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Decentralization and Rural Governments in India

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Decentralization can be defined as transfer or dispersal of decision making powers, accompanied by delegation of required authority to individuals or units at all levels of organization even if they are located far away from the power centre.

In the context of the present discussion, decentralization signifies the devolution of powers and authority of governance of the Union Government and State Governments to the sub-state level organizations i.e. Panchayats in India.

History and Evolution

History of decentralization in India is, as a matter of fact, the history of evolution of Panchayati Raj System in the country.

During the period of British domination of India there was no particular urge for economic and social development except only those activities necessary for safeguarding the rule. Naturally, the issue of decentralization was not in the agenda of the rulers, though local government institutions in the form of Union Boards, District Boards etc. were established as per law.

In the course of the freedom movement it became clear that after independence India’s nationhood would evolve within a democratic political and institutional setting. Some leaders believed that it should be a representative democracy much in the mould of western countries. But Mahatma Gandhi’s development discourse hinged on a village based participatory democracy embedded in his vision of the Panchayati Raj. Gandhi advocated for a democratic polity that would have its foundation in thousands of self-governing village communities. Gandhi felt that real development of India can take place only through its political system of Gram Swaraj in which the State Government would only exercise such powers which are not within the scope and competence of the lower tiers of participatory governance institutions.

Rural local governments, in the form of Panchayats, were included in the chapter on Directive Principles of the State Policy (Article 40). It stated that the states shall take steps to organize village Panchayats and endow them with such powers and authority as may be necessary to enable them to function as units of self government.

Immediately after independence and especially after the launch of the first 5-year plan, the then Government of India launched massive development projects on one hand and Community Development (CD) Programmes and National Expansion Services for rural development, on the other. Mechanics of workings of Panchayats and their significance in local governance received serious boost with the setting up of the Balwant Rai Mehta Committee (constituted to study the impact of CD Programme and National Extension Service) in 1957. The committee observed that the country’s development cannot progress without the co-location of responsibility and power at even the lower tiers of Government. Community development objectives can materialize only when the Community understands its problems, realizes its responsibilities, exercises necessary powers through chosen representatives and maintains a constant and intelligent vigil on the local administration. The committee further observed that the character of the development programmes should change from “Government’s programme with people’s participation to people’s programme with Governments participation.”

Journey towards political and administrative decentralization started with the recommendations of the Mehta Committee. All the states enacted Panchayat Acts and by 1960 Panchayats were established throughout India. But these steps could hardly change ground realities as laws were weak and inexplicit. Local administrations resisted devolution of functions and powers, regular elections to Panchayati institutions were not held.

The country experienced significant political changes during mid-1970s, with which the process of resurrection and strengthening of Panchayati Raj System regained momentum. Many State Governments delegated authorities and schematic funds to the Panchayats for implementing various development programmes. But in the absence of appropriate statutes defining the role, functions, duties, authorities and powers, the Panchayats were not successful enough to ensure de facto involvement of people in development programmes. In most cases, Panchayats came about to be nothing more than the State Government’s agency for implementation of a few programmes, and delivery of a few services.

Under-performance with regard to poverty alleviation, development and even social assistance programmes to reach and benefit target groups (i.e. the rural poor) disconcerted decision makers both within and outside Government. Demands for suitable empowerment of Panchayats in order to mould them into effective self governments started to gain momentum. It was argued that provisions of Article 40 were not enough to ensure development of village Panchayats the way it was desired. Instead of leaving the issue entirely at their discretion, the states had to be bound by some constitutional mandate.

This led to the 73rd amendment of the Constitution in 1992, given effect from April 24, 1993. This land-mark amendment of the Constitution declared the Panchayats as units of self government, directed the states to devolve functions of 29 subjects directly related to social and economic development of an area, made provisions for resource sharing between the Panchayati Raj Institutions (PRIs) and Governments, regular elections to local bodies, reservation of socially disadvantaged classes and women etc.

In order to make sure that the people can have a say in the process of local governance. The institution of “Gram Sabha” was given high importance. Consultation with the Gram Sabha on all important matters including planning and implementation of development programmes was made a necessary requirement. The amendment, to a great extent, paved the way for decentralization of governance and transforming village Panchayats as institutions of self government.


Almost two decades have elapsed since the 73rd amendment of the Constitution. Critics often argue the 73rd amendment, though very significant, left several things relating to Panchayats to the state’s discretion. Government of India’s due emphasis on the subject was evident from the fact that in the year 2004 the Ministry of Panchayati Raj was again constituted. It held seven Round Tables with State Ministers of Panchayats and compiled, as a series of recommendations, measures for effective devolution of authority to the Panchayats and removal of obstacles in the way of their proper functioning.

It is widely recognized that effective decentralization is dependent on existence of the following necessary conditions:

a) Strong political commitment from higher level authorities within the Government.

Activity mapping which was supposed to be done by states as per resolution of the State Panchayat Ministers’ round table has been done by quite a few states, but implementation has often remained incomplete. Transfer of functionaries has also remained mostly symbolic.

b) Autonomy of the local bodies in decision making and implementation of local schemes:

Since Panchayats implement state and union government schemes they are required to adhere to the guidelines without any authority to deviate even a little as per necessities emanating from local conditions. In the absence of Panchayats’ own financial resources they can hardly undertake programmes on their own in line with local requirements. It is here that decentralization of political decision making needs to be complimented by measures to ensure fiscal autonomy for PRIs so that such institutions can muster necessary financial resources on their own to be truly self-reliant in local decision-making and its implementation.

It is however true that under the govt. sponsored schemes the schemes and / or beneficiaries are selected by the Panchayats in the Gram Sabha meetings. But often such meetings are captured by the village elites and the capacity of common villagers to register their claims gets limited.

c) Availability of the internally generated resources at the local level:

In the federal system of governance that is existent in India, almost all the sources of tax or non tax revenue come under the jurisdictions of the State and Union Governments. This leaves little scope for local governments to generate resources on their own. Their own revenue generation capacity remains limited vis-a-vis their requirements and expenditure obligations. In view of this the constitution mandated for setting up of the State Finance Commissions that would help determine the devolution of state’s revenue to the local governments.

In this connection a few experiments towards effective decentralization in India can be recalled:

i) In the mid-1980s the West Bengal Government initiated decentralized planning process. The districts were asked to prepare district plans which were later integrated for preparing the state plan. The objective of this effort of the State Planning Board was to involve Panchayats in the planning process.

ii) People’s plan initiative of Kerala during 1990s generated lot of enthusiasm. It was possible to garner support of all political parties, educated citizens and government officials. Personalities like EMS Namboodiripad, AK Antony were involved in it.

iii) West Bengal undertook another experiment of village level planning, in mid 1990s under the programme Community Convergent Action, later followed by the Strengthening Rural Decentralization programmes. This met with moderate success and has become of the model of village level planning in the state involving villagers in the Gram Sansad meeting.

iv) Planning Commission of India advised the states to prepare the 11th Five year plan on the basis of village level plans prepared in the Gram Sabhas. This was expected to give a boost towards decentralization.

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