There is no provision for dissolution of the local bodies by Governors. This provision was there in the draft bill, but it was strongly criticized by opposition parties.
The Parliament adopted the proposal with the slogan “Power to the people”. It was felt that in many states the Panchayati Raj institutions have become weak and ineffective owing to a variety of reasons. The
Bill provided the constitution of Finance Commission of the state to review the financial position of the Panchayats and ensure their sound finance through taxes, duties, toll tax and fees etc.
To overcome the ineffectiveness which included failure of holding elections regularly, in adequate representation to the weaker sections of the society i.e. S.C., S.T. and women and inadequate devolution of powers this amendment bill was passed.
The directive principle of the state policy as contained in article 40, lays down that panchayat should have the necessary powers to function as a self-government.
The states are made obligatory to set up a three-tier system of panchayat at the villages, intermediate and district levels.
The seats in these bodies will have to be filled by direct elections. The members of Lok Sabha and state assemblies can participate in its functioning without having voting rights.
The term of panchayats will be of five years. The panchayats will prepare plans for social justice, economic development. The accounts will be duly audited.
The bill restricts itself to democracy and development at the grass root level in the rural areas. The revival of co-operative movement is essential for the success of Panchayati Raj.
Some of the Eastern States of India like Arunachal Pradesh, Nagaland, Meghalaya and Mizoram would be exempted from the Panchayati system as the traditional system of self-government is already in existence there.