Village councils (panchayats) have a several thousand year long tradition in India. However, panchayats were not democratic institutions in the past. In 1947, when India became an independent country, a heated discussion started on the third, local level of state administration. India's constitution (the most extensive in the world - 395 articles and 12 annexes) regulated the administrative system at the federal (union) and state levels. There were no regulations pertaining to the functioning of administrative authorities at the local level. The constitution merely mentioned the possibility of creating self-governed panchayats. Due to the absence of a clear regulation relating to local authorities in the constitution local councils were rarely formed and played a minimal role in managing the affairs of local communities. The main obstacle to the creation of local councils were social and cultural factors, i.e. the division of the society into many classes and, especially, the existence of the caste system, religious and ethnic intolerance, illiteracy, etc. In such situation chances for the development of democratic local institutions were minimal. After some time, however, India's authorities became convinced that despite the earlier described barriers efforts should be launched at the central level to create rural self-governments, which found reflection in the 73rd amendment to the country's constitution, which was adopted in 1992. The amendment became effective in 1993 and this marked the start of work on the creation of the third, local level of state administration. This work is considered to be the greatest decentralisation venture in the history of mankind.