Step 1: Understanding the Question:
The question asks about the legislative list under which the subject 'Panchayati Raj' falls in the Indian Constitution.
Step 2: Key Concept:
The Seventh Schedule of the Indian Constitution divides the legislative powers between the Union and the States into three lists: the Union List, the State List, and the Concurrent List. 'Local Government', which includes Panchayati Raj, is a subject mentioned in the State List.
Step 3: Detailed Explanation:
Entry 5 of the State List (List II) of the Seventh Schedule deals with "Local government, that is to say, the constitution and powers of municipal corporations, improvement trusts, district boards, mining settlement authorities and other local authorities for the purpose of local self-government or village administration."
The 73rd Constitutional Amendment Act of 1992 gave constitutional status to Panchayati Raj institutions but the power to make laws on this subject remains with the state legislatures.
Therefore, Panchayati Raj is included in the State List.
Step 4: Final Answer
Based on the distribution of powers in the Seventh Schedule, Panchayati Raj is a subject under the State List.