73rd and 74th Amendments: local self-government as the third tier of India's federal set-up

Background

In a federation the powers and functions of government are divided between two governments; in India these are the Union Government and the various State Governments.
With the passage of the 73rd and 74th amendment acts of the Constitution of India, in 1993 (as the Ministry of Panchayati Raj's page puts it), the division of powers and functions was further trickled down to Local Self Governments.
These are the Panchayat at village levels and the Municipalities and Municipal Corporations in towns and large cities.
As such, India now has not two but three tiers of governments in its federal set-up.
The Ministry of Panchayati Raj looks into all matters relating to Panchayati Raj and Panchayati Raj Institutions; it was created in May 2004 and is headed by a minister of cabinet rank.