Content

1. Rashtriya Panchayati Raj Diwas
2. Insurance for All: Expanding Coverage, Strengthening Social Security

Rashtriya Panchayati Raj Diwas

Why in News ?

• Rashtriya Panchayati Raj Diwas (24 April 2026) commemorates implementation of the 73rd Constitutional Amendment Act (1993) institutionalising grassroots democracy.
• Launch of Panchayat Advancement Index (PAI)-2.0 and rural heritage initiatives signals shift towards data-driven governance and cultural integration.
• Emphasis on digital platforms and capacity building highlights ongoing transformation of Panchayati Raj Institutions into efficient governance units.

Issue in Brief

• Panchayati Raj Institutions represent the constitutionalisation of grassroots democracy, enabling decentralised governance and participatory development aligned with local needs.
• However, despite expansion and digitalisation, challenges of capacity, devolution gaps, and uneven implementation continue to limit their transformative potential.

Relevance

GS Paper II (Polity & Governance)

• Constitutionalisation via 73rd Amendment → Part IX, 11th Schedule
• Democratic decentralisation, cooperative federalism, local self-government
• Institutional ecosystem: Gram Sabha, State Election Commission, State Finance Commission
• Tribal governance via Panchayats (Extension to Scheduled Areas) Act, 1996

Practice Questions

Q1.“Despite digital transformation and fiscal transfers, Panchayati Raj Institutions remain structurally weak.”Critically analyse with reference to 3Fs and capacity constraints. (250 word

Evolution and constitutional foundation

• Panchayati Raj has roots in ancient village assemblies (sabhas and samitis), reflecting long-standing traditions of local self-governance in India.
• Post-independence decentralisation efforts gained momentum with the Balwant Rai Mehta Committee (1957) recommending a three-tier structure.
• The 73rd Constitutional Amendment Act, 1992 (effective 1993) granted constitutional status, inserting Part IX and mandating Panchayats nationwide.
• It institutionalised regular elections, reservations, and decentralised planning, making local governance an integral component of India’s democratic framework.

Structure and grassroots democracy

• The three-tier structure—Gram Panchayat, Block Panchayat, and District Panchayat—ensures governance is distributed across village, intermediate, and district levels.
• The Gram Sabha, comprising all registered voters, functions as the foundation of direct democracy, enabling participation, accountability, and social oversight.
• Panchayats handle core functions such as local infrastructure, service delivery, welfare implementation, and development planning, bringing governance closer to citizens.

Scale, inclusion and significance

• India has over 2.5 lakh Panchayats with around 24.04 lakh elected representatives, making it the largest grassroots governance network globally.
• Women constitute approximately 49.75% of representatives, reflecting significant progress towards gender inclusion and political empowerment at the local level.
• Panchayats reduce administrative delays by enabling local decision-making, improving responsiveness to everyday issues like water supply, sanitation, and infrastructure.

Digital transformation of Panchayati Raj

• Platforms such as eGramSwaraj, AuditOnline, Gram Manchitra, and Local Government Directory enhance transparency, planning, and financial tracking.
• Over 95% villages have 3G/4G connectivity, enabling digital governance and improving last-mile delivery of services and schemes.
• eGramSwaraj-PFMS integration enabled transfer of over ₹53,342 crore, ensuring real-time payments and reducing delays in fund utilisation.
• SabhaSaar, an AI-based tool, automates Gram Sabha documentation in 23 languages, improving accountability and reducing administrative burden.

Flagship initiatives strengthening PRIs

• SVAMITVA Scheme uses drone mapping to provide property ownership rights, with 3.10 crore property cards prepared, reducing disputes and enabling asset monetisation.
• Rashtriya Gram Swaraj Abhiyan (RGSA) focuses on capacity building, training over 45 lakh participants, strengthening governance capabilities of Panchayats.
• Model Women-Friendly Gram Panchayat initiative promotes gender-sensitive governance, enhancing women’s participation and leadership in local institutions.
• Sashakt Panchayat–Netri Abhiyan has trained over 1.48 lakh women representatives, improving leadership, decision-making, and governance effectiveness.

Youth and participatory governance

• Model Youth Gram Sabha (MYGS) engages students in mock Panchayat processes, promoting awareness of governance and strengthening democratic values among youth.
• The initiative aligns with Digital India and Atmanirbhar Bharat, fostering future-ready citizens with understanding of grassroots governance mechanisms.

Tribal governance and PESA

• The PESA Act, 1996 extends Panchayati Raj provisions to Scheduled Areas, empowering Gram Sabhas in tribal regions with community-based governance.
• It covers 10 states, 77,564 villages, and 22,040 Panchayats, strengthening decentralised decision-making in tribal areas.
• Establishment of a Centre of Excellence on PESA enhances capacity building, documentation, and dissemination of best practices in tribal governance.

Financial strengthening and fiscal decentralisation

• The 15th Finance Commission (2021–26) recommended ₹2.36 lakh crore for rural local bodies, strengthening financial autonomy of Panchayats.
• The 16th Finance Commission (2026–31) increased this allocation to nearly ₹4.35 lakh crore, significantly enhancing fiscal decentralisation.
• Rural development budget increased by over 211% (₹87,765 crore to ₹2.73 lakh crore) in the last decade, improving infrastructure and service delivery.
• Funds include both untied grants for local priorities and tied grants for basic services, balancing flexibility with accountability.

Key challenges and gaps

• Despite constitutional backing, incomplete devolution of Funds, Functions, and Functionaries continues to limit Panchayats’ autonomy and effectiveness.
• Capacity constraints, including lack of trained personnel and technical expertise, hinder effective planning and implementation at the grassroots level.
• Digital divide and uneven adoption of e-governance platforms create disparities in governance outcomes across regions.
• Gram Sabhas often remain underutilised, with low participation reducing their potential as effective instruments of accountability.
• State-level control and bureaucratic dominance continue to restrict genuine decentralisation envisaged under the Constitution.

Way forward

• Strengthening 3Fs devolution with clear activity mapping and legal backing is essential for making Panchayats effective self-governing institutions.
• Enhancing capacity through continuous training, digital literacy, and institutional support can improve planning, service delivery, and governance outcomes.
• Expanding digital platforms and ensuring last-mile connectivity can improve transparency, accountability, and citizen participation.
• Revitalising Gram Sabhas through awareness campaigns and mandatory participation norms can deepen participatory democracy.
• Strengthening implementation of PESA and promoting inclusive initiatives can ensure equitable governance across tribal and marginalised regions.

Prelims pointers

• The 73rd Constitutional Amendment Act came into force on 24 April 1993, marking the constitutionalisation of Panchayati Raj Institutions.
• Panchayat provisions are contained in Part IX of the Constitution, while the 11th Schedule lists 29 subjects for devolution.
• Gram Sabha is not a tier, but a general body of all registered voters forming the foundation of local democracy.
• PESA Act, 1996 applies to Fifth Schedule areas, not Sixth Schedule areas, which follow different governance structures.
• SVAMITVA Scheme uses drone and GIS technology to map rural properties and issue legal ownership cards.

Insurance for All: Expanding Coverage, Strengthening Social Security

Why in News ?

• Government push towards “Insurance for All by 2047” led by Insurance Regulatory and Development Authority of India to ensure universal risk coverage.
• Passage of Insurance Laws (Amendment) Act, 2025 raising FDI limit to 100% and improving regulatory framework.
• Expansion of flagship schemes like PMJJBY, PMSBY, AB-PMJAY, strengthening India’s social security architecture.

Issue in Brief

• Insurance is emerging as a critical pillar of financial resilience and social security, enabling households to manage risks without falling into poverty traps.
• Despite rapid growth, low penetration, affordability constraints, and trust deficits continue to limit universal insurance coverage in India.

Relevance

GS III (Economy)

• Insurance sector as part of financial sector development
• Insurance penetration (3.7% of GDP) and density (USD 97)
• Role in capital formation (₹74.44 lakh crore AUM)
• FDI reforms (100%) and regulatory changes

GS II (Governance & Welfare)

• Social security architecture: PMJJBY, PMSBY, AB-PMJAY, PMFBY
• Inclusive growth and welfare delivery mechanisms
• Role of Insurance Regulatory and Development Authority of India

Practice Questions

Q1.“Insurance is not merely a financial product but a critical pillar of social security.”Examine in the context of India’s goal of ‘Insurance for All by 2047’. (250 words)

Insurance sector performance and trends

• India is the 10th largest insurance market globally, with 1.8% global share, reflecting growing but still under-penetrated potential.
• Insurance penetration remains modest at 3.7% of GDP (life: 2.7%, non-life: 1%), indicating significant scope for expansion.
• Insurance density increased to USD 97, showing gradual rise in per capita insurance spending, though still below global averages.
• Total premium collection reached ₹11.93 lakh crore in FY25, while claims worth ₹8.36 lakh crore indicate growing risk coverage.
• Share of insurance and pension funds in household assets increased to 29.6% (FY25) from 28.6% (FY19), reflecting rising financial awareness.

Role in economy and social protection

• Insurance acts as a risk-transfer mechanism, preventing households from distress asset sales and enabling economic stability during shocks.
• It promotes long-term savings and capital formation, with assets under management reaching ₹74.44 lakh crore, supporting investment flows.
• Expanding insurance coverage reduces vulnerability of informal workers, farmers, and low-income households, strengthening inclusive growth.
• A well-developed insurance sector enhances financial sector stability and supports economic resilience against climate, health, and livelihood risks.

Key reforms and policy measures

• The Insurance Laws (Amendment) Act, 2025 increased FDI limit to 100%, aiming to attract long-term capital and improve technology adoption.
• Regulatory shift towards principle-based framework reduces compliance burden while allowing innovation and flexibility in insurance products.
• GST exemption on life and health insurance premiums (2025) reduces cost burden, improving affordability and encouraging wider adoption.
• Strengthened consumer protection through higher penalties (up to ₹10 crore) and powers to order disgorgement enhances regulatory discipline.
• Creation of Policyholders’ Education and Protection Fund aims to improve awareness and financial literacy regarding insurance products.

Health insurance reforms

• Reduction of moratorium period from 8 years to 5 years enhances policyholder protection and reduces claim rejection risks.
• Introduction of 30-day free-look period allows policyholders to review and exit unsuitable policies without financial loss.
• Guaranteed renewal provisions prevent denial based on past claims, ensuring continuity of coverage and reducing uncertainty.
• Portability and migration provisions enable policyholders to switch insurers without losing accrued benefits, improving competition and choice.
• Monitoring of Third Party Administrators (TPAs) improves accountability and service quality in claim processing and customer experience.

Major insurance schemes

• Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) provides ₹2 lakh life cover at ₹436 annual premium, with 26.88 crore enrolments.
• Pradhan Mantri Suraksha Bima Yojana (PMSBY) offers accident insurance at ₹20 premium, with 57.11 crore enrolments, targeting vulnerable populations.
• Ayushman Bharat PM-JAY provides ₹5 lakh health cover per family, with 43.52 crore cards issued, expanding healthcare access.
• Employees’ State Insurance (ESI) covers 3.24 crore employees and 14.91 crore beneficiaries, offering comprehensive social security benefits.
• Pradhan Mantri Fasal Bima Yojana (PMFBY) provides crop insurance with subsidised premiums, with ₹1.94 lakh crore claims paid.

Key challenges and gaps

• Insurance penetration remains low due to affordability issues, low financial literacy, and limited trust in claim settlement processes.
• High dependence on agents and intermediaries leads to mis-selling and information asymmetry, affecting consumer confidence.
• Informal sector workers, who form a large workforce share, remain underinsured due to irregular incomes and lack of awareness.
• Regional disparities persist, with rural and backward regions having lower coverage despite higher vulnerability to risks.
• Climate risks and emerging threats are not fully integrated into insurance products, limiting sector preparedness for future shocks.

Data points

• 41.84 crore policies issued in FY25, reflecting expanding scale of insurance coverage across segments.
• Distribution network expanded from 48 lakh (FY21) to 83 lakh (FY25), improving last-mile delivery and rural outreach.
• Total number of insurers stands at 74, indicating increasing competition and diversification in the insurance market.

Way forward

• Expanding insurance coverage requires targeted efforts to improve financial literacy, awareness, and trust through transparent claim settlement mechanisms.
• Leveraging digital public infrastructure such as Aadhaar and UPI can reduce transaction costs and improve accessibility for underserved populations.
• Developing micro-insurance and customised products for informal sector workers can enhance inclusivity and address income volatility.
• Strengthening regulatory oversight to curb mis-selling and improve grievance redressal systems will enhance consumer confidence.
• Integrating climate risk insurance and parametric insurance products can improve resilience against natural disasters and climate shocks.
• Encouraging public-private partnerships and innovation can help scale insurance penetration and achieve universal coverage by 2047.

Prelims pointers

• Insurance penetration refers to premium as percentage of GDP, while insurance density refers to per capita premium expenditure.
• IRDAI is the statutory regulator of the insurance sector, established under the IRDA Act, 1999.
• FDI limit in insurance increased to 100% (2025), earlier capped at 74%, a frequently tested factual change.
• PMJJBY covers death (life insurance), while PMSBY covers accidents and disability, often confused in exams.
• AB-PMJAY provides ₹5 lakh coverage per family per year, with no restriction on age, gender, or family size.