The 73rd constitutional amendment transferred great amounts of governance responsibility to local governing bodies i.e. Gram Panchayats and Gram Sabhas. The amount of resources transferred to these institutions under the 14th finance commission are immense. If planned and implemented better these resources can be critical in development of rural areas of India. There are several challenges in achieving full potential of these decentralised governance institutions, some of these are:
- Trust gap between citizens and their governing institutions
- Lack of capacity of local governing institutions with regard to fulfilling aspirations of their citizens
- Lack of resources
- Inadequate transfer of powers and responsibilities to these institutions in true spirit