History of decentralization in India is, as a matter of fact, the history of evolution of Panchayati Raj System in the country.

During the period of British domination of India there was no particular urge for economic and social development except only those activities necessary for safeguarding the rule. Naturally, the issue of decentralization was not in the agenda of the rulers, though local government institutions in the form of Union Boards, District Boards etc. were established as per law.

In the course of the freedom movement it became clear that after independence India’s nationhood would evolve within a democratic political and institutional setting. Some leaders believed that it should be a representative democracy much in the mould of western countries. But Mahatma Gandhi’s development discourse hinged on a village based participatory democracy embedded in his vision of the Panchayati Raj. Gandhi advocated for a democratic polity that would have its foundation in thousands of self-governing village communities. Gandhi felt that real development of India can take place only through its political system of Gram Swaraj in which the State Government would only exercise such powers which are not within the scope and competence of the lower tiers of participatory governance institutions.

Rural local governments, in the form of Panchayats, were included in the chapter on Directive Principles of the State Policy . It stated that the states shall take steps to organize village Panchayats and endow them with such powers and authority as may be necessary to enable them to function as units of self-government.

Immediately after independence and especially after the launch of the first 5-year plan, the then Government