Key Measures to Strengthen Panchayati Raj Institutions in India

More than three decades after the 73rd Constitutional Amendment gave Panchayati Raj Institutions (PRIs) a permanent place in our democratic architecture, the promise of true grassroots governance remains only partially fulfilled. Panchayats are expected to plan for economic development, implement welfare schemes, and deliver essential services to over 65 percent of the population living in rural areas. Yet many of them still operate with limited authority, thin finances, and inadequately trained representatives. If the third tier of government is to truly come into its own, a focused set of reforms is urgently needed. Here are the key measures that can transform PRIs from ceremonial bodies into genuine institutions of self-government.

Applying the subsidiarity principle to functional devolution 🔗

At the heart of a strong PRI system lies a simple but powerful idea: whatever can be done at the local level should not be done at a higher level. This is the principle of subsidiarity, and it forms the foundation of effective decentralisation. The 73rd Amendment listed 29 subjects in the Eleventh Schedule that should be transferred to Panchayats, ranging from agriculture and rural housing to health, education, and women’s welfare.

The reality, however, is sobering. According to the Ministry of Panchayati Raj’s 2022 report on devolution, functional devolution has actually declined from 35.34 percent to 29.18 percent, meaning a significant number of Panchayats still do not control essential services. Many states have transferred functions only on paper, retaining real authority with line departments.

The need for clear activity mapping 🔗

The Second Administrative Reforms Commission (ARC) recommended a pragmatic “middle path” based on subsidiarity, where each of the 29 subjects is broken down into specific activities and assigned to the appropriate tier – Gram Panchayat, Panchayat Samiti, or Zila Parishad – based on economies of scale, local capacity, and the nature of the work. This exercise, known as activity mapping, prevents overlap and confusion. Without it, elected representatives end up uncertain about what they can decide, and officials continue to bypass them.

Ensuring adequate financial resources and autonomy 🔗

Functions without funds are meaningless. Yet Panchayats across the country remain financially starved. They raise barely one percent of their revenue locally, and own source revenue (OSR) generated by Gram Panchayats between 2017-18 and 2021-22 totalled only ₹25,595 crore nationally – with over 60 percent of that coming from just five southern states. This means most Panchayats depend heavily on tied grants from above, which severely restricts how they can respond to local priorities.

Untied funds and flexibility 🔗

Of the grants the 15th Finance Commission allocated to rural local bodies, 60 percent are tied to drinking water and sanitation while 40 percent are untied. The Parliamentary Standing Committee on Rural Development and Panchayati Raj, in its July 2025 report, noted that when saturation is already achieved in tied categories, funds remain unreleased because tied grants cannot be reallocated. The Committee recommended creating a mechanism that allows tied grants to be reallocated as untied grants for optimal utilisation – a small but meaningful change that would give Panchayats real flexibility.

Strengthening own source revenue 🔗

Panchayats must also be empowered and encouraged to raise their own revenue through property tax, user fees for water and sanitation, and other local levies. Innovations such as the Ministry of Panchayati Raj’s Samarth Panchayat Portal, piloted in Chhattisgarh and Himachal Pradesh, are showing how technology can streamline collection and record-keeping. The SVAMITVA scheme, which uses drone surveys to create accurate property records in rural inhabited areas, further enables Gram Panchayats to levy property tax on a reliable basis.

Timely constitution of State Finance Commissions 🔗

Article 243-I of the Constitution requires every state to constitute a State Finance Commission (SFC) every five years to review the financial position of Panchayats and recommend how resources should be shared. In practice, this mandate has been widely neglected.

A report by the Standing Committee on Rural Development and Panchayati Raj revealed that out of 26 states, only nine had constituted their 6th SFCs, and of those only two were active. Some states have not even constituted their 4th and 5th SFCs. This delay destroys predictability in fund flow, creating what experts call “unfunded mandates” – responsibilities without the money to discharge them.

From recommendations to implementation 🔗

Even where SFCs submit reports, state governments often shelve their recommendations. Studies of Odisha, for instance, show that successive SFC recommendations have had uneven implementation, leaving Panchayats with shifting financial ground. From 2024-25 onwards, the central government has made the establishment of a functioning SFC a mandatory condition for accessing certain central grants, which is a welcome step. What is further needed is a statutory timeline, a standardised format for SFC reports, and a legal obligation on state governments to publish an Action Taken Report within a fixed period.

Building capacity of elected representatives and officials 🔗

India has roughly three million elected representatives in Panchayats – the largest body of local elected officials anywhere in the world. Many of them are stepping into public office for the first time, with varying levels of literacy. Without structured training, they cannot be expected to draft budgets, scrutinise contracts, prepare village development plans, or hold officials accountable.

Why current training falls short 🔗

Training is conducted through State Institutes of Rural Development (SIRDs), but the quality is uneven. A field assessment found that trainers often explain the 73rd Amendment without first checking whether members know about the Constitution, or teach budgeting without verifying basic arithmetic skills. There is also a shortage of qualified trainers and serious infrastructural gaps at training centres. As a result, many elected members complete their five-year term with limited awareness of the rules, finances, and procedures of their Gram Panchayat – and effective power drifts to the Panchayat Secretary or Block Development Officer.

The RGSA framework 🔗

The Rashtriya Gram Swaraj Abhiyan (RGSA) is the flagship centrally sponsored scheme for capacity building. It funds training of elected representatives and functionaries, supports Gram Panchayat Bhawans, and promotes e-governance initiatives through the Mission Mode Project on e-Panchayats. For this to yield lasting results, training needs to be modular, delivered in the local language, and tailored to the learner’s starting point rather than following a uniform curriculum. Peer learning, exposure visits to best-performing Panchayats, and handholding by trained mentors have shown strong results in states like Kerala and Karnataka.

Administrative autonomy and a dedicated Panchayat cadre 🔗

Even when funds and functions are devolved, Panchayats often lack functionaries – the third “F” in the devolution framework. Most Panchayats rely on state-appointed secretaries and development officers who report to line departments rather than to the elected body. This dilutes accountability and keeps Panchayats dependent on the state bureaucracy.

A dedicated Panchayat cadre, professionally trained and answerable to the elected leadership, would transform day-to-day functioning. Karnataka’s success in decentralised governance through direct fund transfers to Gram Panchayats is a useful reference for other states. Additionally, the Second ARC had recommended setting up a National Institute for Panchayat Leadership and Training to professionalise capacity building at scale.

Awareness, transparency, and citizen participation 🔗

PRIs cannot work in a vacuum. They draw their strength from the Gram Sabha – the assembly of all registered voters in a village. When the Gram Sabha is active, it scrutinises expenditure, reviews beneficiary lists, and forces local officials to respond. When it is dormant, power slips into fewer hands.

Digital tools for transparency 🔗

Digital platforms have opened new possibilities. The eGramSwaraj portal brings decentralised planning, progress reporting, and work-based accounting into the public domain. Tools like Gram Manchitra for geospatial planning and mActionSoft for capturing geo-tagged project photos make it harder to fake completion of works. In Maharashtra, digitisation of Gram Sabha proceedings reduced corruption allegations and helped accelerate public health delivery during the COVID-19 pandemic.

Meaningful participation of women and marginalised groups 🔗

Reservation has brought unprecedented numbers of women into Panchayats – 21 states and 2 Union Territories now provide 50 percent reservation for women in PRIs. But the practice of “sarpanch pati” or “pradhan pati”, where husbands or male relatives effectively run the office in place of elected women, continues to undermine this progress. Strengthening PRIs means investing in leadership training for women representatives, providing childcare support during meetings, and holding accountable those who usurp elected roles.

Coordination across government levels 🔗

Finally, Panchayats do not operate in isolation. Their plans must align with block, district, and state priorities, and with dozens of centrally sponsored schemes. The Second ARC recommended stronger coordination mechanisms to ensure that Gram Panchayat Development Plans (GPDP) are genuinely integrated into higher-level planning rather than being a paperwork exercise for grant eligibility. A concern flagged in earlier Finance Commission studies is that the GPDP requirement, while well-intentioned, has sometimes been used by line ministries to push their own priorities downward, defeating the spirit of bottom-up planning.

Converging schemes like MGNREGA, Jal Jeevan Mission, Swachh Bharat, and the National Rural Health Mission through the Panchayat as the nodal planning unit would reduce duplication, improve targeting, and give citizens a single accountable authority to approach.

What do you think? If you could pick just one reform – functional devolution, timely State Finance Commissions, capacity building, or stronger Gram Sabhas – which would you prioritise first to transform Panchayats into genuine institutions of self-government? And in your own district, where do you see the biggest gap between what Panchayats are supposed to do and what they actually do?

References

1. https://lawfoyer.in/doctrine-of-subsidiarity/
2. https://www.drishtiias.com/daily-updates/daily-news-editorials/strengthening-panchayati-raj-institutions-in-india
3. https://www.insightsonindia.com/wp-content/uploads/2013/07/local-governance-arc.pdf
4. https://prsindia.org/policy/report-summaries/devolution-of-funds-under-panchayati-raj-system
5. https://india.mongabay.com/2023/03/state-finance-commissions-in-poor-shape/
6. https://journals.sagepub.com/doi/10.1177/09722661221087979
7. https://idronline.org/strengthening-panchayats-in-india/
8. https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=1909222
9. https://www.civilsdaily.com/story/panchayati-raj-institutions-issues-and-challenges/
10. https://compass.rauias.com/polity/suggested-reforms-panchayati-raj-institutions/
11. https://fincomindia.nic.in/asset/doc/commission-reports/15th-FC/reports/studies/Devolution%20of%20Union%20FC%20grants%20to%20Panchayats.pdf