\

a-2 P (BSMC.S-.1 as> Panchayati ReJ & Rural Adm· . 3-8 p (118MC-Selll• 7 & 8)
lllJs'tratt llutal l)evelopment : A & P
.·- --~~ - 011.

SpetdflC obJeetiVM : . .ty

A,98istance to the economically weaker secti008 of ~he commum .
l. Cohesion and cooperative selfhelp in the eommunitY-
2' Development of cooperative institutions.
3
· Development oflocal resources including the utilization ~manpower·
4
· Production in agriculture as the highest priority in pianmng-.
5
· Progressive dispers~ of autho~ty and initiative both v~~~
6· horizontally with
special empha818 on the role ofvoluntarY u i . ~ - -

~-~ 1Explain the stnicture of Panchayati Raj Institutions in 7.

Promotion of rural industries.
Understanding and harmony between the people's representativesan
.
d
India. 8. ugh h • tr-~,;_ ..Jedu,catieD and a c1ear
people servants thro eompre ~~~ ~
,wt:. 1 .~~ 1 demarcation of duties and responsibilitie s.
pbiJoeophy of Panchayat Rad :
L Panch.ayati Raj (Council of five officials) is the system of local self. 1. The philosophy of Panchayat Raj is deeply steeped in tradition and culture
government of villages in rural India.
of rural India and is by no means a new concept. .
2. It consists of the Panch.ayati Raj institutions (PRis) through which the, 2. Panchayati Raj Provided a system of self-governanc e at the village level.
self-governm. entofvillagesi srealized.
3. Panchayati Raj Institutions is the grass-roots units of se}i'...government-
3. PR.Is are tasked with economic development, strengthening social justice have been declared as the vehicles of socio-economic transformatio n in
and implementatio n of Central and State Government Schemes.
rural India.
4. Part IX of the Indian Constitution is the ,-section of the Constitution 4. Effective and meaningful functioning of these bodies would depend on
relating to the Panchayats. active involvement, contribution and participation of its citizens both
5. It stipulates that in st.ates or Union Territories with more than two male and female.
million inhabitants there are three levels of PRis : 5. The aim of every village being a republic and panchayats having powers
i.. 'lhe Gram Panebayats at village level : A Gram, meaning a has been translated into reality with the introduction of the three-tier
village or a dust.er of villages, is divided into a minimum of five Panchayati Raj system to enlist people's participation in rural
constituencies depending on the number of voters the Gram is reconstruction .
having. From each of these constituencies one member is elected.
Body of these elected members is called the Gram Panchayat. What do you mean by Gram Panehayau ? Explain the
a The Panchayat Samiti at block level : Panchayat samiti is ~ major functions of Gram Panchayais.
rural local government (panchayat) body at the intermediate tebsil
(taluka/manda l) level in India.
1.
iii. The Zi1aParishad ·at district level : The Zila Panchayat or A _G~am, meaning a village or a cluster of villages, is divided into a
District Council or Mandal Parishad or District Panchayat _is t~e m1mm:um of_five constituencie s depending on the number of voters the
0 ram 1s havmg.
third tier of the Panchayati Raj system and functions at the district
2.
levels in all states. A Zila Parishad is an elected body. ~om each of these constituencie s one member is elected.
3.
~dy of these elected members is called the Gram Panchayat
Mention specific objectives and philosophy of Pancha)'llt 4. S1ze of the Gr p h . .
5. . am anc ayats vanes widely from state to state·
It 1s adem t'
ocra le structure at the grass-roots level in India. ·
 3-4 P <BSMc-9ea.7 a a>
. . . Pancba yati Re.i & Rural ..
6 . It lS a
politica l institu te art-inn ~ " llti
7. 'Ille Gr ' -v&UtS as cabinet of the vill
am Sabha work as the ge al &ge.
°" ttutal Development : A & P .... p (BSIIC -8na-'7 . 8)
8. 'Ille membe rs of th ner body of the Grlllll p
e Gram Pancha yat ft at,o ,uperviletl the worb of Gram Pancbayat.1 witbin iu Juri,adi dion.
l 8.llcha,at 2
Funet iom of Gram Panchayats : are e ected by the Grain Sabha_ · It baa to instill among people within ite juriJldic tion a spirit
of aelf-belp ·
3
1· Prepara tion
of Annual Pl
· 811d initiativ e and work (or ramngt he 9taDdard ofltrinfJ.
area. ans for the development of the vill 4. ft has to supp,rt (or the implem entation of de-,elapment pr8111111
11DM•
&gePancbayat It has the welfare and develop ment activitiN in the fiek:19 of apiicult
2. Prepar ation Annual Budget of ViUA°"" p 5 ure,
3 Mobiliz a .
ha · · animal husband ry, health, sanitati on, elemen tary edueatio
- - . anc yat. D, cottage
. tion of relief in natural calamit i industri es and aocial.
4 & ~ 6. It has to use the village housing project Cunds and loam.
· mo'!al of encroac hments on p~·'-li
Organi zing .
w, c propert ies.
5. Main: volunta ry labours and contrib ution for commurut .. WWd oyoa- by7.i laP... ..._.?h plaia tlle... ;o.,
6. _tenance of essenti al statistic s of villages. Yworks. tuaedo m al Zila Pari.. .._
7. Service or develop mental functio
health, agn·cult uch . /· ' ~ ·'P." •~;; 'J
ure,etc . n. s as promotion of educatio
n,
~~ ~';~):,
L The Zila Panchay at or District Council or Mamlal Paiaba d
8. : : : ~ t i v e functio n. where the main role is to voi.ce and or Dullriet
represent Panchayat is the third tieroftb e Pancbayati Baj syst.em ad funetiom
at
the district levels in aD stat.es.
9. Regulatory an~ ~ t i v e functions, which consists of regulat· 2. A Zila Parisba d is an e1ect;ed body.
, .
the conduc t of individ uals and institut ions and also collection
of tax~ 3. Block Pramuk h ofBlockPanchayatare alsu 1ep:mru ted mm
a~
~ -u (J What do you mean by Panch ayat Samiti 1 Explain th~
4. The members of the Stat.e Iepalat iu,emd the
of India are members of the ma Parisba d.
tenof"tlM. Paial ed
- . . . functions ~ Panch ayat Sam.iti .
5. The Zila parisha d is the t.op most tier of the pancha yat

D
ra,j system and
~-• .. ~. _jj :icts as the link between the stat.e guvermnent and the
~ L 4 ½·il Gram Panchay at.
village- level
L Panchayat samiti is a rural local governm ent (panchayat)
body at the 6. Zila Parishad are Panchayats at Apn _. District Level in Pancba
interm ediate tehsil (taluka /manda l) level in India. Institutions. _. Bai
,,_ "
2. It works for the villages ofthe tehsil that togethe r are called
a development 7. The Chairm an of all the Pancbayat Samitis under the district
are the ex
block. officio members of Zila Parishad.
3. It has been said to be the "panch ayat of panchay ats". 8. The deputy chief executi ve officer from Genera l Admin
istratio n
4. Typical ly, pancha yat samiti is composed of elected members department at district level is ex-officio secreta ry ofZila Pari.sha
d.
of the area:
the block develo pment officer, membe rs of the state's legislati 9. The chief executiv
ve e officer, who is an IAS officer or senior state service
assemb ly, membe rs of parliam ent belonging to that area, otherwis officer, heads the adminis trative setup of the Zila Parishad.
e
unrepre sented groups (Schedu led Castes, Scheduled Tribes and women), Functio ns of ZiJa Parish ad :
associate membe rs and the elected membe rs of that panchayat block
on 1. It works as advisory body for blocks.
the zila parisha d.
2. It approves budget and plan of blocks.
5. The samiti is elected for five years and is headed by a chair
~ and 3. It allots funds to the blocks.
deputy chairm an elected by the membe rs of the panchay at
samiti.
6. One sarpan ch samiti supervi ses the other gram pandchayats
co-ordi nating body betwee n district pancha yat an gram pane
. It::Yt:~
·
8
4. It approves budget and plan of blocks.
5. Secondary education is the responsibility of this co cil
6. Itsho ld ad .
. u vtse Government in all . .
un . .
Funct ions of Panch ayat Samiti : tn the district. · · ·
tion matters relating to rural develop ment
1 The main functio ns of the Pancha yat Sami·t·18 are plannin
.
g execu .
. . •k
and supervi sion of all develop menta1programmes m the B1oc .
3-6 P (IISMC-Sem-7 & 8)
-~~--~---..:.-=.::_
,., __~Pan~c~ha~y~at~i~Raj~·~&~R~uraI Adminis
7. It has to review the results achi d tration
blocks. . eve under Various item . R\IJ'al Development : A & P 3-7 P (Jl8MC-8em-7 & 8)
sin all th
. ·•-·.-,. , e ll. In August 1978 submitted ita report with various recommendations to
revive and strengthen the declining Panchayati Raj system in the country.
,'' [ PAR 12. Its major recommendation were two tier system of panchayat, regular
. ' nstitutidns ime' social audit, representation of political parties at all level of panchayat
0~i · l:nstituti elections, provisions for regular election, reservation to SCa/STs in
panchayata and a minister for panchayati raj in stat.e oouncil of ministers.
13. Further, G V K Rao Committee appointed in 1985 again recommended
some measures to strengthen Panchayati Raj institutions.
14. LM Singhvi Committee appointed in 1986 first time recommended for
the constitutional status of Panchayati Raj institutions.
15. In response to the recommendations of LM Singhvi committee, a bill
was introduced in the Lok Sabha by Rajiv Gandhi's government in July
1989 to constitutionalize Panchayati Raj Institutions, but t he bill was not
" "'.~ . , Write a short note on : Emergence and Growth of passed in Rajya Sabha.
Panchayati Ratj Institution in India. 16. After this P V Narashima Rao's government introduced a bill for this
purpose in Lok Sabha in September, 1991 and the bill finally emerged as
Aenr :t the 73 rd Constitutional Amendment Act, 1992 and came into force on
24th April, 1993.
1. Panchayati Raj was not a new concept to India.
2. Indian villages had Panchayats, which were having both executive and ;~ !c.l~7.;'.':J Write a short note on : Balwantrai Mehta Committee.
judicial powers and used to handle various issues or disputes arising in
the village area. ..,.,,...,_., :, 1
J.An~~r
:.;;,..,

D
3. Gandhiji also held the opinion of empowerment of Panchayats for the · 1.· Balwantrai Mehta Committee was the first Committee set up in 1957 to
development of rural areas. look into the problems of democratic decentralization in independent
India
4. Thus, recognizing their importance our Constitution makers included a
provision for Panchayats in part IV of constitution. 2. The Committee was asked to report on community development projects.
Article 40 confers the responsibility upon State to take steps to organise 3. The Committee made far reaching recommendations in the direction of
5.
Village Panchayats and endow them with powers and authority to enable democratic decentralization and rural reconstruction.
them to function as units of self-government. But it does not give 4. It pointed out that the community development programme was not
guidelines for organising village panchayats. successful because it failed to evoke local initiative and that in the ah:!ence
ofloc~ initiative and interest development would not be possible.
6. Panchayati Raj formal organisation and structure was firstlr
5. Tliecommittee laid down following five fundamental principles :
recommended by Balwant Rai committee.
The Committee in its report in November 1957, recommended ~he. i. There ~ould be three tier structures of local self government bodies
7. from Village to the district level and these bodies should be linked
tablishment ~f the scheme of 'democratic decentralisation', which
es 'Raj together.
ultimately came to be known as Panchayab •
. bl k d district level ii. There sh~uld be genuine transfer of power and responsibility to
It recommended for a three tier system at Village, oc an t
8. these bodies to enable them to discharge their responsibility.
and it also recommended for direct election of village level panchaya .
. h t' Raj at Nag!llll' iii. Adequate_ resources should be transferred to these bodies to enable
Rajasthan was the first state to establish Pane _aya 1 . them to discharge their responsibilities.
9.
district on October 2, 1959. . ted 1r1
• Raj as appo1n "' iv. ~ welfare and developmental schemes and programmes at all
After this, Ashok Mehta Committee on Panchayat1 w ee levels should be channelled through these bodies, and
10.
December 1977.
3-8 P <BSMC-Sem-'1 & 8)
Panchayati Raj & Rural Ad . .
rn1ruetra~
v. ~e three tier system should facilitate further Rural l)evelopment : A &: P
s-e P (118MC-Sem·'1 A 8)
disposal of power and responsibility in future. devolution «111{
6. The committee envisaged three tire system of Pan h
ZillaParisbad, n..--L-. . . c ayats kn0
c a.ucnayat Samiti and Gram Panchayat and '111-.
.,_.,,.. l
encouragement of peoples' participation in communit ~ 0 mtnended The Committee to review the ~ .Adminiatratffe Arrangements
1. for Rural Oevelopment and P o v e r t y ~ Progr~ ~~
of agricult~ and animal husbandry, promoting t~::elf:Proinotion chairmanship ofG.V.K. Rao WM appoimed by the Planning COIDlD]S810n
weaker sections and women through the Panchayats. are of the
in 1985.
7. For the first, time the Committee made recommendation ti
s or co-optin.. _ The Committee came _to concl~on that the developmental~~ was
of tw h . 2
o women w o are interested to work for women and childr .., - -- ~ ~ gradually bureaucratised and divorced from the Panc::hayati Raj.
8. H owever, like the rest of the male members, women were noten. 3. This phenomena of bureaucratisation of development ~atro.11 as
elected but were to be co-opted. to be against the democratisation weakened the Panchayati Raj.institutions.
9. The recommendations of the Balwantrai Mehta Committee cam • _ Hence, the Committee made the following recommendations to
4
effect on 1st April 1958. e lllto strengthen and revitalise the Panchayati Raj system :
i. The district level body, that is, the Zila Paishad should be of pivotal
10. Rajasthan was the first state to implement it on 2nd October 1959. importance in the scheme of democratic decentraliBatio
1
Qati~ ·• Write a short note on : Ashok Mehta Committee. ii. The Panchayati Raj institutions at the district and lower levels
should be assigned an important role with respect to planning.
implementation and monitoring of rmal development programmes.
Answer J iii Some of the planning functions at the state level should be
1. In December 1977, the Janata Government appointed a committee on transferred to the district level planning units for effective
panchayati raj institutions under the chairmanship of Ashok Mehta. decentralized district planning.
2. It submitted its report in August 1978 and made 132 recommendations iv. A post of District Development Commissioner should be created.
to revive and strengthen the declining panchayati raj system in the He should act as the chief executive officer of the Zila Parish.ad and
country. should be in charge of all the development departments at the
Its main recommendations were : district level.
3.
i The three-tier system of panchayati raj should be replaced by the v. Elections to the Panchayati Raj institutions should be held regularly.
two-tier system, that is, zila parishad at the district le~el, and ~low 5. Thus the committee, in its scheme of decentralised system of field
it, the mandal panchayat consisting of a group of villages with a administration, assigned a leading role to the Panchayati Raj in local
total population of 15,000 to 20,000. . planning and development.
ii A district should be the first point for decentralization under popular Qv.Q :\~1,«t;•,I Write a short note on : LM. Siqbvi Committee.
supervision below the state level.
iii Zila parishad should be the executive body and made responsible ~Aa~... ·· 1
for planning at the district level. . all 1· L.M. Singhvi Committee is one of the committees related to Panchyati
iv. There should be an official participation of political parties at Raj in India.
levels ofpanchayat elections. f 2.
1 powerso L.~. S~ghvi Committee is a committee on revitalisation of Panchayati
v. The panchayati raj institutions shoul_d have compu sory Raj Institutions for democracy and development.
. to mobilise their own financial resources. . .f 3. 1986

4.
t axat 10n
Due to the collapse of the Janata Government befo~e:
its term, no action could be taken on the recommen a 10
h
:::f plet1on o
the As}lok
4.
c
. , Raj~v Gandhi government appointed the committee under the
lnhair
lllanship ofL.M. Singhvi.
~t made the following recommendations :
Mehta Committee. L ;ehe P~chayati Rltj institutions should be constitutionall
~ a;;,.' 1 Writ.e a short not.e OD : G V K Rao Committee,
cogmsed, protected and preserved. - Y
 3-10 P (HSMC-Sem-7 & 8) Panchayati Raj & Rur al Ad .
m1nist
ii.
ta.~
It also suggested constitutional provisions to ens . 0\
and fair elections to the Panchayati Raj bodies ure relJUla, ~ Rural oe,;,eloprnent : A & P 3-11 P (BSMC-Sem-7 & 8)
. ' 'f\
iii.
Nyaya Panchayats should be established for a clu t
s er ofv·u
iv. The villages should be reorganised to make Gram p h 1 ~ .
- °'· A State FinBnce Com tmfleion is to be set up in each State every tive
years. ..
viable. It also emphasised the importance of the Ganc ayllt8 lllo Following are some of the provisions, which are not binding on the
called it as the embodiment of direct democracy. ram Sabha ~ States, but are only guidelines :
v. The Village Panchayats should have more financial reso i. Giving representation to the members of the Central and State
vi. The judicial tribunals should be established in each state t ur_ces: legislatures in these bodies;
controversies about election to the Panchayati Raj instit 0t dJudica~ ii Providing reservation for backward classes; and
dissolution and other matters related to their functioIU~ ions, the~ iii. The Panchayati Raj institutions should be given financial powers in
ng. relation to taxes, levy fees etc., and efforts shall be made to make
Qu~ S.ll. IWhat are the various features of 73rd AmendlllentA.i Panchayats autonomous bodies.
1992? -~ Que #.-lf :.7
. Mention varioott i s8tles that P anebaya ti Raj
OR Institutions are facing •
Write a short note on : 73 rd Amendment Act, 1992.

An~r i Answer I
Following are various issues that Panchayati Raj Institutions are facing :
1. The 73 rd Amendment to the Constitution enacted in 1992 added a 1. In India the panchayats has minimal powers to genenrte :revenue. They
part-IX to the Constitution. ~ew do not have the powers to levy taxes and therefore they are hugely
2. It also added anew XI schedule containing list of29 functional items for dependent on the State Government for funding. Therefore it is just a
Panchy ats and made statutory provisions for the establishment functional autonomy.
empowerment and functioning of Panchayati Raj institutions. ' 2. The State Finance Commission is me ant to ensure an effective
mechanism for the panchayati raj institutions. However, the
3. Some provisions of this amendment are binding on the_States, while
recommendations of the State Finance Commission are not accepted.
others have been left to be decided by respective State Legislatures at
t heir discretion. 3. No state or U. T. have transferred all 29 functions or suijects to the PRI.
This clearly shows that in India the panchayats are merely an extension
4. The salient features of this amendment are as follows : of the State and are not like a separate administrative unit.
i. Organization of Gram Sabhas; 4. Institutional structures like the district planning boards, created to
ii. Creation of a three-tier Panchayati Raj Structure at the District expedite decentralised planning, are either non-functional or do not
(Zila), Block and Village levels; give priority to PRis.
5. Limited efforts have been made to empower elected PRI representatives
iii. Almost all posts, at all levels to be filled by direct elections; ·
with their constitutional functions; the focus has mostly been on trainings
iv. Minimum age for contesting elections to the Panchayati ,Bal on the schemes and programmes.
institutions be twenty one years; 6.
Even a.ft:er th e legislative of keeping the panchayats clean from politics,
V. The post of Chairman at the District and Block levels sbQuld be there still exists influence of the bureaucracy and the political parties.
filled by indirect election; J
vi. There should be reservation of seats for S ch e d~ led Caste
Scheduled Tribes in Panchayats, in proportion to then' pop
u)atiollt I PART- 3 1

and for women in Panchayats up to one-third seats;

People and Pfln.chayati Raj.
d cl
11
vii. State Election Commission to be set up in each State to con
elociions to Panchayati Raj institutions; . Iv~ Questfo~!l...t\nswers
'f d1SSO
viii. The tenure of Panchayati Raj institutions is five years, 1d
earlier, fresh elections to be held within si~ months; an
~11 P (BSMC-sem:'7 le 8) Panch ayati Raj & Rural Adm. .
tnistrati
~ , l l i·1a.
1
....,.,&J:t,; Bow to eD9ure people's participati on in Pan h ~ Rordl ~ lopment : A & P
'Aairiai.j l • "Ylll a.,, ~ 18 have been empowered to levy and collect taxee/fee11.
a Centtal and State
govemmente provide mmrtly tied (acheme ~~>
c D.,_.....
1. 4
To evoke local interest and excite local initiative in th · (undl'I to Panchayate.
developmen t people's participatio n in panchayat is necessary~ field ()f _ However panchayats do not have control over their own re8()lll'Ce8.
5
2. By enhancing people's participatio n PRls can be strengthen d _ 1f provided actual control over all the physical and natural retlOUl'ces
e. 6 lying in their respective
3. geographical areas, pancbayats can easily
Following circumstanc es helps in strengtheni ng people's Part' .
in PRls : 1 1 mobilise tens of millions of rupees 811 their own revenue .
c pation
D. E.tabli11hing linkages between Ccw:auaity Gn.p9 aad PBl9 :
A. Strengthen ing the Gram Sabha :
l . Besides statutory bodies like GP and GS, there are a number of
1. The Gram Sabha is the only forum which provides opportunit' community groups in almoet every village.
the adult villagers to directly participate and suggest what can ie~to all
. For effective collaborations of community orpnisatiODB and PRis, the
to be done for their own village and how. an need 2
GS should be made aware, active and strong.
2. In all ~ther forums, people are substituted by "leaders" elected a. These community groups should have cJoee interaction with speeiali8ed
othel"WlSe. . or standing committees of GPs.
3. Only a strong Gram Sabha can ensure "the acquisition of the capacit • 4. In this regard, project-base d committees should be strengthene d to be
the many to regulate authority". Yin more effective, autonomous and participatory .
4. If not made accountable to the community, Gram Panchayats have a
tendency to become Sarpanch Panchayats. '~ g=f:!~ ·f What are various enabliqaepeda aldhed particiJ
1
tile
5. Gram Sabha serves to keep Gram Panchayat accountable. in Panchayati Raj Institution s ?
B. Developing strong leadership of women and Dalits :
1. Reservation of seats in Panchayats for women and Dalits has given · 1. Grassroots democracy can only be strengthene d through people's
them an opportunity to participate in developmen t process. . participation.
2. However most of them are illiterate and have to comply with social 2. The PRls should be given encompassin g responsibilit y and authorities
taboos and patriarchal values. So, it is not easy for them to actively over local matters and be held accountable for those matters by their .
participate in developmen t process. voters (the Gram Sabha).
3. To overcome this special programme s of awareness generation, . 3. It must be ensured that women and dalits participate actively and
attitudinal changes and skill developmen t should be conducted for effectively in the local self-governance.
women and Dalits. 4. The state-led and other types of project committees should collaborate
4. They should be made an integral part (from beginning to end) of any with PRis and PRls should provide a space to these community
process. organisations.
5. The lack of adequate information about their roles and responsibilities
inhibits women Panchayat leaders to function effectively. · .· , . I PA AT-4 t
6. Better information disseminatio n and support and encouragement frolll Fi,- · Organ~Gtions in Pqnc •
community and NGOs are effective means of building up women and
SC/ST leadership.
. . I
C. Enabling Panchayat s to have control over their own resource•
1. If a Gram Panchayat is capable of doing effective work for village pe()ple's

2.
participatio n in Gram Sabha gets enhanced.
A number of provisions have been incorporated in the Constitution to
--
'
====-- - :.:...:__:===:!3.:~:.:2~~::3~
strengthen tinanc!al situations of PRis.
 3-l4 P (HSMC-Sem-7 & 8)
Panchayati Raj & Rural Ad . .
m1n1strar
~-,~ - I
~•f~lS._ Discuss the current financial position of PRI
~ Rural Development : A & P 3-15 P (ffSMC-Sem-7 & 8)
. ·. sin lrtdi 'l'o study the structure and functions allocated to the Panchayati Raj
~ e r ___f ._ lnstitutions at different levels and their performance.
1. All PRis h~v~ a poor fiscal base. Resource mobilisation b th To analyse the resource situation with regard to the functions allocated
3.
generally lumted. Y e PR.Is is to the PRls.
2. To analyse the implications of the existing situation of PRls in relation to
Therefore it is essential to provide PRis with revenue r · · 4.
th · , rus1ng pow the 73rd amendment.
err own m order to reduce their excessive dependence on th ers of
and Central Governments. e State_
PART·S
3. But till such time that they are financially dependent on fund f
State Governments, the State Budgets should specify th s rom the Structure of Rural Jlin:aru:e.
earmarked for district sector plans under Panchayati Raj a amou~t
distribution among the three tiers.
:i
s so theu-
4. lt is suggested that 30-40 percent of a State's Plan be devolved 1
~~
bodies.
5. In addition, a part of the finances should be in the fori:r. of untied f, ds
so that the funds can be utilised as per the felt needs of the Panchaya unt s.
6. Training and capacity building of PRI functionaries is essential. Q~,~ ~-,~?!J Give the structure of rural finance in India..
7. Devolution of financial resources must be accompanied by suitable
strengthening of PRis through transfer of departmental functi~naries.
t~si~;r,::,,,I
The rural finance market comprises of :
q.u; S:tl. j What is the need of Finance Commissions in Panchay-;.ti A. Organized or formal segment :

Raj Institutions ? Also give the objectives of Finance Commissio.ns. 1. The formal segment consists of the Reserve Bank oflndia (RBI), National
Bank for Agriculture and Rural Development (NABARD), Public and
Answer ) Private Sector Commercial Banks, Regional Rural Banks (RR.B), Land
Development Banks (LDB), State Cooperative Banks (SCB), Central
Need of Finance Commissions : Cooperative Banks (CCB), Primary Agricultural Cooperative Banks
1. Th.ere has been a concern with regard to the adequacy of resources of , (PACB), Central and States Governments, Life Insurance Corporation
the Panchayati Raj Institutions to be commensurate with the functions (LIC), Post Office Savings Bank, etc.
that have been allotted to them. 2. RBI is responsible for overall monetary policy and provides
2. The various committees and commissions that were appointed have accommodation to NABARD and IDBI for agricultural and Rural
generally concluded that adequate finances are not available for Industries respectively.
performing the functions allotted to the PRis. 3- !hese institutions in turn provide refinance to commercial banks
3. They also do not have the freedom to tap and utilise the resourcesdmato; mcluding RRB's and SCB's and State Land Development Banks (SLDB's).
5 4· The refinance from NABARD is distributed to the rural entrepreneurs
available to them according to their needs, nor do they have fun ·
thr0 ugh two or three tier cooperative structures respectively for long
discriminatory expenditure. f
. . h f fi . l esources o term, short term and medium term lending. In case of commercial banks
4. There is scope for mcreasmg t e quantum o mancia r and RRB's they refinance directly to the users.
5
PRis. . . · rove t}l!l · ~xcer LDB's and PAC's, all financing agencies collect deposits from
The Finance Commissions have been appomted m order to imp ura households. Post office saving banks are active in rural areas.
S. financial position of the PRis. B. Unora ·
a&ntzed or informal segment :
. .
ObJectives o fF'inance Commissions: f
d'tute o · l. Relatives and fr' d B
froni rel ,
b . .
1e~ s: orrowers o tam their loans more promptly
d ta with regard to the finances - income and expen 1 attves and fnends and loans are virtually interest free.
1. To co 11 ec t a
the PRis.
 3-l• p <BSIIC-Se a-7 A 8) Panchayati Raj & Rural Admini t .
s ratio11 R~ Development : A & P 3-17 P (11811C.8eaa-'7 A 8)
I. llcmey leaden: Money lenders are the main informal sourc - ; - -
for roral household in India. Because in rural areas people
access to banks and other financial institutions.
d:0
credit
not ha~e
----;J;erefor e, the Re8el'Ve Bank of India (RBI) at the imistence of the
2· aovernment of India, constituted a committee
to look into tbeee very
critical aspects.
3. ~ ~ ~ R i o n Apnts: Traders and Commission e
m village are m direct contact with the farmers. Much of their fin:
is really in the nature of advance payment for purchase of product~
?ts The comJDittee W88 formed on 30 March 1979, under the ChairmaDahip
3· of Shri B. Sivaraman,
former member of Planning Commission ,
Qovernment of India.
,.g,U&] _Which are the various government organizations . _ The Committee submitted its interim report on 28 November 1979.
4
WOltina in the field of rural finance in India?
5. ~:;i::::: :ti:::~:~ ::z===~f::e::::
issues linked with rural development.
L Reeerve Bank of India (RBI) : The Reserve Bank of India is India' _ Its recommenda tion was formation of a unique development finaneial
central bank and regulatory body under the jurisdiction of Ministry ~ 6
institution which would address these aspirations.
0
Finance, Governmen t of India. _
7 Thus formation of National Bank for Agriculture and Bmal De"1elopment
2. National Bank for Agricultu re and Rural Developme nt (NABARD) was approved by the Parliament through .Act 61 of 1981.
(NABARD) : N.ABARD is an apex regulatory body for overall regulation 8. It was dedicated to the service of the nation by the late Prime Minister
of regional rural banks and apex cooperative banks in India. It is under .Smt. Indira Gandhi on 05 November 1982.
the jurisdiction of Ministry of Finance , Governmen t of India.
Vision: Development Bank of the Nation for Fostering Rural Prospe:rity .
3. Regional Rural Banks (RRBs) : Regional Rural Banks (RRBs) are
Mission : Promote sustainable and equitable agriculture and rural
government owned scheduled commercial banks of India that operate
development through participative financial and non-financial intervention s,
at regional level in different states of India. innovations, technology and institutional development for 98CUriDg prosperity.
4. Land Developme nt Banks (LDB) : A land developmen t bank is a ·
special kind of bank in India. The main functioning of this bank _is to Discuss Regional Rural Banks (RRBs) and their
develop the agriculture and tried to avoid the land corruption. objectives.
5. Cooperativ e Banks : The rural co-operative credit system in India is .
primarily mandated to ensure flow of credit to the agriculture sector. It
comprises short-term and long-term co-operative credit_ structures. ~e 1. In Mid-1970's it was realised that more systematic and concentrated
short-term co-operative credit structure operates With a thre~-tier efforts were needed to strengthen the flow of institutiOIµl} rural credit,
system : Primary Agricultura l Credit Societies (PACS) at the village with a view to developing the rural economy by providing for the purpose
level, Central Cooperative Banks (CCBs) at the district level and State ?f agriculture, trade, commerce, industry and other productiw activities
Cooperative Banks (SCBs) at the State level. m rural areas particularly to the small and marginal farmers, agrieultural
6. Life Insurance Corporatio n (LIC) : LIC is an Indian stat~to~ labourers, artisans and small entrepreneu rs.
2.
insurance and investment corporation. It is under the ownership 0 The Working Group under Shri M. Na,.asirobam recommende d the
Ministry of Finance, Governmen t oflndia. establishmen t of a new type of institution to supplement the efforts of
commercial and cooperative institutions in the rural sector.
8r
Write a short note on : National Bank for Agriculture 3.
; ~ "

and R ~ Developme nt (NABARD) and its Vision and Mission,

.. To begin with such rural banks were to be established in regions were
the ~xisting credit structure
was weak. This marked the beginning of
Re gional Rural Banks.
, ,,_,,, <
:,~ irer .\.
~A;l,: <] 4.
!~ RRBs h~ve achieved considerable degree of success in taking
y has
i«•~ '-~ ~ U:~rtance of institutiona l credit in boosting
~ural etn:i:ges of ~ g services to the remote areas which had hitherto remained
1. been clear to the Governmen t of India right from its ear y :\h ed and making available institutional credit to the weaker sections
. ese areas.
planning.
 3-18 P (HSMC -Sem-7 & 8) Panchay ati Raj & kural Adtninist .
ration. ~ 1 Developm ent : A & P
3-19 P (BSMC. Sem-7 & 8)
5. Every RRB function s as a commer cial bank and apart from~ Rurai
short term and long term loans directly , it is empowe red to
savings. m:~:.ntse«
1
iii. The Zila Paris had at district level.
J}epartm ent8 of G o v ~t : The Ministry of Rural Development
6.
They sanction loans for agricult ure, allied activitie s, retail trad consists of two departm ents, VlZ. ,
small industri es in the rural sector. A.
e antt Departm ent of Rural Develop ment :
7. They also specific ally cover The departm ent run three national-level schemes : Pradhan Mantri
the target group of small and margi 1.
farmers , landless laboure rs, rural artisans etc., under the Integra~ 1 Gram Sadak Yojana (PMGSY) _for rural roads develop ment ,
~
Rural Develop ment Program me by extendin g credit to the poorest Swarnajayanti Gram Swarozgar YOJal'la (SGSY) rural employm ent and
f
the poor in the rural areas. . 0 for rural housing, Pradhan Mantri Awas Yojana (PMAY).
8. These banks are also extendi ng financia l assistan ce to cooperati 2. It handles the administ ration of District Rural Development Agency
ve (DRDA), and has three autonomous organisations under it :
institut ions of the local region to strength en their financia l base.
Object ives : The main objectiv es of the Regiona l Rural Banks i. Council of Advancement of People's Action and Rural Technology
were to : (CAPART).
1. Take banking to the doorstep s of the rural masses, particula rly in
areas ii National Institute of Rural Development (NIRD) .
without banking facilitie s.
2. Make availabl e cheaper instituti onal credit to the weaker
m. Nationa l Rural Road Development Agency (NRRDA ).
sections of B. Departm ent of Land Resources :
society.
3. Mobilis e rural savings and channel ise them for supporti ng productiv The Departm ent of Land Resources runs three national-level programs
e :
activitie s in rural areas. 1. Pradhan Mantri Krishi Sinchayee Yojna (Wat ershed Develop ment
4. Genera te employ ment opportu nities in the rural areas. Component).
2. Digital India Land Record Modernization Programme.
5. Bring down the cost of providin g rural credit.
3. N eerancha l Nationa l Watersh ed Project.

I PART -6 1· . I
:,Q~€~~2., Describ e the need for non-gov ernment orpniz ations
Govern ment and Non-Oo vemme nt Organi z.ation? I
Based Organi.zatiof!,s. ·
7~J. (NGOs) workin g in the field of rural develop ment in India?
, \ > · ·' '.~ ~~er·.,_. I
1. Rural develop ment is a complex process as it involves continuo
us
·~ reorient ation and adaptati on of tradition al values with scientifi
Questf o ., c
. . knowledge and technologies to enhance quality of life and welfare
.
of
the people.
Long Answe r Type ~d ~e~·
2. It is essentia lly a problem of change in moderni zation which can be
handled effectively only with the active particip ation of the people
in
· every stage of decision-making.
Que 3.21. f Which are the variou s govern men t organizat ions tbat
. . 3. For this to happen people have to be organized and enable to be active
are associa ted with rural develo pmen t?. . particip ants of the develop ment process.
4. Given the manner governm ent machine ry operates , this job cannot
be
Answe r J 1Development perform ed by the governm ent servants .
Pancha yati Raj Institut ions (PRls) and Ministr y ofRura 5
· This role is appropriately suited to the Non-Governmental Organizations
1. ciated with rural develoP Jilent.
are asso 'th pRls at <NQOs) which have emer ged as viable forces for the articula tion
. can interact s w1 of
2. Th e individu al or the commu nity in the v111age '
people's needs and grievanc es.
·
6
followin g level : · ~cogniz ing this goverru nent policy has also been to encoura ge NGOs
The Gram Pancha yats at village le_v el. to pai·ticipate in the task ofrural develop ment.
i. The Pancha yat Samiti at block level.
ii.
 3-20 P (HSMC-Sem-7 & 8)
Panchayati Raj & Rural A~-!- .
·-..uuunstr~
Ill D'evelopnn nt : A & P 3-21 P (BSMC-Sem-7
~
Describe Community Ba11ed Organizations (CBo. ~ - -- - - -- - -- - - - - - - -&-
8)
V"llage8 face numerous problems related to poverty, illiteracy, lack of
J
~ ~ ~- ' ! ' ! I ).
3. ~lla lack of formal credit etc. 1beee problems cannot be tackled at an
,,.1,-~i.., .' ,. ~ndi\tidual level and need collective efforts.
1.
Community~ organiza_tions (CBOs) are nonprofit groups that ,rhus SHG can become a vehicle of change for the poor and marginalized.
at a local level to improve hfe for residents. 4·
. Wor\ SHG rely on the notion of "Self Help" to enoourage self-employment
2. The focus is to build equality across society in all streams. and poverty alleviation.
3. CBOs ~ typically, and almost necessarily, staffed by local membe runctton111 of suo. :
commumty members who experience first hand the needs within t~8.- Income generation for the poor.
neighborhoods. eu 1. Access to banks for poor, financial :inclwrion.
2.
4. Besides being co~~ted ge~graphically, t~e only link between statr A pressure group in Gram Panchayats.
3.
members and their mterests 1s often the desire and willingness to help. Social Upliftment of marginal sections.
4.
5. In CBOs occupational skill sets and experience are greatly diverse. _ Upliftment of women.
5
6. Work conducted by CBOs generally falls into the themes of· human .
services, natural environment conservation or restoration, and urban ' Why SBG are a neeeuity in rar.al develi; ea1?
environment safety and revitalization.. Examples include : "'
.i Affordable housing,
1. One of the chief reasons for roral poverty is the lack of acce88 er lilllited
ii Food security, access to credit and financial services. SHGs play a vital Tele in giving
a .Environmental protection/conse rvation, credit access to the poor and this is extremely cnmal in p!:IWerty
iv_ Community sustainability, alleviation.
v_ B , nnaoit.Jlrian/disa ster response, 2. They also play a great role in empowering women bea.mse SHGs help
women from economically weaker sectioos build social capital
vi Medical relief funds. Financial independence through self~yment oppertunitie8 also
3.
~ ,. ~.· ;, ' . -~\'·,-."'; helps improve other development factors such as literacy levels, imploved
j PART- healthcare and better family planning.
l Bel "

\:.'ii: ·

Following are the various benefits of SHGs :

L Social intepity : SHGs encourages collective efforts for cqmbating
practices like dowry, alcoholism etc. ·
2. Gender Equity : SiiGs empowers
women and inculcates leadership
~ -> ·,0, ~ What are Self Help Groups (SHGs) ? Desert'be the skill among them. Empowered women participate more actively in mm
sabha and elections. ·\
funetic,DB of SHGs. . a.
Preuure Groups: SHGs participation in governance process enables
f•~~;, :d um rmalassociationsofpeoplewhochoose
them to highlight issues such as dowry, alcohn)jsm the menar:e of open
;-' t~
1.
':'.~,.,.
Self-Hel:,
to come ge
, .
ar:=
SHGs)
~ find wS:.;s tooiJnprove their living conditions, f
l d infi tion group o
defecation, primary health care etc and impact policy decision.
~ Voice to maqpnalised ■eetioa : Moat of the beneficiaries of
government schemes have been from weak.er and marginalized
2 It can be defined as self governed,_peer control e d ~-~ a desire to ~om_munities and hence their participation through SHGs ensures social
. people with similar socio-economic ~kground an v1 Juat1ce.
collectively perform common purpo ·
 Pancha & Rur al
yati Raj2:-=-=: · .
Admuustrat·
3-22
_ __ _ _ _&
_ __ -Sem-7
P (HSMC _8)____ _ _..::__-- .::..:._:~
1
• Sector Lending norms and- - - -- ---..011
. __ Jotal J)evelop ment : A & P ~ - P OISIIC- Sem-7 A 8)
5.. Financ ial Inclus ion : Priority
•
The SHG-B a:i:; ~ ance
of returns incentivize banks to lend to SHGs. Jlapid exp8118ion of financia l infrutr udure by adopting extensiv
e IT
e ~nkage
program me pioneer ed by NABARD has made access to credit 3.
enabled commun ication and capacity building meuure a.
ot~Ier lllld
reduced the depend ence on traditio nal money lenders and Efforts
institut ional sources.
er non. Extension of Self-He lp Groupe to Urban/Peri-Ur ban Area:
4.
be made to increue ineome generat ion abilities of the urban
depend should
6. Altern ate source of emplo yment : SHGs eases
ncy on poor.
agricul ture by providi ng support in setting up micro-enterprie SHG monitor ing cell should be estabmh ecl in ""ffY state.
tailorin g, grocery , and too;e: e.~,,
persona lised busines s venture s like 5. the State
shops.
epair
6. comme rcial Banks and NABAR D in collabor ation with
Govern ment need to continu oualy innovate and-cle sip new
financ:ia1
7. Chang es In Consu mption Patter n :. It has enabled the Partic'Ipating products for these groups.
h ouseh oIds to spend more on educat10n, food and health than
non.
client househo lds.
8. Bankin g literac y : It encoura ges and motiva tes
its member s to eee
save
and act as a conduit for formal banking service s to reach them.

QaeU ll. ~ What are variou s proble ms associa ted with

Self Help
Group s (SHGs) ?
OR
What are the variou s weakn esses of SHGs ?

Annve r J
families,
1. Membe rs of a group do not come necessa rily from the poorest
are still based on primitive
2. Many of the activitie s underta ken by the SHGs
level wages,
skills. With poor value addition and prevale nce of subsistence
the income
such.ac tivities often do not lead to any substan tial increas e in
of group membe rs.
areas who
3. There is a lack of qualifie d resourc e personn el in the rural
by group
could help in skill upgrad ation or acquisi tion of new skills
membe rs.
of funds.
4. Poor accoun ting practic es and inciden ts of misapp ropriati on
5. Lack of resourc es and means to market their goods.
ent
6. SHGs are heavily depend ent on their promot er NGOs and governm
suppor t often leads to their collapse .
agencie s. The withdra wal of

• iJM,,. .1Give some measu res to make SHGs more effective,

~- 1
1. The Govern ment should create a support ive environ ment for
0wth
the of s fe
the ro ·
and develop ment of the SHG movem ent. It should play
y
facilita tor and promot er. . f the countr ,
. .
2. Expand ing SHG movem ent to credit deficie nt areas o