Fifth and Sixth Schedules

UNIT 13 LOCAL SELF-GOVERNMENTS*

Structure
13.0 Objectives
13.1 Introduction
13.2 Historical Background of Rural Self - Government in India
13.3 Panchayati Raj in Post-Independence India (1950s-1992)
13.4 The 73rd Constitutional Amendment Act, 1992
13.4.1 Panchayats (Extension to the Scheduled Areas) Act, 1996
13.5 The Panchayati Raj Institutions in the Post-73rd Amendment Era: The Case
of UP
13.5.1 Gram Panchayat
13.5.2 KshetraPanchayat
13.5.3 ZilaPanchayat (ZilaParishad)
13.5.4 Relationships Between the PRIs and DRDAs
13.5.5 The PRIs: An Assessment
13.6 Urban Local Self-Government
13.6.1 The Post- 74th Constitutional Amendment (1992): Urban Local Self-Government
Bodies
13.7 The Municipal Finance
13.7.1 Tax Revenue
13.7.2 Octroi
13.7.3 Non - Tax Revenue
13.7.4 Grants-in-Aid’
13.7.5 Borrowings and Loans
13.7.6 Goods and Services Tax (GST)
13.8 Let Us Sum Up
13.9 References
13.10Answers to Check Your Progress Exercises

13.0 OBJECTIVES
After reading this unit, you should be able to:
• Trace the evolution of Local Self-Government (LSG) in India;
• Describe the structure and working of the LSG in rural and urban areas of
India;
• Describe the changes in the scope and powers of the LSG; and
• Explain the relationship of the LSG with the central and state governments.

13.1 INTRODUCTION
The political power in India is shared by three vertical units of governance —
the central government, the state government and the local government. The
Dr. Vinayak Narayan Srivastav, Formerly, Fellow Nehru Memorial Museum and Library, New Delhi, and
Dr. Gurupada Saren, Assistant Professor, SOCE, IGNOU, New Delhi. This Unit has adopted from Course
BPSE-212, Unit 18. 129
Federalism and local government includes the Panchayati Raj Institutions (PRIs) in the villages
Decentralization
and the Municipal or Metropolitan Councils in the cities. These are known as
institutions of local self-governance (LSG). The 73rd and 74th Constitutional
Amendments have widened the scope of local self-governance.

13.2 HISTORICAL BACKGROUND OF RURAL

SELF-GOVERNMENT IN INDIA
The PanchayatiRaj, albeit in different forms, had a considerably long history
going back to the ancient period when the rural communities organised institutions
to manage their own affairs. The village autonomy was significant in Mughal
era, and therefore, the impact of the Mughal era on the local communities was
minimal. But the formal structure of the rural self-government was introduced in
1882 according to Ripon’s Resolution. Its main purpose was to provide the
institutional backing of the local Indian elites to the colonial administration.
Contemporary local self-government in India can be deemed as more a
continuation of the system introduced by British rather than in pre-British era.
Several provincial Acts on local bodies were passed, and they provided
aframework for other provincial and central legislations. The local self-
government in the rural areas known as the village panchayat was set up in the
villages according to the recommendations of the Royal Commission of
Decentralisation in 1907. It aimed to decentralise the power and associate the
people with local administration through the institutions of village panchayats.
Panchayats were not to be placed under the control of local boards but the deputy
commissioner. The village panchayat enjoyed certain Judicial and administrative
power. It was also entitled to a portion of land cesses and special grants.
The Rural self-government Bill 1925, provided for a nine-member village
authority elected on the basis of the restricted adult franchise. A successful village
authority was to be given more power. A panchayat could include more than one
village. It could be entrusted with certain functions such as water supply, medical
relief and sanitation. Single member village authority could also be put in place
where no recognised forms of village organisation existed.

13.3 PANCHAYATI RAJ IN POST-INDEPENDENCE

INDIA (1950S-1992)
In the initial years of Independence, the government made attempts to introduce
a device for the development of village society through the Community
Development and National Extensive Services Programmes. These programmes
created a large number of the government functionaries such as Block
Development Officers (BDOs) and Village Level Workers (VLWs). But the results
of the Community Development Programmes were far from satisfactory.
The first initiative to introduce Panchayati Raj Institute in post-IndependenceIndia
was taken in January 1957. At that time, the Planning Commission appointed a
Committee on Plan Projects. The Committee was known as Mehta Committee
which was named after its chairman, Balwant Rai G. Mehta. The Mehta Committee
aimed to:
i) Give a report on the possible linkages between village panchayats and higher
level popular organisations for proper implementation of Community
130 Projects and National Extension service.
ii) To determine in advance the stages of organisation of district administration; Local- Self Governments
it would help the democratic bodies to take over the entire general
administration and development of the districts, or sub-divisions.
The Balwant Rai Mehta Committee conducted a nationwide survey and observed
that the Community Projects and the National Extension Services lacked people’s
participation. They also functioned in an ad hoc manner. To overcome this
limitation, the Balwant Rai Mehta Committee recommended the establishment
of democratic institutions in villages - the village panchayats. The Balwant Rai
Mehta Committee Report had also recommended that the village panchayats
shouldhave been vested with adequate power and financial allocation. However,
the village panchayats were consideredas agents of the state government in
implementing special developmental schemes.The Balwant Rai Mehta Committee
Report emphasised the need to implement the state-devised and state-sponsored
scheme for local development.It suggested that functions of local bodies should
cover the development of agriculture in all aspects - the improvement of cattle
and local industries, public health, welfare work, administration of primary
schools and collection and maintenance of statistics, and act as an agent of state
government in executing special schemes of development entrusted to it. It also
supported the relative autonomy of the state from the excessive control of the
government.

Balwant Rai Mehta Committee recommended measures for “democratic

decentralisation” in order to meet the deficiency of the Community Development
Programmes and Extension Services Programmes. It suggested that the power
for development should be located in the intermediate level- the Panchayat Samiti.
The Mehta Committee report made the VLWs or Gram Sewaks as a link between
the Panchayat Samiti and Village level Panchayat. The Mehta Committee Report
became the basis of the extension of the PRIs all over India. Following the
recommendation of the Mehta Committee Report, the first village panchayat in
India was elected in 1957 in Nagaur district of Rajasthan. However, the PRIs, as
established by Balwant Rai Mehta Committee Report suffered from the
factionalism within its members, feud and corruption in the villages. The elections
to the PRIs were not held for long, and inefficiency of the PRIs had reached its
zenith by the second half of the 1970s.

Thus, according to the Balwant Rai Mehta Committee report, there is a need for
reviewing the functioning of the PRIs established in India. For this purpose, the
Central government led by the Janata in the 1970s appointed Ashok Mehta
Committee. The purpose of this committee to assess the functioning of the PRIs
in India and recommend measures for their improvement. However, The Ashok
Mehta Committee gave more emphasis on the delivery mechanism than
development. It also made few new suggestions such as to allow political parties
to contest elections and enable women to participate in the PRIs. It also
recommended replacement of the three-tier Panchayati Raj system with a two-
tier system, at the district level the Zila Parishad, and below it Mandal Panchayat
which covered a group of villages having a population from 15000 to 20000.
However, the Ashok Mehta Report remained unimplemented in most states
following the fall of the Janata Party government and formation of the Congress
government in 1980. Some states ruled by non- Congress parties such as
Karnataka, West Bengal and Andhra Pradesh initiated the process to activate the
PRIs. Eventually, recommendations of the Ashok Mehta Committee Report were
taken into consideration by the Congress government in the 1990s. The 131
Federalism and recommendations were included in the 73rd and 74thConstitution Amendments
Decentralization
with some modifications. April 24, 1993, is an important day in the history of
Panchayati Raj in India. On this day the Constitution (73rd Amendment) Act,
1992 came into force to provide constitutional status to the Panchayati Raj
institutions. The 74th Constitutional Amendment act has started a new trend in
the process of decentralization and urban governance in India. The 74th
Amendment Act, 1992 came into force on 1 June, 1993. In the next sub-section,
you will know about the features of the 73rd and 74th Constitutional Amendment
Acts.

13.4 THE 73RD CONSTITUTIONAL AMENDMENT

ACT,1992
The 73rd Amendment provides for more democratisation, empowerment of
disadvantaged groups and betterment of the functioning of the Panchayats in the
country. The 74th Amendments provides for similar guidelines regarding
municipalities in the urban areas. These Amendment Acts provided a framework
and guidelines for all states to formulate their policies regarding the devolution
to the Panchayats and the urban bodies. All states were asked to make changes in
the provisions regarding the Panchayats.
The main features of the 73rd Constitutional (Amendment) Act are:
a) A three-tier system of Panchayati Raj at the village, block (intermediate
level) and district levels for all States having a population of over 20 lakhs.
b) To conduct Panchayat elections regularly in every five years and elections
to be held within six months after the dissolution of the Panchayat.
c) Reservation of seats for Scheduled Castes, Scheduled Tribes, OBCs, women
(33%) and general seats:
d) To appoint State Finance Commission to make recommendations regarding
the financial powers of the Panchayats: and
e) To constitute District Planning Committee to prepare a draft development
plan for the district as a whole.

The 73rd Constitutional Amendment Act aimed to devolve powers to the village
panchayats for developing them as an institution of self-governance, economic
development and social justice. For this purpose, it entrusted the panchayats to
implement schemes on 29 subjects.

a) The Eleventh Schedule consists of 29 subjects, relating to agriculture, land

reforms, minor irrigation, rural infrastructure, poverty alleviation, women
and child development, the welfare of the weaker sections and primary,
secondary and non-formal education. These subjects have been listed in
the Eleventh Schedule of the Constitution. According to this Act, the
Panchayats can be authorised by the state legislature to enact lawto i) levy,
collect and appropriate such taxes, duties tolls and fees collected by the
state government: ii) avail of taxes, duties, tolls and fees collected by the
state government; iii) and to get grant-in-aid from the Consolidated funds
of the state.

132
13.4.1 Panchayats (Extension to the Scheduled Areas) Act, 1996 Local- Self Governments

The provisions of the Panchayats (Extension to the Scheduled Areas) Act, 1996
came into force on 24th December 1996. The Act extends Panchayats to the
tribal areas of eight states of India, namely, Andhra Pradesh, Bihar. Gujarat,
Himachal Pradesh, Maharashtra, Madhya Pradesh, Odisha and Rajasthan. It
intends to enable the tribal society to assume control over their own destiny, to
preserve and conserve their traditional rights over natural resources. The state
governments were required to enact their legislations in accordance with the
Provisions of the Act before the expiry of one year, i.e. 23 December 1997.
Check Your Progress Exercise 1
Note: 1) Use the space below for your answers
2) Check your answers with the model answers given at the end of this
unit.
I) Explain the difference between the nature of Panchayati Raj during and
before the British period.
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................

2) Why was Balwant Rai Mehta Committee set up, and what were its
recommendations?
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................

3) Identifythe main features of the73rd Amendment Act regarding the

disadvantaged groups.
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
133
Federalism and
Decentralization 13.5 THE PANCHAYATI RAJ INSTITUTIONS IN
THE POST-73RDAMENDMENT ERA: THE
CASE OF UP
Most of the states, covered by the 73rd Amendment Act, have passed the
conformity Acts and have set up PRIs in the light of the provisions of the Act.
Nirmal Mukherjee and Balveer Arora consider the PRIs as the third layer of
federalism -an extension of the two-layer federalism between the Centre and the
states.Even before the confirmation and implementation of the 73rd Amendment
Act, five state governments had introduced the PRIs, i.e., Western States of
Maharashtra and Gujarat, an eastern state of West Bengal, southern States of
Andhra Pradesh and Karnataka.However, there are slight variations in the
nomenclature of the structures of the PRls at various levels; the 73rd Amendment
provides the common framework for them. This section deals with the structure
of PRIs in UP as one of the examples. The PRls in UP consists of the following
structure.

13.5.1 Gram Panchayat

Gram Panchayat consists of the Gram Sabha and members of the village
panchayats who are directly elected by the electorate and headed by the Pradhans.
The village pradhans are elected indirectly by the members of the village
panchayat.The body which consists of all adults of the village is known as
gramsabha (village council). The law enjoins the gramsabha to hold general
meetings annually. The Gram Sabha can make recommendations and suggestions
to the gram panchayat on various issues, statement of account of the gram
panchayat on various aspects related to the functioning of the panchayats. The
gram panchayat jurisdiction covers all 29 subjects mentioned in the Eleventh
Schedule. The panchayats are supposed to consist of several committees to help
it in performing various duties. Therefore, the gram panchayat has a wide range
of functions, if not powers. Each gram panchayat is expected to function through
four committees, viz. Samata Samiti (welfare of women and children and interests
of SCs/STs and backward classes), Vikas Samiti (rural agriculture industry and
development schemes), Shiksha Samiti (education) and LokHita Samiti (Public
health, public work).

13.5.2 Kshetra Panchayat

Membership of the Kshetra Panchayat,the intermediate tier, comprises all the
elected pradhans of the gram panchayats from within the block, members elected
by direct elections from the territorial constituencies in the panchayat area, apart
from MLAs and MLCs,and representatives of Zila Parishad (ZilaPanchayat).

13.5.3 Zila Panchayat (ZilaParishad)

Like kshetra panchayats,Zila Parishad includes elected members chosen directly
in territorial constituencies, MLAs and MLCs along with the Parmukhs of all
kshetra panchayats in the district.

The primary functions entrusted to the ZilaParishad are to supervise the activities
of gram panchayats and Kshetra Samitees,to classify fairs and festivals, and to
134 classify roads as village roads, district roads, etc..for maintenance. The Zila
Parishads are enjoined to prepare an annual district development plan Local- Self Governments
incorporating those of the Kshetra panchayats which in turn incorporate the ones
prepared by the gram panchayats.

An overwhelming majority of states have direct elections of the office bearers of

gram panchayats and indirect ones to that of Zila panchayats and the intermediary
level. However, there are a few exceptions, for example, Goa has direct election
for all the tiers.

13.5.4 Relationships between the PRls and DRDAs

The nature of relationships between the panchayats and administrative structure
is an important aspect of the PRls. For instance, the UP government set up Bajaj
Committee in 1995 for suggesting measures to strengthen the relationship between
the DRDAs (District Rural Development Authorities) and the Panchayats. The
committee suggested the functional integration of the Zila Panchayat and DRDAs,
as the merger was not feasible. In a significant move to devolve powers, it made
the Zila Parishad Chairman also as the chairperson of the DRDAs and the District
Magistrate as the Deputy Chairman. The District Magistrate has also been
excluded from the structure of the panchayat; instead, the Chief Development
Officer (below the rank of District Magistrate) has become the Chief Executive
Officer of Panchayat. The Bajaj Committee also made recommendations for
functional integration of two cadres of village level functionaries- GPAs (Gram
Panchayat Adhikars) and the VDOs (Village Development Officers), and
representation of the Block Pramukhs in the DRDAs. But these recommendations
have not been yet made effective.

13.5.5 PRIs: An Assessment

The performance of the PRIs needs to be assessed in the context of the
social,economic and political milieu in the village. The PRIs have contributed to
the overall development of the village society to a significant extent. But their
performance has varied in different circumstances. Nevertheless, their most
significant contribution has been in raising the level of political consciousness
of the people.

Following the 73rd Constitutional Amendment Act, a large number of states

have attempted to devolve powers to the local bodies in the 1990s. The states
like Madhya Pradesh, Rajasthan, Andhra Pradesh and Kerala have made special
efforts to involve people in planning, decision-making and implementation of
the state policies. In the era of globalisation, the collaboration among the
NGOs,Panchayats and the DRDAs has played a significant role, the PRIs in
these states have contributed to the development of village communities, in rural
development, education, health, etc. Because of the usage of the internet in the
functioning of village Panchayats in Rajasthan, Andhra Pradesh and Madhya
Pradesh, the PRIs have involved in e-governance also.

The 73rd Constitutional Amendment Act made it mandatory for all states to
introduce reservation for the SCs, STs, OBCs, and women in the PRIs. The
PRIs,however, have been facing serious challenges, i.e., factionalism, casteism,
corruption, which thwarted their democratisation. While before the 73rd
Amendment the dominant communities in most states highjacked the PRIs,in
the following period in most cases the women panchayat members have become
135
Federalism and proxies of the male members of their families. However, it has bolstered the
Decentralization
confidence of women, and in some instances, they are providing effective
leadership in the PRIs.They have also contributed towards meeting the target of
Millennium Development Goals (MDG), i.e., confirmation of the participation
of the local people including weaker sections of the society in various development
activities and become stakeholders of various programmes. The 73rd Constitutional
Amendment has ensured the transparency and social audit during the process of
implementation of various programmes.

13.6 URBAN LOCAL SELF - GOVERNMENT

Until the passage of the 74th Amendment, there have been existing five types of
urban governments -Municipal Corporations, Municipal Councils, Town Area
Committees, Notified Area Committees and Cantonment Boards. Madras was
first to have the Municipal Corporation in 1687; it was followed by Bombay and
Calcutta in 1762. Lord Mayo’s Resolution of 1870 encouraged the introduction
of an elected president in the municipalities. The present form and structure of
the institutions of local governance owe their existence to Lord Ripon’s resolution
on local self-government, adopted on 18 May 1882. There were about 200
municipalities in the British India by 1870.

13.6.1 74th Constitutional Amendment (1992): Urban Local Self-

Government Bodies
The Government of India passed the 74th Constitution on Amendment Act in
1992 to make the institutions of urban governance more representative,
accountable, efficient and transparent. The 74th Constitutional Amendment Act
was enacted on the basis of the recommendation of the Rural-Urban Relationship
Committee. Prior to the passage of the 74th Constitutional Amendment Act, there
were five types of bodies of urban governance. This amendment replaced the
five urban bodies with three - Nagar Panchayats for areas in transition from rural
to urban clusters, Municipal Councils in smaller urban settlements, and Municipal
Corporations in the larger urban area. The decision,as to which type of the urban
body has to be introduced in a city, is taken by the state government. The Municipal
areas with a population more than three lacs will also have the ward committees,
apart from the municipalities. It makes urban governance a two-tier system.

The municipal bodies include - elected representatives from the electoral wards;
members of the Lok Sabha and State Legislative Assemblies covering wholly or
partly the municipal area concerned; the members of the council of states and
the state legislative council who are registered as voters within the municipal
area; chairpersons of the committees of the municipal authorities; any person
who is having special knowledge or experience in municipal administration sans
right to vote in the council.

The seats are also reserved for the municipal bodies for the weaker sections of
the society - OBCs SCs, and women. The percentage of seats reserved for women
is 33. The ward committees which exist for the municipal areas covering more
than three lakh population consist of the members nominated by the ward
councillor or by the corporation as a whole or by the state government or a
combination of these.The tenure of the municipalityis five years;in case if it is
dissolved or superseded, they have right to be heard. The elections should be
136
held within six months of superseding or dissolution of the municipalities. The Local- Self Governments
twelfth schedule of the 74th amendment contains 18 items which are mentioned
below:
1) Urban planning, including town planning
2) Regulation of land-use and construction of buildings
3) Planning for economic and social development
4) Roads and bridges
5) Water supply for domestic, industrial and commercial purposes
6) Public health, sanitation conservancy and solid waste management
7) Fire services
8) Urban forestry, protection of environment, and promotion of ecological
aspects
9) Safeguarding the interests of weaker sections of society, including the
disabled and mentally retarded
10) Slum improvement and upgrading
11) Urban poverty alleviation
12) Provision of urban amenities and facilities such as parks, gardens,
playgrounds
13) Promotion of cultural, educational and aesthetic aspects
14) Burials and burial grounds, cremations, cremation grounds and electric
crematoriums
15) Cattle pounds: prevention of cruelty to animals.
16) Registration of births and deaths
17) Public amenities including street lighting, parking lots, bus stops and public
conveniences
18) Regulation of slaughter houses and tanneries.
The state governments enjoy discretion to decide on the taxes, duties, tolls and
fees which have to be levied by municipal bodies, and the grant-in-aid to be
given to them. A state government is supposed to appoint a finance commission,
in every five years. The state finance commission is supposed to give
recommendations regarding principles of sharing of the state taxes, duties, tolls
and fees between the state government, municipalities and its distribution between
the municipalities. The state finance commission also recommends the principle
of the grant-in-aid to be given from the Consolidated Fund of the state.
The 74th Constitutional Amendment Act has provided for a direct election of the
Mayor from the municipal area for the time period of five years. A motion of no-
confidence cannot be moved against the Mayor within a period of two years
from the date on which he or she enters the office. The Mayor cannot be moved
if the remaining period of a corporation is less than six months. The removal of
the mayor needs a majority of two-thirds of the elected councillors present and
voting if such a majority is more than half of the total number of elected
councillors. In thecase of the Mayor, it needs a majority of more than two third
of the elected councillors,i.e., More than two-thirds of the total number of elected
councillors. 137
Federalism and The Municipal Corporation can deal directly with the state government, whereas,
Decentralization
the Municipalities are answerable to the District Collector and Divisional
Commissioner. The General Body of the Municipal Corporation consists of
councillors, who are elected for a term of three to five years. They are either
directly elected or nominated councilors with some specialised knowledge in
municipal functions.

To execute various functions, the Municipal Corporations constitute two kinds

of committees - Statutory Committees and non-Statutory Committees. The former
include an executive committee, standing committee, planning committee, health
committee and education committee. The latter include transport committee,
women and child welfare committee, etc. The Standing Committee of the
Corporation acts as the steering committee exercising executive, supervisory,
financial and personnel power.The Standing Committee is the most important of
all committees.

The Municipal Council elects a president from among the councillors. The term
of the president may be co-terminus with that of the council. In certain States,the
presidents of the Municipal Councils are elected directly by the citizens. S/he
enjoys considerable authority and power both in the deliberative and executive
organs of the municipality. S/he convenes and presides over the meetings of the
Council, gives her/his rulings on all controversial matters and executes its decision
as its Chief Executive Officer. Her/his power depends on the support of the
majority. Committees can be formed by the Municipal Council. The powers and
functions of the Municipal Council Committees are the same as those of the
Municipal Corporation. Cantonments are predominantly military-occupied areas
along with a sizeable civil population that necessitates the municipalisation of
its administration.

Local urban bodies are responsible for the efficiency of programmes and services,
raising local resources and providing meaningful planning and services at the
local level. The functions, duties and responsibilities of the municipal government
are both obligatory’ and discretionary. Obligatory functions include thesupply
of potable water: construction and maintenance of public streets: lighting and
cleansing of public streets, sewers, etc.: maintaining public hospitals: establishing
and maintaining primary schools: registration of birth and naming streets and
numbering houses. Discretionary functions may include securing or removing
dangerous buildings or places: construction and maintenance of public parks,
gardens, libraries, museums, rest houses, leper homes, orphanages and rescue
homes for women, etc.: planting and maintenance of roadside and other trees;
housing for low income groups: organizing public receptions, public exhibitions,
public entertainment, etc. Compulsory Primary Education is the responsibility
of the local bodies in a large number of states.

13.7 THE MUNICIPAL FINANCE

There is no separate list of taxes for municipal bodies. It comes under the discretion
of respective state governments. Municipal Revenues are basically of the
following types:

138
13.7.1 Tax Revenue Local- Self Governments

Major taxes levied by the urban local government are the following:
i) Tax on property including service charges levy for water supply;
ii) Conservancy, drainage, lighting and garbage disposal;
iii) Tax on Professions:
iv) Tax on vehicles (other than motor vehicles).
The scope of taxation of Municipal Corporations is broader; the Municipal
Corporations are empowered to impose or increase taxes within limits laid down
in the State Acts. Property tax is one example of such tax. Property tax is the
largest single source of revenue for municipal bodies in the states where there is
no provision for octroi. Property tax is levied on buildings and land on the basis
of rental value.

13.7.2 Octroi
Tax on entry of goods into a local area for consumption or sale therein is popularly
known as octroi. Octroi is the most traditional tax and a major source of local
revenue. It accounts for about 60 to 80 percent of total revenue of the urban local
bodies where it is imposed.Octroi has been replaced by one single tax under
Good and Services Tax which has been implemented in India from 1 July 2017.

13.7.3 Non-Tax Revenue

Municipal Acts provide for the issuance of licenses. Every local authority is
empowered to charge and collect fees and for services provided. It can change a
user fee for public utilities, parking, entry fee for the playground, swimming
pools, etc.

13.7.4 Grants-in-Aid
An important element of municipal finance is grants-in-aid. There are two types
of grants: a General-Purpose Grant (GPG) and a Specific PurposeGrant (SPG).
The former augment the revenue of the local bodies for discharging their normal
functions. The latter is used for specific purposes, e.g., the increase of wage bills
due to inflation, education grants, public health, road maintenance, etc. Grants
are ad-hoc and discretionary in nature.

13.7.5 Borrowings and Loans

Municipal bodies can borrow from the state government and other agencies under
Local Authorities Loans Act(1914). They can borrow for development
activitiesand repayment of debt. These borrowings can be for:
i) Construction:
ii) Provision of relief and relief work during scarcity or famine;
iii) Outbreak of any epidemic;
iv) Land acquisition;
v) Repayment of outstanding loans.
139
Federalism and With the addition of eighteen functions in the Twelfth Schedule after the 74th
Decentralization
Amendment, the functional responsibilities of municipalities have increased. They
participate in the preparation of plans for local development and the
implementation of development projects, apart from providing civic amenities.
As their domain of work has increased so has requirement of extra financial
allocation.

13.7.6 Good And Service Tax (GST)

GST is a single indirect tax levied on goods and services for the entire country.
The GST is also levied for a unified common market. It came into effect on 1
July 2017 after thirteen years since it was first discussed in 2003 in the report of
the Kelkar Task Force on indirect taxes. It is a single tax on the supply of goods
and services, right from the manufacturer to the consumer. Through GST the
indirect tax rates and structures are common across the country. It is assumed
that reduction in transaction costs of doing business would eventually lead to
improved competitiveness for the trade and industry. However, on some
commodities, GST has negative impacts as the tax rates have increased.
Check Your Progress Exercise 2
Note: 1) Use the space below for your answers
2) Check your answers with the model answers given at the end of this
unit.
1) What is the composition of a gram panchayat?
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................

2) Identify the urban bodies of local self-governance which existed before and
after the 74th Constitutional Amendment.
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................

3) Identify the types of municipal revenues?

......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
140
 Local- Self Governments
13.8 LET US SUM UP
Local-self governance is considered as a grass root level institution that ensures
the law and justice for the villages and cities. The local government includes the
Panchayati Raj Institutions (PRIs) in the villages and the Municipal and
Metropolitan Councils in the cities. This institute is a safety valve of democracy
at the lower level. After the 73rd and 74th Constitutional Amendments, it has
widened and strengthened the scope and role of local self-government at various
level. At the village level, Panchayati Raj institutions have participation of
villagers. This strengthenes democracy at the village level. However, the PRI
face several challenges such as corruption and interference of dominant social
groups

13.9 REFERENCES
Jha, N. S. and P. C. Mathur (eds) (1999). Decetralisation and Local Politics.
New Delhi, India: Sage Publication.
Lieten. G.K. and Ravi Srivastava (1999).Unequal Partners: Power Relations,
Devolution and Development in Uttar Pradesh. New Delhi, India: Sage
Publications. New Delhi. 1999.
Pinto. Marina (2000).Metropolitan City Governance in India.New Delhi, India:
Sage Publications.

13.10 ANSWER TO CHECK YOUR PROGRESS

EXERCISES
Check Your Progress Exercise 1
1) However, the Panchayati Raj system had existed even before the British
period.The British made it different from the earlier system in the sense
that they had formalised it.
2) To review the functioning of the Community Development Programmes
and National Extension Services Programmes.It recommended setting up
village Panchayati with adequate political and financial powers with the
aim to bring out the overall development of the village society.
3) It introduced reservation for women (33%), OBCs, SCs, and STs and the
general categories to ensure their representation in the PRIs.
Check Your Progress 2
1) A Gram Panchayat consists of the Gram Sabha and elected members of the
village Panchayats, and it is regulated by the village Pradhan. A Gram
Panchayat also has an indirectly elected up- pradhan.
2) There were existing five types of municipal bodies before the introduction
of the 74th Amendment- Municipal Corporations, Municipal Councils, Town
Area Committees, Notified Area Committees and the Cantonment Boards.
The 74th Amendment has reduced them into three- Nagar Panchayats,
Municipal Councils and Municipal Corporations.
3) Tax revenue, Octroi, Non-tax revenue, Grants-in-aid and Borrowings or
loans.
141