What are the reasons that create inefficiency in Panchayats ?

•  Panchayats at all levels are mostly bust at implementing construction oriented schemes, which promotes the contractor - wage labour relationship, which makes the people not to be treated as equals but again in hierarchy.
• There is an overwhelming dependency of Panchayats on government funding i.e more than 95 percent sometimes.
• Most of the states didn't grant the financial powers and the devolution recommended by the 14th Finance Commission.
• There are huge arrears and in some cases accounts have not been audited for more than 10 years.
• The quality of the audit reports is very poor, therefore the utility of such audits is doubtful, the impact it makes on improving systems is at best is marginal perhaps negative.
• There is a widespread complaints about corruption in the way of functioning and auditing process which makes the audit reports more complex to believe. 
• Elected non officials are not held for the discrepancies in the audit report which makes them irresponsible.
• The grading or ranking system of well performing Panchayats is absent which makes the functioning of Panchayats less competitive and it hinders in adopting the best practices.
• There are fundamental social and cultural differences between Indian states and also within the different regions of the state which makes the uniform model to fail in most of the times.
• The members are less aware of the duties and rules of Panchayats which makes the functioning of Panchayats less transparent.

What are the ways to bring efficiency in Panchayats ?

•  Panchayats should be made more active in education, health, SHGs, watershed, nutrition, pastures and forestry programmes which requires people to come together as equals and work through consensus.
• At the village level an important power devolved to Panchayats is the right to levy tax on property, business, markets, fairs and for the service provided, like street lighting or public toilets among other and this must be encouraged.
• The measures should be taken to increase the revenue by themselves and this must be supported by the respective state governments.
• As 14th Finance Commission recommends two type of grants - basic and performance grants and it must be passed down to the respective Panchayats based on the performance.
• Proper auditing mechanism must be chalked out so that all the stakeholders are made responsible in both revenue generation and expenditure.
• The quality of work done by Panchayats should be closely monitored by a team of journalists, civil society members, Panchayats leaders from other districts and all other stakeholders.
• Through a carefully designed methodology, it is quite possible to measure the performance of Panchayats and to what extent they are inclusive and participative thereby ensuring transparency.
• There should be improvement in the social capital as it will reduce the disparities among the different regions in the state and also among the states.
• Panchayats can increase transparency by holding open meetings, sharing the minutes of meetings with the community and publicly naming people who fail to follow the rules or pay their taxes.
• Better social capital will result in a higher level of participation of the community in the schooling process and it also acts as a watch dog by way of exerting pressures on the community.