Lecture 24 - 22nd July, 2021

Lecture 24- 22nd July, 2021
Notebook: INDIAN ECONOMY VD

Created: 22-07-2021 11:06 Updated: 22-07-2021 13:16
Author: [email protected]
The concept of Local Self Government in India, What does History tell?
Evidences from Ancient India

The concept of decentralization is found in the Vedic texts of the assemblies.
Communities assemblies. Around 600 BC. the present time north Bihar and Eastern UP
would be covered by Jan Pats which would take care of the local responsibilities.
Around 300 BC, evidences are found of local governance in South India and Patna.
Evidences from the British era

Establishment of first local self government was in 1688 with Municipal Corporation
Act in Madras. Similarly, it was done in Bombay and Calcutta.
Britishers established local institutions of self government. First in urban areas ans
then rapidly those institutions grew in other parts of the country. By 1880, there
would be elected representatives, a local self government was formed, whereby they
would take care of the local needs, revenue collection and assessment,
negotiating them with different kingdoms etc. There was a well designed mechanism
with mayors, cadres etc. In 1882, local self governance resolution was passed by which
it was made mandatory to have a structure of local government not only in urban
areas by also in the rural areas with a well designed system. As a result, the structure
of rural local bodies came with the Bengal Self Government, 1885. Local boards were
set up spread across the country. Royal Commission on Decentralization in 1907, then
two major reforms in 1919. Partly this was done because it was not possible for the
Britishers with ha centralized system, have an effective administration and they were
seeing signs of revolutions there. So that they can get secret information and revenue
easily. The structure of local self governance that was established in the British era
continued even after independence.
Post Independence Developments.
First thing, the Constitution came into existence. So far as local self governance, the
then leaders hardly wanted to change the then existing structure put in place by the
Britishers. When the constitution came into effect in 1950, Directive Principles of State
Policy Part 4, Article 40 has a provision of panchayat. It says that every village will take
steps to form a panchayat as an institution of local self governance. Powers and
authority would be given to them to the extent that is necessary for them to perform
their activities. Keeping this in view, there was a concept of the gram swaraj which was
popularized by Gandhi, it led to the implementation of this part of the constitution,
The debate was how this part would be implemented. The general view was that if we
further empower the local self government, they would become like the
state government and so leaders were not interested to do it. As a solution, in 1952,
the community development programmes was launched with the aim of having a
socio-economic transformation of the village life and creating a democratic system in
the rural areas.
"Under the community development programme, the communities formed from the
villages used to have assistance from the government in terms of technical know-how
supply of essential items and credit. In 1953 a National Extension Scheme was
introduced so as to promote the implementation of scientific knowledge and technical
know-how in areas such as agriculture dairy development, etc."
These were basically promoted through cautious state level development bodies and

had nothing to do with the local panchayats. Later, it was felt that if greater process of
participation of rural panchayats was doe, it would be more effective. The 2nd 5 year
plan recommended that village panchayats be linked with other bodies that were
working in those areas at a higher level. To make these
recommendations operational , the government appointed a committee under,
Balwantrai Mehta Committee in 1957. The recommendations:
Strengthening the administrative decentralization. When we talk about this, it

basically means the building up of capacity at the local level.
All community development projects and district level projects should have
various Samitis' in all CD/NES block
It recommended reservation historically marginalized communities like SC/ST
There should be Zila Parishad which would be at the top of these units that
would monitor and regulate their activities.
As a follow up of these recommendations (read the PDF)
But, because of the centralized nature of the government, although panchayati raj

legislation was set up in many states, they remained less empowered. Frequent
elections were not held. Many activities related to community, agriculture
development was outside the powers of the zila parishads. The funds that were
transferred to the panchayats were at its minimum so they could not carry out their
functions.
K Santhanam Committee, 1963

It was set up to address these challenges. IT came up with the recommendation that
there should be a financial committee set up for the fiscal needs of the panchayats.
First Administrative reforms Commission, 1969.

It had a number of recommendations.
Zila Parishads should be empowered in a better way and they should have the leading
role as the institution of the local self government.
Samitis will have minimal role wherever it is required. After Zila Parishad, it will be the
local panchayats which would have the secondary role. Samitis were basically
intermediaries at block levels, so they were recommended to have a lesser role.
Asoka Mehta Committee, 1977
The FARC recommendations, some of them were implemented by the form of more
local panchayats. But the finances were still a huge problem as they were not
provided funds. The Mehta committee whose recommendations formed the basis of
the constitutional amendment of 1992
The points:
Panchayati raj should emerge as an active institution for local self governance,
an active rural local self government institution. This means that they should be
empowered more in terms of resources and authorities.
Every district would be the first point of decentralization below the State.
Then Mandal Panchayats would exist. Basically a three tier system was
recommended. District level, Mundal level and then the village level.
Panchayat Samiti would continue but only as a arm of the Zila Parishad to
support the Zila Parishad and the Panchayat.
A village level committee which would consist of members from various bodies
and SC/ST. Village bodies are basically the village bodies.
Panchayati Raj institution should be empowered by Constitutional
Amendments. This was very important. When you see the 7th Schedule, the
Union and State and Concurrent list. There is no list of local bodies.
Decentralization after independence was only said to be between
G.V.K Rao Committee in 1985

Minor recommendations. There should be a block development office BDO should
assume broad planning roles. (see PDF
L.M. Singvhi Committee

Recommended the setting up of Gram Sabha which would be the main unit of
decentralization at the village level.
Constitutional Recognition and Empowerment to Local Self government

64th and 65th Constitutional amendment bill was tabled in the parliament in 19??
There was a change in the political equation. From a single party but since 1977, there
was a change in power and then in the 1980s, the Congress party came in power but
with a different approach.
Constitutional (73rd Amendment) Act 1992

This amendment came in affect from 1993. See the PDF. Amendment 73 is for rural
development
Article 243- See the subsections in the PDFs
Following subsection for the direct interest for our course:
"Article 243G - Subject to the provisions of this 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 responsibilities upon
panchayats at the appropriate level, subject to such conditions as may be specified there
in, with respect to:
a. The preparation for plans for economic development and social justice.
b. The implementation of schemes for economic development and social justice as may
be entrusted to them including those in relation to the matters in the eleventh schedule
(11th schedule recommends the transfer of 29 subjects to the panchayats)
Article 243H - Power to impose taxes by, and funds of, the panchayats. The legislature
of a state may, by law,
a. Authorize a panchayat to levy, collect and appropriate such taxes, duties, tolls and
fees in accordance with such procedure and subject to such limits
b. Assign to a panchayat such taxes, duties, tolls and fees levied and collected by the
state government for such purposes and subject to such conditions and limits.
c. Provide for making such grants in aid to the panchayats from the consolidated
funds of the state.
d. Provide for constitution of such funds for crediting all moneys received,
respectively, by or on behalf of the panchayats and also for the withdarwal of such
moneys therefrom, as may be specified in the law.
Article 243I - Constitution of Finance Commission to review financial position
1. The Governor of a state shall, as soon as maybe within one year from the
commencement of the Constitution (73rd Amendment Act 1992) and thereafter
the expiration of every 5th year, constitute a finance commission to review the
financial position of the panchayats and tot make recommendations to the
Governor as to
a. The principles which should govern

i. The distribution between the state and the panchayats of the net proceeds of the
taxes, duties, tolls and fees leviable by the state, which may be divided between them
under this part. And the allocation between the panchayats at all levels of their
respective shares of such proceeds.
ii. The determination of the taxes, duties, tolls and fees which may be assigned to, or
appropriated by the panchayats
iii. The grants in aid to the panchayats from the consolidated funds of the state.
b. The measures needed to improve the financial positions of the panchayats
c. Any other matter referred to the finance commission by the Governor in the interest of
the sound finance of the panchayats
2. The legislature of the state, may, by law, provide for the composition of the
Commission, the qualification which shall be requisite for the appointment of
members thereof, and the manner in which they shall be selected. The
commission shall determine their procedure and shall have such powers in the
performance of their functions as the legislature of the state may, by law, confer
on them.
4. The Governor shall cause every recommendations made the commission under

this article together with a explanatory memorandum as to the actions taken
thereon to be laid before to the legislature of the state "

Lecture 24 - 22nd July, 2021

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Lecture 24- 22nd July, 2021

Notebook: INDIAN ECONOMY VD

Evidences from Ancient India

Evidences from the British era

These were basically promoted through cautious state level development bodies and

Balwantrai Mehta Committee in 1957. The recommendations:

Strengthening the administrative decentralization. When we talk about this, it

As a follow up of these recommendations (read the PDF)

But, because of the centralized nature of the government, although panchayati raj

K Santhanam Committee, 1963

First Administrative reforms Commission, 1969.

G.V.K Rao Committee in 1985

L.M. Singvhi Committee

Constitutional Recognition and Empowerment to Local Self government

Constitutional (73rd Amendment) Act 1992

Following subsection for the direct interest for our course:

Article 243I - Constitution of Finance Commission to review financial position

a. The principles which should govern

4. The Governor shall cause every recommendations made the commission under

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