DECENTRALIZATION AND LOCAL GOVERNANCE IN INDIA

Exam Notes | Introduction to the Indian Constitution | Dr. Smita Agarwal

1. INTRODUCTION
Grassroots democracy refers to a political process in which as much decision-making authority as possible is shifted to the
lowest geographic level of an organization. It leads to the creation of institutions, both formal and informal, that are
collectively called local governance. Local governance is closely linked with the concept of decentralization, which broadly
means the gradual transfer of functions, resources, and decision-making powers to lower-level democratically elected
bodies (Crook and Manor, 1998). Decentralization can take different forms such as privatization, de-concentration,
downward fiscal transfers, and devolution. Of these, devolution is considered the most ideal form because it transfers tasks
and functions along with matching resources and decision-making powers to locally elected bodies that are largely
independent of higher-level authorities.

2. HISTORY OF LOCAL GOVERNANCE IN INDIA: AN OVERVIEW

Local governance historically predates the emergence of nation-states. In ancient India, around 2500 BC, a rich civilization
in the Indus Valley placed great emphasis on autonomy in local governance and established a consensus on division of
work among members of society. References to village self-governance also appear in the Rig Veda (around 1200 BC). By
600 BC, there is definite evidence of the existence of village sabhas (councils of assemblies) and gramins (senior village
persons). Over time, these took the form of panchayats, assemblies of five people, which had both police and judicial
powers. Alongside village panchayats, there were also caste panchayats to ensure members of a particular caste followed its
social code. The Gandhian vision of village swaraj further provided the philosophical foundation for local self-governance,
envisioning each village panchayat as a complete republic with legislative, judicial, and executive functions combined.

3. LOCAL GOVERNANCE IN PRE-COLONIAL AND COLONIAL PERIOD

Pre-Colonial Period
In the pre-colonial period, panchayats were the pivot of administration, the center of social life, and the focus of community
solidarity across both north and south India. Even during the Medieval and Mughal periods, the basic character of village
panchayats remained intact. Although the Mughals curtailed their judicial powers, local affairs largely remained
unregulated from above and village officers were answerable primarily to the panchayats.

Colonial Period
With British rule, the self-contained village communities and their panchayats lost their sustenance and were replaced by
formally constituted administrative institutions. The British primarily created local bodies in areas of trade interest,
consisting of nominated members only. As early as 1687, a Municipal Corporation was formed in Madras based on the
British Town Council model. A major shift came with the Mayo Resolution of 1870, which called for decentralization of
power to bring about administrative efficiency. The Ripon Resolution of 1882 is considered the Magna Carta of local
democracy in India. It established local bodies with elected non-official members presided over by a non-official
chairperson, and proposed rural local boards where two-thirds of membership was elected. In 1907, a Royal Commission
on Decentralization was formed, which recognized the importance of panchayats but its recommendations largely remained
on paper. The Montagu-Chelmsford Reforms of 1919 made local self-government a transferred subject, bringing it under
Indian ministers at the provincial level. By 1925, eight British Indian provinces had passed statutory panchayat acts, though
they covered only limited villages with limited functions. The Government of India Act 1935 marked another stage in the
evolution of panchayats, with popularly elected provincial governments feeling duty-bound to further democratize local
self-governing institutions.

Constituent Assembly Debates

After Independence, despite Gandhi's influence and popular sentiment, panchayats were not given statutory status in the
Constitution. Dr. Ambedkar criticized village republics as a sink of localism and ignorance, though other members like
Madhav Rau of Mysore defended their potential. Ultimately, panchayats were placed in Article 40 of the Constitution as a
Directive Principle, leaving it to state legislatures to legislate on local governance through List II, Entry 5 of the Seventh
Schedule.

4. RISE AND DECLINE OF PANCHAYATS TILL 1977

 India's early development strategy relied on centrally administered plans. The Community Development Project of 1952
soon failed due to lack of people's participation. To address this, the Balwant Ray Mehta Committee was set up in 1957. It
gave two key recommendations: (a) administrative decentralization for effective implementation of development
programmes and (b) control by elected bodies over this decentralized system. These recommendations gave a fillip to the
nationwide movement for Panchayati Raj. Rajasthan was the first state to inaugurate Panchayati Raj following this report.
By 1959, all states had passed panchayat acts, and by the mid-1960s, panchayats covered over 96 percent of inhabited
villages. However, panchayats gradually declined due to shortage of funds, postponement of elections, traditional rivalries,
and the reduction of the Community Development Ministry to a department in 1966-67, which further marginalized their
role.

5. ASHOK MEHTA COMMITTEE, 1978

The Ashok Mehta Committee was set up to inquire into the working of Panchayati Raj institutions and suggest ways to
strengthen them. It marked a turning point in the concept and functioning of Panchayati Raj and launched what are called
second generation panchayats (the first generation being those of the Nehruvian era). The Committee recommended that (1)
all development activities should flow through the block level organization, and (2) the Panchayat Samiti should be the key
unit of decentralization, coterminous with the Block in most cases. States like West Bengal, Karnataka, Jammu and
Kashmir, and Andhra Pradesh revised or enacted new panchayat acts in accordance with these recommendations. This
phase saw panchayats develop more clearly into political institutions, largely through the intervention of political leaders at
the state level. The West Bengal model was considered a success story. The Ashok Mehta Committee was the first to
officially recommend including panchayats in the Constitution, as concentration of power at the center was seen as a
serious impediment to effective local governance.
By the end of 1988, the P.K. Thungon sub-committee also recommended giving constitutional status to panchayats. The
64th Amendment Bill was introduced in Parliament but although it passed in the Lok Sabha, it failed in the Rajya Sabha by
two votes. Eventually, in September 1991, the Congress government under Narasimha Rao introduced the 72nd
(Panchayats) and 73rd (Nagarpalikas) Amendment Bills. The Lok Sabha passed both on 22 December 1992 and the Rajya
Sabha the next day. Their sequence was reversed and they became the 73rd and 74th Amendment Acts respectively. After
ratification by more than one-third of state assemblies, the President gave assent on 20 April 1993. These amendments
brought a fundamental change to both local governance and India's federal character.

6. 73RD AMENDMENT ACT: KEY MANDATORY PROVISIONS

Gram Sabha (Article 243A)

The Gram Sabha is a body consisting of all persons registered in the electoral rolls of a village. It is endowed with such
powers and functions as the state legislature may provide by law.

Constitution of Panchayats (Article 243B)

Every state, except those with populations below 2 million, must establish panchayats at three levels: village, intermediate,
and district.

Elections (Articles 243C and 243E)

Direct elections must be held to all seats in panchayats at all levels. The position of chairperson at intermediate and district
levels is filled through indirect elections. Elections must be held compulsorily every five years. If a panchayat is dissolved
prematurely, elections must be held within six months.

Reservation of Seats (Article 243D)

Not less than one-third of the total seats in every panchayat must be reserved for Scheduled Castes and Scheduled Tribes.
Of this reserved quota, one-third must go to women belonging to these communities. Further, not less than one-third of all
seats across every panchayat must be reserved for women overall, allotted by rotation to different constituencies. Similarly,
one-third of all chairperson offices at every level must be reserved for women. Following this amendment, about eight lakh
women representatives entered rural governance in 1993-94.

Election Commission (Article 243K), State Finance Commission (Article 243I), and District Planning
Committees (Article 243ZD)
An independent State Election Commission is required to supervise and manage panchayat elections. A State Finance
Commission must be established every five years to review the financial position of local bodies and recommend principles
for allocation of funds. District Planning Committees are mandated to consolidate plans prepared by both rural and urban
 local bodies into a unified district plan.

Provisions for Tribal and Scheduled Areas (Article 243M)

Part IX of the Constitution does not apply directly to the Scheduled Areas referred to in Article 244. States like Nagaland,
Meghalaya, Mizoram, and hill areas of Manipur with existing District Councils are also excluded. Parliament may, by law,
extend Part IX to Scheduled Areas with exceptions and modifications as needed.

7. THE PANCHAYATS (EXTENSION TO SCHEDULED AREAS) ACT, 1996 (PESA)

PESA was enacted to extend the provisions of Part IX of the Constitution to Fifth Schedule Areas with certain
modifications under Article 243M(4)(b). This legislation extended development, planning, and audit functions to Gram
Sabhas in these areas and also gave them the management and control of natural resources and the power to adjudicate
justice in accordance with local traditions and customs.

8. ISSUES IN THE WORKING OF PANCHAYATI RAJ INSTITUTIONS

Despite the 73rd Amendment, Panchayati Raj Institutions (PRIs) have been described as either a failure or at best a series of
missed opportunities. Several key issues persist. First, there has been a limited transfer of power to panchayats because state
legislatures have been reluctant to make them truly autonomous, leaving panchayats as mere implementing agencies of
state and central governments. Second, there is a chronic lack of funds because the 73rd Amendment did not mandate either
taxing authority or intergovernmental transfers, and State Finance Commission recommendations are not binding on state
governments, leaving PRIs starved of finances. Third, the proxy candidate problem has persisted whereby despite the
one-third reservation for women, research has found that women often acted as rubber stamps for male family members
who made the real decisions. However, research also shows that female PRI leaders are more likely to focus on
women-centric issues, and Chattopadhyay and Duflo (2001) found that areas with female sarpanch/pradhans saw
significantly greater investment in drinking water. Fourth, the distribution of functions between different tiers of panchayats
has not been made along scientific lines and functions overlap between the Panchayat and Panchayat Samiti, creating
confusion and duplication. Fifth, a bureaucratic attitude toward panchayats means key administrative positions are held by
government officials who resist accountability to elected representatives. Sixth, panchayat elections are often delayed,
indirect elections increase the risk of corruption, and PRIs are frequently treated as organizational arms of ruling political
parties rather than as genuine institutions of democratic decentralization.

9. CONCLUSION AND WAY AHEAD

For PRIs to succeed, elected representatives need clear mandates, financial autonomy, and genuine political will from
higher levels of government. Gram Sabhas, if regularly conducted, can serve as effective forums of accountability for all
tiers of panchayats and enable social audits at the local level. The key element for the success of PRIs is a change in
mindset, from working for the people to working with the people. This requires a shift in the attitude of bureaucrats and
senior politicians from a centralizing, control-oriented approach to one of sharing authority through democratic institutions.
Training of both PRI representatives and local officials for their new roles is essential for ensuring cooperation and
effective local administration.