Decoding The Promise vs Practice of Panchayati Raj

The 73rd Constitutional Amendment of 1992 represented the most ambitious formal decentralisation of governance in Indian history. By giving constitutional status to Panchayati Raj Institutions (PRIs), it sought to implement Article 40 of the Directive Principles — which directed the state to organise village panchayats as units of self-government — and to shift the locus of rural governance from distant state governments to elected local bodies. 

The amendment's provisions were transformative on paper: mandatory three-tier elected structure, regular elections every five years, one-third reservation for women, reservation for Scheduled Castes and Tribes proportional to their population, State Finance Commissions to recommend fiscal devolution, State Election Commissions to conduct elections, and devolution of the 29 subjects listed in the Eleventh Schedule including land reform implementation, libraries, social forestry, sanitation, and poverty alleviation programmes.

Representational image: Decoding The Promise vs Practice of Panchayati Raj

Thirty-three years later, the record is mixed. The democratic revolution has largely succeeded: elections are held regularly across India, millions of previously excluded groups now hold formal governance positions, and the panchayat system has produced a generation of local politicians — many of them women, Dalits, and Adivasis — with governance experience that has begun to change local political cultures. The fiscal revolution has largely stalled: most gram panchayats have minimal budgets, limited own revenue, and function primarily as implementing agents for centrally and state-designed schemes rather than as autonomous local governments that plan and execute their own development programmes. The functional devolution has been partial: some states (Kerala being the most cited example) have genuinely transferred both functions and funds to local bodies; most have transferred functions on paper while retaining administrative and financial control in state departments.

What You Need to Know

• The 73rd Constitutional Amendment added Part IX (Articles 243–243O) to the Constitution in 1992; it mandated three-tier Panchayati Raj in states with populations exceeding 2 million; the Eleventh Schedule listed 29 subjects for potential devolution to panchayats including agriculture, water management, fisheries, social and farm forestry, minor irrigation, non-conventional energy sources, poverty alleviation, primary schools, and sanitation.
• As of 2025, more than 2.5 lakh gram panchayats hold elections every five years with approximately 31 lakh (3.1 million) elected representatives, of whom approximately 46% are women — one of the world's largest gender-inclusive elected governance systems; 13 states reserve more than 50% of seats for women, exceeding the constitutional minimum.
• Down to Earth's 30-year retrospective analysis (June 2024) using Himachal Pradesh as a case study found that PRIs continue to have "limited financial powers" and their "viability is entirely dependent upon the political will of states"; LegalServiceIndia research confirmed that while Karnataka and Kerala have made genuine devolution attempts, "overall performance has been uneven" — most states have not transferred functionaries (government staff) alongside functions.
• Kerala's "People's Planning Campaign" (launched 1996) transferred 40% of the state's Plan budget to local bodies for local planning; this remains the most ambitious genuine fiscal and functional devolution experiment in Indian history; Kerala's local bodies plan and execute local infrastructure, health, and education investments with genuine autonomy; Kerala's panchayat health outcomes (including community-level response to COVID-19) demonstrate the functional potential of genuine devolution.
• PESA (Panchayats Extension to Scheduled Areas) Act, 1996 extended panchayat provisions to Schedule V tribal areas with additional powers over natural resources including minor forest produce, land alienation, money lending, and minor water bodies; implementation of PESA has been weak in most states, with tribal communities still facing diversion of their traditional resource rights.

How It Works in Practice

1. The gram sabha as the democratic foundation: The gram sabha — the assembly of all registered voters in a gram panchayat — is constitutionally the primary democratic institution of village governance; it must meet at least twice a year and should approve development plans and social audit results. In states where gram sabhas function actively — Kerala, Karnataka — they are genuine deliberative bodies. In most states they are poorly attended, quickly concluded, and function more as formal compliance meetings than substantive democratic forums.

2. State control of scheme funds: Most development funds that reach gram panchayats are tied grants — money earmarked for specific central schemes like MGNREGA, Pradhan Mantri Awas Yojana, or Jal Jeevan Mission. The gram panchayat implements the scheme according to central and state guidelines, its staff verify beneficiary lists, and it processes payments — but it has minimal discretion over what to build or who receives benefits. This implementation role is different from the self-governing institution the 73rd Amendment envisioned.

3. Finance Commission untied grants: The 15th and 16th Finance Commissions have included untied grants to gram panchayats — money they can spend according to local priorities. The 16th FC's ₹5.10 lakh crore local body allocation includes a significant untied component. Where these grants function well — and where gram sabhas genuinely deliberate on their use — they come closest to the constitutional vision of local self-government. Their quality depends on whether the gram panchayat has staff capable of planning, the finances to implement, and the political independence to choose genuinely local priorities.

4. Social audit as accountability mechanism: MGNREGA introduced the social audit — a public meeting where wage records, attendance muster rolls, and expenditure statements are read out and verified by community members — as an accountability mechanism for panchayat-implemented works. Where social audits function actively (Andhra Pradesh, Rajasthan) they have exposed significant corruption and improved scheme implementation. Where they are pro forma exercises (many northern states), they provide no accountability.

5. PESA and tribal governance: PESA extends Panchayati Raj to tribal areas in Schedule V states with additional provisions recognising customary law and traditional governance. Gram sabhas in PESA areas have powers over natural resources, land alienation, and minor forest produce that gram sabhas outside PESA areas lack. Implementation is weak: state governments have not passed conforming legislation fully implementing PESA; forest departments continue to claim authority over forest produce that PESA vests in gram sabhas; and land diversion for mining and industrialisation continues over gram sabha objections.

What People Often Misunderstand

• Elections do not equal empowerment: Regular panchayat elections are genuinely democratising — they have changed who governs at the local level; but electoral accountability requires that local bodies have real authority and resources over which elected leaders can be held accountable; where they don't, elections produce accountability without power.
• Women's reservation has changed governance priorities, not just faces: Research consistently shows that female sarpanches invest more in drinking water, toilets, and sanitation — priorities that disproportionately benefit women and children; the reservation is not merely symbolic but has produced measurable governance changes.
• The 29 Eleventh Schedule subjects are indicative, not mandatory: The 73rd Amendment listed 29 subjects that should be devolved to panchayats but did not mandate this devolution; states must decide whether to transfer these subjects; actual transfer has been highly variable, making the Eleventh Schedule a goal rather than a guarantee.
• Panchayati Raj functions best when states genuinely devolve: The performance difference between Kerala's panchayat system and most other states' systems is not constitutional — both operate under the same constitutional framework; it is political — Kerala's state government made a deliberate choice to transfer real money and real functions to local bodies, something most other states have not done.
• Gram panchayat staff constraints are a major barrier: Most gram panchayats have very limited staff — a Gram Panchayat Development Officer (GPDO) or Panchayat Secretary serving multiple panchayats simultaneously — making effective plan preparation, accounts maintenance, and scheme implementation physically difficult regardless of political will.

What Changes Over Time

The PM SVAMITVA scheme (Survey of Villages, Mapping with Improvised Technology in Village Areas) — mapping rural property using drone technology and issuing property cards — is creating the legal and informational infrastructure for property taxation at the gram panchayat level for the first time in many states; if extended and implemented, it could substantially increase gram panchayat own revenues. 

The 16th Finance Commission's enhanced grant for local bodies (₹5.10 lakh crore for 2026–31) continues the trend of increasing Finance Commission support; the question is whether states adequately complement these central grants with state fiscal devolution and genuine functional transfer.

Sources and Further Reading

• Down to Earth — 30 years after the 73rd Amendment: https://www.downtoearth.org.in/governance/30-years-after-the-73rd-constitutional-amendment-panchayati-raj-institutions-still-leave-a-lot-to-be-desired-hp-a-case-study
• LegalServiceIndia — Panchayati Raj System before and after 73rd Amendment: https://www.legalserviceindia.com/legal/article-8234-panchayati-raj-system-prior-and-after-the-73rd-amendment.html
• Legacy IAS — Local Self Government 73rd and 74th Amendments: https://www.legacyias.com/local-self-government-73rd-74th-amendments/
• PRS Legislative Research — 16th Finance Commission: https://prsindia.org/policy/report-summaries/report-of-the-16th-finance-commission-for-2026-31

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