This study addresses the roles of different levels of government and the institutional arrangements involved in the provision of key services with focus on disadvantaged rural areas. This is the third and last of a series of studies on rural decentralization carried out since 1999 by the Bank. The first study, Overview of Rural Decentralization in India (OUP 2001), is on the emerging institutional landscape and issues. The second study, Fiscal Decentralization to Rural Governments in India (OUP 2004) describes panchayat finances in Kerala and Karnataka, and an analysis of those issues inthe fiscal framework for local governments that hamper effective functioning. The present study will assist the Government of India and state governments in defining the role of panchayats in the delivery of key services to rural people. To this end, it recommends a conceptual framework, thenapplies the criteria elicited from this framework to four key sectors: health, education, drinking water and sanitation, and employment programs. Taking rural decentralization for granted, it is a study on what the various levels of panchayats can do in the delivery of those services within thegovernment structure created by the 1993 Amendment to the Constitution of India and relevant state-level legislation.