When power is taken away from Central and State governments and given to local government, it is called decentralisation.
Decentralisation helps in solving a large number of problems and issues at the local level.
People have better knowledge of problems in their localities and hence they are the best resources to solve problems.
They also have better ideas on where to spend money and how to manage things more efficiently
Besides, at the local level it is possible for the people to directly participate in decision making. This helps to inculcate a habit of democratic participation
Local government is the best way to realise one important principle of democracy, namely local self-government.