Exploring the Panchayati Raj System for the UPSC Exam 2024

Panchayati Raj System

Table of Contents

1. Context

2. Panchayati Raj System In India: Introduction and Evaluation

3. 73^rd Constitutional Amendment Act of 1992

4. Importance of Panchayati Raj Institutions

5. Revenue generation of Panchayat Raj Institutions

6. Current financial status of Panchayats in India

7. Challenges Faced By Panchayati Raj System In India

8. Challenges faced by Panchayati Raj Institutions in generating their own revenue.

9. Way Forward To Strengthening Panchayati Raj System In India

10. Conclusion

Context: This editorial, titled “Empowering Panchayats as Self-Governing Institutions,” discusses the concept of decentralization, its efficacy, and its challenges in India. It underscores the importance of enhancing self-sufficiency and fostering a more optimistic approach towards decentralization.

Relevancy for Prelims: Panchayati Raj Institution,73^rd and 74^th Amendment Act.

Relevancy for Mains: Examining the historical background and significance of Panchayati Raj systems in India, assessing the challenges they face, and the way forward.

Introduction to the Panchayati Raj System in India

Panchayati Raj is a system of local self-government in rural areas of India. It aims to decentralize administrative power and promote grassroots democracy. Panchayati Raj institutions are established in all states of India except Nagaland, Meghalaya, and Mizoram, and in all Union Territories except Delhi; there are certain other areas where they exist. These include:

The scheduled areas and tribal areas in various states.
The hill area of Manipur, where a district council operates.
Darjeeling district of West Bengal, where the Darjeeling Gorkha Hill Council functions.

Evolution of Panchayati Raj

The Panchayati system in India has historical roots dating back to the ancient times when village panchayats served as elected councils with executive and judicial powers. However, foreign domination and socio-economic changes, especially during Mughal and British rule, diminished their significance.
In the pre-independence era, village panchayats often reflected the dominance of upper castes, exacerbating socio-economic and caste-based divides within communities.
The evolution of the Panchayati Raj System gained momentum post-independence, with the drafting of the Constitution. Article 40 of the Constitution mandated the organization of village panchayats and the empowerment of these units with self-government powers.

To study the implementation of rural self-government and recommend necessary steps, several committees were appointed by the Government of India, including:

Balwant Rai Mehta Committee
Ashok Mehta Committee
G. V. K. Rao Committee
L. M. Singhvi Committee

Balwant Rai Mehta Committee

Balwant Rai Mehta Committee (1957) was instrumental in recommending the establishment of ‘democratic decentralization,’ later known as the Panchayati Raj. Its key recommendations included:

Proposing a three-tier Panchayati Raj system.

Advocating for the constitution of the village panchayats with directly elected representatives.

Entrusting planning and development responsibilities to these local bodies.

Urging for the transfer of adequate resources to support their functions.

Highlighting the need for a proper system to realize the devolution of powers.

Rajasthan pioneered the establishment of Panchayati Raj, inaugurating it in 1959 in Nagaur district. While most states adopted the system, significant variations existed, including two-tier, three-tier, and four-tier structures, along with differences in the devolution of power across the country.

Ashok Mehta Committee

Appointed by the Janata government, the Ashok Mehta Committee (1977) aimed to strengthen and revive the weakening institutions. Its main recommendations included:

Advocating for replacing the three-tier system with a two-tier system.

Designating the district as the primary decentralization unit.

Proposing the Zila Parishad as the executive body.

Stressing the importance of official participation of political parties.

Recommending granting compulsory powers of taxation.

Advocating for regular social audits.

Proposing elections within six months, if the Panchayati institutions are superseded.

Suggesting the appointment of a state-level minister for Panchayati Raj.

Advocating for reservation of seats for SC and ST.

Pushing for constitutional recognition of these institutions.

V. K. Rao Committee

Appointed by the Planning Commission, the GVK Rao Committee (1985) attributed the lackluster performance of Panchayati institutions to bureaucratization. Its significant recommendations included:

Designating the Zila Parishad as the primary unit for democratic decentralization.

Assigning an important role to PRIs at the district and lower levels in planning, implementation, and monitoring.

Recommending the creation of a post of district development commissioner to oversee the development departments at the district level.

Advocating for a regular conduct of PRI elections.

M. Singhvi Committee

Appointed by the Rajiv Gandhi government, the LM Singhvi Committee (1986) emphasized the constitutional recognition and other key recommendations regarding PRIs:

Advocating for constitutional recognition.

Proposing the establishment of Nyaya Panchayats for clusters of villages.

Placing emphasis on Gram Sabha as the center for democratic decentralization.

Suggesting that village panchayats should have access to more resources.

Recommending the establishment of judicial tribunals to adjudicate PRI-related judicial matters.

Though the 64^th Constitutional Amendment bill was introduced in the Lok Sabha in 1989 itself, the Rajya Sabha opposed it. It was only during the Narasimha Rao government’s term that the idea finally became a reality in the form of the 73^rd and 74^th Constitutional Amendment Acts of 1992.

The acts of 1992 added two new parts, IX and IX-A, to the constitution, along with two new schedules – 11 and 12, containing the lists of functional items of Panchayats and Municipalities. They provide for a three-tier system of Panchayati Raj in every state – at the village, intermediate, and district levels.

73^rd Constitutional Amendment Act of 1992

Significance of the Act

The Act added Part IX to the Constitution, Articles 243 to 243 O, titled “The Panchayats,” and introduced the Eleventh Schedule, comprising 29 functional items of the panchayats.
It gives shape to Article 40 of the Constitution, directing the state to organize village panchayats and empower them for self-government.
With the Act, Panchayati Raj systems become justiciable, mandating states to adopt the system independently of the state government’s will.
The Act contains both compulsory and voluntary provisions, with compulsory aspects mandated to be included in state laws, including the creation of new Panchayati Raj systems.
It represents a significant step in creating democratic institutions at the grassroots level, transforming representative democracy into participatory democracy.

Salient Features of the Act:

Gram Sabha: Constitutes the primary body of the Panchayati Raj system, comprising all registered voters within the panchayat’s jurisdiction, empowered to exercise certain functions as determined by the state legislature.
Three-tier System: Provides for a three-tier system of Panchayati Raj in states, including village, intermediate, and district levels, with exceptions for states with populations below 20 lakhs.
Election of Members and Chairperson: Members are elected directly, while chairpersons at intermediate and district levels are elected indirectly, and at the village level, chairpersons are elected as determined by the state government.
Reservation of Seats: Seats are reserved for Scheduled Castes (SCs), Scheduled Tribes (STs), and women, ensuring representation at all levels.
Duration of Panchayat: All levels of the Panchayat have a five-year term, with provisions for dissolution and fresh elections within six months.
Disqualification: Criteria for disqualification outlined with questions referred to designated authorities by state legislatures.
State Election Commission: Responsible for electoral roll preparation and conduct of elections for Panchayats, with state legislatures empowered to regulate election matters.
Powers and Functions: States are empowered to endow Panchayats with necessary powers and authority for self-government, including economic development and social justice planning.
Finances: Provision for Panchayats to levy taxes, receive grants-in-aid and establish funds, with State Finance Commissions reviewing financial positions.
Audit of Accounts: State legislatures are empowered to make provisions for the maintenance and audit of Panchayat accounts.
Application to Union Territories: The President is empowered to direct Act application to Union Territories, with specified exceptions and modifications.
Exempted States and Areas: Act not applicable to certain states and areas, with Parliament empowered to extend its provisions.
Continuance of Existing Law: State laws relating to Panchayats continue until the Act’s expiry, with existing Panchayats continuing until term expiry.
Bar to Interference by Courts: Courts are barred from interfering in Panchayat electoral matters, with provisions for election petitions as per state legislature directives.

Panchayat Extension to Scheduled Areas (PESA) Act, 1996

The provisions of Part IX are not applicable to the Fifth Schedule areas; however, the Parliament can extend this Part to such areas with modifications and exceptions as it may specify. Under these provisions, Parliament enacted the Provisions of the Panchayats (Extension to the Scheduled Areas) Act, popularly known as the PESA Act or the extension act.

Objectives of the PESA Act:

1. To extend the provisions of Part IX to the scheduled areas.

2. To provide self-rule for the tribal population.

3. To establish village governance with participatory democracy.

4. To evolve participatory governance consistent with traditional practices.

5. To preserve and safeguard the traditions and customs of the tribal population.

6. To empower panchayats with powers conducive to the tribal requirements.

7. To prevent panchayats at a higher level from assuming the powers and authority of panchayats at a lower level.

Importance of the Panchayat Raj system in India

Ensuring People’s Participation:

PRIs serve as local self-governing bodies that facilitate people’s participation and involvement in the formulation and implementation of rural development programs. This fosters grassroots democracy and empowers communities to address their own needs and priorities.

Strengthening Grassroots Democracy:

The main objective of the Panchayat system is to strengthen democracy at the grassroot level. By decentralizing power and decision-making, PRIs provide an avenue for citizens to actively engage in political processes and exercise their democratic rights.

Empowering Weaker Sections:

The introduction of PRIs aimed to bring the weaker and poorer sections of rural India into active political control. By giving voice and representation to marginalized communities, PRIs promote social inclusion and equitable development.

Integrating Tribal Development:

PRIs serve as vital catalysts for integrating the development of tribal communities in rural areas, facilitating the implementation of tailored development programs and initiatives that address the specific needs of these marginalized groups.

Promoting Rural Development:

PRIs contribute to rural development by strengthening democratic structures, improving rural infrastructure, enhancing the income of rural households, and ensuring the effective delivery of essential services such as education, health, and safety mechanisms. They serve as instruments of social and economic change, catalyzing development at the local level.

Revenue generation of Panchayat Raj Institutions

Panchayat Raj generates revenues through various means, including:

Grants from the Union Government based on recommendations of the Central Finance Commission as per Article 280 of the Constitution.
Devolution from the State Government based on recommendations of the State Finance Commission as per Article 243-I.
Loans and grants from the State Government.
Programme-specific allocation under the Centrally Sponsored Schemes and Additional Central Assistance.
Internal resource generation such as tax and non-tax collection.

Current financial status of Panchayats in India

Panchayats in India primarily rely on grants from the central and the state governments, which constitute approximately 95% of their income.
Only about 1% of their revenue is generated through local taxes.
Tax collection by panchayats decreased from ₹3,12,075 lakh in 2018-19 to ₹2,71,386 lakh in 2021-2022.
Non-tax revenue also saw a decline in the same period, from ₹2,33,863 lakh to ₹2,09,864 lakh.
The allocation for rural local bodies increased significantly from the 10^th to the 15^th Central Finance Commission (CFC), with amounts of ₹4,380 crore and ₹2,80,733 crore, respectively.

Challenges for the poor functioning of the Panchayati Raj Institutions (PRIs) in India

Finances

Heavy dependence on grants from the Union and State Governments.
Poor internal resource generation and revenue realization efficiency.
Lack of regular financial audits leading to misappropriation and inefficiency.
Fiscal accountability lapses and high corruption.
Voluntary provisions hinder fiscal autonomy, such as granting financial powers to levy taxes, assign taxes collected by the state, and reliance on grants from the state’s consolidated fund.

Functionaries:

Mismatches in competencies.
Inadequate training.
Lack of skilled, professional human resources.
Vast vacancies at the local level and fewer functionaries per 1000 population.
Many elected representatives are semi-literate or illiterate and lack awareness of their roles, responsibilities, programs, procedures, and systems.
Gradual bureaucratization of the development process.

Functions:

Ineffective devolution of power by state governments, particularly in voluntary subjects.
Financial autonomy constraints hinder the implementation of priority schemes.
The presence of “Panch-Pati” and proxy representation poses challenges to the effective representation of women and Scheduled Castes/Scheduled Tribes (SC/STs) in Panchayati Raj Institutions (PRIs) in India.
Interference from area MPs and MLAs negatively impacts their performance.
Structural deficiencies like lack of secretarial support and technical knowledge.
Poor infrastructure including lack of full-time secretaries, basic office buildings, and broadband connectivity.

Challenges faced by the Panchayati Raj Institutions (PRIs) in generating their own revenue include

The Freebie Culture:

A cultural aversion to paying taxes due to an expectation of receiving services and benefits without contributing financially to the Panchayats.
Resistance to taxation stems from the belief that public services should be provided without direct financial burden on the local population.

Balancing Popularity and Fiscal Responsibility

Fear among elected representatives that imposing taxes could harm their popularity and electoral prospects.
Reluctance to take bold steps towards revenue generation due to this fear.
Overcoming this challenge requires educating representatives about the long-term benefits of financial self-sufficiency and its positive impact on local development.

Dependency on Grants:

Increased reliance on grants, exacerbated by higher allocations from Central Finance Commissions (CFC).
Significant rise in grants allocated through the 14th and 15^th CFCs, leading to decreased efforts in raising own source revenue.
Shift in focus from revenue generation towards dependency on external funds due to sustained financial support.

Lack of Tax Collection Authority:

In several states, gram panchayats lack the authority to collect taxes, and intermediate and district panchayats often do not have this responsibility either.

To strengthen the Panchayati Raj system in India, the following steps can be taken

To strengthen the Panchayati Raj Institutions (PRIs) in India, the following recommendations from the Second Administrative Reforms Commission (2^nd ARC) on local governance can be implemented:

Strengthening the financial position of PRIs:

Provide PRIs with a greater share of resources and financial autonomy to enable them to carry out their functions effectively. This can include devolving more funds from the central and state governments and granting them authority over local revenue generation.

Enhancing the powers and functions of PRIs:

Grant PRIs more powers and functions to address local issues more effectively. This can involve decentralizing decision-making authority in areas such as rural development, infrastructure, education, and healthcare.

Improving the capacity and training of PRI functionaries:

Establish a National Institute for Panchayat Leadership and Training to provide capacity-building and training to PRI functionaries. This will enhance their skills and capabilities to effectively manage local governance.

Promoting the participation of women and disadvantaged groups:

Implement measures to increase the participation of women and disadvantaged groups in PRIs, such as reserving seats for these groups and providing them with training and support to actively engage in local decision-making processes.

Ensuring the independence of PRIs:

Implement measures to ensure the independence of PRIs from political interference. This can involve establishing clear guidelines and mechanisms to safeguard the PRI autonomy and protect them from undue influence.

Enhancing the coordination of PRIs with other levels of government:

Improve the coordination of PRIs with other levels of government to ensure alignment of development plans and projects. This can involve establishing mechanisms for regular communication, collaboration, and integration of PRI initiatives with broader state and national development agendas.

Other Measures

Education and Awareness:

Educate elected representatives and the public about the importance of raising revenue for developing self-governing panchayats.

Promoting Effectiveness:

Gram Sabhas should promote entrepreneurship and establish partnerships with external stakeholders to enhance revenue generation efforts.

Clear Demarcation of Own Source Revenue (OSR):

Ensure clear demarcation of OSR for all three tiers of panchayats to ensure equitable sharing and effective utilization.

Minimizing Dependency on Grants:

Reduce dependency on grants gradually and empower panchayats to sustain themselves with their own resources through dedicated efforts at all governance levels.

Establishing a Conducive Environment for Taxation:

Implement appropriate financial regulations for both tax and non-tax revenue to create a conducive environment for taxation.

Transparent Financial Management:

Ensure accountability and transparency in financial matters to build community trust and support for local revenue initiatives. This includes regular audits and clear communication about financial decisions and allocations.

In conclusion, strengthening the Panchayati Raj system in India is crucial for promoting local governance, grassroot democracy, and sustainable development. Despite their significance, PRIs face various challenges such as financial constraints, inadequate capacity and training of functionaries, limited powers and functions, and interference from higher levels of government.

By collectively addressing the challenges faced by the Panchayati Raj institutions and implementing proactive measures, India can empower its Panchayati Raj institutions to become effective, accountable, and self-sustaining pillars of local governance.

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