Context: The 73rd amendment to the Constitution, passed in 1992, is one of the landmarks of India’s journey as a constitutional republic, establishing the panchayati raj system. However, the momentum towards deepening local governance in India has stalled.

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Reasons for the Stagnation of the Panchayati Raj System in India

Some of the major reasons for the stagnation of the Panchayati Raj System in India, despite its constitutional backing through the 73rd amendment include:

• Administrative Decentralisation has Plateaued: While initial reforms were made, many states have not devolved the full 29 subjects listed in the Constitution's Eleventh Schedule. Less than 20% of states have fully implemented these provisions, restricting panchayats' operational autonomy.
• Fiscal Autonomy Decline: Direct transfers to panchayats have increased, but untied grants have reduced significantly. From 85% in the Thirteenth Finance Commission to 60% in the Fifteenth, limiting local governments' financial independence.
• Overdependence on Central Schemes: Panchayats now function more as delivery agents for centrally sponsored schemes like PM-KISAN, with reduced local decision-making power. This undermines the panchayats' role in local governance.
• Rise of Cash Transfer Programs: Cash transfers like PM-KISAN have reduced the traditional role of panchayats in beneficiary selection and grievance redress, decreasing their relevance in rural governance.
• Urbanisation: As India's rural population decreases, urban centres have become the focus of governance and policy, sidelining rural governance structures like panchayats.

Read the article on the Panchayati Raj Institutions & Urban Local Bodies!

Revitalization of the Panchayati Raj System

The following measures can be taken to be revitalize the Panchayati Raj System to better serve rural India:

• Decentralising Administrative Functions: States need to fully implement the devolution of powers and responsibilities to panchayats, ensuring they have adequate administrative control to function autonomously.
• Increased Fiscal Autonomy: A greater share of untied grants should be provided to panchayats, giving them the financial flexibility to address local needs and priorities beyond centrally directed schemes.
• Leveraging Technology: Panchayats can integrate digital platforms for better citizen engagement in planning and decision-making processes, leading to increased transparency and accountability in local governance.
• Focus on Rural Development Projects: Panchayats can take the lead in water conservation, renewable energy projects, and disaster risk management, playing an active role in community-based initiatives and local resource management.
• Support for Internal Migration: Panchayats can facilitate internal migration by ensuring safe living conditions for rural migrants and their families, strengthening rural-urban connectivity and reducing the divide.

Read the article on the Programmes of Rural Development in India!

Effect of Urbanisation on the Relevance of the Panchayati Raj System

Urbanisation has the following negative impacts on the role & relevance of the Panchayati Raj System:

• Shift in Policy Priorities: With urbanisation increasing, development policies now focus more on urban infrastructure, reducing attention on rural governance reforms.
• Declining Rural Population: As rural populations decrease (from 75% in 1990 to ~60% today), panchayats represent a shrinking electorate, leading to reduced political focus.
• Limited Financial Resources for Panchayats: Urban areas receive more investment in infrastructure and governance reforms, while rural local bodies struggle with limited resources.
• Migration Weakening Rural Governance: As people move to cities for employment, panchayats lose skilled human resources and potential leaders, affecting governance capacity.
• Reduced Political Influence of Panchayats: With increased emphasis on municipal governance, reforms for panchayats have stagnated, making them less relevant in policy discussions.

Read the article on the Integral Rural Development Programme (IRDP)!

Way Forward

The following steps can be adopted to avoid stagnation of the Panchayati Raj System in India:

• Reintegrating Panchayats into Development Policy: Policies should ensure that panchayats play an active role in rural development instead of being treated only as last-mile service delivery agents.
• Strengthening Rural-Urban Linkages: Panchayats should facilitate migration support services, skill training, and social security programs to help rural populations integrate with urban opportunities.
• Expanding Panchayats' Role in Climate and Resource Management: Panchayats can be empowered to lead initiatives in water conservation, renewable energy, and disaster resilience to maintain their governance relevance.
• Using Technology for Decentralised Governance: Digital platforms can enhance transparency, improve financial management, and enable direct citizen participation in local governance.
• Institutional Support and Financial Empowerment: A renewed focus on untied grants and greater financial independence will help panchayats take proactive roles in rural governance.

Read the article on the Strides in Rural Development!

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UPSC Practice Question

Despite constitutional backing through the 73rd Amendment, the Panchayati Raj system in India has stagnated. Discuss the key systemic challenges that hinder its effective functioning.