Local Government Institutions: Panchayati Raj and Municipalities

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Why Panchayati Raj?

  • India, primarily, is a land of villages.
  • Governance and Democracy should start at the smallest unit
  • Democracy demands Participation and Accountability
  • Local Government are more easy approach and cost effective

Structure of Panchayati Raj Institutions

Structure of Panchayati Raj Institutions

Panchayati Raj and 73rd Amendment Act

  • Panchayati Raj; Rural Local Self Government, initiate decentralization and participative governance, Grassroot Democracy
  • 73rd Constitutional Amendment Act 1992
  • Added Part IX (Article 243 - 243 O)
  • Added Eleventh Schedule
  • Gives Practical Shape to Article 40 of DPSP
  • It provides Constitutional Status to Panchayati Raj Institutions

The Act has two Provisions:

  • Compulsory
  • Voluntary

Compulsory Provisions

  • Organisation of Gram Sabha and Establishment of Panchayats
  • Direct and Indirect Elections
  • Reservation of Seats
  • Fixing Five Years Tenure
  • Establishment of State Election Commission and State Finance Commission

Voluntary Provisions

  • Representation to Members of Parliament
  • Reservation of seats for Backward class
  • Granting Powers to Panchayats
  • Devolution of powers
  • Granting financial power to Panchayats

Features of 73rd Amendment Act

  • Gram Sabha
  • Three Tier System
  • Election of Members And Chairpersons
  • Reservation of Seats
  • Duration of Panchayats
  • State Election Commission

Powers and Functions

Authority and power to Panchayats by the state legislature with respect to:

  • Preparation of Plans
  • Implementation of schemes including 29 matters listed in Eleventh Schedule like Agriculture, land improvement, Housing, Drinking water, Roads, Education, etc.


  • Authorize to Levy , Collect and Appropriate Tax
  • Assign Levied and collected taxes by state government
  • Grants-In-Aid from Consolidated Fund of India

State Finance Commission

  • Constituted by Governor of the State
  • Tenure is five years
  • State Legislature provide for its composition

Makes recommendations to the governor such as:

  • Principles that govern net proceeds levied by States
  • Determine tax that is assigned to the Panchayat
  • Measures for financial improvement
  • Any matter referred by the Governor

Reasons for Ineffective Performance

  • Lack of adequate devolution
  • Excessive control by bureaucracy
  • Reluctance to use fiscal power
  • Poor Infrastructure
  • Tied nature of Funds

Current Issues

  • Education as a criteria for local elections
  • Rajasthan government Scrapped Education criteria
  • Hariyana Panchayati Raj Amendment Act
  • Sabki Yojana Sabka Vikas
  • Involving people in preparing development plan
  • Gram Panchayats to publicly display all sources of Funds