Rostrum’s Law Review | ISSN: 2321-3787

Problems of Rural Consumers and thier Empowerment through Panchayati Raj Institutions


“The State shall take steps to organize village panchayats and endow them with such powers and authority as may be necessary to enable them to function as units of self-government.” (Article–40)

In State of Uttar Pradesh v. Pradhan Sangh Kshettra Samiti[i], the Supreme Court observed that Article–40 does not give guidelines for organizing village panchayats. All that they require is that the village panchanyats howsoever organized have to be equipped with such powers and authority as may be necessary to enable them to function as units of self-government.

The details of Panchayat Raj institutions as political system of local governance are found in abundance in the history of South-East Asia particularly in the countries of subcontinent like India, Pakistan, Bangladesh and Nepal. Indian social system has tremendous vitality. Since racial, religious, cultural, linguistic, geographical and economic diversity has been coexisting and nurtured since ages, this provides a strong unity to social system. In simple understanding Culture is day to day pattern of living. In India the cultural diversity has been maintained as a social policy by the rulers in their polity.

The word ‘Panchayat’ literally means assembly or Ayat of five or panch elderly and wise persons. Panchayati Raj Institutions existed, functioned and contributed significantly. It is important to note that the village panchayats have always been elected bodies and functioned as units of local self-government. Gram panchayats are contrastingly apart and distinct from the unelected khap or caste panchayats prevalent in some parts of India.

Constitutional and Legal Role of Panchayat Raj Institutions in Consumer Protection

India is a country with extensive topography, vast geography and consequent economic diversity. Largest segment of population which is around 70 percent of the population lives and works hard in rural India. The people in rural areas are engaged in agricultural and related activities. In independent India the rural economy has rapidly transformed itself and the economic activities are getting organized very fast. The contribution of rural economy is significant and it sustains a large section of population in India. Agriculture and related activities have grown enormously on scientific and technological lines. Mechanization of agriculture and irrigation has gone a long way. The economic activities are to be managed and administered in a user friendly manner.

There are more than 72 million consumers in villages and rural India, as per the reports of various government and non-government organizations. The protection of consumers in rural areas has become an area of concern. The consumers in the form of farmers and entrepreneurs are using agricultural inputs and technology to a considerable extent. They are to be protected. In this the Panchayat Raj Institutions are required to play a vital role. The powers of these institutions and co-related obligations towards the consumers are required to be emboldened. It will give a new dimension and role to the functioning of these institutions. Panchayat Raj Institutions are required to be oriented towards people and development.

From the second half of the 20th century law rapidly came to be recognized as a tool of social development and welfare of humanity. The process of social engineering came on priority. The reforms started coming very fast. It was an urgent requirement to emancipate people living in Afro-Asia which had been made slums by the colonial powers.

The object of law is to do welfare of humanity, similar to that of all branches of knowledge like science and technology, engineering, medical sciences, social sciences, political science, management science, economics etc. India has been strengthened by various revolutions in co-operative and private sector like the green, yellow, blue, white and pink revolutions. These developments are the result of the hard work of the people of India. There is massive production and consumption of goods and services across India. In all the four sectors of economy there is rapid rise of consumers.

Mahatma Gandhi emphasized on the establishment and organization of the village panchayats for the administration and development of villages as a unit of self government. He clearly believed that India can have a strong economy only when the villages will be self reliant. His philosophy came to be known as Gram Swaraj. Article–40 of the Constitution of India stands explicitly inspired by Gandhian philosophy. It is a major directive to the State of India in law and policy making.

In pursuance of this directive, Balwant Rai Mehta Committee in Nehruvian era, Ashok Mehta Committee in Desai era, P.K. Thungan Committee in Rajeev Gandhi era were major mile stones. The constitutional status of Panchayat Raj institutions by 73rd and 74th Amendments of the Constitution came during Narsimha Rao era in pursuance of the dream of Rajeev Gandhi to take democracy to the grass root level. In fact the organized establishment and constitutional status given to the functioning of these institutions had become and urgent requirement in the light of the growth of Indian economy as well as the impact of liberalization and globalization of agricultural and related activities.

By 73rd Amendment of the Constitution Part IX dealing with the Panchayats (containing Articles 243, 243A to 243O) was inserted. Similarly Part IXA related to the Municipalities (containing Articles 243P to 243Z, 243ZA to 243ZG) was inserted by the 74th amendment. For details of the aforesaid provisions Eleventh and Twelfth Schedule were also added in the Constitution. Detailed provisions defining Gram, Gram Sabha, Panchayat, composition of Panchayats, Panchayat area, Intermediate level, District level, reservation of seats, disqualifications for membership, powers, authority and responsibilities of Panchayats, power to impose taxes by, and funds of the Panchayats, constitution of finance commission to review financial position, audit of accounts of Panchayats, elections to the Panchayats etc. have been enshrined. Similar details with regard to the Municipalities have also been provided.

Article 243G mentions Powers, authority and responsibilities of Panchayats and clearly lays down that the Panchayats at appropriate level shall have the responsibilities for the preparation of plans for economic development and social justice, the implementation of schemes for economic development including those in relation to the matters listed in the Eleventh Schedule. Similarly Article 243W and Twelfth schedule enshrine the similar role of Municipalities.

The Constitution (73rd Amendment) Act, 1992 enshrines a key role for the Panchayati Raj Institutions related to the 29 subjects such as education, health, rural housing, drinking water, agriculture etc., as mentioned in the Eleventh Schedule of the Constitution. States are required to transfer these functions to the Panchayati Raj Institutions and to devolve funds, functions and functionaries upon the Panchayati Raj Institutions for discharging these functions. The Comptroller & Auditor General of India is responsible for exercising control and supervision over the proper maintenance of accounts and the audit of all the three tiers. The format for preparation of budget and for keeping accounts is prescribed by C&AG. The classification of transactions in Panchayati Raj Institutions their budgets and accounts has been structured on a function-cum-program basis to provide uniformity in three levels of governance i.e. Union, State and Local Government.

The role of the Panchayati Raj Institutions in consumer education and their protection is of prime importance in present times. The evolution of law in the field of consumer protection and the constitutional status accorded to Panchayat Raj Institutions are closely related. Both of them achieve special significance and meaning in the light of the fact that India is a country with extensive rural base and a large number of consumers are living in rural areas. Rural markets are feeling the impact of globalization and liberalization of law and economy.

The economic prosperity achieved by the common men in India by their hard and sustained work has gone a long way in pre and post green revolution era. This improvement in the economic status has made Panchayat Raj Institutions and consumer protection more meaningful. Education and awareness in rural areas has increased and is to be increased further. The thought process of consumers in rural areas is evolving and getting rationalized resulting into the emergence of better and more rational preferences. The behavior of consumers in rural areas is becoming systematic and is changing in a positive direction. In this context the innovations in the field of rural management, science and technology have played a crucial role. With the generation of massive requirement in the resurgent nation this is a thrust area in which law related to consumer protection can not only protect the welfare of masses but also can work as a tool for social development in conjunction with Panchayat Raj Institutions.

Democracy is incomplete unless the local government and the individual consumers are empowered. There was a time when consumer came last and was least important in the economy but now the consumer is the mainstay of empowerment. One of the major drawbacks of the present consumer protection movement is that it is restricted to the urban areas. One way to empower the rural population is to empower the members of Panchayati Raj Institutions and through them the masses. On the one side there is growing market and on the other side there is manipulation and exploitation which impairs the interests and rights of the consumers. Consumer protection and business should proceed together. Markets are to be disciplined with orientation towards the satisfaction of the interests of consumers.

Empowerment of Consumers in Rural Areas

India started transforming itself rapidly with the promulgation of the Constitution. The Constitution enshrined the Preamble containing objectives of socio-economic justice, the fundamental rights for the many fold development of the individuals, and the Directive Principles of State Policy to usher the era of welfare in India. The establishment of Planning Commission to be chaired by the Prime Minister, by a Resolution of Cabinet on 15th March 1950 within 47 days of the promulgation of the Constitution was a significant step. The policy of ceiling i.e. hadbandi on land holdings and bringing scattered peaces of land i.e. chakbandi were major steps of land reforms. Another significant effort in this context was of Bhudan and Gram Dan movements by Acharya Vinoba Bhave.

The turning point of transformation of agriculture and rural India came with the green revolution. The government made signal innovations in the empowerment of simple, dedicated and honest people in rural India through Community Development Programs like Food for Work Program, National Rural Employment Program (NREP), National Rural Landless Employment Guarantee Program (RLEGP), Integrated Rural Development Program (IRDP), Training of Rural Youth for Self-Employment (TRYSEM) etc. The legendary Jawahar Rozgar Yojna (JRY) in which the aforesaid programs got merged and introduction of Perspective Planning were milestones achieved by the government. Granting of the constitutional status to Panchayat Raj Institutions was the logical conclusion arrived towards taking democracy to the grass root level. The empowerment of consumers in rural areas became a visible reality with Insurance of Agricultural Sector under the auspices of General Insurance Corporation (GIC) and making available the credit cards, named Kisan Credit Cards. Mahatma Gandhi National Rural Employment Guarantee Act, 2005 (MGNREGA) also aims to empower the consumers in rural areas.

The welfare measures as mentioned above have contributed to the general well being, happiness and prosperity in rural India giving vast purchasing power and emergence of rural consumers and markets. The role of the banking industry and of NABARD has helped a lot in this direction. The expansion of cooperative activities in general and of IFFCO, KRIBHCO and NAFED in particular has been beyond imagination. The HBJ (Hazira-Babrala-Jagdishpur) pipe line, rightly named as Gas Ganga has been instrumental in giving and entirely new dimension to rural economy of Northern India.

The philosophy and aim of Co-operative Federalism is proving itself to be the correct objective in nation building. The life and life style of rural India has tremendously changed and getting updated and upgraded. This has narrowed down the gap between Urban and Rural India. Rural Marketing Association of India (RMAI) and MART are providing valuable inputs in this direction. The income in rural areas and of rural consumers is on the rise as is visible from enormous growth in rural marketing operations. The rural share of popular consumer goods and durables is also rapidly rising. The growth and potential in rural markets is enormous and significantly more as compared to Urban markets.

The Pharmaceutical Revolution at the dawn of 21st century popularly came to be known as Pink Revolution has made India the largest manufacturer of medicines in the world. The medical facilities have reached rural India vertically and have spread horizontally making it a thrust area in rural markets. Significantly Pink Revolution has occurred in private sector. Indian economy is rapidly transforming itself into a global economy with the arrival of patenting in the field of agricultural research and development.

The invention of Internet led to Information Technology Revolution, ultimately bringing Cell Phone as a necessity in the hands of most of rural consumers. Requirement and availability of mobile phones, computers, internet connectivity, laptops, palm tops and information highways have changed the form, shape, nature and extent of consumer markets in rural India generating remarkable potential changes and growth. Super conductivity and Optical Fiber Technology has contributed a lot towards Rapid Transit Transportation Systems and Tele Communication Technology. The construction of extensive road networks has generated usage of automobiles on a large scale in rural India. Automobiles have given wheels to the people of rural India. Their life has become faster and business oriented.

Problems of Consumers in Rural Areas

Rural consumers in emerging market countries are among the largest and fastest growing segments of the world’s population. Rural India is growing at a fast speed and is a potential market for the goods and services. The extent of rural markets in rural India is expected to be doubled than that of urban India. Liberalization resulting into Globalization, rise in income, expansion of media and information technology in rural areas, women empowerment, improvement in infrastructure etc. are some of the catalysts for the growth of rural markets.

With the growth and expansion of rural market at such a fast pace there is a consequential and simultaneous rise in the problems and grievances. The major difficulties and problems of consumers in rural areas are lack of awareness, adulteration, less and incorrect weighing and measuring, quite often absence of safety and quality in equipments, defective goods and deficient services,  misrepresentation and unfair assurances, misleading warranties and guarantees, high pricing, cheating in the form of spurious and mirror image goods and malpractices like selling on more than prescribed minimum retail price, faulty weights and measures, deficiency in services, misrepresenting advertisements etc. The six sensitive areas in consumer protection are related to Credit Cards, Milk production and supply, Banking, Travel, Telecommunication and Consumer goods.

 The reality is that the conditions are unfavorable for the consumers. They stand exploited. Ignorance is an important factor in the exploitation of the consumers especially in the rural areas. With economic reforms the market is gradually being transformed from a predominantly sellers market to a buyers market where choice of the consumers depends on their awareness level. Consumer rights could be protected in a competitive economy only when right standards for goods and services are ensured by evolving a network of institutions and legal protection system. To ensure consumer welfare is the responsibility of the Welfare State.

Even a manufacturer or provider of a service is a consumer of some other goods or services. If both the producers and consumers realize the need for co-existence, adulterated products, spurious goods and other deficiencies in services will get reduced.

The rural consumer remains disadvantaged as their right to information, choice, redress, education and to be heard are not sufficiently fulfilled. There is need for the improvement in the existing consumer protection and consumer welfare polices for meeting the specific requirements of rural consumers more effectively. Indian consumer is also to be protected from wrong influences which some times come from the media.

In fact Mahatma Gandhi had rightly said that a consumer is the most important visitor on our premises. He is not dependent on us, we are on him. He is not an interruption to our work; he is the purpose of it. We are not doing a favour to a consumer by giving him an opportunity. He is doing us a favour by giving us opportunity to serve him. As per the Gandhian thought the consumers and producers were not looked as separate individuals. The process of production was supposed to be decentralized and distributed in parity. In consumer protection movement there is need of emphasizing and resorting to Gandhian values with decentralization as a policy for protecting all, including consumers.

The benefits of the decentralization must be able to reach the poorest of the poor. As Mahatma Gandhi clearly observed “Whenever you are in doubt or when the self becomes too much with you, apply the following test: Recall the face of the poorest and the weakest man whom you may have seen and ask yourself if the step you contemplate is going to be of any use to him. Will he gain anything by it? Will it restore him to a control over his own life and destiny? In other words, will it lead to Swaraj for the hungry and spiritually starving millions? Then you will find your doubts and your self melting away.”

Empowerment of Redressal Mechanism

Protection connotes that someone is there as protector and protected. Consumer Protection Act, 1986 aimed to provide better protection to the consumers. Consequently consumer movement acquired momentum. It provides three tier structure from district to national level for the redressal of consumer grievances.

The Act enshrines consumer rights which are internationally accepted. The Act provides for simple, speedy and inexpensive redressal to the consumer grievances against defective goods, deficiency in services including the restrictive and unfair trade practices.

An enlightened consumer is an empowered consumer.  An aware consumer not only protects himself from exploitation but brings efficiency, transparency and accountability in the production of goods and services. It is important that top priority be accorded to Consumer Education, Consumer Protection and Consumer Awareness.  The Consumer Protection Act, 1986 applies to all goods and services unless specially exempted by the Central Government, in all sectors whether Private, Public or Co-operative.

A person can make a complaint if he is not satisfied with the standard of service which has been provided to him. Anyone who feels that he was provided a poor service or is not satisfied with the product or the service can make a complaint in the Consumer Court. Consumer complaints are legal methods for expressing dissatisfaction with regard to a service or product. It is the legal way of filing a claim. The important rights of consumers are Right to Safety, Right to Information, Right to Choice, Right to be heard, Right to Redress and Right to consumer education etc.

Every body is using goods or services in day today life and is a consumer. However, the reality is that the conditions are not favorable and conducive for consumers. They are being exploited and cheated especially in the rural areas. For this the consumers are to be made aware of various aspects and their rights. The best way to educate the rural consumers is to hold the meetings of Gram Sabha regularly which are generally attended by most of the villagers.

The task of consumer protection has three basic dimensions.  First, to ensure a legal framework of legislations related to consumer protection.  Secondly, to evolve standards so that consumers are able to exercise their choice amongst different products.  Standards are the essentials for quality and play a key role in consumer protection.  Standards are technical specifications of usage of proper terminology, codes of practice and procedures and of management systems.  Thirdly, awareness of consumers and their education for protection is very important. How to educate the rural masses still remains a challenging task.

Some significant measures are visible in this direction Multi-media publicity campaigns have been launched through print and electronic media on the issues which are very relevant such as putting ISI marks,  Hallmark, Labeling, MRP, etc,. Advertisements are now released through a network of national as well as regional newspapers.  The Department of Consumer Affairs has video spots of 30 seconds duration on various consumer related issues, which are being telecast through Cable and Satellite channels.  Special programs have also been telecast on Lok Sabha TV and Doordarshan to highlight the issues relating to consumer awareness.  Issues pertaining to rural and remote areas have been given prominence in the various advertisement spots.

Consumer Protection Act, 1986 has its own limitations. Although it is providing protection to the rights of consumers yet it requires to be revisited in the light of extensive changes during last two decades.

The disputes redressal mechanism related to consumers operates through consumer forums. They exist at district, state and national level to redress the complaints of consumers. The Consumer Forum is bestowed with the power to order replacement of the commodity or removal of deficiencies in goods and services or refund of payment. It can also award compensation for loss suffered. The three-tier system of consumer forums under the Act reaches to urban areas only. It is difficult for rural consumers to reach the forum. The extension of the consumer forum in rural areas will give relief to consumers.

Consumer forums and Lok Adalats organized by themare required to reach villages. In this regard there is a significant role for the Panchayat Raj Institutions in protecting the rights and interests of rural consumers. Easy and available remedy will ensure further participation of people in rural areas in the growth and change of rural and semi-urban India. The Gram Panchayatsare viable constitutional mechanism present across India. Through this constitutional mechanism the consumer movement can be made effective and awareness among rural consumers can be spread. In this context required amendments can be made to establish consumer forums at Gram, Block and District level.

The Gram Panchayats canplay a crucial role in spreading awareness. Information Technology and both print and electronic media can be used for this purpose. The relevant literature in this regard in languages of the people can be extensively circulated in hard as well as in soft versions. The Gram Panchayatscan use media in the form of documentary films. Street plays can also go a long way in spreading awareness. The teachers and students can do wonders in taking the consumer awareness programs at every door of villages.

Involvement of academicians and researchers in consumer movement is of vital importance. Till now there is not much of the involvement of teachers, students, researchers and educational institutions in generating awareness about the problems of consumers and their protection. There is a need to encourage teachers and students to take up this cause in rural areas. Active participation of the consumers in awareness drives can ensure consumer welfare.

There is need of improvement in infrastructure of the Consumer Forums, sufficient allocation of funds in budget for their effective functioning and for consumer protection and welfare, provision for training of staff, and members of the Consumer Forums and provision of necessary legal aid to the consumers in order to enable them to defend themselves.

Conclusions and Suggestions

In a democratic system people are required to be made active participants in the process of governance and development. This helps in strengthening the democratic fabric and processes consequently developing the sense of belonging in people. It also ensures utilization of the knowledge and experience of the people as a human resource. In this way people develop skills also in them to contribute and accelerate the process of development. Decentralization and devolution of legislative and executive powers is the primary requirement of resurgent nation. Earlier village assemblies resolved disputes between individuals in villages. Now the Constitution and law has decentralized and delegated several administrative functions to the local level. This has empowered elected Gram Panchayats. This decentralization of the aforesaid powers and functions with regard to such a huge population is historical in the history of humanity. C. Rajgopalachari rightly opined ‘A knitting together of people’s hearts makes democracy’.

The rights of consumers are to be protected in every sector and especially of the rural consumers. The Panchayat Raj institutions are required to be made the pivotal agencies in educating and protecting the consumers through policy making. The active involvement and participation from the Union and State governments, the educational Institutions, the NGO’s, the print and electronic media and the adoption and observance of a code of code of professional conduct by the trade and industry and the citizen’s charter by the service providers is necessary for the success of the consumer movement.

Impact of participation of women as functionaries in Panchayati Raj Institutions is significant. It has enhanced their self-esteem, confidence, decision-making ability, respect within the family and in community. Their voice has increased in decisions related to economic matters and other issues in their family. Women who received training have performed better. It should be organized regularly covering rules and regulations, administrative issues, budgeting, finance and the implementation of development schemes.

The need of the hour is for total commitment to the consumer cause and social responsiveness to consumer needs. It is important that this should proceed in a harmonious manner. The majority of consumers in India are not aware of their rights and existence of the consumer forums. The access to consumer forums is not available to them due to numerous factors in general and absence of the network, branches and benches of consumer forums below the district level in particular.

Many a times the consumers suffer financial injuries. Although there is Indian Contract Act of 1872 yet there is no comprehensive legislation like Indian Torts Acts till now. The codification and enactment of Indian Torts Act which is pending since British times is urgently required for the fair justice with regard to civil wrongs. The doctrine of caveat emptor and caveat vendor are required to be in balance. The calls like ‘Jago Grahak Jago’ have reached in every household as a result of the awareness campaigns undertaken during the recent past. The State has endeavored to inform the common men of their rights as a consumer.  Consumer awareness initiative in rural and remote areas should find top priority in governance.

Now, the Fundamental Right to Education in Article 21A of the Constitution is set to give a further fillip to consumer protection movement. MGNREGA is a movement towards making Right to Work a fundamental right and actualizing the directives of law and policy making as mentioned in Article–41 of the Constitution. Major concern in this direction is of corruption, financial misappropriation of funds and lack of commitment towards the cause. The issue is of humane governance and not simply of good governance. For this socially responsible skilled professionals are to be produced as their end products by universities, which are sanctuaries of the nation, its happiness and prosperity.

In the end it is to be appreciated and kept in mind that although Panchayat Raj institutions can play a crucial role in policy making and their implementation yet the judicial function in the adjudication of disputes can not be given to them because that will go against the principles of natural justice. Since huge finances are and will be involved in development, in many cases Panchayat Raj institutions will be a party in disputes. So they can and should not be a judge in their own cause. Awareness, expansion and availability of the network of consumer forums below the district level shall be the right mechanism.

[i] AIR 1995 SC 1512.

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