This article is part of the UPSC Daily Editorial Analysis, covering The Hindu editorial – "The Panchayati Raj Movement Is In Distress," published on 17th February, by the best UPSC coaching in Kolkata.

Syllabus: UPSC General Studies (GS) Paper 2: Governance, Constitution, Polity

Context

Despite its initial success, the Panchayati Raj system is now facing stagnation due to technological, financial and structural challenges.

What is the Panchayati Raj Movement and its significance?

The Panchayati Raj Movement is a political movement in India. It aims to establish decentralized local self-governance at the village level. In this, elected representatives known as a Panchayat, make decisions on local issues. This promotes grassroots democracy and rural development. The movement pushes for village self-rule, inspired by traditional village councils.

The concept of self-governance in villages traces back to the Vedic period. However, modern Panchayati Raj was influenced by Mahatma Gandhi’s vision of Gram Swaraj.

What is Panchayati Raj System and how does it ensure local self-governance?

Panchayati Raj is the system of local self-government in rural India. Local Self-Government is an administrative system where local bodies are directly elected by the people. And these bodies manage the affairs of the local community. It allows for decentralized governance.

Note: If we talk about Local Self Government as a concept, then in India, the structure of local self-governance involves two types of institutions/bodies – Panchayati Raj Institutions (PRI) and Urban Local Bodies (ULB).

Panchayati Raj Institutions (PRIs): A type of local self-government in India

Panchayati Raj Institutions (PRI) are a system of rural local self-governance in India. They enable the governance of rural areas through representatives elected by the people. The Balwant Rai Mehta Committee (1957) recommended a three-tier structure for democratic decentralization, leading to the institutionalization of PRIs across India.

Constitutional Provisions related to Panchayati Raj Institutions (PRIs)

Part IX of the Indian Constitution deals with Panchayati Raj. This part is titled ‘The Panchayats’ and includes provisions from Articles 243 to 243 O. The 73rd Constitutional Amendment Act, 1992, provided constitutional status to PRIs. The act introduces a new Eleventh Schedule to the Constitution, which lists 29 functional items of the Panchayats under Article 243-G. The act also gives a practical form to Article 40 of the Constitution which is a Directive Principle that states that the state should organize village panchayats and give them the authority to function as self-governing units.

The 73rd Constitutional Amendment Act further made it mandatory for states to establish a three-tier system where the population exceeds two million:

Gram Panchayat (village level)
Panchayat Samiti (block level)
Zilla Parishad (district level)

Structure of Panchayati Raj Institutions

Three-Tier System

Gram Panchayat (Village Level): The primary unit of governance where registered voters participate directly in decision-making.
Panchayat Samiti (Block Level): An intermediary body that coordinates activities between Gram Panchayats and Zilla Parishads.
Zilla Parishad (District Level): The apex body that oversees and regulates PRIs within the district.

Four-Tier System in West Bengal

West Bengal initially adopted a four-tier system in 1964, which included:

Gram Panchayats
Locality Panchayats
Locality Councils
District Councils

This was later modified to align with the three-tier system introduced nationwide in 1973.

In states and Union Territories with a population of less than two million, only two levels of PRIs exist.

Jawaharlal Nehru inaugurated the first Panchayati Raj system in Nagaur, Rajasthan, on 2 October 1959. Andhra Pradesh followed on 11 October 1959.

What are the Compulsory and Voluntary Provisions of the Panchayati Raj Act?

The provisions of the act can be categorized into compulsory and voluntary provisions.

Compulsory Provisions:

Organisation of Gram Sabha in a village or group of villages.
Establishment of Panchayats at the village, intermediate and district levels.
Direct elections to all seats in panchayats at the village, intermediate and district levels.
Indirect elections to the post of chairperson of panchayats at the intermediate and district levels.
21 years as the minimum age for contesting elections to panchayats.
Reservation of seats (members and chairpersons) for SCs and STs at all levels.
Reservation of one-third seats (members and chairpersons) for women at all levels.
Fixing tenure of five years for panchayats, with fresh elections within six months if a panchayat is superseded.
Establishment of a State Election Commission to conduct panchayat elections.
Constitution of a State Finance Commission every five years to review the financial position of panchayats.

Voluntary Provisions:

Representation of Members of Parliament and State Legislatures in panchayats within their constituencies.
Reservation of seats for backward classes in panchayats at any level.
Granting autonomy to panchayats, enabling them to function as institutions of self-government.
Devolution of powers to panchayats for economic development, social justice and execution of functions listed in the Eleventh Schedule.
Granting financial powers to panchayats to levy, collect and appropriate taxes, duties, tolls and fees.

Exemptions:

Scheduled areas listed under Schedule V of the Constitution.
The states of Nagaland, Meghalaya and Mizoram.
Darjeeling hill areas in West Bengal, where the Darjeeling Gorkha Hill Council exists.

Elections and Representation in Panchayati Raj Institutions (PRIs):

Elections for Panchayati Raj institutions occur every five years and are conducted by the State Election Commission.

Reservation of seats exists for Scheduled Castes (SCs), Scheduled Tribes (STs) and women. The mandatory reservation for women is at least one-third, but some states have increased it to 50%.

Current Status of Panchayati Raj Institutions (PRIs)

Panchayat elections have gained traction across the country, with 14 lakh elected women representatives marking a significant step towards inclusive governance. PRIs are also key in implementing social sector schemes at the village level. The State Finance Commissions (SFCs) were mandated to allocate funds for local governance, but their recommendations have not been fully implemented.

Steps taken by the Government to strengthen the Panchayati Raj Institutions (PRIs):

Rashtriya Gram Swaraj Abhiyan (RGSA):

A centrally sponsored scheme to enhance PRI capacities for local governance, leveraging technology and resources to achieve SDGs.

e-GramSwaraj:

A web-based portal for unifying planning, accounting and monitoring of Gram Panchayats, integrating Area Profiler, LGD and PFMS for streamlined reporting.

AuditOnline:

Launched in 2020, this system enables online audits of Panchayat accounts, improving transparency and accountability.

People’s Plan Campaign (PPC) - Sabki Yojana Sabka Vikas:

Launched in 2019 to create and publicly share Gram Panchayat Development Plans (GPDPs), tracking flagship schemes on a dedicated website.

National Institute of Rural Development and Panchayati Raj (NIRDPR):

An autonomous body providing training, research and consultancy to strengthen PRI functionaries and stakeholders.

National Panchayat Awards:

Recognizes best-performing Panchayats based on various indicators, promoting exemplary models for others.

SWAMITVA Scheme:

Provides property rights to rural households through mapping and issuance of property cards, empowering PRIs with land ownership data.

Why is the Panchayati Raj System in decline?

Despite its initial success, the momentum of local governance reforms has stalled due to several factors:

Declining Public Participation – Voter turnout and citizen engagement in panchayat affairs have reduced over time.
Overdependence on Centrally Sponsored Schemes – Panchayats now function primarily as delivery mechanisms for government schemes, limiting their autonomy.
Politicization – The involvement of political parties has led to partisan decision-making, affecting the independent functioning of PRIs.
Structural and Systemic Challenges – The evolving development paradigm is making the traditional role of panchayats less relevant.

Other Issues Faced by Panchayati Raj Institutions (PRIs):

Limited Power Devolution:

While states like Kerala, West Bengal and Karnataka have devolved up to 26 departments, many states devolve only 3 functions, often only on paper.

Parallel Bodies:

States like Haryana have created parallel bodies, such as the Rural Development Agency, to oversee Panchayat functions, undermining local governance.

Weak Capacity Building:

Despite years of existence, only a few states have worked on internalizing the planning process for Panchayats. Many newly elected representatives, especially women, SCs and STs, lack necessary training, leading to dependency on officials for basic tasks.

Financial Constraints:

PRIs generate over 93% of their revenue from external sources. Their power to tax is restricted and sources like property tax are insufficient, necessitating state and central transfers.

State Finance Commissions:

SFC recommendations are often non-mandatory and states frequently fail to commit adequate resources to local bodies, despite recommendations from the 14th Finance Commission for a greater transfer to Panchayats.

MP/MLA Interference:

MPs and MLAs often interfere with PRI functioning, affecting their performance and independence.

Proxy Representation:

Despite reservations for women and SC/STs, proxy representation (Panch-Pati) is common, particularly in women’s seats, diluting effective participation.

Inconsistent Election Practices:

Varying conditions for State Election Commissions across states affect election consistency and transparency.

Unclear Function Allocation:

Overlapping functions at different Panchayat levels lead to confusion, inefficiency and duplication of efforts.

Weak Three-Tier System:

Higher Panchayat levels often treat lower levels as subordinate, hindering effective decentralized governance.

Lack of Accountability:

Corruption, inefficiency and patronage continue to plague local governments, reducing their overall effectiveness.

What are the major shifts contributing to the decline of the Panchayati Raj System?

The decline in the Panchayati Raj system can be attributed to four major shifts:

Plateauing of Administrative Decentralization

State governments have not fully devolved powers to panchayats.
Less than 20% of states have transferred all 29 subjects listed in the Eleventh Schedule (Ministry of Panchayati Raj, 2022).
Lack of trained staff and administrative support has weakened local governance.

Reduced Fiscal Autonomy

Direct transfers to panchayats have increased from ₹1.45 lakh crore (13th Finance Commission) to ₹2.36 lakh crore (15th Finance Commission).
However, untied grants (which allow local decision-making) have declined from 85% to 60%.
The central government controls funding through tied grants, reducing state and local autonomy.

Shift in Welfare Delivery Models

The rise of Direct Benefit Transfers (DBTs) through the Jan Dhan-Aadhaar-Mobile (JAM) platform has minimized the role of PRIs in welfare delivery.
Schemes like PM-KISAN directly transfer funds to beneficiaries, bypassing panchayats, thereby reducing local accountability.

Rapid Urbanization and Changing Development Priorities

India’s rural population has declined from 75% (1990) to 60% today, shifting policy focus to urban governance and municipal reforms.
Rural development is increasingly seen through an urban-centric lens, neglecting panchayats.

How Can the Panchayati Raj system be revived for effective governance?

Despite challenges, PRIs remain crucial for governance in rural India, where 94 crore people still reside and 45% of the workforce depends on agriculture. To strengthen panchayats, a new approach is required:

Enhancing Local Autonomy and Administrative Capacity

States must devolve more subjects to panchayats as per the Eleventh Schedule.
Local bodies should have greater authority over resource allocation, staffing and decision-making.

Reforming Panchayat Finances

Increasing untied grants to enhance fiscal autonomy.
Strengthening State Finance Commissions (SFCs) to ensure fair and regular fund allocation.

Leveraging Technology for Governance

Digital platforms should enable citizen participation in local governance.
A networked panchayati raj system can help bridge the rural-urban divide by facilitating safe migration and supporting families left behind.

Strengthening Panchayats in Sustainable Development

PRIs can play a key role in water conservation, renewable energy projects and disaster risk management by integrating scientific knowledge with traditional practices.
Community-led initiatives in climate resilience and sustainable resource management should be promoted.

Reimagining Panchayats in Governance

Panchayats should not be mere implementers of central schemes but drivers of local development.
A new vision must integrate local governance reforms with national development priorities.

Recommendations of the Second Administrative Reforms Commission (2nd ARC) to reform Local Governance:

Empowering Panchayats:

States should ensure that Panchayats have the necessary powers to function as self-governing institutions, along with state-level Election Commissions and Finance Commissions.

Capacity Building:

Programs should be introduced to improve the skills of Panchayat members. The state should encourage outsourcing of Panchayat functions to private or public agencies.

District Council and Audit Committees:

Recommendations include the formation of District Councils with rural and urban areas and Audit Committees for transparency and accountability.

Decentralization of Finance:

Panchayats should be allowed to generate revenue, take loans and receive untied funds from the state for local development.

Personnel Management:

Panchayats should have the authority to recruit and regulate their personnel, subject to state guidelines.

Conclusion

The Panchayati Raj system which was once considered as a pillar of grassroots democracy is now at crossroads. It needs urgent reforms. Otherwise, it risks of becoming irrelevant due to technological, fiscal and policy shifts. Strengthening panchayats requires greater autonomy, financial empowerment and a renewed role in governance. With 94 crore Indians still residing in villages, revitalizing PRIs is essential for India's inclusive and sustainable development.

PRACTICE QUESTION

Q.Enumerate the steps that can be taken to revitalize the Panchayati Raj system to overcome its current challenges and ensure effective rural governance in India. 250 Words

What are the constitutional provisions related to Panchayati Raj?

Part IX (Articles 243-243O) of the Constitution grants constitutional status to Panchayati Raj, mandating a three-tier system and reservations for SC/STs and women.

How does the Panchayati Raj System promote women’s participation in governance?

By reserving one-third of the seats for women, ensuring greater representation and involvement in decision-making.

What is the significance of the 73rd Amendment to the Indian Constitution?

It provides constitutional recognition to Panchayati Raj, ensuring democratic decentralization and empowering local governance.

Why is the Panchayati Raj System facing challenges?

Challenges include political interference, limited financial autonomy, low public participation, and insufficient devolution of powers.

What reforms are required to strengthen the Panchayati Raj System?

Proposed reforms include increased financial autonomy, capacity-building initiatives, integration of e-governance, and enhanced accountability mechanisms for local bodies.

The Panchayati Raj Movement is in Distress