Panchayati Raj System

Constitutional Recognition of Panchayats (Part IX)

Local Self-Government refers to the management of local affairs by the local people or their representatives. In India, this takes the form of Panchayats in rural areas and Municipalities in urban areas. While mentioned as a Directive Principle (Article 40) in the original Constitution, local self-government received constitutional status much later.

Evolution:

Various committees were set up to recommend the structure and functions of Panchayati Raj, including the Balwant Rai Mehta Committee (1957), Ashok Mehta Committee (1977), G.V.K. Rao Committee (1985), and L.M. Singhvi Committee (1986). The L.M. Singhvi Committee strongly recommended constitutional recognition for Panchayati Raj institutions.

This led to the enactment of the 73rd Constitutional Amendment Act, 1992, which gave constitutional status to Panchayati Raj Institutions.

The Act inserted a new Part IX, titled 'The Panchayats', and added the Eleventh Schedule to the Constitution.

Article 243: Definitions

Article 243 provides definitions for various terms used in Part IX, such as 'District', 'Gram Sabha', 'Panchayat', 'Panchayat area', 'Population', 'Village', etc.

It defines a 'Gram Sabha' as a body consisting of persons registered in the electoral rolls relating to a village comprised within the area of Panchayat at the village level.

Article 243A: Gram Sabha

Article 243A states: "A Gram Sabha may exercise such powers and perform such functions at the village level as the Legislature of a State may, by law, provide."

The Gram Sabha is the foundation of the Panchayati Raj System at the village level. It is the village assembly, consisting of all registered voters in the village. It is envisioned as a body for direct democracy, where citizens can participate directly in local governance, discuss issues, and hold the elected representatives of the Gram Panchayat accountable. The specific powers and functions of the Gram Sabha are determined by state legislation.

The Constitution (73rd Amendment) Act, 1992

The 73rd Amendment Act, 1992, is a landmark legislation that provided constitutional backing to Panchayati Raj Institutions (PRIs) in rural areas.

Salient Features of the Act:

Three-Tier System: Provides for a compulsory three-tier system of Panchayats at the village, intermediate, and district levels in states with a population above 20 lakh (Article 243B).
Gram Sabha: Constitutional recognition for the Gram Sabha as the foundation of the Panchayati Raj system (Article 243A).
Direct Election: Provides for direct election of members to all three tiers of Panchayats (Article 243C).
Indirect Election of Chairpersons: Provides for indirect election of the Chairperson at the intermediate and district levels from among the elected members. The method of election of the Chairperson at the village level is decided by the state legislature (Article 243C).
Reservation of Seats: Provides for reservation of seats for SCs, STs, and women at all three tiers (Article 243D).
Duration: Fixes a uniform five-year term of office for Panchayats at all levels and mandates fresh elections within six months in case of dissolution before the expiry of the term (Article 243E).
State Election Commission: Provides for the constitution of a State Election Commission in each state for the superintendence, direction, and control of the preparation of electoral rolls and the conduct of all elections to the Panchayats (Article 243K).
State Finance Commission: Provides for the constitution of a State Finance Commission in each state every five years to review the financial position of Panchayats and make recommendations regarding the distribution of taxes, duties, tolls, fees, and grants-in-aid from the state to the Panchayats (Article 243I).
Eleventh Schedule: Enlists 29 functional items that are to be devolved to the Panchayats (Article 243G).
Powers and Authority: State Legislatures are empowered to endow Panchayats with such powers and authority as may be necessary to enable them to function as institutions of self-government, including preparation of plans for economic development and social justice and implementation of schemes entrusted to them (Article 243G).

Mandatory and Voluntary Provisions:

The 73rd Amendment Act contains certain mandatory (compulsory) provisions which must be included in state legislation, and certain voluntary (discretionary) provisions which states may choose to implement.

Mandatory Provisions:

Organisation of Gram Sabha.
Establishment of a three-tier system of Panchayats at the village, intermediate, and district levels (for states above 20 lakh population).
Direct elections to all seats in Panchayats at all three tiers.
Indirect election of the chairperson at the intermediate and district levels.
Fixed term of five years for Panchayats.
Reservation of seats for SCs and STs at all three tiers.
Reservation of one-third of seats for women at all three tiers.
Constitution of State Election Commission.
Constitution of State Finance Commission.

Voluntary Provisions:

Providing representation to MPs and MLAs in Panchayats at appropriate levels.
Providing reservation of seats for backward classes in any Panchayat or offices of chairpersons in Panchayats.
Granting financial powers to Panchayats (levying taxes, duties, tolls, fees).
Devolving powers and responsibilities regarding the 29 items in the Eleventh Schedule.
Granting powers to the Gram Sabha.

The mandatory provisions ensure a basic uniform structure across the country, while the voluntary provisions allow states flexibility in adapting the system to local needs and capacity.

Three-Tier System: Village, Intermediate, and District Levels

The 73rd Amendment Act mandates the establishment of a three-tier Panchayati Raj system in states with a population exceeding 20 lakh. States with a population below 20 lakh may not constitute the intermediate level.

Structure:

Village Level: Gram Panchayat. This is the basic level of local self-government in rural areas. The members of the Gram Panchayat (Panchs) are directly elected by the voters of the village. The Chairperson of the Gram Panchayat (Sarpanch) is elected either directly by the Gram Sabha or indirectly by the elected members, as the state law may provide.
Intermediate Level: Panchayat Samiti (also known by various names like Block Panchayat, Taluka Panchayat). This level functions between the village and district levels, usually corresponding to a Block. The members of the Panchayat Samiti are directly elected. The Chairperson is elected indirectly by the elected members.
District Level: Zila Parishad. This is the highest level of the Panchayati Raj system in a district. The members of the Zila Parishad are directly elected. The Chairperson is elected indirectly by the elected members.

Each tier is linked to the others, forming a connected structure for rural local governance.

Reservation of Seats

The 73rd Amendment Act incorporates mandatory provisions for the reservation of seats in Panchayats to ensure representation of historically disadvantaged groups and women.

Provisions (Article 243D):

Scheduled Castes and Scheduled Tribes: Seats are reserved for SCs and STs in every Panchayat at all three levels (Village, Intermediate, and District) in proportion to their population in the respective Panchayat area. The reservation applies to both membership and the office of Chairperson.
Women: Not less than one-third of the total number of seats to be filled by direct election in every Panchayat is reserved for women. This includes the seats reserved for women belonging to SCs and STs. Similarly, not less than one-third of the total number of offices of Chairpersons in the Panchayats at each level is reserved for women.
Backward Classes: State Legislatures may, by law, provide for the reservation of seats and offices of Chairpersons in any Panchayat at any level in favour of backward classes of citizens.

These reservations are rotated among different constituencies within a Panchayat area. The reservation for women (minimum one-third) applies horizontally across all reserved and unreserved seats.

This measure has significantly increased the representation of women, SCs, and STs in local governance, promoting inclusive participation.

Panchayat Funds and Audit

For Panchayats to function effectively as institutions of self-government, they need adequate financial resources and proper accounting mechanisms.

Financial Resources (Article 243H):

State Legislatures may, by law, authorise Panchayats to:

Levy, collect, and appropriate taxes, duties, tolls, and fees.
Assign to Panchayats such taxes, duties, tolls, and fees levied and collected by the State Government.
Provide for making grants-in-aid to the Panchayats from the Consolidated Fund of the State.
Provide for the constitution of such Funds as may be required for crediting all moneys received, respectively, by or on behalf of the Panchayats and also for the withdrawal of such moneys therefrom.

The Eleventh Schedule lists the 29 items that can be devolved to Panchayats, many of which have associated functions and potential revenue sources (e.g., rural housing, drinking water, roads, rural electrification, poverty alleviation programs, public distribution system). The actual devolution of powers and finances for these items is left to the discretion of state legislatures.

State Finance Commission (Article 243I):

As mentioned, the Constitution mandates the constitution of a State Finance Commission every five years by the Governor to review the financial position of Panchayats and make recommendations regarding the distribution of financial resources between the state and Panchayats and among the different tiers of Panchayats.

Audit of Accounts (Article 243J):

The Legislature of a State may, by law, make provisions with respect to the maintenance of accounts by the Panchayats and the auditing of such accounts.

Ensuring proper financial management and audit mechanisms is crucial for accountability and transparency in the working of Panchayats.

Despite the constitutional framework, the financial autonomy and effective functioning of Panchayats heavily depend on the willingness of state governments to devolve adequate funds, functions, and functionaries.

Urban Local Self-Government

Constitutional Recognition of Municipalities (Part IX-A)

Parallel to the Panchayati Raj System for rural areas, the Constitution also provided a framework for Urban Local Self-Government (Municipalities) through a constitutional amendment.

Evolution:

The history of urban local government in India dates back to the establishment of the first municipal corporation in Madras in 1688. Various statutes were enacted over time to govern urban areas. However, these bodies lacked constitutional status and often suffered from financial weakness, arbitrary dissolutions, and limited autonomy.

The 74th Constitutional Amendment Act, 1992, gave constitutional status to Urban Local Bodies.

The Act inserted a new Part IX-A, titled 'The Municipalities', and added the Twelfth Schedule to the Constitution.

Article 243P: Definitions

Article 243P provides definitions for various terms used in Part IX-A, such as 'Committee', 'District', 'Metropolitan area', 'Municipal area', 'Municipality', 'Panchayat', 'Population', 'Ward Committee', etc.

It defines a 'Metropolitan area' as an area having a population of ten lakhs or more, comprised in one or more districts and consisting of two or more Municipalities or Panchayats or other contiguous areas, as specified by the Governor by public notification.

The Constitution (74th Amendment) Act, 1992

The 74th Amendment Act, 1992, is a landmark legislation that provided constitutional backing to Urban Local Bodies (ULBs) or Municipalities.

Salient Features of the Act:

Three Types of Municipalities: Provides for the constitution of three types of Municipalities based on the area and population (Article 243Q).
Composition: Members of a Municipality are generally elected directly from the territorial constituencies known as Wards. State Legislatures can provide for representation of specific persons in Municipalities (e.g., persons with special knowledge or experience, MPs and MLAs) (Article 243R).
Ward Committees: Provides for the constitution of Ward Committees, consisting of one or more Wards, within the territorial area of a Municipality having a population of three lakhs or more (Article 243S).
Reservation of Seats: Provides for mandatory reservation of seats for SCs, STs, and women in Municipalities (Article 243T).
Duration: Fixes a uniform five-year term of office for Municipalities and mandates fresh elections within six months in case of dissolution before the expiry of the term (Article 243U).
State Election Commission: The State Election Commission constituted under Article 243K for Panchayats is also responsible for conducting elections to the Municipalities (Article 243ZA).
State Finance Commission: The State Finance Commission constituted under Article 243I for Panchayats is also required to review the financial position of Municipalities and make recommendations (Article 243Y).
Twelfth Schedule: Enlists 18 functional items that are to be devolved to the Municipalities (Article 243W).
Powers and Authority: State Legislatures are empowered to endow Municipalities with such powers and authority as may be necessary to enable them to function as institutions of self-government, including preparing plans for economic development and social justice and performing functions and implementing schemes relating to the 18 items in the Twelfth Schedule (Article 243W).
District Planning Committee (DPC) and Metropolitan Planning Committee (MPC): Provides for the constitution of these committees for consolidating plans prepared by Panchayats and Municipalities in the district/metropolitan area and preparing a draft development plan for the district/metropolitan area (Articles 243ZD, 243ZE).

Types of Urban Local Bodies (Municipal Corporation, Municipality, Nagar Panchayat)

The 74th Amendment Act mandates the constitution of three types of Municipalities in every state (Article 243Q):

Nagar Panchayat: For an area in transition from a rural area to an urban area.
Municipal Council (Municipality): For a smaller urban area.
Municipal Corporation: For a larger urban area.

The specific criteria for defining these areas (based on population, density, percentage of non-agricultural employment, economic importance, etc.) are left to be specified by the Governor through public notification.

These bodies, based on population size, are responsible for the governance and infrastructure development in urban areas.

Territorial Wards and Mayor-in-Council System

The structure and functioning of Municipalities involve divisions into wards and different models for executive leadership.

Wards:

The area of a Municipality is divided into territorial constituencies known as Wards (Article 243R). Members of the Municipality are directly elected from these Wards.

For Municipalities with a population of three lakhs or more, the Act also provides for the constitution of Ward Committees, consisting of one or more Wards. State Legislatures can make provisions for the composition and territorial area of Ward Committees and the manner in which the seats in a Ward Committee shall be filled.

Mayor-in-Council System:

While the 74th Amendment provides the basic framework, state legislation governs the internal structure and executive arrangements of Municipalities. Different states have adopted different models for the executive head of the Municipality, including:

Mayor-in-Council System: In some Municipal Corporations, a Mayor-in-Council (similar to the cabinet system) is formed. The Mayor is the head, and the Council (consisting of elected councillors) assists and advises the Mayor. Decision-making power rests with the Mayor-in-Council.
Mayor as ceremonial head with Municipal Commissioner as executive head: In many Municipal Corporations, the Mayor is largely a ceremonial head, while the Municipal Commissioner (an IAS officer appointed by the state government) is the chief executive officer responsible for the day-to-day administration.
Directly elected Mayor: In some systems, the Mayor is directly elected by the voters of the entire municipal area and holds executive powers.

The actual system varies based on state laws and the type of urban local body (Municipal Corporation, Council, or Nagar Panchayat).

Reservation of Seats

Similar to Panchayats, the 74th Amendment Act provides for mandatory reservation of seats in Municipalities for SCs, STs, and women.

Provisions (Article 243T):

Scheduled Castes and Scheduled Tribes: Seats are reserved for SCs and STs in every Municipality in proportion to their population in the municipal area. The reservation applies to both the seats filled by direct election and the offices of Chairpersons of Municipalities.
Women: Not less than one-third of the total number of seats to be filled by direct election in every Municipality is reserved for women. This includes the seats reserved for women belonging to SCs and STs. Similarly, not less than one-third of the total number of offices of Chairpersons in the Municipalities are reserved for women.
Backward Classes: State Legislatures may, by law, provide for the reservation of seats and offices of Chairpersons in any Municipality in favour of backward classes of citizens.

These reservations are designed to ensure adequate representation of these groups in urban local governance, promoting social inclusion and participation in decision-making processes at the local level.

Municipal Funds and Audit

Adequate finances and proper financial management are essential for the effective functioning of Municipalities, enabling them to provide urban services and undertake development activities listed in the Twelfth Schedule.

Financial Resources (Article 243X):

State Legislatures may, by law, authorise a Municipality to:

Levy, collect, and appropriate taxes, duties, tolls, and fees in accordance with the procedure laid down in the state law.
Assign to a Municipality such taxes, duties, tolls, and fees levied and collected by the State Government.
Provide for making grants-in-aid to the Municipalities from the Consolidated Fund of the State.
Provide for the constitution of such Funds as may be required for crediting all moneys received, respectively, by or on behalf of the Municipalities and also for the withdrawal of such moneys therefrom.

The Twelfth Schedule lists 18 items, including urban planning, regulation of land use, roads and bridges, water supply, public health, sanitation, solid waste management, fire services, urban forestry, environmental protection, slum improvement, urban poverty alleviation, and provision of urban amenities. Municipalities are expected to perform functions related to these items, which require significant financial resources.

State Finance Commission (Article 243Y):

The State Finance Commission, constituted for Panchayats, also reviews the financial position of Municipalities and makes recommendations regarding revenue sharing, grants-in-aid, and measures to improve their financial status.

Audit of Accounts (Article 243Z):

The Legislature of a State may, by law, make provisions with respect to the maintenance of accounts by the Municipalities and the auditing of such accounts.

Ensuring proper financial management, devolution of sufficient funds from the state government, and transparent audit mechanisms are critical for the success of urban local self-government.

Co-operative Societies

Article 19(1)(c): Right to form Co-operative Societies

Co-operative Societies are voluntary associations of persons who join together with the motive of economic benefit to themselves, through mutual help in accordance with cooperative principles. They play a significant role in various sectors of the Indian economy, particularly in agriculture, dairy, and credit.

Fundamental Right:

The Constitution (97th Amendment) Act, 2011, made the right to form cooperative societies a Fundamental Right.

The Amendment added the word 'co-operative societies' after 'unions and associations' in Article 19(1)(c). As amended, Article 19(1)(c) now guarantees to all citizens the right "to form associations or unions or co-operative societies".

This makes the formation of cooperative societies a constitutionally protected right, similar to forming associations or unions.

Like other rights under Article 19, this right is not absolute and is subject to reasonable restrictions that the State may impose in the interests of the sovereignty and integrity of India, public order, or morality (Article 19(4)).

The Constitution (97th Amendment) Act, 2011

The 97th Constitutional Amendment Act, 2011, gave constitutional status and protection to co-operative societies, aiming to promote their autonomous functioning and democratic control.

Key Changes Introduced by the 97th Amendment Act, 2011:

Fundamental Right: Made the right to form co-operative societies a Fundamental Right (Article 19(1)(c)).
Directive Principle: Added a new Directive Principle under Article 43B, which states that the State shall endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management of co-operative societies.
New Part IX-B: Inserted a new Part IX-B in the Constitution, titled 'The Co-operative Societies' (Articles 243ZH to 243ZT).

Insertion of Part IX-B: The Co-operative Societies

Part IX-B contains various provisions aimed at regulating cooperative societies and ensuring their democratic functioning. These include:

Incorporation of Co-operative Societies: Provisions related to the formation and registration of co-operative societies (Article 243ZI).
Number and Term of Members of Board: Specifies that the maximum number of directors of a co-operative society shall not exceed twenty-one. The term of office of elected members of the board and its office bearers shall be five years (Article 243ZJ).
Reservation of Seats: Mandatory reservation of one seat for women and one seat for the Scheduled Castes or the Scheduled Tribes on the board of every co-operative society containing such members (Article 243ZK).
Co-option of Members: Provides for co-option of expert members and members from the weaker sections (Article 243ZK).
Election of Members of Board: Conduct of elections to the board shall be by an authority or body of a character as may be provided by the State Legislature, to be held before the expiry of the term of the board (Article 243ZL).
Supersession and Suspension of Board and Interim Management: Limits the period of supersession or suspension of the board of a co-operative society to six months (Article 243ZM).
Audit of Accounts: Mandatory audit of accounts (Article 243ZN).
Convening of General Body Meetings: Mandatory holding of annual general body meetings (Article 243ZO).
Right of a Member to Get Information: Ensures transparency by providing access to information for members (Article 243ZP).
Returns: Mandatory filing of returns (Article 243ZQ).
Offences and Penalties: Provisions for penalties for offences (Article 243ZR).
Application to Union Territories: Applies to UTs as well (Article 243ZT).

Note: In Union of India v. Rajendra N. Shah (2021), the Supreme Court struck down a major part of Part IX-B relating to multi-state cooperative societies as unconstitutional for lack of ratification by state legislatures as required by Article 368(2) proviso. However, the provisions relating to cooperative societies within a single state remain valid.

Objectives and Importance:

Constitutional Status: Providing constitutional status to co-operative societies aimed at strengthening them as democratic and autonomous organisations.
Promoting Autonomy: The provisions in Part IX-B are designed to reduce excessive state intervention and promote the autonomous management of cooperatives.
Ensuring Democratic Functioning: Provisions regarding elections, board composition, and general body meetings aim to ensure democratic control by the members.
Professional Management: Encourages professional management.
Economic Development: Strengthens the cooperative movement, which is vital for rural development, poverty reduction, and economic empowerment, particularly for weaker sections.

The 97th Amendment was intended to professionalise and depoliticise the cooperative movement, ensuring its growth as a genuine people's movement based on cooperative principles, although its implementation and impact continue to evolve.