This document provides a history and overview of decentralization and local governments in India. It discusses the traditional village self-governing systems that existed, the introduction of local governments during British rule, and the constitutional recognition of Panchayati Raj after independence. While the 73rd and 74th amendments aimed to constitutionally mandate democratic local governance, in practice Panchayats have faced issues like lack of real financial and administrative autonomy, elite capture, and poor community empowerment that have limited their effectiveness. Real decentralization requires clear roles, financial independence, accountability, and capacity building support for local governments.

1. Centre for Policy Research
Dharma Marg, Chanakyapuri
New Delhi 110021
www.accountabilityindia.org

2. Created by
T.R. Raghunandan

3. Part 1:
Introduction and background to
decentralisation & Local Governments
in India

4. A brief history
• Existence of self-governing village communities across sub-continent
that over millennia, served as main interface between
predominantly agrarian village economies and
• Custom and tradition elevated these earlier councils or assemblies
called “sabhas” to a position of considerable authority.
• “Panchayat” (an assembly of five respected elders) became pivot
of administration, focus of social solidarity and principal forum for
dispensation of justice and resolution of local disputes.
• Characteristics of village panchayats remained unchanged during
medieval and Mughal periods.

5. Local governments in British India
• 1687: Municipal corporation of Madras constituted, on the British
model of a town council, with powers to levy taxes and deliver
services, comprising of nominated members.
• 1870: Revival of traditional village panchayat system in Bengal
• 1882: Ripon Resolution, providing for rural local boards with two-thirds
of membership to be composed of elected, non-official
representatives and presided over by a non-official Chairperson.

6. The Indian freedom movement and local
governments
• Indian freedom movement starts demanding “self-government” as
the first political goal, before evolving to demand for
independence.
• 1909: Royal Commission on Decentralisation recognises
importance of Panchayats in the governance of India.
• 1919: Government of India Act 1919, brings in system of ‘dyarchy’,
and transfers self government to the domain of Indian Ministers in
the provinces.
• 1935-39: Provincial Autonomy under the Government of India Act,
1935 results in popularly elected governments in Provinces, who in
turn enacted legislation for further democratization of local self-governments,

7. The first constitutional steps
• Mahatma Gandhi:
– The entire edifice of Indian democracy should be based upon
one popular election to the Village Panchayat and indirect
elections from panchayats to State Assemblies and from the
State Assemblies to the Parliament.
• Article 40 of the Constitution:
– The State shall endeavour to constitute village Panchayats as
institutions of local self government

8. More history..
• 1953: Autonomous councils set up in tribal areas
• 1955: Balwant Rai Mehta Committee submits report and recommends three tier
system of local governments in rural areas,
• 1959 to 1965: LGs set up in the first flush of enthusiasm, but then further
elections are delayed, except in a few States, Gujarat and Maharashtra.
• 1972:West Bengal constitutes Panchayats at three levels and undertakes election,
• 1977: Ashok Mehta Committee, recommending two tier Panchayats,
• 1987: Big-bang devolution to Panchayats in Karnataka
• 1989: The failed 64th and 65th amendments

9. Panchayats
&
Nagarpalikas
•24 States,
•5 Union
Territories
Local government structures in India
Fifth
Schedule
Areas
Areas of
9 States
•AP,
•Chhattisgarh
•MP
•Rajasthan
•HP
•Jharkhand
•Maharashtra
•Gujarat
•Orissa
Sixth
Schedule
Areas
Areas of
Assam,
•Meghalaya,
•Mizoram,
•Tripura
Others systems
established
through
State laws
•Hill areas of
Manipur,
•Nagaland,
•Darjeeling
Gorkha
Hill Council;
(Exempt from ZPs)
•J&K
Environmentally sensitive or resource rich areas have diverse LG structures

10. Salient features of the 73rd Constitution
Amendment Act, 1993
• Constitutional status for Gram Sabha (assembly of the community),
• Three tier Panchayat system at the village, intermediate and district
levels except in State with populations of less than 20 lakhs, where
intermediate Panchayats may not be constituted,
• Reservation of seats and leadership positions for SCs/STs and women,
• Regular elections every 5 years,
• Establishment of independent State Election Commission,
• State Finance Commissions to be set up once in 5 years,
• Powers to be so devolved upon Panchayats as to enable them to
functions as institutions of self government (Article 243 G read with
Schedule XI).

11. Salient features of the 74th Constitution Amendment Act,
1993
• Different kinds of urban local bodies
– (a) Nagar Panchayat for an area in transition from a rural area to an urban
area;
– (b) Municipal Council for a smaller urban area; and
– (c) Municipal Corporation for a larger urban area,
– Industrial townships exempted from Municipalities.
• Reservation of seats and leadership positions for deprived communities and
women,
• Regular elections every 5 years through independent State Election
Commissions,
• State Finance Commissions to be set up once in 5 years to recommend financial
share of LGs, Central Finance Commission to do the same, from central
revenues,
• Powers to be so devolved upon ULBs to enable them to function as institutions
of self government.
• Wards committees to be set up for peoples’ participation
• Other committees can also be set up by the government

12. Article 243 G reads as under,
Powers, authority and responsibilities of Panchayats.-
Subject to the provisions of this Constitution, the Legislature of a State may,
by law, endow the Panchayats with such powers and authority as may be
necessary to enable them to function as institutions of self-government
and such law may contain provisions for the devolution of
powers and responsibilities upon Panchayats at the appropriate level,
subject to such conditions as may be specified therein, with respect to-
(a) the preparation of plans for economic development and social justice;
(b) the implementation of schemes for economic development and social
justice as may be entrusted to them including those in relation to the
matters listed in the Eleventh Schedule.

13. Eleventh Schedule lists 29 matters as below
Land improvement,
land reforms, consolidation
soil conservation.
Family welfare
Minor irrigation,
water management
watershed devpment
Agriculture, incl.
extension
Animal husbandry,
dairying and poultry
Welfare of the weaker sections,
in particular of SCs and STs
Markets
Fairs
Technical training
vocational education
Khadi, village and
cottage industries
Fisheries
Social forestry
farm forestry
Minor forest
produce
Rural housing Drinking water
Fuel and fodder
Maintenance of
community assets
Roads, culverts,bridges,
ferries, waterways
other means of communication
Small scale industries,
food processing industries
Non-conventional
energy
Education,
including primary
and secondary schools
Poverty
alleviation programme
Rural electrification,
distribution of
electricity
Health and sanitation
hospitals. Primary health centres
dispensaries
Cultural
activities
Libraries
Adult and non-formal
education
Public distribution
system
Social Welfare,
Welfare lf handicapped and
mentally retarded
Women and
Child development

14. Burial and burial grounds,
cremations,
crematoriums
Public amenities, incl. street lighting
parking lots, bus stops
Twelfth Schedule
Regulation of land use and
construction of buildings
Planning for economic
and social development
Urban Planning, incl.
town planning
Safeguarding interests of weaker sections,
including handicapped and mentally retarded
Provision of urban amenities
and facilities such as
parks and playgrounds
Urban forestry,
environmental protection
and promotion of environmental aspects
Regulation of
Slaughter houses and
tanneries
Fire services
Water supply for drinking,
industrial and commercial
purposes
Roads and bridges
Promotion of cultural,
educational and
aesthetic aspects
Urban Poverty
alleviation
Public health, sanitation
Conservancy and solid waste
management
Cattle pounds,
prevention of cruelty
to animals
Slum improvement and
upgradation
Vital statistics incl.
registration of births and deaths

15. Part 2:
Merits and demerits of Panchayati Raj in
India

16. Inclusion of people in governance: Statistics
on Panchayats…
• 537 District Panchayats, 15,694 elected
representatives. (37 % women, 17 % SC, 11 % ST)
• 6094 Intermediate Panchayats, 1,56,609 elected
representatives. (37 % women, 21 % SC, 7 % ST)
• 2,33,913 Village Panchayats, 26,56,476 elected
representatives. (37 % women, 19% SC and 12% ST)
At the Village Panchayat level, each elected
representative’s constituency comprises of about 340
people, (70 families)

17. Modes of functional assignments impact
expenditure assignment design
Delegation
Deconcentration
Devolution
Passing down of authority and responsibility from
a superior to an agent to carry out specific tasks.
Levels of territorial and functional administration
of Centre at lower levels carrying out central
functions.
Powers and authority endowed by higher
government level of government to lower
government level through statute (including
Constitution) backed by financial resources, &
considerable autonomy; accountability largely
to citizens.

18. What are the dividends from decentralisation?
• Political?
– Politicians have always led decentralisation:
– Yet evidence is that political benefits are shortlived for the visionary
who triggers decentralisation.
• Efficiency?
– Bureaucrats have generally resisted decentralisation:
• Feeling that too many levels of decision are slowing down decisions; that
we are paying a ‘democracy tax’ in the form of delays, the belief that
corruption is decentralised.
– Economists are newcomers;
• Lack of data and good research prevents serious in depth examination of
economic arguments
• Equity?
– Civil society remains skeptical of benefits:
– Elite capture hinders better targeting through Panchayati Raj

19. Transfer of political, administrative and fiscal
responsibilities to Panchayats not achieved.
• Formal strong legal framework hides reality of marginalisation of
Panchayats.
• Poor definition of and considerable overlap in their roles among Panchayat
levels.
• Poor fiscal decentralisation
• Panchayats supplanted by parallel institutions, to which entitled funds of
Panchayats are diverted,
• Large measure of centralisation in plan formulation, with virtually no local
discretion leading to tendency to divide funds equally among elected
representatives for their constituencies, which limits the size, scale, reach
and effectiveness of projects.
• Empowerment of communities to exert control over Panchayats still weak,
• Failure of Gram Sabhas to ensure downwards accountability and good social
audit.
Deformities

20. Reality concealed by political
rhetoric and official reporting…
• Replication at Panchayat levels of political and
administrative distortions existing at higher levels,
• Rising of power centres usually occupied by elites within
the Panchayati system, undermining the spirit of
democratic decentralization.
• Unchanged power relations among Panchayats, the
bureaucracy, MLAs and MPs
• PRI functioning sometimes beset with patronage politics.
• Insufficient attention to decision-making details, leading
to poor quality of decision-making.
Deformities

21. The difference between real and not-so-real
devolution
Real Devolution:
• Clear role assignment,
• Power to spend money,
• Power to tax,
• Discretion in spending
money,
• Power to hire fire and
control staff,
• Direct Accountability.
Not-so-real devolution:
• Scheme bound expenditure,
• Staff on deputation,
• Limited power to collect
resources
• Somebody else (above or
below) acting for the
Panchayats
• Somebody else (above or
below) responsible for
Panchayat performance

22. Elements of good design for
devolution
• Role clarity,
• Finance to follow function,
• Rules of devolution to be clear,
• Clear accountability for devolved responsibilities,
• institutions able to respond to the emerging demand
for capacity support,
• a minimum level of capacity to absorb a program of
capacity building,

23. Thank you