Panchayat is smallest unit of administration at village level.
Panchayat is like Schrodinger's cat. Unless you observe, the Panchayat may both be working and not. Under observation of higher ups, it appears to work. For public, it appears to not work (at least to their satisfaction).
But technology helps. Vigilant public helps. RTI helps. They ensure that the box has a camera and the cat cannot be both alive and dead.
A challenge in public policy is, how do you put a camera in all the boxes of public service administration. I have installed cameras in my office. Seems that the cat is more alive than dead. How do I know?
The other day I was shown a rat that was caught in my office!