Context:  The article explains the issue of state government control over functioning of panchayats.

• Recently, an up-sarpanch in Telangana’s committed suicide due to indebtedness. He had taken out a loan to undertake development works in the village and was unable to pay after the State government’s inordinate delay in releasing bill payments.

• The failure of the State governments to release funds in time has forced the local government heads to utilise either private resources or borrow large amounts to complete Panchayat activities and meet various targets.

How State governments exercise considerable discretionary authority and influence over panchayats?

• Issue of funding– Gram panchayats remain fiscally dependent on grants from the State and the Centre for everyday activities. Broadly, panchayats have three main sources of funds — their own sources of revenue, grants in aid, and discretionary or scheme-based funds.

• Their own sources of revenue constitute a tiny proportion of overall panchayat funds. In Telangana, less than a quarter of a panchayat’s revenue comes from its own sources of revenue.

• Further, access to discretionary grants for panchayats remains dependent on political and bureaucratic connections.

• Even when higher levels of government allocate funds to local governments, sarpanchs need help in accessing them. An inordinate delay in transferring approved funds to panchayat accounts stalls local development.

• There are also severe constraints on panchayats for using the funds allocated to them. State governments often impose spending limits on various expenditures through panchayat funds. In almost all States, there is a system of double authorisation for spending panchayat funds. Apart from sarpanchs, disbursal of payments requires bureaucratic concurrence.

• Interference of higher authorities– State governments also bind local governments’ through the local bureaucracy. Approval for public works projects often requires technical approval from the engineering department and administrative approval from local officials of the rural development department.

• Higher-level politicians and bureaucrats often intervene in selecting beneficiaries for government programmes and limiting the power of sarpanches further.

• Sarpanchs need to have good relationships with politicians and local bureaucrats if they want access to discretionary resources, timely disbursement of funds.

• The ability of sarpanches to exercise administrative control over local employees is also limited. In many States, the recruitment of local functionaries is conducted at the district or block level. Often the sarpanch does not even have the power to dismiss these local-level employees.

• Dismissal process– Sarpanchs can be dismissed while in office. Gram Panchayat Acts in many States have empowered district-level bureaucrats, mostly district Collectors, to act against sarpanchs for official misconduct.

• Across the country, there are regular instances of bureaucrats deciding to dismiss sarpanchs from office. In Telangana, more than 100 sarpanchs have been dismissed from office in recent years.

Rural local self-governance in India

• Panchayati Raj Institution (PRI) is a system of rural local self-government in India.

• PRI was constitutionalized through the 73rd Constitutional Amendment Act, 1992 to build democracy at the grass roots level and was entrusted with the task of rural development in the country.

• This act has added a new Part-IX to the Constitution of India. This part is entitled as ‘The Panchayats’ and consists of provisions from Articles 243 to 243 O.

• In addition, the act has also added a new Eleventh Schedule to the Constitution. This schedule contains 29 functional items of the Panchayats. It deals with Article 243-G.

• In its present form and structure PRI has completed 30 years of existence. However, a lot remains to be done in order to further decentralization and strengthen democracy at the grass root level.

What is the basis of Local self-governance in India?

• Local self-governance is linked to the idea of subsidiarity and is typically grounded on two broad arguments.

• First, it provides for the efficient provision of public goodssince governments with smaller jurisdictions can provide services as per the preferences of their residents.

• Second, it promotes deeper democracy since governments that are closer to the people allow citizens to engage with public affairs more easily.

• The democratic decentralization through the 73rd and 74th CAA has entrusted the Local self-government with the main task of local governance, while the district administration plays an enabling and coordinating role.

• However, in several cases bureaucratic inertia and lack of empowerment of LSG (local self-government) have hindered the objective of decentralized local governance (enshrined in Art.40 of the DPSP), needing immediate reform in this regard.

• However, India is undergoing a centralising shift in its politics, economy, and culture.

What are the loopholes in the local governance structure?

• Limited autonomy and authority: Despite the constitutional promise of local self-governance, local governments, especially municipalities, operate with limited autonomy and authority.

• Limitations include the discretion given to the States regarding the devolution of powers and levying of local taxes.

• State governments are reluctant to implement the 74th amendment as cities are economic powerhouses and controlling urban land is important for financing State governments and political parties.

• Narrowing the scope of Municipalities: The courts have also mostly interpreted the 74th amendment narrowly, allowing State governmentsto retain their control over cities.

• The 2021 amendment transferred the powers of appointment of Grade C and D employeesof municipalities from the Empowered Standing Committee of the municipality to the State government-controlled Directorate of Municipal Administration.