Under Dyarchy

Local self-government was made a ‘transferred’ subject under popular ministerial control by Government of India Act, 1919, and each province was allowed to develop local self- institutions according to provincial needs and requirements.

But, since finance was a ‘reserved’ subject under the charge of an executive councillor, the Indian ministers could not do much work in the sphere of local self-government for lack of funds.

The Simon Commission (May 1930) pointed out the lack of progress of village panchayats except in UP, Bengal and Madras. The commission suggested the retrograde step of increasing provincial control over local bodies for the sake of efficiency. The commission also adversely commented on reluctance of elected members to impose local taxes and observed that, generally speaking, the management of finances of local bodies had deteriorated since the introduction of the reforms of 1919.