Final answer:
Panchayati Raj is termed local self-government because it empowers local rural communities to govern themselves and make policy decisions at the local level without the need for central government intervention, promoting democratic participation and autonomy.
Step-by-step explanation:
Panchayati Raj is called local self-government because it is a system where local rural communities have a direct say in their own affairs, making decisions and managing public services at the village or small town level. Self-government is a core aspect of democratic systems and is characterized by the people's power to elect officials, make policies, and govern themselves without excessive outside interference. In India, the Panchayati Raj was envisioned to give local self-governance so that citizens could address local issues and needs.
The concept of local self-governance is also supported by how Indian society historically organized itself into close-knit, clustered villages and towns. The Panchayati Raj system was re-empowered in the 20th century, with the intent to decentralize power and include more people in the governance process, reducing the caste discrimination by encouraging political participation through voting and representation. The essence of local self-governance lies in the autonomy of local governments, as they are granted the discretion to make policy and tax decisions to cater to the specific requirements of their regions.