Critical Analysis of the Functional Domain of Panchayati Raj Institutions

The 73rd Constitutional Amendment Act of 1992 was meant to be a turning point for grassroots democracy. It gave constitutional status to Panchayati Raj Institutions (PRIs) and promised them a well-defined role in rural governance through the Eleventh Schedule, which listed 29 subjects for devolution. More than three decades later, however, the functional domain of PRIs remains a work in progress. The gap between constitutional intent and ground reality is wide, and the reasons for it are deeply structural.

The constitutional promise versus reality 🔗

Article 243G of the Constitution empowers State Legislatures to endow Panchayats with such powers and authority as may be necessary to enable them to function as institutions of self-government. The Eleventh Schedule lists 29 subjects covering functions, finances, and functionaries that can be devolved from the State to the three tiers of PRIs. These subjects range from agriculture, minor irrigation, and animal husbandry to education, health, rural housing, poverty alleviation, and welfare of weaker sections.

The crucial word here is “may”. The Constitution leaves the actual devolution to the discretion of the State Legislature. This single word has shaped, and in many ways constrained, the entire journey of Panchayati Raj. While the 73rd Amendment made PRIs a permanent feature of India’s federal structure, it did not mandate the devolution of any specific function. The result is a patchwork of experiments, where some states have embraced meaningful decentralisation and others have treated the Eleventh Schedule as a suggestion rather than a commitment.

The problem of undefined activity mapping 🔗

One of the most persistent criticisms of the functional domain of PRIs is the absence of activity mapping. Activity mapping is the exercise of unbundling each of the 29 subjects into discrete activities and assigning them to the appropriate tier, Gram Panchayat, Panchayat Samiti, or Zilla Parishad, based on the principle of subsidiarity. In theory, this is how decentralisation is operationalised. In practice, it has been one of the weakest links in the chain.

Many states have either skipped activity mapping entirely or produced documents that are vague and non-binding. Without a clear demarcation of who does what, functions overlap, responsibilities blur, and line departments of the state government continue to hold on to powers that were meant to be transferred. A Panchayat may be told it is responsible for primary education, for example, but without activity mapping it has no control over teacher recruitment, school infrastructure, or mid-day meal logistics, all of which continue to be handled by state departments.

Why activity mapping matters 🔗

Activity mapping is not a bureaucratic formality. It is the difference between a Panchayat that can plan and execute local development and one that merely signs papers prepared elsewhere. In Karnataka, the state government transferred 428 plan and 230 non-plan schemes along with functionaries to PRIs, but left them little say in how funds could actually be spent. Scheme-based transfers of this kind fragment responsibility at the local level and reduce Panchayats to implementing agencies rather than decision-making bodies.

Financial autonomy: The missing pillar 🔗

Functional devolution is meaningless without financial backing. This is where PRIs struggle the most. The three tiers of the Panchayati Raj system continue to have very limited financial powers, with their viability largely dependent on the political will of the states.

Most Panchayats depend heavily on tied grants from the Centre and the State. Their own sources of revenue, property tax, fees on markets, water charges, and the like, are small and often poorly collected. Even when State Finance Commissions recommend higher transfers, implementation is frequently delayed or diluted. The functional devolution index actually declined from 35.34 in 2013-14 to 29.18 in 2015-16 at the national level, even as financial devolution improved modestly from 32.05 to 37.04. This divergence is telling: money is slowly flowing in, but the authority to spend it autonomously is not keeping pace.

The tied-funds trap 🔗

A large share of PRI funding comes through Centrally Sponsored Schemes (CSS) such as MGNREGA, PMAY-G, and the Swachh Bharat Mission. These funds arrive with rigid guidelines that leave little room for local priorities. A Panchayat in a drought-prone region and one in a flood-prone region receive the same scheme template, with the same spending rules. Untied funds, which allow Panchayats to plan for local needs, remain a small fraction of the total inflow. This tied-funds trap is one of the main reasons Panchayats fail to function as genuine units of self-government.

Administrative control and the problem of parallel bodies 🔗

Even where functions have been transferred on paper, administrative control often remains with the state. The staff working at the Panchayat level, agricultural extension officers, health workers, teachers, engineers, typically report to their parent state departments rather than to the elected Panchayat. This creates a dual command structure in which the Sarpanch or Panchayat President has responsibility without authority.

The proliferation of parallel bodies has made matters worse. User committees, mission societies, and special-purpose vehicles created under various schemes often bypass PRIs altogether. These bodies typically report directly to state or central line departments, undermining the constitutional position of Panchayats as the primary institutions of local self-government. Instead of strengthening the Panchayat, such arrangements hollow it out.

Uneven progress across states 🔗

The devolution landscape across India is deeply uneven. A handful of states have taken the 73rd Amendment seriously and built robust systems; most others have moved slowly and incrementally.

The front-runners 🔗

Kerala, Karnataka, and West Bengal are widely regarded as the states that have made the most meaningful progress. These states have been frontrunners in transferring not just functions but also finances and functionaries, the 3Fs, to Panchayats. Kerala’s People’s Plan Campaign, launched in 1996, was a landmark effort that earmarked a significant share of the state plan outlay for local bodies and pioneered participatory planning at the Gram Sabha level.

Karnataka introduced the Karnataka Panchayat Raj Act as early as 1993 and has consistently ranked near the top on devolution indices. In the Devolution Report 2016-17, Karnataka attained the top position in the Cumulative Devolution Index among all states and union territories, with a balanced performance across the major pillars of devolution. West Bengal’s three-tier system benefited from the political continuity provided by successive governments that prioritised rural decentralisation.

The laggards 🔗

At the other end of the spectrum, several states have treated PRIs as administrative extensions of the state government. Functions are listed in state Panchayati Raj Acts but not backed by activity mapping, funds, or personnel. The most recent Devolution Index Report shows that overall devolution rose from 39.9% to 43.9% between 2013-14 and 2021-22, a modest improvement over nearly a decade. States such as Goa, Haryana, Punjab, Jharkhand, Arunachal Pradesh, and Manipur continue to lag well behind the national average, alongside several union territories.

The Devolution Report and what it revealed 🔗

The Devolution Reports prepared under the Panchayats Empowerment and Accountability Incentive Scheme (PEAIS) have been instrumental in making these discrepancies visible. The reports for 2014-15 and 2015-16, prepared by the Tata Institute of Social Sciences, and subsequent reports by the Indian Institute of Public Administration, assess states on dimensions such as Framework, Functions, Finances, Functionaries, Capacity Building, and Accountability.

The findings are sobering. While institutional frameworks are largely in place, almost every state holds regular Panchayat elections, constitutes State Election Commissions, and sets up State Finance Commissions, the operational reality is far behind. Functional devolution has not kept pace with the infrastructural and procedural progress. Many states have not notified the rules required under their Panchayati Raj Acts, leaving the statutory scheme incomplete. Others have notified rules but have not implemented them in spirit.

The ‘units of self-government’ question 🔗

A central theme running through successive devolution reports is whether Panchayats are truly functioning as “institutions of self-government” as envisaged in Article 243G. The evidence suggests that in most states, they are not. They remain implementation agencies for state and central schemes, with limited space for local priorities, local planning, and local accountability. The constitutional vision of Gram Swaraj, a village that governs its own affairs, is still largely aspirational.

Structural causes of incomplete devolution 🔗

Why has the functional domain of PRIs remained so weak despite decades of reform? Several structural factors are at play.

First, there is a political economy of resistance. Devolving real power to Panchayats means state-level politicians and bureaucrats giving up control over development funds, schemes, and patronage. This is rarely attractive to those in power.

Second, capacity deficits are real. Many Panchayats, especially in poorer states, lack trained personnel, reliable data, and technical expertise to plan and execute complex development activities. This becomes a self-reinforcing cycle: low capacity is cited as a reason not to devolve more, and without more devolution, capacity never builds.

Third, the legal and procedural scaffolding is often incomplete. State Acts exist, but the rules, orders, and activity mappings needed to operationalise them are missing or outdated. Without these, even well-drafted laws remain dormant.

Fourth, financial fragility means Panchayats cannot invest in their own capacity. Dependent on irregular transfers and tied grants, they have little scope to hire technical staff, invest in technology, or plan for the long term.

Paths forward 🔗

Strengthening the functional domain of PRIs requires more than exhortation. It needs a credible sequence of reforms. States need to complete and notify detailed activity mapping for all 29 subjects, tier by tier. Untied funds need to rise as a share of PRI resources, so that local bodies can actually plan for local priorities. Line department staff working at the Panchayat level should be brought under the functional control of elected Panchayats. Parallel bodies should be folded into PRIs wherever constitutionally feasible. And capacity-building initiatives such as the Rashtriya Gram Swaraj Abhiyan, which has already helped raise the capacity enhancement sub-index substantially, need to be sustained and deepened.

The experience of Kerala, Karnataka, and West Bengal shows that meaningful devolution is politically and administratively possible. The question is whether the rest of the country will follow, and whether the political will exists to close the gap between constitutional promise and rural reality.

What do you think? If you were advising a state that ranks low on devolution, which of the three Fs, functions, finances, or functionaries, would you prioritise first, and why? And do you think the word “may” in Article 243G should be replaced with “shall” to make devolution a constitutional obligation rather than a state option?

References

1. https://en.wikipedia.org/wiki/Panchayati_raj_in_India
2. https://www.pib.gov.in/newsite/PrintRelease.aspx?relid=11575
3. https://accountabilityindia.in/sites/default/files/policy-brief/panchayatbrief2.pdf
4. https://secforuts.mha.gov.in/73rd-amendment-of-panchayati-raj-in-india/
5. https://www.academia.edu/144438312/Panchayat_Devolution_Index_Summary
6. https://banotes.org/state-politics-in-india/powers-responsibilities-rural-local-bodies/
7. https://crmindia.org/wp-content/uploads/2024/07/Devolution-Report.pdf
8. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2102965
9. https://decentralization.net/2025/02/the-status-of-devolution-to-panchayats-in-india/