Panchayati Raj Institutions: Issues and Challenges

[op-ed snap] Throttled at the grass roots


From UPSC perspective, the following things are important :

Prelims level : Nothing much

Mains level : Empowering Local Bodies


25 years after the 73rd and 74th constitutional amendments, very little actual progress has been made in this direction. Local governments remain hamstrung and ineffective; mere agents to do the bidding of higher-level governments. 


  • About 32 lakh peoples’ representatives are elected every five years to the local bodies.
  • Devolution is not mere delegation. It implies that governance functions are assigned by law to local governments, along with adequate transfer of financial grants, taxes, and staff so that they carry out their responsibilities.
  • Local governments are to report primarily to their voters, and not so much to higher-level departments. 
  • The Constitution mandates that panchayats and municipalities shall be elected every five years.
  • States are mandated to devolve functions and responsibilities to them through law. 
  • Given diverse habitation patterns, political and social history, it makes sense to mandate States to assign functions to local governments. 
  • A study for the 14th FC by the Centre for Policy Research shows that all States have formally devolved powers with respect to five core functions of water supply, sanitation, roads and communication, streetlight provision and the management of community assets to the gram panchayats.

Issues remain – Finance

  • The volume of money set apart for them is inadequate to meet their basic requirements. 
  • Much of the money given is inflexible; even in the case of untied grants mandated by the Union and State Finance Commissions, their use is constrained through the imposition of several conditions. 
  • There is little investment in enabling and strengthening local governments to raise their own taxes and user charges.


  • Local governments do not have the staff to perform even basic tasks. 
  • As most staff are hired by higher-level departments and placed with local governments on deputation, they do not feel responsible for the latter; they function as part of a vertically integrated departmental system.


  • In violation of the constitutional mandate of five-yearly elections to local governments, States have often postponed them. 
  • In 2005, when the Gujarat government postponed the Ahmedabad corporation elections, a Supreme Court constitutional bench held that under no circumstances can such postponements be allowed. 
  • Supreme Court rejected other alibis for election postponements, such as delays in determining the seat reservation matrix, or fresh delimitation of local government boundaries. 
  • In Tamil Nadu, panchayat elections have not been held for over two years now, resulting in the State losing finance commission grants from the Union government.
  • Criminal elements and contractors are attracted to local government elections, tempted by the large sums of money now flowing to them. They win elections through bribing voters and striking deals with different groups
  • Higher officers posted at the behest of MLAs extract bribes from local governments for plan clearances, approving estimates and payments. 
  • There is no evidence to show that corruption has increased due to decentralisation. Decentralised corruption tends to get exposed faster than national or State-level corruption.

Problems with centralisation

  • The current Union government has centralised service delivery by using technology, and panchayats are nothing more than front offices for several Union government programs. 
  • The ‘Smart City’ program does not devolve its funds to the municipalities; States have been forced to constitute ‘special purpose vehicles’ to ring-fence these grants.

Way ahead

  • Gram sabhas and wards committees in urban areas have to be revitalised. 
  • Consultations with the grama sabha could be organised through smaller discussions where everybody can really participate. 
  • Even new systems of Short Message Services or social media groups could be used for facilitating discussions between members of grama sabha.
  • Local government organisational structures have to be strengthened. Panchayats are burdened with a huge amount of work that other departments thrust on them, without being compensated for the extra administrative costs. 
  • Local governments must be enabled to hold State departments accountable and to provide quality, corruption-free service to them, through service-level agreements.
  • We cannot have accountable GPs, without local taxation. Local governments are reluctant to collect property taxes and user charges fully. They are happy to implement top-down programs because they know that if they collect taxes, their voters will never forgive them for misusing their funds. 


A decentralisation is always a messy form of democracy, but it is far better than the operation of criminal politicians at a higher level. We can keep track of corrupt local government representatives; at a higher level, we will never know the extent of dirty deals that happen.

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