<P> "The panchayat was destroyed by the East India Company when it was granted the office of Diwan in 1765 in Bengal by the Mughal Emperor as part of reparation after his defeat at Buxar . As Diwan the Company took two decisions . The first was that it abolished the village land record office and created a company official called Patwari . The Patwari became the official record keeper for a number of villages . The second was the creation of the office of magistrate and the abolition of village police . The magistrate carried out policing functions through the Darogha who had always been a state functionary under the Faujdar . The primary purpose of these measures was the collection of land revenue by fiat . The depredations of the Patwari and the Darogha are part of our folklore and it led to the worst famine in Bengal . The effects of the famine lingered right to the end of the 18th century . These two measures completely disempowered the village community and destroyed the panchayat . After 1857 the British tried to restore the panchayat by giving it powers to try minor offences and to resolve village disputes . But these measures never restored the lost powers of the village community ." </P> <P> From 1870 that Viceroy Lord Mayo's Resolution (for decentralization of power to bring about administrative efficiency in meeting people's demand and to add to the finances of colonial regime) gave the needed impetus to the development of local institutions . It was a landmark in the evolution of colonial policy towards local government . The real bench marking of the government policy on decentralization can, however, be attributed to Lord Ripon who, in his famous resolution on local self - government on May 18, 1882, recognized the twin considerations of local government: (i) administrative efficiency and (ii) political education . The Ripon Resolution, which focused on towns, provided for local bodies consisting of a large majority of elected non-official members and presided over by a non-official chairperson . This resolution met with resistance from colonial administrators . The progress of local self - government was tardy with only half - hearted steps taken in setting up municipal bodies . Rural decentralization remained a neglected area of administrative reform . </P> <P> The Royal Commission on Decentralization (1907) under the chairmanship of C.E.H. Hobhouse recognized the importance of panchayats at the village level . The commission recommended that "it is most desirable, alike in the interests of decentralization and in order to associate the people with the local tasks of administration, that an attempt should be made to constitute and develop village panchayats for the administration of local village affairs". </P> <P> But, the Montague - Chemsford reforms (1919) brought local self - government as a provincial transferred subject, under the domain of Indian ministers in the provinces . Due to organisational and fiscal constraints, the reform was unable to make panchayat institutions truly democratic and vibrant . However, the most significant development of this period was the' establishment of village panchayats in a number of provinces, that were no longer mere ad hoc judicial tribunal, but representative institutions symbolising the corporate character of the village and having a wide jurisdiction in respect of civic matters '. l By 1925, eight provinces had passed panchayat acts and by 1926, six native states had also passed panchayat laws . </P>

Explain the need of the panchayati raj system with the help of a flow chart