Subject Notes

UNIT-3

Panchayati Raj & Rural Administration

SUBJECT: RURAL DEVELOPMENT:

ADMINISTRATION AND PLANNING
(KHU-701)

Prepared by: Dr. Bhupender Sharma (Associate Professor, EN)

KHU701 Unit-3

1. Introduction to Panchayat Raj

“Panchayati Raj is a system of local governance in India that aims to promote democratic
participation at the grassroot level. The term "Panchayati Raj" literally means "rule by five"
and refers to a system of village councils that traditionally existed in rural India.”
In India, Rural development is one of the main objectives of Panchayati Raj: the Panchayati
Raj now functions as a system of governance in which gram panchayats are the basic units of
local administration. Currently, the Panchayati Raj system exists in all states except
Nagaland, Meghalaya, and Mizoram, and in all Union Territories except Delhi.
According to Schedule 11 of the constitution, the Panchayati Raj system in India can be
viewed as a tool for democratic decentralization and grassroots political participation.
It provides an opportunity for local communities to have a say in decision-making processes
and to take ownership of their own development.
One of the key political benefits of the Panchayati Raj system is that by allowing people to
elect their own representatives and participate in decision-making processes.
Another key socio-economic benefit of the Panchayati Raj system is that it helps to
promote rural development. And that is by devolving power to the local level, the system
enables local communities to take ownership of their own development needs and to work
together to address them.
As a result, it provides access to basic services like healthcare, education, and sanitation, as
well as promotes sustainable rural livelihoods.
Consequently, the political benefit of the Panchayati Raj system is that it can help to reduce
corruption and improve accountability. By devolving power to the local level, the system can
help prevent corruption and power abuse by higher-level officials.
Furthermore, the socioeconomic benefit of the Panchayati Raj system is that it can help to
promote social justice. By giving marginalized communities a greater voice in decision-
making processes, the system can help to address longstanding social and economic
inequalities. This can help to promote greater social cohesion and inclusivity and to reduce
social tensions and conflicts.
Lastly, the Panchayati Raj system can also help to promote social and political equality.
2. Evolution of Panchayati Raj System

The foundation of the present local self-government in India was laid by the Panchayati Raj
System (1992). But the history of Panchayati Raj starts from the self-sufficient and self-

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governing village communities. In the time of the Rig-Veda (1700 BC), evidence suggests
that self-governing village bodies called ‘sabhas’ existed. With the passage of time, these
bodies became panchayats (council of five persons). Panchayats were functional institutions
of grassroots governance in almost every village. They endured the rise and fall of empires in
the past, to the current highly structured system. The village panchayat, as a system of
administration, began in the British days, as their offer to satisfy the demands for local
autonomy. They opened up the governance of the lowest levels to the citizens. The
Government of India act, 1935 also authorizes the provinces to enact legislations. Even
though such minor forms of local governance was evident in India, the framers of the
constitutions, unsatisfied with the existing provisions, included Article 40 among the
Directive Principles, whereby:
“The state 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.”
Later, the conceptualisation of the system of local self-government in India took place
through the formation and effort of four important committees from the year 1957 to 1986.

(a) Balwant Rai Mehta Committee (1957)

Originally appointed by the Government of India to examine the working of two of its earlier
programs, the committee submitted its report in November 1957, in which the term
‘democratic decentralization’ first appears. The important recommendations are:
• Establishment of a three-tier Panchayati Raj system – gram panchayat at village level
(direct election), panchayat Samiti at the block level and Zila Parishad at the district
level (indirect election).
• District Collector to be the chairman of Zila Parishad.
• Transfer of resources and power to these bodies to be ensured.
The existent National Development Council accepted the recommendations. However, it did
not insist on a single, definite pattern to be followed in the establishment of these institutions.
Rather, it allowed the states to devise their own patterns, while the broad fundamentals were
to be the same throughout the country. Rajasthan (1959) adopted the system first, followed by
Andhra Pradesh in the same year. Some states even went ahead to create four-tier systems
and Nyaya panchayats, which served as judicial bodies.

(b) Ashok Mehta Committee (1977-1978)

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The committee was constituted by the Janata government of the time to study Panchayati Raj
institutions. Out of a total of 132 recommendations made by it, the most important ones are:
• Three-tier system to be replaced by a two-tier system.
• Political parties should participate at all levels in the elections.
• Compulsory powers of taxation to be given to these institutions.
• Zila Parishad to be made responsible for planning at the state level.
• A minister for Panchayati Raj to be appointed by the state council of ministers.
• Constitutional recognition to be given to Panchayati Raj institutions.
Unfortunately, the Janata government collapsed before action could be taken on these
recommendations.

(c) G V K Rao Committee (1985)

Appointed by the Planning Commission, the committee concluded that the developmental
procedures were gradually being taken away from the local self-government institutions,
resulting in a system comparable to ‘grass without roots’.
• Zila Parishad to be given prime importance and all developmental programs at that
level to be handed to it.
• Post of DDC (District Development Commissioner) to be created acting as the chief
executive officer of the Zila Parishad.
• Regular elections to be held

(d) L M Singhvi Commitee (1986)

Constituted by the Rajiv Gandhi government on ‘Revitalisation of Panchayati Raj institutions
for Democracy and Development’, its important recommendations are:
• Constitutional recognition for PRI institutions.
• Nyaya Panchayats to be established for clusters of villages
Though the 64th Constitutional Amendment bill was introduced in the Lok Sabha in 1989
itself, 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 73rd and 74th Constitutional Amendment
acts, 1992.

(e) Panchayati Raj System under 73rd and 74th Constitutional Amendment acts, 1992
The acts of 1992 added two new parts IX and IX-A to the constitution. It also added two new
schedules–11 and 12 which contains the lists of functional items of Panchayats and

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Municipalities. It provides for a three-tier system of Panchayati Raj in every state – at the
village, intermediate and district levels. Panchayat and Municipality are the generic terms for
the governing body at the local level. Both exist as three tier systems – at the lower,
intermediate and upper levels.
The 73rd Constitutional Amendment act provides for a Gram Sabha as the foundation of the
Panchayati Raj system. It is essentially a village assembly consisting of all the registered
voters in the area of the panchayat. The state has the power to determine what kind of powers
it can exercise, and what functions it has to perform at the village level. The 74th
Constitutional Amendment act provides for three types of Municipalities:
• Nagar Panchayat for a transitional area between a rural and urban area.
• Municipal Council for a small urban area.
• Municipal Corporation for a large urban area.
Municipalities represent urban local self-government. Most of the provisions of the two acts
are parallel, differing only in the fact that they are being applied to either a Panchayat or a
Municipality respectively. Each Gram sabha is the meeting of a particular constituency called
ward. Each ward has a representative chosen from among the people themselves by direct
election. The chairperson of the Panchayat or Municipality at the intermediate and district
level are elected from among these representatives at the immediately lower level by indirect
election.

73rd Constitutional Amendment Act of 1992

Significance of the Act

• The Act added Part IX to the Constitution, “The Panchayats” and also added the
Eleventh Schedule which consists of the 29 functional items of the panchayats.

• Part IX of the Constitution contains Article 243 to Article 243 O.

• The Amendment Act provides shape to Article 40 of the Constitution, (directive

principles of state policy), which directs the state to organise the village panchayats
and provide them powers and authority so that they can function as self-government.

• With the Act, Panchayati Raj systems come under the purview of the justiciable part
of the Constitution and mandates states to adopt the system. Further, the election
process in the Panchayati Raj institutions will be held independent of the state
government’s will.

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• The Act has two parts: compulsory and voluntary. Compulsory provisions must be
added to state laws, which includes the creation of the new Panchayati Raj systems.
Voluntary provisions, on the other hand, is the discretion of the state government.

• The Act is a very significant step in creating democratic institutions at the grassroots
level in the country. The Act has transformed the representative democracy into
participatory democracy.

Salient Features of the Act

1. Gram Sabha: Gram Sabha is the primary body of the Panchayati Raj system. It is a
village assembly consisting of all the registered voters within the area of the
panchayat. It will exercise powers and perform such functions as determined by the
state legislature. Candidates can refer to the functions of gram panchayat and gram
panchayat work, on the government official website – https://grammanchitra.gov.in/.

2. Three-tier system: The Act provides for the establishment of the three-tier system of
Panchayati Raj in the states (village, intermediate and district level). States with a
population of less than 20 lakhs may not constitute the intermediate level.

3. Election of members and chairperson: The members to all the levels of the
Panchayati Raj are elected directly and the chairpersons to the intermediate and the
district level are elected indirectly from the elected members and at the village level
the Chairperson is elected as determined by the state government.

4. The Chairperson of a Panchayat and other members of a Panchayat, whether or

not elected directly from territorial constituencies in the Panchayat area, have the right
to vote in Panchayat meetings.

5. Reservation of seats:

o For SC and ST: Reservation to be provided at all the three tiers in accordance
with their population percentage.

o For women: Not less than one-third of the total number of seats to be reserved
for women, further not less than one-third of the total number of offices for
chairperson at all levels of the panchayat to be reserved for women.

o The state legislatures are also given the provision to decide on the reservation
of seats in any level of panchayat or office of chairperson in favour of
backward classes.

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6. Duration of Panchayat: The Act provides for a five-year term of office to all the
levels of the panchayat. However, the panchayat can be dissolved before the
completion of its term. But fresh elections to constitute the new panchayat shall be
completed –

o before the expiry of its five-year duration.

o in case of dissolution, before the expiry of a period of six months from the
date of its dissolution.

7. Disqualification: A person shall be disqualified for being chosen as or for being a

member of panchayat if he is so disqualified –

o Under any law for the time being in force for the purpose of elections to the
legislature of the state concerned.

o Under any law made by the state legislature. However, no person shall be
disqualified on the ground that he is less than 25 years of age if he has attained
the age of 21 years.

o Further, all questions relating to disqualification shall be referred to an

authority determined by the state legislatures.

8. State election commission:

o The commission is responsible for superintendence, direction and control of

the preparation of electoral rolls and conducting elections for the panchayat.

o The state legislature may make provisions with respect to all matters relating
to elections to the panchayats.

8. Powers and Functions: The state legislature may endow the Panchayats with such
powers and authority as may be necessary to enable them to function as institutions of
self-government. Such a scheme may contain provisions related to Gram Panchayat
work 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 29 matters listed
in the Eleventh Schedule.

9. Finances: The state legislature may –

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a. Authorize a panchayat to levy, collect and appropriate taxes, duties, tolls and
fees.

b. Assign to a panchayat taxes, duties, tolls and fees levied and collected by the
state government.

c. Provide for making grants-in-aid to the panchayats from the consolidated fund
of the state.

d. Provide for the constitution of funds for crediting all money of the panchayats.

10. Finance Commission: The state finance commission reviews the financial position of
the panchayats and provides recommendations for the necessary steps to be taken to
supplement resources to the panchayat.

11. Audit of Accounts: State legislature may make provisions for the maintenance and
audit of panchayat accounts.

12. Application to Union Territories: The President may direct the provisions of the Act
to be applied on any union territory subject to exceptions and modifications he
specifies.

13. Exempted states and areas: The Act does not apply to the states of Nagaland,
Meghalaya and Mizoram and certain other areas. These areas include,

a. The scheduled areas and the tribal areas in the states

b. The hill area of Manipur for which a district council exists

c. Darjeeling district of West Bengal for which Darjeeling Gorkha Hill Council
exists.
However, Parliament can extend this part to these areas subject to the
exception and modification it specifies. Thus, the PESA Act was enacted.

14. Continuance of existing law: All the state laws relating to panchayats shall continue
to be in force until the expiry of one year from the commencement of this Act. In
other words, the states have to adopt the new Panchayati raj system based on this Act
within the maximum period of one year from 24 April 1993, which was the date of
the commencement of this Act. However, all the Panchayats existing immediately
before the commencement of the Act shall continue till the expiry of their term, unless
dissolved by the state legislature sooner.

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15. Bar to interference by courts: The Act bars the courts from interfering in the
electoral matters of panchayats. It declares that the validity of any law relating to the
delimitation of constituencies or the allotment of seats to such constituencies cannot
be questioned in any court. It further lays down that no election to any panchayat is to
be questioned except by an election petition presented to such authority and in such
manner as provided by the state legislature.

PESA Act of 1996

The provisions of Part IX are not applicable to the Fifth Schedule areas. The Parliament can
extend this Part to such areas with modifications and exceptions as it may specify. Under
these provisions, Parliament enacted Provisions of the Panchayats (Extension to the
Scheduled Areas) Act, popularly known as 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 have village governance with participatory democracy.
4. To evolve participatory governance consistent with the traditional practices.
5. To preserve and safeguard traditions and customs of tribal population.
6. To empower panchayats with powers conducive to tribal requirements.
7. To prevent panchayats at a higher level from assuming powers and authority of
panchayats at a lower level.
As a result of these constitutional steps taken by the union and state governments, India has
moved towards what has been described as ‘multi-level federalism’, and more significantly, it
has widened the democratic base of the Indian polity. Before the amendments, the Indian
democratic structure through elected representatives was restricted to the two houses of
Parliament, state assemblies and certain union territories. The system has brought governance
and issue redressal to the grassroot levels in the country but there are other issues too. These
issues, if addressed, will go a long way in creating an environment where some of the basic
human rights are respected.

After the new generation of panchayats had started functioning, several issues have come to
the fore, which have a bearing on human rights. The important factor which has contributed
to the human rights situation vis-a-vis the panchayat system is the nature of Indian society,
which of course determines the nature of the state. Indian society is known for its inequality,
social hierarchy and the rich and poor divide. The social hierarchy is the result of the caste

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system, which is unique to India. Therefore, caste and class are the two factors, which
deserve attention in this context.

Thus, the local governance system has challenged the age old practices of hierarchy in the
rural areas of the country particularly those related to caste, religion and discrimination
against women.

The Panchayati Raj system constitutes an integral part of the IAS prelims and UPSC mains
syllabus. Aspirants preparing for the upcoming CSE must be aware of the administrative set
in the country.

3. Three-tier structure of Panchayati Raj

(a) Gram Panchayat (village level)

Gram Panchayats are at the lowest level of Panchayat Raj institutions (PRIs), whose legal
authority is the 73rd Constitutional Amendment of 1992, which is concerned with rural local
governments. The Gram Panchayat is divided into wards and each ward is represented by a
Ward Member or Commissioner, also referred to as a Panch or Panchayat Member, who is
directly elected by the villagers. The Panchayat is chaired by the president of the village,
known as a Sarpanch. The term of the elected representatives is five years. The Secretary of
the Panchayat is a non-elected representative, appointed by the state government, to oversee
Panchayat activities. A Gram panchyat's term of office is five years. Every five years
elections take place in the village. All people over the age of 18 who are residents of the
territory of that village's Gram panchayat can vote. For women's empowerment and to
encourage participation of women in the democratic process, the government of India has set
some restrictions on Gram panchayat elections, reserving one-third of the seats for women, as
well as reserving seats for scheduled castes and tribes.
Functions of Panchayat
All Panchayati Raj Institutions perform such functions as are specified in state laws relating
to panchayati raj. Some States distinguish between obligatory (compulsory) and optional
functions of Gram Panchayats while other States do not make this distinction.
• The civic functions relating to sanitation, cleaning of public roads, minor irrigation,
public toilets and lavatories, primary health care, vaccination, the supply of drinking
water, constructing public wells, rural electrification, social health and primary and
adult education, etc. are obligatory functions of village panchayats.

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• The optional functions depend on the resources of the panchayats. They may or may
not perform such functions as tree plantation on roadsides, setting up of breeding
centers for cattle, organizing child and maternity welfare, promotion of agriculture,
etc.
• After the 73rd Amendment, the scope of functions of Gram Panchayat was widened.
Such important functions like preparation of annual development plan of panchayat
area, annual budget, relief in natural calamities, removal of encroachment on public
lands and implementation and monitoring of poverty alleviation programmes are now
expected to be performed by panchayats.
• Selection of beneficiaries through Gram Sabhas, public distribution system, non-
conventional energy source, improved Chullahs, biogas plants have also been given to
Gram Panchayats in some states.

(b) Mandal Parishad or Block Samiti or Panchayat Samiti (block level)

The second or middle tier of the Panchayati Raj is Panchayat Samiti, which provides a link
between Gram Panchayat and a Zila Parishad. The strength of a Panchayat Samiti also
depends on the population in a Samiti area. In Panchayat Samiti, some members are directly
elected. Sarpanchs of Gram Panchayats. Sarpanchs of Gram Panchayats are ex-officio
members of Panchayat Samitis. However, all the Sarpanchs of Gram Panchayats are not
members of Panchayat Samitis at the same time. The number varies from State to State and is
rotated annually. It means that only chairpersons of some Gram Panchayats in a Samiti area
are members of Panchayat Samiti at a time. In some panchayats, members of Legislative
Assemblies and Legislative Councils, as well as members of Parliament who belong to the
Samiti area, are co-opted as its members. Chairpersons of Panchayat Samitis are, elected
indirectly- by and from amongst the elected members thereof.
Functions of Panchayat Samiti
• Panchayat Samitis are at the hub of developmental activities.
• They are headed by Block Development Officers (B.D.Os).
• Some functions are entrusted to them like agriculture, land improvement, watershed
development, social and farm forestry, technical and vocational education, etc.
• The second type of functions relates to the implementation of some specific plans,
schemes or programmes to which funds are earmarked. It means that a Panchayat
Samiti has to spend money only on that specific project. The choice of location or
beneficiaries is, however, available to the Panchayat Samiti.

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(c) Zila Parishad (district level)

Zila Parishad or district Panchayat is the uppermost tier of the Panchayati Raj system. This
institution has some directly elected members whose number differs from State to State as it
is also based on population. Chairpersons of Panchayat Samitis are ex-officio members of
Zila Parishads. Members of Parliament, Legislative Assemblies and Councils belonging to
the districts are also nominated members of Zila Parishads. The chairperson of a Zila
Parishad, called Adhyaksha or President is elected indirectly-by and from amongst the
elected members thereof. The vice-chairperson is also elected similarly. Zila Parishad
meetings are conducted once a month. Special meetings can also be convened to discuss
special matters. Subject committees are also formed. Zila Parishad meetings are conducted
once a month. Special meetings can also be convened to discuss special matters. Subject
committees are also formed.
Functions of Zila Parishad
• Zila Parishad links Panchayat Samitis within the district.
• It coordinates their activities and supervises their functioning.
• It prepares district plans and integrates Samiti plans into district plans for submission
to the State Government.
• Zila Parishad looks after development works in the entire district.
• It undertakes schemes to improve agricultural production, exploit ground water
resources, extend rural electrification and distribution and initiate employment
generating activities, construct roads and other public works.
• It also performs welfare functions like relief during natural calamities and scarcity,
the establishment of orphanages and poor homes, night shelters, the welfare of women
and children, etc.
• In addition, Zila Parishads perform functions entrusted to them under the Central and
State Government sponsored programmes. For example, Jawahar Rozgar Yojna is a
big centrally sponsored scheme for which money is directly given to the districts to
undertake employment-generating activities.

4. Structural transformation of rural finance in India

In 1947, with the help of survey, Reserve Bank of India (RBI) recorded that money lenders
and other informal lenders met more than 90% of the rural credit needs. The share of banks
was only about 1 % of the total rural household debt. The increasing amount of

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institutionalization of rural finance led to the structural transformation. The major emphasis
was given during the Fourth Five-Year Plan (1969–1974) following bank nationalization and
by setting up of NABARD (National Bank for Agriculture and Rural Development), the
formation of Self-Help Group (SHG)—bank linkage and the setting up of Micro Finance
Institutions (MFIs).
The entire phase of rural credit provisioning in independent India can be classified into three
phases.
• First from the 1950s up to the mid-1960s when cooperatives were the main
institutional setups.
• Second, the 1970s and 1980s when commercial banks and RRBs (Regional Rural
Banks) played the dominating role in institutional credit disbursement.
• The final phase starting from the reform period in the early 1990s to the present which
observes the restructuring of the banking system, the emergence of SHGs, and a
growing number of MFIs.
The entire structural transformation process can be divided into four phases:

(a) Increasing dominance of cooperatives

• The introduction of cooperatives is the earliest attempt at institutionalization of rural
finance.
• The cooperative credit movement in India started with the passing of the Cooperative
Societies Act in 1904. It came into force following the Fourth Five-year Plan (1969–
1974).
• The aim of cooperatives is to fulfil the short, medium and the long-term credit needs
of the rural households.

(b) Bank nationalization and dominance of commercial banks

• The share of scheduled commercial banks (SCBs) in total institutional credit has
gradually increased since the nationalization of banks in 1969.
• After bank nationalization, RBI made it mandatory for commercial banks to cover the
unbanked rural and semi urban areas. Each bank would have to open at least three
branches in unbanked rural or semi urban areas.

(c) Establishment of NABARD and Bank—Self-Help Groups (SHGs) Linkage

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• With this establishment of NABARD (National Bank for Agriculture and Rural
Development) in July 1982 the government has widened its role in rural credit from
‘‘agricultural development’’ to ‘‘rural development.’’
• NABARD approves short, medium, and long-term credits and facilitate the
development of bank–SHGs linkage.
• NABARD provides refinance support to banks at very low interest rates for financing
SHGs. As most of the SHGs comprise women members so empowerment of rural
women was achieved.
• The government has introduced Rural Infrastructure Development Fund (RIDF) in
1995–1996 in NABARD. The fund is created to finance various rural infrastructure
projects such as irrigation, road, bridges, watershed, cold storage, fisheries, inland
waterways development, etc.

(d) Introduction and commercialization of Micro Finance

• The most recent innovation toward institutionalization of the rural credit system is the
introduction of microfinance.
• MFIs in India have non-profit motivation on one hand and profit maximization for
long-term on the other hand.
• It has evolved as an attractive and cost-effective mechanism to reach financial
services to the rural poor.
• MFIs has eliminated the basic problems of incorrect client identification and mitigate
repayment risks to a great extent.
• MFIs are more aggressive and innovative to reach the rural poor than the formal
banking system. They not only provide loan for productive purposes but also for
consumption purposes.

5. Self-help groups
Self-Help Groups (SHGs) are the people who choose to come together to find ways to
improve their living conditions. It can be defined as self-governed group of people with
similar socio-economic background and having a desire to collectively perform common
purpose. Villages face numerous problems related to poverty, illiteracy, lack of skills, lack of
formal credit etc. These problems cannot be tackled at an individual level and need collective

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efforts. Thus SHG can become a vehicle of change for the poor and marginalized. SHG rely
on the idea of “Self Help” to encourage self-employment and to reduce poverty.

Functions:
• It looks to build the functional capacity of the poor and the marginalized in the field
of employment and in the income generating activities.
• It resolves conflicts through collective leadership and mutual discussion.
• It provides collateral free loan with terms decided by the group at the market driven
rates. The poor collect their savings and save it in banks. In return they receive easy
access to loans with a small rate of interest to start their micro unit enterprise.
• Consequently, Self-Help Groups have emerged as the most effective mechanism for
delivery of microfinance services to the poor.

Need for SHGs:

• One of the reasons for rural poverty in our country is low access to credit and
financial services.
• A Committee constituted under the chairmanship of Dr. C. Rangarajan to prepare a
comprehensive report on Financial Inclusion in the Country identified some major
reasons for lack of financial inclusion:
o Inability to provide collateral security
o Inadequate reach of the institutions
• The existence of sound community networks in villages is increasingly being
recognised as one of the most important elements of credit linkage in the rural areas.
• SHGs help in accessing credit to the poor and thus, play a critical role in poverty
reduction.
• SHGs help to build social capital among the poor, especially women. This empowers
women and gives them greater voice in the society.

Benefits of SHGs:
(i) Social integrity: SHGs take action to stop practices like dowry, alcoholism etc.
(ii) Gender Equity: SHGs empowers women and develop leadership skill among them.
Empowered women participate more actively in gram sabha and elections. Self-Help Groups
formation has a multiplier effect in improving women’s status in society as well as in the

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family leading to improvement in their socio-economic condition and also enhances their
self-esteem.
(iii) Voice to marginalized section: Most of the beneficiaries of government schemes have
been from weaker and marginalized communities and hence their participation through SHGs
ensures social justice.
(iv) Financial Inclusion: The SHG-Bank linkage programme pioneered by NABARD has
made access to credit easier and reduced the dependence on traditional money lenders and
other non-institutional sources.
(v) Improving efficiency of government schemes and reducing corruption through social
audits.
(vi) Alternate source of employment: It eases dependency on agriculture by providing
support in setting up micro-enterprises like tailoring, grocery, and tool repair shops.
(vii) Financial independence: Financial independence through self-employment has many
externalities such as improved literacy levels, better health care and even better family
planning.
(viii) Changes in consumption pattern: It has enabled the participating households to spend
more on education, food and health than non-client households.
(ix) Impact on housing & health: The financial inclusion attained through SHGs has led to
reduced child mortality, improved maternal health and the ability of the poor to take action to
prevent disease through better nutrition, housing and health–especially among women and
children.

6. Need for increased funding to Panchayats

The panchayats gained prominence as crucial nodal points during the COVID-19 as they ran
isolation centres, medical camps, and contact tracing. However, they faced a lot of challenges
during the lockdown period as for most panchayats it was difficult to provide food at short
notice. Hence, the Panchayati Raj Ministry has proposed to set up community kitchens in
each panchayat that will be operated by the local self-help groups (SHGs).
• The utilisation rate for Finance Commission grants between 2015 and 2019 stands at
78% and the allocations had tripled between the 13th and 14th Commissions.
• The role of panchayats becomes more important post lockdown period because now
the newly returned migrant workers will also depend on them to generate employment
under the Garib Kalyan Rojgar Abhiyan.

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• The 2.63 lakh panchayats across the country have 29 functions under their ambit,
according to the 11th Schedule of the Constitution. Road construction, its
maintenance and drinking water supply are the major projects carried out by
panchayats using FC grants.

Sources of funds for the various levels of Panchayati Raj System:

(a) Gram Panchayat (village level)
The income of the gram panchayat comes from:
• Collection of taxes on houses, market places etc.
• Government scheme funds received through various departments of the government–
through the Janpad and Zila Panchayats.
• Donations for community works etc
(b) Mandal Parishad or Block Samiti or Panchayat Samiti (block level)
The income of the panchayat samiti comes from:
• Land and water use taxes, professional taxes, liquor taxes and others
• Income-generating programmes
• Grants-in-aid and loans from the state government and the local zila parishad
• Voluntary contributions
(c) Zila Parishad (district level)
The income of the zila parishad comes from:
• Income from taxes levied by Zila Parishad, license fees and market fees
• A share is given to Zila Parishad from the collected land revenue
• Income from various properties of Zila Praishad
• Grants from the State and Central governments
• Funds allotted by the State for developmental activities.

7. Role of bureaucracy in India

Grass roots bureaucracy are the officials consisting at the district and its below level. The
officials in these institutions are directly responsible for implementing the welfare schemes
for the people. There are three pillars that form the basic structures of these institutions i.e
state government departments responsible for planning, collector responsible for coordinating
and act as a executive officer at the district level and at last is the democratically elected local
government. Even though the schemes are well planned, the implementation has the major

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shortcomings. It is due to centralization of power, lack of coordination, lack of skilled field

officers, rigid mode of working etc. Scrutinizing the implementation failure is the need of the
hour which prevents the wastage of resources which is planned for effective implementation.

Problems:
(a) Centralization of powers
Though, at the district level collector is the chief executive officer of various government
welfare schemes, state departments hold the district offices tightly. Collector has huge
authority over the police and revenue department but comparatively less over personnel in
district level offices which makes coordination more difficult at the district level. Offices at
different geographical units and the non-acceptance of single authority as a coordinating body
makes the things even worse. Local Government who are well aware of the needs and
problems of the local people are helpless as they are disempowered to do so. Local
government are responsible for implementing the socio economic development schemes but
they are disempowered by state government as the financial autonomy is under voluntary
provision despite of 73rd CAA. Because of this disempowerment, local government got
caught in between the public demands and lack of actual authority.
(b) Lack of skilled officers
We have doctors, engineers and other professionals but we lack of nutritionists, health
administrators who are all needed to implement the schemes at grass root level. There is
shortage of personnel as number of people per official is too huge which is unavoidable in
our country. Because of this official carry huge workload and often they tend to concentrate
on the works where the superior pressure in intense.
(c) Mode of working
Officials define their terms based on the implementation programmes rather than the goals
that are set by implementation programmes. It is because of their that they are confined only
to implement the plan and not caring about the future results.These problems faced by
officials subsumes the great amount work involved every year for planning and also the
government initiatives.
Reforms
The reforms are the need of the hour as it severely affects the quality of the programmes
initiated by the government. The less effectiveness involves the wastage of resources in the
country which are limited. So for effective implementation and optimum use of resources and

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for the benefit of the people and in a view that benefit should go to the people effectively, the
reforms must be undertaken.
(i) Technology must be used at the max level to ensure the sync between state and district
officials rather than officials and the local community.
(ii) Decentralization and devolution of powers should be done.
(iii) Corruption has to be reduced by encouraging social audits, RTI etc.
(iv) Unproductive working process should be weaned away and management principles has
to be applied for the effective working of the institutions at the low cost.
The optimum level of bureaucracy at the grass root level is the need of the hour as they are
the real executive bodies who has a direct contact with the people. Reduction of corruption,
prevention of excessive centralization, coordination among the state and district level
institutions, empowering of redressal mechanism, giving financial and administrative powers
to the local governmental bodies need to be done in order to realize the Gandhian principles.

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