The correct answer is option-2 - Decentralisation.

Decentralisation refers to the transfer of power and decision-making authority from a central authority to local or regional bodies. The Panchayati Raj system in India follows this principle of decentralisation. Under this system, governing bodies called Panchayats are established at the village, block, and district levels to enable local self-governance. These Panchayats have the power to make decisions and implement policies related to various aspects such as rural development, agriculture, health, education, and infrastructure at the local level. This decentralisation of power aims to empower local communities, enhance their participation in decision-making processes, and promote grassroots democracy. By devolving authority, the Panchayati Raj system aims to bring governance closer to the people and address local issues effectively.