The village councils, the precursors to present-day Village Panchayats, were institutions of very ancient origin in Tamil Nadu and they functioned very much like little republics enjoying a great deal of local autonomy and powers, including the power of taxation. The epigraphical inscription on the walls of the Vaikuntha Perumal temple at Uthiramerur in Chengalput District bears ample testimony to this. It speaks of how village administration was governed by Assemblies known as “Sabai” and how the villages were divided into several wards ( Mandalam). It also speaks of how representatives from every such ward was elected by Pot-ticket system of election ( Kudavolai Murai ). Till the advent of the British in India, the central authority was far removed from the day-to-day affairs of the villages. The British rule had far- reaching effects on the villages. The introduction of mill-made cloth and manufactured goods decimated the village industries. The village artisans and agricultural labour were thrown out of employment and they migrated in large number to the emerging towns. Consequently, the rural economy was greatly upset. the administration also became highly centralized during the British rule. The administration of justice in rural areas was taken over by civil and criminal courts; the Police department took over functions of maintaining peace in villages; and the administration of land revenue was vested in separate department of Government. The self-reliance with which the villagers had always managed their affairs had gradually disappeared and the Village Panchayats which remained as useful rural institutions sank into insignificance. There came a situation where people looked up to the central authorities for carrying out even simple local works.
In course of time, the futility of too much centralization was realized even by the British administration. They felt that Village panchayats were an excellent remedy for the imperfections of a bad form of Government. They realised it imperative to foster voluntary co-operation among the people for carrying out public objects. The credit for realising the importance of shaping new measures towards that direction goes to Lord Rippon whose resolution of 1882 regarding association of non-officials in the administration of local institutions lead to the passing of the Madras Local Boards Act, 1884, which provided for the constitution of “unions” in small towns and large villages mainly for sanitation and lighting. The members in each union were nominated after the visit of the Royal Commission on Decentarlisation and the Government of Madras decided to increase the number of these unions and to introduce therein the principles of election. They also decided to constitute informal Panchayats, under the control of the Collectors, with the local village head men as ex-officio chairmen. About 1,000 of these informal Panchayats were formed but their position was weak and unsatisfactory, as they had no statutory basis. The Royal Commission on Decentralisation laid stress on the necessity. As they have no connection with district or taluk boards. the Madras Village Panchayats Act was accordingly passed and brought into force in 1920. The Act enfranchised all men over 25 years of age and provided for the election of all members of the Panchayats.
By 1930, the number of panchayats increased, and the panchayats were placed on the same footing as the “unions” formed under the Madras Local Boards Act, and were vested with more powers. Their supervision and control were subsequently vested with Inspector and Municipal Chairman and Local Board Act.