<Li> Funds for implementation of centrally sponsored schemes </Li> <Li> Funds released by the state governments on the recommendations of the State Finance Commissions </Li> <P> Mahatma Gandhi advocated Panchayati Raj as the foundation of India's political system, as a decentralized form of government in which each village would be responsible for its own affairs . The term for such a vision was Gram Swaraj ("village self - governance"). Instead, India developed a highly centralized form of government . However, this has been moderated by the delegation of several administrative functions to the local level, empowering elected gram panchayats . There are significant differences between the traditional Panchayati Raj system, that was envisioned by Gandhi, and the system formalized in India in 1992 . </P> <P> The Panchayat Raj system was first adopted by the state of Rajasthan in Nagaur district on 2 Oct 1959 . During the 1950s and 60s, other state governments adopted this system as laws were passed to establish panchayats in various states . The second state was Andhra Pradesh, while Maharashtra was the ninth state . It also founded backing in the Indian Constitution, with the 73rd amendment in 1992 to accommodate the idea . </P>

Who recommended democratic decentralisation which is popularly known as panchayat raj