The institutions of Panchayati Raj in the rural areas and Nagarpalikas in the towns and cities represent local self-government and real decentralisation of power. They proudly represent the grass roots of India's democratic governance.
The Janata Government appointed a high level committee on Panchayati Raj Institutions under the chairmanship of Ashok Mehta in 1977 to evaluate the institution and its functioning over the past decade and a half.
The report observed that the Panchayati Raj Institution failed to transfer the fruits of democracy to the weaker sections of society as they were dominated mostly by the socially and economically privileged people of society.
The cause of democratic decentralisation received a boost during the tenure of Rajiv Gandhi. His government brought into the Parliament the Panchayati Raj & Nagarpalika Bills. But, this move was defeated in the Rajya Sabha. The measure was revived by the government under Narsimha Rao and both the houses passed the bill in December 1992. The Act was brought into force by a govt, notification in April 1993 as the Constitution (73rd Amendment Oct.) Act 1992.
The 73rd Amendment marked a watershed in the history of the evolution of Panchayati Raj institutions.
At present, the constitution provides for a three-tier system of Panchayati Raj for all states or Union territories except those having a population of less than 20 lakhs.
The Panchayati Raj system covers the village, the tahsil, taluk and the district. The structural frame of Panchayati Raj is a three-tier organisation consisting of the Gram Panchayat at the base, Panchayat Samiti at the intermediate level and Zila Parishad at the district level. Other than these three tiers, there is the body called the Gram Sabha, and is the general body of all the residents of a village. The people directly elect the members of the 'Panchayats' while the members of Panchayat samities are elected by the Panchayats. The members of Zila Parishad comprise of the presidents of the Panchayat Samities, bodies of MLAs and MPs elected from the district.
By law, a state may authorise a Panchayat to levy, collect and appropriate taxes, duties, tolls, etc. It can also assign to a panchayat various taxes, duties, etc., collected by the state. Grants in aid may be given to the panchayat from the Consolidated Fund of the state. In short, the PR Institutions have four-fold functions. They are; 1. The rights of self government, 2. Rural development, 3. Economic development and 4. Political development