This act has added Part-IX to the Constitution of India. It is entitled as ‘The Panchayats’ and consists of provisions from articles 243 to 243-0. In addition, the Act has also added Eleventh schedule to the Constitution. It contains 29 functional items of the Panchayats and deals with Article 243-G.
The Act has given a practical shape to Article 40 of the Constitution which says that, “The state shall take steps to organise village Panchayats and endow them with such powers and authority as may be necessary to enable them to function as units of self- government.” This article forms a part of the Directive Principles of State Policy.
The Act gives a constitutional status to the Panchayati Raj institutions. It has brought them under the purview of the justiciable part of the Constitution.
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In other words, the state governments are under constitutional obligation to adopt the new Panchayati Raj system in accordance with the provisions of the Act. Consequently, neither the formation of Panchayats nor the holding of elections a regular interval depends on the will of the state government any more.
The provisions of the Act can be grouped into two categories—compulsory and voluntary. The compulsory provisions of the Act have to be included in the state laws creating the new Panchayati Raj system. The voluntary provisions, on the other hand, may be included at the discretion of the states.
Thus the voluntary provisions of the Act ensure the right of the states to take local factors like geographical, politico-administrative, and others, into consideration while adopting the new Panchayati Raj system. In other words, the Act does not disturb the constitutional balance between the centre and the states in the Indian federal system.
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Though it is a central law on a state subject (i.e., local government is a subject included in the state list under the Seventh schedule of the constitution), the Act does not encroach upon the jurisdiction of the states which are given adequate discretionary powers with regard to the Panchayats.
The Act is a significant landmark in the evolution of grassroots democratic institutions in the country. It transfers the representative democracy into participatory democracy. It is a revolutionary concept to build democracy at the grassroots level in the country.