2013State of Governance

Devolution of Powers and The Panchayats

“Should there be a panchayat list in the same manner as there are Central, State and Concurrent lists? A panchayat list will not really make things too rigid. But it might give panchayats what they really need – a place in India’s federal polity”
Sudha Pillai Distinguished Fellow, SKOCH Development Foundation

The Constitution 73rd Amendment Act, which came into effect on 23 April, 1993, created a three-tier structure of Panchayati Raj. The Act provided for mandatory conduct of panchayat elections to the three tiers – district, intermediate and village – every five years, the setting up of a State Election Commission, a State Finance Commission and reservation of not less than one-third of the elective seats of members and chairpersons for women, and for SC and ST persons in each district in proportion to their population. The Constitution, moreover, provided for devolution of powers upon panchayats. Article 243 G of the Constitution provides as under:

“A 243 G powers, authority and responsibilities of panchayats – Subject to the provisions of the Constitution, the legislature of a State may, by law endow the panchayats with such powers and authority as may be necessary to enable them to function as institutions of self government and such law may contain provisions for the devolution of powers and responsibility upon panchayats, at the appropriate level, subject to such conditions as may be specified therein, with respect to (a) the preparation of plans for economic development and social justice, and (b) the implementation of schemes for economic development and social justice as may be entrusted to them, including those in relation to matters listed in the Eleventh Schedule.”

According to the Expert Committee on Leveraging Panchayats for Efficient Delivery of Goods and Services, headed by Mani Shankar Aiyar, which gave its report in April 2013, Article 243 G “calls” for “Panchayats” to be endowed with the required power and authority function as “institutions of self government” for planning and execution of economic development and social justice, pertaining to the 29 subjects listed in schedule XI, whether in respect of devolution to PRIs through Central Government schemes, or through devolution to the PRIs through State Governments”. The provision relating to grassroots planning contained in Article 243 ZD, is to be read with Article 243 G.

Twenty years down the line, many things have changed. The subject of Panchayati Raj was dealt with by a division in the Ministry of Rural Development till mid-2004. The earlier years saw focus on the implementation of certain provisions, such as conduct of elections under the 73rd Amendment as well as the Panchayat’s Extension to Scheduled Areas Act, which was passed in December 1996. Even during those early years, the Central Government was mindful of the need for grassroots planning as well as devolution of powers and functions under Article 243 G. It was equally clear that the spirit of the law envisaged empowered panchayats and vibrant Gram Sabhas. It was also equally clear that empowerment would result not only from a generalised devolution from State governments, but that this devolution would work only if there was clarity of roles among the three tiers. Further, the devolution would work only if matching funds and functionaries were also made available to panchayats.

The Model Panchayati Raj Act and Activity Mapping Exercises, undertaken through these years, were aimed at making possible operationalisation of Article 243 G and Article 243 ZD. The subsequent transfer of Article 243 ZD to the remit of the newly created Ministry of Panchayati Raj was expected to stitch together planning and implementation roles of panchayats. During these years, several advisories and what Mani Shankar Aiyar calls, “unambiguous orders” at the highest level to institutionalise Panchayat Raj systems, have not really led to the embedding of grassroots planning in the annual or five-year plans of Centre/States, nor have the panchayats been significantly vested with powers as contemplated under Article 243 G. Panchayat elections are being held, though some States manage to put them off for a year or two. Panchayat elections could be held in Jharkhand only 12 years after the creation of the State. By and large, provisions relating to reservation and Gram Sabha meetings, have been complied with.

However, we have to come back to Article 243 G, which, to quote Mani Shankar Aiyar (MSA) once again, is the “operative core” of the 73rd Amendment. Both, the State governments and central ministries have been very slow to take note of these provisions. It has been suggested that the use of the word “may” in Article 243 G implies that there is no mandatory requirement to devolve powers and functions. Shortly after he took over as Minister for Panchayati Raj, Mani Shankar Aiyar embarked on a series of round table conferences with State governments to discuss each and every issue pertaining to the 73rd Amendment. The very first round table, held in July 2004, pertained to ‘Effective Devolution of Functions’. The relevant resolutions which were the outcome of the joint exercise, stated that the essential step was the identification of activities related to the devolved functions, with the view to attribute each of these activities to the appropriate tier of the three-tier system; that, to the extent possible, there should be no overlapping; and, the principle of subsidiarity must guide this exercise. States were called upon to complete activity mapping within the fiscal 2004-05. The Union Ministry of Panchayat Raj even offered technical advice on demand. Most importantly, the resolution called upon the State governments to ensure a measure of “irrevocability of devolved functions by routing devolution through legislative measures, or alternatively providing a strong legislative framework for devolution through executive orders”.

The resolutions, similarly, covered effective devolution of functionaries in consonance with activity mapping of functions and also reconceiving the DRDAs. Resolutions pertaining to finances called for the preparation of a road-map by end of fiscal 2005-06 comprising inter alia the inclusion of PRI component in the budget of each State/Central Government department, based on activity mapping, provision of progressively larger untied grants from the Planning Commission to PRIs, setting a timeframe for submission of State Finance Commission Reports, and action on these recommendations/ATRs. The resolutions also called for steps to encourage panchayats to raise their own resources. Finally, this round table called for certain specific steps for empowerment of Gram Sabhas as contemplated under Article 243 A. In November 2004, the Cabinet Secretary also issued a letter to all ministries operating Centrally Sponsored Schemes (CSS) to reflect in their respective schemes, “the import of Constitutional provisions in letter and spirit.” This exercise was to be completed, in consultation with the Ministry of PR, within two months. In January 2009, an advisory was issued by Secretary PR to chief secretaries of States. The scope and content of this advisory is so exceptional that had the State governments acted on in and put the systems in place by the stipulated date of 1 April 2009, the last four years would have represented the golden age of decentralised governance, characterised by grassroots participation, transparency and accountability.

In August 2006, the Planning Commission had issued guidelines for the preparation of the district plans and their incorporation into the 11th Plan and Annual Plan 2007-08. Some States, notably Kerala, issued detailed guidelines on planning

As for planning, there is similarly, no dearth of guidelines and advisories. In August 2006, the Planning Commission had issued guidelines for the preparation of the district plans and their incorporation into the 11th Plan and Annual Plan 2007-08. Some States, notably Kerala, issued detailed guidelines on planning. The Kerala example has been periodically made available to other States, specially with regard to participatory planning exercise at the level of Gram Panchayats. However, despite these well thought-out and detailed guidelines/advisories and messages from none other than the Prime Minister, the pace of devolution has been slow and patchy.

The Indian Institute of Public Administration (IIPA) brought out a publication earlier this year on Panchayat Devolution Index 2012-13, relating to the implementation of the ‘Operative Core’ – devolution of funds, functions and functionaries. According to this Devolution Index, certain States have done better than others. Maharashtra, Karnataka, Kerala, Rajasthan, Tamil Nadu, West Bengal, Madhya Pradesh, Chhattisgarh, Haryana, Gujarat, Odisha, Tripura, Uttrakhand and Sikkim are above average in the Devolution Index. Uttar Pradesh, Assam and Himachal Pradesh are at midpoint. States such as Goa, Punjab and Bihar show a very low level of devolution.

In the devolution of functions, Karnataka tops the list while Maharashtra occupies overall the first position and also the first position with regard to the devolution of finances and functionaries. Kerala occupies overall the third position, but is at number four with regard to devolution of functions. It is Rajasthan which is at number three with regard to this parameter.

Since Karnataka, Maharashtra and Kerala are certainly leading the States, it is important to analyse their profile with regard to devolution of funds, functions and functionaries.


The State leads in the overall Index. The State government has regularly constituted SFCs, taken steps to facilitate IT-enabled e-governance, and has empowered panchayats to levy taxes. As many as 102 schemes of 11 key departments stand transferred to panchayats along with approximately 16,000 personnel. The downside is that with regard to the 11 subjects transferred, the devolution is not complete. Moreover, the subjects with regard to which no devolution has taken place, are critical to the working of panchayats.

Given the size of Maharashtra, the number of functionaries transferred to panchayats is inadequate. In the tribal districts, staff situation, both in terms of inadequacy of sanctioned posts and vacancy position, is much worse than elsewhere. Accountability to panchayats is not embedded into the system. Zila Parishad recruits officials at class III and IV levels, while staff to higher positions is provided by the State government.The most serious problem is that of one gram sevak being in change of more than one Gram Panchayat. Multi-village Gram Panchayats are also another facet of this problem which leads to lack of accountability.


The IIPA Devolution Index places Karnataka overall at the number two position. The State is number one in the devolution of functions, number two in the devolution of finances, and number three in the devolution of functionaries.

In the devolution of functions, Karnataka tops the list while Maharashtra occupies overall the first position and also the first position with regard to the devolution of finances and functionaries. Kerala occupies overall the third position

Specific functions have been spelt out in Karnataka PR Act 1993. Further, empowerment and independence has been ensured by the Activity Mapping Framework issued in 2003. However, there are areas of ambiguity. Moreover, with regard to subjects such as agriculture, animal husbandry and dairy, power and general education, the scope of functions is very limited.


The State is number three in the Devolution Index, but in many ways it has demonstrated greater compliance with the 73rd Amendment. Most of the provisions of the Model Act have been reflected in the State Panchayat Raj Act, with only a few notable exceptions – for example, the making of a panchayat disaster management plan.

Devolution has been spelt in respect of 17 functions. However, as in other leading States, the number of functionaries is not adequate relative to the functions. This places the available staff under great pressure. State Finance Commissions are appointed on time and with due regularity. Funds for panchayats comprise one-third of the State Plan and are shown in the State Plan. The eco-system is more pro-Panchayati Raj on the 73rd Amendment paradigm. However, Gram Sabhas are mostly platforms for identification of beneficiaries. Maintenance of accounts and their audit, greater functional role for members of panchayats, improved functioning of statutory committees which will draw into these members and give a greater say to women and SC/ST members, are reforms that Kerala can contemplate. There is need for more and better trained staff to provide for greater financial and functional efficiency. The there is need also for some formal provisions of rules for social audit.

An Expert Committee has come to the conclusion that nothing would incentivise full-scope activity mapping by the States, as activity mapping through Centrally Sponsored Schemes

If we now look at some other States such as Odisha, Chhattisgarh, and Gujarat, which are above the mean in the Devolution Index, we find that in Odisha, the law does provide for entrusting the panchayat with 21 matters out of 29 matters listed in the XI Schedule and Activity Mapping has also been done. Orders were issued in October 2005. In fact, Activity Mapping clearly sets down the list of functionaries and the panchayat to whom they are accountable. However, none of the 11 departments concerned have operationalised these orders. Only with regard to drinking water and sanitation are the Gram Panchayats directly involved. At the intermediate and district panchayat level, almost all activities are carried out by the line departments and functionaries are mostly under the control of the administrative department. On paper, however, they are accountable to panchayat with regard to finances, the revenue base of Gram Panchayats is rather poor though the kendu leaf grant constitutes a major source a revenue. The overall budgetary allocation for panchayats is low.

In Chhattisgarh, there was a reverse movement in the first 10 years after the formation of the State. Now, however, the state has shown a renewed commitment to devolution. An activity mapping documents that the role of panchayast is limited to schemes such as MGNREGA, though under PDS panchayats are playing an increasingly important role. Finally, bulk of the money available to PRIs is from the Central Finance Commission grants and centrally sponsored schemes.

In Gujarat, after several top-level initiatives and activity mapping exercises, it was decided that 14 subjects would be fully devolved and five would be partly devolved. Notable among the 14 devolved functions are agriculture, rural housing, road, poverty eradication programmes and health. Among the partly devolved functions, primary and secondary education are the most important. Lack of accountability of staff to panchayats and lack of funds characterise the present situation with regard to panchayats, even though in many respects the State Government has taken innovative steps and computerisation of Gram Panchayats has certainly been a pioneering and empowering step.

In some States, however, even formal activity mapping has not been done. Devolution in these States is at an “elementary or rudimentary level”. The Expert Committee has, in fact, come to the conclusion that nothing would incentivise full-scope activity mapping by the States as activity mapping through CSS. Once CSS scheme guideline are brought in line with the Constitutional imperative, it would automatically “create the framework within which States would find it practical and feasible to devolve state schemes to PRIs.”

The Expert Committee refers to the 2008 report of Secretary Coordination and Performance Management Cabinet Secretariat and Secretary (PR), titled ‘Modifying the Guidelines of Centrally Sponsored Schemes for Identifying a Domain for Panchayati Raj Institutions’. In its essence, the report recommends that CSS guidelines be “substantially modified to provide centrality to elected rural local bodies with a new initiative to enhancing coverage and outreach”.

These recommendations, as also the latest advisory of the Planning Commission of 1 April 2009, have remained on paper. In the meantime, CSSs continue to be implemented through parallel bodies which emerge as competing power centres. These send a strong anti-panchayat messages that neutralise all the advisories and limit the impact of the schemes of the Ministry of Panchayati Raj. It is not strange, therefore, that only a handful of States put their weight behind Article 243 G.

This brings us to the toughest question that we must confront. Does Article 243 G as it is presently worded, really create a legal and Constitutional imperative to devolve powers upon panchayats?

Should it have been worded differently and should there be a panchayat’s list in the same manner as there are Central, State and Concurrent lists? The existence of the State list has not prevented formulation of CSSs so a panchayat list will not really make things too rigid. But it might give panchayats what they really need – a place in India’s federal polity.

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