The Panchayati Raj system is a system of local self-government in India that operates in rural areas. It is a three-tiered system that includes Gram Panchayats, Panchayat Samitis, and Zila Parishads. The system is designed to decentralize administrative functions and promote grassroots democracy. 

How does it work?

Gram Panchayat: The basic unit of local governance at the village level 

Panchayat Samiti: Looks after the financial distribution in the Gram Panchayats of the respective states 

Zila Parishad: The highest structure of local government, above the Panchayat Samiti 

History

The system has its roots in ancient Indian history 

The 73rd Constitutional Amendment Act of 1992 laid out provisions for the creation of local self-government institutions in villages 

The word 'raj' means 'rule,' and panchayat' means 'assembly' (ayat) of 'five' (panch) 

Significance

The system is significant for promoting grassroots democracy, empowering local communities, and ensuring participatory development 

It is one of the oldest systems of local government in the Indian subcontinent