Three levels of government and decentralisation

Detail

1. Why governments work at more than one level

• Level (tier) of government: a layer of government that serves an area of a certain size, such as a village or city, a state, or the whole country.
• Every government works at least at two levels: local and national.
• India has three tiers: Union (the whole country), state and local (panchayats and municipalities). NCERT Class 6 draws them as a pyramid (Fig. 10.4).
• Rule of thumb: each level handles the matters that suit its size.
• Analogy 1 (a broken bulb): you change the bulb yourself → a bigger fault needs an electrician → a fault in the whole area goes to the Electricity Board.
• Analogy 2 (a flood):
• A small flood → the local authorities deal with it.
• A bigger flood → the state sends rescue teams.

• A major disaster → the Centre sends the army and relief.

• Why India needs three tiers: India is a large and diverse country, with over 1.4 billion people and 28 states and 8 Union Territories (NCERT: over 1.4 billion; 28 states and 8 UTs). One government cannot run all of it from one place.

2. From two tiers to three: the constitutional history

• 1950: the Constitution created only two levels, the Union and the states.
• "Local government" was a State List subject (Seventh Schedule, List II). This meant each state decided whether it would have local bodies and how strong they would be.

• Article 40 is a Directive Principle of State Policy (DPSP). A DPSP is a guideline that governments should follow, but no court can enforce it. Article 40 only asks the state to organise village panchayats and give them the powers they need to work as units of self-government.

• 1992: two amendments made local bodies the third tier written into the Constitution.

Feature	73rd Amendment, 1992	74th Amendment, 1992
Covers	Rural local bodies (panchayats)	Urban local bodies (municipalities)
New Part	Part IX (Arts. 243–243O)	Part IXA (Arts. 243P–243ZG)
In force from	24 April 1993	1 June 1993
New Schedule	Eleventh Schedule: 29 subjects	Twelfth Schedule: 18 subjects
Key powers article	Art. 243G (powers and functions of panchayats)	Art. 243W (powers and functions of municipalities)

• Exam trap: these Schedules list subjects that states may hand to local bodies. The states pass the laws that do it. This is why devolution differs from state to state (see section 6).
• 24 April is celebrated as National Panchayati Raj Day because Part IX came into force on that date.

3. Who does what: division of work across the three tiers

Tier	Typical subjects (NCERT examples)
Union	Defence, foreign affairs, currency. It also shares Concurrent List subjects (subjects on which both the Union and the states can make laws), such as education and marriage
State	Police, land, health, agriculture, education
Local bodies	Drinking water, drainage, streetlamps, parks, local roads

• School-education example (NCERT Class 7, Fig. 6.19): one sector is split across all three levels.
• The Union sets national policy and frameworks.
• States run most schools and decide syllabus and staffing.
• Local bodies look after school buildings and attendance at the ground level.
• Child rights are protected by the NCPCR (National Commission for Protection of Child Rights) at the Union level and by SCPCRs (State Commissions) in the states.

4. Decentralisation and the principle of subsidiarity

• Decentralisation: moving powers, functions and resources from higher governments down to local governments. People can then decide matters about their own area. Local problems are solved locally. Bigger issues, such as defence, stay with higher levels.

• Five benefits (NCERT Class 7, Fig. 6.18): 1. More democratic: more people take part in decisions. 2. Better local knowledge: local people know local needs best. 3. Stronger local governments. 4. Local discussion: problems are debated where they happen. 5. More accountability: it is easier to question a leader who lives nearby.

• Principle of subsidiarity: a task should go to the lowest level of government that can do it well. A higher level takes a task only when the lower level cannot manage it.

• Its roots are in Catholic social teaching, in Pope Pius XI's Quadragesimo Anno (1931).

• It was later written into the EU's Maastricht Treaty (1992).

• The Second ARC's view of subsidiarity:

• Citizens are the final decision-makers and also the users of all services [5].
• A citizen hands to the community only the tasks they cannot do alone. The community hands up to the smallest local government only what it cannot do. It goes on upward like this [5].
• So functions should sit at the smallest unit possible and move upward only when the local unit cannot do the job [5].

5. Forms of decentralisation (weakest to strongest)

Form	Who receives the work	Power to elected local bodies?	Example
Deconcentration	The government's own field offices	No. Officials stay answerable to the higher government	Work shifted to the District Collector or a block office
Delegation	Semi-autonomous agencies (bodies that run on their own but are set up and controlled by the government)	Partly. The agency acts for the government, which keeps final control	A state housing board or development authority
Devolution	Elected local bodies with their own powers and funds	Yes. This is real self-government	Panchayats under Art. 243G, municipalities under Art. 243W

• These three forms appear in all three kinds of decentralisation:
• political: decision-making power;
• administrative: staff and tasks;

• fiscal: money, taxes and grants.

• The 3Fs: the Second Administrative Reforms Commission (2nd ARC) says devolution is real only when local bodies get all three Fs: Funds, Functions and Functionaries (staff).

• The 2nd ARC was set up on 31 August 2005 under Veerappa Moily to plan a full overhaul of public administration [4].

• Its 6th Report (2007) was titled "Local Governance – An Inspiring Journey into the Future" [4][5].

• Key 6th Report recommendations:

• Every subject law with parts best handled locally should provide for devolution to that level, either in the law itself or in rules made under it. All relevant Union and state laws should be reviewed urgently and amended [5].
• Among the staff under local bodies, each function should go to the lowest suitable functionary, so that citizens can reach them easily [5].

6. Two views of the village, and the gaps today

• Gandhi's gram swaraj (village self-rule): the village should be "a complete republic, independent of its neighbours for its own vital wants, and yet interdependent for many others".
• Ambedkar's view (Constituent Assembly, 4 November 1948): the village was "a sink of localism, a den of ignorance, narrow-mindedness and communalism". He wanted the individual, not the village, to be the unit of the Constitution.
• Result: the Assembly settled on a compromise. Panchayats went into Art. 40 as a directive, which no court can enforce. They became a compulsory third tier only in 1992.
• Reality check 1: devolution is uneven.
• The Ministry of Panchayati Raj (MoPR) released "Status of Devolution to Panchayats in States – An Indicative Evidence Based Ranking" on 13 February 2025 [2][3].
• It ranks states on six dimensions: Framework, Functions, Finances, Functionaries, Capacity Enhancement and Accountability [2].
• Top states (score above 55): Karnataka, Kerala, Tamil Nadu, Maharashtra, Uttar Pradesh, Gujarat, Tripura, Rajasthan, West Bengal and Chhattisgarh [2].
• Uttar Pradesh rose from 15th to 5th place. Tripura rose from 13th to 7th [2].

• Overall devolution rose only from 39.9% (2013–14) to 43.9% (2021–22) [2]. Less than half of what could be devolved has actually been devolved.

• Reality check 2: proxy representation ("sarpanch pati" or "pradhan pati"). This means a male relative runs the office in place of an elected woman.

• Art. 243D(3) reserves at least one-third of seats and chairperson posts in panchayats for women [8].
• 20 states have raised this reservation to 50% in their state Panchayati Raj Acts [8].
• About 14.5 lakh (46%) of roughly 31 lakh elected local representatives are women [9].
• MoPR set up an Advisory Committee in September 2023 to study proxy representation. It reported in February 2025, and the Ministry accepted the report [6][7].

• Its recommendations [7]:

  • legal safeguards and penal provisions (punishments) against proxies;
  • women ombudspersons (officials who hear complaints);
  • public oath-taking by elected women;
  • mentoring by women leaders;
  • social audits;
  • capacity-building (training).

• Reality check 3: other gaps.

• Parallel bodies, such as scheme committees and district agencies, do work that should belong to elected local bodies.
• Weak own revenue: local bodies depend on grants from the Union and the states. They raise very little from their own taxes.
• The 3Fs have not reached local bodies together. Most states hand over functions without matching funds and staff.

Prelims Hooks

• Art. 40 (a DPSP) asks the state to organise village panchayats. Before 1992, "local government" was a State List subject.
• 73rd Amendment → Part IX → in force 24 April 1993 → Eleventh Schedule, 29 subjects. 74th Amendment → Part IXA → in force 1 June 1993 → Twelfth Schedule, 18 subjects.
• Art. 243G gives the powers of panchayats. Art. 243W gives the powers of municipalities.
• Art. 243D(3): at least one-third reservation for women in panchayats. 20 states provide 50% [8].
• Deconcentration goes to the government's own field offices. Delegation goes to semi-autonomous agencies. Devolution goes to elected bodies with their own powers and funds. Trap: deconcentration is not devolution.
• Subsidiarity: the lowest competent level does the task. It comes from Quadragesimo Anno (1931) and is in the EU's Maastricht Treaty (1992).
• 2nd ARC: set up 31 August 2005, chaired by Veerappa Moily. Its 6th Report is "Local Governance – An Inspiring Journey into the Future" and stresses the 3Fs: funds, functions, functionaries [4][5].
• MoPR Devolution Index (13 February 2025): six dimensions. Karnataka is ranked 1st, then Kerala and Tamil Nadu [2].
• "Sink of localism, a den of ignorance…": Ambedkar, 4 November 1948. "A complete republic": Gandhi's gram swaraj.

Mains Points

• Constitutional mandate versus real devolution: the 73rd and 74th Amendments made local bodies compulsory. But the transfer of the 29 and 18 subjects depends on state laws. As a result, devolution rose only from 39.9% to 43.9% between 2013–14 and 2021–22 [2].
• Reform: amend subject laws to devolve the 3Fs, as the 2nd ARC 6th Report proposed [5].

• Reform: link Finance Commission grants to devolution scores.

• Subsidiarity as a federal principle: a good federation shares power not only between the Union and the states, but also below the states.

• Argument for local bodies: they have better local knowledge, and leaders who live nearby are easier to hold to account.
• Argument against: local bodies have little capacity, and powerful local groups can take control of them.

• Ambedkar's 1948 warning shows the second risk is real. The answer is safeguards such as reservation, gram sabha oversight and social audit, not keeping power central.

• Descriptive versus real representation of women: about 46% of local representatives are women [9], yet "sarpanch pati" proxies undercut this.

• The Advisory Committee's 2025 steps would give women real power: penal provisions, women ombudspersons and mentoring [7].

• Deconcentration dressed up as decentralisation: parallel bodies and line departments controlled by district officials keep power with the bureaucracy.

• Reform: give elected bodies their own staff and their own revenue. Today they mostly carry out programmes designed by higher governments.