Finance Roll

1. Introduction:
Late Rajiv Gandhi came to the helm of affairs in the country he repeatedly stressed the importance of Panchayati Raj. He formed his views on the subject by under-taking whirlwind tours of rural India to familiarize himself with the realities of rural life, by holding frequent workshops of district magistrates all over the country, and thus assessing their views and understanding their difficulties. As a result of this interaction with the people and the administrators, his views on Panchayati Raj gradually evolved, his thoughts ware clarified and he could form his own plan of Panchayati Raj and place it before the parliament with perfect self-confidence and case. He also sought to give it constitutional sanction by proposing to add a fresh chapter to the Indian constitution in the form of the 64th amendment, through the Bill which he moved in the parliament on the 15th of May, 1989. As a result of his clarity of thought and powerful advocacy, the bill was passed with near unanimity, with only five M.P.'s voting against it. Late Rajiv Gandhi forcefully and clearly unfolded the concept of Panchayati Raj, the urgent need of constitutional sanction for it, and the salient features of his scheme for making it a reality. He told the members of the parliament that, "Democracy was the greatest gift of our freedom struggle to the people of India. Independence made the nation free. Democracy made our people free. A free people are a people who are governed by their will and ruled with their consent. A free people are a people who participate in decisions affecting their lives and their destinies". "Gandhiji believed that democratic freedoms have to be founded in institutions of self-government in every village of India. He drew his inspiration and his vision from the Panchayats, the traditional 'village republics' of India. Panditji established the institution of Panchayati Raj as the primary instrument for bringing development to the doorstep of rural India. Indiraji stressed the need for the people's participation in the processes of economic and social transformation.

In this era of globalization and rapid economic growth, it is even more essential to ensure that the voices of the Panchayats are heard, that Panchayati Raj leaders and workers have a say in shaping and influencing development policies. So that grassroots needs and aspirations are represented, and the benefits of our economic growth flow. The Panchayat system has been integral part of the Indian village system through ages. A village is self contained microcosm, a composite peasant society representing different communities and cultural hues. It does not have irritant elements but represent an integrated culture, free to a greater extent from the penetrations of urban cultural patterns into the village life.

2. Local self government:
In the context of a large, diverse nation like India where the public faces a myriad of problems large and small, a functioning system of local self-governance becomes even more critical. To speed up the development process and make it most effective, people at the grassroots level must have as much authority to tackle the issue facing them as possible. Their powers should not be limited only to casting a vote once in five years. They should be actively involved in day-to-day governance issues and should have a say in the matters that concern them. They should not have to run for every small task to their local bureaucrats and politicians. The efforts to eliminate poverty must synthesize the top down policies of the central and state governments with bottom up knowledge, problem solving abilities and the needs of the grassroots citizens.

Idea of Gram Sabha in Panchyats Raj system was created with the hope that it would provide a platform to the local people to collectively plan and implement programs for their own development. However, they are yet to become effective institutions of local self-governance. The local institutions, though exists formally now, have far too little power particularly over funds and local officials to accomplish the will of their constituents. In case of Municipalities, it is even worse because at the least Gram Sabha in Panchayat Raj provides a platform to the villagers to collectively deliberate and decide but no such platform in Municipalities, where people can collectively express their will and concerns.

3. Panchayati raj:
The panchayat raj is a South Asian political system mainly in India, Pakistan, and Nepal. The word "panchayat" is a traditional one and are an ancient form of local government based on the idea that when five (panch) respected elders chosen and accepted by the village community, God will be present. It literally means assembly of five people. Traditionally, these assemblies settled disputes between individuals and villages. The five elders in a village who mediated conflict and spoke on behalf of all the residents of a village in pre-modern times. In these traditional bodies, the lower castes and women had no representation. The question did not arise. Modern Indian government has decentralized several administrative functions to the village level, empowering elected gram panchayats. Panchayati Raj is a system of governance in which gram panchayats are the basic units of administration. It has 3 levels: village, block and district.

4. The Panchayat Raj system has a three-tier structure as:

1. The Village Panchayats
2. The Panchayat Samitis and
3. The Zilla Parishad

4.1. The Village Panchayat or Gram Panchayat:
The village panchayat or the gram Panchayat functions at the Village level. It is called a Panchayat at the village level. It is a local body working for the good of the village. The number of members usually ranges from 7 to 31; occasionally, groups are larger, but they never have fewer than 7 members.

4.2. Panchayat Samiti/ Intermediate level panchayat:
Panchayat samiti is a local government body at the tehsil or Taluka level in India. It works for the villages of the Tehsil or Taluka that together are called a Development Block. The Panchayat Samiti is the link between the Gram Panchayat and the district administration. There are a number of variations of this institution in various states. It is known as Mandal Praja Parishad in Andhra Pradesh, Taluka panchayat in Gujarat, Mandal Panchayat in Karnataka, etc. In general it's a kind of Panchayati raj at higher level.

4.2.1. Constitution:
It is composed of ex-officio members all sarpanchas of the panchayat samiti area, the MPs and MLAs of the area and the SDO of the subdivision, co-opted members representatives of SC/ST and women, associate members a farmer of the area, a representative of the cooperative societies and one of the marketing services and some elected members. The samiti is elected for 5 years and is headed by the chairman and the deputy chairman.

4.2.2. Departments:
The common departments in the Samiti are as follows:

- General administration
- Finance
- Public works
- Agriculture
- Health
- Education
- Social welfare
- Information Technology and others.

There is an officer for every department. A government appointed block development officer is the executive officer to the samiti and the chief of its administration the department in the samiti.

4.2.3. Functions:
- Implement schemes for the development of agriculture.
- Establishment of primary health centers and primary schools.
- Supply of drinking water, drainage, construction and repair of roads.
- Development of cottage and small-scale industries and opening of cooperative societies.
- Establishment of youth organizations.

4.2.4. Sources of income:
The main source of income in the panchayat samitis are grants-in-aid and loans from the State Government.

4.3. Zilla Parishad/ District level panchayat:
In the district level of the panchayati raj system you have the "Zillah parishad". It looks after the administration of the rural area of the district and its office is located at the district headquarters. It is headed by the "District Collector" or the "District Magistrate" or the "Deputy Commissioner". It is the link between the state government and the panchayat samiti.

4.3.1. Constitution:
Members of the Zilla Parishad are elected from the district on the basis of adult franchise for a term of five years. Zilla Parishad has minimum of 50 and maximum of 75 members. There are seats reserved for Scheduled Castes, Scheduled Tribes, backward classes and women. The Chairmen of all the Panchayat Samitis form the members of Zilla Parishad. The Parishad is headed by a President and a Vice-President.

4.3.2. Functions:

1. Provide essential services and facilities to the rural population and the planning and execution of the development programmes for the district.
2. Supply improved seeds to farmers. Inform them of new techniques of training. Undertake construction of small-scale irrigation projects and percolation tanks. Maintain pastures and grazing lands.
3. Set up and run schools in villages. Execute programmes for adult literacy. Run libraries.
4. Start Primary Health Centers and hospitals in villages. Start mobile hospitals for hamlets, vaccination drives against epidemics and family welfare campaigns.
5. Construct bridges and roads.
6. Execute plans for the development of the scheduled castes and tribes. Run ashramshalas for adivasi children. Set up free hostels for scheduled caste students.
7. Encourage entrepreneurs to start small-scale industries like cottage industries, handicraft, agriculture produce processing mills, dairy farms, etc. implement rural employment schemes.
8. They construct roads, schools, public properties and they take care of the public properties.
9. They even supply work for the poor people like tribes, scheduled caste, and lower caste.

4.3.3. Sources of Income:

1. Taxes on water, pilgrimage, markets, etc.
2. Fixed grant from the State Government in proportion with the land revenue and money for works and schemes assigned to the Parishad.

5. Gram swaraj (village self-government):
Gram swaraj was a goal of India's Freedom Movement, although it was not enshrined in India's 1951 constitution. Mahatma Gandhi advocated Panchayati Raj, a decentralized form of Government where each village is responsible for its own affairs, as the foundation of India's political system. His term for such a vision was "Gram Swaraj" Village Self-governance. The village Republic will be managed by a panchayat which will be living political force and entity.

6. Objectives-panchayats raj institutions-gram sabha:
The 73th Amendment envisages the Gram Sabha as the foundation of the Panchayats Raj System to perform functions and powers entrusted to it by the State Legislatures. The amendment provides for a three tier Panchayats Raj System at the village, intermediate and district levels. Articles 243A provides that the Gram Sabha may exercise such power perform such functions at the village level as the Legislature of a state may be law provide. "Gram Sabha" means a body consisting of persons registered in the electoral rolls comprised within the area of Panchayats at the village level. In the Panchayats Raj System Gram Sabha is the only permanent unit. Duration of Panchayats i.e. Mukhiyas and other members of Panchayats continue for 5 years only from the date appointed for the first meeting but the villagers do not change. Articles 243H empowers State Legislature to make by law provision for imposing taxes etc. by the panchayats. Drafting and implementation of development plans for the uplift of the villages would be vetted and monitored by the Gram Sabha. Panchayats Institutions are the vehicles of political empowerment of people at the grass root level for shaping their own destiny.

7. Constitutional Scheme:

7.1. Three-tier structure:
"India is poor because the villages of India are poor. India will be rich if the villages of India are rich. Panchayats should be given greater power; for we want the villagers to have a greater measure of real swaraj in their own villages." According to Mahatma Gandhi, "Indian Independence must be at the bottom and every village ought to be a Republic with Panchayat having powers."

7.2. Directive Principles:
The Constitution provided, in Part 4, The Directive Principles of State Policy, Article 40 for the setting up of village panchayats.

7.3. Gram sabha: Art. 234 A
To ensure that the panchayats stay accountable to all the people of their constituency, they are required to hold village assemblies means gram sabha with a quorum of citizens several times each year. In the Panchayati Raj set up, the Gram Sabha, the general assembly of villagers has a key role for effective functioning of Panchyats. In the Gram Sabha meeting, the rural poor, the women and the marginalised people would now get an opportunity to join in decision making on matters affecting their lives. Active functioning of the Gram Sabha would ensure a participatory democracy with transparency, accountability and achievement.

• Gram Sabha should meet a least in each quarter preferably on Republic Day, Labour Day, Independence Day and Gandhi Jayanti.
• Decide developmental work to be undertaken by Panchayats based on needs assessment.
• Suggest remedial measures for economy and efficiency in the functioning of the Panchayats.
• Discuss the Annual Financial Statement of Gram Panchayats.

7.3.1. Under the Act, Gram Sabha has been vested with powers for:

• Ownership of Minor Forest Produce
• Development plans approval
• Selection of beneficiaries under various programmes
• Consultation on land acquisition
• Manage minor water bodies
• Control mineral leases
• Regulate/Prohibit sale of intoxicants
• Prevent alienation of land and restore unlawfully alienated land of STs
• Manage village markets
• Control money lending to STs
• Control institutions and functionaries in all social sectors.
• Training and awareness generation programme

7.4. Constitution of Panchayats, Art.243 B:
There shall be constituted in every State, Panchayats at the village, intermediate and district levels in accordance with the provisions of this part. Panchayats at the intermediate level may not be constituted in a state having a population not exceeding twenty lakhs.

7.5. Reserved seats: Art. 243D
The 73rd amendment reserves seats for the most powerless members of society. One-third of all seats including one-third of all panchayats presidencies are reserved for women.

7.5.1. Reservations for Women:
73rd Amendment of the Constitution in the year 1992 reserved 33% seats for women in Panchayats. This provision is a major move towards strengthening the position of rural women. The introduction of women in sizable numbers into the new Panchayats could bring significant changes in the functioning of these grass-root level institutions. Involvement of women in the Panchayati Raj Institutions is expected to bring qualitative change in the matters relating to health nutrition, children welfare, family care, drinking water etc. The 73rd Amendment to the Constitution of India is a milestone in the history of women empowerment in India.

7.5.2. Reservations for SC/ST:
There is a mandatory provision for reservation of seats for SC/ST in every tier of Panchayati Raj System. The reservation for SC/ST is another significant aspect for development of disadvantaged groups in the rural areas.

• The State Legislature shall provide for the reservation of offices of the chairpersons in the Panchayats at the village or any other level for the SCs and the STs.
• The Act provides for the reservation of not less than one-third of the total number of seats for women including the number of seats reserved for women belonging to the SCs and the STs.

7.6. Disqualification for membership: ART.243F
1. A person shall be disqualified for being chosen as, and for being, a member of panchayats,
a. If he is so qualified by or under any law for the time being in force for the purposes of elections to the Legislature of the state concerned: Provided that no person shall be disqualified on the ground that he is less than twenty- five years of age, if he has attained the age of twenty- one years.
b. If he is so disqualified by or by under any law made by legislature of the state.

2. If any question arises as to whether a member of panchayats has become subject to any of the disqualifications mentioned in clause (1), the question shall be referred for the decision of such authority and in such manner as the state.

7.7. Powers, authority and responsibilities of Panchayats: Art.243G
According to the Constitution, Panchayats shall be given powers and authority to function as institutions of self-government. The following powers and responsibilities are to be delegated to Panchayats at the appropriate level:

a. Preparation of Plan for economic development and social justice.
b. Implementation of schemes for economic development and social justice in relation to 29 subjects given in Eleventh Schedule of the Constitution.
c. To levy, collect and appropriate taxes, duties, tolls and fees.

7.8. Constitution of Finance Commission: Art. 243-I.
Finance Commission has to be constituted in every state to review the financial position of the Panchayats and to make recommendation to the Governor regarding the allocation of fund to be Panchayats.

7.9. Constitutionalization of Municipalities:

• It emerged as the 74th Constitutional Amendment Act of 1992 and came into force on 1 st June 1993
• This Act contains Part-IX A of the Constitution of India.
• It is entitled as 'The Municipalities' and consists provisions of Article 243-P to 243-ZG.
• The Act also added the Twelth Schedule to the Constitution.
• It contains 18 functional items of the Municipalities and deals with Art 243.
• The Act gave Constitutional status to the Municipalities.
• It brought them under the purview of justifiable part of the Constitution.
• The Act provided for the constitution of the following three types of Municipalities in every State;
i. A Nagar Panchayat for a transitional area.
ii. A Municipal Council for a smaller urban area.
iii. A Municipal Corporation for a larger urban area.

- The following types of urban local bodies are created in India for the administration of urban areas: Municipal Corporation, Municipality, Notified Area Committee, Town Area Committee, Cantonment Board, Township, Port Trust, Special Purpose Agency.

8. The Panchayati Raj Elections:
Seats for the SCs and the STs should be reserved on the basis of their population.

8.1. Election of the Members and Chairpersons:
• All members of the Panchayats at the Village, the Intermediate and the District levels shall be elected directly by the people.
• The chairperson of the Panchayats at the Intermediate and District levels shall be elected indirectly by and from amongst the elected members.
• The chairperson of a Panchayats at the Village level shall be elected in such a manner as the State Legislature determines.

8.2. State Election Commission:
Powers of the state legislatures to make provisions with respect to elections to Panchayats under superintendence, direction and control of the Chief electoral officer of the state,
• The superintendence, direction and control of the preparation of electoral rolls and the conduct of all elections to the Panchayats shall be vested in the State Election Commission.
• It consists of a State Election Commissioner who is to be appointed by the Governor.
• His conditions of service and tenure of office shall be determined by the Governor.
• He shall not be removed from the office except in the manner and on the grounds prescribed for the removal of a Judge of the State High Court.
• His conditions of service shall not be varied to his disadvantage after his appointment.

8.3. Inclusion and Local Elected Governments:
The Panchayat Raj System in India policy interventions to improve inclusion and spread benefits more equitably among village populations. As decentralization is a relatively new process where theory and practice are both still evolving, moving ahead without recurrent analysis risks discrediting the process.

9. Finances:

9.1. The panchayats receive funds from three sources:
i. local body grants, as recommended by the Central Finance Commission,
ii. funds for implementation of centrally-sponsored schemes, and
iii. Funds released by the state governments on the recommendations of the State Finance Commissions.

9.2. State Finance Commission:
• The Governor of a State shall, after every five years, constitute a Finance Commission to review the financial position of the Panchayats.
• The Principles which should govern the distribution between the States and the
Panchayats of the net proceeds of taxes, duties, tolls and fees levied by the State.
• The Principles which should govern the determination of taxes, duties, tolls and fees which may be assigned to the Panchayats.
• The Principles which should govern the grants-in-aid to the Panchayats from the Consolidated Fund of State.
• The measures needed to improve the financial position of the Panchayats.
• Any other matter returned to the Finance Commission by the Governor in the interest of sound finance of the Panchayats.
• The State Legislature may provide for the composition of the commission, the required qualifications of its members and the manner of their selection.
• The Governor shall place the recommendations of the commission along with the action taken report before the State Legislature.
• The Central Finance Commissioner shall also suggest the measures needed to augment the Consolidated. Fund of State to supplement the resources of the Panchayats in the States on the basis of the recommendations made by the Finance Commission of the State.
• These areas include the Scheduled Areas and the Tribal Areas referred to in Article 244 of the Constitution, the hilly areas of Manipur for which a District council exists and Darjeeling District of West Bengal for which Darjeeling Gorkha Hill Council exists.

10. Participation in village level government:
Even though nearly all villagers participate in voting, far fewer between 20 and 40 percent are involved with the other activities that are associated with influencing decision making in PRIs.

11. Accountability:
The value of benefit and accountability are two key factors influencing people's use of PRI system. The State acts and the rules of the gram panchayat provide for certain mechanisms through which elected representatives can be held accountable for their actions. In Madhya Pradesh and Rajasthan there are three common mechanisms by which villagers can hold their gram panchayat representatives accountable: (i) the gram sabha; (ii) the right of recall; and (iii) recourse to higher authority. In Rajasthan there is also the additional mechanism of the vigilance committee at the level of the gram panchayat. The gram sabha is intended to be the main platform for widespread transparency and accountability. Its central function is to take stock of past developments, review expenditures, and to decide which new activities are possible within the sanctioned budget. The purpose of the gram sabha is to provide villagers with the opportunity to obtain clarification from their representatives on all aspects and activities of the gram panchayat. But gram sabha, with only an average of seven percent of members attending, is not yet an effective mechanism of governance. Madhya Pradesh became the first state in the country to empower the people of a gram panchayat to recall an elected representative. The right of recall can only be exercised once a panchayat member has completed half of his or her term and requires that 50 percent of the total electorate support the vote for the representative's removal. In addition to the gram sabha and the right of recall at the gram panchayat level there is also scope for recourse to higher authority. In both states, the District Magistrate has the authority to remove or suspend an elected representative assessed to be disqualified for the post. In Rajasthan, the vigilance committee is an additional mechanism of accountability. The purpose of the committee is to monitor and oversee the work of the gram panchayat, and its membership is comprised of nonelected representatives.

12. Political participation:
However, over the short span of five years since reservations have been implemented no directly visible impact has resulted either in terms of participation rates or distribution of benefits. Gender is a key factor in determining who's included in gram panchayat activities. Women participate significantly less than men, and the social factors which limit women's involvement in public affairs, are also reflected in the generally low levels of education and information that prevail among women. At the same time, however, education and information also suggest ways of reducing the gap between men and women that arise from social and traditional norms. Women who are educated and well informed are often able to bridge social differences associated with gender.

13. Recommendations:
Gram panchayats as instruments of democracy, development and service provision i.e. what gram panchayats do, and Increasing inclusion of women, tribal and the landless in gram panchayat activities i.e. who is involved. Gram panchayats as instruments of democracy, development and service provision the majority of rural people do not regard panchayats as particularly relevant to their lives. The reasons behind this low valuation suggest a need to examine current expectations of the roles that gram panchayats can play in the short and longer terms. Insofar as people participate in activities associated with electing representatives, the gram panchayat does work as a democratic entity. However, the tendency to regard elections as an opportunity to consolidate often inequitable social and economic relations implies that panchayats are not currently local bodies which can be used in the short If people are to begin to perceive these entities as instruments of change, actions that combine increased accountability to constituents with improved opportunities for gram panchayats to achieve results, need to be taken.

• Improving constituents' knowledge of accountability mechanisms through better distribution of information about panchayats purposes, responsibilities and control;
• Using district administrators to enforce the use of gram sabhas and establish of vigilance committees;
• Monitoring for a limited period the functioning of gram sabhas, vigilance committees, right to recall and use of recourse to higher authority.

13.1.1. Monitoring instruments could include:
a study of effective accountability mechanisms in local organizations is required to further understanding of how to improve the performance of local units of governance. The study would need to cover both local level organizations used for a variety of activities in India, and other country experiences with decentralized governance.

13.1.2. Improving results:
Achievement of good results is primarily dependent on the quality and quantity of resources financial, human and organizational available to the gram panchayat. Efforts are being made to increase the level of financial resources available to panchayats, particularly through decentralization of line department budgets and channelling central government funds directly to PRIs.

14. States governments conducted their own experiments with local self-government
This is the result of the shift in power from the traditional upper castes to the OBCs How this impacted on the SCs and STs that Ambedkar was concerned about is another question. Caste and class are not overlapping categories. Grabbing political power from the Brahmin and other upper castes does not mean that SC/STs will automatically be empowered and the same applies to women as well. An interesting point missed out in all debates on reservations is that there are women in all castes, class and religions.

14.1. West Bengal
West Bengal has gone through several cycles of elections since 1978, when this system was introduced. A major reason for success here was the commitment of the Left Front government to these bodies. It has been argued that their strength comes from the fact that the cadres of these parties have now entrenched themselves in the PRI institutions.

14.2. Andhra Pradesh
Andhra Pradesh is another state that took to PRIs in the 1980s, when N.T. Rama Rao was the Chief Minister. Here also the system started with hope. 9% of the seats were reserved for women but not the chairman positions.

14.3. Madhya Pradesh
Madhya Pradesh Chief Minister realised its potential and decided to gamble his political career on it. He had two advantages. None of the major parties in MP were looking at decentralised governance their attention was fixed firmly on urban areas and large contracts. Madhya Pradesh has made use of the panchayat system in an innovative way to meet social sector demands. Several of the Rajiv Gandhi Missions all implemented through the PRIs have done well, on an independent reckoning. Today it has the most progressive PRI system in the country.

14.4. Karnataka
Karnataka has been something of an exception when it comes to decentralisation and panchayati raj. For various extraneous reasons, the state legislature passed a law in 1983 setting up a system of panchayati raj. That system was a two tier one of the zilla parishad at the district level and the mandal panchayat for a cluster of villages at the local level.