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Name the lowest level of government in the rural area.

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Decentralisation was done in 1992 that created the third tier of democracy to make it more powerful. Local government is set from among the members of the locality. Rural local government is also known as Panchayati Raj institution. Gram Panchayats, when grouped together, are called panchayat Samiti , all the samitis forms Zilla Parishad. 

Hence Gram Panchayats are the smallest government in rural areas.

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