The Seventy Third Constitutional Amendment Act (73rd CAA) of 1992 paved the way for modern Panchayati Raj Institutions in India. According to constitutional directives, each state had to enact their Conformity State Panchayati Raj Act within a year of the 73rd CAA’s enactment. Consequently, by 1994, all states enacted their State Panchayati Raj Acts for establishing constitutional Panchayati Raj Institutions. Since then, Panchayats in India have experienced various developments—some positive and some challenging.
The Panchayati Raj Institutions (PRIs), established under the 73rd Constitutional Amendment Act (CAA), were envisioned as the foundation of grassroots democracy in India. Over the years, they have transformed governance by decentralizing power, bringing visible leadership from women, Dalits, and tribal groups, ensuring direct fund allocation to villages, and enabling local participation in development. Overall, Panchayats performed well. The purpose of this write-up is to focus on areas that need improvement to enhance the performance of Panchayats. As PRIs evolve, several systemic challenges threaten their effectiveness. A critical review is necessary to address these gaps and unlock their full potential in driving sustainable local development.
Decentralization and Guaranteed Development Funds:
Unlike in the past, when village development depended on bureaucratic discretion, today, every Panchayat is constitutionally entitled to funds for local development. This shift has empowered villagers to undertake infrastructure projects, social welfare programs, and livelihood initiatives independently. While the performance of individual Panchayats may vary, the system ensures that no village is entirely deprived of development resources.
Inter-Tier Coordination: A Missing Link
The three-tier structure of PRIs—Gram Panchayats, Panchayat Samitis, and Zila Parishads—was designed to facilitate coordinated planning and optimal resource utilization. However, in reality, inter-tier conflicts often overshadow collaboration. Competing priorities, overlapping interests, and lack of clear accountability mechanisms hinder convergence, leading to inefficiencies in district-level development. Strengthening institutional mechanisms for coordination is crucial to realizing the intended benefits of decentralized governance.
Transparency and Accountability: A Mixed Record
While some Panchayats exemplify transparency and good governance, many still struggle with weak administrative capacities. Issues like opaque decision-making, fund mismanagement, and corruption persist, undermining public trust. Strengthening social audits, digitizing financial transactions, and enhancing training for elected representatives can improve accountability and restore confidence in local governance.
The Challenge of “Topsy-turvy” in Progressive Panchayats
A unique dilemma faces a few high-performing Panchayats that have already achieved basic infrastructure, digital governance, and full scheme saturation. With most development indicators met, their leaders grapple with the question: What next? This situation may come with many more Panchayats in future. Unfortunately, there is little institutional support to guide them toward advanced governance models, innovative livelihoods, or climate-resilient planning. Policymakers must create frameworks to help such Panchayats transition into next-generation rural hubs.
Declining Institutional Support: A Major Setback
Initially, the Ministry of Panchayati Raj (MoPR) and institutions like the National Institute of Rural Development and Panchayati Raj (NIRDPR) played an initiative-taking role in capacity building. However, recent years have seen a retreat in institutional support—MoPR’s role is now largely limited to issuing guidelines, while NIRDPR faces severe funding cuts, crippling its ability to train Panchayat functionaries. Without structured mentorship, many PRIs remain ill-equipped to manage complex governance challenges.
The Vanishing Role of NGOs
Non-Governmental Organizations (NGOs) were once pivotal in strengthening Panchayats through training, handholding, and advocacy. The Institute of Social Sciences has been engaged with strengthening Panchayats for over 3 decades. But with government and international funding drying up, NGOs can no longer sustain long-term engagements with PRIs. This withdrawal comes at a time when Panchayats need them most particularly in areas like participatory planning, gender inclusion, and climate adaptation. Reviving partnerships between PRIs and civil society is essential for fostering innovation in local governance.
The Way Forward: A Systematic Review and Course Correction
Given these challenges, a comprehensive evaluation of Panchayati Raj implementation is urgently needed. Panchayati Raj has the potential to revolutionize rural India by fostering inclusive growth and social justice. However, without addressing structural gaps, the system risks stagnation. The time has come for a renewed commitment to empowering PRIs—ensuring they evolve from mere implementing agencies to true institutions of participatory democracy and sustainable development. The stakes are high: failure to act could mean losing decades of progress in local self-governance.
Manoj Rai is Executive Director & CEO of Institute of Social Sciences. His email id is manoj.rai@issin.org