, for the local bodies to function efficiently, they must be provided autonomy in their functioning. Local bodies having administrative, legislative and financial autonomy with a dedicated bureaucracy at the lower level will help in realising the dream of Mahatma Gandhi.

“In this structure composed of innumerable villages, there will be ever widening, never ascending, circles. Life will not be a pyramid with the apex sustained by the bottom. But, it will be an oceanic circle, whose centre will be the individual, always ready to perish for the village, the latter ready to perish for the circle of the villages, till at last the whole becomes one life composed of individuals, never aggressive in their arrogance, but ever humble, sharing the majesty of the oceanic circle of which they are integrated units. Therefore, the outermost circumference will not wield power to crush the inner circle, but will give strength to all within and will derive its own strength from it.”

Mahatma Gandhi

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