"...each village a complete republic...independent for its vital wants and yet interdependent for many others in which dependence is necessity."-Gandhi's vision of Village Governance.

The impulse for decentralization is traced to the recognition of the failure of centralized mode of decision-making and the top down processes of development. It is a fact that the 73rd and 74th Amendments to the Constitution followed immediately upon the macro-economic crises of 1990-91 and the stabilization and structural adjustments, packages administered by the IMF and the World Bank. However, as Amartaya Sen has noted, the failures, in the development of educational facilities, health care provisions, and environmental protection cannot be ascribed to "overactive" government alone. The errors of commission (state led allocation of resources, public investment in manufacturing and services) are to be viewed together with the errors of omission (under investments in health, nutrition and education).