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Mentor’s Comment: UPSC mains have always focused on the Panchayat System (2015), and Local Governance (2021).

The 73rd Amendment of 1992 was a milestone in India’s democracy, establishing the Panchayati Raj system to decentralize governance. It created a three-tier structure at the village, block, and district levels, ensuring regular local elections and reserving 50% of seats for women, Scheduled Castes, and Scheduled Tribes. This brought democracy to the grassroots, promoting local representation and inclusive leadership. However, progress in strengthening local governance has slowed. Rapid technological and societal changes now risk making Panchayats less relevant. To keep them effective, their role must be reimagined to address modern challenges while preserving their core democratic purpose.

Today’s editorial talks about issues related to local government. This content would help in GS Paper 2 in mains answer writing.

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Let’s learn!

Why in the News?

The special discussion in Parliament on the 75th anniversary of the Indian Constitution had several salient aspects of the Constitution and policy directions adopted by previous governments but very little on a vital aspect of local governance was highlighted.

Why is the Panchayati Raj movement facing distress?

• Incomplete Devolution of Powers: Many States have not transferred all 29 subjects under the Eleventh Schedule, limiting Panchayats’ decision-making authority. Example: A 2022 Ministry of Panchayati Raj report found that less than 20% of States had fully devolved powers, restricting local governance.
• Declining Fiscal Autonomy: Though direct transfers have increased, untied grants (which Panchayats can use freely) have reduced from 85% (13th Finance Commission) to 60% (15th Finance Commission). Example: Many Gram Panchayats rely on centrally sponsored schemes, leaving little room for independent development planning.
• Marginalization Due to Digital Welfare Schemes: Direct Benefit Transfer (DBT) schemes like PM-KISAN bypass Panchayats, reducing their role in beneficiary selection and grievance redress. Example: Farmers receive ₹6,000 annually under PM-KISAN directly in their accounts, eliminating Panchayats’ role in rural welfare.
• Political and Bureaucratic Interference: State governments and political parties use Panchayats as tools for electoral gains rather than empowering them as self-governing institutions. Example: In states like West Bengal and Kerala, Panchayat elections are highly politicized, often leading to violence and reducing focus on governance.
• Impact of Urbanization: With India’s rural population declining (from ~75% in 1990 to ~60% today), policy focus has shifted towards urban development and municipal governance. Example: Rural development funds have increasingly been diverted towards urban infrastructure projects, weakening Panchayat-led rural initiatives.

What impact does the distress in Panchayati Raj have on rural development?

• Inefficiency in Rural Welfare Implementation: Panchayats have been sidelined in the distribution of welfare benefits, leading to inefficiencies and reduced grievance redressal. Example: Schemes like PM-KISAN and PM Awas Yojana bypass Panchayats, causing delays in identifying genuine beneficiaries and addressing local concerns.
• Neglect of Rural Infrastructure and Public Services: Panchayats’ inability to raise resources has led to poor maintenance of rural roads, sanitation, and drinking water supply. Example: Many village schools and health centres remain understaffed due to a lack of funds and decision-making power at the Panchayat level.
• Increased Rural-Urban Migration: The failure to create employment and sustainable livelihoods in villages forces rural youth to migrate to cities for work. Example: States like Bihar and Uttar Pradesh witness high rural-to-urban migration as Panchayats are unable to promote local skill development and job creation.
• Weakened Local Decision-Making and Planning: Panchayats struggle to implement need-based development projects due to limited autonomy and lack of funds. Example: In many states, Gram Panchayats cannot initiate independent infrastructure projects like rural roads or drinking water facilities without state approval.
• Reduced Grassroots Participation in Governance: Declining public engagement weakens democratic processes, reducing local accountability and effective implementation of schemes. Example: Many village-level meetings (Gram Sabhas) see low attendance, leading to top-down decision-making that may not reflect local priorities.

What steps can be taken to revive and strengthen the Panchayati Raj system?

• Greater Devolution of Powers and Functions: State governments should fully implement the Eleventh Schedule by transferring all 29 subjects to Panchayats. Example: Kerala’s People’s Plan Campaign empowered Panchayats with financial and planning autonomy, leading to better local governance.
• Enhancing Financial Autonomy: Increase untied grants from Finance Commissions to Panchayats and allow them to generate local revenue through taxes and fees. Example: Maharashtra has successfully implemented property tax collection at the Gram Panchayat level to fund local development.
• Strengthening Administrative Capacity: Appoint dedicated local-level bureaucrats and improve digital governance tools for efficient service delivery. Example: Karnataka’s Gram Swaraj Project uses IT-based platforms to improve transparency and monitoring of Panchayat activities.
• Encouraging Citizen Participation and Accountability: Regular and active Gram Sabha meetings should be mandated for community involvement in decision-making. Example: In Rajasthan, social audits of MGNREGA work through Gram Sabhas have improved transparency and reduced corruption.
• Expanding Panchayats’ Role in Emerging Areas: Panchayats should be given new responsibilities in areas like water conservation, renewable energy, and disaster management. Example: Gujarat’s Mission Mangalam engaged Panchayats in women-led SHGs to promote local entrepreneurship and sustainable rural development.

Way forward: 

• Comprehensive Devolution and Strengthening Autonomy – Ensure full transfer of subjects under the Eleventh Schedule, increase untied grants, and empower Panchayats with independent revenue-generating mechanisms to enhance self-governance.
• Capacity Building and Community Engagement – Improve Panchayat administration through digital tools, dedicated local bureaucrats, and mandated Gram Sabha participation to enhance transparency, accountability, and grassroots governance.