Raghunandan, T. R. "Re-energizing Democratic Decentralization in India". In Rethinking Public Institutions in India, edited by Devish Kapur, Pratap Bhanu Metha and Milan Vaishav, 464-508. New Delhi: Oxford University Press, 2017.

Raghunandan, T. R. "Re-energizing Democratic Decentralization in India". In Rethinking Public Institutions in India, edited by Devish Kapur, Pratap Bhanu Metha and Milan Vaishav, 464-508. New Delhi: Oxford University Press, 2017.

• Until the passing of the 73rd and 74th amendments to the Constitution in 1993, India had few local government institutions, with democracy mostly being practiced at the regional and national level. Now all rural and urban settlements are required to have democratically elected panchayat councils (464).
• These laws guarantee that panchayat elections will be held at least every 5 years, that some seats will reserved for scheduled castes and tribes, that one-third of all seats in every reservation category are reserved for women, that one area within a constituency cannot dominate local politics for multiple election cycles (471).
• These amendments set out the responsibilities of the panchayat raj as implementing planning economic and social development projects, with the right to plan their own development schemes. There is also broad space for state governments to devolve any powers they have to the panchayat raj (476-477).
• Since their creation, panchayat councils have become less important in governance, as they are severely understaffed and underfunded, and generally derided by other levels as incompetent. The author argues that panchayat are ineffective because they do not receive sufficient funds, and that the national and state governments shift blame for poor service provision onto the panchayat, using them as scapegoats for wider dysfunction (465, 493-494).
• Panchayat raj are not conceived of as a chance for local democracy, but instead as a way to enhance service provision through local offices. Politicians stress that service provision should be the panchayat's first task, and see the abysmal quality of service provision as an argument against further empowering the panchayat (467-468).
• Even when governments have devolved powers to the panchayat, they have often failed to actually put in the effort to inform all levels of government about the change or get the technical aspects and logistics changed to actually give panchayat the tools to implement their new duties (477). 
• The author believes that the current [2017] political climate is opposed to decentralization and that the position of panchayat is unlikely to improve nor are the major problems facing panchayat likely to be solved. Change will only come if there are large-scale demands for more empowered panchayat (504-505).
• The federal system in India is designed to centralize as much power as possible while giving autonomy where it is demanded. In this political culture, panchayat tend to think of themselves as the lower levels of a hierarchical government responsive to the state government, and do not act independently or autonomously of that government (466).
• Calls for decentralization of power in India do not focus on the panchayat, but instead, call for the increased independence of state governments from the national government or the creation of new states. Almost no political movements call for increasing the powers of panchayat (467).
• Many Indian states have had periods of intense centralization of power to local governments, but support for these initiatives in those states had waxed and waned over time (469). Most were championed as to advance some other political agenda, and have since either stagnated or been repealed (470).
• During the 1970s, the Left Front government in West Bengal decentralized power to panchayat and gave them control of land reform to stimulate support and opportunities for Communist Party members at the local level (469).
• In 1987, Karnataka radically decentralized power to district-level governments called 'zilla parishad' and put a quarter of the state budget under their control. Local governments, however, became much more centralized and placed under the control of the zilla parishad (469).
• Kerala pursued radical decentralization of authority to panchayat, which in Kerala are mainly urban, and encourage grassroots democratic participation in local government. Over a third of the state budget was earmarked for projects to be implemented by the panchayat (469).
• The Madhya Pradesh government has troubled by a belief that panchayat were dominated by autocratic leaders. To address this, Madhya Pradesh defunded the panchayat raj and created a new system of local government beneath it to promote a more plural governance system in villages (469).
• One downside of the system of rotating reservations of geographic constituencies, designed to avoid one community from dominating local government, is that reelection is unlikely, especially for those in reserved seats. This decreases the motivation of panchayat raj members and leaves them more susceptible to manipulation by state government officials (472).
• State governments have tried to subvert local elections by postponing panchayat raj elections and putting those municipalities under direct state government control in the interim (472-473).
• The Supreme Court denounced these practices and reiterated the necessity of elections every five years in the Kishan Singh Tomar case, but state governments have continued to postpone elections through new strategies, like claiming that the distribution of reserved seats had been incorrectly drawn, leading locals to request postponement of elections themselves as they squabbled over reservations, leaving the panchayat raj under the control of the state government (473-474).
• These new practices to postpone panchayat elections were brought before the Supreme Court in 2013, after a protracted battle between regional courts and the government of Karnataka, and were denounced as unconstitutional. The Supreme Court has since castigated Andhra Pradesh for similar trickery, and the practice of postponing election is now much less common (474-475).
• States that have devolved powers to the panchayat usually have not devolved power to the bodies across the board, but instead have created different regulations for rural and urban panchayat. Villages tend to be treated the same, but are often given levels of authority than urban panchayat, which are treated differently from one another (478).
• Devolution to panchayat has been limited in practical effect by the continued responsibility of authorities not under the control of the panchayat raj for basic services, like garbage disposal or water supplies. This means that panchayat are often made responsible for the provision of these services, but are not given any control over the state-owned companies or private contractors that actually perform the services (479).
• States have not made efforts to actually improve the function of panchayat, with initiatives designed to improve understanding of actual responsibilities and competence of different panchayat facing resistance from state governments. States have tried to make the information they release on the responsibilities of panchayat as muddled and confusing as possible (481). The central government has also been noncommittal to the whole process (480-481).
• Considering the diversity of responsibilities over different sectors that different panchayat have in different states, the fact that the scope of these responsibilities have changed over time, and that urban and rural panchayat might have different mandates, a clear register of responsibilities is necessary for panchayat to function properly (482).
• One of the reasons that ignorance about the duties of panchayat benefits the state governments is that states have set up a number of departments, usually directly under the chief minister, that perform activities that should be the sole prerogative of the panchayat raj. State governments prefer working through these, technically illegal and certainly undemocratic and unaccountable, bodies directly under the state government to dealing with local government (482-484).
• The use of these executive agencies to perform the duties of local governments has both deprived panchayat of funding and resources, and excluded them from development projects that would have given them much-needed experience (484-485).
• Panchayat can receive funding from a number of sources, including the central government, state government, special development schemes, or, with state government permission, by levying their own taxes or taking own their own loans. In practice, almost all funding comes from set amounts from the central government budget, which greatly increased in 2013 (485-486).
• State governments used to skim money from the central government funds for panchayat that were placed in their care, but this practice has become rare since action by the 12th Finance Commission in 2004 and more rigorous accounting (486).
• State governments have usually grossly underfunded panchayat, giving panchayat a fraction of the budget allocations recommended by Indian economic advisory bodies. Instead, states prefer to fund panchayat through special development schemes that force the panchayat to implement projects designed at the state level without local input (486-487).
• The central government also likes using these special development schemes to allocate funds to panchayat, since it allows them to bypass the input of both state and local governments. This practice has become less common after the implementation of the 14th Finance Commission's recommendations to greatly increase funding for panchayat in 2014 (487-490).
• A number of panchayat do have the ability to collect their own taxes, but this has usually only been implemented effectively in urban areas. In rural areas, even panchayat that do have the right to collect taxes often do not. When rural panchayat do they collect taxes it is usually as arbitrary lump sums, because the panchayat raj does not know actual assessment values for taxation (490-491).
• A few urban panchayat have managed to secure loans for themselves, and sometimes urban development grants, but the practice is still rare and most panchayat with the right to do so still don't take out loans (491).
• The entire system by which funds are held by state governments and transferred to local governments is incredibly confusing and difficult (492). 
• The author recommends solving this problem by creating a system where the central government and state government will put when they will be release the funds held for panchayat, and panchayat will be able to look at these statements and be able to plan their projects with actual knowledge of when their money is coming and how much (495).
• Fiscal decentralization in Latin America led to a debt crisis as local governments used their newfound powers to make obscene promises, borrow heavily, and then misspend the loans in order to gain reelection. Latin American governments ultimately had to cover these loans (492-493). This experience gave a number of lessons about decentralization:
• If given too much power over finances, local officials will borrow and spend recklessly in order to win reelection (493).
• Local governments will argue to get the largest portions of regional and national budgets possible while attempting to use their own tax base minimally (493).
• "The lack of progress in activity mapping, the proliferation of parallel structures, high degrees of centralization in financing, and the confusing methods of fiscal transfers are four knockout punches that lay low any possibility that LGs can function effectively. Together, they also send an unequivocal message: that the momentum is clearly towards centralization. LGs are a forgotten constitutional heirloom [...]. We seem condemned to suffer the consequences of hazy functional allocations. New parallel structures continue to be established and there seems no way that the current momentum toward fiscal centralization will slow down. No political party goes beyond mouthing the empty rhetoric of decentralization. Voters also do not consider the absence of decentralization as an election issue. Bureaucrats [...] do not see LGs as anything more than places where they might be posted, from where they can exercise their executive power, without being accountable to the locally elected body. The results of excessive centralization are there for everyone to see: abysmal local service delivery systems and the virtual absence of any effective regulation over civic and other essential services. Yet, the obvious opportunity to reverse the tide by strengthening LGs through sustained institutional reforms is ignored" (494).
• Some believe that the councilors on the panchayat raj are too poorly educated, inexperienced, and often illiterate to be trusted with more power. The view disregards the value of the local knowledge that councilors have. To improve the system, panchayat raj councilors should be trained, not sidestepped (496).
• Despite being deeply dysfunctional, panchayat are sometimes responsive to local need, even though they do not have the resources to adequately address these needs. Panchayat raj councilors are held accountable by locals for service provision, and often pay out of their personal funds to solve issues despite lack of government funding (500).