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47. It may be seen from the statement of objects and reasons appended to the Seventy-Second Amendment Bill 1991 to the HCJ & VRS, J W.P.Nos.23267 of 2017 & batch Constitution, which was enacted as the Constitution Seventy-Third Amendment Act, 1992 that the object of inserting Part-IX in the Constitution was to enable the local bodies to function as units of Self-Government. The provisions inserted in Part-IX of the Constitution provided for (1) constitution of Panchayats, (2) elections to all seats in the Panchayats, (3) fixation of a tenure for Panchayats, (4) devolution by the State Legislature, of powers and responsibilities upon the Panchayats, with respect to the preparation of plans for economic development and social justice and for the implementation of the development schemes, (5) grants-in-aid to the Panchayats from the consolidated fund of the State and appropriation by the Panchayats of the revenues of designated taxes, duties, tolls and fees, (6) setting up of a Finance Commission and the review of the financial position of the Panchayats once in five years, and (7) auditing of the accounts of the Panchayats.

48. This is why Article 243G empowers the Legislature of a State, by law, to endow the Panchayats with such powers and authority as may be necessary to enable them to function as institutions of self-government. The law so enacted may contain provisions for devolution of powers and responsibilities upon Panchayats with respect to the preparation of plans for economic development and social justice and implementation of schemes for economic development and social justice including those in relation to matters listed in the Eleventh Schedule. Article 243 H empowers the Legislature of a State, by law, to authorise Panchayats to levy, HCJ & VRS, J W.P.Nos.23267 of 2017 & batch collect and appropriate such taxes, duties, tolls and fees in accordance with such procedure and subject to such limits. The law so enacted may also provide for making such grants-in-aid to the Panchayats from the consolidated fund of the State. It may also provide for constitution of such funds for crediting all monies received respectively by or on behalf of the Panchayats and for withdrawal of such monies therefrom.