Jharkhand has been losing out nearly Rs 100 crore each year because it doesn't have panchayat bodies. The last election took place in 1971, when Jharkhand was a part of Bihar. Since the state's creation in 2000, there have been no panchayat elections, though Bihar has had local body elections twice in this duration.

During a recent meeting with prime minister Manmohan Singh, Jharkhand chief minister Madhu Koda requested that the state be relieved of the condition of holding panchayat elections before accessing the centre's rural development funds. The 12th Finance Commission had mandated that Jharkhand hold the polls first. It is widely believed that this is a reflection of a lack of political will among the main parties in the state.

The Jharkhand State Election Commission put out a schedule for panchayat polls in 2002. A notification regarding panchayat elections were issued on August 22, 2005, by the government. On September 2, 2005, that schedule was cancelled in view of an interim order of the Jharkhand High Court, which declared ultra vires certain provisions of the state's Panchayati Raj Act and its Panchayati Raj (Extension to Scheduled Areas) Act. The matter is now pending with the Supreme Court.

Backward communities, which constitute 40 per cent of the state's population, opposed the reservations for tribals in areas where the tribal population was under 50 per cent. Succumbing to the demand, the state government de-reserved some seats. Consequently, the trials moved the court against the government.

The State Election Commission then issued a new election schedule for local government on September 2, 2005, in pursuance of the court order. The commission claims that the state government has failed to respond to any of its 2002 notifications on panchayat elections.