Rural Transformation Through Decentralization

Why in the News?

Union Budget allocations for Rural Development rose over 211% reaching 2.73 lakh crore (from 2016-17 to 2026-27) towards strengthening rural infrastructure, livelihoods and institutional capacity. 

About Decentralization

• Meaning: Delegation or dispersal of administrative authority among a number of individuals or units. 
• Constitutional provisions:
  • 73^rd and 74^th Amendment Acts 1992: Constitutionalized Panchayats and Municipalities with addition of Part IX (Panchayats) and Part IXA (Municipalities). 
  • Article 40: States to take steps to organise village panchayats and endow them with necessary powers and authority. 
  • Article 243G: Empowers State Legislature towards devolution of power and responsibilities upon Panchayat. 
  • Seventh Schedule: Panchayat listed as a State subject. 
• Committees related to Decentralization 
  • Balwant Rai Mehta Committee (1957): Suggested three tier system of rural local government involving Zila Parishad (district level), Panchayat Samiti (Block/tehsil/taluka); Gram Panchayat (village). 
    • First Panchayati Raj Institution (PRI) formed in Nagaur, Rajasthan on 2ndOctober, 1959. 
  • Asoka Mehta Committee (1977):  Two-tier system PRI with Zila Parishad (district level) and Mandal Panchayat (base level). 
  • Others include: L.M. Singhvi Committee (1985); Sarkaria Commission (1986); P.K. Thungon Committee (1988), etc.

Significance of decentralization for rural transformation

• Improved Economic and Social Indicators: NITI Aayog's Multidimensional Poverty Index (MPI), indicates Poverty Headcount Ratio declined from 55.3% in 2005–06 to 11.28% in 2022–23. 
  • 99.6% (2024-25) of rural households use improved drinking water sources owing to Jal Jeevan Mission; 96% villages under Swachh Bharat mission attained Open Defecation Free (ODF) plus status by 2025; etc. 
• Democratic Spaces for Women: Women now constitute ~40% of PRI leadership. 
• Increased finances: As per Ministry of Panchayati Raj Devolution Index, 2024, the extent of devolution increased to 43.9% (2021-22) from 39.9% (2013-14). 
• Healthy Cooperative Federalism: E.g., Kerala devolved all 29 functions to panchayats; Bihar adopted "Panchayat Sarkar" and Odisha have increased seats for women to 50%. 
• Institutionalised Setup:  Giving local bodies greater responsibility for governance & providing an element of continuity and enlarged the participatory process at grassroot. 

Recent Initiatives towards Decentralisation of Powers to Rural Areas

• Rashtriya Gram Swaraj Abhiyan (RGSA):  A revamped Centrally Sponsored Scheme implemented since 2022-23 for capacitating PRIs through training, etc. 
•  Devolution Index: Ranks for all States/UTs based on 6 identified dimensions, namely, Framework, Functions, Finances, Functionaries, Capacity Enhancement, and Accountability; 'AuditOnline' for audits of Panchayat accounts; etc. 
• eGramSwaraj: Web-based portal, integrated with Public Financial Management System for online transfer of Central Finance Commission funds by States to PRIs.
  • It has been integrated with Government e-Marketplace (GeM) for transparency in public procurement. 
• Fiscal decentralisation: Increased from around ₹2.36 lakh crore under 15^th Finance Commission (FC) (2021-2026) to nearly ₹4.35 lakh crore under 16^th FC (2026-2031). 
• Digitization Initiatives: 
  • Mission Mode Project on e-Panchayats (MMP-ePanchayat), a Central component of RGSA; 
  • SVAMITVA scheme for drone-based mapping to formalise rural property rights; 
  • Namo Drone Didi initiative supports women's participation in digital economy; 
  • Digital India Land Records Modernisation Programme (DILRMP) for land governance reforms. 
  • Unique Land Parcel Identification Numbers (ULPIN/Bhu-Aadhaar), etc.
• Empowering Various Sections: 
  • Youth: Model Youth Gram Sabha (MYGS) promotes democratic engagement. 
  • Women: Samaveshi Aajeevika Yojana (2023) under DAY-NRLM, adopts Ultra-Poor Graduation Approach to promote sustainable livelihoods among rural women. 
    • SHE-Marts for Rural Women-led Enterprises in Union Budget 2026-27. 
• Employment and Skilling
  • Viksit Bharat Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, 2025, offers legal entitlement of 125 days of unskilled wage employment per rural household annually; 
  • Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY) offering demand-driven skill training. 

Issues persisting in Decentralization

• Lack of Devolution: As 73^rd and 74^th Amendment Acts do not mandate devolution of functions, local bodies have limited functional capacities with some states having very little devolution. 
• Inter-Governmental Hierarchy: Third-tier lacks power of policy making and functions as instruments of state government challenging the very notion of local-self-governance. 
• Fiscal Constraints: Local bodies dependent on state governments for grants; low own sources of revenue (OSR); etc. 
  • E.g., According to the RBI, the OSR of Panchayats was only 1.1% of their total revenue.
• Corruption amongst local body officials: Low level of awareness coupled with prevalence of caste, class and gender hierarchies has stymied public participation in local governance. E.g., 'Sarpanch Pati' culture.
• Lack of Jurisdictional Clarity: Sphere of activity of each tier under each item has not been defined and is left to discretion of the concerned state governments. 
• Other issues: Irregular Constitution of State Finance Commissions (SFCs); issues in the functioning of the District Planning Committee (DPC); Inadequate Functionariesetc.

Way Forward on Ensuring Rural Decentralization

• Policy Shift from Welfare Delivery to Decentralised Partnerships: Shifting from purely government led model of development to more community driven decentralized approaches.
• Empowering Gram Sabha: Ensuring periodic meetings with maximum participation of people, ensuring benefits reach the needy. 
• Innovative Resource Mobilisation: Generation of income from entrepreneurial activities, productive land, proper tax collection machinery instead of dependence on grants. 
• Promoting Coordination: Among three levels of PRIs on one hand and bureaucracy on the other related to distribution of powers and functions amongst three tiers of PRIs. 
• Strengthening Community Networks/Institutions: Build capabilities of poor, 
  security of livelihood and safeguard against destitution, hunger, disease and alienation.
• Role of States: Providing support for building local institutions, legal framework and creating an enabling environment for participation of people. 
• Role of Non-Governmental Organizations (NGOs): Essential to fill gaps in government and provide underprivileged areas with specialized knowledge and resources. 

Conclusion

Success of decentralized governance hinges on empowerment of 3Fs: Funds, Functions, and Functionaries.