Grassroots governance has become a defining component of India's democratic framework by strengthening local participation, institutional accountability, and decentralized decision-making. The constitutional recognition of Panchayati Raj Institutions (PRIs) and Urban Local Bodies (ULBs) has transformed governance from a centralized administrative structure into a participatory democratic system that enables citizens to influence development policies at the local level. This review paper critically examines the historical evolution, theoretical foundations, institutional mechanisms, and democratic significance of grassroots governance in India. Using a qualitative review methodology based exclusively on the selected literature, the study synthesizes historical developments ranging from ancient village administration to modern constitutional decentralization. The paper evaluates different decentralization models, analyzes the relationship between local autonomy and democratic accountability, and identifies institutional challenges that continue to affect governance efficiency. Particular attention is given to the interaction between political decentralization, fiscal decentralization, and administrative reforms in strengthening democratic transformation. The findings indicate that grassroots governance has substantially enhanced citizen participation, transparency, and localized development while simultaneously facing constraints related to financial dependence, uneven institutional capacity, and political interference. The study concludes that India's democratic transformation depends upon strengthening decentralized institutions through improved fiscal autonomy, administrative reforms, technological integration, and participatory governance mechanisms. The review contributes to the growing scholarship on democratic decentralization by integrating historical, institutional, and governance perspectives within a unified analytical framework.