When the Indian Parliament passed the 73rd and 74th Constitutional Amendments in 1992, it was widely celebrated as a turning point for grassroots democracy. These amendments gave constitutional recognition to Panchayati Raj Institutions (PRIs) in rural areas and Urban Local Bodies (ULBs) in cities, creating what was envisioned as a genuine third tier of governance. More than three decades later, the picture is more complicated. While the framework exists on paper, significant gaps between constitutional intent and ground reality have persisted. Understanding where these amendments fall short is key to understanding why local self-government in India still struggles to deliver on its promise.
Table of Contents
What the amendments set out to do
The 73rd Amendment added Part IX to the Constitution, covering Articles 243 to 243-O, and introduced an Eleventh Schedule listing 29 subjects – from agriculture to social forestry – that could be transferred to Panchayats. It mandated a three-tier Panchayati Raj structure at the village, intermediate, and district levels, required regular elections every five years, and reserved seats for Scheduled Castes, Scheduled Tribes, and women. The 74th Amendment mirrored this for urban areas through Part IX-A, granting constitutional status to Municipalities and listing 18 functions under the Twelfth Schedule that states could devolve to urban local bodies.
Both amendments were rooted in Article 40 of the Directive Principles of State Policy, which directs the state to empower village Panchayats as units of self-government. The goal was clear: push decision-making closer to the people. The problem, however, lies in how far that actually happened.
The core problem: discretion left to the states
One of the most fundamental limitations of both amendments is that they are largely enabling, not mandatory. The Constitution outlines what states may do, not what they must do. Both amendments provide states with significant freedom to adapt the system to their own political, administrative, and geographic conditions – a flexibility that, in practice, many states have used to retain control rather than share it.
This means the depth of devolution has varied enormously across India. States like Kerala and Karnataka have devolved all 29 subjects to Panchayats, while others like Assam and Punjab have fared poorly on devolution indices. According to the Ministry of Panchayati Raj’s own data, less than 20% of states have fully devolved all 29 functions listed in the Eleventh Schedule. This is not a minor compliance gap – it means the constitutional vision has gone unfulfilled in the majority of states for over 30 years.
Functional ambiguity: who does what?
Even where devolution has occurred on paper, a persistent challenge is the lack of clarity around roles and responsibilities. The amendments list subjects that can be transferred but do not define exactly which level of government is responsible for what. This has created overlapping jurisdictions between Panchayats, state line departments, and centrally-sponsored scheme agencies.
State government officials and departments often retain significant control over developmental funds and projects, effectively bypassing elected PRI representatives through the so-called “line department” approach – where subject-specific departments at the state level continue to plan and implement projects without meaningful PRI involvement. The result is a governance arrangement where Panchayats exist formally but function more as implementing agents than autonomous decision-making bodies.
The 74th Amendment has an additional structural weakness here. Unlike the 73rd Amendment, which created three distinct tiers of rural government at the village, intermediate, and district levels, the 74th Amendment does not provide a comparable multi-tiered framework for urban areas. In India’s megacities, governance authority is concentrated in one body – the Municipal Corporation – without the layered accountability structure that exists for rural areas. Ward Committees, which were meant to facilitate citizen participation at the neighborhood level, have largely remained non-functional.
Financial dependence: the Achilles heel
Local self-government requires local financial power. Without it, Panchayats and Municipalities cannot plan independently, hire staff, or implement projects on their own terms. This is where both amendments have failed most visibly.
PRIs rely heavily on central and state grants, with their own tax revenue constituting only around 1% of their total income. This extreme fiscal dependence makes local bodies structurally subordinate to higher levels of government. The situation has worsened over time: untied grants – which allow local bodies to spend according to local priorities – fell from 85% under the Thirteenth Finance Commission to 60% under the Fifteenth Finance Commission. As a result, most PRI spending is tied to centrally-sponsored schemes with rigid guidelines, leaving little room for context-specific decision-making.
The State Finance Commissions (SFCs), constituted under both amendments to recommend fund allocation mechanisms, have also failed to function effectively. Non-implementation of SFC recommendations, centralized GST, and lack of fiscal autonomy continue to restrict Panchayats’ financial control, according to the Ministry of Panchayati Raj’s Panchayat Devolution Index 2024.
Urban local bodies face the same problem. Revenue generated by municipalities often falls far short of their expenditure, making them heavily dependent on state and central grants – and, by extension, on the political goodwill of the governments that disburse those grants.
Bureaucratic control and political interference
The amendments brought elected representatives into local governance, but the administrative machinery around them remained largely unchanged. State governments often exercise excessive control over Panchayati Raj institutions, and bureaucratic interference limits decision-making autonomy at the local level. In many cases, state-appointed officials hold effective authority over funds and scheme implementation, while elected Panchayat representatives are left with little meaningful power.
Political interference compounds this. In West Bengal, Panchayats controlled by opposition parties have often received less funding and faced greater bureaucratic hurdles than those aligned with the ruling government – a pattern that reflects a broader national trend of using local bodies as extensions of state party politics rather than genuine units of self-governance.
For urban bodies, the CAG’s findings are particularly stark. More than 31 years after the 74th Amendment came into force, a CAG report found that compliance remains “weak,” with many states yet to completely devolve key functions like slum rehabilitation, fire services, and urban planning. Of the 18 functions that states were expected to transfer to urban local bodies, only 4 were found to have been devolved with full autonomy.
Capacity deficits and social barriers
Even where powers have been formally devolved, local institutions often lack the capacity to exercise them effectively. Elected representatives frequently lack adequate training in governance, budgeting, and planning, while Panchayat offices often lack basic infrastructure, skilled personnel, and functional systems for financial management.
Social barriers persist alongside administrative ones. Despite the 73rd Amendment’s reservation of seats for women (at least one-third, expanded to 50% in several states), gender bias still exists in Panchayat politics. The phenomenon of “proxy representation” – where male relatives informally exercise the authority of women elected to reserved seats – remains a documented reality in several states. Caste-based exclusions similarly continue to undermine the inclusive governance that the amendments aimed to achieve.
Low participation in Gram Sabhas – the village-level body meant to serve as the primary forum of grassroots accountability – further weakens the system. Low Gram Sabha participation reduces oversight, while local elites often manipulate PRIs for personal gains, sidelining marginalized voices. Without active citizens holding elected representatives accountable, the formal structures introduced by the amendments cannot perform their intended function.
The gap between intent and implementation
The 73rd and 74th Amendments were structurally sound in their vision. The problem is that the constitutional framework was built on the assumption of willing and cooperative state governments. In reality, state governments and the bureaucracy continue to exert control over PRIs, hindering their autonomy – often because devolving power means giving up influence over patronage, funds, and electoral constituencies.
The amendments also left critical questions unanswered – most notably, the precise division of responsibilities between Panchayats, state departments, and central agencies. Without clear activity mapping and enforced accountability, the system has drifted toward a pattern where Panchayats have become heavily reliant on centrally-sponsored schemes, reducing their autonomy and relevance in local decision-making. The shift toward Direct Benefit Transfers, which channel welfare payments directly to beneficiaries, has further eroded the role of Panchayats in beneficiary selection and grievance redressal.
What India needs is a move from political representation to genuine power devolution – transferring not just functions, but also funds, staff, and decision-making authority in a coordinated and enforceable way. Building the capacities of PRIs not merely as implementers of projects but as planners and evaluators is essential to translating constitutional provisions into real governance outcomes.
What do you think? Given that over 30 years have passed since both amendments came into force, should the Constitution be revised to make devolution of the 29 and 18 subjects mandatory rather than discretionary? And how can citizens make Gram Sabhas and Ward Committees more effective as tools of local accountability?
References
- https://panchayat.gov.in/en/document/73rd-constitutional-amendment-act-1992/
- https://mahadma.maharashtra.gov.in/en/74th-constitutional-amendment-and-urban-local-bodies-in-india/
- https://secforuts.mha.gov.in/73rd-amendment-of-panchayati-raj-in-india/
- https://www.rgics.org/governance/panchayati-raj-institutions-thirty-years-after-the-73rd-amendment-of-the-indian-constitution/
- https://pwonlyias.com/mains-answer-writing/pris-in-india-continue-to-function-with-limited-financial-and-administrative-autonomy/
- https://assam.pscnotes.com/dmpq/describe-challenges-in-devolution-of-power-and-finances-to-panchayati-raj-institutions-in-assam/
- https://www.civilsocietyonline.com/column/city-life/urban-governance-is-a-failure/
- https://www.nextias.com/ca/editorial-analysis/17-02-2025/panchayati-raj-movement
- https://www.drishtiias.com/daily-updates/daily-news-analysis/status-of-devolution-to-panchayats-in-states-2024-report
- https://www.ih21.org/aktuality/decentralisation-in-urban-india-beyond-the-73rd-74th-amendments
- https://uppcsmagazine.com/challenges-of-the-panchayati-raj-system-in-india-and-the-impact-of-the-73rd-constitutional-amendment/
- https://theprint.in/india/governance/over-30-yrs-after-74th-amendment-cag-flags-weak-compliance-with-law-empowering-urban-local-bodies/2357067/
- https://hubsociology.com/democratic-decentralisation-and-panchayati-raj/
- https://www.dalvoy.com/en/upsc/mains/previous-years/2020/public-administration-paper-ii/panchayati-raj-state-control-bureaucracy
- https://www.insightsonindia.com/2025/02/17/panchayati-raj-institutions-india/
Leave a Reply