Chapter 39: Panchayati Raj

Meaning and significance

• Panchayati Raj signifies the system of rural local self-government in India.
• Established in all states through state legislation to build grassroots democracy and
promote rural development.
• It was constitutionalised through the 73rd Constitutional Amendment Act, 1992.
• In India’s federal scheme, “Local Government” is a State List subject (Entry 5 of the State
List, Seventh Schedule).
Evolution of Panchayati Raj
Balwantrai Mehta Committee (1957)
Context
• Appointed (Jan 1957) to review the working of:
◦ Community Development Programme (1952)
◦ National Extension Service (1953)
• Report submitted: Nov 1957
• Recommended “democratic decentralisation” (later called Panchayati Raj).
Key recommendations
• Three-tier system:
◦ Gram Panchayat (village)
◦ Panchayat Samiti (block)
◦ Zila Parishad (district)
◦ Tiers to be linked through indirect elections.
• Direct elections for village panchayat; indirect for samiti and parishad.
• Planning and development activities to be entrusted to these bodies.
• Panchayat Samiti as executive body; Zila
Parishad as advisory/coordinating/supervisory body.
• District Collector to be chairman of Zila Parishad.
• Real transfer of power and responsibility to these democratic bodies.
• Adequate resources to be transferred to enable functions.
• Mechanism for further devolution over time.
Adoption and early implementation
• Accepted by National Development Council (Jan 1958); states allowed flexibility but
broad principles to remain common.
• Rajasthan first to establish Panchayati Raj (inaugurated 2 Oct 1959, Nagaur).
• Followed by Andhra Pradesh (1959); then most states adopted.
Variation across states (pre-constitutionalisation)
 • Differences in number of tiers, tenure, composition, functions, finances.
◦ Rajasthan: three-tier
◦ Tamil Nadu: two-tier
◦ West Bengal: four-tier
• Power centre differed:
◦ Rajasthan–Andhra model: block as planning unit → Panchayat Samiti stronger
◦ Maharashtra–Gujarat model: district as planning unit → Zila Parishad stronger
• Some states also created Nyaya Panchayats for petty civil/criminal cases.
Study teams and committees (pre-constitutionalisation)
Study Teams and Committees on Panchayati Raj (1960–1976)
• 1960: Committee on Rationalisation of Panchayat Statistics — V.R. Rao
• 1961: Working Group on Panchayats and Cooperatives — S.D. Mishra
• 1961: Study Team on Panchayati Raj Administration — V. Iswaran
• 1962: Study Team on Nyaya Panchayats — G.R. Rajgopal
• 1963: Study Team on Position of Gram Sabha in Panchayati Raj Movement — R.R. Diwakar
• 1963: Study Group on Budgeting and Accounting Procedure of PRIs — M. Rama
Krishnayya
• 1963: Study Team on Panchayati Raj Finances — K. Santhanam
• 1965: Committee on Panchayati Raj Elections — K. Santhanam
• 1965: Study Team on Audit and Accounts of PRIs — R.K. Khanna
• 1966: Committee on Panchayati Raj Training Centres — G. Ramachandran
• 1969: Study Team on Involvement of Community Development Agency & PRIs in Basic Land
Reform Measures — V. Ramanathan
• 1972: Working Group for 5th Five Year Plan on Community Development & Panchayati Raj
— N. Ramakrishnayya
• 1976: Committee on Community Development & Panchayati Raj — Smt. Daya Choubey
Major committees and their contributions
Ashok Mehta Committee (1977–78)
Context
• Appointed by Janata Government (Dec 1977); report (Aug 1978).
• Gave 132 recommendations to revive weakening PRIs.
Main recommendations
• Replace three-tier with two-tier:
◦ Zila Parishad (district)
◦ Mandal Panchayat (group of villages; population about 15,000–20,000)
• District should be the first point for decentralisation below state level.
• Zila Parishad to be executive body and responsible for district planning.
• Political parties should officially participate in panchayat elections.
 • PRIs should have compulsory powers of taxation.
• Social audit by district-level agency and a committee of legislators to ensure funds meant
for vulnerable groups are spent on them.
• State government should not supersede PRIs; if unavoidable, elections within six months.
• Nyaya Panchayats to be separate from development panchayats; presided by a qualified
judge.
• Panchayat elections to be organised by Chief Electoral Officer (state) in consultation
with Chief Election Commissioner.
• Transfer development functions to Zila Parishad; development staff to work under its
control.
• Promote role of voluntary agencies in mobilising people.
• Appoint a Minister for Panchayati Raj in the state council of ministers.
• Reservation for SCs and STs based on population.
• Give constitutional recognition to PRIs.
Outcome
• No central action due to fall of Janata Government, but Karnataka, West Bengal, Andhra
Pradesh revitalised PRIs using some recommendations.
G.V.K. Rao Committee (1985–86)
Context
• Appointed by Planning Commission (1985) to review rural development & poverty alleviation
administrative arrangements.
• Diagnosed bureaucratisation of development as “grass without roots”.
Key recommendations
• Zila Parishad to be pivotal: district is proper unit for planning and development; Zila
Parishad should manage district-level programmes.
• PRIs at district and lower levels to play major role in planning, implementation,
monitoring.
• Transfer some state planning functions to district planning units.
• Create District Development Commissioner as CEO of Zila Parishad, in charge of all
development departments at district level.
• Ensure regular elections (found overdue elections in multiple states).
Comparative note highlighted
• Differs from some other planning models that retained a stronger role for District Collector;
GVK Rao reduces collector’s developmental role and strengthens PRIs.
L.M. Singhvi Committee (1986)
Purpose
• Concept paper on “Revitalisation of Panchayati Raj Institutions for Democracy and
Development”.
Key recommendations
• Constitutional recognition, protection and preservation of PRIs by adding a new
constitutional chapter.
 • Ensure regular, free and fair elections to PRIs.
• Establish Nyaya Panchayats for a cluster of villages.
• Reorganise villages to make Gram Panchayats more viable.
• Emphasise Gram Sabha as the embodiment of direct democracy.
• Strengthen panchayat financial resources.
• Create judicial tribunals in each state to decide controversies relating to PRI elections,
dissolution, and functioning.
Thungon Committee (1988)
Purpose
• Examine political and administrative structure in district for district planning.
Key recommendations
• Constitutional recognition of PRIs.
• Three-tier system (village, block, district).
• Zila Parishad as pivot; planning and development agency in district.
• Fixed tenure of 5 years.
• Maximum supersession period 6 months.
• State-level planning and coordination committee headed by planning minister; Zila Parishad
presidents as members.
• Prepare and incorporate a detailed constitutional list of PRI subjects.
• Reservation for SC/ST on population basis and reservation for women.
• Establish State Finance Commission in each state.
• District collector as CEO of Zila Parishad.
Gadgil Committee (1988)
Purpose
• Congress Party committee on making PRIs effective.
Key recommendations
• Grant constitutional status.
• Three-tier system.
• Five-year term.
• Direct elections at all three levels.
• Reservation for SCs, STs, women.
• PRIs to prepare and implement socio-economic development plans; specify subjects in
Constitution.
• Financial powers to levy/collect taxes and duties.
• Establish State Finance Commission.
• Establish State Election Commission.
• These recommendations became the basis for drafting the amendment bill to
constitutionalise PRIs.
Constitutionalisation journey
Rajiv Gandhi Government
 • Introduced 64th Constitutional Amendment Bill (July 1989).
• Passed Lok Sabha (Aug 1989) but not approved by Rajya Sabha (opposition argued it
would strengthen centralisation).
V.P. Singh Government
• Announced steps to strengthen PRIs.
• CM conference held (June 1990); approved fresh amendment proposal.
• Bill introduced (Sept 1990) but lapsed due to fall of government.
P.V. Narasimha Rao Government
• Modified proposals to remove controversial aspects.
• Introduced bill (Sept 1991).
• Became 73rd Constitutional Amendment Act, 1992; came into force 24 April 1993.
73rd Constitutional Amendment Act, 1992
Constitutional changes made
• Added Part IX: “The Panchayats” (Articles 243 to 243-O).
• Added the Eleventh Schedule (29 functional items).
• Gives practical shape to Article 40 (DPSP): organise village panchayats and endow them
with powers to function as units of self-government.
• Made the PRI system part of the justiciable constitutional framework:
◦ formation of panchayats and regular elections no longer depend on state government
discretion.
Compulsory vs voluntary provisions
• Provisions fall into:
◦ Compulsory (must be included in state laws)
◦ Voluntary (states may choose based on local conditions)
Salient features of the Act (Part IX)
Gram Sabha
• Foundation of Panchayati Raj.
• Village assembly consisting of persons in electoral rolls of the village area.
• Powers/functions at village level as determined by state legislature.
Three-tier system
• Panchayats at:
◦ village
◦ intermediate
◦ district
• Exception: states with population ≤ 20 lakh may skip intermediate level.
Elections of members and chairpersons
• All members at village/intermediate/district levels elected directly by people.
• Chairpersons:
◦ intermediate and district: elected indirectly (by and from elected members)
 ◦ village: election method decided by state legislature
• Chairperson and members (direct/indirect) have voting rights in panchayat meetings.
Reservation of seats and offices
• SC/ST seats reserved in proportion to population in panchayat area at all levels.
• Reservation of chairperson offices for SC/ST at village or any level as state legislature
provides.
• Women:
◦ not less than one-third of total seats (including SC/ST women seats)
◦ not less than one-third of chairperson offices at each level
• State legislature may provide reservation for backward classes.
• SC/ST reservation for members and chairpersons continues till the period in Article
334 (presently till 2030).
• Special point: SC reservation provisions in panchayats not applicable to Arunachal
Pradesh (no SC population); added by 83rd Amendment Act, 2000.
Duration of panchayats
• Five-year term from first meeting.
• Can be dissolved earlier.
• Fresh elections must be completed:
◦ before expiry of five years, or
◦ within six months of dissolution.
• If remaining term is less than six months, no election needed for that short remainder.
• A reconstituted panchayat after premature dissolution lasts only for the remaining period,
not a fresh full five years.
Disqualifications
• Disqualified if:
◦ disqualified under law for state legislature elections, or
◦ under state law.
• Minimum age:
◦ cannot be disqualified for being under 25 if the person has attained 21 years.
• Disqualification disputes decided by authority as state legislature determines.
State Election Commission
• Superintendence, direction, and control of electoral rolls and panchayat elections vested
in State Election Commission.
• State Election Commissioner:
◦ appointed by Governor;
◦ service conditions and tenure determined by Governor;
◦ removal only like a High Court judge (cannot be removed by Governor at will);
◦ conditions cannot be varied to disadvantage after appointment.
• State legislature may legislate on all matters relating to panchayat elections.
Powers and functions
 • State legislature may endow panchayats with powers/authority to function as institutions of
self-government, including devolution related to:
◦ preparation of plans for economic development and social justice, and
◦ implementation of schemes for economic development and social justiceincluding those
relating to the 29 Eleventh Schedule matters.
Finances
State legislature may:
• authorise panchayats to levy, collect and appropriate taxes/duties/tolls/fees;
• assign panchayats taxes/duties/tolls/fees collected by the state;
• provide grants-in-aid from Consolidated Fund of the State;
• constitute panchayat funds for crediting panchayat money.
State Finance Commission
• Governor must constitute a Finance Commission every five years to review PRI financial
position and recommend:
◦ principles for distribution of state taxes/duties/tolls/fees between state and panchayats +
allocation among panchayats,
◦ which state levies may be assigned to panchayats,
◦ grants-in-aid from Consolidated Fund,
◦ measures to improve PRI finances,
◦ any other matter referred by Governor.
• Governor must place recommendations + action taken report before the state legislature.
• Central Finance Commission also suggests measures to augment state Consolidated Fund
to supplement PRI resources (based on SFC recommendations).
Audit of accounts
• State legislature may provide for maintenance and auditing of panchayat accounts.
Application to Union Territories
• Applies to UTs, but President may direct application with exceptions/modifications.
Exempted states and areas
• Not applicable to:
◦ states of Nagaland, Meghalaya, Mizoram, and certain other areas:
▪ Scheduled Areas and Tribal Areas in states,
▪ Hill areas of Manipur (district councils exist),
▪ Darjeeling district (Darjeeling Gorkha Hill Council exists).
• Parliament can extend Part IX to Scheduled/Tribal areas with exceptions/modifications → led
to PESA Act, 1996.
Continuance of existing laws and panchayats
• State panchayat laws could continue for one year from commencement (states had to
adopt the new system within one year from 24 April 1993).
• Existing panchayats continued until end of term unless dissolved sooner.
• Most states passed Panchayati Raj Acts in 1993–94.
Bar to court interference in electoral matters
 • Courts cannot question:
◦ validity of delimitation or seat allotment laws for panchayats.
• Panchayat elections can be challenged only through an election petition to the
authority/manner provided by state legislature.
Eleventh Schedule: 29 functional items of panchayats
• Agriculture (including extension)
• Land improvement; land reforms implementation; land consolidation; soil conservation
• Minor irrigation; water management; watershed development
• Animal husbandry; dairying; poultry
• Fisheries
• Social forestry and farm forestry
• Minor forest produce
• Small-scale industries (including food processing)
• Khadi, village and cottage industries
• Rural housing
• Drinking water
• Fuel and fodder
• Roads, culverts, bridges, ferries, waterways and other communication means
• Rural electrification (including electricity distribution)
• Non-conventional energy sources
• Poverty alleviation programmes
• Education (including primary and secondary schools)
• Technical training and vocational education
• Adult and non-formal education
• Libraries
• Cultural activities
• Markets and fairs
• Health and sanitation (including hospitals, PHCs, dispensaries)
• Family welfare
• Women and child development
• Social welfare (including welfare of handicapped and mentally retarded)
• Welfare of weaker sections (especially SCs and STs)
• Public distribution system
• Maintenance of community assets
Compulsory and voluntary provisions of Part IX
Compulsory provisions
• Gram Sabha organisation.
• Three-tier panchayats (village/intermediate/district).
 • Direct elections to all seats at all three levels.
• Indirect election of chairperson at intermediate and district levels.
• Voting rights of chairperson and all directly/indirectly elected members.
• Minimum age 21 years to contest PRI elections.
• Reservation for SC/ST (seats + chairpersons) at all three levels.
• Reservation of one-third seats and chairpersons for women at all three levels.
• Five-year tenure; elections within six months after supersession.
• State Election Commission.
• State Finance Commission every five years.
Voluntary provisions
• Powers/functions to Gram Sabha at village level.
• Method of election of village chairperson.
• Representation of village chairpersons in intermediate panchayats (or district where no
intermediate).
• Representation of intermediate chairpersons in district panchayat.
• Representation of MPs/MLAs in panchayats within their constituencies.
• Reservation for backward classes.
• Making panchayats truly autonomous (powers/authority as institutions of self-government).
• Devolution for planning and performing some/all Eleventh Schedule functions.
• Financial powers to levy/collect/appropriate taxes etc.
• Assigning state taxes/duties/tolls/fees to panchayats.
• Grants-in-aid from Consolidated Fund.
• Panchayat funds for crediting all panchayat moneys.
PESA Act, 1996 (Extension Act)
Why needed
• Part IX not applicable to Fifth Schedule areas by default.
• Parliament extended Part IX to Scheduled Areas with modifications through PESA, 1996.
Fifth Schedule states (as listed)
• Andhra Pradesh, Telangana, Chhattisgarh, Gujarat, Himachal Pradesh, Jharkhand,
Madhya Pradesh, Maharashtra, Odisha, Rajasthan
• All 10 states enacted compliance legislations by amending their Panchayati Raj Acts.
Objectives of PESA
• Extend Part IX to Scheduled Areas with modifications.
• Provide self-rule for tribal population.
• Promote village governance with participatory democracy; make Gram Sabha nucleus.
• Create suitable administrative framework consistent with traditional practices.
• Safeguard tribal traditions and customs.
• Empower panchayats with powers suited to tribal needs.
• Prevent higher-level panchayats from taking over Gram Sabha/lower panchayat powers.
Key features of PESA
• State panchayat law in Scheduled Areas must align with customary law, social/religious
practices, traditional community resource management.
• “Village” ordinarily means a habitation/hamlet/group managing its affairs as per traditions.
• Gram Sabha includes all persons in electoral rolls of village panchayat area.
• Gram Sabha competent to safeguard traditions, cultural identity, community resources,
customary dispute resolution.
• Gram Sabha must:
◦ approve plans/programmes/projects for development before implementation at village
panchayat level,
◦ identify beneficiaries for poverty alleviation and other programmes.
• Village panchayat must obtain Gram Sabha certification for utilisation of funds for such
plans/projects.
• Reservation in Scheduled Areas:
◦ proportional reservation as under Part IX,
◦ but ST reservation not less than one-half of total seats,
◦ all chairperson seats at all levels reserved for STs.
• State may nominate STs lacking representation at intermediate/district level (nomination
≤ one-tenth of total elected members).
• Gram Sabha/panchayats must be consulted before land acquisition for development
projects and before resettlement/rehabilitation; coordination at state level.
• Planning and management of minor water bodies entrusted to panchayats at appropriate
level.
• Gram Sabha/panchayat recommendations mandatory for:
◦ prospecting licence or mining lease for minor minerals,
◦ concession by auction for exploitation of minor minerals.
• State legislature must ensure Gram Sabha/panchayats are endowed with powers like:
◦ enforce prohibition / regulate intoxicants,
◦ ownership of minor forest produce,
◦ prevent alienation of land and restore unlawfully alienated tribal land,
◦ manage village markets,
◦ control money-lending to STs,
◦ control institutions/functionaries in social sectors,
◦ control local plans and resources (including tribal sub-plans).
• Safeguards to ensure higher-level panchayats do not assume lower-level/Gram Sabha
powers.
• State should follow Sixth Schedule pattern while designing district-level arrangements in
Scheduled Areas.
• Inconsistent provisions in existing laws cease after one year of Presidential assent to PESA,
but existing panchayats continue till term unless dissolved sooner.
Finances of Panchayati Raj
Sources of PRI funds (as summarised)
• Grants from Union Government based on Central Finance Commission recommendations
(Article 280).
• Devolution from State Government based on State Finance Commission recommendations
(Article 243-I).
• Loans/grants from State Government.
• Programme-specific allocation under Centrally Sponsored Schemes and additional central
assistance.
• Internal resource generation (tax and non-tax).
Financial issues highlighted
• Structural empowerment exists, but autonomy and efficiency depend on financial
strength and own resource capacity.
• Many states have not adequately empowered panchayats fiscally; own resources
are meagre.
• Even “progressive” states show heavy dependence on grants.
• Broad conclusions:
◦ weak internal resource generation (thin tax domain + reluctance to collect),
◦ heavy dependence on Union/State grants,
◦ large portion of grants are scheme-specific → limited spending flexibility,
◦ states often reluctant to devolve funds due to their own fiscal constraints,
◦ in critical Eleventh Schedule areas (education, health, water, sanitation, irrigation), state
government often still implements directly,
◦ responsibilities entrusted to panchayats often not matched by resources.
• Gram Panchayats are relatively better in own resource collection; higher tiers depend more
on tolls/fees/non-tax revenue.
• Typical taxes/fees under village panchayat domain include: property/house tax, profession
tax, land tax/cess, vehicle taxes/tolls, entertainment fees, licence fees, non-agricultural land
tax, cattle registration fees, sanitation/drainage tax, water tax, lighting tax, education cess,
tax on fairs/festivals, etc.
Reasons for ineffective PRI performance (despite 73rd Amendment)
• Lack of adequate devolution of 3Fs: functions, funds, functionaries; mismatch between
responsibilities and resources; weak implementation of SFC recommendations in many
states.
• Excessive bureaucratic control: Gram Panchayats often subordinated; sarpanches spend
excessive time at block offices for funds/approvals, distorting representative role.
• Tied nature of funds: scheme activities may not suit local needs → unsuitable works or
under-spending.
• Overdependence on government funding reduces incentive for social audit and citizen
pressure.
• Reluctance to use fiscal powers: few panchayats levy/collect local taxes; political difficulty
of taxing one’s own community.
• Weak Gram Sabha status: many state acts don’t specify Gram Sabha powers, procedures,
or penalties for officials.
• Creation of parallel bodies (missions/societies): can bypass PRIs, create duality and
alienation, usurp PRI space; not proven to reduce corruption/elite capture.
• Poor infrastructure: lack of full-time secretary, office buildings, and reliable databases for
planning/monitoring.
• Capacity issue noted: many elected representatives are semi-literate/illiterate; lack of
periodic training reduces effectiveness.
Articles related to Panchayats (at a glance)
• 243: Definitions
• 243A: Gram Sabha
• 243B: Constitution of panchayats
• 243C: Composition of panchayats
• 243D: Reservation of seats
• 243E: Duration of panchayats
• 243F: Disqualifications for membership
• 243G: Powers, authority and responsibilities of panchayats
• 243H: Powers to impose taxes and panchayat funds
• 243-I: State Finance Commission
• 243J: Audit of accounts
• 243K: Elections to panchayats (State Election Commission)
• 243L: Application to Union Territories
• 243M: Part not to apply to certain areas
• 243N: Continuance of existing laws and panchayats
• 243-O: Bar to court interference in electoral matters
Committees after constitutionalisation
• Task Force on Devolution of Powers and Functions to PRIs — Lalit Mathur (Appointed 2001;
Reported 2001)
• Expert Group on Planning at the Grassroots Level — V. Ramachandran (Appointed 2005;
Reported 2006)
• Task Force for Preparation of a Manual for District Planning — Smt. Rajwant
Sandhu (Appointed 2008; Reported 2008)
• Committee on Restructuring of DRDA — V. Ramachandran (Appointed 2010; Reported
2012)
• Expert Committee on Leveraging Panchayats for Efficient Delivery of Public Goods and
Services — Mani Shankar Aiyar (Appointed 2012; Reported 2013)
Footnote-linked facts captured in context
• The constitutional amendment bill that became the 73rd Amendment was passed by Lok
Sabha (22 Dec 1992) and Rajya Sabha (23 Dec 1992), approved by 17 state assemblies,
received Presidential assent (20 April 1993).
• Definitions used in the Act include Panchayat (self-government institution for rural areas),
Village (as notified by Governor), Intermediate level, and District.
• State Election Commissioner removal protection is like that of a High Court judge (removed
by President on Parliament’s recommendation).
• Scheduled Areas: ten states listed above; Tribal Areas (autonomous districts) total ten
across Assam (3), Meghalaya (3), Tripura (1), Mizoram (3).
• PESA received Presidential assent on 24 December 1996.