Panchayat Raj Institution(PRI) in India-Significance, Challenges and Way forward – Explained , Pointwise

A recent World Bank report suggests giving more power to Panchayats and boosting their financial capacity to counteract recentralization caused by the increasing use of online payment systems and digital beneficiary tracking. The report emphasizes that empowering Panchayats is vital for effective local governance and recommends delegating more authority to them instead of reducing their power. Therefore, in this article, we will discuss the evolution of Panchayat Raj Institution(PRI) in India, the significance of PRIs for ensuring social justice and inclusive growth, various challenges hindering the growth of Panchayats and way forward to address these challenges.

How did Panchayat Raj Institution(PRI) evolve in India?

Article 40 of the Constitution, under the Directive Principles of State Policy, acknowledged the importance of panchayats. Although panchayats gained constitutional recognition, their structures differed among states because the Directive Principles were not legally binding. Consequently, several committees were established to promote uniformity in their structure.

1) The Balwant Rai Mehta Committee (1957) recommended a three-tier model: Gram Panchayat, Panchayat Samiti, and Zilla Parishad. Rajasthan and Andhra Pradesh were the first states to adopt this system.

2) The Ashok Mehta Committee (1978) proposed a two-tier system, taxation powers for Panchayats, and constitutional recognition.

3) The GVK Rao Committee (1985) emphasized Zilla Parishad’s role in development and suggested the appointment of a District Development Commissioner.

4) The LM Singhvi Committee (1986) recommended constitutional recognition for Panchayati Raj Institutions and the establishment of Nyay Panchayats.

5) Finally,The 73rd Constitutional Amendment Act, 1992 gave constitutional status to the PRIs and established a system of uniform structure, elections, reservation of seats for Scheduled Caste, Scheduled Tribes and women and devolution of fund, functions and functionaries to PRIs. The Amendment included a new Part IX to the constitution, with the title “The Panchayats”.  It covered provisions from Article 243 to 243(O); and a new Eleventh Schedule covering 29 subjects within the functions of the Panchayats.

What are some important constitutional provisions related to PRI in India?

What is the status of funding for PRI’s in India?

As per the Reserve Bank of India (RBI) report on the financial dynamics of Panchayati Raj Institutions (PRIs) in India, PRIs generates revenue through following ways-

1) Revenue Composition:Panchayats earn only 1% of their revenue through taxes.Majority of their revenue comes from grants provided by the Centre and the States.Data indicates that 80% of the revenue is from Central government grants, while 15% is from State government grants.

2) Revenue Statistics-In the fiscal year 2022-23, Panchayats recorded a total revenue of Rs 35,354 crore. Only Rs 737 crore came from their own tax revenue sources, like taxes on professions, land, stamps, properties, and services.
They also earned Rs 1,494 crore from non-tax sources, mainly from interest payments and Panchayati Raj programs. Notably, Panchayats received Rs 24,699 crore from the Central government and Rs 8,148 crore from State governments in grants.

3) Revenue Per Panchayat:On average, each Panchayat earned about Rs 21,000 from its own tax revenue and Rs 73,000 from non-tax sources. In contrast, grants from the Central government averaged around Rs 17 lakh per Panchayat, while State government grants totaled over Rs 3.25 lakh per Panchayat.

4) State Revenue Share and Inter-State Disparities:Panchayats’ share in their respective State’s own revenue remains minimal.For ex-in Andhra Pradesh, revenue receipts of panchayats form just 0.1% of the State’s own revenue, while in Uttar Pradesh, it forms 2.5%, the highest among states.

What is the significance of Panchayat Raj Institution(PRI) in India?

1) Strengthen grassroots-level democracy: PRIs provide a platform for direct participation of people in governance at the grassroots level, promoting democratic values and accountable administration.

2) Decentralization of power: The three-tier structure of PRIs (Gram Panchayat, Panchayat Samiti, and Zilla Parishad) facilitates the decentralization of power from the state to the local level, ensuring better understanding and addressing of local needs and priorities.

3) Rural development: It plays an important role in planning and implementing various rural development programs related to agriculture, education, health, infrastructure, and social welfare. For ex-The Panchayat of Hiwara, Uttarakhand,Pedda Amberpet Gram Panchayat, Telangana etc. are one of the best performing and developed Panchayats in India.

4) Inclusive governance and empowerment of women: The reservation system in PRIs ensures representation and participation of marginalized sections of society, such as women, Scheduled Castes, Scheduled Tribes, and Other Backward Classes, promoting inclusive governance and empowerment.
For ex-Chaavi Rajawat- An MBA turned Sarpanch made impressive changes by bringing better water, solar power, paved roads, and toilets in her ancestral village.

5) Fulliment of SDGs:-PRIs, being closer to the people, can provide public services better and faster, dealing with local problems promptly and meeting community needs. The role of PRIs is crucial in bringing development to the grassroots and implementing the 2030 Sustainable Development Goals (SDGs) at the local level.

6) Address Climate Change–

A)  Adaptation-Panchayats have a deep understanding of local conditions, traditional practices, and indigenous knowledge systems. This knowledge can be invaluable in developing locally relevant adaptation strategies to cope with the impacts of climate change, such as drought, floods, or changing weather patterns.

B) Mitigation-Panchayats can contribute to sustainable natural resource management practices, such as water conservation, afforestation, and soil conservation,.This can help mitigate the impacts of climate change.

7) Social mobilization:They serve as platforms for involving people in developmental projects and building a feeling of community ownership and responsibility.

8) Preserving local culture and traditions: It can play a role in preserving and promoting local cultures, traditions, and indigenous knowledge.This will ensure preservation of India’s rich cultural diversity.

9) Accountability and transparency: Directly electing PRI representatives and holding Gram Sabha meetings make local governance more accountable and transparent.

What are the initiative taken by the government to empower Panchayat Raj Institution(PRI) in India?

What are the issues faced by the PRIs in India?

1) Issues raised by second ARC in the Panchayat Raj Institution(PRI) in India-

A) Inadequate devolution of functions, funds, and functionaries :It noted that the devolution of functions, funds, and functionaries to PRIs has been inadequate that limits their ability to effectively discharge their responsibilities.

B) Capacity constraints and lack of training-It highlighted the need for capacity building and training of elected representatives and officials of PRIs to enhance their skills and knowledge for effective governance.

C) Multiplicity of agencies and lack of coordination-:It highlighted the multiplicity of agencies involved in rural development programs and the lack of coordination among them.This leads to duplication of efforts and inefficient implementation.

D) Interference from bureaucracy and state governments -It raised concerns about excessive bureaucratic control and interference from state government officials.This  undermines the autonomy and decision-making power of PRIs.

E) Lack of clarity in roles and responsibilities -It highlighted the lack of clear demarcation of roles and responsibilities among the three tiers of PRIs (Gram Panchayat, Panchayat Samiti, and Zilla Parishad), leading to overlapping functions and conflicts.

F) Insufficient data and monitoring mechanisms-It emphasized the need for better data collection and monitoring mechanisms to assess the performance and impact of PRIs in delivering services and implementing development programs.

G) Lack of financial autonomy-It stressed that PRIs don’t have enough financial independence since they mostly depend on irregular and inadequate grants from state governments.

H) Lack of accountability and transparency mechanisms :It noted the absence of robust accountability and transparency mechanisms, such as social audits and performance evaluation system.This leads to potential misuse of funds and lack of public trust.

I) Inadequate infrastructure and resources -There is a lack of basic infrastructure, such as office buildings, equipment, and human resources, hindering the effective functioning of PRIs.

What are the recommendations to reform Panchayat Raj Institution(PRI) in India?

1) Recommendation by 2nd ARC–

A) Strengthening the Gram Sabha-The ARC proposed giving more power directly to the Gram Sabha. It suggested that the Gram Sabha should not only supervise but also be involved in planning economic development and social justice programs.

B) Devolution of Functions, Funds, and Functionaries:It recommended devolving more power, fund, and staff to local Panchayat Raj institutions (PRIs) based on the principle of subsidiarity. It advised states to transfer all responsibilities listed in the Eleventh Schedule of the Constitution to the PRIs.

C) Capacity Building and Training:The ARC stressed the importance of training elected officials and staff of PRIs to improve their abilities for better governance. It suggested creating special institutions for training and research focused on the Panchayat Raj system

D) State Finance Commissions:State Finance Commissions need to be empowered to recommend sufficient transfer of resources from the state to the local bodies.

E) Separate Election Commission for Local Bodies:It recommended the establishment of separate State Election Commissions for conducting elections to the PRIs and urban local bodies to ensure their autonomy and independence.

F) E-Governance and Citizen Participation:It highlighted the importance of leveraging information and communication technologies (ICT) for e-governance initiatives at the local level to improve transparency, accountability, and citizen participation.

2) Miscelleneous recommendations by various experts–

A) Build Local Tax Capacity-It can be achieved through filling bill collector vacancies, digitizing property records, and granting panchayats more freedom to levy their own taxes and cesses.

B) SHG-Panchayat Linkages– Linking Self-Help Groups (SHGs) with Panchayats can improve village governance. This convergence enhances financial access and collective action for women. Recent studies show that SHGs empower marginalized women to participate in local elections, highlighting their importance in grassroots democracy.For ex-in Bihar

C) Improve Administrative Data Quality-There is a need to improve administrative data quality and enhance its accessibility by using visuals like maps and interactive charts that can be easily understood by citizens. By involving citizens in creating these tools, everyone can better understand and use the data to make informed decisions.

D) Develop Scoring Systems for Panchayats-There is a need to establishing a transparent scoring system to assess Panchayats that can be overseen by an independent body.This can foster accountability and performance improvement. Based on the performance ,Panchayat officials and staff can recieve rewards like certificates and increased funds for the village which can motivate them to perform their duties diligently.